<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JULY 4, 1998
COMMISSION FILE NUMBER 1-14330
POLYMER GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 57-1003983
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4838 JENKINS AVENUE
NORTH CHARLESTON, SOUTH CAROLINA 29405
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (843) 566-7293
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
On August 3, 1998 there were 32,000,000 Common Shares, $.01 par value
outstanding.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
POLYMER GROUP, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part I. Financial Information............................................. 3
Item 1. Financial Statements............................................ 3
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 15
Part II. Other Information................................................ 16
Signatures................................................................ 17
Exhibit Index............................................................. 18
</TABLE>
2
<PAGE>
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
POLYMER GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
JULY 4, JANUARY 3,
1998 1998
----------- ----------
(UNAUDITED)
ASSETS
------
<S> <C> <C>
Current assets:
Cash and equivalents................................. $ 66,993 $ 50,190
Marketable securities................................ 7,936 7,754
Accounts receivable, net............................. 121,029 107,328
Inventories.......................................... 104,643 94,128
Assets held for disposition, net..................... -- 464,524
Other................................................ 32,025 31,146
---------- ----------
Total current assets............................... 332,626 755,070
Property, plant and equipment, net..................... 647,984 606,260
Intangibles, loan acquisition and organization costs,
net................................................... 260,314 229,391
Other.................................................. 47,718 37,032
---------- ----------
Total assets....................................... $1,288,642 $1,627,753
========== ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable, accrued liabilities and other...... $ 121,865 $ 105,824
Short-term bridge financing.......................... -- 425,945
Current portion of long-term debt.................... 2,832 3,276
---------- ----------
Total current liabilities.......................... 124,697 535,045
---------- ----------
Long-term debt, less current portion................... 865,027 741,860
Deferred income taxes.................................. 82,221 82,213
Other noncurrent liabilities........................... 15,810 14,815
Minority interest...................................... -- 54,730
Shareholders' equity:
Series preferred stock--$.01 par value, 10,000,000
shares authorized, 0 shares issued and outstanding.. -- --
Common stock--$.01 par value, 100,000,000 shares
authorized, 32,000,000 shares issued and
outstanding......................................... 320 320
Non-voting common stock--$.01 par value, 3,000,000
shares authorized, 0 shares issued and outstanding.. -- --
Additional paid-in capital........................... 243,662 243,662
(Deficit)............................................ (33,548) (39,355)
Other................................................ (9,547) (5,537)
---------- ----------
200,887 199,090
---------- ----------
Total liabilities and shareholders' equity......... $1,288,642 $1,627,753
========== ==========
</TABLE>
See accompanying notes.
3
<PAGE>
POLYMER GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- ------------------
JULY 4, JUNE 28, JULY 4, JUNE 28,
1998 1997 1998 1997
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Net sales............................. $ 206,111 $ 131,508 $399,447 $260,455
Cost of goods sold.................... 154,227 96,792 301,285 193,154
--------- --------- -------- --------
Gross profit.......................... 51,884 34,716 98,162 67,301
Selling, general and administrative
expenses............................. 24,329 19,037 50,354 37,693
--------- --------- -------- --------
Operating income...................... 27,555 15,679 47,808 29,608
Other (income) expense:
Interest expense, net............... 17,194 6,698 33,174 13,532
Foreign currency transaction (gains)
losses, net........................ 486 (5) 1,162 (325)
--------- --------- -------- --------
17,680 6,693 34,336 13,207
--------- --------- -------- --------
Income before income taxes and
extraordinary item................... 9,875 8,986 13,472 16,401
Income taxes.......................... 3,635 2,974 4,937 5,427
--------- --------- -------- --------
Income before extraordinary item...... 6,240 6,012 8,535 10,974
Extraordinary item, (loss) from
extinguishment of debt............... -- -- (2,728) --
--------- --------- -------- --------
Net income...................... $ 6,240 $ 6,012 $ 5,807 $ 10,974
========= ========= ======== ========
Net income per common share:
Basic:
Average common shares outstanding. 32,000 32,000 32,000 32,000
Income before extraordinary item.. $ 0.20 $ 0.19 $ 0.27 $ 0.34
Extraordinary item, (loss) from
extinguishment of debt........... -- -- (0.09) --
--------- --------- -------- --------
Net income per common share -
basic.......................... $ 0.20 $ 0.19 $ 0.18 $ 0.34
========= ========= ======== ========
Diluted:
Average common shares outstanding. 32,000 32,000 32,000 32,000
Income before extraordinary item.. $ 0.20 $ 0.19 $ 0.27 $ 0.34
Extraordinary item, (loss) from
extinguishment of debt........... -- -- (0.09) --
--------- --------- -------- --------
Net income per common share -
diluted........................ $ 0.20 $ 0.19 $ 0.18 $ 0.34
========= ========= ======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
POLYMER GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------
JULY 4, JUNE 28,
1998 1997
--------- --------
<S> <C> <C>
Operating activities
Net income.............................................. $ 5,807 $ 10,974
Adjustments to reconcile net income to net cash provided
by operating activities:
Extraordinary item.................................... 2,728 --
Depreciation and amortization expense................. 30,385 20,008
Foreign currency transaction (gains) losses, net...... 1,162 (325)
Changes in operating assets and liabilities, net of
effects of business acquisition:
Accounts receivable................................... (5,452) (10,579)
Inventories........................................... (5,226) (5,685)
Accounts payable and other............................ 8,573 1,881
--------- --------
Net cash provided by operating activities........... 37,977 16,274
--------- --------
Investing activities
Purchases of property, plant and equipment.............. (39,934) (27,457)
Purchases of marketable securities classified as
available for sale..................................... (7,533) (10,585)
Proceeds from sales of marketable securities classified
as available for sale.................................. 7,299 9,591
Proceeds from sale of assets, net of canceled
subordinated advance................................... 323,524 --
Minority interest....................................... (54,730) --
Other, including business acquisition................... (53,493) (84)
--------- --------
Net cash provided by (used in) investing activities. 175,133 (28,535)
--------- --------
Financing activities
Proceeds from debt...................................... 595,586 27,093
Payments of debt........................................ (781,356) (14,780)
Loan acquisition costs, net............................. (10,029) (113)
--------- --------
Net cash provided by (used in) financing activities. (195,799) 12,200
--------- --------
Effect of exchange rate changes on cash................... (508) (5,671)
--------- --------
Net increase (decrease) in cash and equivalents........... 16,803 (5,732)
Cash and equivalents at beginning of period............... 50,190 37,587
--------- --------
Cash and equivalents at end of period..................... $ 66,993 $ 31,855
========= ========
</TABLE>
See accompanying notes.
