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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One) FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 1-11756
PILLOWTEX CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-2147728
(State of incorporation) (IRS Employer Identification No.)
4111 Mint Way
Dallas, Texas 75237
(Address of principal executive offices) (Zip Code)
(214) 333-3225
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes / X / No / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS Outstanding at July 29, 1997
Common Stock, $0.01 par value 10,695,474
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PILLOWTEX CORPORATION AND SUBSIDIARIES
INDEX
Part I - Financial Information Page No.
Item 1. Unaudited Interim Consolidated Financial Statements:
Consolidated Balance Sheets as of
December 28, 1996 and June 28, 1997 3
Consolidated Statements of Earnings for the three months
ended June 29, 1996 and June 28, 1997 4
Consolidated Statements of Earnings for the six months
ended June 29, 1996 and June 28, 1997 5
Consolidated Statements of Cash Flows for the six months
ended June 29, 1996 and June 28, 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Signature 16
Index to Exhibits 17
2
PILLOWTEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 28, 1996 and June 28, 1997
(Dollars in thousands, except for par value)
(Audited, except as noted)
ASSETS 1996 1997
----------- -----------
(Unaudited)
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . $ 20 33
Receivables:
Trade, less allowance for doubtful accounts of
$2,346 in 1996 and $2,256 in 1997. . . . . . . . . 78,482 60,281
Other. . . . . . . . . . . . . . . . . . . . . . . . 4,480 2,482
Inventories . . . . . . . . . . . . . . . . . . . . . 133,495 159,961
Prepaid expenses. . . . . . . . . . . . . . . . . . . 2,613 3,416
Deferred income taxes . . . . . . . . . . . . . . . . 2,567 2,681
----------- -----------
Total current assets . . . . . . . . . . . . . . . 221,657 228,854
Property, plant and equipment, less accumulated
depreciation of $43,720 and $49,329 in 1996 and
1997, respectively. . . . . . . . . . . . . . . . . . 94,267 99,908
Intangible assets, at cost less accumulated
amortization of $3,843 in 1996 and $4,608 in
1997. . . . . . . . . . . . . . . . . . . . . . . . . 57,113 56,273
Other assets. . . . . . . . . . . . . . . . . . . . . . 2,677 3,100
----------- -----------
$ 375,714 388,135
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . $ 45,481 40,795
Accrued expenses. . . . . . . . . . . . . . . . . . . 22,156 16,644
Dividends payable . . . . . . . . . . . . . . . . . . - 639
Current portion of long-term debt . . . . . . . . . . 1,868 1,541
Income taxes payable. . . . . . . . . . . . . . . . . 1,646 -
----------- -----------
Total current liabilities. . . . . . . . . . . . . 71,151 59,619
Long-term debt, net of current portion. . . . . . . . . 194,851 216,118
Deferred income taxes . . . . . . . . . . . . . . . . . 9,708 9,304
Shareholders' equity:
Preferred stock, $0.01 par value; authorized
20,000,000 shares; none issued and outstanding. . . - -
Common stock, $0.01 par value; authorized 30,000,000
shares; 10,617,722 and 10,692,474 shares issued
and outstanding in 1996 and 1997, respectively. . . 106 107
Additional paid-in capital. . . . . . . . . . . . . . 58,427 59,501
Retained earnings . . . . . . . . . . . . . . . . . . 41,665 43,912
Currency translation adjustment . . . . . . . . . . . (194) (426)
----------- -----------
Total shareholders' equity . . . . . . . . . . . . 100,004 103,094
----------- -----------
$ 375,714 388,135
=========== ===========
See accompanying notes to consolidated financial statements.
3
PILLOWTEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended June 29, 1996 and June 28, 1997
(In thousands, except for per share data)
(Unaudited)
1996 1997
----------- -----------
Net sales . . . . . . . . . . . . . . . . . . . . . . . $ 91,185 104,894
Cost of goods sold. . . . . . . . . . . . . . . . . . . 75,570 85,193
----------- -----------
Gross profit . . . . . . . . . . . . . . . . . . . 15,615 19,701
Selling, general and administrative expenses. . . . . . 9,942 11,952
----------- -----------
Earnings from operations . . . . . . . . . . . . . 5,673 7,749
Interest expense. . . . . . . . . . . . . . . . . . . . 3,217 4,692
----------- -----------
Earnings before income taxes . . . . . . . . . . . 2,456 3,057
Income taxes. . . . . . . . . . . . . . . . . . . . . . 965 1,186
----------- -----------
Net earnings . . . . . . . . . . . . . . . . . . . $ 1,491 1,871
=========== ===========
Net earnings per common share . . . . . . . . . . . . . $ .14 .18
=========== ===========
Weighted average common shares. . . . . . . . . . . . . 10,618 10,646
=========== ===========
Dividends declared per common share . . . . . . . . . . $ .05 .06
=========== ===========
See accompanying notes to consolidated financial statements.
