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Delaware | 2221 | 57-1003983 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Proposed Maximum | Proposed Maximum | Amount of | ||||||||||
Title of Each Class of | Amount to be | Offering Price per | Aggregate | Registration | ||||||||
Securities to be Registered | Registered | Note | Offering Price(1) | Fee | ||||||||
7.75% Senior Secured Notes due 2019 | $560,000,000 | 100% | $560,000,000 | $64,176.00(2) | ||||||||
Guarantees of 7.75% Senior Secured Notes due 2019(3) | (4) | (4) | (4) | (4) | ||||||||
(1) | Estimated solely for the purpose of calculating the registration fee under Rule 457(f) of the Securities Act of 1933, as amended (the “Securities Act”). |
(2) | Previously paid. |
(3) | See inside facing page for additional registrant guarantors. |
(4) | Pursuant to Rule 457(n) under the Securities Act, no separate filing fee is required for the guarantees. |
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Address, including Zip | ||||||||||||
Exact Name of Registrant | State or Other | I.R.S. | Code and Telephone | |||||||||
Guarantor as Specified in its | Jurisdiction of | Employer | Industrial | Number, including Area | ||||||||
Charter (or Other | Incorporation or | Identification | Classification | Code, of Registrant’s | ||||||||
Organizational Document) | Organization | Number | Code Number | Principal Executive Offices | ||||||||
Chicopee, Inc. | Delaware | 57-1013629 | 2221 | 9335 Harris Corners Parkway Suite 300 Charlotte, NC 28269 (704) 697-5100 | ||||||||
Dominion Textile (USA), L.L.C. | Delaware | 13-2865428 | 2200 | 9335 Harris Corners Parkway Suite 300 Charlotte, NC 28269 (704) 697-5100 | ||||||||
Fabrene, L.L.C. | Delaware | 51-0319685 | 2221 | 9335 Harris Corners Parkway Suite 300 Charlotte, NC 28269 (704) 697-5100 | ||||||||
PGI Europe, Inc. | Delaware | 56-2154891 | 2221 | 9335 Harris Corners Parkway Suite 300 Charlotte, NC 28269 (704) 697-5100 | ||||||||
PGI Polymer, Inc. | Delaware | 57-0962088 | 2221 | 9335 Harris Corners Parkway Suite 300 Charlotte, NC 28269 (704) 697-5100 |
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The information in this prospectus is not complete and may be changed. We may not issue the exchange notes in the exchange offer until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where such offer or sale is not permitted. |
• | We will exchange all outstanding notes that are validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradeable. | |
• | You may withdraw tenders of outstanding notes at any time prior to the expiration date of the applicable exchange offer. | |
• | The exchange offer expires at 5:00 p.m., New York City time, on , 2011 which is the 21st business day after the date of this prospectus. | |
• | The exchange of outstanding notes for exchange notes in the exchange offer will not be a taxable event for U.S. federal income tax purposes. | |
• | The terms of the exchange notes to be issued in the exchange offer are substantially identical to the outstanding notes, except that the exchange notes will be freely tradeable. |
• | The exchange notes may be sold in theover-the-counter-market, in negotiated transactions or through a combination of such methods. We do not plan to list the exchange notes on a national market. |
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• | general economic factors including, but not limited to, changes in interest rates, foreign currency translation rates, consumer confidence, trends in disposable income, changes in consumer demand for goods produced, and cyclical or other downturns; | |
• | cost and availability of raw materials, labor and natural and other resources, and our ability to pass raw material cost increases along to customers; | |
• | changes to selling prices to customers which are based, by contract, on an underlying raw material index; | |
• | substantial debt levels and potential inability to maintain sufficient liquidity to finance our operations and make necessary capital expenditures; | |
• | ability to meet existing debt covenants or obtain necessary waivers; | |
• | achievement of objectives for strategic acquisitions and dispositions; | |
• | ability to achieve successful or timelystart-up of new or modified production lines; | |
• | reliance on major customers and suppliers; | |
• | domestic and foreign competition; | |
• | information and technological advances; | |
• | risks related to operations in foreign jurisdictions; |
• | changes in environmental laws and regulations, including climate change-related legislation and regulation; and |
• | uncertainty regarding the effects of the Transactions. |
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% of | Projected | |||||||||||
Key Product Applications | Annual Revenue | Representative End Products | Key Customers | Growth(1) | ||||||||
Hygiene | 50 | % | Baby diapers, feminine hygiene products, adult incontinence products, and training pants | • Procter & Gamble • Kimberly-Clark • SCA | 5.4 | % | ||||||
Medical | 16 | % | Surgical gowns and drapes, face masks, shoe covers and wound care sponges and dressings | • Kimberly-Clark • Cardinal Health • 3M • Johnson & Johnson | 5.9 | % | ||||||
Wipes | 14 | % | Personal care and facial wipes, baby wipes, and household wipes | • Procter & Gamble • Clorox • Sysco | 8.7 | % | ||||||
Industrial | 20 | % | Filtration, cable wrap, house wrap, furniture and bedding, and landscape and agricultural applications | • Simmons Bedding • Dow • Chiquita | 6.0 | % |
(1) | Represents projected CAGR for global nonwoven volume demand from 2009 to 2014 for each product application group, according to ADL Consulting. |
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(1) | Represents a $255.0 million cash equity investment by Blackstone and a $4.9 million investment by the management investors. The proceeds of such investment were contributed to the Issuer, which used such proceeds, together with other sources of funds, to fund the Transactions. | |
(2) | Our ABL Facility is secured, subject to certain limitations and exclusions, by (i) a first-priority security interest in personal property of the Issuer and the subsidiary guarantors consisting of accounts receivable (including related contracts and contract rights, inventory, cash, deposit accounts, other bank accounts and securities accounts), inventory, intercompany notes and intangible assets (other than intellectual property), instruments, chattel paper, documents and commercial tort claims to the extent arising out of the foregoing, books and records of the Issuer, and the proceeds thereof including any business interruption insurance proceeds, subject to permitted liens and other customary exceptions (the “ABL Priority Collateral”); and (ii) a second-priority security interest in the collateral securing the notes (described below). See “Description of Other Indebtedness — ABL Facility.” | |
(3) | The notes are secured (i) together with up to $7.5 million of Tranche 2Sub-Facility under the ABL Facility, on a first-priority lien basis by substantially all of the assets of the Issuer, and any existing and future subsidiary guarantors (other than collateral securing our ABL Facility on a first-priority basis), including |
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all of the capital stock of the Issuer and each restricted subsidiary (which, in the case of foreign subsidiaries, will be limited to 65% of the capital stock of each first-tier foreign subsidiary) and (ii) on a second-priority basis by the collateral securing our ABL Facility, in each case, subject to certain exceptions and permitted liens. Notwithstanding the foregoing, in the event of a foreclosure on the collateral securing the notes and the Tranche 2Sub-Facility, any borrowings under the Tranche 2Sub-Facility will be repaid from the collateral prior to the notes. See “Description of Notes — Security for the Notes.” |
(4) | The notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis, by each of our existing and future material wholly-owned domestic restricted subsidiaries and by certain other restricted subsidiaries that guarantee our or a subsidiary guarantor’s indebtedness as described herein. Our existing and future foreign subsidiaries are not expected to guarantee the notes. Our non-guarantor subsidiaries accounted for $782.4 million, or 71%, and $626.0 million, or 70%, of our consolidated net sales (including intercompany sales) for the fiscal year ended January 1, 2011 and the nine months ended October 1, 2011, respectively. Our non-guarantor subsidiaries accounted for $398.7 million, or 77%, of our property, plant and equipment, net as of October 1, 2011. Before intercompany eliminations with our non-guarantor subsidiaries, our non-guarantor subsidiaries accounted for $782.7 million, or 52.7%, of the combined Issuer, guarantor and non-guarantor subsidiaries total assets (including intercompany receivables with such non-guarantor subsidiaries, but excluding the value of such non-guarantor subsidiaries’ investments in our other subsidiaries) as of October 1, 2011. After intercompany eliminations, our non-guarantor subsidiaries accounted for $725.7 million, or 66.0%, of our consolidated total assets (excluding the value of such non-guarantor subsidiaries’ investments in our other subsidiaries) as of October 1, 2011. As of October 1, 2011, we and our guarantor subsidiaries held $325.4 million of intercompany receivables due from our non-guarantor subsidiaries to facilitate cash repatriation from our non-guarantor subsidiaries to us. Our guarantor subsidiaries also guarantee our ABL Facility. |
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General | On January 28, 2011, the Issuer issued an aggregate of $560.0 million principal amount of 7.75% Senior Secured Notes due 2019 in a private offering. In connection with the private offering, the Issuer and the guarantors entered into registration rights agreement with the initial purchasers in which they agreed, among other things, to deliver this prospectus to you and to complete the exchange offer within 365 days after the date of issuance and sale of the outstanding notes. | |
The Exchange Offer | The Issuer is offering to exchange $560.0 million principal amount of 7.75% Senior Secured Notes due 2019, which have been registered under the Securities Act, for any and all of its outstanding 7.75% Senior Secured Notes due 2019. | |
You may only exchange outstanding notes in a principal amount of $2,000 or in integral multiples of $1,000 in excess thereof. | ||
Resale | Based on an interpretation by the staff of the Securities and Exchange Commission (the “SEC”) set forth in no-action letters issued to third parties, the Issuer believes that the exchange notes issued pursuant to the exchange offer in exchange for outstanding notes may be offered for resale, resold and otherwise transferred by you (unless you are our “affiliate” within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that: | |
• you are acquiring the exchange notes in the ordinary course of your business; and | ||
• you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the exchange notes. | ||
If you are a broker-dealer and receive exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market-making activities or other trading activities, you must acknowledge that you will deliver this prospectus in connection with any resale of the exchange notes. See “Plan of Distribution.” | ||
Any holder of outstanding notes who: | ||
• is our affiliate; | ||
• does not acquire exchange notes in the ordinary course of its business; or | ||
• tenders its outstanding notes in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of exchange notes; cannot rely on the position of the staff of the SEC enunciated inMorgan Stanley & Co. Incorporated (available June 5, 1991) andExxon Capital Holdings |
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Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling (available July 2, 1993), or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. | ||
Expiration Date | The exchange offer will expire at 5:00 p.m., New York City time, on , 2011, which is the 21st business day after the date of this prospectus, unless extended by the Issuer. The Issuer does not currently intend to extend the expiration date. | |
Withdrawal | You may withdraw the tender of your outstanding notes at any time prior to the expiration of the exchange offer. The Issuer will return to you any of your outstanding notes that are not accepted for any reason for exchange, without expense to you, promptly after the expiration or termination of the exchange offer. | |
Interest on the exchange notes and the outstanding notes | The exchange note will bear interest at their respective rate per annum set forth on the cover page of this prospectus from the most recent date to which interest has been paid on the outstanding notes. The interest will be payable semi-annually on February 1 and August 1. No interest will be paid on outstanding notes following their acceptance for exchange. | |
Conditions to the Exchange Offer | The exchange offer is subject to customary conditions, which the Issuer may waive. | |
See “The Exchange Offer — Conditions to the Exchange Offer.” | ||
Procedures for Tendering Outstanding Notes | If you wish to participate in the exchange offer, you must complete, sign and date the accompanying letter of transmittal, or a facsimile of such letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must then mail or otherwise deliver the letter of transmittal, or a facsimile of such letter of transmittal, together with the outstanding notes and any other required documents, to the exchange agent at the address set forth on the cover page of the letter of transmittal. | |
If you hold outstanding notes through The Depository Trust Company (“DTC”) and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC, by which you will agree to be bound by the letter of transmittal. By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us that, among other things: | ||
• you are not our “affiliate” within the meaning of Rule 405 under the Securities Act or, if you are our affiliate, that you will comply with any applicable registration and prospectus delivery requirements of the Securities Act; | ||
• you do not have an arrangement or understanding with any person or entity to participate in the distribution of the exchange notes; | ||
• you are acquiring the exchange notes in the ordinary course of your business; and |
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• if you are a broker-dealer that will receive exchange notes for your own account in exchange for outstanding notes that were acquired as a result of market-making activities, that you will deliver a prospectus, as required by law, in connection with any resale of such exchange notes. | ||
Special Procedures for Beneficial Owners | If you are a beneficial owner of outstanding notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those outstanding notes in the exchange offer, you should contact the registered holder promptly and instruct the registered holder to tender those outstanding notes on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date. | |
Guaranteed Delivery Procedures | If you wish to tender your outstanding notes and your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents, or you cannot comply with the applicable procedures under DTC’s Automated Tender Offer Program for transfer of book-entry interests, prior to the expiration date, you must tender your outstanding notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offer — Guaranteed Delivery Procedures.” | |
Effect on Holders of Outstanding Notes | As a result of the making of, and upon acceptance for exchange of all validly tendered outstanding notes pursuant to the terms of the exchange offer, the Issuer and the guarantors will have fulfilled a covenant under the registration rights agreement. Accordingly, there will be no increase in the interest rate on the outstanding notes under the circumstances described in the registration rights agreement. If you do not tender your outstanding notes in the exchange offer, you will continue to be entitled to all the rights and limitations applicable to the outstanding notes as set forth in the indenture, except the Issuer and the guarantors will not have any further obligation to you to provide for the exchange and registration of the outstanding notes under the registration rights agreement. To the extent that outstanding notes are tendered and accepted in the exchange offer, the trading market for remaining outstanding notes that are not so tendered and exchanged could be adversely affected. | |
Consequences of Failure to Exchange | All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture. In general, the outstanding notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, the Issuer and the guarantors do not currently anticipate that they will register the outstanding notes under the Securities Act. |
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Certain U.S. Federal Income Tax Considerations | The exchange of outstanding notes in the exchange offer will not be a taxable event for United States federal income tax purposes. See “Certain U.S. Federal Income Tax Considerations.” | |
Use of Proceeds | The Issuer will not receive any cash proceeds from the issuance of exchange notes in the exchange offer. See “Use of Proceeds.” | |
Exchange Agent | Wilmington Trust Company is the exchange agent for the exchange offer. The addresses and telephone numbers of the exchange agent are set forth in the section captioned “The Exchange Offer — Exchange Agent” of this prospectus. |
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Issuer | Polymer Group, Inc. | |
Notes Offered | $560.0 million aggregate principal amount of 7.75% Senior Secured Notes due 2019. | |
Maturity Date | The exchange notes will mature on February 1, 2019. | |
Interest | The exchange notes will accrue interest at a rate of 7.75% per annum, payable on February 1 and August 1 of each year. | |
Guarantees | The exchange notes will be fully and unconditionally guaranteed, jointly and severally, on a senior secured basis, subject to certain limitations described herein, by each of our existing and future material wholly-owned domestic restricted subsidiaries, subject to certain exceptions, and by certain other restricted subsidiaries that guarantee our or a subsidiary guarantor’s indebtedness as described herein. Our existing and future foreign subsidiaries are not expected to guarantee the exchange notes. | |
Under certain circumstances, subsidiaries may be released from these guarantees without the consent of the holders of the exchange notes. | ||
See “Description of Notes — Guarantees.” | ||
Collateral | The exchange notes will be secured (i) together with the Tranche 2Sub-Facility, on a first-priority lien basis by substantially all of the assets of the Issuer, and any existing and future subsidiary guarantors (other than collateral securing our ABL Facility on a first-priority basis), including all of the capital stock of the Issuer and each restricted subsidiary (which, in the case of foreign subsidiaries, will be limited to 65% of the capital stock of each first-tier foreign subsidiary) and (ii) on a second-priority basis by the collateral securing our ABL Facility, in each case, subject to certain exceptions and permitted liens, as described in this prospectus. Without giving effect to security interests, the exchange notes will rank equally in right of payment with all of our existing and future senior indebtedness. Notwithstanding the foregoing, in the event of a foreclosure on the collateral securing the exchange notes and the Tranche 2Sub-Facility or any distribution in an insolvency proceeding, any borrowings under the Tranche 2Sub-Facility will be repaid from the eligible collateral prior to the exchange notes. Additionally, the exchange notes will be effectively subordinated to indebtedness incurred under the ABL Facility to the extent of the value of the assets securing the ABL Facility on a first-priority lien basis. |
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The collateral securing the exchange notes on a first-priority lien basis will not include (i) the collateral securing the ABL Facility on a first priority lien basis and (ii) certain excluded assets. |
As of October 1, 2011, the book value of the Notes Collateral (as defined below) (other than capital stock of the Issuer and restricted subsidiaries) was approximately $625.3 million. |
See “Description of Notes — Security for the Notes.” | ||
Ranking | The exchange notes and the related guarantees will be our senior secured obligations. The indebtedness evidenced by the exchange notes and the guarantees will rank: | |
• senior to all unsecured indebtedness of the Issuer to the extent of the value of the collateral securing the exchange notes (the “Notes Collateral”); | ||
• senior to the Issuer’s existing and future obligations under the ABL Facility (or equally with respect to the Tranche 2Sub-Facility) to the extent of the value of the Notes Collateral owned by the Issuer; | ||
• junior to the Issuer’s existing and future obligations under the ABL Facility to the extent of the value of the collateral that secures the ABL Facility; | ||
• junior to any existing or future indebtedness of the Issuer that is secured by liens on assets that do not constitute a part of the Notes Collateral to the extent of the value of such assets; | ||
• without giving effect to security interests, equally in right of payment with all existing and future senior indebtedness of the Issuer, including existing and future obligations under the ABL Facility; | ||
• equally in priority as to the Notes Collateral owned by the Issuer with respect to the Issuer’s obligations under (i) any otherpari passulien obligations incurred after the Issue Date and (ii) the Tranche 2Sub-Facility (although the Holders of the exchange notes will receive proceeds of Notes Collateral after the payment in full of the Tranche 2Sub-Facility in the event of a foreclosure or in any bankruptcy, insolvency or similar event); and | ||
• senior in right of payment to any existing and future subordinated indebtedness of the Company. | ||
The exchange notes will also be structurally subordinated to all existing and future indebtedness, claims of holders of preferred stock and other liabilities of our subsidiaries that do not guarantee the exchange notes. |
As of October 1, 2011: |
• we had total indebtedness of $600.5 million, with a carrying value of $599.9 million (including indebtedness of non-guarantor subsidiaries of $40.2 million, with a carrying value of $39.6 million), all of which was senior indebtedness; |
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• we had $20.0 million of secured indebtedness (with a carrying value of $19.4 million) secured by assets that are not part of the Notes Collateral, and $0.5 million of capital leases; |
• we had $20.0 million drawn under our unsecured China Facility (as defined herein); and |
• we had approximately $24.8 million of availability under the ABL Facility (which had aggregate commitments of $50.0 million as of the Issue Date), after giving effect to availability under our borrowing base and $10.8 million of outstanding letters of credit. |
Our non-guarantor subsidiaries accounted for $782.4 million, or 71%, and $626.0 million, or 70%, of our consolidated net sales (including intercompany sales) for the fiscal year ended January 1, 2011 and the nine months ended October 1, 2011, respectively. Our non-guarantor subsidiaries accounted for $398.7 million, or 77%, of our property, plant and equipment, net as of October 1, 2011. Before intercompany eliminations with our non-guarantor subsidiaries, our non-guarantor subsidiaries accounted for $782.7 million, or 52.7%, of the combined Issuer, guarantor and non-guarantor subsidiaries total assets (including intercompany receivables with such non-guarantor subsidiaries, but excluding the value of such non-guarantor subsidiaries’ investments in our other subsidiaries) as of October 1, 2011. After intercompany eliminations, our non-guarantor subsidiaries accounted for $725.7 million, or 66.0%, of our consolidated total assets (excluding the value of such non-guarantor subsidiaries’ investments in our other subsidiaries) as of October 1, 2011. As of October 1, 2011, we and our guarantor subsidiaries held $325.4 million of intercompany receivables due from our non-guarantor subsidiaries to facilitate cash repatriation from our non-guarantor subsidiaries to us. Our guarantor subsidiaries will also guarantee our ABL Facility. |
Optional Redemption | We may, at our option, redeem at any time and from time to time prior to February 1, 2015 (i) some or all of the exchange notes at 100% of their principal amount thereof plus accrued and unpaid interest to the redemption date and a “make-whole premium” described under “Description of Notes — Optional Redemption” and (ii) during any 12 month period, up to $56.0 million of the principal amount of the exchange notes in each such period at a price equal to 103% of the principal amount, plus accrued and unpaid interest. From and after February 1, 2015, we may, at our option, redeem some or all of the exchange notes, at any time and from time to time, at the redemption prices set forth under “Description of Notes — Optional Redemption.” | |
In addition, on or prior to February 1, 2014, we may, at our option, redeem up to 35% of the exchange notes with the proceeds from certain equity offerings at the redemption price listed under “Description of Notes — Optional Redemption.” | ||
Change of Control Offer | If a change of control occurs, unless the Issuer has presently or concurrently mailed a redemption notice with respect to the outstanding notes, the Issuer must offer holders of the exchange notes the opportunity to sell to the Issuer their notes at 101% of the |
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principal face amount, plus accrued and unpaid interest. For more information, see “Description of Notes — Repurchase at the Option of Holders — Change of Control.” | ||
Asset Sale Proceeds | If the Issuer or its restricted subsidiaries engage in asset sales or experience certain events of loss, the Issuer generally must either invest the net proceeds from such asset sales in its business within a specific period of time, prepay certain of its or its restricted subsidiaries’ debt or make an offer to purchase a principal amount of the exchange notes with the specified excess net proceeds, subject to certain exceptions. The purchase price of the exchange notes will be 100% of their principal amount plus accrued and unpaid interest, if any. For more information, see “Description of Notes — Repurchase at the Option of Holders — Asset Sales.” | |
Certain Covenants | The exchange notes will be governed by the same indenture under which the outstanding notes were issued. The indenture governing the notes contains covenants that, among other things, will limit the ability of the Issuer and its restricted subsidiaries to: | |
• incur or guarantee additional debt or issue disqualified stock or preferred stock; | ||
• pay dividends and make other distributions on, or redeem or repurchase, capital stock; | ||
• make certain investments; | ||
• incur certain liens; | ||
• enter into transactions with affiliates; | ||
• merge or consolidate; | ||
• enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other payments to the Issuer; | ||
• designate restricted subsidiaries as unrestricted subsidiaries; and | ||
• transfer or sell assets. | ||
These covenants are subject to important exceptions and qualifications. In addition, during any period of time that the exchange notes have investment grade ratings from both Moody’s Investors Service, Inc. and Standard & Poor’s, many of the covenants will be suspended. See “Description of Notes — Certain Covenants.” | ||
Use of Proceeds | We will not receive any proceeds from the exchange offer. See “Use of Proceeds.” | |
No Prior Market | The exchange notes will generally be freely transferable (subject to certain restrictions discussed in “The Exchange Offer”) but will be a new issue of securities for which there will not initially be a market. Accordingly, there can be no assurance as to the development or liquidity of any market for the exchange notes. The initial purchasers in the private offering of the outstanding notes have |
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advised us that they currently intend to make a market for the exchange notes, as permitted by applicable laws and regulations. However, they are not obligated to do so and may discontinue any such market making activities at any time without notice. We do not intend to apply for a listing of the exchange notes on any securities exchange or automated dealer quotation system. | ||
Governing Law | The exchange notes will be governed by the laws of the State of New York. |
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Predecessor | Successor | ||||||||||||||||||||||||
January 2, | |||||||||||||||||||||||||
2011 | January 29, | ||||||||||||||||||||||||
Fiscal Year Ended | Nine Months | through | 2011 | ||||||||||||||||||||||
January 3, | January 2, | January 1, | Ended October 2, | January 28, | through | ||||||||||||||||||||
2009 | 2010 | 2011 | 2010 | 2011 | October 1, 2011 | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||
Net sales | $ | 1,026.2 | $ | 850.6 | $ | 1,106.2 | $ | 873.3 | $ | 84.6 | $ | 811.2 | |||||||||||||
Cost of goods sold | 856.6 | 667.2 | 896.3 | 678.3 | 68.5 | 689.7 | |||||||||||||||||||
Gross profit | 169.6 | 183.4 | 209.9 | 159.0 | 16.1 | 121.5 | |||||||||||||||||||
Selling, general and administrative expenses | 115.5 | 113.3 | 141.5 | 102.3 | 11.6 | 96.0 | |||||||||||||||||||
Acquisition and integration expenses | — | 1.8 | 1.7 | 1.7 | — | — | |||||||||||||||||||
Special charges, net | 20.1 | 20.8 | 18.0 | 11.7 | 20.8 | 36.9 | |||||||||||||||||||
Other operating (income) loss, net | 4.9 | (4.7 | ) | (0.8 | ) | (2.1 | ) | (0.6 | ) | 2.7 | |||||||||||||||
Operating income (loss) | 29.1 | 52.2 | 49.5 | 45.2 | (15.7 | ) | (14.1 | ) | |||||||||||||||||
Other expense (income): | |||||||||||||||||||||||||
Interest expense, net | 31.1 | 26.7 | 31.7 | 24.6 | 1.9 | 33.5 | |||||||||||||||||||
Gain on reacquisition of debt | — | (2.4 | ) | — | — | — | — | ||||||||||||||||||
Loss on extinguishment of debt | — | 5.1 | — | — | — | — | |||||||||||||||||||
Foreign currency and other loss, net | 0.5 | 5.2 | 1.5 | 1.1 | 0.1 | 3.8 | |||||||||||||||||||
(Loss) income before income tax expense and discontinued operations | (2.5 | ) | 17.6 | 16.3 | 19.5 | (17.7 | ) | (51.4 | ) | ||||||||||||||||
Income tax expense (benefit) | 7.0 | 8.6 | 4.5 | 3.0 | 0.6 | (0.9 | ) | ||||||||||||||||||
(Loss) income from continuing operations | $ | (9.5 | ) | $ | 9.0 | $ | 11.8 | $ | 16.5 | $ | (18.3 | ) | $ | (50.5 | ) | ||||||||||
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Predecessor | Successor | ||||||||||||||||||||||||
January 2, | |||||||||||||||||||||||||
2011 | January 29, | ||||||||||||||||||||||||
Fiscal Year Ended | Nine Months | through | 2011 | ||||||||||||||||||||||
January 3, | January 2, | January 1, | Ended October 2, | January 28, | through | ||||||||||||||||||||
2009 | 2010 | 2011 | 2010 | 2011 | October 1, 2011 | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Statement of Cash Flows Data: | |||||||||||||||||||||||||
Cash provided by (used in) operating activities | $ | 59.5 | $ | 99.0 | $ | 63.2 | $ | 40.1 | $ | (25.3 | ) | $ | (7.4 | ) | |||||||||||
Cash used in investing activities | (31.6 | ) | (14.6 | ) | (41.3 | ) | (19.6 | ) | (8.3 | ) | (446.2 | ) | |||||||||||||
Cash provided by (used in) financing activities | (12.9 | ) | (72.7 | ) | (8.1 | ) | (9.6 | ) | 31.4 | 444.7 |
Predecessor | Successor | ||||||||||||||||||||||||
January 2, | |||||||||||||||||||||||||
2011 | January 29, | ||||||||||||||||||||||||
Fiscal Year Ended | Nine Months | through | 2011 | ||||||||||||||||||||||
January 3, | January 2, | January 1, | Ended October 2, | January 28, | through | ||||||||||||||||||||
2009 | 2010 | 2011 | 2010 | 2011 | October 1, 2011 | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Balance Sheet Data (end of period): | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 45.7 | $ | 57.9 | $ | 72.3 | $ | 68.9 | $ | 70.8 | $ | 62.4 | |||||||||||||
Operating working capital(a) | 95.8 | 79.2 | 53.1 | 61.6 | 52.7 | 66.0 | |||||||||||||||||||
Total assets | 702.2 | 699.9 | 732.0 | 730.8 | 819.3 | 1,098.8 | |||||||||||||||||||
Long-term debt, less current portion | 392.5 | 322.0 | 328.2 | 313.1 | 359.5 | 592.8 | |||||||||||||||||||
Total Polymer Group, Inc. shareholders’ equity | 61.8 | 116.4 | 134.3 | 133.2 | 148.2 | 206.0 | |||||||||||||||||||
Ratio of earnings to fixed charges(b) | — | 1.6 | x | 1.5 | x | 1.7 | x | — | — |
(a) | Operating working capital is defined as accounts receivable plus inventories less trade accounts payable and accrued liabilities. |
(b) | For purposes of determining the ratio of earnings to fixed charges, earnings are defined as pre-tax earnings from continuing operations plus fixed charges. Fixed charges include interest expense on all indebtedness, amortization of debt issuance fees and one-third of rental expense on operating leases representing that portion of rental expense deemed to be attributable to interest. Earnings were insufficient to cover fixed charges for the fiscal year ended January 3, 2009 by $2.6 million. Earnings were insufficient to cover fixed charges for the periods from January 2, 2011 through January 28, 2011 and from January 29, 2011 through October 1, 2011 by $17.9 million and $52.3 million, respectively. |
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• | the number of holders of exchange notes; | |
• | our operating performance and financial condition; | |
• | the market for similar securities; | |
• | the interest of securities dealers in making a market in the exchange notes; and | |
• | prevailing interest rates. |
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• | unscheduled maintenance outages; | |
• | prolonged power failures; | |
• | an equipment failure; | |
• | a chemical spill or release; | |
• | explosion of a boiler; | |
• | labor difficulties; | |
• | disruptions in transportation infrastructure, including roads, bridges, railroad tracks and tunnels; | |
• | fires, floods, windstorms, earthquakes, hurricanes or other catastrophes; | |
• | terrorism or threats of terrorism; | |
• | governmental regulations; and | |
• | other operational problems. |
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• | making it more difficult for us to satisfy our obligations with respect to the notes and our other debt; | |
• | limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; | |
• | requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; | |
• | increasing our vulnerability to general adverse economic and industry conditions; | |
• | exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest; | |
• | limiting our flexibility in planning for and reacting to changes in the industry in which we compete; | |
• | placing us at a disadvantage compared to other, less leveraged competitors; and | |
• | increasing our cost of borrowing. |
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• | incur additional indebtedness, issue preferred stock or enter into sale and leaseback obligations; | |
• | pay certain dividends or make certain distributions on our capital stock or repurchase or redeem our capital stock; | |
• | make certain capital expenditures; | |
• | make certain loans, investments or other restricted payments; | |
• | place restrictions on the ability of subsidiaries to pay dividends or make other payments to us; | |
• | engage in transactions with stockholders or affiliates; | |
• | sell certain assets or engage in mergers, acquisitions and other business combinations; | |
• | amend or otherwise alter the terms of our indebtedness; | |
• | alter the business that we conduct; | |
• | guarantee indebtedness or incur other contingent obligations; and | |
• | create liens. |
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• | were insolvent or rendered insolvent by reason of such indebtedness; | |
• | were engaged in, or about to engage in, a business or transaction for which our remaining assets constituted unreasonably small capital; or | |
• | intended to incur, or believed that we would incur, debts beyond our ability to repay such debts as they mature. |
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• | the sum of our debts, including contingent liabilities, were greater than the fair saleable value of all our assets; | |
• | the present fair saleable value of our assets were less than the amount that would be required to pay our probable liability on existing debts, including contingent liabilities, as they become absolute and mature; or | |
• | we could not pay our debts as they become due. |
• | to enable the sale, transfer or other disposal of such collateral in a transaction not prohibited under the indenture governing the notes or the credit agreement governing the ABL Facility, including the sale of assets in accordance with the asset sale covenant in the indenture that will govern the notes and the sale of any entity in its entirety that owns or holds such collateral; and | |
• | with respect to collateral held by a guarantor, upon the release of such guarantor from its guarantee. |
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• | incur additional indebtedness or issue preferred stock; | |
• | make distributions or other restricted payments; | |
• | sell capital stock or other assets; | |
• | engage in transaction with affiliates; and | |
• | designate our subsidiaries as unrestricted subsidiaries. |
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• | an investment made by Blackstone and the management investors totaling $259.9 million in equity of Holdings; | |
• | the entering into the ABL Facility; and | |
• | the issuance of the notes. |
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As of October 1, | ||||
2011 | ||||
(Unaudited) | ||||
(Dollars in millions) | ||||
Cash and cash equivalents | $ | 62.4 | ||
Short-term borrowings(1) | $ | 3.6 | ||
Long-term debt, including current portion: | ||||
ABL facility(2) | — | |||
Notes | 560.0 | |||
Other existing debt(1) | 36.3 | |||
Total short-term borrowings and long-term debt, including current portion | 599.9 | |||