5
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Polymer Group, Inc. ("Polymer Group" or the "Company") is a world-wide
manufacturer of flexible nonwoven and oriented polyolefin fabrics. The
Company's principal lines of business include hygiene, medical, wiping and
industrial and specialty products. The Company operates manufacturing
facilities in the United States, Canada, Mexico, Germany, the Netherlands,
France and England.
The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The Condensed Consolidated Balance Sheets
and Statements of Cash Flow contain summarized information; as a result,
information as of January 3, 1998 does not include the same detail provided in
the 1997 Annual Report. In the opinion of the management of Polymer Group,
these unaudited consolidated financial statements contain all adjustments of a
normal recurring nature necessary for a fair presentation. Operating results
for the three and six months ended July 4, 1998, are not necessarily
indicative of the results that may be expected for fiscal 1998. Certain
amounts previously presented in the consolidated financial statements for
prior periods have been reclassified to conform to current classification. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2. INVENTORIES
Inventories are stated at the lower of cost or market using the first-in,
first-out method of accounting and consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 4, JANUARY 3,
1998 1998
---------- ----------
(UNAUDITED)
<S> <C> <C>
Inventories:
Finished goods.................................. $ 53,740 $48,769
Work in process and stores and maintenance
parts.......................................... 12,221 11,201
Raw materials................................... 38,682 34,158
-------- -------
Total......................................... $104,643 $94,128
======== =======
</TABLE>
NOTE 3. NET INCOME (LOSS) PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share" ("FAS 128"). FAS 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share excludes
any dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. The numerator for both basic and diluted earnings per
share is net income (loss) applicable to common stock. The denominator for
both basic and diluted earnings per share is average common shares
outstanding.
NOTE 4. ACQUISITIONS
On December 19, 1997, DT Acquisition Inc. ("DTA"), a special-purpose
subsidiary of the Company, completed the purchase of approximately 98% of the
outstanding common shares of Dominion Textile Inc. ("Dominion") for Cdn$14.50
per share and approximately 96% of the outstanding first preferred shares of
Dominion for Cdn$150 per share. The acquisition, which was accounted for using
the purchase method of accounting, was financed with $215.9 million of
borrowings under DTA's
6
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4. ACQUISITIONS (CONTINUED)
$600.0 million senior secured credit facilities, and subordinated advances of
$141.0, $69.0 and $25.0 million by Galey & Lord, Inc. ("Galey"), ZB Holdings,
Inc. ("ZB Holdings") and the Company, respectively. ZB Holdings is a wholly-
owned subsidiary of The InterTech Group, Inc., an affiliate of the Company.
On January 29, 1998, DTA acquired all remaining common and preferred shares,
at which time Dominion underwent a "winding up". All assets of Dominion were
transferred to DTA, all liabilities of Dominion were assumed by DTA and all
outstanding common shares and first preferred shares held by DTA were
redeemed. Immediately thereafter, pursuant to a purchase agreement dated
October 27, 1997, the apparel fabrics business of Dominion was sold to Galey
for approximately $464.5 million, including related fees and expenses, and the
Company acquired (the "Nonwovens Acquisition") the assets and liabilities of
Dominion that comprised the nonwovens and industrial fabrics operations (the
"Nonwovens Business") for approximately $351.6 million, including fees and
expenses. The Nonwovens Business includes a 50% interest in Argentina-based
Dominion Nonwovens Sudamerica S.A. ("DNS"). DNS manufactures and markets
nonwovens to hygiene markets in South America. Concurrently, Dominion Textile
(USA) Inc. ("DT USA"), a wholly-owned subsidiary of Dominion, purchased
approximately $145.6 million of its $150.0 million outstanding 8.875%
Guaranteed Senior Notes due 2003 and, at the same time, purchased
approximately $124.5 million of its $125.0 million outstanding 9.25%
Guaranteed Senior Notes due 2006. Net assets of the apparel fabrics business
of Dominion were classified as assets held for disposition on the Company's
consolidated balance sheet at January 3, 1998. Operating results of the
apparel fabrics business of Dominion have been excluded from the Company's
results of operations for the six months ended July 4, 1998.