4
PILLOWTEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Six Months Ended June 29, 1996 and June 28, 1997
(In thousands, except for per share data)
(Unaudited)
1996 1997
----------- -----------
Net sales . . . . . . . . . . . . . . . . . . . . . . . $ 191,979 218,657
Cost of goods sold. . . . . . . . . . . . . . . . . . . 160,796 180,250
----------- -----------
Gross profit . . . . . . . . . . . . . . . . . . . 31,183 38,407
Selling, general and administrative expenses. . . . . . 20,556 23,616
----------- -----------
Earnings from operations . . . . . . . . . . . . . 10,627 14,791
Interest expense. . . . . . . . . . . . . . . . . . . . 6,615 9,036
----------- -----------
Earnings before income taxes . . . . . . . . . . . 4,012 5,755
Income taxes. . . . . . . . . . . . . . . . . . . . . . 1,580 2,233
----------- -----------
Net earnings . . . . . . . . . . . . . . . . . . . $ 2,432 3,522
=========== ===========
Net earnings per common share . . . . . . . . . . . . . $ .23 .33
=========== ===========
Weighted average common shares. . . . . . . . . . . . . 10,618 10,632
=========== ===========
Dividends declared per common share . . . . . . . . . . $ .10 .12
=========== ===========
See accompanying notes to consolidated financial statements.
5
PILLOWTEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 29, 1996 and June 28, 1997
(Dollars in thousands)
(Unaudited)
1996 1997
----------- -----------
Cash flows from operating activities:
Net earnings. . . . . . . . . . . . . . . . . . . . . $ 2,432 3,522
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization. . . . . . . . . . . 6,253 7,065
Deferred income taxes. . . . . . . . . . . . . . . 560 (518)
Provision for doubtful accounts. . . . . . . . . . (212) 360
Loss on disposal of property, plant and equipment. 5 4
Changes in operating assets and liabilities, net
of businesses acquired:
Trade receivables. . . . . . . . . . . . . . . . 18,592 17,806
Inventories. . . . . . . . . . . . . . . . . . . (35,102) (26,533)
Accounts payable . . . . . . . . . . . . . . . . (1,788) (10,741)
Accrued expenses . . . . . . . . . . . . . . . . (3,528) (5,497)
Other assets and liabilities . . . . . . . . . . (3,711) (1,742)
----------- -----------
Net cash used in operating activities . . . . (16,499) (16,274)
----------- -----------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment . 16 191
Purchases of property, plant and equipment. . . . . . (1,368) (11,347)
Payments for businesses purchased, net of cash
acquired. . . . . . . . . . . . . . . . . . . . . . (112) -
----------- -----------
Net cash used in investing activities . . . . (1,464) (11,156)
----------- -----------
Cash flows from financing activities:
Increase (decrease) in checks not yet presented
for payment . . . . . . . . . . . . . . . . . . . . (4,006) 6,065
Retirement of long-term debt. . . . . . . . . . . . . (15,469) (1,110)
Borrowings on revolving credit loans. . . . . . . . . 72,300 72,650
Repayments of revolving credit loans. . . . . . . . . (34,200) (50,600)
Dividends paid. . . . . . . . . . . . . . . . . . . . (1,062) (637)
Proceeds from stock option exercises. . . . . . . . . - 1,075
----------- -----------
Net cash provided by financing activities . . 17,563 27,443
----------- -----------
Net change in cash and cash equivalents . . . . . . . . (400) 13
Cash and cash equivalents at beginning of period. . . . 411 20
----------- -----------
Cash and cash equivalents at end of period. . . . . . . $ 11 33
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest. . . . . . . . . . . . . . . . . . . . . . $ 7,961 9,020
=========== ===========
Income taxes. . . . . . . . . . . . . . . . . . . . $ 2,124 5,120
=========== ===========
See accompanying notes to consolidated financial statements.