Total shareholders’ equity | 206.0 | |||
Total capitalization | $ | 805.9 | ||
(1) | Short-term borrowings and our other existing debt consist of: |
• | our Argentine facilities entered into by our Argentina subsidiary, consisting of short-term credit facilities to finance working capital requirements, under which $3.5 million of indebtedness is currently outstanding, and a long-term facility under which $16.4 million (with a $15.8 million carrying value) of indebtedness is currently outstanding; |
• | our China Facility entered into by our Suzhou, China subsidiary, under which $20.0 million of indebtedness was outstanding as of October 1, 2011; and |
• | $0.5 million of capital leases and $0.1 million of other short-term borrowings. |
(2) | Our ABL Facility provides for aggregate borrowings of up to $50.0 million, subject to availability under a borrowing base, which amount may be increased to $70.0 million, subject to certain conditions, and has a four-year maturity. As of October 1, 2011, the borrowing base availability was $35.6 million and, after giving effect to the outstanding letters of credit of $10.8 million, the net availability was approximately $24.8 million. Because the borrowing base under the ABL Facility is expected to depend, in part, on inventory, accounts receivables and other assets that fluctuate from time to time, such amount may not reflect actual availability under our ABL Facility. See “Description of Other Indebtedness — ABL Facility.” |
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Fiscal Year Ended January 1, 2011
Pro Forma Adjustments | ||||||||||||||||
Adjustments | Adjustments | |||||||||||||||
Historical | for the | for China and Spain | ||||||||||||||
Predecessor | Transactions | Acquisitions | Pro Forma | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Net sales | $ | 1,106.2 | $ | — | $ | — | $ | 1,106.2 | ||||||||
Cost of goods sold | 896.3 | 9.0 | (a) | 2.1 | (f) | 907.4 | ||||||||||
Gross profit | 209.9 | (9.0 | ) | (2.1 | ) | 198.8 | ||||||||||
Selling, general and administrative expenses | 141.5 | 7.0 | (a) | — | 148.5 | |||||||||||
Special charges, net | 18.0 | (6.4 | )(b) | — | 11.6 | |||||||||||
Acquisition and integration expenses | 1.7 | — | — | 1.7 | ||||||||||||
Other operating (income) loss, net | (0.8 | ) | — | — | (0.8 | ) | ||||||||||
Operating income (loss) | 49.5 | (9.6 | ) | (2.1 | ) | 37.8 | ||||||||||
Other expense (income): | ||||||||||||||||
Interest expense, net | 31.7 | 20.4 | (c) | — | 52.1 | |||||||||||
Foreign currency and other loss (gain), net | 1.5 | 7.9 | (d) | — | 9.4 | |||||||||||
Income (loss) before income tax expense and discontinued operations | 16.3 | (37.9 | ) | (2.1 | ) | (23.7 | ) | |||||||||
Income tax expense (benefit) | 4.5 | (3.0 | )(e) | 0.6 | (g) | 2.1 | ||||||||||
Income (loss) from continuing operations | 11.8 | (34.9 | ) | (2.7 | ) | (25.8 | ) | |||||||||
Loss from discontinued operations, net of tax | (0.8 | ) | — | — | (0.8 | ) | ||||||||||
Net income (loss) | 11.0 | (34.9 | ) | (2.7 | ) | (26.6 | ) | |||||||||
Net income attributable to noncontrolling interests | (0.6 | ) | — | 0.6 | (h) | — | ||||||||||
Net income (loss) attributable to Polymer Group, Inc. | $ | 10.4 | $ | (34.9 | ) | $ | (2.1 | ) | $ | (26.6 | ) | |||||
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Nine Months Ended October 1, 2011
Historical | Pro Forma Adjustments | |||||||||||||||||||
Predecessor One | Successor Eight | Adjustments | Adjustments | Pro Forma Nine | ||||||||||||||||
Month Ended | Months Ended | for the | for China and Spain | Months Ended | ||||||||||||||||
January 28, 2011 | October 1, 2011 | Transactions | Acquisitions | October 1, 2011 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Net sales | $ | 84.6 | $ | 811.2 | $ | — | $ | — | $ | 895.8 | ||||||||||
Cost of goods sold | 68.5 | 689.7 | (19.7 | )(a) | 0.2 | (f) | 738.7 | |||||||||||||
Gross profit | 16.1 | 121.5 | 19.7 | (0.2 | ) | 157.1 | ||||||||||||||
Selling, general and administrative expenses | 11.6 | 96.0 | 0.5 | (a) | — | 108.1 | ||||||||||||||
Special charges, net | 20.8 | 36.9 | (45.2 | )(b) | — | 12.5 | ||||||||||||||
Other operating (income) loss, net | (0.6 | ) | 2.6 | — | — | 2.0 | ||||||||||||||
Operating income (loss) | (15.7 | ) | (14.0 | ) | 64.4 | (0.2 | ) | 34.5 | ||||||||||||
Other expense (income): | ||||||||||||||||||||
Interest expense, net | 1.9 | 33.5 | 1.7 | (c) | — | 37.1 | ||||||||||||||
Foreign currency and other loss (gain), net | 0.2 | 3.9 | (0.1 | )(d) | — | 4.0 | ||||||||||||||
Income (loss) before income tax expense and discontinued operations | (17.8 | ) | (51.4 | ) | 62.8 | (0.2 | ) | (6.6 | ) | |||||||||||
Income tax expense | 0.5 | (0.9 | ) | 2.9 | (e) | 0.1 | (g) | 2.6 | ||||||||||||
Income (loss) from continuing operations | (18.3 | ) | (50.5 | ) | 59.9 | (0.3 | ) | (9.2 | ) | |||||||||||
Income (loss) from discontinued operations, net of tax | 0.2 | (5.9 | ) | — | — | (5.7 | ) | |||||||||||||
Net loss | (18.1 | ) | (56.4 | ) | 59.9 | (0.3 | ) | (14.9 | ) | |||||||||||
Net income attributable to noncontrolling interests | (0.1 | ) | (0.1 | ) | — | 0.2 | (h) | — | ||||||||||||
Net loss attributable to Polymer Group, Inc. | $ | (18.2 | ) | $ | (56.5 | ) | $ | 59.9 | $ | (0.1 | ) | $ | (14.9 | ) | ||||||
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(a) | Reflects the following pro forma adjustments: |
Fiscal Year Ended | Nine Months Ended | |||||||
January 1, 2011 | October 1, 2011 | |||||||
(Dollars in millions) | ||||||||
Depreciation and amortization(1) | $ | (4.5 | ) | $ | (1.8 | ) | ||
Inventorystep-up(2) | 17.5 | (17.5 | ) | |||||
Blackstone advisory fee(3) | 3.0 | 0.1 | ||||||
Net adjustment | $ | 16.0 | $ | (19.2 | ) | |||
(1) | The pro forma adjustment to depreciation and amortization has been calculated using preliminary estimates of purchase price allocation and preliminary average useful lives, both of which are subject to change. Depreciation has been calculated assuming useful lives of 20 years for buildings and 8 years for machinery and equipment. Amortization of identifiable intangible assets (consisting of technology, trade names and customer relationships) has been calculated assuming an average useful life of 10 years. This adjustment is calculated as follows: |
Fiscal Year Ended | Nine Months Ended | |||||||
January 1, 2011 | October 1, 2011 | |||||||
(Dollars in millions) | ||||||||
Pro forma depreciation | $ | 43.6 | $ | 31.4 | ||||
Pro forma amortization | 4.8 | 3.6 | ||||||
Total pro forma depreciation and amortization | 48.4 | 35.0 | ||||||
Less: | ||||||||
Historical depreciation and amortization | (45.5 | ) | (36.2 | ) | ||||
Spain pro forma depreciation adjustment(i) | (7.4 | ) | (0.6 | ) | ||||
$ | (4.5 | ) | $ | (1.8 | ) | |||
(i) | See footnote (f) below for additional information. |
Intangible | ||||||||||||
Buildings | Equipment | Assets | ||||||||||
(Dollars in millions) | ||||||||||||
Useful lives | 20 | 8 | 10 | |||||||||
Annual depreciation and amortization | $ | 5.8 | $ | 37.0 | $ | 4.7 | ||||||
Useful lives | 18 | 6 | 8 | |||||||||
Annual depreciation and amortization | $ | 6.6 | $ | 49.3 | $ | 5.9 | ||||||
Useful lives | 22 | 10 | 12 | |||||||||
Annual depreciation and amortization | $ | 5.3 | $ | 29.6 | $ | 3.9 |
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(2) | Represents the turn-around impact of the purchase accounting fair value adjustment to inventories, as this inventory is considered sold within three months after the closing; and |
(3) | The $3.0 million for the fiscal year ended January 1, 2011 and the $0.1 million for the nine months ended October 1, 2011 represent a full-year impact and nine months impact, respectively, of the Blackstone Management Partners V L.L.C. annual management service agreement fee, using $3.0 million as the base amount. For additional information, see “Certain Relationships and Related Party Transactions.” |
Fiscal Year Ended | Nine Months Ended | |||||||
January 1, 2011 | October 1, 2011 | |||||||
(Dollars in millions) | ||||||||
Cost of goods sold | $ | 9.0 | $ | (19.7 | ) | |||
Selling, general and administrative expenses | 7.0 | 0.5 | ||||||
Net adjustment | $ | 16.0 | $ | (19.2 | ) | |||
Fiscal Year Ended | Nine Months Ended | |||||||
January 1, 2011 | October 1, 2011 | |||||||
(Dollars in millions) | ||||||||
Accelerated Equity Award(1) | $ | — | $ | (12.7 | ) | |||
Merger related costs(2) | (6.4 | ) | (32.5 | ) | ||||
Net adjustment | $ | (6.4 | ) | $ | (45.2 | ) | ||
(1) | The $(12.7) million for the nine months ended October 1, 2011 represent the adjustment to exclude the impact of the accelerated equity awards, which vested as a result of the change in control associated with the Transactions. |
(2) | The $(6.4) million for fiscal year ended January 1, 2011 and the $(32.5) million for the nine months ended October 1, 2011 represent adjustments to remove one-time professional fees and other transaction-related costs attributed to the Transactions. |
Fiscal Year Ended | Nine Months Ended | |||||||
January 1, 2011 | October 1, 2011 | |||||||
(Dollars in millions) | ||||||||
ABL Facility(1) | $ | — | $ | — | ||||
Notes(2) | 43.4 | 32.6 | ||||||
Existing debt not repaid, letter of credit, commitment and factoring fees(3) | 6.0 | 2.4 | ||||||
Total cash interest expense | 49.4 | 35.0 | ||||||
Amortization of debt issuance costs(4) | 2.7 | 2.1 | ||||||
Total pro forma interest expense | 52.1 | 37.1 | ||||||
Less historical interest expense | (31.7 | ) | (35.4 | ) | ||||
Net adjustment | $ | 20.4 | $ | 1.7 | ||||
(1) | Our ABL Facility bears interest initially at a rate equal to, at our option, either (A) Adjusted LIBOR (adjusted for statutory reserve requirements) plus (i) 3.50% in the case of the Tranche 1Sub-Facility or (ii) 5.50% in the case of the Tranche 2Sub-Facility; or (B) the higher of (a) the administrative agent’s Prime Rate and (b) the federal funds effective rate, plus 0.5% plus (i) 2.50% in the case of the Tranche 1Sub-Facility or (ii) 4.50% in the case of the Tranche 2Sub-Facility. See “Description of Other Indebtedness — ABL Facility.” As of October 1, 2011, the ABL Facility was undrawn. |
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(2) | Reflects interest expense for the Notes at an interest rate of 7.75% per annum. |
(3) | Reflects historical interest expense on our Argentine debt and capital leases which are expected to remain outstanding after the Transactions. Our Argentina U.S. dollar-denominated term loan bears interest at LIBOR plus 290 basis points (3.20% at October 1, 2011). Our Argentina U.S. dollar-denominated short-term borrowings had an average interest rate of 1.7% at October 1, 2011. See “Description of Other Indebtedness — Argentine Facilities.” As of October 1, 2011, we borrowed $20.0 million under the China Facility. |
Further, reflects (i) historical letter of credit fees on ournon-U.S. letters of credit which do not reduce availability under our ABL Facility, (ii) assumed letter of credit fees under our ABL Facility on pro forma U.S. letters of credit outstanding during the periods presented, (iii) commitment fees of 0.875% on the assumed average unused balance of the Tranche 2Sub-Facility and 0.625% on the assumed average unused balance of the Tranche 1Sub-Facility of our ABL facility, and (iv) historical amounts charged to interest expense for factoring advances. See “Description of Other Indebtedness — ABL Facility — Interest Rate and Fees” for a description of fees payable under our ABL Facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Other Obligations and Commitments — Factoring Agreements.” | ||
(4) | Reflects non-cash interest expense related to estimated capitalized debt issuance costs that are being amortized over the term of the related facility (four years for the ABL Facility and eight years for the notes). |
(d) | Reflects changes in the value of the tax indemnification asset associated with the application of the PHC rules. Income tax expense (benefit) resulting from changes in the recorded tax liability for the potential application of the PHC rules, for which we will have indemnification from the selling shareholders, is offset by an equal amount of income (expense) relating to the tax indemnification asset, which is recorded in Foreign currency and other loss (gain), net. |
(e) | Reflects pro forma income tax expense (benefit) applicable to the Transactions pro forma adjustments based on the respective jurisdictions to which the pro forma adjustments pertain and the associated applicable statutory tax rates, after taking into consideration the impact of changes in our valuation allowance. |
(f) | Reflects the following pro forma adjustments associated with the Spain Acquisition: |
Fiscal Year | Nine Months | |||||||
Ended | Ended | |||||||
January 1, 2011 | October 1, 2011 | |||||||
(Dollars in millions) | ||||||||
Depreciation and amortization(1) | $ | 7.4 | $ | 0.6 | ||||
Lease expense at PGI Spain(2) | (5.3 | ) | (0.4 | ) | ||||
$ | 2.1 | $ | 0.2 | |||||
(1) | Reflects the depreciation of the fixed assets that were underlying the leased equipment fromTesalca-Texnovo. Consistent with pro forma adjustment (a) (1) on page 47 of the prospectus, depreciation has been calculated assuming useful lives of 20 years for buildings and 8 years for machinery and equipment. |
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(2) | Reflects the elimination of lease expense associated with the leased equipment from Tesalca-Texnovo in connection with the final phase of the Spain Business Acquisition. |
(g) | Reflects pro forma income tax expense (benefit) applicable to the China and Spain Acquisitions pro forma adjustments based on the respective jurisdictions to which the pro forma adjustments pertain and the associated applicable statutory tax rates, after taking into consideration the impact of changes in our valuation allowance. |
(h) | Reflects the pro forma adjustment to remove the effect of noncontrolling interest accounting. |
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Predecessor | Successor | Predecessor | |||||||||||||||||||||||||||||||
January 29, | January 2, | ||||||||||||||||||||||||||||||||
2011 | 2011 | Nine Months | |||||||||||||||||||||||||||||||
Fiscal Year Ended | through | through | Ended | ||||||||||||||||||||||||||||||
January 1, | January 2, | January 3, | December 29, | December 30, | October 1, | January 28, | October 2, | ||||||||||||||||||||||||||
2011 | 2010 | 2009 | 2007 | 2006 | 2011 | 2011 | 2010 | ||||||||||||||||||||||||||
(Dollars in | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||
thousands) | |||||||||||||||||||||||||||||||||
Statement of Operations: | |||||||||||||||||||||||||||||||||
Net sales | $ | 1,106,211 | $ | 850,605 | $ | 1,026,194 | $ | 940,455 | $ | 909,877 | $ | 811,199 | $ | 84,606 | $ | 837,292 | |||||||||||||||||
Cost of goods sold | 896,319 | 667,255 | 856,622 | 781,695 | 764,621 | 689,684 | 68,531 | 678,247 | |||||||||||||||||||||||||
Gross profit | 209,892 | 183,350 | 169,572 | 158,760 | 145,256 | 121,515 | 16,075 | 159,045 | |||||||||||||||||||||||||
Selling, general and administrative expenses | 141,461 | 113,318 | 115,474 | 100,173 | 103,208 | 96,008 | 11,564 | 102,298 | |||||||||||||||||||||||||
Special charges, net | 17,993 | 20,763 | 20,088 | 46,568 | 38,683 | 36,887 | 20,824 | 11,868 | |||||||||||||||||||||||||
Acquisition and integration expenses | 1,742 | 1,789 | — | — | — | — | — | 1,729 | |||||||||||||||||||||||||
Other operating (income) loss, net | (815 | ) | (4,736 | ) | 4,960 | (1,435 | ) | 1,289 | 2,715 | (564 | ) | (2,030 | ) | ||||||||||||||||||||
Operating income (loss) | 49,511 | 52,216 | 29,050 | 13,454 | 2,076 | (14,095 | ) | (15,749 | ) | 45,180 | |||||||||||||||||||||||
Other expense (income): | |||||||||||||||||||||||||||||||||
Interest expense, net | 31,728 | 26,712 | 31,067 | 29,926 | 26,882 | 33,525 | 1,922 | 24,554 | |||||||||||||||||||||||||
Gain on reacquisition of debt | — | (2,431 | ) | — | 115 | — | — | — | — | ||||||||||||||||||||||||
Loss on extinguishment of debt | — | 5,088 | — | — | — | — | — | — | |||||||||||||||||||||||||
Foreign currency and other loss (gain), net | 1,454 | 5,246 | 526 | (381 | ) | 1,687 | 3,760 | 82 | 1,139 | ||||||||||||||||||||||||
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Predecessor | Successor | Predecessor | |||||||||||||||||||||||||||||||
January 29, | January 2, | ||||||||||||||||||||||||||||||||
2011 | 2011 | Nine Months | |||||||||||||||||||||||||||||||
Fiscal Year Ended | through | through | Ended | ||||||||||||||||||||||||||||||
January 1, | January 2, | January 3, | December 29, | December 30, | October 1, | January 28, | October 2, | ||||||||||||||||||||||||||
2011 | 2010 | 2009 | 2007 | 2006 | 2011 | 2011 | 2010 | ||||||||||||||||||||||||||
(Dollars in | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||
thousands) | |||||||||||||||||||||||||||||||||
(Loss) income before income tax expense and discontinued operations | 16,329 | 17,601 | (2,543 | ) | (16,206 | ) | (26,493 | ) | (51,380 | ) | (17,753 | ) | 19,487 | ||||||||||||||||||||
Income tax expense | 4,534 | 8,578 | 7,008 | 10,838 | 7,953 | (907 | ) | 549 | 2,978 | ||||||||||||||||||||||||
(Loss) income from continuing operations | 11,795 | 9,023 | (9,551 | ) | (27,044 | ) | (34,446 | ) | (50,473 | ) | (18,302 | ) | 16,509 | ||||||||||||||||||||
Discontinued operations: | |||||||||||||||||||||||||||||||||
Income (loss) from operations of discontinued business | (765 | ) | 2,113 | 8,291 | (11,713 | ) | 1,735 | (5,157 | ) | 182 | (401 | ) | |||||||||||||||||||||
Gain on sale of discontinued operations, net | — | 6,802 | — | — | — | (736 | ) | — | — | ||||||||||||||||||||||||
Income (loss) from discontinued operations | (765 | ) | 8,915 | 8,291 | (11,713 | ) | 1,735 | (5,893 | ) | 182 | (401 | ) | |||||||||||||||||||||
Net (loss) income | 11,030 | 17,938 | (1,260 | ) | (38,757 | ) | (32,711 | ) | (56,366 | ) | (18,120 | ) | 16,108 | ||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (623 | ) | 2,137 | 5,969 | (2,076 | ) | (2,095 | ) | (161 | ) | (83 | ) | (447 | ) | |||||||||||||||||||
Net (loss) income attributable to Polymer Group, Inc. | $ | 10,407 | $ | 20,075 | $ | 4,709 | $ | (40,833 | ) | $ | (34,806 | ) | $ | (56,527 | ) | $ | (18,203 | ) | $ | 15,661 | |||||||||||||
Operating and other data: | |||||||||||||||||||||||||||||||||
Cash provided by (used in) operating activities | $ | 63,244 | $ | 99,009 | 59,458 | $ | 38,974 | $ | 67,121 | $ | (7,426 | ) | $ | (25,270 | ) | $ | 40,073 | ||||||||||||||||
Cash used in investing activities | (41,276 | ) | (14,567 | ) | (31,626 | ) | (53,831 | ) | (64,506 | ) | (446,197 | ) | (8,305 | ) | (19,610 | ) | |||||||||||||||||
Cash provided by (used in) financing activities | (8,086 | ) | (72,651 | ) | (12,860 | ) | 12,719 | (1,934 | ) | 444,662 | 31,442 | (9,550 | ) | ||||||||||||||||||||
Gross margin | 19.0 | % | 21.6 | % | 16.5 | % | 16.9 | % | 16.0 | % | 15.0 | % | 19.0 | % | 19.0 | % | |||||||||||||||||
Depreciation and amortization | $ | 46,353 | $ | 50,370 | $ | 52,294 | $ | 58,699 | $ | 60,663 | $ | 35,845 | $ | 3,535 | $ | 34,916 | |||||||||||||||||
Capital expenditures | 45,183 | 43,477 | 34,460 | 60,720 | 68,405 | 46,380 | 8,405 | 21,439 | |||||||||||||||||||||||||
Balance sheet data (at end of period): | |||||||||||||||||||||||||||||||||
Cash and cash equivalents and short term investments | $ | 72,355 | $ | 57,894 | $ | 45,718 | $ | 31,698 | $ | 32,227 | $ | 62,371 | $ | 70,771 | $ | 68,947 | |||||||||||||||||
Operating working capital(a) | 53,068 | 79,215 | 95,803 | 100,526 | 91,478 | 65,981 | 52,662 | 61,554 | |||||||||||||||||||||||||
Total assets | 731,977 | 699,911 | 702,171 | 749,739 | 741,004 | 1,098,790 | 819,259 | 730,832 | |||||||||||||||||||||||||
Long-term debt, less current portion | 328,170 | 322,021 | 392,505 | 415,514 | 402,416 | 592,772 | 359,525 | 313,134 | |||||||||||||||||||||||||
Noncontrolling interests | 8,916 | 8,038 | 10,886 | 17,101 | 15,513 | — | — | 8,640 | |||||||||||||||||||||||||
Total Polymer Group, Inc. shareholders’ equity | 134,336 | 116,357 | 61,753 | 80,741 | 111,756 | 205,990 | 148,187 | 133,192 | |||||||||||||||||||||||||
Ratio of earnings to fixed charges(b) | 1.5 | x | 1.6 | x | — | — | — | — | — | 1.7 | x |
(a) | Operating working capital is defined as accounts receivable plus inventories less trade accounts payable and accrued liabilities. |
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(b) | For purposes of determining the ratio of earnings to fixed charges, earnings are defined as pre-tax earnings from continuing operations plus fixed charges. Fixed charges include interest expense on all indebtedness, amortization of debt issuance fees and one-third of rental expense on operating leases representing that portion of rental expense deemed to be attributable to interest. Earnings were insufficient to cover fixed charges for the fiscal years ended December 30, 2006 by $29.3 million, December 29, 2007 by $17.9 million and January 3, 2009 by $2.6 million. Earnings were insufficient to cover fixed charges for the periods from January 2, 2011 through January 28, 2011 and from January 29, 2011 through October 1, 2011 by $17.9 million and $52.3 million, respectively. |
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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• | Volumes sold, which are tied to our available production capacity and customer demand for our products; | |
• | Prices, which are tied to the quality of our products, the overall supply and demand dynamics in our regional markets, and the cost of our raw material inputs, as changes in input costs have historically been passed through to customers through either contractual mechanisms or business practice. This can result in significant increases in total net sales during periods of sustained raw material cost increases and declines in net sales during periods of raw material cost declines; and | |
• | Product mix, which is tied to demand from various markets and customers, along with the type of available capacity and technological capabilities of our facilities and equipment. Average selling prices can vary for different product types, which impacts our total revenue trends. |
• | Raw materials (primarily polypropylene resins, which generally comprise over 75% of our raw material purchases) represent approximately 60% to 70% of COGS. We purchase raw materials, including polypropylene resins, from a number of qualified venders located in the regions in which we operate. Polypropylene is a petroleum-based commodity material and its price historically has exhibited volatility. As discussed in the revenue factors above, we have historically been able to mitigate volatility in polypropylene prices through changes in our selling prices to customers, enabling us to maintain a more stable gross profit per kilogram. | |
• | Other variable costs include utilities (primarily electricity), direct labor, and variable overhead. Utility rates vary depending on the regional market and provider. Our focus on operating efficiencies and initiatives associated with sustainability has resulted in a general trend of lower kilowatts used per ton produced over the last three years. Labor generally represents less than 10% of COGS and varies by region. Historically, we have been able to mitigate wage rate inflation with operating initiatives resulting in higher productivity and improvements in throughput and yield. | |
• | Fixed overhead consists primarily of depreciation expense, which is impacted by our level of capital investments and structural costs related to our locations. We believe our strategically located manufacturing facilities provide sufficient scale to maintain competitive unit manufacturing costs. |
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• | In the fourth quarter of 2005, we commenced operations on a new spunmelt line at our facility in Cali, Colombia, which primarily provides nonwoven materials for hygiene applications in Latin America. | |
• | In the second quarter of 2006, we commenced operations on a new spunmelt line at our facility in Mooresville, North Carolina, which primarily provides nonwoven materials for hygiene applications in the United States. | |
• | In the third quarter of 2006, we commenced operations on a new spunmelt line at our facility in Suzhou, China, which primarily provides nonwoven materials to local converters of medical products. | |
• | In the fourth quarter of 2007, we completed the retrofit of an existing hydroentanglement line at our facility in Benson, North Carolina, which produces Spinlace products. | |
• | In the first quarter of 2008, we commenced operations on a new spunmelt line at our facility near Buenos Aires, Argentina, which primarily provides nonwoven materials for hygiene applications in Latin America. | |
• | In the second quarter of 2009, we commenced operations of a new spunmelt line at our facility in San Luis Potosi, Mexico, which provides nonwoven materials for medical and hygiene applications in the U.S. and Mexico. |
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Predecessor | Successor | Predecessor | ||||||||||||||
One Month Ended | Eight Months Ended | |||||||||||||||
January 28, | January 30, | October 1, | October 2, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of goods sold: | ||||||||||||||||
Materials | 53.2 | 49.6 | 59.3 | 53.1 | ||||||||||||
Labor | 6.6 | 7.3 | 6.2 | 6.5 | ||||||||||||
Overhead | 21.2 | 25.5 | 19.5 | 21.2 | ||||||||||||
81.0 | 82.5 | 85.0 | 80.8 | |||||||||||||
Gross profit | 19.0 | 17.5 | 15.0 | 19.2 | ||||||||||||
Selling, general and administrative expenses | 13.7 | 11.7 | 11.8 | 12.3 | ||||||||||||
Special charges, net | 24.6 | 0.7 | 4.5 | 1.5 | ||||||||||||
Acquisition and integration expenses | 0.0 | 0.4 | 0.0 | 0.2 | ||||||||||||
Other operating (income) loss, net | (0.7 | ) | (0.4 | ) | 0.3 | (0.2 | ) | |||||||||
Operating income (loss) | (18.6 | ) | 5.0 | (1.7 | ) | 5.4 | ||||||||||
Other expense (income): | ||||||||||||||||
Interest expense, net | 2.3 | 3.3 | 4.1 | 2.9 | ||||||||||||
Foreign currency and other (gain) loss, net | 0.1 | (0.3 | ) | 0.5 | 0.2 | |||||||||||
Income (loss) before income taxes and discontinued operations | (21.0 | ) | 2.0 | (6.3 | ) | 2.4 | ||||||||||
Income tax expense (benefit) | 0.6 | 1.2 | (0.1 | ) | 0.3 | |||||||||||
Income (loss) from continuing operations | (21.6 | ) | 0.7 | (6.2 | ) | 2.1 | ||||||||||
Income (loss) from discontinued operations | 0.2 | 0.2 | (0.6 | ) | (0.1 | ) | ||||||||||
Gain (loss) on sale of discontinued operations | — | — | (0.1 | ) | — | |||||||||||
Income (loss) from discontinued operations | 0.2 | 0.2 | (0.7 | ) | (0.1 | ) | ||||||||||
Net income (loss) | (21.4 | ) | 0.9 | (6.9 | ) | 2.0 | ||||||||||
Less: net (income) loss attributable to noncontrolling interests | 0.1 | 0.0 | 0.0 | 0.1 | ||||||||||||
Net income (loss) attributable to Polymer Group, Inc. | (21.5 | )% | 0.9 | % | (7.0 | )% | 2.0 | % | ||||||||
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One Month Ended | ||||||||||||
January 28, | January 30, | |||||||||||
2011 | 2010 | Change | ||||||||||
Net sales: | ||||||||||||
Nonwovens Segments | ||||||||||||
U.S. Nonwovens | $ | 26.1 | $ | 25.9 | $ | 0.2 | ||||||
Europe Nonwovens | 24.3 | 22.2 | 2.1 | |||||||||
Asia Nonwovens | 9.4 | 10.4 | (1.0 | ) | ||||||||
Latin America Nonwovens | 20.0 | 22.1 | (2.1 | ) | ||||||||
Total Nonwovens Segments | 79.8 | 80.6 | (0.8 | ) | ||||||||
Oriented Polymers | 4.8 | 3.8 | 1.0 | |||||||||
$ | 84.6 | $ | 84.4 | $ | 0.2 | |||||||
Operating income (loss): | ||||||||||||
U.S. Nonwovens | $ | 2.5 | $ | 1.1 | $ | 1.4 | ||||||
Europe Nonwovens | 1.8 | 0.7 | 1.1 | |||||||||
Asia Nonwovens | 1.7 | 2.0 | (0.3 | ) | ||||||||
Latin America Nonwovens | 2.1 | 4.2 | (2.1 | ) | ||||||||
Oriented Polymers | 0.6 | (0.3 | ) | 0.9 | ||||||||
Unallocated Corporate, net of eliminations | (3.6 | ) | (2.4 | ) | (1.2 | ) | ||||||
5.1 | 5.3 | (0.2 | ) | |||||||||
Acquisition and integration expenses | — | (0.4 | ) | 0.4 | ||||||||
Special charges, net | (20.8 | ) | (0.6 | ) | (20.2 | ) | ||||||
$ | (15.7 | ) | $ | 4.3 | $ | (20.0 | ) | |||||
U.S. | Europe | Asia | Latin America | Oriented | ||||||||||||||||||||
Nonwovens | Nonwovens | Nonwovens | Nonwovens | Polymers | Total | |||||||||||||||||||
Net sales — one month ended January 30, 2010 | $ | 25.9 | $ | 22.2 | $ | 10.4 | $ | 22.1 | $ | 3.8 | $ | 84.4 | ||||||||||||
Change in sales due to: | ||||||||||||||||||||||||
Volume | (1.6 | ) | 2.1 | (1.4 | ) | (4.3 | ) | 0.6 | (4.6 | ) | ||||||||||||||
Price/mix | 1.8 | 1.4 | 0.3 | 2.2 | 0.3 | 6.0 | ||||||||||||||||||
Foreign currency translation | — | (1.4 | ) | 0.1 | — | 0.1 | (1.2 | ) | ||||||||||||||||
Net sales — one month ended January 28, 2011 | $ | 26.1 | $ | 24.3 | $ | 9.4 | $ | 20.0 | $ | 4.8 | $ | 84.6 | ||||||||||||
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US | Europe | Asia | Latin America | Oriented | Corporate | |||||||||||||||||||||||
Nonwovens | Nonwovens | Nonwovens | Nonwovens | Polymers | /Other | Total | ||||||||||||||||||||||
Operating income (loss) — one month ended January 30, 2010 | $ | 1.1 | $ | 0.7 | $ | 2.0 | $ | 4.2 | $ | (0.3 | ) | $ | (3.4 | ) | $ | 4.3 | ||||||||||||
Change in operating income due to: | ||||||||||||||||||||||||||||
Volume | 0.2 | 0.9 | (0.3 | ) | (1.5 | ) | 0.1 | — | (0.6 | ) | ||||||||||||||||||
Price/mix | 1.8 | 1.7 | 0.3 | 2.0 | 0.2 | — | 6.0 | |||||||||||||||||||||
Higher raw material costs | (2.8 | ) | (2.0 | ) | (0.3 | ) | (1.3 | ) | 0.6 | — | (5.8 | ) | ||||||||||||||||
Lower (Higher) manufacturing costs | 2.2 | 0.4 | (0.1 | ) | (0.5 | ) | (0.1 | ) | — | 1.9 | ||||||||||||||||||
Foreign currency | — | — | — | (0.1 | ) | 0.1 | — | — | ||||||||||||||||||||
Lower (Higher) depreciation and amortization expense | — | 0.1 | 0.2 | (0.3 | ) | — | — | — | ||||||||||||||||||||
Lower acquisition and integration expenses | — | — | — | — | — | 0.4 | 0.4 | |||||||||||||||||||||
Higher special charges, net | — | — | — | — | — | (20.2 | ) | (20.2 | ) | |||||||||||||||||||
All other, including higher selling, general and administrative spending | — | — | (0.1 | ) | (0.4 | ) | — | (1.2 | ) | (1.7 | ) | |||||||||||||||||
Operating income (loss) — one month ended January 28, 2011 | $ | 2.5 | $ | 1.8 | $ | 1.7 | $ | 2.1 | $ | 0.6 | $ | (24.4 | ) | $ | (15.7 | ) | ||||||||||||
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Eight Months Ended | ||||||||||||
October 1, | October 2, | |||||||||||
2011 | 2010 | Change | ||||||||||
Net sales: | ||||||||||||
Nonwovens Segments | ||||||||||||
U.S. Nonwovens | $ | 244.2 | $ | 222.5 | $ | 21.7 | ||||||
Europe Nonwovens | 221.9 | 186.4 | 35.5 | |||||||||
Asia Nonwovens | 95.8 | 86.4 | 9.4 | |||||||||
Latin America Nonwovens | 207.0 | 213.8 | (6.8 | ) | ||||||||
Total Nonwovens Segments | 768.9 | 709.1 | 59.8 | |||||||||
Oriented Polymers | 42.3 | 43.8 | (1.5 | ) | ||||||||
$ | 811.2 | $ | 752.9 | $ | 58.3 | |||||||
Operating income (loss): | ||||||||||||
U.S. Nonwovens | $ | 14.6 | $ | 17.2 | $ | (2.6 | ) | |||||
Europe Nonwovens | 6.5 | 9.7 | (3.2 | ) | ||||||||
Asia Nonwovens | 14.9 | 17.3 | (2.4 | ) | ||||||||
Latin America Nonwovens | 16.4 | 32.0 | (15.6 | ) | ||||||||
Oriented Polymers | (1.4 | ) | 3.1 | (4.5 | ) | |||||||
Unallocated Corporate, net of eliminations | (28.2 | ) | (25.8 | ) | (2.4 | ) | ||||||
22.8 | 53.5 | (30.7 | ) | |||||||||
Acquisition and integration expenses | — | (1.3 | ) | 1.3 | ||||||||
Special charges, net | (36.9 | ) | (11.3 | ) | (25.6 | ) | ||||||
$ | (14.1 | ) | $ | 40.9 | $ | (55.0 | ) | |||||
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U.S. | Europe | Asia | Latin America | Oriented | ||||||||||||||||||||
Nonwovens | Nonwovens | Nonwovens | Nonwovens | Polymers | Total | |||||||||||||||||||
Net sales — eight months ended October 2, 2010 | $ | 222.5 | $ | 186.4 | $ | 86.4 | $ | 213.8 | $ | 43.8 | $ | 752.9 | ||||||||||||
Change in sales due to: | ||||||||||||||||||||||||
Volume | (1.3 | ) | 4.4 | 3.1 | (31.0 | ) | (6.0 | ) | (30.8 | ) | ||||||||||||||
Price/mix | 23.0 | 14.9 | 5.1 | 23.6 | 3.7 | 70.3 | ||||||||||||||||||
Foreign currency translation | — | 16.2 | 1.2 | 0.6 | 0.8 | 18.8 | ||||||||||||||||||
Net sales — eight months ended October 1, 2011 | $ | 244.2 | $ | 221.9 | $ | 95.8 | $ | 207.0 | $ | 42.3 | $ | 811.2 | ||||||||||||
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Latin | ||||||||||||||||||||||||||||
US | Europe | Asia | America | Oriented | Corporate/ | |||||||||||||||||||||||
Nonwovens | Nonwovens | Nonwovens | Nonwovens | Polymers | Other | Total | ||||||||||||||||||||||
Operating income (loss) — eight months ended October 2, 2010 | $ | 17.2 | $ | 9.7 | $ | 17.3 | $ | 32.0 | $ | 3.1 | $ | (38.4 | ) | $ | 40.9 | |||||||||||||
Change in operating income due to: | ||||||||||||||||||||||||||||
Purchase accounting adjustments, primarily inventory value impacts | (4.5 | ) | (6.9 | ) | (1.3 | ) | (1.5 | ) | (4.0 | ) | — | (18.2 | ) | |||||||||||||||
Volume | (0.7 | ) | 2.8 | 0.6 | (11.0 | ) | (1.5 | ) | — | (9.8 | ) | |||||||||||||||||
Price/mix | 23.0 | 15.1 | 6.1 | 23.3 | 3.8 | — | 71.3 | |||||||||||||||||||||
Higher raw material costs | (22.9 | ) | (16.3 | ) | (7.8 | ) | (26.2 | ) | (2.8 | ) | (0.2 | ) | (76.2 | ) | ||||||||||||||
Lower (Higher) manufacturing costs | 4.1 | 3.1 | 1.5 | 0.3 | (1.0 | ) | (0.2 | ) | 7.8 | |||||||||||||||||||
Foreign currency | — | 0.8 | (0.3 | ) | (4.5 | ) | — | (0.1 | ) | (4.1 | ) | |||||||||||||||||
Lower (Higher) depreciation and amortization expense | 0.3 | (2.1 | ) | (1.0 | ) | 2.5 | 0.1 | (2.9 | ) | (3.1 | ) | |||||||||||||||||
Lower acquisition and integration expenses | — | — | — | — | — | 1.3 | 1.3 | |||||||||||||||||||||
Higher special charges, net | — | — | — | — | — | (25.6 | ) | (25.6 | ) | |||||||||||||||||||
All other, including higher selling, general and administrative spending | (1.9 | ) | 0.3 | (0.2 | ) | 1.5 | 0.9 | 1.0 | 1.6 | |||||||||||||||||||
Operating income (loss) — eight months ended October 1, 2011 | $ | 14.6 | $ | 6.5 | $ | 14.9 | $ | 16.4 | $ | (1.4 | ) | $ | (65.1 | ) | $ | (14.1 | ) | |||||||||||
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2010 | 2009 | 2008 | ||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost of goods sold: | ||||||||||||
Materials | 52.7 | 46.3 | 54.8 | |||||||||
Labor | 6.7 | 7.8 | 7.0 | |||||||||
Overhead | 21.6 | 24.3 | 21.7 | |||||||||
81.0 | 78.4 | 83.5 | ||||||||||
Gross profit | 19.0 | 21.6 | 16.5 | |||||||||
Selling, general and administrative expenses | 12.8 | 13.3 | 11.3 | |||||||||
Acquisition and integration expenses | 0.2 | 0.2 | — | |||||||||
Special charges, net | 1.6 | 2.4 | 2.0 | |||||||||
Other operating (income) loss, net | (0.1 | ) | (0.6 | ) | 0.5 | |||||||
Operating income (loss) | 4.5 | 6.1 | 2.8 | |||||||||
Other expense (income): | ||||||||||||
Interest expense, net | 2.9 | 3.1 | 3.0 | |||||||||
Gain on reacquisition of debt | — | (0.3 | ) | — | ||||||||
Loss on extinguishment of debt | — | 0.6 | — | |||||||||
Foreign currency and other (gain) loss, net | 0.1 | 0.6 | (0.1 | ) | ||||||||
Income (loss) before income taxes and discontinued operations | 1.5 | 2.1 | (0.2 | ) | ||||||||
Income tax expense | 0.4 | 1.0 | 0.7 | |||||||||
Income (loss) from continuing operations | 1.1 | 1.1 | (0.9 | ) | ||||||||
Income (loss) from discontinued operations | (0.1 | ) | 0.2 | 0.8 | ||||||||
Gain on sale of discontinued operations | — | 0.8 | — | |||||||||
Net income from discontinued operations | 0.1 | 1.0 | 0.8 | |||||||||
Net income (loss) | 1.0 | 2.1 | (0.1 | ) | ||||||||
Net (income) loss attributable to noncontrolling interests | (0.1 | ) | 0.3 | 0.6 | ||||||||
Net income attributable to Polymer Group, Inc. | 0.9 | % | 2.4 | % | 0.5 | % | ||||||
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Fiscal Year Ended | ||||||||||||
January 1, | January 2, | |||||||||||
2011 | 2010 | Change | ||||||||||
Net sales: | ||||||||||||
U.S. Nonwovens | $ | 326.8 | $ | 302.3 | $ | 24.5 | ||||||
Europe Nonwovens | 282.1 | 159.4 | 122.7 | |||||||||
Asia Nonwovens | 129.4 | 108.8 | 20.6 | |||||||||
Latin America Nonwovens | 306.5 | 234.3 | 72.2 | |||||||||
Oriented Polymers | 61.4 | 45.8 | 15.6 | |||||||||
$ | 1,106.2 | $ | 850.6 | $ | 255.6 | |||||||
Operating income (loss): | ||||||||||||
U.S. Nonwovens | $ | 24.5 | $ | 34.5 | $ | (10.0 | ) | |||||
Europe Nonwovens | 13.6 | 2.2 | 11.4 | |||||||||
Asia Nonwovens | 25.2 | 23.2 | 2.0 | |||||||||
Latin America Nonwovens | 41.6 | 42.4 | (0.8 | ) | ||||||||
Oriented Polymers | 3.3 | 2.4 | 0.9 | |||||||||
Unallocated Corporate, net of eliminations | (39.0 | ) | (30.0 | ) | (9.0 | ) | ||||||
69.2 | 74.7 | (5.5 | ) | |||||||||
Acquisition and integration expenses | (1.7 | ) | (1.7 | ) | — | |||||||
Special charges, net | (18.0 | ) | (20.8 | ) | 2.8 | |||||||
$ | 49.5 | $ | 52.2 | $ | (2.7 | ) | ||||||
U.S. | Europe | Asia | Latin America | Oriented | ||||||||||||||||||||
Nonwovens | Nonwovens | Nonwovens | Nonwovens | Polymers | Total | |||||||||||||||||||
Net sales — fiscal year ended January 2, 2010 | $ | 302.3 | $ | 159.4 | $ | 108.8 | $ | 234.3 | $ | 45.8 | $ | 850.6 | ||||||||||||
Change in sales due to: | ||||||||||||||||||||||||
Volume | (10.2 | ) | 131.1 | 10.1 | 29.5 | 10.5 | 171.0 | |||||||||||||||||
Price/mix | 34.7 | (1.1 | ) | 10.2 | 41.8 | 3.3 | 88.9 | |||||||||||||||||
Foreign currency translation | — | (7.3 | ) | 0.3 | 0.9 | 1.8 | (4.3 | ) | ||||||||||||||||
�� | ||||||||||||||||||||||||
Net sales — fiscal year ended January 1, 2011 | $ | 326.8 | $ | 282.1 | $ | 129.4 | $ | 306.5 | $ | 61.4 | $ | 1,106.2 | ||||||||||||
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Latin | ||||||||||||||||||||||||||||
US | Europe | Asia | America | Oriented | ||||||||||||||||||||||||
Nonwovens | Nonwovens | Nonwovens | Nonwovens | Polymers | Corporate/Other | Total | ||||||||||||||||||||||
Operating income — fiscal year ended January 2, 2010 | $ | 34.5 | $ | 2.2 | $ | 23.2 | $ | 42.4 | $ | 2.4 | $ | (52.5 | ) | $ | 52.2 | |||||||||||||
Change in operating income due to: | ||||||||||||||||||||||||||||
Volume | 2.6 | 26.1 | 2.9 | 10.5 | 2.8 | — | 44.9 | |||||||||||||||||||||
Price/mix | 34.5 | (1.3 | ) | 9.6 | 39.8 | 3.4 | — | 86.0 | ||||||||||||||||||||
Higher raw material costs | (42.1 | ) | (4.2 | ) | (7.7 | ) | (38.0 | ) | (3.0 | ) | 0.1 | (94.9 | ) | |||||||||||||||
Lower (Higher) manufacturing costs | (4.9 | ) | 2.4 | (2.8 | ) | (3.6 | ) | (0.7 | ) | (0.1 | ) | (9.7 | ) | |||||||||||||||
Foreign currency | (0.8 | ) | (0.5 | ) | (0.7 | ) | (2.9 | ) | (1.1 | ) | — | (6.0 | ) | |||||||||||||||
Lower (Higher) depreciation and amortization expense | 0.1 | 1.5 | 2.0 | (0.3 | ) | (0.1 | ) | (0.2 | ) | 3.0 | ||||||||||||||||||
Higher special charges, net | — | — | — | — | — | 2.8 | 2.8 | |||||||||||||||||||||