In connection with the Nonwovens Acquisition and related transactions, the
Company also amended its senior secured credit facility to provide for $125.0
million in term loans. The Company used borrowings under the credit facility,
as amended, to finance the purchase of the Nonwovens Business, in part by
retiring amounts outstanding under the DTA $600.0 million credit facility and
repaying the subordinated advance made by ZB Holdings.
On March 5, 1998, the Company issued $200.0 million of 8.75% Senior
Subordinated Notes due 2008 (the "2008 Notes") to qualified institutional
buyers pursuant to Rule 144A under the Securities Act (the "March 1998
Offering"). Proceeds from the sale of the 2008 Notes were used, in part, to
finance the Oriented Polymer Acquisition (as defined below) and to repay
existing revolving obligations. The Company subsequently registered the 2008
Notes with the Securities Exchange Commission pursuant to a Registration
Statement on Form S-4 declared effective July 1, 1998.
On March 16, 1998, the Company completed the acquisition (the "Oriented
Polymer Acquisition") of a leading North American manufacturer of
polypropylene-based commercial twine and polyethylene-based specialty knitted
products for approximately $47.0 million in a transaction accounted for by the
purchase method of accounting. Supplemental pro forma information for the
Oriented Polymer Acquisition is not presented because the acquisition was not
material to the consolidated results of operations.
NOTE 5. SELECTED FINANCIAL DATA OF GUARANTORS
Payment of the 2007 Notes and 2008 Notes is guaranteed jointly and severally
on a senior subordinated basis by certain of the Company's subsidiaries.
Management has determined that separate complete financial statements of the
guarantors are not material to users of the financial statements. The
following sets forth selected financial data of the guarantor and non-
guarantor subsidiaries (in thousands):
7
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING SELECTED BALANCE SHEET FINANCIAL DATA
AS OF JULY 4, 1998
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NON-GUARANTOR THE RECLASSIFICATIONS
SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------------ ------------- ---------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Working capital......... $ 92,656 $ 99,918 $ 7,060 $ 8,295 $ 207,929
Total assets............ 1,556,589 977,563 1,434,659 (2,680,169) 1,288,642
Total debt.............. 1,210,384 776,925 1,206,402 (2,325,852) 867,859
Shareholder's equity.... 626,325 139,963 201,291 (766,692) 200,887
</TABLE>
CONDENSED CONSOLIDATING SELECTED BALANCE SHEET FINANCIAL DATA
AS OF JANUARY 3, 1998
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NON-GUARANTOR THE RECLASSIFICATIONS
SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------------ ------------- -------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Working capital......... $ 68,859 $ 137,167 $ 3,100 $ 10,899 $ 220,025
Total assets............ 1,164,642 1,141,546 950,260 (1,628,695) 1,627,753
Total debt.............. 2,050 342,320 425,767 (25,001) 745,136
Shareholder's equity.... 586,079 82,720 199,090 (668,799) 199,090
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS SELECTED FINANCIAL DATA
FOR THE SIX MONTHS ENDED JULY 4, 1998
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NON-GUARANTOR THE RECLASSIFICATIONS
SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------------ ------------- ------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $252,281 $155,015 $ -- $ (7,849) $399,447
Operating income........ 27,317 15,458 4,889 144 47,808
Income (loss) before
income taxes (benefit)
and extraordinary item. 10,453 10,529 (8,152) 642 13,472
Income taxes (benefit).. 3,363 3,333 (1,743) (16) 4,937
Income (loss) before
extraordinary item..... 7,090 7,196 (6,409) 658 8,535
Extraordinary item...... -- (2,728) -- -- (2,728)
Equity in earnings of
subsidiaries........... -- -- 11,558 (11,558) --
Net income.............. 7,090 4,468 5,149 (10,900) 5,807
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS SELECTED FINANCIAL DATA
FOR THE SIX MONTHS ENDED JUNE 28, 1997
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NON-GUARANTOR THE RECLASSIFICATIONS
SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------------ ------------- ------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $165,495 $99,174 $ -- $ (4,214) $260,455
Operating income........ 12,120 14,381 3,107 -- 29,608
Income (loss) before
income taxes (benefit)
and extraordinary item. 9,681 12,311 (5,591) -- 16,401
Income taxes (benefit).. (93) 1,510 4,010 -- 5,427
Income (loss) before
extraordinary item..... 9,774 10,801 (9,601) -- 10,974
Equity in earnings of
subsidiaries........... -- -- 20,575 (20,575) --
Net income.............. 9,774 10,801 10,974 (20,575) 10,974
</TABLE>
8
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. OTHER
In 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" ("FAS 130") which is effective for fiscal
years beginning after December 15, 1997. FAS 130 establishes new rules for the
reporting and display of comprehensive income and its components. FAS 130
requires unrealized gains or losses on the Company's available-for-sale
securities and the foreign currency translation adjustments, which prior to
adoption were reported separately in shareholders' equity, to be included in
other comprehensive income. The Company's comprehensive income for the three
months ended July 4, 1998 and June 28, 1997 approximated $8.7 million and $6.3
million, respectively. Year to date comprehensive income approximated $1.8
million in 1998 and $3.7 million in 1997. The difference between comprehensive
income and consolidated net income is due primarily to foreign currency
translation adjustments.