6
PILLOWTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands of dollars)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements of Pillowtex
Corporation and subsidiaries (the 'Company') include all adjustments,
consisting only of normal, recurring adjustments and accruals, which are,
in the opinion of management, necessary for fair presentation of the
results of operations and financial position. The unaudited consolidated
financial statements should be read in conjunction with the consolidated
financial statements included in the Company's annual report on Form 10-K
filed with the Securities and Exchange Commission on March 17, 1997 for the
fiscal year ended December 28, 1996.
(2) Inventories
Inventories consisted of the following at December 28, 1996 and June 28,
1997:
1996 1997
-------- --------
Finished goods $ 56,085 76,947
Work-in-process 33,436 33,500
Raw materials 41,955 46,365
Supplies 2,019 3,149
-------- --------
$133,495 159,961
======== ========
(3) Earnings per Common Share
Earnings per share is based on the weighted average number of common shares
outstanding and equivalent shares from dilutive stock options, if any. As
of June 29, 1996 and June 28, 1997, there were stock options outstanding
for 539,615 and 670,185 common shares, respectively. Stock options are
excluded from the calculations since they have no material dilutive effect
on per share data.
7
PILLOWTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands of dollars)
(4) Supplemental Condensed Consolidating Financial Information
The following is summarized condensed consolidating financial information
for the Company, segregating Pillowtex Corporation (the 'Parent') and
guarantor subsidiaries from non-guarantor subsidiaries. The guarantor
subsidiaries are wholly owned subsidiaries of the Company and guarantees
are full, unconditional and joint and several. Separate financial
statements of the guarantor subsidiaries are not presented because
management believes that these financial statements would not be material
to investors.
December 28, 1996 June 28, 1997
-------------------------------------- --------------------------------------
Parent and Non- Parent and Non-
Guarantor Guarantor Guarantor Guarantor
Financial Position Subsidiaries Subsidiaries Consolidated Subsidiaries Subsidiaries Consolidated
------------------ ------------ ------------ ------------ ------------ ------------ ------------
ASSETS
------------------------------
Receivables:
Trade $ 73,439 5,043 78,482 57,840 2,441 60,281
Affiliates 4,283 - - 1,033 - -
Inventories 125,803 7,692 133,495 152,598 7,363 159,961
Other current assets 8,944 736 9,680 8,209 403 8,612
------------ ------------ ------------ ------------ ------------ ------------
Total current assets 212,469 13,471 221,657 219,680 10,207 228,854
Property, plant and equipment,
net 91,381 2,886 94,267 97,301 2,607 99,908
Intangible assets 54,454 2,659 57,113 53,674 2,599 56,273
Other assets 2,677 - 2,677 3,100 - 3,100
------------ ------------ ------------ ------------ ------------ ------------
Total assets $ 360,981 19,016 375,714 373,755 15,413 388,135
============ ============ ============ ============ ============ ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
------------------------------
Accounts payable and accrued
liabilities $ 64,534 3,103 67,637 54,493 2,946 57,439
Accounts payable - affiliates - 4,283 - - 1,033 -
Other current liabilities 3,347 167 3,514 2,142 38 2,180
------------ ------------ ------------ ------------ ------------ ------------
Total current liabilities 67,881 7,553 71,151 56,635 4,017 59,619
Noncurrent liabilities 203,928 631 204,559 224,990 432 225,422
Shareholders' equity 89,172 10,832 100,004 92,130 10,964 103,094
------------ ------------ ------------ ------------ ------------ ------------
Total liabilities and
shareholders' equity $ 360,981 19,016 375,714 373,755 15,413 388,135
============ ============ ============ ============ ============ ============
8
PILLOWTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands of dollars)
(4) Supplemental Condensed Consolidating Financial Information (Continued)
Three Months Ended June 29, 1996 Three Months Ended June 28, 1997
-------------------------------------- --------------------------------------
Parent and Non- Parent and Non-
Guarantor Guarantor Guarantor Guarantor
Results of Operations Subsidiaries Subsidiaries Consolidated Subsidiaries Subsidiaries Consolidated