All other, including higher selling, general and administrative spending | 0.6 | (12.6 | ) | (1.3 | ) | (6.3 | ) | (0.4 | ) | (8.8 | ) | (28.8 | ) | |||||||||||||||
Operating income — fiscal year ended January 1, 2011 | $ | 24.5 | $ | 13.6 | $ | 25.2 | $ | 41.6 | $ | 3.3 | $ | (58.7 | ) | $ | 49.5 | |||||||||||||
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Fiscal Year Ended | ||||||||||||
January 2, | January 3, | |||||||||||
2010 | 2009 | Change | ||||||||||
Net sales: | ||||||||||||
U.S. Nonwovens | $ | 302.3 | $ | 385.4 | $ | (83.1 | ) | |||||
Europe Nonwovens | 159.4 | 196.6 | (37.2 | ) | ||||||||
Asia Nonwovens | 108.8 | 122.9 | (14.1 | ) | ||||||||
Latin America Nonwovens | 234.3 | 266.5 | (32.2 | ) | ||||||||
Oriented Polymers | 45.8 | 54.8 | (9.0 | ) | ||||||||
$ | 850.6 | $ | 1,026.2 | $ | (175.6 | ) | ||||||
Operating income (loss): | ||||||||||||
U.S. Nonwovens | $ | 34.5 | $ | 26.4 | $ | 8.1 | ||||||
Europe Nonwovens | 2.2 | 11.6 | (9.4 | ) | ||||||||
Asia Nonwovens | 23.2 | 16.3 | 6.9 | |||||||||
Latin America Nonwovens | 42.4 | 17.3 | �� | 25.1 | ||||||||
Oriented Polymers | 2.4 | 2.2 | 0.2 | |||||||||
Unallocated Corporate, net of eliminations | (30.0 | ) | (24.7 | ) | (5.3 | ) | ||||||
74.7 | 49.1 | (25.6 | ) | |||||||||
Acquisition and integration expenses | (1.7 | ) | — | (1.7 | ) | |||||||
Special charges, net | (20.8 | ) | (20.1 | ) | (0.7 | ) | ||||||
$ | 52.2 | $ | 29.0 | $ | 23.2 | |||||||
Latin | ||||||||||||||||||||||||
U.S. | Europe | Asia | America | Oriented | ||||||||||||||||||||
Nonwovens | Nonwovens | Nonwovens | Nonwovens | Polymers | Total | |||||||||||||||||||
Net sales — fiscal year ended January 3, 2009 | $ | 385.4 | $ | 196.6 | $ | 122.9 | $ | 266.5 | $ | 54.8 | $ | 1,026.2 | ||||||||||||
Change in sales due to: | ||||||||||||||||||||||||
Volume | (41.8 | ) | (28.3 | ) | 2.0 | (4.0 | ) | (7.4 | ) | (79.5 | ) | |||||||||||||
Price/mix | (41.3 | ) | 2.4 | (16.4 | ) | (11.7 | ) | (0.5 | ) | (67.5 | ) | |||||||||||||
Foreign currency translation | — | (11.3 | ) | 0.3 | (16.5 | ) | (1.1 | ) | (28.6 | ) | ||||||||||||||
Net sales — fiscal year ended January 2, 2010 | $ | 302.3 | $ | 159.4 | $ | 108.8 | $ | 234.3 | $ | 45.8 | $ | 850.6 | ||||||||||||
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Latin | ||||||||||||||||||||||||||||
US | Europe | Asia | America | Oriented | Corporate/ | |||||||||||||||||||||||
Nonwovens | Nonwovens | Nonwovens | Nonwovens | Polymers | Other | Total | ||||||||||||||||||||||
Operating income — fiscal year ended January 3, 2009 | $ | 26.4 | $ | 11.6 | $ | 16.3 | $ | 17.3 | $ | 2.2 | $ | (44.8 | ) | $ | 29.0 | |||||||||||||
Change in operating income due to: | ||||||||||||||||||||||||||||
Volume | (2.1 | ) | (10.8 | ) | 0.8 | (3.8 | ) | (2.4 | ) | (0.1 | ) | (18.4 | ) | |||||||||||||||
Price/mix | (42.7 | ) | 2.1 | (16.7 | ) | (11.4 | ) | (0.5 | ) | — | (69.2 | ) | ||||||||||||||||
Lower raw material costs | 52.2 | 4.0 | 20.0 | 39.1 | 4.4 | — | 119.7 | |||||||||||||||||||||
(Higher) lower manufacturing costs | (6.2 | ) | (3.8 | ) | 3.9 | (4.5 | ) | (3.0 | ) | 0.6 | (13.0 | ) | ||||||||||||||||
Foreign currency | 1.6 | (0.6 | ) | (0.3 | ) | 8.6 | 0.9 | (1.2 | ) | 9.0 | ||||||||||||||||||
Lower (Higher) depreciation and amortization expense | 2.1 | (0.5 | ) | (0.3 | ) | (2.4 | ) | 0.3 | (0.8 | ) | (1.6 | ) | ||||||||||||||||
Higher acquisition and integration expenses | — | — | — | — | — | (1.7 | ) | (1.7 | ) | |||||||||||||||||||
Increased share-based compensation costs | — | — | — | — | — | (1.0 | ) | (1.0 | ) | |||||||||||||||||||
Spain Business Acquisition operating results | — | (0.7 | ) | — | — | — | — | (0.7 | ) | |||||||||||||||||||
Higher special charges, net | — | — | — | — | — | (0.7 | ) | (0.7 | ) | |||||||||||||||||||
All other, including higher selling, general and administrative spending | 3.2 | 0.9 | (0.5 | ) | (0.5 | ) | 0.5 | (2.8 | ) | 0.8 | ||||||||||||||||||
Operating income — fiscal year ended January 2, 2010 | $ | 34.5 | $ | 2.2 | $ | 23.2 | $ | 42.4 | $ | 2.4 | $ | (52.5 | ) | $ | 52.2 | |||||||||||||
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October 1, 2011 | January 1, 2011 | |||||||
Successor | Predecessor | |||||||
(Dollars in millions) | ||||||||
Balance Sheet Data: | ||||||||
Cash and cash equivalents | $ | 62.4 | $ | 72.4 | ||||
Working capital | 174.0 | 178.8 | ||||||
Total assets | 1,098.8 | 732.0 | ||||||
Total debt | 599.9 | 333.9 | ||||||
Total shareholders’ equity | 206.0 | 134.3 |
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Eight Months | One Month | Nine Months | ||||||||||
Ended October 1, | Ended January 28, | Ended October 2, | ||||||||||
2011 | 2011 | 2010 | ||||||||||
Successor | Predecessor | Predecessor | ||||||||||
(Dollars in millions) | ||||||||||||
Cash flow data: | ||||||||||||
Net cash (used in) provided by operating activities | $ | (7.4 | ) | $ | (25.3 | ) | $ | 40.1 | ||||
Net cash used in investing activities | (446.2 | ) | (8.3 | ) | (19.6 | ) | ||||||
Net cash provided by (used in) financing activities | 444.7 | 31.4 | (9.6 | ) |
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January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Predecessor | ||||||||
(Dollars in millions) | ||||||||
Balance Sheet Data: | ||||||||
Cash and cash equivalents | $ | 72.4 | $ | 57.9 | ||||
Working capital | 178.8 | 163.8 | ||||||
Total assets | 732.0 | 699.9 | ||||||
Total debt | 333.9 | 342.6 | ||||||
Total shareholders’ equity | 143.3 | 124.4 |
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Fiscal Year Ended | ||||||||
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Predecessor | ||||||||
(Dollars in millions) | ||||||||
Cash flow data: | ||||||||
Net cash provided by operating activities | $ | 63.2 | $ | 99.0 | ||||
Net cash used in investing activities | (41.3 | ) | (14.6 | ) | ||||
Net cash used in financing activities | (8.1 | ) | (72.7 | ) |
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January 2, | January 3, | |||||||
2010 | 2009 | |||||||
Predecessor | ||||||||
(Dollars in millions) | ||||||||
Balance Sheet Data: | ||||||||
Cash and cash equivalents | $ | 57.9 | $ | 45.7 | ||||
Working capital | 163.8 | 191.3 | ||||||
Total assets | 699.9 | 702.2 | ||||||
Total debt | 342.6 | 413.7 | ||||||
Total shareholders’ equity | 124.4 | 72.6 |
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Fiscal Year Ended | ||||||||
January 2, | January 3, | |||||||
2010 | 2009 | |||||||
Predecessor | ||||||||
(Dollars in millions) | ||||||||
Cash Flow Data: | ||||||||
Net cash provided by operating activities | $ | 99.0 | $ | 59.5 | ||||
Net cash used in investing activities | (14.6 | ) | (31.6 | ) | ||||
Net cash used in financing activities | (72.7 | ) | (12.9 | ) |
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Payments Due by Period | ||||||||||||||||||||
Less than | 1 - 3 | 3 - 5 | More than | |||||||||||||||||
Total | 1 Year | Years | Years | 5 Years | ||||||||||||||||
Debt, including short-term borrowings(1) | $ | 333.6 | $ | 5.6 | $ | 16.9 | $ | 6.9 | $ | 304.2 | ||||||||||
Obligations under third party nonaffiliated operating lease agreements(2) | 40.4 | 9.8 | 14.7 | 10.7 | 5.2 | |||||||||||||||
Capital lease obligations(3) | 0.3 | 0.1 | 0.2 | — | — | |||||||||||||||
Purchase commitments(4) | 92.1 | 88.4 | 3.7 | — | — | |||||||||||||||
Total(5) | $ | 466.4 | $ | 103.9 | $ | 35.5 | $ | 17.6 | $ | 309.4 | ||||||||||
(1) | Excludes estimated cash interest payments of approximately $22.6 million, $44.9 million, $43.5 million and $66.4 million for periods less than 1 year, periods 1 to 3 years, period 3 to 5 years and periods more than 5 years, respectively, based on the assumption that the rate of interest remains unchanged from January 1, 2011 and only required amortization payments are made. | |
(2) | We lease certain manufacturing, warehousing and other facilities and equipment under operating leases. The leases on most of the properties contain renewal provisions. These amounts do not include the obligations under the Equipment Lease Agreement. Lease payments under the Equipment Lease Agreement will be approximately $8.3 million annually, commencing on the Basic Term Commencement Date, which occurred in the fourth quarter of 2011. | |
(3) | Represents rental payments under capital leases with initial or remaining non-cancelable terms in excess of one year. |
(4) | Represents our commitments related to the purchase of raw materials, maintenance, converting services and capital projects, including our obligations associated with the China Capital Expansion Projects (discussed in further detail below). As of January 1, 2011 we have documentary letters of credit related to $5.0 million of raw material purchases that are included in this amount. |
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(5) | See“Other Obligations and Commitments”below for further discussion of other contractual obligations, including unrecognized tax obligations. |
Payments due by period | ||||||||||||||||||||
Less than | 1 - 3 | 3 - 5 | More than | |||||||||||||||||
Total | 1 year | Years | Years | 5 Years | ||||||||||||||||
Debt, including short-term borrowings(1) | $ | 599.9 | $ | 7.0 | $ | 26.9 | $ | 6.0 | $ | 560.0 | ||||||||||
Obligations under third party nonaffiliated operating lease agreements(2) | 8.5 | 3.0 | 4.1 | 1.2 | 0.2 | |||||||||||||||
Capital lease obligations(3) | 0.5 | 0.2 | 0.3 | — | — | |||||||||||||||
Purchase commitments(4) | 140.4 | 70.6 | 69.8 | — | — | |||||||||||||||
Total(5) | $ | 749.3 | $ | 80.8 | $ | 101.1 | $ | 7.2 | $ | 560.2 | ||||||||||
(1) | Excludes estimated cash interest payments of approximately $39.1 million, $88.4 million, $86.9 million and $111.1 million for periods less than 1 year, periods 1 to 3 years, period 3 to 5 years and periods more than 5 years, respectively, based on the assumption that the rate of interest remains unchanged from October 1, 2011 and only required amortization payments are made. |
(2) | We lease certain manufacturing, warehousing and other facilities and equipment under operating leases. The leases on most of the properties contain renewal provisions. These amounts do not include the obligations under the Equipment Lease Agreement. Lease payments under the Equipment Lease Agreement will be approximately $8.3 million annually, commencing on the Basic Term Commencement Date, which occurred in the fourth quarter of 2011. |
(3) | Represents rental payments under capital leases with initial or remaining non-cancelable terms in excess of one year. |
(4) | Represents our commitments related to the purchase of raw materials, maintenance, converting services and capital projects, including our obligations associated with the China Capital Expansion Projects (discussed in further detail below). As of October 1, 2011, we have documentary letters of credit related to $4.6 million of raw material purchases that are included in this amount. |
(5) | See “Other Obligations and Commitments”below for further discussion of other contractual obligations, including unrecognized tax obligations. |
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Three | Twelve | |||||||
Months Ended | Months Ended | |||||||
October 1, | October 1, | |||||||
2011 | 2011 | |||||||
Net loss | $ | (6.8 | ) | $ | (80.0 | ) | ||
Loss from discontinued operations | 3.4 | 5.4 | ||||||
Loss from sale of discontinued operations | 0.5 | 0.7 | ||||||
Net income attributable to noncontrolling interest | — | 0.4 | ||||||
Interest expense, net | 12.9 | 42.6 | ||||||
Income and franchise tax expense (benefit) | 0.8 | 5.3 | ||||||
Depreciation and amortization(a) | 13.7 | 48.5 | ||||||
Adjustments resulting from application of purchase accounting(b) | (0.1 | ) | 18.2 | |||||
Non-cash compensation(c) | 0.2 | 3.8 | ||||||
Special charges(d) | 2.1 | 63.8 | ||||||
Foreign currency and other non-operating (gain) loss, net(e) | 4.5 | 8.4 | ||||||
Severance and relocation expenses(f) | 0.7 | 2.6 | ||||||
Unusual or non-recurring charges (gains), net | — | 0.8 | ||||||
Business optimization expense(g) | 0.4 | 1.3 | ||||||
Management, monitoring and advisory fees(h) | 0.8 | 2.2 | ||||||
Impact of the Spain lease(i) | — | 1.8 | ||||||
Annualized incremental contribution from Cali, Colombia spunmelt lines(j) | 3.3 | 16.7 | ||||||
Public company costs(k) | — | 0.5 | ||||||
Adjusted EBITDA | $ | 36.4 | $ | 143.0 | ||||
(a) | Excludes loan amortization costs that are included in interest expense. |
(b) | Reflects adjustments to inventory related to thestep-up in value pursuant to U.S. GAAP resulting from the application of purchase accounting in relation to the Transactions. |
(c) | Reflects non-cash compensation costs related to employee and director restricted stock, restricted stock units and stock option plans. |
(d) | Reflects costs associated with non-cash asset impairment charges, the restructuring and realignment of manufacturing operations and management organizational structures, pursuit of certain transaction opportunities and other charges included in Special charges, net in our consolidated statement of operations. |
(e) | Reflects (gains) losses from foreign currency translation of intercompany loans, unrealized (gains) losses on interest rate and foreign currency hedging transactions, (gains) losses on sales of assets outside the ordinary course of business, factoring costs and certain other non-operating (gains) losses recorded in Foreign Currency and Other (Gain) Loss, net above as well as (gains) losses from foreign currency transactions recorded in Other Operating (Income) Loss, net above. |
(f) | Reflects severance and relocation expenses not included under Special charges or Acquisition and integration expenses above. |
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(g) | Reflects costs incurred to improve IT and accounting functions, costs associated with establishing new facilities and certain other expenses. |
(h) | Reflects management, monitoring and advisory fees paid under the Sponsor Management Agreement. |
(i) | Reflects the lease payments associated with the Spain Building and Equipment Lease prior to our exercise of the Spain Call Option on January 28, 2011. |
(j) | Represents the annualized earnings of our spunmelt lines in Cali, Colombia for the period the plant was down due to the flooding. The adjustment is based on the actual earnings of the spunmelt lines in Colombia during the third quarter of 2010. |
(k) | Reflects estimated costs associated with having public equity, including director fees and transfer agent fees, annual report costs, incremental costs associated with a separate audit report on internal controls and other costs that are not expected to continue post-closing. Costs that will continue following the exchange offer for the notes related to having public debt have not been adjusted. We are presenting these adjustments for the 2010 fiscal year, but not for any other historical periods. |
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• | Spunmelt technology uses thermoplastic polymers that are melt-spun to manufacture continuous-filament fabrics. |
• | Carded technologies (chemical, thermal and spunlace) involve fibers laid on a conveyor belt, teased apart and consolidated into a web and then bonded with chemical adhesive, heat or high pressure water, respectively. |
• | Air-laid technology uses high-velocity air to condense fibers. | |
• | Wet-laid technology drains fibers through a wire screen similar to papermaking. |
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Volume Demand Growth By Application | Volume Demand Growth By Region(1) | |
Source: ADL Consulting | (1) Represents demand for hygiene, medical and wipes applications. | |
Source: ADL Consulting. |
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Key Product | % of Annual | Projected | ||||||||||
Applications | Revenue | Representative End Products | Key Customers | Growth(1) | ||||||||
Hygiene | 50 | % | Baby diapers, feminine hygiene products, adult incontinence products, and training pants | • Procter & Gamble �� Kimberly-Clark • SCA | 5.4 | % | ||||||
Medical | 16 | % | Surgical gowns and drapes, face masks, shoe covers and wound care sponges and dressings | • Kimberly-Clark • Cardinal Health • 3M • Johnson & Johnson | 5.9 | % | ||||||
Wipes | 14 | % | Personal care and facial wipes, baby wipes, and household wipes | • Procter & Gamble • Clorox • Sysco | 8.7 | % | ||||||
Industrial | 20 | % | Filtration, cable wrap, house wrap, furniture and bedding, and landscape and agricultural applications | • Simmons Bedding • Dow • Chiquita | 6.0 | % |
(1) | Represents projected CAGR for global nonwoven volume demand from 2009 to 2014 for each product application group, according to ADL Consulting. |
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• | In developing regions, such as certain parts of Latin America and Asia, where penetration rates for nonwoven hygiene products such as disposable diapers are low, growth is expected to be driven by population growth and increased disposable product penetration resulting from increasing per capita income. | |
• | In developed regions, growth is expected to be driven by population growth and consumers’ continued demand for enhanced functionality and greater sophistication in their end-products. | |
• | According to ADL Consulting, global nonwoven volume demand for hygiene applications is forecasted to grow at a CAGR of approximately 5.4% from 2009 to 2014. |
• | Growth in the United States is expected to be driven by, the number of medical procedures and demand for enhanced barrier protection, driven by regulations. | |
• | In Europe, where the penetration rate of medical nonwovens of approximately 70% is significantly lower than that of the U.S., growth is expected to be driven by increased use of disposable products as customers switch to nonwovens from higher cost materials that require additional barrier protection. | |
• | In Asia, where a significant portion of labor intensive medical garments are produced, we are well positioned for future growth due to our proximity to regional medical converters, which allows us to respond to customer demands on an accelerated basis relative to our competitors who are not present in the region. | |
• | Domestic consumption in Asia, Latin America, and other developing markets is expected to grow as standards of living improve and these regions adopt the medical practices of more developed nations. | |
• | According to ADL Consulting, global volume demand for nonwoven medical applications is projected to grow at a CAGR of approximately 5.9% from 2009 to 2014. |
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• | We expect to capture growth through the implementation of our proprietary technology and innovation to bring higher capabilities into wipes applications. We will continue to leverage our proprietary Spinlace technology, which meets our customers’ demands for products that offer better value and improved functionality, such as improved strength and absorbency. | |
• | In developed regions, growth is expected to be driven by consumers’ increasing focus on sanitation and disease control and by customers’ continued demand for enhanced functionality and greater sophistication in their end-products. | |
• | In developing regions, where penetration rates for consumer wipes products are low, growth is expected to be driven by increased disposable product penetration resulting from increasing standards of living. | |
• | According to ADL Consulting, global nonwoven volume demand for wipes applications is forecasted to grow at a CAGR of approximately 8.7% from 2009 to 2014. |
• | Growth in industrial products is driven by category-specific demand dynamics. Examples include increased nonwovens consumption as a result of applicable regulations for filtration applications and the United States’ more stringent standards for flame-retardant fabrics in mattresses, for which the Company has been able to utilize its proprietary technologies and processes. | |
• | We are also taking advantage of numerous opportunities to utilize nonwovens in new applications where they have not traditionally been utilized, such as in the roofing and packaging markets. | |
• | According to ADL Consulting, global nonwovens volume demand in certain of the industrial applications which we serve is projected to grow at a CAGR of approximately 6.0% from 2009 to 2014. |
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• | In fiscal 2011, we entered into a firm purchase commitment to acquire a fourth spunmelt line, the New China Hygiene Line, to be installed in China, that will manufacture nonwoven products primarily for the hygiene market. |
• | In fiscal 2010, we entered a purchase commitment and a lease agreement and commenced construction of new spunmelt line sites in Suzhou, China and Waynesboro, Virginia. Commercial production was initiated at these facilities in the third quarter of 2011. | |
• | In the second quarter of 2009, ourstate-of-the-art spunmelt line in San Luis Potosi, Mexico commenced commercial production. The plant expansion increased capacity to meet demand for nonwoven materials in medical and hygiene applications in the U.S. and Mexico. | |
• | In the first quarter of 2008, we initiated commercial production on a new spunmelt line at our facility near Buenos Aires, Argentina. The line is currently fully dedicated to hygiene applications in Latin America. | |
• | In the fourth quarter of 2007, we completed the retrofit of an existing hydroentanglement line at our Benson, North Carolina facility to produce Spinlace products. |
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Location | Principal Function | |
Nonwovens U.S. | ||
Benson, North Carolina | Manufacturing, Warehousing and Research and Development | |
Mooresville, North Carolina | Manufacturing and Research and Development | |
Waynesboro, Virginia | Manufacturing, Warehousing and Research and Development | |
Nonwovens Europe | ||
Bailleul, France | Manufacturing, Marketing, Warehousing, Research and Development and Administration | |
Cuijk, The Netherlands | Manufacturing, Sales, Marketing, Warehousing and Research and Development | |
Tarragona, Spain | Manufacturing, and Warehousing | |
Nonwovens Latin America | ||
Buenos Aires, Argentina | Manufacturing, Sales, Marketing, Warehousing and Administration | |
Cali, Colombia | Manufacturing, Sales, Marketing, Warehousing and Administration | |
San Luis Potosi, Mexico | Manufacturing and Warehousing | |
Nonwovens Asia | ||
Nanhai, China(1) | Manufacturing, Sales, Marketing, Warehousing and Administration | |
Suzhou, China | Manufacturing, Sales, Marketing, Warehousing and Administration | |
Oriented Polymers Segment | ||
Portland (Clackamas), Oregon | Manufacturing | |
North Bay, Ontario | Manufacturing, Marketing, Warehousing and Administration |
(1) | Represents our 80% interest in a joint venture/partnership-type arrangement (our Chinese subsidiary, Nanhai Nanxin) with Nanhai Chemical Fiber Enterprises Co.. In first quarter 2011, Nanhai became a wholly-owned business as result of our completion of our China Noncontrolling Interest Acquisition. |
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Name | Age | Position | ||||
Veronica Hagen | 65 | President & Chief Executive Officer and Director | ||||
Michael Hale | 61 | Executive Vice President & Chief Operating Officer | ||||
Dennis Norman | 37 | Executive Vice President & Chief Financial Officer | ||||
Chinh Chu | 44 | Director | ||||
Anjan Mukherjee | 37 | Director | ||||
Jason Giordano | 32 | Director | ||||
James S. Alder | 63 | Director | ||||
Mark S. Burgess | 52 | Director |
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• | Compensation Philosophy; | |
• | Elements of Compensation; |
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• | Certain Accounting and Tax Considerations; and | |
• | Executive Compensation Program Following the Transactions. |
• | provide an externally competitive and internally equitable base salary and other current compensation necessary to attract, retain and motivate highly qualified executives who possess the skills and talent required for our success; | |
• | compensate executives in recognition of new responsibilities or new positions and motivate each executive to perform at the highest level; | |
• | encourage executive performance to fulfill our annual and long-term business objectives and strategy by balancing short-term and long-term compensation; and | |
• | provide variable compensation opportunities based on our performance and align executive compensation with the interests of stockholders through long-term equity compensation programs. |
• | short-term compensation elements, which may include: base salary, cash payouts under annual incentive plans, equity awards that vest upon granting of the award, and other annual compensation, including perquisites; and | |
• | long-term compensation elements, which may include: grants of restricted stock, restricted stock units, and stock options that vest over a prescribed service period or upon the achievement of annual financial performance targets, and benefits provided under retirement plans and termination agreements. |
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• | Base salary | |
• | Payouts under the Annual Incentive Plan | |
• | Perquisites and other personal benefits |
• | Grants under the 2003 Option Plan | |
• | Grants under the 2005 Stock Plan | |
• | Grants under the 2008 Stock Plan | |
• | Carryover of incentives in the event that performance targets under the 2003 Option Plan and 2005 Stock Plan are not initially achieved |
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Amount | ||||||||||||||||||||||||||||||||||||||||||||
Target | Working | Awarded | Safety | |||||||||||||||||||||||||||||||||||||||||
Bonus | EBITDA | Amount | Capital | for | Performance | Amount | Total | Discretionary | Total | |||||||||||||||||||||||||||||||||||
(% of | Target | Component | Awarded | Component | Working | Component | Awarded | Bonus | Personal | Actual | ||||||||||||||||||||||||||||||||||
Base | Bonus | of Target | for EBITDA | of Target | Capital | of Target | for Safety | Amount | Performance | Bonus | ||||||||||||||||||||||||||||||||||
Name | Salary) | Amount | Bonus | Performance | Bonus | Performance | Bonus | Performance | Awarded | Adjustment | Awarded | |||||||||||||||||||||||||||||||||
Hagen | 100 | % | $ | 754,251 | $ | 490,263 | $ | 527,523 | $ | 188,563 | $ | 377,126 | $ | 75,425 | $ | 49,026 | $ | 953,675 | $ | 63,055 | $ | 1,016,730 | ||||||||||||||||||||||
Hale | 55 | % | $ | 222,381 | $ | 144,548 | $ | 155,533 | $ | 55,595 | $ | 111,190 | $ | 22,238 | $ | 14,455 | $ | 281,178 | $ | 18,591 | $ | 299,769 | ||||||||||||||||||||||
Norman | 55 | % | $ | 174,240 | $ | 113,256 | $ | 121,863 | $ | 43,560 | $ | 87,120 | $ | 17,424 | $ | 11,326 | $ | 220,309 | $ | 89,491 | $ | 309,800 |
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• | Vesting Terms. |
• | Time-Vesting Options. The time-vesting options vest in five equal annual installments beginning on January 28, 2012, subject to the executive’s continued employment with us, but will become fully vested upon a change in control that occurs during his employment with us, or during the 90 days following terminations of his or her employment without “cause” or with “good reason” or due to death or disability. In addition, if executive’s employment is terminated (a) by us without “cause”, (b) by executive as a result of his or her resignation with “good reason” or (c) as a result of the executive’s death or disability, an additional number of these time-vesting options will vest equal to the number that would have vested over the12-month period following the applicable termination date. Any other time-vesting options that remain unvested on termination of employment and do not vest as described above will be forfeited. |
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• | Performance-Vesting Options. The performance-vesting options vest in five equal annual installments beginning on March 31, 2012, subject to the executive’s continued employment with us, and if the free cash flow goals established by Holdings at the time of the grant are achieved for the previous fiscal year, but will become fully vested (to the extent not already vested) upon a change in control if (x) the change in control occurs prior to March 31, 2016, (y) the change in control causes the exit-vesting option (described below) to vest, and (z) at the time of the change in control, Holdings has achieved the applicable cumulative free cash flow goals (as adjusted). In addition, if a performance-vesting option does not vest in a particular fiscal year because the applicable free cash flow goal is not achieved, that portion of the performance-vesting option may vest in that year or in a subsequent year if cumulative free cash flow targets (as adjusted) are achieved. In addition, if an executive’s employment is terminated (a) by us without “cause”, (b) by executive as a result of her or his resignation with “good reason” or (c) as a result of the executive’s death or disability, the portion of the performance-vesting option that would have been eligible to vest on the next March 31 will remain outstanding and eligible to vest, based on actual free cash flow results for the immediately previous fiscal year. Any other performance-vesting options that remain unvested on termination of executive’s employment and do not vest as described above will be forfeited. Free cash flow is defined as Management EBITDA less (1) capital expenditures; (2) capitalized IT costs and (3) restructuring and integration cash payments. Cumulative free cash flow as adjusted with respect to any fiscal year is calculated by adding free cash flow for that fiscal year and any prior fiscal years and adjusting the cumulative free cash flow to apply a 10% penalty for any shortfall in actual cumulative free cash flow relative to the cumulative free cash flow target. Management EBITDA is defined as net income before interest expense, income and franchise taxes and depreciation and amortization, further adjusted to exclude certain non-recurring, non-cash and other specified items. |
• | Exit-Vesting Options. The exit-vesting options will vest on the date, if ever, that our Sponsor receives cash proceeds from its investment in Holdings aggregating in excess of 2.0 times the Sponsor’s cumulative invested capital in Holdings’ securities, and such cash proceeds also result in an annual internal rate of return of at least 20% on its cumulative invested capital in the Holdings’ securities, subject to her or his continued employment with us. In addition, if an executive’s employment is terminated (a) by us without “cause”, (b) by executive as a result of her or his resignation with “good reason” or (c) as a result of the executive’s death or disability, the exit-vesting options will remain outstanding and eligible to vest for 12 months following the applicable termination date. If the exit-vesting options do not vest as described above during the 12 months following such a termination, such options will terminate and be forfeited. |
• | Put and Call Rights. If the executive’s employment is terminated due to death or disability, she or he has the right, subject to certain limitations, for a specified period following the termination date, to cause us to purchase on one occasion all, but not less than all, of the shares of our common stock held by her or him (whether or not acquired through the exercise of an option) at the fair market value of such shares. |
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• | Restrictive Covenants. As a condition of receiving the options, our named executive officers have agreed to certain restrictive covenants, including confidentiality of information, non-competition, and non-solicitation covenants, which are contained in the option agreements pursuant to which the options were granted and are in addition to any other restrictive covenants agreed to by our named executive officers. As described above, we have the right to purchase our named executive officers’ shares of our common stock in the event of breach of these restrictive covenants during the periods covered by the restrictive covenants, or if the named executive officer engages in a competitive activity, which is defined as providing services to one of our competitors at any time (regardless of whether the conduct would violate a restrictive covenant). |
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Change in | ||||||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||||||
Name and Principal | Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||||||||
Position | Year | ($) | ($)(1) | ($)(2)(3) | ($)(2) | ($)(3) | ($) | ($)(4) | ($) | |||||||||||||||||||||||||||
Ms. Hagen | 2010 | $ | 754,251 | $ | 63,055 | $ | 2,201,780 | $ | — | $ | 953,675 | $ | — | $ | 42,360 | $ | 4,015,121 | |||||||||||||||||||
President & Chief Executive | 2009 | 707,005 | 1,218,768 | 615,102 | — | — | — | 57,116 | 2,597,991 | |||||||||||||||||||||||||||
Officer | 2008 | 683,000 | — | 271,500 | — | 478,100 | — | 43,747 | 1,476,347 | |||||||||||||||||||||||||||
Mr. Hale | 2010 | 404,329 | 18,591 | 636,240 | — | 281,178 | — | 18,376 | 1,358,714 | |||||||||||||||||||||||||||
Executive Vice President & | 2009 | 381,160 | 249,560 | 299,563 | 3,201 | — | — | 15,876 | 949,360 | |||||||||||||||||||||||||||
Chief Operating Officer | 2008 | 371,656 | — | 130,861 | 27,788 | 130,080 | — | 18,227 | 678,612 | |||||||||||||||||||||||||||
Mr. Norman | 2010 | 316,800 | 89,491 | 495,060 | 7,200 | 220,309 | — | 14,901 | 1,143,761 | |||||||||||||||||||||||||||
Executive Vice President & | 2009 | 207,039 | 110,162 | 90,582 | 3,209 | — | — | 13,384 | 424,376 | |||||||||||||||||||||||||||
Chief Financial Officer |
(1) | For fiscal 2010, reflects the portion of the bonus awarded under the 2010 AIP as a result of the application of the personal performance modifier. For fiscal 2009, reflects discretionary 2009 bonuses, a portion of which was paid in December 2009 and a portion of which was subject to service requirements and paid in March 2010, as discussed further under “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — December 2009 Discretionary Bonuses.” In 2008, Ms. Hagen was paid a bonus of $650,000 for fiscal 2007 performance, which was guaranteed under the terms of the 2007 CEO Agreement. This amount is not reflected in the table above because it was earned in 2007. |
(2) | Represents the grant date fair value of all stock and option awards for all periods presented as calculated pursuant to ASC 718 awards. In fiscal 2010 and 2009, we achieved maximum performance targets established for all performance-based awards. As a result, amounts presented in the above table represent compensation at the maximum performance level. | |
Compensation for stock and option awards is determined in accordance with generally accepted accounting principles pertaining to share-based payments. For a discussion of terms and assumptions regarding the accounting for restricted shares and options, see Note 2 “Accounting Policies and Financial Statement Information” and Note 14 “Stock Option and Restricted Stock Plans” to the consolidated financial statements for the fiscal year ended January 1, 2011. |
(3) | The non-equity incentive plan compensation for fiscal 2010 represents amounts paid in April 2011 under the 2010 AIP for fiscal 2010 performance prior to the application of the personal performance modifier. The non-equity incentive plan compensation for fiscal 2008 represents amounts paid in April 2009 under the Company’s Annual Incentive Plan for fiscal 2008 performance. In March 2009, the Board of Directors approved a program for certain participants in the Annual Incentive Plan, under which such participants elected to receive all, or a portion, of the cash amounts due under the Annual Incentive Plan in the form of immediately vested restricted stock subject to a minimum two year holding requirement. Ms. Hagen, Mr. Hale and Mr. Norman elected to receive the following amounts of compensation in the form of restricted stock: Ms. Hagen — $478,100; Mr. Hale — $97,560; and Mr. Norman — $12,844. The number of shares issued for such compensation was based on the average closing price of the Company’s stock |
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over the fifteen trading days ending March 31, 2009. Further, in consideration of the election by the executive officers to receive restricted stock in lieu of cash, additional non-cash compensation was provided to the executive officers in the form of restricted shares, which were to vest over a two year period from the grant date and were subject to the same two year holding requirement. The number of additional restricted shares awarded was as follows: Ms. Hagen — 102,377; Mr. Hale — 15,668; and Mr. Norman — 688. The grant date fair value of such awards for 2009 is included as stock awards in the table above. | ||
(4) | All Other Compensation for executive officers in fiscal 2010 is as follows: |
Ms. Hagen | Mr. Hale | Mr. Norman | ||||||||||
Company Contributions to Defined Contribution and Savings Plans | $ | 14,700 | $ | 14,700 | $ | 14,700 | ||||||
Life Insurance Premiums Paid by the Company | 756 | 756 | 756 | |||||||||
Perquisites: | ||||||||||||
Car Usage | 20,789 | — | — | |||||||||
Other Perquisites(a) | 6,115 | 2,920 | 1,070 | |||||||||
Total All Other Compensation | $ | 42,360 | $ | 18,376 | $ | 14,901 | ||||||
(a) | Other perquisites are primarily comprised of subscriptions, seminars and annual credit card fees. Other perquisites for Ms. Hagen also included $5,004 of membership fees and seminar costs in various business organizations. |
Closing | ||||||||||||||||||||||||||||||||||||||||||||||||||
All Other | All Other | Market | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock | Option | Exercise | Price of | Grant | ||||||||||||||||||||||||||||||||||||||||||||||
Awards: | Awards: | or | Securities | Date | ||||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts | Estimated Future Payouts | Number of | Number of | Base | Underlying | Fair | ||||||||||||||||||||||||||||||||||||||||||||
Under Non-equity Incentive | Under Equity Incentive | Shares of | Securities | Price of | Options at | Value of | ||||||||||||||||||||||||||||||||||||||||||||
Plan Awards | Plan Awards | Stock or | Underlying | Option | Date of | Stock and | ||||||||||||||||||||||||||||||||||||||||||||
Grant | Approval | Threshold | Target | Maximum | Threshold | Target | Maximum | Units | Options | Awards | Grant | Option | ||||||||||||||||||||||||||||||||||||||