In 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("FAS
131") which is effective for years beginning after December 15, 1997. FAS 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. FAS 131 does not require interim disclosures during the initial
year of application; however, the segment information must be reported for
comparative purposes in interim financial statements in the second year of
application. The Company has adopted FAS 131 and will defer reporting segment
information in the interim financial statements until the second year of
application.
In 1998, the Financial Accounting Standards Board issued Statement No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits"
("FAS 132") which is effective for fiscal years beginning after December 15,
1997. FAS 132 revises and standardizes employers' disclosures for pensions and
other postretirement benefit plans and it requires additional information
about changes in the benefit obligations and the fair value of plan assets
that are expected to enhance financial analysis. It does not change the
measurement or recognition standards for these plans.
In 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("FAS 133")
which is effective for fiscal years beginning after June 15, 1999. FAS 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and
measure those instruments at fair value. FAS 133 contains disclosure
requirements based on the type of hedge and the type of market risk that is
being hedged.
In April 1998, the American Institute of Certified Public Accountants issued
SOP 98-5, "Reporting the Costs of Start-Up Activities". The SOP is effective
beginning on January 1, 1999, and requires that start-up/organization costs
capitalized prior to January 1, 1999 be written-off and any future start-up
costs to be expensed as incurred. The unamortized balance of start-up costs
will be written off as a cumulative effect of an accounting change. The
Company is currently quantifying the impact of this change and is evaluating
the feasibility of early adoption.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated results of operations and financial condition. The discussion
should be read in conjunction with the consolidated financial statements and
notes thereto contained in Part I of this report on Form 10-Q and with the
Company's Annual Report on Form 10-K for the fiscal year ended January 3,
1998.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationships to net sales of
certain income statement items.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SIX MONTHS ENDED
---------------- ----------------
JULY 4, JUNE 28, JULY 4, JUNE 28,
1998 1997 1998 1997
------- -------- ------- --------
<S> <C> <C> <C> <C>
Net sales by product category:
Hygiene.................................... 38.5% 42.5% 40.0% 42.3%
Medical.................................... 11.2 17.7 11.5 17.2
Wiping..................................... 12.6 19.2 13.0 19.7
Industrial and specialty................... 37.7 20.6 35.5 20.8
----- ----- ----- -----
100.0 100.0 100.0 100.0
Cost of goods sold........................... 74.8 73.6 75.4 74.2
----- ----- ----- -----
Gross profit............................... 25.2 26.4 24.6 25.8
Selling, general and administrative expenses. 11.8 14.5 12.6 14.5
----- ----- ----- -----
Operating income............................. 13.4 11.9 12.0 11.3
Other (income) expense:
Interest expense, net...................... 8.3 5.1 8.3 5.1
Foreign currency (gains) losses, net....... 0.2 -- 0.3 (0.1)
----- ----- ----- -----
8.5 5.1 8.6 5.0
Income before income taxes and extraordinary
item........................................ 4.9 6.8 3.4 6.3
Income taxes................................. 1.8 2.3 1.2 2.1
----- ----- ----- -----
Income before extraordinary item............. 3.1 4.5 2.2 4.2
Extraordinary item, (loss) from
extinguishment of debt...................... -- -- (0.7) --
----- ----- ----- -----
Net income............................... 3.1% 4.5% 1.5% 4.2%
===== ===== ===== =====
</TABLE>
COMPARISON OF THREE MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
NET SALES
The following table sets forth components of the Company's net sales by
product category for the three months ended July 4, 1998 and the corresponding
increase/(decrease) over the comparable fiscal period in the prior year:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------- %
JULY 4, JUNE 28, INCREASE/ INCREASE/
1998 1997 (DECREASE) (DECREASE)
--------- --------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales by product category:
Hygiene............................ $ 79,442 $ 55,950 $23,492 42.0%
Medical............................ 23,122 23,284 (162) (0.7)
Wiping............................. 25,911 25,181 730 2.9
Industrial and specialty........... 77,636 27,093 50,543 186.6
--------- --------- -------
Total net sales.................. $ 206,111 $ 131,508 $74,603 56.7
========= ========= =======
</TABLE>
10
<PAGE>
Net sales increased $74.6 million, or approximately 56.7%, from $131.5
million for the three months ended June 28, 1997 to $206.1 million for the
three months ended July 4, 1998. The increase was comprised of $71.7 million
in net sales due to the Nonwovens Acquisition and the Oriented Polymer
Acquisition and $4.6 million due to organic growth primarily within the
hygiene and industrial and specialty product groups, offset by a $1.7 million
decline in net sales due to unfavorable European and Canadian foreign currency
translation rates.
GROSS PROFIT
Gross profit increased to $51.9 million, or 25.2% of net sales, for the
second quarter of 1998 versus $34.7 million for the comparable period of 1997.