--------------------- ------------ ------------ ------------ ------------ ------------ ------------
Net sales $ 83,191 7,994 91,185 99,539 5,355 104,894
Cost of goods sold 67,963 7,607 75,570 80,469 4,724 85,193
------------ ------------ ------------ ------------ ------------ ------------
Gross profit 15,228 387 15,615 19,070 631 19,701
Selling, general and administrative 9,565 377 9,942 11,641 311 11,952
------------ ------------ ------------ ------------ ------------ ------------
Earnings from operations 5,663 10 5,673 7,429 320 7,749
Interest expense 3,222 (5) 3,217 4,691 1 4,692
------------ ------------ ------------ ------------ ------------ ------------
Earnings before income taxes 2,441 15 2,456 2,738 319 3,057
Income taxes 1,008 (43) 965 1,152 34 1,186
------------ ------------ ------------ ------------ ------------ ------------
Net earnings $ 1,433 58 1,491 1,586 285 1,871
============ ============ ============ ============ ============ ============
9
PILLOWTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands of dollars)
(4) Supplemental Condensed Consolidating Financial Information (Continued)
Six Months Ended June 29, 1996 Six Months Ended June 28, 1997
-------------------------------------- --------------------------------------
Parent and Non- Parent and Non-
Guarantor Guarantor Guarantor Guarantor
Results of Operations Subsidiaries Subsidiaries Consolidated Subsidiaries Subsidiaries Consolidated
--------------------- ------------ ------------ ------------ ------------ ------------ ------------
Net sales $ 175,553 16,426 191,979 207,337 11,320 218,657
Cost of goods sold 145,014 15,782 160,796 169,852 10,398 180,250
------------ ------------ ------------ ------------ ------------ ------------
Gross profit 30,539 644 31,183 37,485 922 38,407
Selling, general and administrative 19,787 769 20,556 22,920 696 23,616
------------ ------------ ------------ ------------ ------------ ------------
Earnings (loss) from operations 10,752 (125) 10,627 14,565 226 14,791
Interest expense 6,629 (14) 6,615 9,039 (3) 9,036
------------ ------------ ------------ ------------ ------------ ------------
Earnings (loss) before income
taxes 4,123 (111) 4,012 5,526 229 5,755
Income taxes 1,732 (152) 1,580 2,232 1 2,233
------------ ------------ ------------ ------------ ------------ ------------
Net earnings $ 2,391 41 2,432 3,294 228 3,522
============ ============ ============ ============ ============ ============
10
PILLOWTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tables in thousands of dollars)
(4) Supplemental Condensed Consolidating Financial Information (Continued)
Six Months Ended June 29, 1996 Six Months Ended June 28, 1997
-------------------------------------- --------------------------------------
Parent and Non- Parent and Non-
Guarantor Guarantor Guarantor Guarantor
Cash Flows Subsidiaries Subsidiaries Consolidated Subsidiaries Subsidiaries Consolidated
- ---------- ------------ ------------ ------------ ------------ ------------ ------------
Cash provided by (used in) operating activities $ (21,840) 5,341 (16,499) (19,453) 3,179 (16,274)
Cash used in investing activities (1,443) (21) (1,464) (11,101) (55) (11,156)
Cash provided by (used in) financing activities 22,880 (5,317) 17,563 30,567 (3,124) 27,443
------------ ------------ ------------ ------------ ------------ ------------
Net change in cash and cash equivalents (403) 3 (400) 13 - 13
Cash and cash equivalents at beginning of year 406 5 411 12 8 20
------------ ------------ ------------ ------------ ------------ ------------
Cash and cash equivalents at end of year $ 3 8 11 25 8 33
============ ============ ============ ============ ============ ============
11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the attached
unaudited consolidated financial statements and notes thereto, and with the
Company's audited consolidated financial statements and notes thereto for the
fiscal year ended December 28, 1996.
RESULTS OF OPERATIONS
NET SALES. Net sales were $104,894,000 for the three months ended June 28,
1997, representing an increase of $13,709,000 or 15.0% as compared to
$91,185,000 for the three months ended June 29, 1996. Net sales for the six
months ended June 28, 1997 increased $26,678,000 or 13.9% to $218,657,000 as
compared to $191,979,000 for the same period in 1996. These increases reflected
strong bed pillow, mattress pad, fashion bedding and blanket sales, due in part
to the inclusion of the newly acquired Fieldcrest blanket business.