Name | Date | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(4) | (#) | $(/Sh)(5) | $(/Sh) | Awards | |||||||||||||||||||||||||||||||||||||
Ms. Hagen | 1/3/2010(1) | 3/29/2007 | — | — | — | — | 12,500 | — | — | — | $ | — | — | $ | 180,000 | |||||||||||||||||||||||||||||||||||
1/3/2010(1) | 3/12/2008 | 2,500 | $ | 36,000 | ||||||||||||||||||||||||||||||||||||||||||||||
4/22/2010 | 3/10/2010 | $ | 377,126 | $ | 754,251 | $ | 1,508,502 | |||||||||||||||||||||||||||||||||||||||||||
4/23/2010 | 3/10/2010 | — | — | — | — | — | — | 24,763 | — | — | — | 495,260 | ||||||||||||||||||||||||||||||||||||||
4/23/2010(2) | 2/23/2010 | — | — | — | — | 25,000 | — | — | — | — | — | 500,000 | ||||||||||||||||||||||||||||||||||||||
4/23/2010(3) | 3/10/2010 | — | — | — | 24,763 | 49,526 | — | — | — | — | — | 990,520 | ||||||||||||||||||||||||||||||||||||||
Mr. Hale | 4/22/2010 | 3/10/2010 | 111,190 | 222,381 | 444,762 | |||||||||||||||||||||||||||||||||||||||||||||
4/23/2010 | 3/10/2010 | — | — | — | — | — | — | 10,604 | — | — | — | 212,080 | ||||||||||||||||||||||||||||||||||||||
4/23/2010(3) | 3/10/2010 | — | — | — | 10,604 | 21,208 | — | — | — | — | — | 424,160 | ||||||||||||||||||||||||||||||||||||||
Mr. Norman | 1/3/2010(1) | 5/4/2007 | — | — | — | — | 500 | — | — | — | 6.00 | — | 7,200 | |||||||||||||||||||||||||||||||||||||
4/22/2010 | 3/10/2010 | 87,120 | 174,240 | 348,480 | ||||||||||||||||||||||||||||||||||||||||||||||
4/23/2010 | 3/10/2010 | — | — | — | — | — | — | 8,251 | — | — | — | 165,020 | ||||||||||||||||||||||||||||||||||||||
4/22/2010(3) | 3/10/2010 | — | — | — | 8,251 | 16,502 | — | — | — | — | — | 330,040 |
(1) | The awards shown as granted on January 3, 2010 in the above table are awards made in prior years that were subject to vesting over a multi-year period based on annual performance targets. Because each annual performance target was set at the start of each respective single-year performance period rather than at the start of the multi-year period, consistent with ASC 718, we treat each of those dates as a separate grant date for purposes of measuring the grant date fair value of the respective tranche that is subject to that year’s performance target. Specifically, 12,500 shares reflected in the table for Ms. Hagen represent a portion of the 50,000 performance-based restricted shares awarded to her in 2007 pursuant to her 2007 |
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employment agreement that were subject to vest over a four-year period (see “Narrative Disclosure to Summary Compensation Table and 2010 Grants of Plan-Based Awards — The 2007 CEO Agreement”), and the 2,500 shares reflected in the table represent a portion of the 10,000 restricted shares awarded to her in 2008 that were subject to vest over a four-year period (see “Narrative Disclosure to Summary Compensation Table and 2010 Grants of Plan-Based Awards — Awards Under the 2005 Stock Plan”). The 500 options reflected in the table for Mr. Norman represent the portion of the 2,000 performance-based options with a four-year vesting period awarded to him in 2007. The performance goals for these restricted shares for Ms. Hagen and options for Mr. Norman related to the 2010 fiscal year and were determined in early 2010. Accordingly, as described above, although originally awarded in prior years, in accordance with ASC 718, these restricted shares and options are deemed granted on January 3, 2010, the date when the performance targets with respect to them was determined. All executive officers receiving restricted stock awards were required to pay $.01 per awarded share. |
(2) | The 25,000 restricted shares for Ms. Hagen relate to the portion of the 100,000 restricted shares with a four-year vesting period awarded to her on April 23, 2010, for which the performance target was approved in early 2010. See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — Awards under the 2008 Stock Plan.” |
(3) | Reflects restricted stock units that could vest based on the achievement of 2010 performance targets and the completion of requisite service periods that were awarded in 2010. See “Narrative Disclosure to Summary Compensation Table and 2010 Grants of Plan-Based Awards Table — Awards under the 2008 Stock Plan.” |
(4) | Represent restricted shares awarded in 2010 that contain service-based vesting provisions. See “Narrative Disclosure to Summary Compensation Table and 2010 Grants of Plan-Based Awards Table — Awards under the 2008 Stock Plan.” |
(5) | The exercise price of $6.00 per share represents the exercise price determined in connection with the initial issuance of options under the 2003 Option Plan in fiscal 2003. |
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Paid in | Paid in | |||||||||||||||
December 2009 | March 2010 | Total | ||||||||||||||
Ms. Hagen | $ | 857,178 | $ | 361,590 | $ | 1,218,768 | ||||||||||
Mr. Hale | 124,780 | 124,780 | 249,560 | |||||||||||||
Mr. Norman | 55,081 | 55,081 | 110,162 |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||||||
Equity | Plan | |||||||||||||||||||||||||||||||||||
Incentive | Awards: | |||||||||||||||||||||||||||||||||||
Plan | Market or | |||||||||||||||||||||||||||||||||||
Awards: | Payout | |||||||||||||||||||||||||||||||||||
Equity | Number of | Value of | ||||||||||||||||||||||||||||||||||
Incentive | Market | Unearned | Unearned | |||||||||||||||||||||||||||||||||
Plan Awards: | Number of | Value of | Shares, | Shares, | ||||||||||||||||||||||||||||||||
Number of | Shares or | Shares | Units, | Units, | ||||||||||||||||||||||||||||||||
Number of | Number of | Securities | Units of | or Units | or Other | or Other | ||||||||||||||||||||||||||||||
Securities | Securities | Underlying | Stock | of Stock | Rights | Rights | ||||||||||||||||||||||||||||||
Underlying | Underlying | Unexercised | That | That Have | That Have | That Have | ||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unearned | Option | Option | Have Not | Not | Not | Not | ||||||||||||||||||||||||||||
Options (#) | Options (#) | Options | Exercise | Expiration | Vested | Vested | Vested | Vested | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable(1) | (#) | Price ($) | Date | (#)(2) | ($)(3) | (#)(4) | ($)(3) | |||||||||||||||||||||||||||
Ms Hagen | — | — | — | $ | — | — | 102,185 | $ | 1,634,956 | 56,319 | $ | 901,101 | ||||||||||||||||||||||||
Mr. Hale | — | — | — | — | — | 21,811 | 348,976 | 30,459 | 487,339 | |||||||||||||||||||||||||||
Mr. Norman | — | 2,750 | 250 | 6.00 | 5/11/2012 | 2,583 | 41,328 | 21,659 | 346,544 |
(1) | The vesting dates of options containing service-based vesting and options earned as a result of achieving performance-based targets are as follows: |
Vested at | Vesting | |||||||||||
1/1/2011 | 5/11/2011 | Total | ||||||||||
Mr. Norman | 2,750 | 250 | 3,000 |
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(2) | The vesting dates of restricted shares are as follows: |
Ms. Hagen | Mr. Hale | Mr. Norman | ||||||||||
4/9/2011 | 51,189 | 7,834 | 344 | |||||||||
4/23/2011 | 27,966 | 2,651 | — | |||||||||
6/4/2011 | — | 2,059 | 765 | |||||||||
6/18/2011 | — | 1,982 | 737 | |||||||||
4/10/2012 | 6,250 | 2,651 | — | |||||||||
4/23/2012 | 10,590 | — | — | |||||||||
6/18/2012 | — | 1,983 | 737 | |||||||||
4/23/2012 | 6,190 | 2,651 | — | |||||||||
Total | 102,185 | 21,811 | 2,583 | |||||||||
(3) | Determined based on the closing price of our common stock ($16.00) on January 1, 2011. | |
(4) | All of these shares became immediately vested in connection with the Transactions and were cashed out. |
Option Awards | Stock Awards | |||||||||||||||
Number of | ||||||||||||||||
Shares | Value | Number of Shares | ||||||||||||||
Acquired | Realized on | Acquired on | Value Realized on | |||||||||||||
Upon Exercise | Exercise | Vesting | Vesting | |||||||||||||
Name | (#) | ($)(1) | (#) | ($)(5) | ||||||||||||
Ms Hagen | — | $ | — | $ | 12,500 | (2) | 250,000 | |||||||||
6,250 | (3) | 125,000 | ||||||||||||||
— | — | 4,400 | (4) | 79,200 | ||||||||||||
Mr. Hale | 12,500 | 175,000 | 4,041 | (4) | 74,732 | |||||||||||
Mr. Norman | 5,000 | 70,000 | 1,502 | (4) | 27,773 |
(1) | Shares were valued at the closing price of our common stock on the exercise date. | |
(2) | Vested shares relate to service-based shares granted on April 23, 2007 under the 2004 Restricted Plan. | |
(3) | Vested portion of service-based shares guaranteed pursuant to the terms of the 2007 CEO Agreement. | |
(4) | Represents service-based vesting of awards made to Ms. Hagen, Mr. Hale and Mr. Norman under the 2008 Stock Plan. | |
(5) | Shares were valued at the closing price of our common stock on the vesting date. |
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Number of | ||||||||
Ending Stock Price | Shares Awarded | |||||||
Less than $17.50 | 20,000 | |||||||
$17.50 | 20,000 | |||||||
$22.50 | 40,000 | |||||||
$25.00 | 55,000 | |||||||
$27.50 | 75,000 | |||||||
$30.00 or higher | 100,000 |
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• | certain significant changes in voting control, | |
• | changes in the composition of the Board not approved by two-thirds of the existing Board, | |
• | the consummation of a merger or consolidation of the Company unless (a) the existing security holders continue to own more than 50% of the voting power of the surviving corporation, or (b) the corporate existence of the Company is unaffected and the CEO and directors retain their positions (and the existing directors constitute a majority of the Board), or | |
• | a complete liquidation of the Company or a sale of substantially all of our assets. |
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Severance | Early Vesting of | Early Vesting of | Health | Outplacement | ||||||||||||||||||||
Amount | Restricted Shares(1) | Options(2) | Benefits | Services | Total | |||||||||||||||||||
Ms Hagen | $ | 3,116,754 | $ | 4,428,448 | $ | — | $ | 42,240 | $ | — | $ | 7,587,442 | ||||||||||||
Mr. Hale | 1,419,618 | 952,736 | — | 11,374 | 15,000 | 2,398,728 | ||||||||||||||||||
Mr. Norman | $ | 1,258,216 | 387,872 | 7,500 | 16,631 | 15,000 | 1,685,219 |
(1) | Determined based on the closing price of our common stock ($16.00) on January 1, 2011. | |
(2) | Under the 2003 Option Plan, all unvested options immediately vest in the event of a change in control. Such options are valued at the closing price of the underlying shares as of the last day of the 2010 fiscal year ($16.00), reduced by the exercise price of $6.00 per share required to be paid by the participant. |
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Additional Value | ||||||||||||||||||||
if Termination | ||||||||||||||||||||
without Cause, | ||||||||||||||||||||
for Good Reason | ||||||||||||||||||||
or Due to Death | ||||||||||||||||||||
or Disability | ||||||||||||||||||||
Termination | Termination | During 90 Days | ||||||||||||||||||
without | for “Good | Prior to Change | Change in | Death or | ||||||||||||||||
“Cause” | Reason” | in Control | Control | Disability | ||||||||||||||||
Ms. Hagen: | ||||||||||||||||||||
Cash Severance | $ | 2,278,913 | $ | 2,278,913 | $ | — | $ | — | $ | — | ||||||||||
Acceleration of Equity Awards(1)(2) | 694,000 | 694,000 | N/A | N/A | N/A | |||||||||||||||
Health Benefits | 21,120 | 21,120 | — | — | — | |||||||||||||||
Total | $ | 2,994,033 | $ | 2,994,033 | $ | — | $ | — | $ | — | ||||||||||
Mr. Hale: | ||||||||||||||||||||
Cash Severance | $ | 948,629 | $ | 948,629 | $ | — | $ | — | $ | — | ||||||||||
Acceleration of Equity Awards(2) | — | — | N/A | N/A | N/A | |||||||||||||||
Health Benefits | 17,061 | 17,061 | — | — | — | |||||||||||||||
Total | $ | 965,690 | $ | 965,690 | $ | — | $ | — | $ | — | ||||||||||
Mr. Norman: | ||||||||||||||||||||
Cash Severance | $ | 740,319 | $ | 740,319 | $ | — | $ | — | $ | — | ||||||||||
Acceleration of Equity Awards(2) | — | — | N/A | N/A | N/A | |||||||||||||||
Health Benefits | 24,947 | 24,947 | — | — | — | |||||||||||||||
Total | $ | 765,266 | $ | 765,266 | $ | — | $ | — | $ | — | ||||||||||
(1) | Represents the value of a one-time grant of shares of Holdings Ms. Hagen is entitled to receive under the terms of her 2011 employment agreement. |
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(2) | As described above, the current option award agreements provide for acceleration of vesting of option awards under certain termination scenarios or change in control. However, as the option awards under the current agreements did not exist at the end of the 2010 fiscal year, we are unable to quantify values relating to acceleration of equity awards. |
Changes in | ||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||
Fees Earned or | Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||
Paid in Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||
Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Mr. Hewitt | $ | 41,000 | $ | 106,565 | — | — | — | — | $ | 147,565 | ||||||||||||||||||
Mr. Cavallé(1) | 50,000 | 66,291 | — | — | — | — | 116,291 | |||||||||||||||||||||
Ms. Fessenden | 63,500 | 76,959 | — | — | — | — | 140,459 | |||||||||||||||||||||
Mr. Hall(2) | 52,250 | 41,730 | — | — | — | — | 93,980 | |||||||||||||||||||||
Mr. Ovenden | 106,500 | 59,313 | — | — | — | — | 165,813 | |||||||||||||||||||||
Mr. Volpe(3) | — | 78,625 | — | — | — | — | 78,625 |
(1) | Of the amount reported as Mr. Cavallé’s cash compensation in the table above, $37,500 paid directly to a charitable organization at his request. | |
(2) | Mr. Hall returned to full-time service as a director on April 12, 2010. The compensation provided to Mr. Hall for his services as a director from April 12, 2010 through the 2010 fiscal year end is set forth in this table. | |
(3) | Mr. Volpe ceased being a director upon his death on March 16, 2010. |
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Grant Date | ||||||||
Fair Value of | ||||||||
Award Date | Awards Issued | |||||||
Mr. Hewitt | 1/11/2010 | $ | 84,048 | |||||
Mr. Hewitt | 4/9/2010 | 12,260 | ||||||
Mr. Hewitt | 7/6/2010 | 10,257 | ||||||
Mr. Cavallé | 4/15/2010 | 66,291 | ||||||
Ms. Fessenden | 1/11/2010 | 65,756 | ||||||
Ms. Fessenden | 4/9/2010 | 6,140 | ||||||
Ms. Fessenden | 7/6/2010 | 5,063 | ||||||
Mr. Hall | 4/12/2010 | 41,730 | ||||||
Mr. Ovenden | 1/11/2010 | 59,313 | ||||||
Mr. Volpe | 1/11/2010 | 78,625 |
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Common Stock | ||||||||
Amount and Nature of | Percent of | |||||||
Name and Address of Beneficial Owner | Beneficial Ownership | Class | ||||||
Blackstone Funds(1)(2) | 255,000 | 98.1498 | % | |||||
Veronica M. Hagen(2) | 2,230 | 0.8583 | % | |||||
Michael W. Hale(2) | 630 | 0.2425 | % | |||||
Dennis Norman(2) | 258 | 0.0993 | % | |||||
James S. Alder(2) | — | — | ||||||
Mark S. Burgess(2) | — | — | ||||||
Chinh E. Chu(3) | — | — | ||||||
Anjan Mukherjee(4) | — | — | ||||||
Jason Giordano(5) | — | — | ||||||
All Directors and Executive Officers as a Group(8 persons) | 3,118 | 1.2001 | % |
(1) | Shares of Common Stock shown as beneficially owned by the Blackstone Funds (as hereinafter defined) are held by the following entities: (i) Blackstone Capital Partners (Cayman) V L.P (“BCP Cayman V”) owns 108,381.413 shares of Common Stock representing 41.7161% of the outstanding shares of Common Stock, (ii) Blackstone Capital Partners (Cayman) V-A L.P (“BCP Cayman VA”) owns 96,964.519 shares of Common Stock representing 37.3217% of the outstanding shares of Common Stock, (iii) Blackstone Capital Partners (Cayman) V-AC L.P (“BCP Cayman VAC”) owns 48,799.818 shares of Common Stock |
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representing 18.7831% of the outstanding shares of Common Stock, (iv) Blackstone Family Investment Partnership (Cayman) V L.P (“BFIP”) owns 621.435 shares of Common Stock representing 0.2392% of the outstanding shares of Common Stock and (v) Blackstone Participation Partnership (Cayman) V L.P (“BPP”) owns 232.815 shares of Common Stock representing 0.0896% of the outstanding shares of Common Stock (BCP Cayman V, BCP Cayman VA, BCP Cayman VAC, BFIP and BPP are collectively referred to as the “Blackstone Funds”). The general partner of BCP Cayman V, BCP Cayman VA and BCP Cayman VAC is Blackstone Management Associates (Cayman) V L.P. BCP V GP L.L.C. is a general partner and controlling entity of BFIP, BPP and Blackstone Management Associates (Cayman) V L.P. Blackstone Holdings III L.P. is the managing member and majority interest owner of BCP V GP L.L.C. Blackstone Holdings III L.P. is indirectly controlled by The Blackstone Group L.P. and is owned, directly or indirectly, by Blackstone professionals and The Blackstone Group L.P. The Blackstone Group L.P. is controlled by its general partner, Blackstone Group Management L.L.C., which is in turn wholly owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of such Blackstone entities and Mr. Schwarzman may be deemed to beneficially own the securities beneficially owned by the Blackstone Funds directly or indirectly controlled by it or him, but each disclaims beneficial ownership of such securities except to the extent of its or his indirect pecuniary interest therein. The address of each of the entities listed in this note isc/o The Blackstone Group, L.P., 345 Park Avenue, New York, New York 10154. | ||
(2) | The shareholders agreement of Holdings provides that (i) each share of Common Stock owned by an employee or director will vote in the manner as BCP Cayman V directs, (ii) BCP Cayman V has the right to require the Common Stock owned by an employee or director to participate in any transaction constituting a change of control or any other transaction involving a transfer of Common Stock owned by the Blackstone Funds to a third-party, and (iii) the transfer of Common Stock owned by an employee or director is restricted until the earlier of (x) a change of control and (y) the two year anniversary of an initial public offering. As a result, the Blackstone Funds may be deemed to beneficially own 100% of the outstanding Common Stock. The shares of Common Stock held by employees or directors that may be so deemed beneficially owned by the Blackstone Funds are not included in the number of shares of Common Stock held by the Blackstone Funds presented in the table above. For additional information see “Management” and “Certain Relationships and Related Party Transactions.” | |
(3) | Mr. Chu is a Senior Managing Director in Blackstone’s Private Equity Group. Mr. Chu disclaims beneficial ownership of any shares of Common Stock owned directly or indirectly by the Blackstone Funds, except to the extent of his indirect pecuniary interest therein. Mr. Chu’s address isc/o The Blackstone Group, L.P., 345 Park Avenue, New York, New York 10154. | |
(4) | Mr. Mukherjee is a Senior Managing Director in Blackstone’s Private Equity Group. Mr. Mukherjee disclaims beneficial ownership of any shares of Common Stock owned directly or indirectly by the Blackstone Funds, except to the extent of his indirect pecuniary interest therein. Mr. Mukherjee’s address isc/o The Blackstone Group, L.P., 345 Park Avenue, New York, New York 10154. | |
(5) | Mr. Giordano is a Principal in Blackstone’s Private Equity Group. Mr. Giordano disclaims beneficial ownership of any shares of Common Stock owned directly or indirectly by the Blackstone Funds, except to the extent of his indirect pecuniary interest therein. Mr. Giordano’s address isc/o The Blackstone Group, L.P., 345 Park Avenue, New York, New York 10154. |
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• | the material terms of the transaction, including the type of the transaction and the amount involved; |
• | the identity of the related person and its relationship to us; |
• | the nature of the related person’s interest in the transaction; |
• | the importance of the transaction to the related person and to us; |
• | whether the transaction would impair the judgment of a director or executive officer to act in our best interest; |
• | whether the transaction complies with the terms of agreements governing our material outstanding indebtedness; and |
• | any other relevant facts and circumstances. |
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• | 85% of all of the Borrower’s eligible receivables and 85% of the net orderly liquidation value of all of the Borrower’s eligible inventory (the “Tranche 1 Borrowing Base”); and | |
• | 15% of all of the Borrower’s eligible receivables and 15% of the net orderly liquidation value of all of the Borrower’s eligible inventory (the “Tranche 2 Borrowing Base”). |
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• | incur liens; | |
• | make investments and acquisitions; | |
• | incur indebtedness; | |
• | engage in fundamental changes, including mergers, liquidations and dissolutions; | |
• | enter into speculative hedging arrangements; | |
• | engage in asset sales; | |
• | pay dividends, make distributions, repurchase or redeem capital stock, or make other similar payments in respect of capital stock; | |
• | engage in certain transactions with affiliates; | |
• | enter into burdensome agreements; | |
• | restrict subsidiary distributions and negative pledge clauses; | |
• | make material accounting changes; | |
• | change our fiscal year; | |
• | prepay or modify subordinated debt; | |
• | make material changes in the nature of our business; and | |
• | with respect to our parent, engage in any unpermitted operating activities. |
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• | are general secured senior obligations of the Company; | |
• | are secured on a first-priority lien basis (together with Additional Parity Debt) by the Notes Collateral owned by the Company and on a second-priority lien basis by the ABL Collateral owned by the Company, in each case subject to certain liens permitted by the Indenture; | |
• | are effectively senior to all unsecured Indebtedness of the Company to the extent of the value of the collateral securing the Notes (after giving effect to any senior Lien on the Collateral); | |
• | are effectively senior to the Company’s existing and future Obligations under the ABL Facility to the extent of the value of the Notes Collateral owned by the Company (although the Holders of the Notes will receive proceeds of Notes Collateral only after the payment in full of the Tranche 2Sub-Facility in the event of a foreclosure or in any bankruptcy, insolvency or similar event); | |
• | are effectively subordinated to the Company’s existing and future Obligations under the ABL Facility to the extent of the value of the ABL Collateral owned by the Company; | |
• | are effectively subordinated to any existing or future Indebtedness of the Company that is secured by liens on assets that do not constitute a part of the collateral securing the Notes to the extent of the value of such assets; | |
• | without giving effect to security interests, rank equally in right of payment with all existing and future Senior Indebtedness of the Company, including the Company’s existing and future Obligations under the ABL Facility; | |
• | rank equally in priority as to the Notes Collateral owned by the Company with respect to the Company’s obligations under any Additional Parity Debt incurred after the Issue Date including the Tranche 2Sub-Facility (although the Holders of the Notes will receive proceeds of Notes Collateral only after the payment in full of the Tranche 2Sub-Facility in the event of a foreclosure or in any bankruptcy, insolvency or similar event); |
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• | are structurally subordinated to all existing and future Indebtedness, claims of holders of Preferred Stock and other liabilities of the Company’s Subsidiaries that do not guarantee the Notes; | |
• | are senior in right of payment to any Subordinated Indebtedness of the Company; | |
• | are guaranteed on a senior secured basis by the Guarantors, as described under “— Guarantees”; and | |
• | are subject to registration with the SEC pursuant to a Registration Rights Agreement, as described under “The Exchange Offer.” |
• | is a general senior secured obligation of each Guarantor; | |
• | is secured, on a first-priority lien basis by the assets of such Guarantor constituting Notes Collateral and on a second-priority basis by the assets of such Guarantor constituting ABL Collateral, in each case subject to certain liens permitted by the Indenture; | |
• | is effectively senior to all unsecured Indebtedness of such Guarantor to the extent of the value of the collateral securing such Guarantee (after giving effect to any senior Lien on the Collateral); | |
• | is effectively senior to any borrowings under and the guarantees of the ABL Facility by such Guarantor to the extent of the value of the Notes Collateral owned by such Guarantor (although the Holders of the Notes will receive proceeds of Notes Collateral only after the payment in full of the Tranche 2Sub-Facility in the event of a foreclosure or in any bankruptcy, insolvency or similar event); | |
• | is effectively subordinated to such Guarantor’s Guarantee of the ABL Facility to the extent of the value of the ABL Collateral owned by such Guarantor; | |
• | is effectively subordinated to any existing or future Indebtedness of such Guarantor that is secured by liens on assets that do not constitute a part of the collateral securing the Notes to the extent of the value of such assets; | |
• | without giving effect to security interests, is pari passu in right of payment with all existing and future Senior Indebtedness of each such Guarantor, including such Guarantor’s existing and future Obligations under the ABL Facility; | |
• | ranks equally in priority as to the Notes Collateral of such Guarantor, if any, with respect to such Guarantor’s obligations under any Additional Parity Debt incurred after the Issue Date and the Tranche 2Sub-Facility (although the Holders of the Notes will receive proceeds of Notes Collateral only after the |
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payment in full of the Tranche 2Sub-Facility in the event of a foreclosure or in any bankruptcy, insolvency or similar event); and |
• | is senior in right of payment to all existing and future Subordinated Indebtedness of each such Guarantor. |
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• | the Company and the Guarantors had $560.3 million of indebtedness (excluding indebtedness of non-guarantor Subsidiaries of $40.2 million), all of which is Senior Indebtedness; and |
• | the Company and the Guarantors had $0.1 million of indebtedness secured by assets that are not part of the Collateral; and |
• | the Company had $24.8 million of additional availability under the ABL Facility (which has aggregate commitments of $50.0 million as of the Issue Date), after giving effect to availability under out borrowing base and $10.8 million of outstanding letters of credit. |
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• | it will not take or cause to be taken any action the purpose or effect of which is, or could be, to make any Lien that the Notes Collateral Agent has (on behalf of the Holders of the Notes and holders of Additional Parity Debt) on the ABL Collateralpari passuwith, or to give the Notes Collateral Agent, the Trustee, the Holders of the Notes or the holders of Additional Parity Debt any preference or priority relative to, any Lien that the holders of any ABL Lenders Debt secured by any ABL Collateral have with respect to such ABL Collateral; | |
• | it will not challenge or question in any proceeding the validity or enforceability of any first-priority security interest in the ABL Collateral, the validity, attachment, perfection or priority of any lien held by the holders of any ABL Lenders Debt secured by any ABL Collateral, or the validity or enforceability of the priorities, rights or duties established by or other provisions of the Intercreditor Agreement; | |
• | it will not take or cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the ABL Collateral by the ABL Collateral Agent or the holders of any ABL Lenders Debt secured by such ABL Collateral; | |
• | it will have no right to (A) direct the ABL Collateral Agent or any holder of any ABL Lenders Debt secured by any ABL Collateral to exercise any right, remedy or power with respect to such ABL Collateral or (B) consent to the exercise by the ABL Collateral Agent or any holder of any ABL Lenders Debt secured by the ABL Collateral of any right, remedy or power with respect to such ABL Collateral; | |
• | it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the ABL Collateral Agent or any holder of any ABL Lenders Debt secured by any ABL Collateral seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to, and neither the ABL Collateral Agent nor any holders of any ABL Lenders Debt secured by any ABL Collateral will be liable for, any action taken or omitted to be taken by the ABL Collateral Agent or such lenders with respect to such ABL Collateral; | |
• | it will not seek, and will waive any right, to have any ABL Collateral or any part thereof marshaled upon any foreclosure or other disposition of such ABL Collateral; and | |
• | it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of the Intercreditor Agreement. |
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• | to enable the disposition of such property or assets (other than any such disposition to the Company or a Guarantor) to the extent not prohibited under the covenant described under “— Repurchase at the Option of Holders — Asset Sales”; | |
• | in the case of a Guarantor that is released from its Guarantee, the release of the property and assets of such Guarantor; or | |
• | as described under “— Amendment, Supplement and Waiver” below. |
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Year | Percentage | |||
2015 | 103.875 | % | ||
2016 | 101.938 | % | ||
2017 and thereafter | 100.000 | % |
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• | if any change in law or in currently prevailing interpretations of the Staff of the SEC do not permit us to effect an exchange offer; | |
• | if an exchange offer is not consummated within the registration period contemplated by the registration rights agreement; | |
• | if, in certain circumstances, certain holders of unregistered exchange notes so request; or | |
• | if in the case of any holder that participates in an exchange offer, such holder does not receive exchange notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such holder as an affiliate of ours within the meaning of the Securities Act). |
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• | you are not an affiliate of the Issuer or any guarantor within the meaning of Rule 405 of the Securities Act; | |
• | you have no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of the exchange notes in violation of the Securities Act; | |
• | you are not engaged in, and do not intend to engage in, a distribution of the exchange notes; and | |
• | you are acquiring the exchange notes in the ordinary course of your business. |
• | you are not an affiliate of the Issuer or any guarantor within the meaning of Rule 405 under the Securities Act; | |
• | you do not have an arrangement or understanding with any person to participate in a distribution of the exchange notes; | |
• | you are not engaged in, and do not intend to engage in, a distribution of the exchange notes; and | |
• | you are acquiring the exchange notes in the ordinary course of your business. |
• | you cannot rely on the position of the SEC set forth in Morgan Stanley & Co. Incorporated (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling, dated July 2, 1993, or similar no-action letters; and | |
• | in the absence of an exception from the position stated immediately above, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. |
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• | to delay accepting for exchange any outstanding notes (if the Issuer amends or extends the exchange offer); |
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• | to extend the exchange offer or to terminate the exchange offer if any of the conditions set forth below under “— Conditions to the Exchange offer” have not been satisfied, by giving written notice of such delay, extension or termination to the exchange agent; and | |
• | subject to the terms of the applicable registration rights agreement, to amend the terms of the exchange offer in any manner. |
• | the exchange offer or the making of any exchange by a holder violates any applicable law or interpretation of the SEC; or | |
• | any action or proceeding has been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer that, in their judgment, would reasonably be expected to impair their ability to proceed with the exchange offer. |
• | the representations described under “— Purpose and Effect of the Exchange offer,” “— Procedures for Tendering Outstanding Notes” and “Plan of Distribution;” or | |
• | any other representations as may be reasonably necessary under applicable SEC rules, regulations, or interpretations to make available to the Issuer an appropriate form for registration of the exchange notes under the Securities Act. |
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• | complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal, have the signature(s) on the letter of transmittal guaranteed if required by the letter of transmittal and mail or deliver such letter of transmittal or facsimile thereof to the exchange agent at the address set forth below under “— Exchange Agent” prior to the expiration date; or | |
• | comply with DTC’s Automated Tender Offer Program procedures described below. |
• | the exchange agent must receive certificates for outstanding notes along with the letter of transmittal prior to the expiration date; | |
• | the exchange agent must receive a timely confirmation of book-entry transfer of outstanding notes into the exchange agent’s account at DTC according to the procedures for book-entry transfer described below or a properly transmitted agent’s message prior to the expiration date; or | |
• | you must comply with the guaranteed delivery procedures described below. |
• | make appropriate arrangements to register ownership of the outstanding notes in your name; or | |
• | obtain a properly completed bond power from the registered holder of outstanding notes. |
• | by a registered holder of the outstanding notes who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” in the letter of transmittal; or | |
• | for the account of an eligible guarantor institution. |
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• | DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering outstanding notes that are the subject of the book-entry confirmation; | |
• | the participant has received and agrees to be bound by the terms of the letter of transmittal, or in the case of an agent’s message relating to guaranteed delivery, that such participant has received and agrees to be bound by the applicable notice of guaranteed delivery; and | |
• | the Issuer may enforce that agreement against such participant. |
• | outstanding notes or a timely book-entry confirmation of such outstanding notes into the exchange agent’s account at the book-entry transfer facility; and | |
• | a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message. |
• | you are not an affiliate of the Issuer or the guarantors within the meaning of Rule 405 under the Securities Act; | |
• | you do not have an arrangement or understanding with any person or entity to participate in a distribution of the exchange notes; and | |
• | you are acquiring the exchange notes in the ordinary course of your business. |
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• | the tender is made through an eligible guarantor institution; | |
• | prior to the expiration date, the exchange agent receives from such eligible guarantor institution either a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail, or hand delivery or a properly transmitted agent’s message and | |
• | notice of guaranteed delivery, that (1) sets forth your name and address, the certificate number(s) of such outstanding notes and the principal amount of outstanding notes tendered; (2) states that the tender is being made thereby; and (3) guarantees that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal, or facsimile thereof, together with the outstanding |
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notes or a book-entry confirmation, and any other documents required by the letter of transmittal, will be deposited by the eligible guarantor institution with the exchange agent; and |
• | the exchange agent receives the properly completed and executed letter of transmittal or facsimile thereof, as well as certificate(s) representing all tendered outstanding notes in proper form for transfer or a book-entry confirmation of transfer of the outstanding notes into the exchange agent’s account at DTC, and all other documents required by the letter of transmittal within three New York Stock Exchange trading days after the expiration date. |
• | the exchange agent must receive a written notice, which may be by telegram, telex, facsimile or letter, of withdrawal at its address set forth below under “— Exchange Agent;” or | |
• | you must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system. |
• | specify the name of the person who tendered the outstanding notes to be withdrawn; | |
• | identify the outstanding notes to be withdrawn, including the certificate numbers and principal amount of the outstanding notes; and | |
• | where certificates for outstanding notes have been transmitted, specify the name in which such outstanding notes were registered, if different from that of the withdrawing holder. |
• | the serial numbers of the particular certificates to be withdrawn; and | |
• | a signed notice of withdrawal with signatures guaranteed by an eligible institution unless you are an eligible guarantor institution. |
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By Mail or Overnight Courier: | By Facsimile: (302) 636-4139 | By Hand Delivery: | ||
Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE19890-1615 Attention: Sam Hamed Telephone:(302) 636-6181 | To Confirm by Telephone: (302) 636-6181 | Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, DE 19890-1615 Attention: Sam Hamed Telephone: (302) 636-6181 |
• | certificates representing outstanding notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered; | |
• | tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or | |
• | a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange |
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• | as set forth in the legend printed on the outstanding notes as a consequence of the issuances of the outstanding notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and | |
• | as otherwise set forth in the offering memorandum distributed in connection with the private offering of the outstanding notes. |
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Page | ||||
Audited Consolidated Financial Statements of Polymer Group, Inc.: | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
Financial Statement Schedule | ||||
F-78 | ||||
Unaudited Financial Statements of Polymer Group, Inc.: | ||||
F-79 | ||||
F-80 | ||||
F-81 | ||||
F-82 | ||||
F-83 | ||||
F-84 |
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January 1, 2011 | January 2, 2010 | |||||||
(In thousands, except share data) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 72,355 | $ | 57,894 | ||||
Accounts receivable, net | 121,747 | 122,706 | ||||||
Inventories, net | 105,180 | 99,671 | ||||||
Deferred income taxes | 4,640 | 3,605 | ||||||
Other current assets | 42,338 | 34,012 | ||||||
Assets of discontinued operations | 18,805 | 17,096 | ||||||
Total current assets | 365,065 | 334,984 | ||||||
Property, plant and equipment, net | 323,134 | 328,072 | ||||||
Intangibles and loan acquisition costs, net | 7,533 | 8,937 | ||||||
Deferred income taxes | 916 | 889 | ||||||
Other noncurrent assets | 35,329 | 27,029 | ||||||
Total assets | $ | 731,977 | $ | 699,911 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term borrowings | $ | 2,112 | $ | 3,690 | ||||
Accounts payable and accrued liabilities | 173,859 | 143,162 | ||||||
Income taxes payable | 1,932 | 4,754 | ||||||
Current portion of long-term debt | 3,609 | 16,921 | ||||||
Liabilities of discontinued operations | 4,793 | 2,615 | ||||||
Total current liabilities | 186,305 | 171,142 | ||||||
Long-term debt | 328,170 | 322,021 | ||||||
Deferred income taxes | 20,067 | 21,425 | ||||||
Other noncurrent liabilities | 54,183 | 60,928 | ||||||
Total liabilities | 588,725 | 575,516 | ||||||
Commitments and contingencies Polymer Group, Inc. shareholders’ equity: | ||||||||
Preferred stock — 0 shares issued and outstanding | — | — | ||||||
Class A common stock — 21,326,678 and 20,875,378 issued and outstanding at January 1, 2011 and January 2, 2010, respectively | 213 | 209 | ||||||
Class B convertible common stock — 78,203 and 83,807 shares issued and outstanding at January 1, 2011 and January 2, 2010, respectively | 1 | 1 | ||||||
Class C convertible common stock — 24,319 and 24,319 shares issued and outstanding at January 1, 2011 and January 2, 2010, respectively | — | — | ||||||
Class D convertible common stock — 0 shares issued and outstanding | — | — | ||||||
Class E convertible common stock — 0 shares issued and outstanding | — | — | ||||||
Additional paid-in capital | 216,888 | 211,768 | ||||||
Retained deficit | (121,819 | ) | (132,226 | ) | ||||
Accumulated other comprehensive income | 39,053 | 36,605 | ||||||
Total Polymer Group, Inc. shareholders’ equity | 134,336 | 116,357 | ||||||
Noncontrolling interests | 8,916 | 8,038 | ||||||
Total equity | 143,252 | 124,395 | ||||||
Total liabilities and equity | $ | 731,977 | $ | 699,911 | ||||
F-3
Table of Contents
Fiscal Year Ended | ||||||||||||
January 1, | January 2, | January 3, | ||||||||||
2011 | 2010 | 2009 | ||||||||||
(In thousands, except per share data) | ||||||||||||
Net sales | $ | 1,106,211 | $ | 850,605 | $ | 1,026,194 | ||||||
Cost of goods sold | 896,319 | 667,255 | 856,622 | |||||||||
Gross profit | 209,892 | 183,350 | 169,572 | |||||||||
Selling, general and administrative expenses | 141,461 | 113,318 | 115,474 | |||||||||
Special charges, net | 17,993 | 20,763 | 20,088 | |||||||||
Acquisition and integration expenses | 1,742 | 1,789 | — | |||||||||
Other operating (income) loss, net | (815 | ) | (4,736 | ) | 4,960 | |||||||
Operating income | 49,511 | 52,216 | 29,050 | |||||||||
Other expense (income): | ||||||||||||
Interest expense, net | 31,728 | 26,712 | 31,067 | |||||||||
Gain on reacquisition of debt | — | (2,431 | ) | — | ||||||||
Loss on extinguishment of debt | — | 5,088 | — | |||||||||
Foreign currency and other loss, net | 1,454 | 5,246 | 526 | |||||||||
Income (loss) before income tax expense and discontinued operations | 16,329 | 17,601 | (2,543 | ) | ||||||||
Income tax expense | 4,534 | 8,578 | 7,008 | |||||||||
Income (loss) from continuing operations | 11,795 | 9,023 | (9,551 | ) | ||||||||
Discontinued operations: | ||||||||||||
(Loss) income from operations of discontinued business | (765 | ) | 2,113 | 8,291 | ||||||||
Gain on sale of discontinued operations | — | 6,802 | — | |||||||||
(Loss) income from discontinued operations | (765 | ) | 8,915 | 8,291 | ||||||||
Net income (loss) | 11,030 | 17,938 | (1,260 | ) | ||||||||
Net (income) loss attributable to noncontrolling interests | (623 | ) | 2,137 | 5,969 | ||||||||
Net income attributable to Polymer Group, Inc. | $ | 10,407 | $ | 20,075 | $ | 4,709 | ||||||
Earnings per common share attributable to Polymer Group, Inc. common shareholders: | ||||||||||||
Basic: | ||||||||||||
Continuing operations | $ | 0.54 | $ | 0.57 | $ | (0.19 | ) | |||||
Discontinued operations | (0.04 | ) | 0.45 | 0.43 | ||||||||
Basic | $ | 0.50 | $ | 1.02 | $ | 0.24 | ||||||
Diluted: | ||||||||||||
Continuing operations | $ | 0.53 | $ | 0.57 | $ | (0.19 | ) | |||||
Discontinued operations | (0.04 | ) | 0.45 | 0.43 | ||||||||
Diluted | $ | 0.49 | $ | 1.02 | $ | 0.24 | ||||||
F-4
Table of Contents
Polymer Group, Inc. Shareholders | ||||||||||||||||||||||||||||||||
Accumulated | Total Polymer | |||||||||||||||||||||||||||||||
Other | Group, Inc. | |||||||||||||||||||||||||||||||
Common Stock | Additional | Retained | Comprehensive | Shareholders | Noncontrolling | |||||||||||||||||||||||||||
Shares | Amount | Paid-in Capital | Deficit | Income (Loss) | Equity | Interest | Total Equity | |||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||||||
Balance — December 29, 2007 | 19,407 | $ | 194 | $ | 193,410 | $ | (157,010 | ) | $ | 44,147 | $ | 80,741 | $ | 17,101 | $ | 97,842 | ||||||||||||||||
Net income | — | — | — | 4,709 | — | 4,709 | (5,969 | ) | (1,260 | ) | ||||||||||||||||||||||
Cash flow hedge adjustment, net of reclassification adjustments | — | — | — | — | (194 | ) | (194 | ) | — | (194 | ) | |||||||||||||||||||||
Compensation recognized on share-based awards | 147 | 1 | 3,201 | — | — | 3,202 | — | 3,202 | ||||||||||||||||||||||||
Surrender of shares to satisfy employee withholding tax obligations | (46 | ) | — | (579 | ) | — | — | (579 | ) | — | (579 | ) | ||||||||||||||||||||
Exercise of stock options | 11 | — | 27 | — | — | 27 | — | 27 | ||||||||||||||||||||||||
Employee benefit plans, net of tax | — | — | — | — | (15,152 | ) | (15,152 | ) | — | (15,152 | ) | |||||||||||||||||||||
Currency translation adjustments, net of tax | — | — | — | — | (11,001 | ) | (11,001 | ) | (246 | ) | (11,247 | ) | ||||||||||||||||||||
Balance — January 3, 2009 | 19,519 | 195 | 196,059 | (152,301 | ) | 17,800 | 61,753 | 10,886 | 72,639 | |||||||||||||||||||||||
Net income | — | — | — | 20,075 | — | 20,075 | (2,137 | ) | 17,938 | |||||||||||||||||||||||
Cash flow hedge adjustment, net of reclassification adjustments | — | — | — | — | 985 | 985 | — | 985 | ||||||||||||||||||||||||
Compensation recognized on share-based awards | 501 | 5 | 4,035 | — | — | 4,040 | — | 4,040 | ||||||||||||||||||||||||
Surrender of shares to satisfy employee withholding tax obligations | (86 | ) | — | (345 | ) | — | — | (345 | ) | — | (345 | ) | ||||||||||||||||||||
Issuance of Class A common shares | 1,049 | 10 | 14,443 | — | — | 14,453 | — | 14,453 | ||||||||||||||||||||||||
Acquisition of noncontrolling interest | — | — | (2,424 | ) | — | (1,043 | ) | (3,467 | ) | (616 | ) | (4,083 | ) | |||||||||||||||||||
Recognition of tax benefits from utilization of preconfirmation net operating loss carryforwards and other tax attributes | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Employee benefit plans, net of tax | — | — | — | — | 12,792 | 12,792 | — | 12,792 | ||||||||||||||||||||||||
Currency translation adjustments, net of tax | — | — | — | — | 6,071 | 6,071 | (95 | ) | 5,976 | |||||||||||||||||||||||
Balance — January 2, 2010 | 20,983 | 210 | 211,768 | (132,226 | ) | 36,605 | 116,357 | 8,038 | 124,395 | |||||||||||||||||||||||
Net income | — | — | — | 10,407 | — | 10,407 | 623 | 11,030 | ||||||||||||||||||||||||
Cash flow hedge adjustment, net of reclassification adjustments | — | — | — | — | 1,595 | 1,595 | — | 1,595 | ||||||||||||||||||||||||
Compensation recognized on share-based awards | 453 | 4 | 6,707 | — | — | 6,711 | — | 6,711 | ||||||||||||||||||||||||
Surrender of shares to satisfy employee withholding tax obligations | (123 | ) | — | (2,026 | ) | — | — | (2,026 | ) | — | (2,026 | ) | ||||||||||||||||||||
Exercise of stock options | 116 | — | 439 | — | — | 439 | — | 439 | ||||||||||||||||||||||||
Employee benefit plans, net of tax | — | — | — | — | 5,735 | 5,735 | — | 5,735 | ||||||||||||||||||||||||
Currency translation adjustments, net of tax | — | — | — | — | (4,882 | ) | (4,882 | ) | 255 | (4,627 | ) | |||||||||||||||||||||
Balance — January 1, 2011 | 21,429 | $ | 214 | $ | 216,888 | $ | (121,819 | ) | $ | 39,053 | $ | 134,336 | $ | 8,916 | $ | 143,252 | ||||||||||||||||
F-5
Table of Contents
Fiscal Year Ended | ||||||||||||
January 1, | January 2, | January 3, | ||||||||||
2011 | 2010 | 2009 | ||||||||||
(In thousands) | ||||||||||||
Net income (loss) | $ | 11,030 | $ | 17,938 | $ | (1,260 | ) | |||||
Other comprehensive income (loss), net of tax | ||||||||||||
Unrealized currency translation adjustments | (4,627 | ) | 5,976 | (11,247 | ) | |||||||
Employee postretirement benefits | 5,735 | 12,792 | (15,152 | ) | ||||||||
Cash flow hedge adjustments | 1,595 | 985 | (194 | ) | ||||||||
Total other comprehensive (loss) income, net of tax | 2,703 | 19,753 | (26,593 | ) | ||||||||
Comprehensive income (loss) | 13,733 | 37,691 | (27,853 | ) | ||||||||
Comprehensive (loss) income attributable to noncontrolling interests | (878 | ) | 2,232 | 6,215 | ||||||||
Comprehensive income (loss) attributable to Polymer Group, Inc. | $ | 12,855 | $ | 39,923 | $ | (21,638 | ) | |||||
F-6
Table of Contents
Fiscal Year Ended | ||||||||||||
January 1, | January 2, | January 3, | ||||||||||
2011 | 2010 | 2009 | ||||||||||
(In thousands) | ||||||||||||
Operating activities: | ||||||||||||
Net income attributable to Polymer Group, Inc. | $ | 10,407 | $ | 20,075 | $ | 4,709 | ||||||
Adjustments to reconcile net income attributable to Polymer Group, Inc. to net cash provided by operating activities: | ||||||||||||
Asset impairment charges | 744 | 3,444 | 13,096 | |||||||||
Deferred income taxes | (3,682 | ) | (624 | ) | (1,724 | ) | ||||||
Depreciation and amortization | 46,353 | 50,370 | 52,294 | |||||||||
(Gains) losses on sale of assets, net | (391 | ) | (8,210 | ) | 36 | |||||||
Loss on derivatives and other financial instruments | 2,192 | 777 | — | |||||||||
Gain on reacquisition of debt | — | (2,431 | ) | — | ||||||||
Noncash write-off of loan acquisition costs | — | 3,483 | — | |||||||||
Noncash compensation | 4,681 | 3,690 | 2,622 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable, net | (3,632 | ) | 17,151 | 1,038 | ||||||||
Inventories, net | (7,809 | ) | 13,034 | 11,505 | ||||||||
Other current assets | (8,215 | ) | (685 | ) | 1,325 | |||||||
Accounts payable and accrued liabilities | 30,555 | (2,670 | ) | (6,253 | ) | |||||||
Other, net | (7,959 | ) | 1,605 | (19,190 | ) | |||||||
Net cash provided by operating activities | 63,244 | 99,009 | 59,458 | |||||||||
Investing activities: | ||||||||||||
Purchases of property, plant and equipment | (45,183 | ) | (43,477 | ) | (34,460 | ) | ||||||
Proceeds from sale of assets | 4,363 | 33,342 | 3,424 | |||||||||
Acquisition of noncontrolling interest | — | (4,083 | ) | — | ||||||||
Acquisition of intangibles and other | (456 | ) | (349 | ) | (590 | ) | ||||||
Net cash used in investing activities | (41,276 | ) | (14,567 | ) | (31,626 | ) | ||||||
Financing activities: | ||||||||||||
Proceeds from other long-term debt | 28,086 | 19,519 | 32,680 | |||||||||
Proceeds from short-term borrowings | 17,859 | 18,843 | 20,129 | |||||||||
Repayment of term loan | (3,999 | ) | (60,931 | ) | (24,100 | ) | ||||||
Repayment of other long-term debt | (30,880 | ) | (6,156 | ) | (29,768 | ) | ||||||
Repayment of short-term borrowings | (19,425 | ) | (27,136 | ) | (11,828 | ) | ||||||
Loan acquisition costs | (166 | ) | (4,492 | ) | — | |||||||
Reacquisition of debt | — | (12,298 | ) | — | ||||||||
Other financing, net | 439 | — | 27 | |||||||||
Net cash used in financing activities | (8,086 | ) | (72,651 | ) | (12,860 | ) | ||||||
Effect of exchange rate changes on cash | 579 | 385 | (952 | ) | ||||||||
Net increase in cash and cash equivalents | 14,461 | 12,176 | 14,020 | |||||||||
Cash and cash equivalents at beginning of period | 57,894 | 45,718 | 31,698 | |||||||||
Cash and cash equivalents at end of period | $ | 72,355 | $ | 57,894 | $ | 45,718 | ||||||
F-7
Table of Contents
Note 1. | Background and Basis of Consolidation |
Note 2. | Accounting Policies and Financial Statement Information |
F-8
Table of Contents
F-9
Table of Contents
F-10
Table of Contents
F-11
Table of Contents
F-12
Table of Contents
Fiscal Year Ended January 1, 2011 | ||||||||||||
Before- | Tax | Net-of- | ||||||||||
Tax | (Expense) | Tax | ||||||||||
Amount | or Benefit | Amount | ||||||||||
Foreign currency translation adjustments | $ | (4,627 | ) | $ | — | $ | (4,627 | ) | ||||
Defined benefit pension plans | 7,741 | (2,006 | ) | 5,735 | ||||||||
Cash flow hedge adjustments | 2,360 | (765 | ) | 1,595 | ||||||||
Other comprehensive income | $ | 5,474 | $ | (2,771 | ) | $ | 2,703 | |||||
F-13
Table of Contents
Fiscal Year Ended January 2, 2010 | ||||||||||||
Before- | Tax | Net-of- | ||||||||||
Tax | (Expense) | Tax | ||||||||||
Amount | or Benefit | Amount | ||||||||||
Foreign currency translation adjustments | $ | 5,976 | $ | — | $ | 5,976 | ||||||
Defined benefit pension plans | 12,869 | (77 | ) | 12,792 | ||||||||
Cash flow hedge adjustments | 1,126 | (141 | ) | 985 | ||||||||
Other comprehensive income | $ | 19,971 | $ | (218 | ) | $ | 19,753 | |||||
Fiscal Year Ended January 3, 2009 | ||||||||||||
Before- | Tax | Net-of- | ||||||||||
Tax | (Expense) | Tax | ||||||||||
Amount | or Benefit | Amount | ||||||||||
Foreign currency translation adjustments | $ | (11,247 | ) | $ | — | $ | (11,247 | ) | ||||
Defined benefit pension plans | (14,612 | ) | (540 | ) | (15,152 | ) | ||||||
Cash flow hedge adjustments | (194 | ) | — | (194 | ) | |||||||
Other comprehensive income | $ | (26,053 | ) | $ | (540 | ) | $ | (26,593 | ) | |||
2010 | 2009 | 2008 | ||||||||||
Income (loss): | ||||||||||||
Income (loss) from continuing operations | $ | 11,795 | $ | 9,023 | $ | (9,551 | ) | |||||
Income from discontinued operations | (765 | ) | 8,915 | 8,291 | ||||||||
Net (income) loss attributable to noncontrolling interests | (623 | ) | 2,137 | 5,969 | ||||||||
Effect of dilutive securities — convertible securities and share-based awards | — | — | — | |||||||||
Net income attributable to Polymer Group, Inc. | $ | 10,407 | $ | 20,075 | $ | 4,709 | ||||||
Outstanding shares: | ||||||||||||
Weighted average common shares outstanding | 20,785 | 19,601 | 19,261 | |||||||||
Effect of dilutive securities — convertible securities and share-based awards | 411 | 83 | 71 | |||||||||
Weighted average common shares outstanding — assuming dilution | 21,196 | 19,684 | 19,332 |
F-14
Table of Contents
F-15
Table of Contents
F-16
Table of Contents
Note 3. | Special Charges, Net |
2010 | 2009 | 2008 | ||||||||||
Restructuring and plant realignment costs | $ | 9,098 | $ | 16,898 | $ | 6,388 | ||||||
Asset impairment charges | 744 | 3,444 | 13,096 | |||||||||
Other costs | 8,151 | 421 | 604 | |||||||||
$ | 17,993 | $ | 20,763 | $ | 20,088 | |||||||
2010 | 2009 | 2008 | ||||||||||
Balance accrued at beginning of year | $ | 2,713 | $ | 2,672 | $ | 5,903 | ||||||
Restructuring and plant realignment costs: | ||||||||||||
First Quarter | 4,217 | 1,284 | 1,352 | |||||||||
Second Quarter | 2,766 | 4,092 | 1,398 | |||||||||
Third Quarter | 1,480 | 1,266 | 1,512 | |||||||||
Fourth Quarter | 635 | 10,256 | 2,126 | |||||||||
Total | 9,098 | 16,898 | 6,388 | |||||||||
Cash payments | (10,181 | ) | (16,857 | ) | (9,739 | ) | ||||||
Adjustments | 96 | — | 120 | |||||||||
Balance accrued at end of year | $ | 1,726 | $ | 2,713 | $ | 2,672 | ||||||
F-17
Table of Contents
F-18
Table of Contents
F-19
Table of Contents
Note 4. | Acquisitions |
F-20
Table of Contents
Accounts receivable (approximates contractual value) | $ | 21,880 | ||
Inventories | 9,420 | |||
Other current assets | 307 | |||
Property, plant and equipment | 488 | |||
Customer relationships | 858 | |||
Goodwill | 2,542 | |||
Indemnification asset | 3,658 | |||
Total assets | 39,153 | |||
Accounts payable and accrued liabilities | 20,554 | |||
Current portion of long-term debt | 145 | |||
Long-term debt | 343 | |||
Other noncurrent liabilities | 3,658 | |||
Total purchase price | $ | 14,453 | ||
F-21
Table of Contents
January 2, 2010 | January 3, 2009 | |||||||||||||||
As Reported | Proforma | As Reported | Proforma | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Net Sales | $ | 850,605 | $ | 931,378 | $ | 1,026,194 | $ | 1,108,497 | ||||||||
Net earnings attributable to Polymer Group, Inc. | 20,075 | 15,208 | 4,709 | (654 | ) | |||||||||||
Net earnings per share: | ||||||||||||||||
Basic | $ | 1.02 | $ | 0.74 | $ | 0.24 | $ | (0.03 | ) | |||||||
Diluted | $ | 1.02 | $ | 0.73 | $ | 0.24 | $ | (0.03 | ) | |||||||
Note 5. | Discontinued Operations |
F-22
Table of Contents
Fiscal Year Ended | ||||||||||||
January 1, 2011 | January 2, 2010 | January 3, 2009 | ||||||||||
Net sales | $ | 39,194 | $ | 67,970 | $ | 119,443 | ||||||
Pre-tax (loss) income | $ | (473 | ) | $ | 1,843 | $ | 8,144 | |||||
Income tax expense (benefit) | 292 | (270 | ) | (147 | ) | |||||||
Net (loss) income | $ | (765 | ) | $ | 2,113 | $ | 8,291 | |||||
F-23
Table of Contents
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Accounts receivable, net | $ | 5,812 | $ | 5,270 | ||||
Inventories | 8,285 | 7,149 | ||||||
Property, plant and equipment, net | 2,351 | 2,343 | ||||||
Deferred income taxes | 1,858 | 1,888 | ||||||
Other assets | 499 | 446 | ||||||
Assets of discontinued operations | $ | 18,805 | $ | 17,096 | ||||
Liabilities of discontinued operations | $ | 4,793 | $ | 2,615 | ||||
Note 6. | Accounts Receivable Factoring Agreements |
F-24
Table of Contents
Note 7. | Inventories, net |
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Finished goods | $ | 53,619 | $ | 56,169 | ||||
Work in process | 9,262 | 9,486 | ||||||
Raw materials and supplies | 42,299 | 34,016 | ||||||
$ | 105,180 | $ | 99,671 | |||||
Note 8. | Property, Plant and Equipment, net |
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Land | $ | 12,009 | $ | 12,431 | ||||
Buildings and land improvements | 95,854 | 99,796 | ||||||
Machinery, equipment and other | 494,053 | 500,765 | ||||||
Construction in progress | 43,118 | 3,317 | ||||||
645,034 | 616,309 | |||||||
Less accumulated depreciation | (321,900 | ) | (288,237 | ) | ||||
$ | 323,134 | $ | 328,072 | |||||
F-25
Table of Contents
Note 9. | Intangibles and Loan Acquisition Costs |
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Cost: | ||||||||
Goodwill | $ | 2,253 | $ | 2,588 | ||||
Customer relationships | 760 | 818 | ||||||
Proprietary technology | 3,215 | 2,900 | ||||||
Loan acquisition costs | 4,544 | 4,378 | ||||||
Other | 2,008 | 2,114 | ||||||
12,780 | 12,798 | |||||||
Less accumulated amortization | (5,247 | ) | (3,861 | ) | ||||
$ | 7,533 | $ | 8,937 | |||||
F-26
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Amortization of: | ||||||||||||
Intangibles with finite lives, included inSelling, general and administrative expense | $ | 744 | $ | 650 | $ | 640 | ||||||
Spain covenant not to compete, included inSpecial charges, net | 34 | — | — | |||||||||
Loan acquisition costs, included inInterest expense, net | 867 | 1,105 | 1,406 | |||||||||
Total amortization expense | $ | 1,645 | $ | 1,755 | $ | 2,046 | ||||||
Note 10. | Accounts Payable and Accrued Liabilities |
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Accounts payable to vendors | $ | 124,320 | $ | 107,339 | ||||
Accrued salaries, wages, incentive compensation and other fringe benefits | 22,911 | 17,180 | ||||||
Other accrued expenses | 26,628 | 18,643 | ||||||
$ | 173,859 | $ | 143,162 | |||||
F-27
Table of Contents
Note 11. | Debt |
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Old Credit Facility, as defined below, interest rates for U.S. dollar borrowings are based on a specified base plus a specified margin; due in mandatory quarterly payments of approximately $1.0 million, subject to additional payments from annual excess cash flows, as defined by the Credit Facility, and are subject to certain terms and conditions: | ||||||||
First Lien Term Loan (Tranche 1) — interest at 4.5% and 2.49% as of January 1, 2011 and January 2, 2010 respectively with any remaining unpaid balance due November 2012 | $ | 15,932 | $ | 17,123 | ||||
First Lien Term Loan (Tranche 2) — interest at 7.00% and 7.00% as of January 1, 2011 and January 2, 2010 with any remaining unpaid balance due November 2014 | 270,538 | 273,346 | ||||||
Argentine Facility: | ||||||||
Argentine Peso Loan — interest at 18.56% and 18.85% as of January 1, 2011 and January 2, 2010 respectively; denominated in Argentine pesos with any remaining unpaid balance due April 2016 | 4,573 | 6,307 | ||||||
Argentine Peso Loan for working capital — interest at 18.63% and 18.85% as of January 1, 2011 and January 2, 2010 respectively; denominated in Argentine pesos with any remaining unpaid balance due September 2012 | 844 | 1,892 | ||||||
United States Dollar Loan — interest at 3.19% and 3.25% as of January 1, 2011 and January 2, 2010 respectively; denominated in U.S. dollars with any remaining unpaid balance due May 2016 | 18,979 | 25,880 | ||||||
Mexico Term Loan — interest at 8.08% and 8.05% as of January 1, 2011 and January 2, 2010 respectively; denominated in U.S. dollars with any remaining unpaid balance due January 2015 | 10,546 | 13,841 | ||||||
Suzhou Term Loan — interest at 4.78% as of January 1, 2011 with any remaining unpaid balance due November 2013 | 10,000 | — | ||||||
Other | 367 | 553 | ||||||
331,779 | 338,942 | |||||||
Less: Current maturities | (3,609 | ) | (16,921 | ) | ||||
$ | 328,170 | $ | 322,021 | |||||
2011 | $ | 3,609 | ||
2012 | 3,586 | |||
2013 | 13,525 | |||
2014 | 3,451 | |||
2015 | 3,451 | |||
2016 and thereafter | 304,157 | |||
Total | $ | 331,779 | ||
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Note 12. | Income Taxes |
2010 | 2009 | 2008 | ||||||||||
Domestic | $ | (25,000 | ) | $ | (7,471 | ) | $ | (10,548 | ) | |||
Foreign | 41,329 | 25,072 | 8,005 | |||||||||
$ | 16,329 | $ | 17,601 | $ | (2,543 | ) | ||||||
2010 | 2009 | 2008 | ||||||||||
Current: | ||||||||||||
Federal and state | $ | (7,693 | ) | $ | 693 | $ | 1,265 | |||||
Foreign | 16,042 | 8,721 | 5,860 | |||||||||
Deferred: | ||||||||||||
Federal and state | (794 | ) | (1,876 | ) | (187 | ) | ||||||
Foreign | (3,021 | ) | 1,040 | 70 | ||||||||
Income tax (benefit) expense | $ | 4,534 | $ | 8,578 | $ | 7,008 | ||||||
2010 | 2009 | 2008 | ||||||||||
Computed income tax expense (benefit) at statutory rate(1) | $ | 5,715 | $ | 6,160 | $ | (890 | ) | |||||
State income taxes, net of U.S. federal tax benefit | 437 | 769 | 1,908 | |||||||||
Worthless stock deduction | — | — | (16,792 | ) | ||||||||
Change in valuation allowance(2) | 10,755 | (752 | ) | 27,168 | ||||||||
Tax attribute carryforward expiration(3) | — | 15,169 | — | |||||||||
Intraperiod allocation rule exception(4) | (2,787 | ) | (3,717 | ) | (39 | ) | ||||||
Foreign rate difference(5) | (3,967 | ) | (4,146 | ) | (1,817 | ) | ||||||
Change in U.S. Personal Holding Company liability(6) | (7,864 | ) | 999 | 1,341 | ||||||||
Other(7) | 2,245 | (5,904 | ) | (3,871 | ) | |||||||
Income tax expense | $ | 4,534 | $ | 8,578 | $ | 7,008 | ||||||
(1) | The Worthless Stock Deduction is a result of a loss allowed under Treasury Regulation 1.1502-20(c) on the liquidation of a subsidiary. |
(2) | The Change in the Valuation Allowance is primarily driven by the changes in the net deferred tax assets in jurisdictions where either a partial or a full valuation allowance exists. |
(3) | The Tax Attribute Carryforward Expiration is expiring foreign tax credits. |
(4) | The Intraperiod Allocation Rule Exception allows certain alternative income sources under specific factual circumstances to be considered when evaluating a net deferred tax asset realization which impacts the allocation of the tax expense or benefit to the correct category of the financial statements. |
(5) | The Foreign Rate Differential reflects the net rate difference of foreign jurisdictions as compared to the US statutory tax rate of 35%. |
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(6) | Change in the U.S. Personal Holding Company liability reflects the net reduction in the unrecognized tax benefit amount for which the statute of limitation has expired. |
(7) | The Other includes various miscellaneous rate reconciliation items primarily in the U.S. |
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Deferred tax assets: | ||||||||
Provision for bad debts | $ | 1,067 | $ | 2,423 | ||||
Inventory capitalization and allowances | 2,752 | 3,237 | ||||||
Net operating loss and capital loss carryforwards | 137,690 | 128,643 | ||||||
Tax credits | 5,288 | 3,642 | ||||||
Employee compensation and benefits | 4,264 | 5,273 | ||||||
Property, plant and equipment and intangibles, net | 46,360 | 30,262 | ||||||
Other, net | 13,766 | 20,989 | ||||||
Total deferred tax assets | 211,187 | 194,469 | ||||||
Valuation allowance | (190,494 | ) | (174,764 | ) | ||||
Net deferred tax assets | 20,693 | 19,705 | ||||||
Deferred tax liabilities: | ||||||||
Property, plant and equipment and intangibles, net | (17,736 | ) | (16,023 | ) | ||||
Stock basis of subsidiaries | (7,709 | ) | (7,709 | ) | ||||
Other, net | (9,759 | ) | (12,904 | ) | ||||
Total deferred tax liabilities | (35,204 | ) | (36,636 | ) | ||||
Net deferred tax liabilities | $ | (14,511 | ) | $ | (16,931 | ) | ||
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Unrecognized tax benefits as of January 2, 2010 | $ | 29,366 | ||
Gross increases for tax positions of prior years | 457 | |||
Gross decreases for tax positions of prior years | (24 | ) | ||
Increases in tax positions for the current year | 1,797 | |||
Lapse of statute of limitations | (7,106 | ) | ||
Currency translation | (133 | ) | ||
Unrecognized tax benefits as of January 1, 2011 | $ | 24,357 | ||
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Note 13. | Pension and Postretirement Benefit Plans |
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U.S. Plans | Non-U.S. Plans | |||||||||||||||
Pension Benefits | Pension Benefits | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In thousands) | ||||||||||||||||
Change in Projected Benefit Obligation: | ||||||||||||||||
Projected benefit obligation at beginning of year | $ | (12,870 | ) | $ | (12,222 | ) | $ | (105,527 | ) | $ | (103,668 | ) | ||||
Service costs | — | — | (1,984 | ) | (2,160 | ) | ||||||||||
Interest costs | (730 | ) | (763 | ) | (5,215 | ) | (6,052 | ) | ||||||||
Participant contributions | — | — | (143 | ) | (152 | ) | ||||||||||
Plan amendments | — | — | 6,121 | (155 | ) | |||||||||||
Actuarial (loss)/gain | (777 | ) | (928 | ) | (4,919 | ) | 8,045 | |||||||||
Currency translation adjustment and other | — | — | 4,312 | (5,792 | ) | |||||||||||
Benefit payments | 1,010 | 1,043 | 4,446 | 4,407 | ||||||||||||
Projected benefit obligation at end of year | $ | (13,367 | ) | $ | (12,870 | ) | $ | (102,909 | ) | $ | (105,527 | ) | ||||
Change in Plan Assets: | ||||||||||||||||
Fair value of plan assets at beginning of year | $ | 10,611 | $ | 8,102 | $ | 113,073 | $ | 93,763 | ||||||||
Actual return on and additional plan assets | 1,584 | 2,899 | 10,454 | 11,715 | ||||||||||||
Employer and plan participant contributions | 780 | 653 | 3,733 | 6,173 | ||||||||||||
Benefit payments | (1,010 | ) | (1,043 | ) | (4,446 | ) | (4,407 | ) | ||||||||
Currency translation adjustment and other | — | — | (5,416 | ) | 5,829 | |||||||||||
Fair value of plan assets at end of year | $ | 11,965 | $ | 10,611 | $ | 117,399 | $ | 113,073 | ||||||||
Funded status | $ | (1,402 | ) | $ | (2,259 | ) | $ | 14,490 | $ | 7,546 |
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U.S. | Non-U.S. | |||||||||||||||
Postretirement | Postretirement | |||||||||||||||
Benefit Plans | Benefit Plans | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In thousands) | ||||||||||||||||
Change in Projected Benefit Obligation: | ||||||||||||||||
Projected benefit obligation at beginning of year | $ | (44 | ) | $ | (84 | ) | $ | (5,903 | ) | $ | (5,051 | ) | ||||
Additional benefit obligations | — | — | — | — | ||||||||||||
Service costs | — | — | (76 | ) | (77 | ) | ||||||||||
Interest costs | — | (4 | ) | (345 | ) | (335 | ) | |||||||||
Actuarial gain | — | — | 427 | (80 | ) | |||||||||||
Currency translation adjustment and other | — | — | (300 | ) | (770 | ) | ||||||||||
Settlements/curtailments | 38 | 39 | — | — | ||||||||||||
Benefit payments | 6 | 5 | 482 | 410 | ||||||||||||
Projected benefit obligation at end of year | $ | — | $ | (44 | ) | $ | (5,715 | ) | $ | (5,903 | ) | |||||
Change in Plan Assets: | ||||||||||||||||
Fair value of plan assets at beginning of year | $ | — | $ | — | $ | — | $ | — | ||||||||
Actual return on plan assets | — | — | — | — | ||||||||||||
Employer and plan participant contributions | 6 | 5 | 482 | 410 | ||||||||||||
Benefit payments | (6 | ) | (5 | ) | (482 | ) | (410 | ) | ||||||||
Currency translation adjustment and other | — | — | — | — | ||||||||||||
Fair value of plan assets at end of year | $ | — | $ | — | $ | — | $ | — | ||||||||
Funded status | $ | — | $ | (44 | ) | $ | (5,715 | ) | $ | (5,903 | ) |
U.S. | Non-U.S. | |||||||||||||||
Pension Plans | Pension Plans | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Other noncurrent assets | $ | — | $ | — | $ | 21,363 | $ | 13,726 | ||||||||
Accounts payable and accrued liabilities | — | — | (336 | ) | (305 | ) | ||||||||||
Other noncurrent liabilities | (1,402 | ) | (2,259 | ) | (6,537 | ) | (5,875 | ) | ||||||||
Accumulated other comprehensive income | 2,813 | 2,931 | (5,823 | ) | 1,332 | |||||||||||
Net amounts recognized | $ | 1,411 | $ | 672 | $ | 8,667 | $ | 8,878 | ||||||||
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Non-U.S. | ||||||||||||||||
U.S. Postretirement | Postretirement | |||||||||||||||
Benefit Plans | Benefit Plans | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Other noncurrent assets | $ | — | $ | — | $ | — | $ | — | ||||||||
Accounts payable and accrued liabilities | — | (44 | ) | (490 | ) | (515 | ) | |||||||||
Other noncurrent liabilities | — | — | (5,225 | ) | (5,388 | ) | ||||||||||
Accumulated other comprehensive income | — | (59 | ) | (2,136 | ) | (1,836 | ) | |||||||||
Net amounts recognized | $ | — | $ | (103 | ) | $ | (7,851 | ) | $ | (7,739 | ) | |||||
U.S. | Non-U.S. | |||||||||||||||
Pension Plans | Pension Plans | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Transition net asset | $ | — | $ | — | $ | 21 | $ | 41 | ||||||||
Net actuarial (gain) loss | 2,813 | 2,931 | 2,165 | 3,220 | ||||||||||||
Prior service cost | — | — | (8,009 | ) | (1,929 | ) | ||||||||||
Net amounts recognized | $ | 2,813 | $ | 2,931 | $ | (5,823 | ) | $ | 1,332 | |||||||
Non-U.S. | ||||||||||||||||
U.S. Postretirement | Postretirement | |||||||||||||||
Benefit Plans | Benefit Plans | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Transition net asset | $ | — | $ | — | $ | 6 | $ | 8 | ||||||||
Net actuarial (gain) loss | — | (59 | ) | (1,725 | ) | (1,401 | ) | |||||||||
Prior service cost | — | — | (417 | ) | (443 | ) | ||||||||||
Net amounts recognized | $ | — | $ | (59 | ) | $ | (2,136 | ) | $ | (1,836 | ) | |||||
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U.S. Plans Pension Benefits | Non-U.S. Plans Pension Benefits | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
(In thousands, except percent data) | ||||||||||||||||||||||||
Components of net periodic benefit cost: | ||||||||||||||||||||||||
Current service costs | $ | — | $ | — | $ | — | $ | 1,984 | $ | 2,160 | $ | 2,504 | ||||||||||||
Interest costs on projected benefit obligation and other | 730 | 763 | 772 | 5,215 | 6,052 | 5,789 | ||||||||||||||||||
Return on plan assets | (1,584 | ) | (2,899 | ) | 4,295 | (10,454 | ) | (11,715 | ) | 4,267 | ||||||||||||||
Settlement loss | — | — | — | — | — | — | ||||||||||||||||||
Net amortization of transition obligation and other | 894 | 2,526 | (5,361 | ) | 5,336 | 6,229 | (10,612 | ) | ||||||||||||||||
Periodic benefit cost, net | $ | 40 | $ | 390 | $ | (294 | ) | $ | 2,081 | $ | 2,726 | $ | 1,948 | |||||||||||
Weighted average assumption rates: | ||||||||||||||||||||||||
Return on plan assets | 8.0 | % | 8.0 | % | 8.0 | % | 2.5-6.0 | % | 3.0-7.0 | % | 2.75-7.5 | % | ||||||||||||
Discount rate on projected benefit obligations | 5.41 | 5.86 | 6.50 | 4.75-8.50 | 5.00-8.50 | 5.50-9.00 | ||||||||||||||||||
Salary and wage escalation rate | N/A | N/A | N/A | 2.0-4.5 | 2.0-5.0 | 2.0-3.0 |
U.S. Postretirement | Non-U.S. Postretirement | |||||||||||||||||||||||
Benefit Plans | Benefit Plans | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
(In thousands, except percent data) | ||||||||||||||||||||||||
Components of net periodic benefit cost: | ||||||||||||||||||||||||
Current service costs | $ | — | $ | — | $ | — | $ | 76 | $ | 78 | $ | 79 | ||||||||||||
Interest costs on projected benefit obligation and other | — | 4 | 6 | 345 | 335 | 347 | ||||||||||||||||||
Curtailment/settlement (gain) loss | — | — | (36 | ) | — | — | — | |||||||||||||||||
Net amortization of transition obligation and other | (97 | ) | (34 | ) | (180 | ) | (241 | ) | (300 | ) | (272 | ) | ||||||||||||
Periodic benefit cost (benefit), net | $ | (97 | ) | $ | (30 | ) | $ | (210 | ) | $ | 180 | $ | 113 | $ | 154 | |||||||||
Weighted average assumption rates: | ||||||||||||||||||||||||
Discount rate on projected benefit obligations | N/A | 1.50 | % | 6.50 | % | 5.00-8.50 | % | 5.75-8.50 | % | 6.25-9.00 | % |
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January 1, | January 2, | |||||||
2011 | 2010 | |||||||
Weighted average health care cost trend rate assumed for next year | 6.75 | % | 6.60 | % | ||||
Rate to which the cost trend is expected to decline (the ultimate trend rate) | 5.00 | % | 5.00 | % | ||||
Year that the rate reached the ultimate trend rate | 2028 | 2028 |
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2010 | 2009 | |||||||
Cash | 3 | % | 4 | % | ||||
Equity Securities | 37 | 37 | ||||||
Fixed Income Securities | 60 | 59 | ||||||
Total | 100 | % | 100 | % | ||||
Category | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash | $ | 4,011 | $ | 196 | $ | 3,815 | $ | — | ||||||||
Total Equity Securities | 47,955 | 8,516 | 39,439 | — | ||||||||||||
Total Fixed Income Securities | 77,398 | 3,253 | 74,145 | — | ||||||||||||
Total | $ | 129,364 | $ | 11,965 | $ | 117,399 | $ | — | ||||||||
Category | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash | $ | 5,141 | $ | 89 | $ | 5,052 | $ | — | ||||||||
Total Equity Securities | 45,475 | 7,479 | 37,996 | — | ||||||||||||
Total Fixed Income Securities | 73,068 | 3,043 | 70,025 | — | ||||||||||||
Total | $ | 123,684 | $ | 10,611 | $ | 113,073 | $ | — | ||||||||
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Category | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash | $ | 196 | $ | 196 | $ | — | $ | — | ||||||||
Equity securities: | ||||||||||||||||
U.S. large-cap(a) | 3,597 | 3,597 | — | — | ||||||||||||
U.S. mid-cap(b) | 1,394 | 1,394 | — | — | ||||||||||||
Foreign equities | 1,954 | 1,954 | — | — | ||||||||||||
Emerging markets growth | 1,571 | 1,571 | ||||||||||||||
Total Equity Securities | 8,516 | 8,516 | — | — | ||||||||||||
Fixed income securities: | ||||||||||||||||
Corporate bonds(c) | 3,253 | 3,253 | — | — | ||||||||||||
Total Fixed Income Securities | 3,253 | 3,253 | — | — | ||||||||||||
Total | $ | 11,965 | $ | 11,965 | $ | — | $ | — | ||||||||
(a) | This category consists of low-cost S&P 500 index funds, which are not actively managed. | |
(b) | This category consists of equity securities of U.S. companies with market capitalizations between $500 million and $5 billion. | |
(c) | This category consists of investment-grade bonds of U.S. issuers from diverse industries. |
Category | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash | $ | 89 | $ | 89 | $ | — | $ | — | ||||||||
Equity securities: | ||||||||||||||||
U.S. large-cap(a) | 6,380 | 6,380 | — | — | ||||||||||||
Emerging markets growth | 1,099 | 1,099 | ||||||||||||||
Total Equity Securities | 7,479 | 7,479 | — | — | ||||||||||||
Fixed income securities: | ||||||||||||||||
Corporate bonds(b) | 3,043 | 3,043 | — | — | ||||||||||||
Total Fixed Income Securities | 3,043 | 3,043 | — | — | ||||||||||||
Total | $ | 10,611 | $ | 10,611 | $ | — | $ | — | ||||||||
(a) | This category consists of low-cost S&P 500 index funds, which are not actively managed. | |
(b) | This category consists of investment-grade bonds of U.S. issuers from diverse industries. |
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Category | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash | $ | 3,494 | $ | — | $ | 3,494 | $ | — | ||||||||
Equity securities: | ||||||||||||||||
U.S. large-cap(a) | 1,693 | — | 1,693 | — | ||||||||||||
Canadian large cap(a) | 5,586 | — | 5,586 | — | ||||||||||||
Foreign large-cap | 1,693 | — | 1,693 | — | ||||||||||||
Total Equity Securities | 8,972 | — | 8,972 | — | ||||||||||||
Fixed income securities: | ||||||||||||||||
Corporate bonds(b) | 7,559 | — | 7,559 | — | ||||||||||||
Canadian government bonds | 1,949 | — | 1,949 | — | ||||||||||||
Total Fixed Income Securities | 9,508 | — | 9,508 | — | ||||||||||||
Total | $ | 21,974 | $ | — | $ | 21,974 | $ | — | ||||||||
(a) | This category consists of actively managed equities and low-cost Canadian S&P/TSX 60 index funds which are not actively managed. | |
(b) | This category consists of investment-grade bonds of Canadian issuers from diverse industries. |
Category | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash | $ | 3,395 | $ | — | $ | 3,395 | $ | — | ||||||||
Equity securities: | ||||||||||||||||