Raw material costs in the second quarter of 1998 were $86.8 million, or 42.1%
of net sales, compared to $57.1 million, or 43.4% of net sales, for the
comparable period in 1997. The decline in raw material costs as a percentage
of net sales reflects the continued trend in lower raw material costs versus
prior periods. Direct labor costs in the second quarter of 1998 were $17.4
million, or 8.4% of net sales, compared to $11.1 million, or 8.1% of net
sales, for the comparable period in 1997. Overhead costs for the second
quarter of 1998 were $50.1 million, up approximately $21.5 million versus
$28.6 million for the same quarter of 1997 due primarily to higher incremental
overhead costs associated with the recent acquisitions.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased from 14.5% of net
sales in the second quarter of 1997 to 11.8% of net sales in the second
quarter of 1998 primarily as a result of improved synergies. Selling, general
and administrative expenses for the second quarter of 1998 were $24.3 million,
up approximately $5.3 million versus $19.0 million for the second quarter of
1997 due primarily to additional costs associated with the recent
acquisitions.
OTHER
Interest expense increased $10.5 million, from $6.7 million in the second
quarter of 1997 to $17.2 million in the second quarter of 1998. Interest
expense as a percentage of net sales increased from 5.1% in the second quarter
of 1997 to 8.3% in the second quarter of 1998. The increase in interest
expense is due to higher indebtedness outstanding during 1998 primarily as a
result of the recent acquisitions.
Net foreign currency transaction losses were approximately $0.5 million
during the second quarter of 1998.
The Company provided for income taxes of approximately $3.6 million for the
three months ended July 4, 1998, representing an effective tax rate of 36.8%.
The provision for income taxes at the Company's effective rate differed from
the provision for income taxes at the statutory rate due primarily to higher
tax rates in foreign jurisdictions and to an increase in non-deductible
goodwill amortization in 1998. The Company provided for income taxes of $3.0
million during the second quarter of 1997, representing an effective tax rate
of 33.1%.
INCOME BEFORE EXTRAORDINARY ITEM
Income before extraordinary item was $6.2 million, or $0.20 per share, in
the second quarter of 1998 as compared to $6.0 million, or $0.19 per share,
for the comparable period in the previous year. The $0.2 million increase
between second quarter 1998 and second quarter 1997 was attributable primarily
to acquisition growth offset by a higher effective tax rate in 1998 and higher
interest expense.
11
<PAGE>
COMPARISON OF SIX MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
NET SALES
The following table sets forth components of the Company's net sales by
product category for the six months ended July 4, 1998 and the corresponding
increase over the comparable fiscal period in the prior year:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------
JULY 4, JUNE 28, %
1998 1997 INCREASE INCREASE
-------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales by product category:
Hygiene................................... $159,615 $110,148 $ 49,467 44.9%
Medical................................... 45,949 44,744 1,205 2.7
Wiping.................................... 52,171 51,484 687 1.3
Industrial and specialty.................. 141,712 54,079 87,633 162.0
-------- -------- --------
Total net sales......................... $399,447 $260,455 $138,992 53.4
======== ======== ========
</TABLE>
Net sales increased $139.0 million, or approximately 53.4%, from $260.5
million for the six months ended June 28, 1997 to $399.5 million for the six
months ended July 4, 1998. The increase was comprised of $125.3 million in net
sales due to the Nonwovens Acquisition and the Oriented Polymer Acquisition
and $18.8 million due to organic growth, primarily within the hygiene and
industrial and specialty product groups, offset by a $5.1 million decline in
net sales due to unfavorable European and Canadian foreign currency
translation rates.
GROSS PROFIT
Year to date gross profit increased to $98.2 million, or 24.6% of net sales,
versus $67.3 million for the comparable period of 1997. Year to date raw
material costs were $168.9 million, or 42.3% of net sales, compared to $112.6
million, or 43.2% of net sales in 1997. The decline in raw material costs as a
percentage of net sales reflects the continued trend in lower raw material
costs versus prior periods. Year to date direct labor costs were $33.4
million, or 8.4% of net sales, as compared to $21.3 million, or 7.9% of net
sales, in 1997. Year to date overhead costs in 1998 were $99.0 million up
approximately $39.7 million versus $59.3 million for the same period of 1997
due primarily to higher incremental overhead costs associated with the recent
acquisitions.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Year to date selling, general and administrative expenses decreased from
14.5% of net sales in 1997 to 12.6% of net sales in 1998 primarily as a result
of improved synergies. Year to date selling, general and administrative
expenses in 1998 were $50.4 million, up approximately $12.7 million versus
$37.7 million in 1997 due primarily to additional costs associated with the
recent acquisitions.
OTHER
Year to date interest expense increased $19.7 million, from $13.5 million in
1997 to $33.2 million in 1998. Year to date interest expense as a percentage
of net sales increased from 5.1% in 1997 to 8.3% in 1998. The increase in
interest expense is due to higher indebtedness outstanding during 1998
primarily as a result of the recent acquisitions.
12
<PAGE>
Year to date net foreign currency transaction losses were approximately $1.2
million in 1998 versus gains of $0.3 million in 1997.