GROSS PROFIT. The gross profit percentage for the second quarter ended
June 28, 1997 increased to 18.8% from 17.1% for the second quarter of 1996. For
the six months ended June 28, 1997, the gross profit increased to 17.6% from
16.2% for the same period in 1996. The gross margin improvement resulted
primarily from lower raw material costs and improved plant efficiencies,
generated by continued cost reductions and the Company's capital investments in
machinery and facilities.
SG&A. Selling, general and administrative ('SG&A') expenses for the three
months ended June 28, 1997 increased to $11,952,000 from $9,942,000 for the same
period in 1996, and increased as a percentage of sales to 11.4% in the second
quarter of 1997 from 10.9% for the same period in 1996. For the six months
ended June 28, 1997, SG&A expenses increased to $23,616,000 from $20,556,000 for
the same period in 1996. While SG&A expenses as a percentage of sales remained
virtually flat in the first half of 1997 at 10.8% as compared to 10.7% for the
first six months in 1996, increases in compensation, travel and product
promotion resulted in an overall rise in SG&A expenses. These increases were due
in part to the filling of new staff positions and positions which were vacant in
1996, as well as incremental costs associated with the integration of the
Fieldcrest blanket operations and development of the new electric blanket
business.
INTEREST. Interest expense for the second quarter of 1997 increased by
$1,475,000 or 45.9% to $4,692,000 from $3,217,000 for the same period in 1996.
Interest expense for the six months ended June 28, 1997 increased by $2,421,000
or 36.6% to $9,036,000 from $6,615,000 for the six months ended June 29, 1996,
principally due to higher borrowings associated with seasonal inventory
increases, installation of new equipment and capital improvements and increased
average interest rates.
TAXES. The effective tax rate for the three months ended June 28, 1997
decreased to 38.8% compared to 39.3% for the three months ended June 29, 1996.
The effective tax rate for the six months ended June 28, 1997 decreased to 38.8%
from 39.4% for the six months ended June 29, 1996, primarily due to lower state
taxes.
NET EARNINGS. Net earnings for the three months ended June 28, 1997
increased $380,000 or 25.5% to $1,871,000 or $.18 per share, compared to net
earnings of $1,491,000 or $.14 per share for the same period in 1996. As a
percentage of sales, net earnings for the three months ended June 28, 1997
increased to 1.8% from 1.6% for the same period in 1996. Net earnings for the
six months ended June 28, 1997 increased $1,090,000 or 44.8% to $3,522,000 or
$.33 per share, from $2,432,000 or $.23 per share for the same period in 1996.
12
LIQUIDITY AND CAPITAL RESOURCES
As of June 28, 1997, the outstanding principal balance under the Company's
$175,000,000 secured revolving credit facility was $83,050,000, with $9,967,000
committed to outstanding letters of credit, and $81,983,000 available for other
needs. The increase in borrowings in the second quarter of 1997 was due
primarily to the seasonal expansion of inventories and the installation of new
equipment and capital improvements at our production facilities.
The Company enters into interest rate swap agreements to minimize the risk
of fluctuations in interest rates. The Company currently has interest rate swap
agreements in place covering approximately $195,000,000 of indebtedness which
expire at various dates with some extending through November 2000, with an
average interest rate of 8.58%.
On June 30, 1997, the Company paid a dividend of $.06 per share to
shareholders of record on June 16, 1997.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings Per Share, which specifies the computation, presentation and
disclosure requirements for earnings per share for entities with publicly held
common stock for both interim and annual periods ending after December 15, 1997.
Management of the Company does not expect the impact from adopting the
provisions of Statement No. 128 in fiscal year 1997 to be material.
GOVERNMENT REGULATIONS
As of July 1, 1996, quota restrictions on down comforter shells imported
from China were eliminated, allowing the Company to import shells on an
unlimited and as-needed basis.