U.S. large-cap(a) | 2,509 | — | 2,509 | — | ||||||||||||
Canadian large cap(a) | 4,780 | — | 4,780 | — | ||||||||||||
Foreign large-cap | 2,084 | — | 2,084 | — | ||||||||||||
Total Equity Securities | 9,373 | — | 9,373 | — | ||||||||||||
Fixed income securities: | ||||||||||||||||
Corporate bonds(b) | 6,843 | — | 6,843 | — | ||||||||||||
Mortgage-backed securities | 560 | — | 560 | — | ||||||||||||
Total Fixed Income Securities | 7,403 | — | 7,403 | — | ||||||||||||
Total | $ | 20,171 | $ | — | $ | 20,171 | $ | — |
(a) | This category consists of actively managed equities and low-cost Canadian S&P/TSX 60 index funds which are not actively managed. | |
(b) | This category consists of investment-grade bonds of Canadian issuers from diverse industries. |
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Category | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash | $ | 321 | $ | — | $ | 321 | $ | — | ||||||||
Equity securities: | ||||||||||||||||
ING Global Equity funds(a) | 23,676 | — | 23,676 | — | ||||||||||||
Emerging markets growth | 2,331 | — | 2,331 | — | ||||||||||||
Non-US equities | 4,460 | — | 4,460 | — | ||||||||||||
Total Equity Securities | 30,467 | — | 30,467 | — | ||||||||||||
Fixed income securities: | ||||||||||||||||
ING Global Fixed Income Funds(b) | 61,732 | — | 61,732 | — | ||||||||||||
Other Foreign Fixed Income Funds | 2,905 | — | 2,905 | — | ||||||||||||
Total Fixed Income Securities | 64,637 | — | 62,637 | — | ||||||||||||
Total | $ | 95,425 | $ | — | $ | 95,425 | $ | — | ||||||||
(a) | This category consists of investments across various regions and sectors. | |
(b) | This category consists of investments in a wide range of bonds containing government bonds, investment grade corporate bonds and asset backed securities, emerging markets debt and lower rated high yield corporate bonds. |
Category | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Cash | $ | 1,657 | $ | — | $ | 1,657 | $ | — | ||||||||
Equity securities: | ||||||||||||||||
ING Global Equity funds(a) | 21,849 | — | 21,849 | — | ||||||||||||
Emerging markets growth | 2,463 | — | 2,463 | — | ||||||||||||
Non-US equities | 4,311 | — | 4,311 | — | ||||||||||||
Total Equity Securities | 28,623 | — | 28,623 | — | ||||||||||||
Fixed income securities: | ||||||||||||||||
ING Global Fixed Income Funds(b) | 59,563 | — | 59,563 | — | ||||||||||||
Other Foreign Fixed Income Funds | 3,059 | — | 3,059 | — | ||||||||||||
Total Fixed Income Securities | 62,622 | — | 62,622 | — | ||||||||||||
Total | $ | 92,902 | $ | — | $ | 92,902 | $ | — | ||||||||
(a) | This category consists of investments across various regions and sectors. | |
(b) | This category consists of investments in a wide range of bonds containing government bonds, investment grade corporate bonds and asset backed securities, emerging markets debt and lower rated high yield corporate bonds. |
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Pension | Postretirement | |||||||
2011 | $ | 4,853 | $ | 490 | ||||
2012 | 5,005 | 487 | ||||||
2013 | 5,265 | 483 | ||||||
2014 | 5,657 | 476 | ||||||
2015 | 6,560 | 471 | ||||||
2016 to 2020 | 36,718 | 2,221 |
Note 14. | Stock Option and Restricted Stock Plans |
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2010 | 2009 | 2008 | ||||||||||
Unexercised options outstanding — beginning of period | 174,097 | 178,622 | 380,675 | |||||||||
Granted | — | 16,055 | 46,093 | |||||||||
Exercised | (116,112 | ) | — | (10,941 | ) | |||||||
Forfeited | (2,700 | ) | (20,580 | ) | (72,833 | ) | ||||||
Expired/cancelled | — | — | (164,372 | ) | ||||||||
Unexercised options outstanding — end of period | 55,285 | 174,097 | 178,622 | |||||||||
2010 | 2009 | 2008 | ||||||||||
2003 Option Plan: | ||||||||||||
Vested options as of year-end | 44,835 | 132,868 | 128,092 | |||||||||
Exercisable options as of year-end | — | — | — | |||||||||
Shares available for future grant as of year-end | 217,662 | 214,962 | 210,437 | |||||||||
Weighted average exercise price per share | $ | 6.00 | $ | 6.00 | $ | 6.00 |
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Expected | ||||||||
Vested | to Vest | |||||||
For options granted and outstanding: | ||||||||
Number of options | 44,835 | 2,610 | ||||||
Weighted average exercise price | $ | 6.00 | $ | 6.00 | ||||
Aggregate intrinsic value (in $000s) | $ | 448 | $ | 26 | ||||
For nonvested options: | ||||||||
Compensation cost not yet recognized (in $000s) | $ | 158 | ||||||
Weighted average period of recognition (years) | 0.1 |
2010 | 2009 | 2008 | ||||||||||
Annual dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
Weighted average expected life (years) | 1.6 | 1.6 | 1.9 | |||||||||
Risk-free interest rate | 1.1 | % | 1.1 | % | 1.6 | % | ||||||
Expected volatility | 60.6 | % | 46.2 | % | 40.6 | % | ||||||
Weighted average fair value per option granted | $ | 9.09 | $ | 1.82 | $ | 6.35 |
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Weighted- | ||||||||
Average | ||||||||
Grant Date | ||||||||
Shares | Fair Value | |||||||
Nonvested shares at January 2, 2010 | 81,480 | $ | 12.58 | |||||
Shares: | ||||||||
Granted | — | — | ||||||
Vested | (54,400 | ) | 10.33 | |||||
Forfeited | (5,000 | ) | 17.11 | |||||
Nonvested shares at January 2, 2010 | 22,080 | 13.26 |
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Weighted- | ||||||||
Average Grant | ||||||||
Date Fair | ||||||||
Shares | Value | |||||||
Nonvested shares at January 2, 2010 | 541,927 | $ | 7.82 | |||||
Shares: | ||||||||
Granted | 466,557 | 20.01 | ||||||
Vested | (219,133 | ) | 7.72 | |||||
Forfeited | (42,247 | ) | 9.58 | |||||
Nonvested shares at January 1, 2011 | 747,104 | 15.36 | ||||||
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Note 15. | Other Operating (Income) Loss, Net and Foreign Currency Loss (Gain), Net |
2010 | 2009 | 2008 | ||||||||||
Included inOther operating(income) loss, net | $ | (69 | ) | $ | (3,279 | ) | $ | 6,460 | ||||
Included inForeign currencyand other loss, net | 1,397 | 4,292 | (40 | ) | ||||||||
$ | 1,328 | $ | 1,013 | $ | 6,420 | |||||||
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Note 16. | Derivatives and Other Financial Instruments and Hedging Activities |
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As of January 1, 2011 | As of January 2, 2010 | |||||||||||||||
Notional | Fair Value | Notional | Fair Value | |||||||||||||
Cash flow hedges: | ||||||||||||||||
Interest rate swaps(1) | $ | 18,693 | $ | 163 | $ | 18,693 | $ | 283 | ||||||||
Interest rate swaps — undesignated(1) | 221,307 | 1,872 | 221,307 | 3,256 | ||||||||||||
Foreign currency hedges: | ||||||||||||||||
Foreign exchange contracts | 21,661 | 542 | — | — | ||||||||||||
Net value | $ | 261,661 | $ | 2,577 | $ | 240,000 | $ | 3,539 | ||||||||
(1) | Comprised of a $240.0 million notional amount interest rate swap agreement that was executed and became effective on June 20, 2009 and matures on June 30, 2011. |
Amount of Gain (Loss) Recognized in | ||||||||||||
Accumulated OCI on Derivative | ||||||||||||
(Effective Portion) | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Derivatives in Cash Flow Hedging Relationships | ||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||
Interest rate contracts | $ | 120 | $ | (1,323 | ) | $ | (4,087 | ) | ||||
Derivatives not designated as hedging instruments | N/A | N/A | N/A |
Amount of Gain (Loss) | ||||||||||||
Reclassified from Accumulated OCI | ||||||||||||
into Income(1) | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Derivatives in Cash Flow Hedging Relationships | ||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||
Interest rate contracts | $ | N/A | $ | (4,458 | ) | $ | (3,893 | ) | ||||
Derivatives not designated as hedging instruments | (2,240 | ) | (777 | ) | N/A |
(1) | Amount of Gain (Loss) (Effective Portion) Reclassified from Accumulated Other Comprehensive Income into Income is located inInterest Expense, netin the Consolidated Statements of Operations. |
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Note 17. | Fair Value of Financial Instruments and Non-Financial Assets and Liabilities |
Quoted Prices in | ||||||||||||||||
As of | Active Markets | Significant Other | ||||||||||||||
January 1, | for Identical | Observable | Unobservable | |||||||||||||
2011 | Assets (Level 1) | Inputs (Level 2) | Inputs (Level 3) | |||||||||||||
Firm commitment | $ | 589 | — | $ | 589 | — | ||||||||||
Derivative liabilities: | ||||||||||||||||
Interest rate swap agreements | (2,035 | ) | — | (2,035 | ) | — | ||||||||||
Foreign exchange contract | (542 | ) | — | (542 | ) | — |
Quoted Prices in | ||||||||||||||||
As of | Active Markets | Significant Other | ||||||||||||||
January 2, | for Identical | Observable | Unobservable | |||||||||||||
2010 | Assets (Level 1) | Inputs (Level 2) | Inputs (Level 3) | |||||||||||||
Derivative liabilities: | ||||||||||||||||
Interest rate swap agreements | (3,539 | ) | — | (3,539 | ) | — |
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Quoted Prices | ||||||||||||||||||||
in Active | Significant | |||||||||||||||||||
Fiscal Period | Markets for | Other | ||||||||||||||||||
Ended January 1, | Identical Assets | Observable | Unobservable | |||||||||||||||||
2011 | Level 1 | Inputs Level 2 | Inputs Level 3 | |||||||||||||||||
Long-lived assets held for sale(1) | $ | 3,415 | — | $ | 2,590 | $ | 825 | $ | — |
(1) | Long-lived assets held for sale in Level 2 Inputs reflect the current sales price at which certain property held for sale is currently being marketed based on local market conditions, less costs to sell. The equipment included in Level 3 assets reflects management’s best estimate at which the respective equipment will be sold based on market conditions for used equipment, less costs to sell. |
As of January 1, 2011 | As of January 2, 2010 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Long-term debt (including current portion) | $ | 331,779 | $ | 330,203 | $ | 338,942 | $ | 333,189 |
Note 18. | Shareholders’ Equity |
Authorized | ||||||||
Type | Par Value | Shares | ||||||
Preferred stock | $ | .01 | 173,000 | |||||
Class A common stock | $ | .01 | 39,200,000 | |||||
Class B convertible common stock | $ | .01 | 800,000 | |||||
Class C convertible common stock | $ | .01 | 118,453 | |||||
Class D convertible common stock | $ | .01 | 498,688 | |||||
Class E convertible common stock | $ | .01 | 523,557 |
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Note 19. | Segment Information |
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2010 | 2009 | 2008 | ||||||||||
Net sales | ||||||||||||
U.S. Nonwovens | $ | 326,812 | $ | 302,326 | $ | 385,407 | ||||||
Europe Nonwovens | 282,076 | 159,436 | 196,643 | |||||||||
Asia Nonwovens | 129,370 | 108,764 | 122,879 | |||||||||
Latin America Nonwovens | 306,480 | 234,320 | 266,492 | |||||||||
Oriented Polymers | 61,473 | 45,759 | 54,773 | |||||||||
$ | 1,106,211 | $ | 850,605 | $ | 1,026,194 | |||||||
Operating income (loss) | ||||||||||||
U.S. Nonwovens | $ | 24,546 | $ | 34,559 | $ | 26,444 | ||||||
Europe Nonwovens | 13,577 | 2,195 | 11,604 | |||||||||
Asia Nonwovens | 25,166 | 23,229 | 16,249 | |||||||||
Latin America Nonwovens | 41,599 | 42,399 | 17,287 | |||||||||
Oriented Polymers | 3,256 | 2,426 | 2,244 | |||||||||
Unallocated Corporate | (38,868 | ) | (30,076 | ) | (24,808 | ) | ||||||
Eliminations | (30 | ) | 36 | 118 | ||||||||
69,246 | 74,768 | 49,138 | ||||||||||
Acquisition and integration expenses | (1,742 | ) | (1,789 | ) | — | |||||||
Special charges, net | (17,993 | ) | (20,763 | ) | (20,088 | ) | ||||||
$ | 49,511 | $ | 52,216 | $ | 29,050 | |||||||
Depreciation and amortization expense included in operating income (loss) | ||||||||||||
U.S. Nonwovens | $ | 14,875 | $ | 14,981 | $ | 17,171 | ||||||
Europe Nonwovens | 5,156 | 6,593 | 6,055 | |||||||||
Asia Nonwovens | 7,091 | 9,022 | 8,492 | |||||||||
Latin America Nonwovens | 16,825 | 15,521 | 14,149 | |||||||||
Oriented Polymers | 450 | 373 | 651 | |||||||||
Unallocated Corporate | 952 | 749 | 544 | |||||||||
�� | ||||||||||||
Depreciation and amortization expense included in operating income | 45,349 | 47,239 | 47,062 | |||||||||
Amortization of loan acquisition costs | 867 | 1,105 | 1,406 | |||||||||
$ | 46,216 | $ | 48,344 | $ | 48,468 | |||||||
Capital spending | ||||||||||||
U.S. Nonwovens | $ | 11,774 | $ | 2,516 | $ | 13,685 | ||||||
Europe Nonwovens | 3,166 | 782 | 1,526 | |||||||||
Asia Nonwovens | 26,865 | 442 | 901 | |||||||||
Latin America Nonwovens | 1,310 | 38,477 | 17,329 | |||||||||
Oriented Polymers | 534 | 347 | 389 | |||||||||
Corporate | 1,521 | 851 | 598 | |||||||||
$ | 45,170 | $ | 43,415 | $ | 34,428 | |||||||
Division assets | ||||||||||||
U.S. Nonwovens | $ | 167,517 | $ | 178,449 | $ | 212,291 | ||||||
Europe Nonwovens | 198,942 | 200,642 | 172,695 | |||||||||
Asia Nonwovens | 139,134 | 102,917 | 99,552 | |||||||||
Latin America Nonwovens | 239,496 | 256,956 | 233,246 | |||||||||
Oriented Polymers | 24,640 | 19,159 | 17,138 | |||||||||
Corporate | 7,691 | 3,763 | 1,619 | |||||||||
Discontinued Operations | 18,805 | 17,096 | 53,555 | |||||||||
Eliminations | (64,248 | ) | (79,071 | ) | (87,925 | ) | ||||||
$ | 731,977 | $ | 699,911 | $ | 702,171 | |||||||
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2010 | 2009 | 2008 | ||||||||||
Net sales | ||||||||||||
United States | $ | 332,624 | $ | 305,084 | $ | 388,132 | ||||||
Canada | 56,885 | 43,003 | 51,296 | |||||||||
Europe | 280,852 | 159,436 | 197,393 | |||||||||
Asia | 129,370 | 108,763 | 122,880 | |||||||||
Latin America | 306,480 | 234,319 | 266,493 | |||||||||
$ | 1,106,211 | $ | 850,605 | $ | 1,026,194 | |||||||
Operating income (loss) | ||||||||||||
United States | $ | (12,275 | ) | $ | 4,250 | $ | 2,307 | |||||
Canada | 1,200 | 2,109 | 867 | |||||||||
Europe | 13,584 | 2,193 | 11,545 | |||||||||
Asia | 25,180 | 23,217 | 16,697 | |||||||||
Latin America | 41,557 | 42,999 | 17,722 | |||||||||
69,246 | 74,768 | 49,138 | ||||||||||
Acquisition and integration expenses | (1,742 | ) | (1,789 | ) | — | |||||||
Special charges, net | (17,993 | ) | (20,763 | ) | (20,088 | ) | ||||||
$ | 49,511 | $ | 52,216 | $ | 29,050 | |||||||
Depreciation and amortization expense included in operating income (loss) | ||||||||||||
United States | $ | 15,810 | $ | 15,759 | $ | 17,764 | ||||||
Canada | 413 | 345 | 603 | |||||||||
Europe | 5,210 | 6,592 | 6,054 | |||||||||
Asia | 7,091 | 9,023 | 8,492 | |||||||||
Latin America | 16,825 | 15,520 | 14,149 | |||||||||
Depreciation and amortization expense included in operating income | 45,349 | 47,239 | 47,062 | |||||||||
Amortization of loan acquisition costs | 867 | 1,105 | 1,406 | |||||||||
$ | 46,216 | $ | 48,344 | $ | 48,468 | |||||||
Property, plant and equipment, net | ||||||||||||
United States | $ | 85,889 | $ | 91,700 | $ | 105,379 | ||||||
Canada | 2,935 | 2,709 | 2,346 | |||||||||
Europe | 28,885 | 33,203 | 37,928 | |||||||||
Asia | 77,313 | 54,596 | 62,826 | |||||||||
Latin America | 128,112 | 145,864 | 126,460 | |||||||||
$ | 323,134 | $ | 328,072 | $ | 334,939 | |||||||
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Note 20. | Commitments and Contingencies |
Gross Minimum | ||||
Rental Payments | ||||
2011 | $ | 9,796 | ||
2012 | 8,528 | |||
2013 | 6,155 | |||
2014 | 5,578 | |||
2015 | 5,109 | |||
Thereafter | 5,197 | |||
$ | 40,363 | |||
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Note 21. | Selected Quarterly Financial Data (Unaudited) |
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
January 1, 2011 | October 2, 2010 | July 3, 2010 | April 3, 2010 | |||||||||||||
Operating data: | ||||||||||||||||
Net sales | $ | 268,919 | $ | 289,067 | $ | 279,220 | $ | 269,005 | ||||||||
Gross profit | 50,847 | 58,726 | 52,401 | 47,918 | ||||||||||||
Net income (loss) | (5,078 | ) | 16,256 | 1,986 | (2,134 | ) |
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
January 1, 2011 | October 2, 2010 | July 3, 2010 | April 3, 2010 | |||||||||||||
Net income (loss) attributable to Polymer Group, Inc. | (5,254 | ) | 16,102 | 1,781 | (2,222 | ) | ||||||||||
Earnings (loss) per common share attributable to Polymer Group, Inc. — basic | $ | (0.24 | ) | $ | 0.77 | $ | 0.08 | $ | (0.11 | ) | ||||||
Earnings (loss) per common share attributable to Polymer Group, Inc. — diluted | $ | (0.24 | ) | $ | 0.76 | $ | 0.08 | $ | (0.11 | ) |
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Fourth Quarter | Third Quarter | Second Quarter | First Quarter | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
January 2, 2010 | October 3, 2009 | July 4, 2009 | April 4, 2009 | |||||||||||||
Operating data: | ||||||||||||||||
Net sales | $ | 234,479 | $ | 215,495 | $ | 199,452 | $ | 201,179 | ||||||||
Gross profit | 44,959 | 47,992 | 42,326 | 48,073 | ||||||||||||
Net income (loss) | (7,823 | ) | 12,727 | 5,136 | 7,898 | |||||||||||
Net income (loss) attributable to Polymer Group, Inc. | (8,250 | ) | 12,529 | 6,235 | 9,561 | |||||||||||
Earnings per common share attributable to Polymer Group, Inc. — basic | $ | (0.41 | ) | $ | 0.63 | $ | 0.31 | $ | 0.49 | |||||||
Earnings per common share attributable to Polymer Group, Inc. — diluted | $ | (0.41 | ) | $ | 0.63 | $ | 0.31 | $ | 0.49 |
Difco and | ||||||||||||||||
Previously | Discontinued | Other | ||||||||||||||
Reported | Operations | Adjustments | As Presented | |||||||||||||
Net sales | $ | 297,436 | $ | (8,369 | ) | $ | — | $ | 289,067 | |||||||
Gross Profit | 59,458 | (732 | ) | — | 58,726 | |||||||||||
Operating Income | 22,178 | (83 | ) | — | 22,095 | |||||||||||
Income before income tax expense | 14,153 | 69 | — | 14,222 | ||||||||||||
Income tax (benefit) expense | (7,490 | ) | (151 | ) | 5,387 | (a) | (2,254 | ) | ||||||||
Net income (loss) attributable to Polymer Group, Inc. | 21,489 | — | (5,387 | ) | 16,102 | |||||||||||
Earnings per common share — basic | $ | 1.03 | $ | — | $ | (0.26 | ) | $ | 0.77 | |||||||
Earnings per common share — diluted | $ | 1.01 | $ | — | $ | (0.25 | ) | $ | 0.76 |
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Difco and | ||||||||||||||||
Previously | Discontinued | Other | ||||||||||||||
Reported | Operations | Adjustments | As Presented | |||||||||||||
Net sales | $ | 289,747 | $ | (10,527 | ) | $ | — | $ | 279,220 | |||||||
Gross Profit | 53,276 | (875 | ) | — | 52,401 | |||||||||||
Operating Income | 13,110 | (477 | ) | — | 12,633 | |||||||||||
Income before income tax expense | 4,676 | (537 | ) | — | 4,139 | |||||||||||
Income tax (benefit) expense | 2,913 | (267 | ) | (223 | )(a) | 2,423 | ||||||||||
Net income (loss) attributable to Polymer Group, Inc. | 1,558 | — | 223 | 1,781 | ||||||||||||
Earnings per common share — basic | $ | 0.07 | $ | — | $ | 0.01 | $ | 0.08 | ||||||||
Earnings per common share — diluted | $ | 0.07 | $ | — | $ | 0.01 | $ | 0.08 |
Difco and | ||||||||||||||||
Previously | Discontinued | Other | ||||||||||||||
Reported | Operations | Adjustments | As Presented | |||||||||||||
Net sales | $ | 279,370 | $ | (10,365 | ) | $ | — | $ | 269,005 | |||||||
Gross Profit | 48,337 | (419 | ) | — | 47,918 | |||||||||||
Operating Income | 9,968 | 494 | (176 | )(b) | 10,286 | |||||||||||
Income before income tax expense | 825 | 477 | (176 | )(b) | 1,126 | |||||||||||
Income tax (benefit) expense | 2,982 | 26 | (199 | )(a) | 2,809 | |||||||||||
Net income (loss) attributable to Polymer Group, Inc. | (2,245 | ) | — | 23 | (2,222 | ) | ||||||||||
Earnings per common share — basic | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | ||||||
Earnings per common share — diluted | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) |
Difco and | ||||||||||||||||
Previously | Discontinued | Other | ||||||||||||||
Reported | Operations | Adjustments | As Presented | |||||||||||||
Net sales | $ | 243,580 | $ | (9,101 | ) | $ | — | $ | 234,479 | |||||||
Gross Profit | 44,567 | 44,959 | ||||||||||||||
Operating Income | (3,383 | ) | 1,262 | — | $ | (2,121 | ) | |||||||||
Income before income tax expense | (9,993 | ) | 1,197 | — | (8,796 | ) | ||||||||||
Income tax (benefit) expense | (124 | ) | 231 | (3,717 | )(a) | (3,610 | ) | |||||||||
Net income (loss) attributable to Polymer Group, Inc. | (10,268 | ) | — | 2,018 | (8,250 | ) | ||||||||||
Earnings per common share — basic | $ | (0.51 | ) | $ | — | $ | 0.10 | $ | (0.41 | ) | ||||||
Earnings per common share — diluted | $ | (0.51 | ) | $ | — | $ | 0.10 | $ | (0.41 | ) |
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Difco and | ||||||||||||||||
Previously | Discontinued | Other | ||||||||||||||
Reported | Operations | Adjustments | As Presented | |||||||||||||
Net sales | $ | 223,022 | $ | (7,527 | ) | $ | — | $ | 215,495 | |||||||
Gross Profit | 47,255 | 737 | — | 47,992 | ||||||||||||
Operating Income | 18,733 | 1,603 | 176 | (b) | 20,512 | |||||||||||
Income before income tax expense | 6,319 | 1,403 | 176 | (b) | 7,898 | |||||||||||
Income tax (benefit) expense | 2,687 | 485 | — | 3,172 | ||||||||||||
Net income (loss) attributable to Polymer Group, Inc. | 12,353 | — | 176 | 12,529 | ||||||||||||
Earnings per common share — basic | $ | 0.62 | $ | — | $ | 0.01 | $ | 0.63 | ||||||||
Earnings per common share — diluted | $ | 0.62 | $ | — | $ | 0.01 | $ | 0.63 |
Difco and | ||||||||||||||||
Previously | Discontinued | Other | ||||||||||||||
Reported | Operations | Adjustments | As Presented | |||||||||||||
Net sales | $ | 206,040 | $ | (6,588 | ) | $ | — | $ | 199,452 | |||||||
Gross Profit | $ | 42,634 | $ | (308 | ) | 42,326 | ||||||||||
Operating Income | 13,868 | 705 | — | 14,573 | ||||||||||||
Income before income tax expense | 5,097 | 626 | — | 5,723 | ||||||||||||
Income tax (benefit) expense | 1,927 | (144 | ) | — | 1,783 | |||||||||||
Net income (loss) attributable to Polymer Group, Inc. | 6,235 | — | — | 6,235 | ||||||||||||
Earnings per common share — basic | $ | 0.31 | $ | — | $ | — | $ | 0.31 | ||||||||
Earnings per common share — diluted | $ | 0.31 | $ | — | $ | — | $ | 0.31 |
Difco and | ||||||||||||||||
Previously | Discontinued | Other | ||||||||||||||
Reported | Operations | Adjustments | As Presented | |||||||||||||
Net sales | $ | 210,010 | $ | (8,831 | ) | $ | — | $ | 201,179 | |||||||
Gross Profit | 49,486 | (1,413 | ) | 48,073 | ||||||||||||
Operating Income | 19,965 | (713 | ) | — | 19,252 | |||||||||||
Income before income tax expense | 13,492 | (716 | ) | — | 12,776 | |||||||||||
Income tax (benefit) expense | 7,535 | (302 | ) | — | 7,233 | |||||||||||
Net income (loss) attributable to Polymer Group, Inc. | 9,561 | — | — | 9,561 | ||||||||||||
Earnings per common share — basic | $ | 0.49 | $ | — | $ | — | $ | 0.49 | ||||||||
Earnings per common share — diluted | $ | 0.49 | $ | — | $ | — | $ | 0.49 |
(a) | The adjustment reflects the cumulative impact for fiscal years 2003 through 2009 of the application of a general exception to the technical application of ASC 740, “Income Taxes”. The adjustment was originally recorded in the Company’sForm 10-Q for the quarterly period ended October 2, 2010 as a cumulativeout-of-periodcatch-up adjustment and was not pushed back to the respective periods in 2003 through |
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2009 that were affected. Management determined the adjustment amounts were not material to the financial statements of the prior periods affected by the adjustment and that the financial statements as previously presented were not materially misstated. However, as set forth in this prospectus, the adjustments are reflected in the proper periods in which the amounts should have been presented. | ||
(b) | The adjustment reflects the application of a net-worth tax associated with the Company’s Colombia legal entity that was not previously recorded in the financial statements for the fiscal quarters presented. |
Note 22. | Supplemental Cash Flow Information |
2010 | 2009 | 2008 | ||||||||||
Cash payments of interest, net of amounts capitalized | $ | 31,193 | $ | 26,261 | $ | 31,879 | ||||||
Cash payments of income taxes, net | 14,367 | 6,514 | 3,645 |
Note 23. | Business Interruption and Insurance Recovery |
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Note 24. | Financial Guarantees and Condensed Consolidating Financial Statements |
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As of January 1, 2011
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 614 | $ | 4,289 | $ | 67,452 | $ | — | $ | 72,355 | ||||||||||
Accounts receivable, net | — | 14,906 | 106,841 | — | 121,747 | |||||||||||||||
Inventories, net | — | 36,866 | 68,314 | — | 105,180 | |||||||||||||||
Deferred income taxes | 25 | 62 | 4,532 | 21 | 4,640 | |||||||||||||||
Other current assets | 1,068 | 10,732 | 30,770 | (232 | ) | 42,338 | ||||||||||||||
Assets of discontinued operations | — | — | 18,805 | — | 18,805 | |||||||||||||||
Total current assets | 1,707 | 66,855 | 296,714 | (211 | ) | 365,065 | ||||||||||||||
Property, plant and equipment, net | 3,114 | 84,887 | 235,133 | — | 323,134 | |||||||||||||||
Goodwill | — | — | 2,253 | — | 2,253 | |||||||||||||||
Intangibles and loan acquisition costs, net | 3,348 | — | 1,932 | — | 5,280 | |||||||||||||||
Net investment in and advances (from) to subsidiaries | 457,742 | 702,560 | (199,545 | ) | (960,757 | ) | — | |||||||||||||
Deferred income taxes | — | — | 916 | — | 916 | |||||||||||||||
Other noncurrent assets | 488 | 8,317 | 34,667 | (8,143 | ) | 35,329 | ||||||||||||||
Total assets | $ | 466,399 | $ | 862,619 | $ | 372,070 | $ | (969,111 | ) | $ | 731,977 | |||||||||
Current liabilities: | ||||||||||||||||||||
Short-term borrowings | $ | — | $ | — | $ | 2,112 | $ | — | $ | 2,112 | ||||||||||
Accounts payable and accrued liabilities | 13,609 | 33,416 | 126,834 | — | 173,859 | |||||||||||||||
Income taxes payable | — | — | 2,164 | (232 | ) | 1,932 | ||||||||||||||
Current portion of long-term debt | — | — | 3,609 | — | 3,609 | |||||||||||||||
Liabilities of discontinued operations | 4,793 | 4,793 | ||||||||||||||||||
Total current liabilities | 13,609 | 33,416 | 139,512 | (232 | ) | 186,305 | ||||||||||||||
Long-term debt | 294,614 | — | 41,699 | (8,143 | ) | 328,170 | ||||||||||||||
Deferred income taxes | 8,161 | 62 | 11,823 | 21 | 20,067 | |||||||||||||||
Other noncurrent liabilities | 15,679 | 12,315 | 26,189 | — | 54,183 | |||||||||||||||
Total liabilities | 332,063 | 45,793 | 219,223 | (8,354 | ) | 588,725 | ||||||||||||||
Common stock | 214 | — | 36,081 | (36,081 | ) | 214 | ||||||||||||||
Other shareholders’ equity | 134,122 | 816,826 | 107,850 | (924,676 | ) | 134,122 | ||||||||||||||
Noncontrolling interests | — | — | 8,916 | — | 8,916 | |||||||||||||||
Total equity | 134,336 | 816,826 | 152,847 | (960,757 | ) | 143,252 | ||||||||||||||
Total liabilities and equity | $ | 466,399 | $ | 862,619 | $ | 372,070 | $ | (969,111 | ) | $ | 731,977 | |||||||||
F-68
Table of Contents
As of January 2, 2010
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 734 | $ | 4,195 | $ | 52,965 | $ | — | $ | 57,894 | ||||||||||
Accounts receivable, net | — | 17,557 | 105,149 | — | 122,706 | |||||||||||||||
Inventories, net | — | 39,216 | 60,455 | — | 99,671 | |||||||||||||||
Deferred income taxes | 22 | 139 | 3,605 | (161 | ) | 3,605 | ||||||||||||||
Other current assets | 1,252 | 6,238 | 26,522 | — | 34,012 | |||||||||||||||
Assets of discontinued operations | — | — | 17,096 | — | 17,096 | |||||||||||||||
Total current assets | 2,008 | 67,345 | 265,792 | (161 | ) | 334,984 | ||||||||||||||
Property, plant and equipment, net | 1,931 | 91,900 | 234,241 | — | 328,072 | |||||||||||||||
Goodwill | — | — | 3,407 | — | 3,407 | |||||||||||||||
Intangibles and loan acquisition costs, net | 4,233 | — | 1,297 | — | 5,530 | |||||||||||||||
Net investment in and advances (from) to subsidiaries | 449,392 | 656,063 | (215,395 | ) | (890,060 | ) | — | |||||||||||||
Deferred income taxes | — | — | 889 | — | 889 | |||||||||||||||
Other noncurrent assets | — | 8,765 | 27,017 | (8,753 | ) | 27,029 | ||||||||||||||
Total assets | $ | 457,564 | $ | 824,073 | $ | 317,248 | $ | (898,974 | ) | $ | 699,911 | |||||||||
Current liabilities: | ||||||||||||||||||||
Short-term borrowings | $ | 283 | $ | — | $ | 3,407 | $ | — | $ | 3,690 | ||||||||||
Accounts payable and accrued liabilities | 6,809 | 28,902 | 107,451 | — | 143,162 | |||||||||||||||
Income taxes payable | — | — | 4,754 | — | 4,754 | |||||||||||||||
Current portion of long-term debt | 4,100 | — | 12,821 | — | 16,921 | |||||||||||||||
Liabilities of discontinued operations | — | — | 2,615 | — | 2,615 | |||||||||||||||
Total current liabilities | 11,192 | 28,902 | 131,048 | — | 171,142 | |||||||||||||||
Long-term debt | 295,121 | — | 35,653 | (8,753 | ) | 322,021 | ||||||||||||||
Deferred income taxes | 8,159 | 139 | 13,288 | (161 | ) | 21,425 | ||||||||||||||
Other noncurrent liabilities | 26,735 | 12,606 | 21,587 | — | 60,928 | |||||||||||||||
Total liabilities | 341,207 | 41,647 | 201,576 | (8,914 | ) | 575,516 | ||||||||||||||
Common stock | 210 | — | 36,083 | (36,083 | ) | 210 | ||||||||||||||
Other shareholders’ equity | 116,147 | 782,426 | 71,551 | (853,977 | ) | 116,147 | ||||||||||||||
Noncontrolling interests | — | — | 8,038 | — | 8,038 | |||||||||||||||
Total equity | 116,357 | 782,426 | 115,672 | (890,060 | ) | 124,395 | ||||||||||||||
Total liabilities and equity | $ | 457,564 | $ | 824,073 | $ | 317,248 | $ | (898,974 | ) | $ | 699,911 | |||||||||
F-69
Table of Contents
For the Year Ended January 1, 2011
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net Sales | $ | — | $ | 340,407 | $ | 782,397 | $ | (16,593 | ) | $ | 1,106,211 | |||||||||
Cost of goods sold | — | 293,071 | 619,841 | (16,593 | ) | 896,319 | ||||||||||||||
Gross profit | — | 47,336 | 162,556 | — | 209,892 | |||||||||||||||
Selling, general and administrative expenses | 38,888 | 21,364 | 81,209 | — | 141,461 | |||||||||||||||
Special charges, net | 8,035 | 7,372 | 2,586 | — | 17,993 | |||||||||||||||
Acquisition and integration | 160 | — | 1,582 | 1,742 | ||||||||||||||||
Other operating loss (income), net | — | (389 | ) | (426 | ) | — | (815 | ) | ||||||||||||
Operating (loss) income | (47,083 | ) | 18,989 | 77,605 | — | 49,511 | ||||||||||||||
Other expense (income): | ||||||||||||||||||||
Interest expense, net | 27,555 | (14,112 | ) | 18,285 | — | 31,728 | ||||||||||||||
Intercompany royalty and technical service fees, net | (6,391 | ) | (7,734 | ) | 14,125 | — | — | |||||||||||||
Foreign currency and other loss, net | (1,634 | ) | 284 | 2,804 | — | 1,454 | ||||||||||||||
Equity in earnings of subsidiaries | 66,319 | 34,712 | — | (101,031 | ) | — | ||||||||||||||
(Loss) income before income tax expense and discontinued operations | (294 | ) | 75,263 | 42,391 | (101,031 | ) | 16,329 | |||||||||||||
Income tax (benefit) expense | (10,701 | ) | 8,763 | 6,472 | — | 4,534 | ||||||||||||||
(Loss) income before discontinued operations | 10,407 | 66,500 | 35,919 | (101,031 | ) | 11,795 | ||||||||||||||
Loss from discontinued operations, net of tax | — | — | (765 | ) | — | (765 | ) | |||||||||||||
Loss on sale of discontinued operations | — | — | — | — | — | |||||||||||||||
Net (loss) income | 10,407 | 66,500 | 35,154 | (101,031 | ) | 11,030 | ||||||||||||||
Net income attributable to noncontrolling interests | — | — | (623 | ) | — | (623 | ) | |||||||||||||
Net (loss) income attributable to Polymer Group, Inc. | $ | 10,407 | $ | 66,500 | $ | 34,531 | $ | (101,031 | ) | $ | 10,407 | |||||||||
F-70
Table of Contents
For the Year Ended January 2, 2010
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net Sales | $ | — | $ | 312,463 | $ | 548,161 | $ | (10,019 | ) | $ | 850,605 | |||||||||
Cost of goods sold | — | 256,618 | 420,656 | (10,019 | ) | 667,255 | ||||||||||||||
Gross profit | — | 55,845 | 127,505 | — | 183,350 | |||||||||||||||
Selling, general and administrative expenses | 30,303 | 22,529 | 60,486 | — | 113,318 | |||||||||||||||
Special charges, net | 464 | 14,074 | 6,225 | — | 20,763 | |||||||||||||||
Acquisition and integration | 1,789 | — | — | — | 1,789 | |||||||||||||||
Other operating loss (income), net | (1,825 | ) | (944 | ) | (1,967 | ) | — | (4,736 | ) | |||||||||||
Operating (loss) income | (30,731 | ) | 20,186 | 62,761 | — | 52,216 | ||||||||||||||
Other expense (income): | ||||||||||||||||||||
Interest expense, net | 26,028 | (17,575 | ) | 18,259 | — | 26,712 | ||||||||||||||
Gain on reacquisition of debt | (2,431 | ) | — | — | — | (2,431 | ) | |||||||||||||
Write off of loan acquisition costs | 5,088 | — | — | — | 5,088 | |||||||||||||||
Intercompany royalty and technical service fees, net | (24,675 | ) | 12,737 | 11,938 | — | — | ||||||||||||||
Foreign currency and other loss, net | 3,073 | (1,327 | ) | 3,500 | — | 5,246 | ||||||||||||||
Equity in earnings of subsidiaries | 49,294 | 22,778 | — | (72,072 | ) | — | ||||||||||||||
(Loss) income before income tax expense and discontinued operations | 11,480 | 49,129 | 29,064 | (72,072 | ) | 17,601 | ||||||||||||||
Income tax (benefit) expense | (8,595 | ) | 6,194 | 10,979 | — | 8,578 | ||||||||||||||
Income (loss) before discontinued operations | 20,075 | 42,935 | 18,085 | (72,072 | ) | 9,023 | ||||||||||||||
Income from discontinued operations, net of tax | — | — | 2,113 | — | 2,113 | |||||||||||||||
Loss on sale of discontinued operations | — | 6,802 | — | — | 6,802 | |||||||||||||||
Net income (loss) | 20,075 | 49,737 | 20,198 | (72,072 | ) | 17,938 | ||||||||||||||
Net loss attributable to noncontrolling interests | — | — | 2,137 | — | 2,137 | |||||||||||||||
Net income (loss) attributable to Polymer Group, Inc. | $ | 20,075 | $ | 49,737 | $ | 22,335 | $ | (72,072 | ) | $ | 20,075 | |||||||||
F-71
Table of Contents
For the Year Ended January 3, 2009
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net Sales | $ | — | $ | 408,880 | $ | 639,684 | $ | (22,370 | ) | $ | 1,026,194 | |||||||||
Cost of goods sold | — | 353,608 | 525,384 | (22,370 | ) | 856,6228 | ||||||||||||||
Gross profit | — | 55,272 | 114,300 | — | 169,572 | |||||||||||||||
Selling, general and administrative expenses | 26,171 | 26,223 | 63,080 | — | 115,474 | |||||||||||||||
Special charges, net | 7,661 | 13,451 | (1,024 | ) | — | 20,088 | ||||||||||||||
Other operating loss (income), net | (1,791 | ) | 113 | 6,026 | — | 4,960 | ||||||||||||||
Operating (loss) income | (32,653 | ) | 15,485 | 46,218 | — | 29,050 | ||||||||||||||
Other expense (income): | ||||||||||||||||||||
Interest expense, net | 31,173 | (17,258 | ) | 17,152 | — | 31,067 | ||||||||||||||
Intercompany royalty and technical service fees, net | (21,012 | ) | 7,615 | 13,397 | — | — | ||||||||||||||
Foreign currency and other loss, net | (6,325 | ) | 1,211 | 5,640 | — | 526 | ||||||||||||||
Equity in earnings of subsidiaries | 32,105 | 17,375 | — | (49,480 | ) | — | ||||||||||||||
(Loss) income before income tax expense and discontinued operations | (4,384 | ) | 41,292 | 10,029 | (49,480 | ) | (2,543 | ) | ||||||||||||
Income tax (benefit) expense | (9,093 | ) | 9,677 | 6,424 | — | 7,008 | ||||||||||||||
(Loss) income before discontinued operations | 4,709 | 31,615 | 3,605 | (49,480 | ) | (9,551 | ) | |||||||||||||
Loss from discontinued operations, net of tax | — | — | 8,291 | — | 8,291 | |||||||||||||||
Loss on sale of discontinued operations | — | — | — | — | — | |||||||||||||||
Net (loss) income | 4,709 | 31,615 | 11,896 | (49,480 | ) | (1,260 | ) | |||||||||||||
Net loss attributable to noncontrolling interests | — | — | 5,969 | — | 5,969 | |||||||||||||||
Net (loss) income attributable to Polymer Group, Inc. | $ | 4,709 | $ | 31,615 | $ | 17,865 | $ | (49,480 | ) | $ | 4,709 | |||||||||
F-72
Table of Contents
For the Year Ended January 1, 2011
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | (8,979 | ) | $ | 5,433 | $ | 66,790 | $ | — | $ | 63,244 | |||||||||
Investing activities: | ||||||||||||||||||||
Purchases of property, plant and equipment | (15,799 | ) | (11,774 | ) | (32,591 | ) | 14,981 | (45,183 | ) | |||||||||||
Proceeds from the sale of assets | 14,981 | 993 | 3,370 | (14,981 | ) | 4,363 | ||||||||||||||
Acquisition of intangibles and other | (316 | ) | — | (140 | ) | — | (456 | ) | ||||||||||||
Net activity in investment in and advances (to) from subsidiaries | 14,002 | 5,442 | (19,444 | ) | — | — | ||||||||||||||
Net cash (used in) provided by investing activities | 12,868 | (5,339 | ) | (48,805 | ) | — | (41,276 | ) | ||||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from other long-term debt | 18,000 | — | 10,086 | — | 28,086 | |||||||||||||||
Proceeds from short-term borrowings | 1,218 | — | 16,641 | — | 17,859 | |||||||||||||||
Repayment of term loan | (3,999 | ) | — | — | — | (3,999 | ) | |||||||||||||
Repayment of other long-term debt | (18,000 | ) | — | (12,880 | ) | — | (30,880 | ) | ||||||||||||
Repayment of short-term borrowings | (1,501 | ) | — | (17,924 | ) | — | (19,425 | ) | ||||||||||||
Loan acquisition costs | (166 | ) | — | — | — | (166 | ) | |||||||||||||
Reacquisition of debt | ||||||||||||||||||||
Other financing, net | 439 | — | — | �� | — | 439 | ||||||||||||||
Net cash used in financing activities | (4,009 | ) | — | (4,077 | ) | — | (8,086 | ) | ||||||||||||
Effect of exchange rate changes on cash | — | — | 579 | — | 579 | |||||||||||||||
Net (decrease) in cash and cash equivalents | (120 | ) | 94 | 14,487 | — | 14,461 | ||||||||||||||
Cash and cash equivalents at beginning of period | 734 | 4,195 | 52,965 | — | 57,894 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 614 | $ | 4,289 | $ | 67,452 | $ | — | $ | 72,355 | ||||||||||
F-73
Table of Contents
For the Year Ended January 2, 2010
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | 40,777 | $ | (12,157 | ) | $ | 70,389 | $ | — | $ | 99,009 | |||||||||
Investing activities: | ||||||||||||||||||||
Purchases of property, plant and equipment | (851 | ) | (2,516 | ) | (40,110 | ) | — | (43,477 | ) | |||||||||||
Proceeds from the sale of assets | — | 33,297 | 45 | — | 33,342 | |||||||||||||||
Acquisition of noncontrolling interest | — | — | (4,083 | ) | — | (4,083 | ) | |||||||||||||
Acquisition of intangibles and other | (349 | ) | — | — | — | (349 | ) | |||||||||||||
Net activity in investment in and advances (to) from subsidiaries | 37,172 | (24,983 | ) | (12,189 | ) | — | — | |||||||||||||
Net cash (used in) provided by investing activities | 35,972 | 5,798 | (56,337 | ) | — | (14,567 | ) | |||||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from other long-term debt | 5,000 | — | 14,519 | — | 19,519 | |||||||||||||||
Proceeds from short-term borrowings | 315 | — | 18,528 | — | 18,843 | |||||||||||||||
Repayment of term loan | (60,931 | ) | (60,931 | ) | ||||||||||||||||
Repayment of other long-term debt | (5,000 | ) | — | (1,156 | ) | — | (6,156 | ) | ||||||||||||
Repayment of short-term borrowings | (32 | ) | — | (27,104 | ) | — | (27,136 | ) | ||||||||||||