The Company provided for year to date income taxes of approximately $4.9
million in 1998, representing an effective tax rate of 36.6%. The provision
for income taxes at the Company's effective rate differed from the provision
for income taxes at the statutory rate due primarily to higher tax rates in
foreign jurisdictions and to an increase in non-deductible goodwill
amortization in 1998. The Company provided for year to date income taxes of
$5.4 million for the comparable period in 1997, representing an effective tax
rate of 33.1%.
INCOME BEFORE EXTRAORDINARY ITEM
Year to date income before extraordinary item was $8.5 million, or $0.27 per
share, in 1998 as compared to $11.0 million, or $0.34 per share, in 1997. The
decrease of $2.5 million from 1997 to 1998 was attributable primarily to
increased interest expense of $19.6 million and a higher effective tax rate in
1998.
EXTRAORDINARY ITEM
As a result of the Nonwovens Acquisition, the Company recorded one-time
charges of $2.7 million for the write-off of previously capitalized deferred
financing costs.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
JULY 4, JANUARY 3,
1998 1998
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Balance sheet data:
Cash and equivalents and marketable securities... $ 74,929 $ 57,944
Working capital, excluding assets held for
disposition and short-term bridge financing..... 207,929 181,446
Total assets..................................... 1,288,642 1,627,753
Long-term debt, less current portion............. 865,027 741,860
Shareholders' equity............................. 200,887 199,090
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------
JULY 4, JUNE 28,
1998 1997
--------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash flow data:
Net cash provided by operating activities......... $ 37,977 $ 16,274
Net cash provided by (used in) investing
activities....................................... 175,133 (28,535)
Net cash provided by (used in) financing
activities....................................... (195,799) 12,200
</TABLE>
OPERATING ACTIVITIES
During the six months ended July 4, 1998, the Company's operations generated
$38.0 million in cash. The Company's working capital, excluding assets held
for disposition and short-term bridge financing, increased $26.5 million, from
$181.4 million at January 3, 1998 to $207.9 million at July 4, 1998. Cash and
equivalents and marketable securities were $74.9 million at July 4, 1998 as
compared to $57.9 million at January 3, 1998. This increase arose principally
from increased operating income and working capital efficiencies during the
first six months of 1998.
13
<PAGE>
INVESTING AND FINANCING ACTIVITIES
Capital expenditures for the six months ended July 4, 1998 totaled $39.9
million, related primarily to margin-enhancing projects throughout the Company
and capacity expansions in North America. For the remainder of fiscal 1998,
the Company expects capital expenditures to approximate $38.3 million.
As discussed in "Note 4. Acquisitions", on December 19, 1997, DTA completed
the purchase of approximately 98% of the outstanding common shares of Dominion
for Cdn$14.50 per share and approximately 96% of the outstanding first
preferred shares of Dominion for Cdn$150 per share. The acquisition, which was
accounted for using the purchase method of accounting, was financed with
$215.9 million of borrowings under DTA's $600.0 million senior secured credit
facilities, and subordinated advances of $141.0, $69.0 and $25.0 million by
Galey, ZB Holdings and the Company, respectively.
On January 29, 1998, DTA acquired all remaining common and preferred shares
of Dominion, at which time Dominion underwent a "winding up". All assets of
Dominion were transferred to DTA, all liabilities of Dominion were assumed by
DTA and all outstanding common shares and preferred shares held by DTA were
redeemed. Immediately thereafter, pursuant to a purchase agreement dated
October 27, 1997, the apparel fabrics business of Dominion was sold to Galey
for approximately $464.5 million, including related fees and expenses, and the
Company acquired the Nonwovens Business for approximately $351.6 million,
including fees and expenses. Concurrently, DT USA purchased approximately
$145.6 million of its $150.0 million outstanding 8.875% Guaranteed Senior
Notes due 2003 and, at the same time, purchased approximately $124.5 million
of its $125.0 million outstanding 9.25% Guaranteed Senior Notes due 2006. Net
assets of the apparel business of Dominion were classified as assets held for
disposition on the Company's consolidated balance sheet at January 3, 1998. In
connection with the Nonwovens Acquisition and related transactions, the
Company also amended its credit facility to provide for $125.0 million in term
loans.
On March 5, 1998, the Company issued $200.0 million of 8.75% Senior
Subordinated Notes due 2008 to qualified buyers pursuant to Rule 144A under
the Securities Act.
On March 16, 1998, the Company completed the Oriented Polymer Acquisition
for approximately $47.0 million in a transaction accounted for by the purchase
method of accounting.
The Company believes that based on current levels of operations and
anticipated growth, its cash from operations, together with other available
sources of liquidity (including but not limited to borrowings under the
amended credit facility) will be adequate over the next several years to make
required debt payments, including interest thereon, to permit anticipated
capital expenditures and to fund the Company's working capital requirements.
EFFECT OF INFLATION
Inflation generally affects the Company by increasing the cost of labor,
equipment and new materials. The Company believes that inflation had no
material effect on the Company's business during the six months ended July 4,
1998.
FOREIGN CURRENCY
The Company's substantial foreign operations expose it to the risk of
exchange rate fluctuations. If foreign currency denominated revenues are
greater than costs, the translation of foreign currency denominated costs and
revenues into U.S. dollars will improve profitability when the foreign
currency strengthens against the U.S. dollar and will reduce profitability
when the foreign currency weakens.