Products that the Company imports from China currently receive preferential
tariff treatment accorded goods from countries granted 'most favored nation'
status. Under the Trade Act of 1974, the President of the United States is
authorized, upon making specified findings, to waive certain restrictions that
would otherwise render China ineligible for most favored nation treatment. The
President has waived these provisions each year since 1979. However, in
response to recent trade and military activities by China, Congress has
encouraged the President to reconsider the renewal of most favored nation status
for China in the future. Therefore, no assurance can be given that China will
continue to enjoy this status. Raw materials and finished products entering the
United States from China without the benefit of most favored nation treatment
would be subject to significantly higher duty rates. However, the Company
believes that the loss of China's most favored nation status is not likely to
have a material adverse effect on the Company's business, financial condition or
results of operations.
FORWARD-LOOKING INFORMATION
This report and other reports and statements filed by the Company from time
to time with the Securities and Exchange Commission (collectively, 'SEC
Filings') contain or may contain certain forward-looking statements and
information that are based upon beliefs of, and information currently available
to, the Company's management. When used in SEC Filings, the words 'anticipate,'
'believe,' 'estimate,' 'future,' 'intend,' 'plan,' and similar expressions with
prospective connotations as they relate to the Company and its business identify
forward-looking statements. All forward-looking statements reflect the current
views of the Company with respect to future events and are subject to various
risks, uncertainties and assumptions relating to the Company and its operating
environment which may cause the actual results to vary significantly from those
anticipated. Specific factors that may cause the Company's actual results to
differ from those anticipated in forward-looking statements are discussed in the
Company's most recently filed Form 10-K.
13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on May 8, 1997.
The following proposals were voted upon and approved at the Annual Meeting:
(1) Election of Directors
For Three-Year Terms Expiring in 2000:
Votes Votes Broker
Cast For Withheld Non-Votes
--------- -------- ---------
Charles M. Hansen, Jr. 7,067,755 475,057 59,032
William B. Madden 7,126,687 416,125 100
M. Joseph McHugh 7,081,987 460,825 44,800
There were no abstentions with respect to this proposal.
Jeffrey D. Cordes, Christopher N. Baker, Mary R. Silverthorne, Paul G.
Gillease and Scott E. Shimizu continued as directors of the Company.
(2) Approval of the Pillowtex Corporation 1993 Stock Option Plan, as
amended and restated:
Votes Votes Votes
Cast For Against Abstaining
---------- --------- ----------
7,018,310 473,036 35,640
(3) Approval of the Pillowtex Corporation Management Incentive Plan:
Votes Votes Votes
Cast For Against Abstaining
---------- --------- ----------
7,460,963 28,791 36,587
14
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Form of Employment Agreement entered into between Pillowtex
Management Services Company and each of Christopher N. Baker,
Jeffrey D. Cordes, Scott E. Shimizu and John H. Karnes.
10.2 Form of Guaranty Agreement dated as of April 22, 1997, between
Pillowtex Corporation and each of Christopher N. Baker, Jeffrey
D. Cordes, Scott E. Shimizu, Kevin M. Finlay and John H. Karnes.
10.3 Form of Employment Agreement dated as of April 11, 1997, between
Pillowtex Management Services Company and Kevin M. Finlay.
27 Financial Data Schedule
(b) Reports on Form 8-K
None
15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
(REGISTRANT) PILLOWTEX CORPORATION
BY (SIGNATURE) /s/ Jeffrey D. Cordes
(NAME AND TITLE) Jeffrey D. Cordes
President, Chief Operating Officer and Director
(Principal Financial and Accounting Officer)
(DATE) AUGUST 6, 1997
16
INDEX TO EXHIBITS
Exhibit Method of Filing
- ------- -----------------------------
10.1 Form of Employment Agreement entered into
between Pillowtex Management Services
Company and each of Christopher N. Baker,
Jeffrey D. Cordes, Scott E. Shimizu and
John H. Karnes. . . . . . . . . . . . . . Filed herewith electronically
10.2 Form of Guaranty Agreement dated as of
April 22, 1997, between Pillowtex
Corporation and each of Christopher N.
Baker, Jeffrey D. Cordes, Scott E.
Shimizu, Kevin M. Finlay and John H.
Karnes. . . . . . . . . . . . . . . . . . Filed herewith electronically
10.3 Form of Employment Agreement dated as of
April 11, 1997, between Pillowtex
Management Services Company and Kevin M.
Finlay. . . . . . . . . . . . . . . . . . Filed herewith electronically
27 Financial Data Schedule . . . . . . . . . Filed herewith electronically
17