Loan acquisition costs | (4,366 | ) | — | (126 | ) | — | (4,492 | ) | ||||||||||||
Reacquisition of debt | (12,298 | ) | — | — | — | (12,298 | ) | |||||||||||||
Net cash used in financing activities | (77,312 | ) | — | 4,661 | — | (72,651 | ) | |||||||||||||
Effect of exchange rate changes on cash | — | — | 385 | — | 385 | |||||||||||||||
Net (decrease) in cash and cash equivalents | (563 | ) | (6,359 | ) | 19,098 | — | 12,176 | |||||||||||||
Cash and cash equivalents at beginning of period | 1,297 | 10,554 | 33,867 | — | 45,718 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 734 | $ | 4,195 | $ | 52,965 | $ | — | $ | 57,894 | ||||||||||
F-74
Table of Contents
For the Year Ended January 3, 2009
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | 10,077 | $ | 20,789 | $ | 28,592 | $ | — | $ | 59,458 | ||||||||||
Investing activities: | ||||||||||||||||||||
Purchases of property, plant and equipment | (598 | ) | (13,685 | ) | (20,177 | ) | — | (34,460 | ) | |||||||||||
Proceeds from the sale of assets | — | 386 | 3,038 | — | 3,424 | |||||||||||||||
Acquisition of intangibles and other | (590 | ) | — | — | — | (590 | ) | |||||||||||||
Net activity in investment in and advances (to) from subsidiaries | 15,383 | (739 | ) | (14,644 | ) | — | — | |||||||||||||
Net cash (used in) provided by investing activities | 14,195 | (14,038 | ) | (31,783 | ) | — | (31,626 | ) | ||||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from other long-term debt | 26,000 | — | 6,680 | — | 32,680 | |||||||||||||||
Proceeds from short-term borrowings | — | — | 20,129 | — | 20,129 | |||||||||||||||
Repayment of term loan | (24,100 | ) | — | — | — | (24,100 | ) | |||||||||||||
Repayment of other long-term debt | (26,000 | ) | — | (3,768 | ) | — | (29,768 | ) | ||||||||||||
Repayment of short-term borrowings | — | — | (11,828 | ) | — | (11,828 | ) | |||||||||||||
Other financing, net | 27 | — | — | — | 27 | |||||||||||||||
Net cash used in financing activities | (24,073 | ) | — | 11,213 | — | (12,860 | ) | |||||||||||||
Effect of exchange rate changes on cash | — | — | (952 | ) | — | (952 | ) | |||||||||||||
Net (decrease) in cash and cash equivalents | 199 | 6,751 | 7,070 | — | 14,020 | |||||||||||||||
Cash and cash equivalents at beginning of period | 1,098 | 3,803 | 26,797 | — | 31,698 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 1,297 | $ | 10,554 | $ | 33,867 | $ | — | $ | 45,718 | ||||||||||
Note 25. | Subsequent Events |
F-75
Table of Contents
F-76
Table of Contents
F-77
Table of Contents
Additions | ||||||||||||||||||||
Balance at | Charged to | |||||||||||||||||||
Beginning | Costs and | Charged to | Balance at | |||||||||||||||||
Description | of Period | Expenses | Other Accounts | Deductions | End of Period | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Fiscal Year ended January 1, 2011 | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 9,148 | 1,307 | 256 | (3) | 3,185 | (6) | 7,526 | ||||||||||||
Valuation allowance for deferred tax assets | 174,792 | 14,965 | 810 | (3) | 72 | (4) | 190,495 | |||||||||||||
Plant realignment | 2,803 | 9,098 | 96 | 10,271 | (5) | 1,726 | ||||||||||||||
Fiscal Year ended January 2, 2010 | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 7,673 | 2,320 | 411 | (1) | 1,256 | (2) | 9,148 | ||||||||||||
Valuation allowance for deferred tax assets | 183,406 | 7,763 | 626 | (3) | 17,003 | (4) | 174,792 | |||||||||||||
Plant realignment | 2,672 | 17,113 | (21 | ) | 16,961 | (5) | 2,803 | |||||||||||||
Fiscal Year ended January 3, 2009 | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 5,963 | 1,931 | (181 | ) | 40 | 7,673 | |||||||||||||
Valuation allowance for deferred tax assets | 172,746 | 16,418 | 3,092 | (2)(3) | 8,850 | (4) | 183,406 | |||||||||||||
Plant realignment | 5,903 | 6,388 | 120 | 9,739 | (5) | 2,672 |
(1) | Opening balance associated with acquisition. | |
(2) | Primarily recoveries. | |
(3) | Foreign currency translation adjustments and valuation allowance related to temporary differences not impacting the Consolidated Statement of Operations. | |
(4) | Net adjustments due to realizations of deferred tax assets and valuation allowance related to temporary differences. | |
(5) | Cash payments and adjustments. | |
(6) | Primarily write-offs. |
F-78
Table of Contents
Successor | Predecessor | ||||||||
October 1, 2011 | January 1, 2011 | ||||||||
(Unaudited) | |||||||||
(In thousands, except share data) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 62,371 | $ | 72,355 | |||||
Accounts receivable, net | 148,185 | 121,747 | |||||||
Inventories, net | 120,140 | 105,180 | |||||||
Deferred income taxes | 5,083 | 4,640 | |||||||
Other current assets | 45,497 | 42,338 | |||||||
Assets of discontinued operations | 4,435 | 18,805 | |||||||
Total current assets | 385,711 | 365,065 | |||||||
Property, plant and equipment, net | 518,636 | 323,134 | |||||||
Goodwill | 90,166 | 2,253 | |||||||
Intangibles and loan acquisition costs, net | 61,238 | 5,280 | |||||||
Deferred income taxes | 64 | 916 | |||||||
Other noncurrent assets | 42,975 | 35,329 | |||||||
Total assets | $ | 1,098,790 | $ | 731,977 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term borrowings | $ | 3,582 | $ | 2,112 | |||||
Accounts payable and accrued liabilities | 202,344 | 173,859 | |||||||
Income taxes payable | — | 1,932 | |||||||
Deferred income taxes | 561 | — | |||||||
Current portion of long-term debt | 3,577 | 3,609 | |||||||
Liabilities of discontinued operations | 1,598 | 4,793 | |||||||
Total current liabilities | 211,662 | 186,305 | |||||||
Long-term debt | 592,772 | 328,170 | |||||||
Deferred income taxes | 37,762 | 20,067 | |||||||
Other noncurrent liabilities | 50,604 | 54,183 | |||||||
Total liabilities | 892,800 | 588,725 | |||||||
Commitments and contingencies | |||||||||
Shareholders’ equity: | |||||||||
Successor common stock — 1,000 shares issued and outstanding | — | — | |||||||
Predecessor Class A common stock — 21,326,678 issued and outstanding at January 1, 2011 | — | 213 | |||||||
Predecessor Class B convertible common stock — 78,203 shares issued and outstanding at January 1, 2011 | — | 1 | |||||||
Predecessor Class C convertible common stock — 24,319 issued and outstanding at January 1, 2011 | — | — | |||||||
Predecessor Class D convertible common stock — 0 shares issued and outstanding | — | — | |||||||
Predecessor Class E convertible common stock — 0 shares issued and outstanding | — | — | |||||||
Predecessor preferred stock — 0 shares issued and outstanding | — | — | |||||||
Additional paid-in capital | 262,271 | 216,888 | |||||||
Retained deficit | (56,527 | ) | (121,819 | ) | |||||
Accumulated other comprehensive income | 246 | 39,053 | |||||||
Total Polymer Group, Inc. shareholders’ equity | 205,990 | 134,336 | |||||||
Noncontrolling interests | — | 8,916 | |||||||
Total equity | 205,990 | 143,252 | |||||||
Total liabilities and equity | $ | 1,098,790 | $ | 731,977 | |||||
F-79
Table of Contents
Successor | Predecessor | ||||||||||||
Eight Months | One Month | Nine Months | |||||||||||
Ended | Ended | Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
2011 | 2011 | 2010 | |||||||||||
(Unaudited) | |||||||||||||
(In thousands) | |||||||||||||
Net sales | $ | 811,199 | $ | 84,606 | $ | 837,292 | |||||||
Cost of goods sold | 689,684 | 68,531 | 678,247 | ||||||||||
Gross profit | 121,515 | 16,075 | 159,045 | ||||||||||
Selling, general and administrative expenses | 96,008 | 11,564 | 102,298 | ||||||||||
Special charges, net | 36,887 | 20,824 | 11,868 | ||||||||||
Acquisition and integration expenses | — | — | 1,729 | ||||||||||
Other operating loss (income), net | 2,715 | (564 | ) | (2,030 | ) | ||||||||
Operating (loss) income | (14,095 | ) | (15,749 | ) | 45,180 | ||||||||
Other expense: | |||||||||||||
Interest expense, net | 33,525 | 1,922 | 24,554 | ||||||||||
Foreign currency and other loss, net | 3,760 | 82 | 1,139 | ||||||||||
(Loss) income before income tax expense and discontinued operations | (51,380 | ) | (17,753 | ) | 19,487 | ||||||||
Income tax (benefit) expense | (907 | ) | 549 | 2,978 | |||||||||
(Loss) income from continuing operations | (50,473 | ) | (18,302 | ) | 16,509 | ||||||||
Discontinued Operations: | |||||||||||||
(Loss) income from discontinued operations | (5,157 | ) | 182 | (401 | ) | ||||||||
Loss on sale of discontinued operations | (736 | ) | — | — | |||||||||
(Loss) income from discontinued operations, net of tax | (5,893 | ) | 182 | (401 | ) | ||||||||
Net (loss) income | (56,366 | ) | (18,120 | ) | 16,108 | ||||||||
Net income attributable to noncontrolling interests | (161 | ) | (83 | ) | (447 | ) | |||||||
Net (loss) income attributable to Polymer Group, Inc. | $ | (56,527 | ) | $ | (18,203 | ) | $ | 15,661 | |||||
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Polymer Group, Inc. Shareholders | ||||||||||||||||||||||||||||||||
Accumulated | Total Polymer | |||||||||||||||||||||||||||||||
Additional | Other | Group, Inc. | ||||||||||||||||||||||||||||||
Common Stock | Paid-in | Retained | Comprehensive | Shareholders | Noncontrolling | Total | ||||||||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income (Loss) | Equity | Interest | Equity | |||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Predecessor | ||||||||||||||||||||||||||||||||
Balance — January 1, 2011 | 21,429 | $ | 214 | $ | 216,888 | $ | (121,819 | ) | $ | 39,053 | $ | 134,336 | $ | 8,916 | $ | 143,252 | ||||||||||||||||
Net income (loss) | — | — | — | (18,203 | ) | — | (18,203 | ) | 83 | (18,120 | ) | |||||||||||||||||||||
Cash flow hedge adjustment, net of reclassification adjustments | — | — | — | — | 183 | 183 | — | 183 | ||||||||||||||||||||||||
Compensation recognized on share-based awards | — | — | 13,591 | — | — | 13,591 | — | 13,591 | ||||||||||||||||||||||||
Issuance of Class A common shares | 394 | 4 | 6,432 | — | — | 6,436 | — | 6,436 | ||||||||||||||||||||||||
Currency translation adjustments, net of tax | — | — | — | — | 2,845 | 2,845 | — | 2,845 | ||||||||||||||||||||||||
Balance — January 28, 2011 | 21,823 | 218 | 236,911 | (140,022 | ) | 42,081 | 139,188 | 8,999 | 148,187 | |||||||||||||||||||||||
Successor | ||||||||||||||||||||||||||||||||
Preliminary balance of noncontrolling interest | — | — | — | — | — | — | 8,999 | 8,999 | ||||||||||||||||||||||||
Issuance of Stock | 1 | — | 259,865 | — | — | 259,865 | — | 259,865 | ||||||||||||||||||||||||
Net income (loss) | — | — | — | (56,527 | ) | — | (56,527 | ) | 161 | (56,366 | ) | |||||||||||||||||||||
Amounts due from shareholders | (58 | ) | (58 | ) | (58 | ) | ||||||||||||||||||||||||||
Buyout of noncontrolling interest | — | — | 1,914 | — | 62 | 1,976 | (9,222 | ) | (7,246 | ) | ||||||||||||||||||||||
Compensation recognized on share-based awards | — | — | 550 | — | — | 550 | — | 550 | ||||||||||||||||||||||||
Currency translation adjustments, net of tax | — | — | — | — | 184 | 184 | 62 | 246 | ||||||||||||||||||||||||
Balance — October 1, 2011 | 1 | $ | — | $ | 262,271 | $ | (56,527 | ) | $ | 246 | $ | 205,990 | $ | — | $ | 205,990 | ||||||||||||||||
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Successor | |||||||||||||
Predecessor | |||||||||||||
Eight Months Ended | One Month Ended | Nine Months Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
2011 | 2011 | 2010 | |||||||||||
(Unaudited) | |||||||||||||
(In thousands) | |||||||||||||
Net (loss) income | $ | (56,366 | ) | $ | (18,120 | ) | $ | 16,108 | |||||
Other comprehensive income (loss), net of tax | |||||||||||||
Unrealized currency translation adjustments | 246 | 2,845 | (3,139 | ) | |||||||||
Employee postretirement benefits | — | — | 275 | ||||||||||
Cash flow hedge adjustments | — | 183 | 1,081 | ||||||||||
Total other comprehensive income (loss), net of tax | 246 | 3,028 | (1,783 | ) | |||||||||
Comprehensive loss | (56,120 | ) | (15,092 | ) | (14,325 | ) | |||||||
Comprehensive income attributable to noncontrolling interests | (223 | ) | (83 | ) | (602 | ) | |||||||
Comprehensive loss attributable to Polymer Group, Inc. | $ | (56,343 | ) | $ | (15,175 | ) | $ | (14,927 | ) | ||||
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Successor | Predecessor | ||||||||||||
Eight Months | One Month | Nine Months | |||||||||||
Ended | Ended | Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
2011 | 2011 | 2010 | |||||||||||
(Unaudited) | |||||||||||||
(In thousands) | |||||||||||||
Operating activities: | |||||||||||||
Net (loss) income attributable to Polymer Group, Inc. | $ | (56,527 | ) | $ | (18,203 | ) | $ | 15,661 | |||||
Adjustments to reconcile net loss attributable to Polymer Group, Inc. to net cash provided by (used in) operating activities: | |||||||||||||
Deferred income taxes | (291 | ) | — | 2,864 | |||||||||
Depreciation and amortization | 35,845 | 3,535 | 34,916 | ||||||||||
Asset impairment charge | — | — | 744 | ||||||||||
Inventorystep-up related to merger | 17,465 | — | — | ||||||||||
Inventory absorption related tostep-up depreciation | 690 | — | — | ||||||||||
Gain on firm commitment | — | — | 62 | ||||||||||
(Gains) losses on sale of assets, net | 703 | (25 | ) | (909 | ) | ||||||||
Loss on derivatives and other financial instruments | — | 187 | — | ||||||||||
Noncash compensation | 550 | 13,591 | 3,108 | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||
Accounts receivable, net | (25,947 | ) | (3,287 | ) | (23,176 | ) | |||||||
Inventories, net | (5,655 | ) | (2,988 | ) | (7,673 | ) | |||||||
Other current assets | 33,097 | (38,025 | ) | (4,292 | ) | ||||||||
Accounts payable and accrued liabilities | (3,427 | ) | 17,238 | 31,917 | |||||||||
Other, net | (3,929 | ) | 2,707 | (13,149 | ) | ||||||||
Net cash (used in) provided by operating activities | (7,426 | ) | (25,270 | ) | 40,073 | ||||||||
Investing activities: | |||||||||||||
Acquisition of Polymer Group, Inc. | (403,496 | ) | — | — | |||||||||
Purchases of property, plant and equipment | (46,380 | ) | (8,405 | ) | (21,439 | ) | |||||||
Proceeds from sale of assets | 10,975 | 105 | 2,234 | ||||||||||
Acquisition of noncontrolling interest | (7,246 | ) | — | — | |||||||||
Acquisition of intangibles and other | (50 | ) | (5 | ) | (405 | ) | |||||||
Net cash used in investing activities | (446,197 | ) | (8,305 | ) | (19,610 | ) | |||||||
Financing activities: | |||||||||||||
Proceeds from issuance of senior notes | 560,000 | — | — | ||||||||||
Issuance of common stock | 259,865 | — | — | ||||||||||
Proceeds from other long-term debt | 10,281 | 31,500 | 18,084 | ||||||||||
Proceeds from short-term borrowings | 5,245 | 631 | 16,841 | ||||||||||
Repayment of term loan | (286,470 | ) | — | (3,008 | ) | ||||||||
Repayment of other long-term debt | (50,133 | ) | (24 | ) | (27,757 | ) | |||||||
Repayment of short-term borrowings | (34,874 | ) | (665 | ) | (13,544 | ) | |||||||
Loan acquisition costs | (19,252 | ) | — | (166 | ) | ||||||||
Net cash provided by (used in) financing activities | 444,662 | 31,442 | (9,550 | ) | |||||||||
Effect of exchange rate changes on cash | 561 | 549 | 140 | ||||||||||
Net (decrease) increase in cash and cash equivalents | (8,400 | ) | (1,584 | ) | 11,053 | ||||||||
Cash and cash equivalents at beginning of period | 70,771 | 72,355 | 57,894 | ||||||||||
Cash and cash equivalents at end of period | $ | 62,371 | $ | 70,771 | $ | 68,947 | |||||||
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Note 1. | Description of Business and Basis of Presentation |
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Successor | ||||||||||||
Eight Months Ended October 1, 2011 | ||||||||||||
Before- | Tax | Net-of- | ||||||||||
Tax | (Expense) | Tax | ||||||||||
Amount | or Benefit | Amount | ||||||||||
Foreign currency translation adjustments | $ | 246 | $ | — | $ | 246 | ||||||
Defined benefit pension plans | — | — | — | |||||||||
Cash flow hedge adjustments | — | — | — | |||||||||
Other comprehensive income | $ | 246 | $ | — | $ | 246 | ||||||
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Predecessor | ||||||||||||
One Month Ended January 28, 2011 | ||||||||||||
Before- | Tax | Net-of- | ||||||||||
Tax | (Expense) | Tax | ||||||||||
Amount | or Benefit | Amount | ||||||||||
Foreign currency translation adjustments | $ | 2,845 | $ | — | $ | 2,845 | ||||||
Defined benefit pension plans | — | — | — | |||||||||
Cash flow hedge adjustments | 183 | — | 183 | |||||||||
Other comprehensive income | $ | 3,028 | $ | — | $ | 3,028 | ||||||
Predecessor | ||||||||||||
Nine Months Ended October 2, 2010 | ||||||||||||
Before- | Tax | Net-of- | ||||||||||
Tax | (Expense) | Tax | ||||||||||
Amount | or Benefit | Amount | ||||||||||
Foreign currency translation adjustments | $ | (3,139 | ) | $ | — | $ | (3,139 | ) | ||||
Defined benefit pension plans | 275 | — | 275 | |||||||||
Cash flow hedge adjustments | 1,724 | (643 | ) | 1,081 | ||||||||
Other comprehensive income | $ | (1,140 | ) | $ | (643 | ) | $ | (1,783 | ) | |||
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Note 2. | Concentration of Credit Risks and Accounts Receivable Factoring Agreements |
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Note 3. | Special Charges, Net |
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Successor | Predecessor | ||||||||||||
Eight Months | One Month | Nine Months | |||||||||||
Ended | Ended | Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
2011 | 2011 | 2010 | |||||||||||
Restructuring and plant realignment costs | $ | 1,314 | $ | 194 | $ | 8,462 | |||||||
Accelerated vesting of share-based awards | — | 12,694 | — | ||||||||||
Blackstone acquisition costs | 26,322 | 6,137 | — | ||||||||||
Colombia flood | 8,095 | 1,685 | — | ||||||||||
Asset impairment costs | — | — | 744 | ||||||||||
Other costs | 1,156 | 114 | 2,662 | ||||||||||
$ | 36,887 | $ | 20,824 | $ | 11,868 | ||||||||
Successor | Predecessor | ||||||||
Eight Months | One Month | ||||||||
Ended | Ended | ||||||||
October 1, | January 28, | ||||||||
2011 | 2011 | ||||||||
Balance accrued at beginning of period | $ | 1,694 | $ | 1,726 | |||||
2011 restructuring and plant realignment costs | 1,314 | 194 | |||||||
Cash payments | (1,810 | ) | (220 | ) | |||||
Adjustments | (73 | ) | (6 | ) | |||||
Balance accrued at end of period | $ | 1,125 | $ | 1,694 | |||||
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Note 4. | Acquisitions |
• | Each share of Predecessor Polymer’s common and preferred stock, outstanding immediately prior to the Acquisition were cancelled and converted into the right to receive up to $18.16 in cash for each share, without interest. A portion of the purchase price, approximately $2.91 per share, was deposited in an escrow fund to cover liabilities, costs and expenses related to the application of the personal holding company (“PHC”) rules of the Internal Revenue Code of 1986, as amended (the “Code”) as further described in Note 10 “Income Taxes”. |
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• | Each outstanding restricted share or restricted share unit convertible into Predecessor Polymer common stock outstanding immediately prior to the Acquisition vested (if unvested) and was cancelled in exchange for the right to receive cash for the excess of up to $18.16 in cash for each share, without interest. As discussed previously, approximately $2.91 per share was deposited in an escrow fund for the PHC matter. | |
• | Each outstanding option to acquire Predecessor Polymer common stock outstanding immediately prior to the Acquisition vested (if unvested) and was cancelled in exchange for the right to receive cash for the excess of up to $18.16 in cash for each share, without interest, over the $6.00 per share exercise price of the option. As discussed previously, approximately $2.91 per share was deposited in an escrow fund for the PHC matter. | |
• | Successor Polymer received $259.9 million in equity contributions and became a wholly-owned subsidiary of Holdings. See Note 16 “Stockholders’ Equity” for further information. | |
• | Successor Polymer issued $560.0 million aggregate principal amount of 7.75% senior secured notes due 2019 (the “Senior Secured Notes”). The Senior Secured Notes are fully, unconditionally and jointly and severally guaranteed on a senior secured basis by each of Polymer’s wholly-owned domestic subsidiaries. See Note 9 “Debt” and Note 22 “Financial Guarantees and Condensed Consolidating Financial Statements” for further information. | |
• | Successor Polymer entered into senior secured asset-based revolving credit facilities (the “ABL Facility”) to provide for borrowings not to exceed $50.0 million, subject to borrowing base availability, with a maturity of four years. See Note 9 “Debt” for further information. | |
• | Successor Polymer repaid approximately $333.9 million of the Company’s pre-Acquisition indebtedness. See Note 9 “Debt” for further information. |
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At January 28, 2011 | (In thousands) | |||||||
Purchase price of outstanding equity | $ | 403,496 | ||||||
Acquisition related costs: | ||||||||
Included in special charges, net: | ||||||||
January 29, 2011 through October 1, 2011 | $ | 26,322 | ||||||
January 2, 2011 through January 28, 2011 | 6,137 | |||||||
January 3, 2010 through January 1, 2011 | 6,388 | 38,847 | ||||||
Deferred financing costs | 19,252 | |||||||
Total acquisition related costs | $ | 58,099 | ||||||
Allocation of purchase price: | ||||||||
Cash and cash equivalents | $ | 70,771 | ||||||
Accounts receivable | 134,422 | |||||||
Inventory | 134,822 | |||||||
Other current assets, includes restricted cash of $31.1 million | 80,869 | |||||||
Property, plant and equipment | 496,953 | |||||||
Intangible assets: | ||||||||
Technology | $ | 21,000 | ||||||
Trade names | 17,500 | |||||||
Customer relationships | 8,500 | 47,000 | ||||||
Goodwill | 90,166 | |||||||
Indemnification tax asset | 16,221 | |||||||
Other noncurrent assets | 36,149 | |||||||
Total assets acquired | $ | 1,107,373 | ||||||
Total current liabilities, excluding current portion of debt and deferred tax liabilities | $ | 232,353 | ||||||
Current portion of long-term debt | 3,586 | |||||||
Long-term debt | 359,010 | |||||||
Deferred tax liabilities | 41,806 | |||||||
Other long-term liabilities | 58,123 | |||||||
Noncontrolling interest in PGI new assets | 8,999 | |||||||
Total liabilities assumed | $ | 703,877 | ||||||
Net assets acquired | $ | 403,496 | ||||||
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As | ||||||||
Nine Months Ended October 2, 2010 | Reported | Pro Forma | ||||||
Net sales | $ | 837,292 | $ | 837,292 | ||||
Net income (loss) | 15,661 | (22,568 | ) |
As | ||||||||
Combined Period Nine Months Ended October 1, 2011 | Reported | Pro Forma | ||||||
Net sales | $ | 895,805 | $ | 895,805 | ||||
Net loss | (74,730 | ) | (15,587 | ) |
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Note 5. | Discontinued Operations |
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Successor | Predecessor | ||||||||||||
Eight Months | One Month | Nine Months | |||||||||||
Ended | Ended | Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
2011 | 2011 | 2010 | |||||||||||
Net sales | $ | 27,212 | $ | 4,060 | $ | 29,261 | |||||||
Pre-tax (loss) income | $ | (4,859 | ) | $ | 320 | $ | (9 | ) | |||||
Income tax expense | 298 | 138 | 392 | ||||||||||
Net (loss) income | $ | (5,157 | ) | $ | 182 | $ | (401 | ) | |||||
Successor | Predecessor | ||||||||
October 1, | January 1, | ||||||||
2011 | 2011 | ||||||||
Accounts receivable, net | $ | 3,617 | $ | 5,812 | |||||
Inventories | — | 8,285 | |||||||
Property, plant and equipment, net | 31 | 2,351 | |||||||
Deferred income taxes | — | 1,858 | |||||||
Other assets | 787 | 499 | |||||||
Assets of discontinued operations | $ | 4,435 | $ | 18,805 | |||||
Accounts payable and accrued liabilities | $ | 1,066 | $ | 4,193 | |||||
Other liabilities | 532 | 600 | |||||||
Liabilities of discontinued operations | $ | 1,598 | $ | 4,793 | |||||
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Note 6. | Inventories, net |
Successor | Predecessor | ||||||||
October 1, | January 1, | ||||||||
2011 | 2011 | ||||||||
Finished goods | $ | 62,067 | $ | 53,619 | |||||
Work in process | 9,452 | 9,262 | |||||||
Raw materials and supplies | 48,621 | 42,299 | |||||||
$ | 120,140 | $ | 105,180 | ||||||
Note 7. | Goodwill, Intangibles and Loan Acquisition Costs |
Successor | Predecessor | ||||||||
October 1, | January 1, | ||||||||
2011 | 2011 | ||||||||
Cost: | |||||||||
Goodwill | $ | 90,166 | $ | 2,253 | |||||
Technology | 21,000 | — | |||||||
Customer relationships | 17,500 | 760 | |||||||
Trade names & trademarks | 8,500 | 3,215 | |||||||
Loan acquisition costs | 19,252 | 4,544 | |||||||
Other | — | 2,008 | |||||||
156,418 | 12,780 | ||||||||
Less accumulated amortization | (5,014 | ) | (5,247 | ) | |||||
$ | 151,404 | $ | 7,533 | ||||||
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Successor | Predecessor | ||||||||||||
Eight Months | One Month | Nine Months | |||||||||||
Ended | Ended | Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
2011 | 2011 | 2010 | |||||||||||
Amortization of: | |||||||||||||
Intangibles with finite lives, included inSelling, general and administrative expenses | $ | 3,169 | $ | 55 | $ | 562 | |||||||
Spain covenant not to compete, included inSpecial charges, net | — | 11 | — | ||||||||||
Loan acquisition costs included inInterest expense, net | 1,845 | 51 | 662 | ||||||||||
Total amortization expense | $ | 5,014 | $ | 117 | $ | 1,224 | |||||||
Note 8. | Accounts Payable and Accrued Liabilities |
Successor | Predecessor | ||||||||
October 1, | January 1, | ||||||||
2011 | 2011 | ||||||||
Accounts payable to vendors | $ | 140,622 | $ | 124,320 | |||||
Accrued salaries, wages, incentive compensation and other fringe benefits | 20,918 | 22,911 | |||||||
Other accrued expenses | 40,804 | 26,628 | |||||||
$ | 202,344 | $ | 173,859 | ||||||
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Note 9. | Debt |
Successor | Predecessor | ||||||||
October 1, | January 1, | ||||||||
2011 | 2011 | ||||||||
7.75% Senior Secured Notes due 2019; denominated in U.S. dollars with interest due semi-annually each February 1 and August 1 | $ | 560,000 | $ | — | |||||
Old Credit Facility, as defined below, are subject to certain terms and conditions: | |||||||||
First Lien Term Loan (Tranche 1) — interest at 4.5% as of January 1, 2011 | — | 15,932 | |||||||
First Lien Term Loan (Tranche 2) — interest at 7.00% as of January 1, 2011 | — | 270,538 | |||||||
Argentine Credit Facility: | |||||||||
Argentine Peso Loan — interest at 18.56% as of January 1, 2011; denominated in Argentine pesos | — | 4,573 | |||||||
Argentine Peso Loan for working capital — interest at 18.63% as of January 1, 2011; denominated in Argentine pesos | — | 844 | |||||||
United States Dollar Loan — interest at 3.20% as of October 1, 2011 and 3.19% as of January 1, 2011; denominated in U.S. dollars with any remaining unpaid balance due May 2016 | 15,845 | 18,979 | |||||||
Mexico Credit Facility — interest at 8.08% as of January 1, 2011; denominated in U.S. dollars | — | 10,546 | |||||||
Suzhou Credit Facility — interest at 4.91% as of October 1, 2011 and January 1, 2011; denominated in U.S. dollars with any remaining unpaid balance due November 2013 | 20,000 | 10,000 | |||||||
Other | 504 | 367 | |||||||
596,349 | 331,779 | ||||||||
Less: Current maturities | (3,577 | ) | (3,609 | ) | |||||
$ | 592,772 | $ | 328,170 | ||||||
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Note 10. | Income Taxes |
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Note 11. | Pension and Postretirement Benefit Plans |
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Successor | Predecessor | ||||||||||||
Eight Months | One Month | Nine Months | |||||||||||
Ended | Ended | Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
Pension Benefits | 2011 | 2011 | 2010 | ||||||||||
Current service costs | $ | 1,421 | $ | 159 | $ | 1,470 | |||||||
Interest costs on projected benefit obligation and other | 4,370 | 492 | 4,698 | ||||||||||
Return on plan assets | (4,784 | ) | (539 | ) | (4,355 | ) | |||||||
Amortization of transition obligation and other | (81 | ) | (8 | ) | 162 | ||||||||
Periodic benefit cost, net | $ | 926 | $ | 104 | $ | 1,975 | |||||||
Successor | Predecessor | ||||||||||||
Eight Months | One Month | Nine Months | |||||||||||
Ended | Ended | Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
Postretirement Benefits | 2011 | 2011 | 2010 | ||||||||||
Current service costs | $ | 59 | $ | 7 | $ | 57 | |||||||
Interest costs on projected benefit obligation and other | 201 | 23 | 257 | ||||||||||
Return on plan assets | — | — | — | ||||||||||
Amortization of transition obligation and other | (218 | ) | (25 | ) | (224 | ) | |||||||
Periodic benefit cost, net | $ | 42 | $ | 5 | $ | 90 | |||||||
Note 12. | Equity Compensation Plans |
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Number of | ||||||||
Shares | Exercise Price | |||||||
Outstanding at January 1, 2011 | — | |||||||
Granted | 5,770.92 | $ | 1,000.00 | |||||
Exercised | — | — | ||||||
Forfeited | 282.61 | 1,000.00 | ||||||
Cancelled/expired | — | — | ||||||
Outstanding at October 1, 2011 | 5,488.31 | $ | 1,000.00 | |||||
January 28, | September 22, | |||||||
2011 Issued | 2011 Issued | |||||||
Options | Options | |||||||
Risk-free interest rate | 1.92 | % | 0.79 | % | ||||
Dividend yield | 0.00 | % | 0.00 | % | ||||
Expected volatility factor | 49.54 | % | 49.71 | % | ||||
Expected option life in years | 5.0 | 4.35 |
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Note 13. | Other Operating Loss (Income), Net and Foreign Currency Loss (Gain), Net |
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Successor | Predecessor | ||||||||||||
Eight Months | One Month | Nine Months | |||||||||||
Ended | Ended | Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
2011 | 2011 | 2010 | |||||||||||
Included inOther operating loss (income), net | $ | 3,229 | $ | (504 | ) | $ | (1,469 | ) | |||||
Included inForeign currency and other loss, net | 567 | 150 | 1,325 | ||||||||||
$ | 3,796 | $ | (354 | ) | $ | (144 | ) | ||||||
Note 14. | Derivative and Other Financial Instruments and Hedging Activities |
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Successor | Predecessor | ||||||||||||||||
As of October 1, 2011 | As of January 1, 2011 | ||||||||||||||||
Notional | Fair Value | Notional | Fair Value | ||||||||||||||
Cash flow hedges: | |||||||||||||||||
Interest rate swaps(1) | N/A | N/A | $ | 18,693 | $ | 163 | |||||||||||
Interest rate swaps — undesignated(1) | N/A | N/A | 221,307 | 1,872 | |||||||||||||
Foreign currency hedges: | |||||||||||||||||
Foreign exchange contracts(3) | 40,265 | (2,673 | ) | 21,661 | 542 | ||||||||||||
Foreign exchange contracts — undesignated(2) | 6,392 | (38 | ) | N/A | N/A | ||||||||||||
Net value | $ | 46,657 | $ | (2,711 | ) | $ | 261,661 | $ | 2,577 | ||||||||
(1) | Comprised of the 2009 Interest Rate Swap, with a $240.0 million notional amount. As discussed above, the 2009 Interest Rate Swap was settled concurrent with the Acquisition. |
(2) | As disclosed above, the Company settled the 2010 FX Forward Contracts on January 19, 2011 and simultaneously entered into the January 2011 FX Forward Contracts. The January 2011 FX Forward Contracts were undesignated as a hedge on July 8, 2011 due to commercial acceptance of the New Suzhou Medical Line and subsequent recording of the remaining liability. |
(3) | As disclosed above, the Company entered into the June 2011 FX Forward Contracts on June 30, 2011. |
Amount of Gain (Loss) Recognized in | |||||||||||||
Accumulated OCI on Derivative | |||||||||||||
(Effective Portion) | |||||||||||||
Successor | Predecessor | ||||||||||||
Eight Months | One Month | Nine Months | |||||||||||
Ended | Ended | Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
Derivatives in Cash Flow Hedging Relationships | 2011 | 2011 | 2010 | ||||||||||
Derivatives designated as hedging instruments: | |||||||||||||
Interest rate contracts | N/A | $ | (3 | ) | $ | 43 | |||||||
Derivatives not designated as hedging instruments | N/A | N/A | N/A |
Amount of Gain (Loss) Reclassified from | |||||||||||||
Accumulated OCI into Income(1) | |||||||||||||
Successor | Predecessor | ||||||||||||
Eight Months | One Month | Nine Months | |||||||||||
Ended | Ended | Ended | |||||||||||
October 1, | January 28, | October 2, | |||||||||||
Derivatives in Cash Flow Hedging Relationships | 2011 | 2011 | 2010 | ||||||||||
Derivatives designated as hedging instruments: | |||||||||||||
Interest rate contracts | N/A | $ | N/A | $ | (1,680 | ) | |||||||
Derivatives not designated as hedging instruments | N/A | (187 | ) | N/A |
(1) | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income is located inInterest Expense, netin the Consolidated Statements of Operations. |
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Note 15. | Fair Value of Financial Instruments and Non-Financial Assets and Liabilities |
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Quoted Prices in | ||||||||||||||||
Successor | Active Markets | Significant Other | Unobservable | |||||||||||||
As of | for Identical | Observable | Inputs | |||||||||||||
October 1, 2011 | Assets (Level 1) | Inputs (Level 2) | (Level 3) | |||||||||||||
(In thousands) | ||||||||||||||||
Firm commitments | $ | 2,673 | — | $ | 2,673 | — | ||||||||||
Derivative liability : | ||||||||||||||||
Foreign exchange contracts | (2,711 | ) | — | (2,711 | ) | — |
Quoted Prices in | ||||||||||||||||
Predecessor | Active Markets | Significant Other | Unobservable | |||||||||||||
As of | for Identical | Observable | Inputs | |||||||||||||
January 1, 2011 | Assets (Level 1) | Inputs (Level 2) | (Level 3) | |||||||||||||
(In thousands) | ||||||||||||||||
Firm commitments | $ | 589 | — | $ | 589 | — | ||||||||||
Derivative liabilities: | ||||||||||||||||
Interest rate swap agreements(1) | (2,035 | ) | — | (2,035 | ) | — | ||||||||||
Foreign exchange contract | (542 | ) | — | (542 | ) | — |
(1) | As more fully disclosed in Note 14 “Derivative and Other Financial Instruments and Hedging Activities”, the Company terminated and settled these agreements in conjunction with the Acquisition. |
Quoted Prices in | ||||||||||||||||||||
Active Markets | Significant Other | Unobservable | ||||||||||||||||||
Successor | for Identical | Observable | Inputs | Total | ||||||||||||||||
As of October 1, 2011 | Assets Level 1 | Inputs Level 2 | Level 3 | Gains (Losses) | ||||||||||||||||
Long-lived assets held for sale(1) | $ | 3,524 | — | $ | 2,806 | $ | 718 | $ | — |
(1) | Long-lived assets held for sale in Level 2 Inputs reflect the current sales price at which the property held for sale is currently being marketed based on local market conditions, less costs to sell. The equipment included in Level 3 assets reflects management’s best estimate at which the respective equipment will be sold based on market conditions for used equipment, less costs to sell. |
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Successor | Predecessor | ||||||||||||||||
As of October 1, 2011 | As of January 1, 2011 | ||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||
Long-term debt (including current portion) | $ | 596,349 | $ | 590,317 | $ | 331,779 | $ | 330,203 |
Note 16. | Shareholders’ Equity |
Type | Par Value | Authorized Shares | ||||||
Preferred stock | $ | .01 | 173,000 | |||||
Class A common stock | $ | .01 | 39,200,000 | |||||
Class B convertible common stock | $ | .01 | 800,000 | |||||
Class C convertible common stock | $ | .01 | 118,453 | |||||
Class D convertible common stock | $ | .01 | 498,688 | |||||
Class E convertible common stock | $ | .01 | 523,557 |
Note 17. | Commitments and Contingencies |
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F-121
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Note 18. | Supplemental Cash Flow Information |
Successor | Predecessor | ||||||||||||
Eight Months Ended | One Month Ended | Nine Months Ended | |||||||||||
October 1, 2011 | January 28, 2011 | October 2, 2010 | |||||||||||
Cash payments of interest, net of amounts capitalized | $ | 27,563 | $ | 444 | $ | 23,294 | |||||||
Cash payments of income taxes | 9,228 | 772 | 7,736 |
Note 19. | Business Interruption and Insurance Recovery |
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Note 20. | Segment Information |
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Successor | Predecessor | ||||||||||||
Eight Months Ended | One Month Ended | Nine Months Ended | |||||||||||
October 1, 2011 | January 28, 2011 | October 2, 2010 | |||||||||||
Net sales | |||||||||||||
U.S. Nonwovens | $ | 244,209 | $ | 26,132 | $ | 248,402 | |||||||
Europe Nonwovens | 221,893 | 24,305 | 208,609 | ||||||||||
Asia Nonwovens | 95,842 | 9,403 | 96,760 | ||||||||||
Latin America Nonwovens | 206,988 | 19,961 | 235,874 | ||||||||||
Oriented Polymers | 42,267 | 4,805 | 47,647 | ||||||||||
$ | 811,199 | $ | 84,606 | $ | 837,292 | ||||||||
Operating income (loss) | |||||||||||||
U.S. Nonwovens | $ | 14,600 | $ | 2,515 | $ | 18,264 | |||||||
Europe Nonwovens | 6,445 | 1,812 | 10,426 | ||||||||||
Asia Nonwovens | 14,924 | 1,718 | 19,337 | ||||||||||
Latin America Nonwovens | 16,350 | 2,080 | 36,189 | ||||||||||
Oriented Polymers | (1,360 | ) | 553 | 2,840 | |||||||||
Unallocated Corporate | (28,162 | ) | (3,603 | ) | (28,279 | ) | |||||||
Eliminations | (5 | ) | — | — | |||||||||
22,792 | 5,075 | 58,777 | |||||||||||
Acquisition and integration expenses | — | — | (1,729 | ) | |||||||||
Special charges, net | (36,887 | ) | (20,824 | ) | (11,868 | ) | |||||||
$ | (14,095 | ) | $ | (15,749 | ) | $ | 45,180 | ||||||
Depreciation and amortization expense included in operating income | |||||||||||||
U.S. Nonwovens | $ | 9,647 | $ | 1,152 | $ | 11,133 | |||||||
Europe Nonwovens | 5,348 | 368 | 3,834 | ||||||||||
Asia Nonwovens | 5,680 | 589 | 5,395 | ||||||||||
Latin America Nonwovens | 9,448 | 1,259 | 12,749 | ||||||||||
Oriented Polymers | 292 | 36 | 337 | ||||||||||
Unallocated Corporate | 3,492 | 68 | 705 | ||||||||||
Eliminations | — | — | — | ||||||||||
Depreciation and amortization expense included in operating income | 33,907 | 3,472 | 34,153 | ||||||||||
Amortization of loan acquisition costs | 1,845 | 51 | 662 | ||||||||||
$ | 35,752 | $ | 3,523 | $ | 34,815 | ||||||||
Capital spending | |||||||||||||
United States Nonwovens | $ | 9,902 | $ | 5,652 | $ | 2,517 | |||||||
Europe Nonwovens | 6,222 | 41 | 440 | ||||||||||
Asia Nonwovens | 25,973 | 2,507 | 16,276 | ||||||||||
Latin America Nonwovens | 3,603 | 151 | 904 | ||||||||||
Oriented Polymers | 266 | 38 | 392 | ||||||||||
Corporate | 414 | 16 | 897 | ||||||||||
$ | 46,380 | $ | 8,405 | $ | 21,426 | ||||||||
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October 1, 2011 | January 1, 2011 | ||||||||