14
<PAGE>
The Euro currency ("Euro") is scheduled to be introduced on January 1, 1999,
at which time the eleven participating European Monetary Union member
countries will establish irrevocable fixed conversion rates between their
local currencies and the Euro. However, the local currencies in these
countries will continue to be used as legal tender through January 1, 2002.
Thereafter, the local currencies will be canceled and Euro bills and coins
will be used for cash transactions in the participating countries. From
January 1, 1999 to December 31, 2001, companies will be allowed to transact
noncash transactions in either the Euro or the local currency.
The Company, with operations in three of the participating countries, is
currently evaluating the Euro conversion and the potential impact to
operations. Management does not currently expect the total cost of the Euro
conversion to be material to the financial condition of the Company taken as a
whole.
YEAR 2000
The Company continues to assess Year 2000 issues and has assigned teams to
manage the process. Currently, certain of the Company's financial and
operational systems, including order and distribution systems, are Year 2000
ready. Actual costs incurred have not been material, and based on the initial
assessment, management anticipates future costs relating to the Year 2000 not
to be material to the financial condition of the Company as a whole. The
Company is in the process of identifying all key vendors and sending surveys
to determine the readiness of third parties. Based on vendor responses,
customer feed back and the identification of all systems requirements, the
Company will begin the next phase of its assessment which will include
completing all remaining modifications to information systems and equipment
and establishing a contingency plan addressing various risks and
uncertainties. There can be no guarantee of the timing and/or costs of the
various stages of preparation, and actual results could differ from those
anticipated.
NEW ACCOUNTING STANDARDS
See "Note 6. Other" of Notes to Consolidated Financial Statements.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION ACT OF 1995
Except for historical information contained herein, certain matters set
forth within Management's Discussion and Analysis of Financial Condition and
Results of Operations of this Form 10-Q are forward looking statements.
Certain risks and uncertainties could cause actual results to differ
materially from those set forth in the forward looking statements. The
following factors could cause actual results to differ materially from
historical results or those anticipated: adverse economic conditions,
competition in the Company's markets, fluctuation in raw material costs, and
other risks detailed in documents filed by the Company with the Securities and
Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
15
<PAGE>
PART II.
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of its stockholders was held on May 29, 1998.
At the annual meeting, the Company's stockholders voted on two proposals: (i)
the election of two nominees to serve as directors for three year terms; and
(ii) the ratification of the appointment of Ernst & Young LLP as independent
auditors for the year 1998. The voting of the Company's stockholders as to
these matters was as follows:
Election of Directors
James G. Boyd--29,108,299 votes for; 46,596 votes withheld.
Michael J. McGovern--29,107,799 votes for; 47,096 votes withheld.
Ratification of Appointment of Accountants
29,151,752 votes for; 2,800 votes against; 343 abstentions
ITEM 5. OTHER INFORMATION
On May 11, 1998, the Company's trading symbol on the New York Stock Exchange
for its common stock, par value $.01 per share, was changed to "PGI" from
"PGH." The Company issued a press release announcing the change on May 11,
1998.
On July 1, 1998, the Company filed an offer to exchange its 8.75% senior
subordinated notes due 2008, series B for any and all of its outstanding 8.75%
senior subordinated notes due 2008, series A.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits required to be filed with this report on Form 10-Q are listed in
the following Exhibit Index.
On February 13, 1998 and April 14, 1998 the Company filed reports on Form 8-
K and Form 8-K/A, respectively, relating to the Nonwovens Acquisition.
16
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
Polymer Group, Inc.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, President, Chief
Executive Officer and Director
(Principal Executive Officer)
/s/ James G. Boyd
By: _________________________________
James G. Boyd
Executive Vice President, Treasurer
and
Director (Principal Financial
Officer and
Principal Accounting Officer)
August 18, 1998
17
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S> <C>
2.1 Agreement dated October 27, 1997, among Polymer Group, Inc.,
Galey & Lord, Inc. and DT Acquisition Inc.(1)
2.2 Letter Agreement, dated October 27, 1997, among Polymer Group,
Inc., Galey & Lord, Inc. and DT Acquisition Inc.(2)
2.3 Operating Agreement, dated December 19, 1997, among Polymer
Group, Inc., Galey & Lord, Inc. and DT Acquisition Inc.(1)
2.4 DT Acquisition Inc. Offers to Purchase Statement for all out-
standing Common Shares and all outstanding First Preferred