Division assets | |||||||||
U.S. Nonwovens | $ | 207,355 | $ | 167,517 | |||||
Europe Nonwovens | 250,020 | 198,942 | |||||||
Asia Nonwovens | 179,429 | 139,134 | |||||||
Latin America Nonwovens | 265,801 | 239,496 | |||||||
Oriented Polymers | 26,288 | 24,640 | |||||||
Corporate | 182,239 | 7,691 | |||||||
Eliminations | (16,777 | ) | (64,248 | ) | |||||
Discontinued operations | 4,435 | 18,805 | |||||||
$ | 1,098,790 | $ | 731,977 | ||||||
Successor | Predecessor | ||||||||||||
Eight Months Ended | One Month Ended | Nine Months Ended | |||||||||||
October 2, 2011 | January 28, 2011 | October 2, 2010 | |||||||||||
Net sales | |||||||||||||
United States | $ | 248,192 | $ | 26,409 | $ | 253,097 | |||||||
Canada | 38,284 | 4,529 | 44,177 | ||||||||||
Europe | 221,893 | 24,305 | 207,385 | ||||||||||
Asia | 95,842 | 9,402 | 96,760 | ||||||||||
Latin America | 206,988 | 19,961 | 235,873 | ||||||||||
$ | 811,199 | $ | 84,606 | $ | 837,292 | ||||||||
Operating income (loss) | |||||||||||||
United States | $ | (12,090 | ) | $ | (961 | ) | $ | (8,395 | ) | ||||
Canada | (2,843 | ) | 422 | 1,048 | |||||||||
Europe | 6,445 | 1,812 | 10,424 | ||||||||||
Asia | 14,872 | 1,728 | 19,333 | ||||||||||
Latin America | 16,408 | 2,074 | 36,367 | ||||||||||
22,792 | 5,075 | 58,777 | |||||||||||
Acquisition and integration expenses | — | — | (1,729 | ) | |||||||||
Special charges, net | (36,887 | ) | (20,824 | ) | (11,868 | ) | |||||||
$ | (14,095 | ) | $ | (15,749 | ) | $ | 45,180 | ||||||
Depreciation and amortization expense included in operating income (loss) | |||||||||||||
United States | $ | 13,211 | $ | 1,229 | $ | 11,814 | |||||||
Canada | 282 | 36 | 307 | ||||||||||
Europe | 5,348 | 367 | 3,887 | ||||||||||
Asia | 5,618 | 581 | 5,396 | ||||||||||
Latin America | 9,448 | 1,259 | 12,749 | ||||||||||
Eliminations | — | — | — | ||||||||||
Depreciation and amortization expense included in operating income | 33,907 | 3,472 | 34,153 | ||||||||||
Amortization of loan acquisition costs | 1,845 | 51 | 662 | ||||||||||
$ | 35,752 | $ | 3,523 | $ | 34,815 | ||||||||
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October 1, 2011 | January 1, 2011 | ||||||||
Property, plant and equipment, net | |||||||||
United States | $ | 117,581 | $ | 85,889 | |||||
Canada | 3,995 | 2,935 | |||||||
Europe | 120,001 | 28,885 | |||||||
Asia | 122,433 | 77,313 | |||||||
Latin America | 154,626 | 128,112 | |||||||
$ | 518,636 | $ | 323,134 | ||||||
Note 21. | Certain Relationships and Related Party Transactions |
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F-127
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Note 22. | Financial Guarantees and Condensed Consolidating Financial Statements |
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As of October 1, 2011
Successor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 3,274 | $ | 11,201 | $ | 47,896 | $ | — | $ | 62,371 | ||||||||||
Accounts receivable, net | — | 21,233 | 126,952 | — | 148,185 | |||||||||||||||
Inventories, net | — | 37,866 | 82,274 | — | 120,140 | |||||||||||||||
Deferred income taxes | 25 | 62 | 4,996 | — | 5,083 | |||||||||||||||
Other current assets | 2,489 | 10,594 | 32,414 | — | 45,497 | |||||||||||||||
Assets of discontinued operations | — | — | 4,435 | 4,435 | ||||||||||||||||
Total current assets | 5,788 | 80,956 | 298,967 | — | 385,711 | |||||||||||||||
Property, plant and equipment, net | 7,942 | 112,003 | 398,691 | — | 518,636 | |||||||||||||||
Goodwill | 90,166 | — | — | — | 90,166 | |||||||||||||||
Intangibles and loan acquisition costs, net | 61,238 | — | — | — | 61,238 | |||||||||||||||
Net investment in and advances (from) to subsidiaries | 628,358 | 738,600 | (247,781 | ) | (1,119,177 | ) | — | |||||||||||||
Deferred income taxes | — | — | 64 | — | 64 | |||||||||||||||
Other noncurrent assets | 14,834 | 171 | 27,970 | — | 42,975 | |||||||||||||||
Total assets | $ | 808,326 | $ | 931,730 | $ | 477,911 | $ | (1,119,177 | ) | $ | 1,098,790 | |||||||||
Current liabilities: | ||||||||||||||||||||
Short-term borrowings | $ | 70 | $ | — | $ | 3,512 | $ | — | $ | 3,582 | ||||||||||
Accounts payable and accrued liabilities | 22,498 | 37,602 | 142,244 | — | 202,344 | |||||||||||||||
Income taxes payable | — | — | — | — | — | |||||||||||||||
Deferred income taxes | — | — | 561 | — | 561 | |||||||||||||||
Current portion of long-term debt | 107 | — | 3,470 | — | 3,577 | |||||||||||||||
Liabilities of discontinued operations | 1,598 | 1,598 | ||||||||||||||||||
Total current liabilities | 22,675 | 37,602 | 151,385 | — | 211,662 | |||||||||||||||
Long-term debt | 560,133 | — | 32,639 | — | 592,772 | |||||||||||||||
Deferred income taxes | 5,945 | 62 | 31,755 | — | 37,762 | |||||||||||||||
Other noncurrent liabilities | 13,583 | 10,822 | 26,199 | — | 50,604 | |||||||||||||||
Total liabilities | 602,336 | 48,486 | 241,978 | — | 892,800 | |||||||||||||||
Common stock | — | — | 36,083 | (36,083 | ) | — | ||||||||||||||
Other shareholders’ equity | 205,990 | 883,244 | 199,850 | (1,083,094 | ) | 205,990 | ||||||||||||||
Noncontrolling interests | — | — | — | — | — | |||||||||||||||
Total equity | 205,989 | 883,244 | 235,933 | (1,119,177 | ) | 205,990 | ||||||||||||||
Total liabilities and equity | $ | 808,326 | $ | 931,730 | $ | 477,911 | $ | (1,119,177 | ) | $ | 1,098,790 | |||||||||
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As of January 1, 2011
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 614 | $ | 4,289 | $ | 67,452 | $ | — | $ | 72,355 | ||||||||||
Accounts receivable, net | — | 14,906 | 106,841 | — | 121,747 | |||||||||||||||
Inventories, net | — | 36,866 | 68,314 | — | 105,180 | |||||||||||||||
Deferred income taxes | 25 | 62 | 4,532 | 21 | 4,640 | |||||||||||||||
Other current assets | 1,068 | 10,732 | 30,770 | (232 | ) | 42,338 | ||||||||||||||
Assets of disc operations | — | — | 18,805 | — | 18,805 | |||||||||||||||
Total current assets | 1,707 | 66,855 | 296,714 | (211 | ) | 365,065 | ||||||||||||||
Property, plant and equipment, net | 3,114 | 84,887 | 235,133 | — | 323,134 | |||||||||||||||
Goodwill | — | — | 2,253 | — | 2,253 | |||||||||||||||
Intangibles and loan acquisition costs, net | 3,348 | — | 1,932 | — | 5,280 | |||||||||||||||
Net investment in and advances (from) to subsidiaries | 457,742 | 702,560 | (199,545 | ) | (960,757 | ) | — | |||||||||||||
Deferred income taxes | — | — | 916 | — | 916 | |||||||||||||||
Other noncurrent assets | 488 | 8,317 | 34,667 | (8,143 | ) | 35,329 | ||||||||||||||
Total assets | $ | 466,399 | $ | 862,619 | $ | 372,070 | $ | (969,111 | ) | $ | 731,977 | |||||||||
Current liabilities: | ||||||||||||||||||||
Short-term borrowings | $ | — | $ | — | $ | 2,112 | $ | — | $ | 2,112 | ||||||||||
Accounts payable and accrued liabilities | 13,609 | 33,416 | 126,834 | — | 173,859 | |||||||||||||||
Income taxes payable | — | — | 2,164 | (232 | ) | 1,932 | ||||||||||||||
Deferred income taxes | — | — | — | — | — | |||||||||||||||
Current portion of long-term debt | — | — | 3,609 | — | 3,609 | |||||||||||||||
Liabilities of disc operations | 4,793 | 4,793 | ||||||||||||||||||
Total current liabilities | 13,609 | 33,416 | 139,512 | (232 | ) | 186,305 | ||||||||||||||
Long-term debt | 294,614 | — | 41,699 | (8,143 | ) | 328,170 | ||||||||||||||
Deferred income taxes | 8,161 | 62 | 11,823 | 21 | 20,067 | |||||||||||||||
Other noncurrent liabilities | 15,679 | 12,315 | 26,189 | — | 54,183 | |||||||||||||||
Total liabilities | 332,063 | 45,793 | 219,223 | (8,354 | ) | 588,725 | ||||||||||||||
Common stock | 214 | — | 36,081 | (36,081 | ) | 214 | ||||||||||||||
Other shareholders’ equity | 134,122 | 816,826 | 107,850 | (924,676 | ) | 134,122 | ||||||||||||||
Noncontrolling interests | — | — | 8,916 | — | 8,916 | |||||||||||||||
Total equity | 134,336 | 816,826 | 152,847 | (960,757 | ) | 143,252 | ||||||||||||||
Total liabilities and equity | $ | 466,399 | $ | 862,619 | $ | 372,070 | $ | (969,111 | ) | $ | 731,977 | |||||||||
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For the Eight Months Ended October 1, 2011
Successor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net Sales | $ | (2 | ) | $ | 253,989 | $ | 567,124 | $ | (9,912 | ) | $ | 811,199 | ||||||||
Cost of goods sold | (164 | ) | 222,314 | 477,446 | (9,912 | ) | 689,684 | |||||||||||||
Gross profit | 162 | 31,675 | 89,678 | — | 121,515 | |||||||||||||||
Selling, general and administrative expenses | 28,019 | 15,882 | 52,107 | — | 96,008 | |||||||||||||||
Special charges, net | 27,274 | 846 | 8,767 | — | 36,887 | |||||||||||||||
Other operating loss (income), net | 566 | (175 | ) | 2,324 | — | 2,715 | ||||||||||||||
Operating (loss) income | (55,697 | ) | 15,122 | 26,480 | — | (14,095 | ) | |||||||||||||
Other expense (income): | ||||||||||||||||||||
Interest expense, net | 30,441 | (9,254 | ) | 12,335 | 3 | 33,525 | ||||||||||||||
Intercompany royalty and technical service (income) fees, net | (4,841 | ) | (5,811 | ) | 10,651 | 1 | — | |||||||||||||
Foreign currency and other loss, net | 1,260 | 246 | 2,258 | (4 | ) | 3,760 | ||||||||||||||
Equity in (earnings) losses of subsidiaries | (15,599 | ) | 8,404 | — | 7,195 | — | ||||||||||||||
(Loss) income before income tax expense and discontinued operations | (66,958 | ) | 21,537 | 1,236 | (7,195 | ) | (51,380 | ) | ||||||||||||
Income tax (benefit) expense | (10,431 | ) | 5,854 | 3,670 | — | (907 | ) | |||||||||||||
(Loss) income from continuing operations | (56,527 | ) | 15,683 | (2,434 | ) | (7,195 | ) | (50,473 | ) | |||||||||||
Loss from discontinued operations, net of tax | — | — | (5,157 | ) | — | (5,157 | ) | |||||||||||||
Loss on sale of discontinued operations | — | — | (736 | ) | — | (736 | ) | |||||||||||||
Net (loss) income | (56,527 | ) | 15,683 | (8,327 | ) | (7,195 | ) | (56,366 | ) | |||||||||||
Net income attributable to noncontrolling interests | — | — | (161 | ) | — | (161 | ) | |||||||||||||
Net (loss) income attributable to Polymer Group, Inc. | $ | (56,527 | ) | $ | 15,683 | $ | (8,488 | ) | $ | (7,195 | ) | $ | (56,527 | ) | ||||||
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For the One Month Ended January 28, 2011
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net Sales | $ | — | $ | 27,052 | $ | 58,887 | $ | (1,333 | ) | $ | 84,606 | |||||||||
Cost of goods sold | (24 | ) | 22,587 | 47,301 | (1,333 | ) | 68,531 | |||||||||||||
Gross profit | 24 | 4,465 | 11,586 | — | 16,075 | |||||||||||||||
Selling, general and administrative expenses | 3,620 | 1,873 | 6,071 | — | 11,564 | |||||||||||||||
Special charges, net | 18,944 | 170 | 1,710 | — | 20,824 | |||||||||||||||
Other operating loss (income), net | (1 | ) | (42 | ) | (521 | ) | — | (564 | ) | |||||||||||
Operating (loss) income | (22,539 | ) | 2,464 | 4,326 | — | (15,749 | ) | |||||||||||||
Other expense (income): | — | |||||||||||||||||||
Interest expense, net | 1,859 | (1,176 | ) | 1,239 | — | 1,922 | ||||||||||||||
Intercompany royalty and technical service fees, net | (546 | ) | (683 | ) | 1,229 | — | — | |||||||||||||
Foreign currency and other loss, net | 28 | 85 | (31 | ) | — | 82 | ||||||||||||||
Equity in earnings of subsidiaries | 5,198 | 1,672 | — | (6,870 | ) | — | ||||||||||||||
(Loss) income before income tax expense and discontinued operations | (18,682 | ) | 5,910 | 1,889 | (6,870 | ) | (17,753 | ) | ||||||||||||
Income tax (benefit) expense | (479 | ) | 706 | 322 | — | 549 | ||||||||||||||
(Loss) income before discontinued operations | (18,203 | ) | 5,204 | 1,567 | (6,870 | ) | (18,302 | ) | ||||||||||||
Income from discontinued operations, net of tax | — | — | 182 | — | 182 | |||||||||||||||
Loss on sale of discontinued operations | — | — | — | — | — | |||||||||||||||
Net (loss) income | (18,203 | ) | 5,204 | 1,749 | (6,870 | ) | (18,120 | ) | ||||||||||||
Net income attributable to noncontrolling interests | — | — | (83 | ) | — | (83 | ) | |||||||||||||
Net (loss) income attributable to Polymer Group, Inc. | $ | (18,203 | ) | $ | 5,204 | $ | 1,666 | $ | (6,870 | ) | $ | (18,203 | ) | |||||||
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For the Nine Months Ended October 2, 2010
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net Sales | $ | — | $ | 258,931 | $ | 590,699 | $ | (12,338 | ) | $ | 837,292 | |||||||||
Cost of goods sold | — | 223,554 | 467,031 | (12,338 | ) | 678,247 | ||||||||||||||
Gross profit | — | 35,377 | 123,668 | — | 159,045 | |||||||||||||||
Selling, general and administrative expenses | 28,327 | 15,987 | 57,984 | — | 102,298 | |||||||||||||||
Special charges, net | 2,547 | 7,019 | 2,302 | — | 11,868 | |||||||||||||||
Acquisition and integration expenses | 147 | — | 1,582 | — | 1,729 | |||||||||||||||
Other operating loss (income), net | (1,329 | ) | (293 | ) | (408 | ) | — | (2,030 | ) | |||||||||||
Operating (loss) income | (29,692 | ) | 12,664 | 62,208 | — | 45,180 | ||||||||||||||
Other expense (income): | ||||||||||||||||||||
Interest expense, net | 21,160 | (10,622 | ) | 14,016 | — | 24,554 | ||||||||||||||
Intercompany royalty and technical service (income) fees, net | (4,779 | ) | (5,721 | ) | 10,500 | — | — | |||||||||||||
Foreign currency and other loss, net | 1,348 | 282 | (491 | ) | — | 1,139 | ||||||||||||||
Equity in earnings of subsidiaries | (47,637 | ) | (25,485 | ) | — | 73,122 | — | |||||||||||||
(Loss) income before income tax expense and discontinued operations | 216 | 54,210 | 38,183 | (73,122 | ) | 19,487 | ||||||||||||||
Income tax (benefit) expense | (15,445 | ) | 6,419 | 12,004 | — | 2,978 | ||||||||||||||
(Loss) income before discontinued operations | 15,661 | 47,791 | 26,179 | (73,122 | ) | 16,509 | ||||||||||||||
Loss from discontinued operations, net of tax | — | — | (401 | ) | — | (401 | ) | |||||||||||||
Loss on sale of discontinued operations | — | — | — | — | — | |||||||||||||||
Net (loss) income | 15,661 | 47,791 | 25,778 | (73,122 | ) | 16,108 | ||||||||||||||
Net income attributable to noncontrolling interests | — | — | (447 | ) | — | 447 | ||||||||||||||
Net (loss) income attributable to Polymer Group, Inc. | $ | 15,661 | $ | 47,791 | $ | 25,331 | $ | (73,122 | ) | $ | 15,661 | |||||||||
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For the Eight Months Ended October 1, 2011
Successor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | (56,811 | ) | $ | 22,456 | $ | 26,929 | $ | — | $ | (7,426 | ) | ||||||||
Investing activities: | ||||||||||||||||||||
Acquisition of Polymer Group, Inc. | (403,496 | ) | — | — | — | (403,496 | ) | |||||||||||||
Purchases of property, plant and equipment | (18,844 | ) | (9,892 | ) | (39,456 | ) | 21,812 | (46,380 | ) | |||||||||||
Proceeds from the sale of assets | 21,812 | 85 | 10,890 | (21,812 | ) | 10,975 | ||||||||||||||
Acquisition of noncontrolling interests | — | — | (7,246 | ) | — | (7,246 | ) | |||||||||||||
Acquisition of intangibles and other | (50 | ) | — | — | — | (50 | ) | |||||||||||||
Net activity in investment in and advances (to) from subsidiaries | (21,461 | ) | (4,658 | ) | 26,119 | — | — | |||||||||||||
Net cash used in investing activities | (422,039 | ) | (14,465 | ) | (9,693 | ) | — | (446,197 | ) | |||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from issuance of senior notes | 560,000 | — | — | — | 560,000 | |||||||||||||||
Issuance of common stock | 259,865 | — | — | — | 259,865 | |||||||||||||||
Proceeds from other long-term debt | — | — | 10,281 | — | 10,281 | |||||||||||||||
Proceeds from short-term borrowings | — | — | 5,245 | — | 5,245 | |||||||||||||||
Repayment of term loan | (286,470 | ) | — | — | — | (286,470 | ) | |||||||||||||
Repayment of other long-term debt | (31,500 | ) | — | (18,633 | ) | — | (50,133 | ) | ||||||||||||
Repayment of short-term borrowings | (561 | ) | — | (34,313 | ) | — | (34,874 | ) | ||||||||||||
Other financing, net | (19,252 | ) | — | — | — | (19,252 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 482,082 | — | (37,420 | ) | — | 444,662 | ||||||||||||||
Effect of exchange rate changes on cash | — | — | 561 | — | 561 | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | 3,232 | 7,991 | (19,623 | ) | — | (8,400 | ) | |||||||||||||
Cash and cash equivalents at beginning of period | 42 | 3,210 | 67,519 | — | 70,771 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 3,274 | $ | 11,201 | $ | 47,896 | $ | — | $ | 62,371 | ||||||||||
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For the One Month Ended January 28, 2011
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | (34,725 | ) | $ | 1,636 | $ | 7,819 | $ | — | $ | (25,270 | ) | ||||||||
Investing activities: | — | |||||||||||||||||||
Purchases of property, plant and equipment | (28 | ) | (5,652 | ) | (2,725 | ) | — | (8,405 | ) | |||||||||||
Proceeds from the sale of assets | — | 65 | 40 | — | 105 | |||||||||||||||
Acquisition of intangibles and other | (5 | ) | — | — | — | (5 | ) | |||||||||||||
Net activity in investment in and advances (to) from subsidiaries | 2,055 | 2,872 | (4,927 | ) | — | — | ||||||||||||||
Net cash provided by (used in) investing activities | 2,022 | (2,715 | ) | (7,612 | ) | — | (8,305 | ) | ||||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from other long-term debt | 31,500 | — | — | — | 31,500 | |||||||||||||||
Proceeds from short-term borrowings | 631 | — | — | — | 631 | |||||||||||||||
Repayment of other long-term debt | — | — | (24 | ) | — | (24 | ) | |||||||||||||
Repayment of short-term borrowings | — | — | (665 | ) | — | (665 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 32,131 | — | (689 | ) | — | 31,442 | ||||||||||||||
Effect of exchange rate changes on cash | — | — | 549 | — | 549 | |||||||||||||||
Net (decrease) increase in cash and cash equivalents | (572 | ) | (1,079 | ) | 67 | — | (1,584 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 614 | 4,289 | 67,452 | — | 72,355 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 42 | $ | 3,210 | $ | 67,519 | $ | — | $ | 70,771 | ||||||||||
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For the Nine Months Ended October 2, 2010
Predecessor
PGI (Issuer) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash provided by operating activities | $ | 3,741 | $ | 7,467 | $ | 28,865 | $ | — | $ | 40,073 | ||||||||||
Investing activities: | ||||||||||||||||||||
Acquisition of Polymer Group, Inc. | — | — | — | — | — | |||||||||||||||
Purchases of property, plant and equipment | (9,932 | ) | (3,916 | ) | (7,591 | ) | — | (21,439 | ) | |||||||||||
Proceeds from the sale of assets | — | 815 | 1,419 | — | 2,234 | |||||||||||||||
Acquisition of noncontrolling interests | — | — | — | — | — | |||||||||||||||
Acquisition of intangibles and other | (265 | ) | — | (140 | ) | — | (405 | ) | ||||||||||||
Net activity in investment in and advances (to) from subsidiaries | 11,441 | 7,558 | (18,999 | ) | — | — | ||||||||||||||
Net cash provided by (used in) investing activities | 1,244 | 4,457 | (25,311 | ) | — | (19,610 | ) | |||||||||||||
Financing activities: | ||||||||||||||||||||
Proceeds from issuance of senior notes | — | — | — | — | — | |||||||||||||||
Issuance of common stock | — | — | — | — | — | |||||||||||||||
Proceeds from other long-term debt | 18,000 | — | 84 | — | 18,084 | |||||||||||||||
Proceeds from short-term borrowings | 1,218 | — | 15,623 | — | 16,841 | |||||||||||||||
Repayment of term loan | (3,008 | ) | — | — | — | (3,008 | ) | |||||||||||||
Repayment of other long-term debt | (18,000 | ) | — | (9,757 | ) | — | (27,757 | ) | ||||||||||||
Repayment of short-term borrowings | (1,393 | ) | — | (12,151 | ) | — | (13,544 | ) | ||||||||||||
Loan acquisition costs | (166 | ) | (166 | ) | ||||||||||||||||
Other financing, net | — | — | — | — | — | |||||||||||||||
Net cash used in financing activities | (3,349 | ) | — | (6,201 | ) | — | (9,550 | ) | ||||||||||||
Effect of exchange rate changes on cash | — | — | 140 | — | 140 | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | 1,636 | 11,924 | (2,507 | ) | — | 11,053 | ||||||||||||||
Cash and cash equivalents at beginning of period | 734 | 4,195 | 52,965 | — | 57,894 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 2,370 | $ | 16,119 | $ | 50,458 | $ | — | $ | 68,947 | ||||||||||
Note 23. | Subsequent Events |
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Item 20. | Indemnification of Directors and Officers. |
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Item 21. | Exhibits and Financial Statement Schedules. |
Exhibit No. | Description | |||
2 | .1 | Agreement and Plan of Merger, dated October 4, 2010, among Polymer Group, Inc., Scorpio Acquisition Corporation, Scorpio Merger Sub Corporation, and MatlinPatterson Global Opportunities Partners L.P. (incorporated by reference to Exhibit 2.1 of Current Report onForm 8-K, dated October 4, 2010, filed on October 4, 2010) | ||
3 | .1* | Restated Certificate of Incorporation of the Company | ||
3 | .2* | Amended and Restated Bylaws of the Company | ||
3 | .3* | Restated Certificate of Incorporation of Chicopee, Inc. | ||
3 | .4* | Bylaws of Chicopee, Inc. | ||
3 | .5* | Certificate of Conversion of Dominion Textile (USA), L.L.C. | ||
3 | .6* | Limited Liability Company Agreement of Dominion Textile (USA), L.L.C. | ||
3 | .7* | Certificate of Conversion of Fabrene, L.L.C. | ||
3 | .8* | Limited Liability Company Agreement of Fabrene, L.L.C. | ||
3 | .9* | Certificate of Incorporation of PGI Europe, Inc. | ||
3 | .10* | Amended and Restated Bylaws of PGI Europe, Inc. | ||
3 | .11* | Restated Certificate of Incorporation of PGI Polymer, Inc. | ||
3 | .12* | Bylaws of PGI Polymer, Inc. | ||
4 | .1* | Indenture, dated as of January 28, 2011, among Polymer Group, Inc., the guarantors named therein and Wilmington Trust Company as trustee | ||
4 | .2* | Form of Note (attached as exhibit to Exhibit 4.1) | ||
4 | .3* | Registration Rights Agreement, dated as of January 28, 2011, among Polymer Group, Inc., the guarantors named therein, Citigroup Global Markets Inc., Morgan Stanley & Co. Incorporated, Barclays Capital Inc. and RBC Capital Markets, LLC. | ||
5 | .1** | Opinion of Simpson Thacher & Bartlett LLP | ||
10 | .1** | �� | Credit Agreement, dated as of January 28, 2011, among Scorpio Acquisition Corporation as Holdings, Scorpio Merger Sub Corporation as lead borrower, the lenders from time to time party thereto, Citibank, N.A., as administrative agent and collateral agent, Morgan Stanley Senior Funding, Inc. as syndication agent, Barclays Bank PLC and RBC Capital Markets as co-documentation agents, and Citigroup Global Markets Inc., Morgan Stanley Senior Funding, Inc., Barclays Capital and RBC Capital Markets, as joint lead arrangers and joint book runners | |
10 | .2* | Security Agreement, dated as of January 28, 2011, among Polymer Group, Inc., Scorpio Acquisition Corporation, certain other subsidiaries of Scorpio Acquisition Corporation named therein and Wilmington Trust Company as Collateral Agent | ||
10 | .3* | Security Agreement, dated as of January 28, 2011, among Scorpio Merger Sub Corporation, Scorpio Acquisition Corporation, certain other subsidiaries of Scorpio Acquisition Corporation named therein and Citibank, N.A., as Collateral Agent |
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Exhibit No. | Description | |||
10 | .4* | Lien Subordination and Intercreditor Agreement, dated as of January 28, 2011, among Citibank, N.A., Wilmington Trust Company as Noteholder Collateral Agent. Scorpio Acquisition Corporation, Polymer Group, Inc. and the subsidiaries of Polymer Group, Inc. named therein. | ||
10 | .5* | Intercreditor Agreement and Collateral Agency Agreement, dated as of January 28, 2011, among Scorpio Acquisition Corporation, Polymer Group, Inc., the subsidiaries of Polymer Group, Inc. named therein, Citibank, N.A., as Tranche 2 representative and Wilmington Trust Company as Collateral Agent and Trustee. | ||
10 | .6* | Guaranty Agreement, dated as of January 28, 2011, among Scorpio Acquisition Corporation, certain other subsidiaries of Scorpio Acquisition Corporation named therein and Citibank, N.A., as Collateral Agent. | ||
10 | .7* | Executive Employment Agreement, dated as of October 4, 2010, between Scorpio Acquisition Corporation and Veronica M. Hagen | ||
10 | .8* | Assignment and Assumption Agreement, dated as of January 28, 2011, between Scorpio Acquisition Corporation and Polymer Group, Inc. | ||
10 | .9* | Executive Employment Agreement, dated January 28, 2011, between Michael Hale and Polymer Group, Inc. | ||
10 | .10* | Executive Employment Agreement, dated January 28, 2011, between Dennis Norman and Polymer Group, Inc. | ||
10 | .11* | 2011 Scorpio Holdings Corporation Stock Incentive Plan | ||
10 | .12* | Form of Management Equity Subscription Agreement Under the 2011 Scorpio Holdings Corporation Stock Incentive Plan | ||
10 | .13* | Form of Nonqualified Stock Option Agreement under the 2011 Scorpio Holdings Corporation Stock Incentive Plan | ||
10 | .14* | Amended and Restated Polymer Group, Inc. Short-Term Incentive Compensation Plan | ||
10 | .15 | Equipment Lease Agreement, dated as of June 24, 2010, between Gossamer Holdings, LLC, as Lessor, and Chicopee, Inc., as Lessee (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report onForm 10-Q filed with the SEC on July 3, 2010) | ||
10 | .16* | Amendment and Waiver to Equipment Lease Agreement, dated as of July 19, 2011, between Chicopee, Inc., as Lessee and Gossamer Holdings, LLC, as Lessor | ||
10 | .17* | Second Amendment to Equipment Lease Agreement, dated as of October 7, 2011, between Chicopee, Inc., as Lessee and Gossamer Holdings, LLC, as Lessor | ||
10 | .18** | Transaction and Advisory Fee Agreement, dated as of January 28, 2011, between Scorpio Merger Sub-Corporation (merged with and into Polymer Group, Inc.) and Blackstone Management Partners V L.L.C. | ||
12 | .1** | Computation of Ratio of Earnings to Fixed Charges | ||
21 | .1* | Subsidiaries of Polymer Group, Inc. | ||
23 | .1** | Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm. | ||
23 | .2** | Consent of Simpson Thacher & Bartlett LLP (included as part of its opinion filed as Exhibit 5.1 hereto) | ||
24 | .1 | Power of Attorney (included in signature pages of the initial filing of this registration statement) | ||
25 | .1* | Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wilmington Trust Company as trustee under the Indenture, dated January 28, 2011, among Polymer Group, Inc., the guarantors named therein and Wilmington Trust Company as trustee | ||
99 | .1* | Form of Letter of Transmittal | ||
99 | .2* | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | ||
99 | .3* | Form of Letter to Clients | ||
99 | .4* | Form of Notice of Guaranteed Delivery |
* | Previously filed. |
** | Filed herewith. |
(b) | Financial Statement Schedules |
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Table of Contents
Additions | ||||||||||||||||||||
Balance at | Charged to | Charged to | ||||||||||||||||||
Beginning | Costs and | Other | Balance at | |||||||||||||||||
Description | of Period | Expenses | Accounts | Deductions | End of Period | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Fiscal Year ended January 1, 2011 | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 9,148 | 1,307 | 256 | (3) | 3,185 | (6) | 7,526 | ||||||||||||
Valuation allowance for deferred tax assets | 174,792 | 14,965 | 810 | (3) | 72 | (4) | 190,495 | |||||||||||||
Plant realignment | 2,803 | 9,098 | 96 | 10,271 | (5) | 1,726 | ||||||||||||||
Fiscal Year ended January 2, 2010 | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 7,673 | 2,320 | 411 | (1) | 1,256 | (2) | 9,148 | ||||||||||||
Valuation allowance for deferred tax assets | 183,406 | 7,763 | 626 | (3) | 17,003 | (4) | 174,792 | |||||||||||||
Plant realignment | 2,672 | 17,113 | (21 | ) | 16,961 | (5) | 2,803 | |||||||||||||
Fiscal Year ended January 3, 2009 | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 5,963 | 1,931 | (181 | ) | 40 | 7,673 | |||||||||||||
Valuation allowance for deferred tax assets | 172,746 | 16,418 | 3,092 | (2)(3) | 8,850 | (4) | 183,406 | |||||||||||||
Plant realignment | 5,903 | 6,388 | 120 | 9,739 | (5) | 2,672 |
(1) | Opening balance associated with acquisition. | |
(2) | Primarily recoveries. | |
(3) | Foreign currency translation adjustments and valuation allowance related to temporary differences not impacting the Consolidated Statement of Operations. | |
(4) | Net adjustments due to realizations of deferred tax assets and valuation allowance related to temporary differences. | |
(5) | Cash payments and adjustments. | |
(6) | Primarily write-offs. |
Item 22. | Undertakings. |
II-5
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II-6
Table of Contents
II-7
Table of Contents
By: | /s/ Dennis E. Norman |
Title: | Executive Vice President & |
Signature | Title | Date | ||||
/s/ Veronica M. Hagen Veronica M. Hagen | President and Chief Executive Officer and Director (Principal Executive Officer) | December 5, 2011 | ||||
/s/ Dennis E. Norman Dennis E. Norman | Executive Vice President & Chief Financial Officer (Principal Financial Officer) | December 5, 2011 | ||||
/s/ James L. Anderson James L. Anderson | Chief Accounting Officer (Principal Accounting Officer) | December 5, 2011 | ||||
* Chinh E. Chu | Director | December 5, 2011 | ||||
* Anjan Mukherjee | Director | December 5, 2011 | ||||
* Jason Giordano | Director | December 5, 2011 | ||||
* James S. Alder | Director | December 5, 2011 | ||||
* Mark S. Burgess | Director | December 5, 2011 | ||||
* By | /s/ Dennis E. Norman Dennis E. Norman Attorney-in-Fact |
II-8
Table of Contents
By: | /s/ Dennis E. Norman |
Title: | Chief Financial Officer |
Signature | Title | Date | ||||
/s/ Veronica M. Hagen Veronica M. Hagen | President and Chief Executive Officer (Principal Executive Officer) | December 5, 2011 | ||||
/s/ Dennis E. Norman Dennis E. Norman | Chief Financial Officer and Director (Principal Financial Officer) | December 5, 2011 | ||||
/s/ James L. Anderson James L. Anderson | Chief Accounting Officer (Principal Accounting Officer) | December 5, 2011 | ||||
* Michael W. Hale | Director | December 5, 2011 | ||||
* By | /s/ Dennis E. Norman Dennis E. Norman Attorney-in-Fact |
II-9
Table of Contents
By: | /s/ Dennis E. Norman |
Title: | Chief Financial Officer |
Signature | Title | Date | ||||
/s/ Dennis E. Norman Dennis E. Norman | Chief Financial Officer and Manager (Principal Financial Officer) | December 5, 2011 | ||||
/s/ Michael W. Hale Michael W. Hale | Chief Executive Officer, President and Manager (Principal Executive Officer) | December 5, 2011 | ||||
/s/ James L. Anderson James L. Anderson | Chief Accounting Officer (Principal Accounting Officer) | December 5, 2011 |
II-10
Table of Contents
By: | /s/ Dennis E. Norman |
Title: | Chief Financial Officer |
Signature | Title | Date | ||||
/s/ Dennis E. Norman Dennis E. Norman | Chief Financial Officer and Manager (Principal Financial Officer) | December 5, 2011 | ||||
/s/ Richard Gillespie Richard Gillespie | President and Chief Executive Officer (Principal Executive Officer) | December 5, 2011 | ||||
/s/ James L. Anderson James L. Anderson | Chief Accounting Officer (Principal Accounting Officer) | December 5, 2011 | ||||
* Michael W. Hale | Manager | December 5, 2011 | ||||
* By | /s/ Dennis E. Norman Dennis E. Norman Attorney-in-Fact |
II-11
Table of Contents
By: | /s/ Dennis E. Norman |
Title: | Chief Financial Officer |
Signature | Title | Date | ||||
/s/ Dennis E. Norman Dennis E. Norman | Chief Financial Officer and Director (Principal Financial Officer) | December 5, 2011 | ||||
/s/ Michael W. Hale Michael W. Hale | President & Chief Executive Officer and Director (Principal Executive Officer) | December 5, 2011 | ||||
/s/ James L. Anderson James L. Anderson | Chief Accounting Officer (Principal Accounting Officer) | December 5, 2011 |
II-12
Table of Contents
By: | /s/ Dennis E. Norman |
Title: | Chief Financial Officer |
Signature | Title | Date | ||||
/s/ Veronica M. Hagen Veronica M. Hagen | President & Chief Executive Officer and Director (Principal Executive Officer) | December 5, 2011 | ||||
/s/ Dennis E. Norman Dennis E. Norman | Chief Financial Officer and Director (Principal Financial Officer) | December 5, 2011 | ||||
/s/ James L. Anderson James L. Anderson | Chief Accounting Officer (Principal Accounting Officer) | December 5, 2011 | ||||
* Darryl Smith | Director | December 5, 2011 | ||||
* By | /s/ Dennis E. Norman Dennis E. Norman Attorney-in-Fact |
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Table of Contents
Exhibit No. | Description | |||
2 | .1 | Agreement and Plan of Merger, dated October 4, 2010, among Polymer Group, Inc., Scorpio Acquisition Corporation, Scorpio Merger Sub Corporation, and MatlinPatterson Global Opportunities Partners L.P. (incorporated by reference to Exhibit 2.1 of Current Report onForm 8-K, dated October 4, 2010, filed on October 4, 2010) | ||
3 | .1* | Restated Certificate of Incorporation of the Company | ||
3 | .2* | Amended and Restated Bylaws of the Company | ||
3 | .3* | Restated Certificate of Incorporation of Chicopee, Inc. | ||
3 | .4* | Bylaws of Chicopee, Inc. | ||
3 | .5* | Certificate of Conversion of Dominion Textile (USA), L.L.C. | ||
3 | .6* | Limited Liability Company Agreement of Dominion Textile (USA), L.L.C. | ||
3 | .7* | Certificate of Conversion of Fabrene, L.L.C. | ||
3 | .8* | Limited Liability Company Agreement of Fabrene, L.L.C. | ||
3 | .9* | Certificate of Incorporation of PGI Europe, Inc. | ||
3 | .10* | Amended and Restated Bylaws of PGI Europe, Inc. | ||
3 | .11* | Restated Certificate of Incorporation of PGI Polymer, Inc. | ||
3 | .12* | Bylaws of PGI Polymer, Inc. | ||
4 | .1* | Indenture, dated as of January 28, 2011, among Polymer Group, Inc., the guarantors named therein and Wilmington Trust Company as trustee | ||
4 | .2* | Form of Note (attached as exhibit to Exhibit 4.1) | ||
4 | .3* | Registration Rights Agreement, dated as of January 28, 2011, among Polymer Group, Inc., the guarantors named therein, Citigroup Global Markets Inc., Morgan Stanley & Co. Incorporated, Barclays Capital Inc. and RBC Capital Markets, LLC. | ||
5 | .1** | Opinion of Simpson Thacher & Bartlett LLP | ||
10 | .1** | Credit Agreement, dated as of January 28, 2011, among Scorpio Acquisition Corporation as Holdings, Scorpio Merger Sub Corporation as lead borrower, the lenders from time to time party thereto, Citibank, N.A., as administrative agent and collateral agent, Morgan Stanley Senior Funding, Inc. as syndication agent, Barclays Bank PLC and RBC Capital Markets as co-documentation agents, and Citigroup Global Markets Inc., Morgan Stanley Senior Funding, Inc., Barclays Capital and RBC Capital Markets, as joint lead arrangers and joint book runners | ||
10 | .2* | Security Agreement, dated as of January 28, 2011, among Polymer Group, Inc., Scorpio Acquisition Corporation, certain other subsidiaries of Scorpio Acquisition Corporation named therein and Wilmington Trust Company as Collateral Agent | ||
10 | .3* | Security Agreement, dated as of January 28, 2011, among Scorpio Merger Sub Corporation, Scorpio Acquisition Corporation, certain other subsidiaries of Scorpio Acquisition Corporation named therein and Citibank, N.A., as Collateral Agent | ||
10 | .4* | Lien Subordination and Intercreditor Agreement, dated as of January 28, 2011, among Citibank, N.A., Wilmington Trust Company as Noteholder Collateral Agent. Scorpio Acquisition Corporation, Polymer Group, Inc. and the subsidiaries of Polymer Group, Inc. named therein. | ||
10 | .5* | Intercreditor Agreement and Collateral Agency Agreement, dated as of January 28, 2011, among Scorpio Acquisition Corporation, Polymer Group, Inc., the subsidiaries of Polymer Group, Inc. named therein, Citibank, N.A., as Tranche 2 representative and Wilmington Trust Company as Collateral Agent and Trustee. | ||
10 | .6* | Guaranty Agreement, dated as of January 28, 2011, among Scorpio Acquisition Corporation, certain other subsidiaries of Scorpio Acquisition Corporation named therein and Citibank, N.A., as Collateral Agent. | ||
10 | .7* | Executive Employment Agreement, dated as of October 4, 2010, between Scorpio Acquisition Corporation and Veronica M. Hagen | ||
10 | .8* | Assignment and Assumption Agreement, dated as of January 28, 2011, between Scorpio Acquisition Corporation and Polymer Group, Inc. |
Table of Contents
Exhibit No. | Description | |||
10 | .9* | Executive Employment Agreement, dated January 28, 2011, between Michael Hale and Polymer Group, Inc. | ||
10 | .10* | Executive Employment Agreement, dated January 28, 2011, between Dennis Norman and Polymer Group, Inc. | ||
10 | .11* | 2011 Scorpio Holdings Corporation Stock Incentive Plan | ||
10 | .12* | Form of Management Equity Subscription Agreement Under the 2011 Scorpio Holdings Corporation Stock Incentive Plan | ||
10 | .13* | Form of Nonqualified Stock Option Agreement under the 2011 Scorpio Holdings Corporation Stock Incentive Plan | ||
10 | .14* | Amended and Restated Polymer Group, Inc. Short-Term Incentive Compensation Plan | ||
10 | .15 | Equipment Lease Agreement, dated as of June 24, 2010, between Gossamer Holdings, LLC, as Lessor, and Chicopee, Inc., as Lessee (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report onForm 10-Q filed with the SEC on July 3, 2010) | ||
10 | .16* | Amendment and Waiver to Equipment Lease Agreement, dated as of July 19, 2011, between Chicopee, Inc., as Lessee and Gossamer Holdings, LLC, as Lessor | ||
10 | .17* | Second Amendment to Equipment Lease Agreement, dated as of October 7, 2011, between Chicopee, Inc., as Lessee and Gossamer Holdings, LLC, as Lessor | ||
10 | .18** | Transaction and Advisory Fee Agreement, dated as of January 28, 2011, between Scorpio Merger Sub-Corporation (merged with and into Polymer Group, Inc.) and Blackstone Management Partners V L.L.C. | ||
12 | .1** | Computation of Ratio of Earnings to Fixed Charges | ||
21 | .1* | Subsidiaries of Polymer Group, Inc. | ||
23 | .1** | Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm. | ||
23 | .2** | Consent of Simpson Thacher & Bartlett LLP (included as part of its opinion filed as Exhibit 5.1 hereto) | ||
24 | .1 | Power of Attorney (included in signature pages of the initial filing of this registration statement) | ||
25 | .1* | Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wilmington Trust Company as trustee under the Indenture, dated January 28, 2011, among Polymer Group, Inc., the guarantors named therein and Wilmington Trust Company as trustee | ||
99 | .1* | Form of Letter of Transmittal | ||
99 | .2* | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | ||
99 | .3* | Form of Letter to Clients | ||
99 | .4* | Form of Notice of Guaranteed Delivery |
* | Previously filed. |
** | Filed herewith. |