Shares of Dominion Textile Inc., dated October 29, 1997.(2)
2.5 Notice of Extension and Variation by DT Acquisition Inc. in
respect of its Offers to Purchase, dated November 18, 1997.(2)
2.6 Notice of Extension by DT Acquisition Inc. in respect of its
Offers to Purchase, dated December 2, 1997.(2)
2.7 Notice of Extension and Variation by DT Acquisition Inc. in
respect of its Offers to Purchase, dated December 8, 1997.(2)
2.8 Notice of Extension by DT Acquisition Inc. in respect of its
Offers to Purchase, dated December 17, 1997.(2)
2.9 Letter Agreement between DT Acquisition Inc., Polymer Group,
Inc. and Dominion Textile Inc. dated November 16, 1997.(2)
2.10 Notice of Redemption pursuant to the provisions of Section 206
of the Canada Business Corporations Act in regard to holders
of Common Shares of Dominion Textile Inc., dated December 30,
1997.(2)
2.11 Notice of Redemption pursuant to the provisions of Section 206
of the Canada Business Corporations Act in regard to holders
of First Preferred Shares of Dominion Textile Inc., dated De-
cember 30, 1997.(2)
2.12 Notice of Redemption in regard to holders of Second Preferred
Shares, Series D of Dominion Textile Inc., dated December 23,
1997.(2)
2.13 Notice of Redemption in regard to holders of Second Preferred
Shares, Series E of Dominion Textile Inc., dated December 23,
1997.(2)
2.14 Indenture, winding up Dominion Textile Inc. pursuant to the
Canada Business Corporations Act, dated January 29, 1998.(2)
2.15 Master Separation Agreement, among Polymer Group, Inc., Galey
& Lord, Inc. and DT Acquisition Inc., dated January 29,
1998.(3)*
3.1(i) Form of Amended and Restated Certificate of Incorporation of
the Company.(3)
3.1(ii) Certificate of Designation of the Company.(4)
3.2 Amended and Restated By-laws of the Company.(3)
4.1 Indenture, dated as of March 1, 1998, among Polymer Group,
Inc., the Guarantors named therein and Harris Trust & Savings
Bank, as trustee.(5)
4.2 Forms of Series A and Series B 8 3/4% Senior Subordinated
Notes due 2008 (contained in Exhibit 4.1 as Exhibit A and B
thereto, respectively).(5)
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S> <C>
4.3 Form of Guarantee (contained in Exhibit 4.2)(5)
4.4 Registration Rights Agreement, dated as of March 5, 1998,
among Polymer Group, Inc., the Guarantors named therein and
Chase Securities Inc.(5)
4.5 Second Supplemental Indenture dated January 29, 1998, to In-
denture dated as of June 30, 1997, among Polymer Group, Inc.,
Dominion Textile (USA) Inc., DomTex Industries Inc., Poly-Bond
Inc. and Harris Trust & Savings Bank with respect to the 9%
Senior Subordinated Notes due 2007.(2)
10.1 Purchase Agreement, dated February 27, 1998, by and among Pol-
ymer Group, Inc., the Guarantors named therein and Chase Secu-
rities Inc., as Initial Purchaser, with respect to the 8 3/4%
Senior Subordinated Notes due 2008.
10.2 Amendment No. 2, dated January 29, 1998, to the Amended, Re-
stated and Consolidated Credit Agreement dated July 3, 1997 by
and among Polymer Group, Inc., the Guarantors named therein,
the lenders named therein and The Chase Manhattan Bank, as
agent.
11 Statement of Computation of Per Share Earnings
27 Financial Data Schedule
</TABLE>
- --------
(1) Incorporated by reference to the respective exhibit to the Company's Form
8-K, dated February 13, 1998.
(2) Incorporated by reference to the respective exhibit to the Company's Form
10-K, dated April 3, 1998.
(3) Incorporated by reference to the respective exhibit to the Company's Form
8-K/A, dated April 14, 1998.
(4) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form S-1 (Reg. No. 333-2424).
(5) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form S-4 (Reg. No. 333-55863).
*Certain portions of this Exhibit have been omitted & filed separately with
the Commission pursuant to an Application for Confidential Treatment.
19
<PAGE>
EXHIBIT 11
POLYMER GROUP, INC.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------- ----------------
JULY 4, JUNE 28, JULY 4, JUNE 28,
1998 1997 1998 1997
--------- --------- ------- --------
<S> <C> <C> <C> <C>
Basic:
Net income applicable to common stock.... $ 6,240 $ 6,012 $ 5,807 $10,974
Weighted average shares outstanding...... 32,000 32,000 32,000 32,000
Net income per common share--basic....... $ 0.20 $ 0.19 $ 0.18 $ 0.34
Diluted:
Net income applicable to common stock.... $ 6,240 $ 6,012 $ 5,807 $10,974
Weighted average shares outstanding...... 32,000 32,000 32,000 32,000
Net income per common share--diluted..... $ 0.20 $ 0.19 $ 0.18 $ 0.34
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Polymer Group, Inc.'s Form 10-Q for the quarter ended July 4, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> JUL-04-1998
<CASH> 66,993
<SECURITIES> 7,936
<RECEIVABLES> 128,235
<ALLOWANCES> 7,206
<INVENTORY> 104,643
<CURRENT-ASSETS> 332,626
<PP&E> 762,824
<DEPRECIATION> 114,840
<TOTAL-ASSETS> 1,288,642
<CURRENT-LIABILITIES> 124,697
<BONDS> 865,027
0
0
<COMMON> 320
<OTHER-SE> 200,567
<TOTAL-LIABILITY-AND-EQUITY> 1,288,642
<SALES> 399,447
<TOTAL-REVENUES> 399,447
<CGS> 301,285
<TOTAL-COSTS> 301,285
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,174
<INCOME-PRETAX> 13,472
<INCOME-TAX> 4,937
<INCOME-CONTINUING> 8,535
<DISCONTINUED> 0
<EXTRAORDINARY> 2,728
<CHANGES> 0
<NET-INCOME> 5,807
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
