As filed with the Securities and Exchange Commission on April 13, 1995
Registration No. 33-58272
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
Post-Effective Amendment No. 2
to
FORM S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
-------------
JPS TEXTILE GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 2221 57-0868166
(State or Other Jurisdiction of (Primary (I.R.S. Employer
Incorporation or Organization) Standard Identification
Industrial No.)
Classification
Code Number)
555 N. Pleasantburg Drive
Suite 202
Greenville, South Carolina 29607
(803) 239-3900
(Address, Including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive Offices)
DAVID H. TAYLOR
c/o JPS Textile Group, Inc.
555 N. Pleasantburg Drive
Suite 202
Greenville, South Carolina 29607
(803) 239-3900
(Name and Address, Including Zip Code,
and Telephone Number, Including Area Code, of Agent For Service)
Copies to:
SIMEON GOLD, ESQ.
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
Approximate date of commencement of proposed sale of the securities to
the public: From time to time after this Registration Statement becomes
effective.
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. [x]
(Cover Page continued on next page)
JPS TEXTILE GROUP, INC.
CROSS-REFERENCE SHEET
Furnished pursuant to Item 501(b) of Regulation S-K
showing location in the Prospectus of the information
required by items of Form S-1
Form S-1 Item Number Caption or Location
and Heading in Prospectus
------------------- -------------------
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus . . Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus . . Inside Front and Outside Back Cover
Pages of Prospectus
3. Summary Information, Risk
Factors and Ratio of
Earnings to Fixed Charges . . Prospectus Summary; Risk Factors;
Summary Historical Financial Data;
Selected Historical Financial Data
4. Use of Proceeds . . . . . . . Not Applicable
5. Determination of Offering
Price . . . . . . . . . . . . Not Applicable
6. Dilution . . . . . . . . . . Not Applicable
7. Selling Securityholders . . . Selling Securityholders
8. Plan of Distribution . . . . Outside Front Cover Page of Prospectus;
Plan of Distribution
9. Description of Securities to
be Registered . . . . . . . . Outside Front Cover Page of Prospectus;
Prospectus Summary; Description of the
Debt Securities; Description of the
Senior Preferred Stock; Description of
the Class A Common Stock
10. Interests of Named Experts and
Counsel . . . . . . . . . . . Legal Matters; Experts
11. Information with Respect to
the Registrant . . . . . . . Outside Front Cover Page of Prospectus;
Prospectus Summary; Risk Factors; The
Company; Capitalization; Selected
Historical Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Security
Ownership of Principal Stockholders and
Management; Description of the Credit
Facility; Financial Statements
12. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities . . . . . . . . . Not Applicable
PROSPECTUS
JPS TEXTILE GROUP, INC.
$109,247,318 Aggregate Principal Amount of
10.85% Senior Subordinated Discount Notes due June 1, 1999
$76,773,000 Aggregate Principal Amount of
10.25% Senior Subordinated Notes due June 1, 1999
$54,071,000 Aggregate Principal Amount of
7% Subordinated Debentures due May 15, 2000
600,000 Shares of Series A Senior Preferred
Stock, $.01 par value per share
490,000 Shares of Class A Common Stock,
$.01 per share par value
__________________________________
This Prospectus relates to the offering (the "Offering") by
the selling securityholders (the "Selling Securityholders") of
(i) $109,247,318 principal amount of 10.85% Senior Subordinated
Discount Notes due June 1, 1999 (the "Discount Notes"),
(ii) $76,773,000 principal amount of 10.25% Senior Subordinated Notes
due June 1, 1999 (the "Subordinated Notes"), (iii) $54,071,000
principal amount of 7% Subordinated Debentures due May 15, 2000 (the
"Debentures," and collectively with the Discount Notes and the
Subordinated Notes, the "Debt Securities"), (iv) 600,000 shares of
Series A Senior Preferred Stock, $.01 par value per share (the "Senior
Preferred Stock"), and (v) 490,000 shares of Class A Common Stock,
$.01 par value per share (the "Class A Common Stock," and collectively
with the Senior Preferred Stock and the Debt Securities, the
"Securities"), all of which Securities were issued by JPS Textile
Group, Inc., a Delaware corporation (the "Company" or "JPS").
The shares of Senior Preferred Stock offered for resale
hereby consist of 390,719 shares, which were originally issued on
April 2, 1991, 101,414 shares which were issued in lieu of cash
dividends on outstanding shares of Senior Preferred Stock through
February 15, 1995, and an additional 107,867 shares that may be issued
from time to time in lieu of cash dividends on the Senior Preferred
Stock. All of the Securities being offered for resale hereby were
originally issued by the Company pursuant to Section 1145(a) of
chapter 11, title 11 ("Chapter 11") of the United States Code (the
"Bankruptcy Code"), on April 2, 1991, the
(Cover Page of Prospectus Continues)
NYFS09...:\75\55175\0004\2540\REG42693.U2J
effective date of the Company's "prepackaged" plan of reorganization
(the "Plan of Reorganization") under Chapter 11 of the Bankruptcy Code
(the "Chapter 11 Case"). See "THE COMPANY -- The Restructuring."
ALL OF THE SECURITIES BEING OFFERED FOR RESALE HEREBY ARE
BEING SO OFFERED FOR THE ACCOUNTS OF THE SELLING SECURITYHOLDERS
IDENTIFIED IN "SELLING SECURITYHOLDERS" AND THE COMPANY WILL NOT
RECEIVE ANY PROCEEDS FROM THE SALE OF SECURITIES OFFERED OR SOLD
PURSUANT HERETO.
Prior to the Offering, there has been no public or secondary
market for the Securities and there can be no assurance that such a
market will develop and, therefore, holders of the Securities may be
unable to resell the Securities due to the lack of such market. The
Company does not presently intend to list the Securities on any
national securities exchange or include them for quotation on any U.S.
automated inter-dealer quotation system.
DISCOUNT NOTES. The Discount Notes are general, unsecured
obligations of the Company and accrue interest at a rate equal to the
sum of (a) 9.85% per annum, payable in cash each June 1 and December 1
through maturity and (b) an additional 1% per annum, payable at
maturity. The Discount Notes may be redeemed, at the option of the
Company, in whole or in part, on or after June 1, 1994, initially at
105.813% of the principal amount thereof and declining to 100% of the
principal amount thereof on and after June 1, 1997, in each case
together with accrued and unpaid interest to the redemption date. In
addition, the Company is required to redeem $37,776,829.50 principal
amount of Discount Notes on each of June 1, 1997 and June 1, 1998, at
a redemption price equal to 100% of the principal amount thereof, plus
accrued interest to the redemption date. See "DESCRIPTION OF THE DEBT
SECURITIES -- Terms of the Discount Notes."
SUBORDINATED NOTES. The Subordinated Notes are general,
unsecured obligations of the Company and accrue interest at a rate
equal to the sum of (a) 9.25% per annum, payable each June 1 and
December 1 through maturity and (b) an additional 1% per annum,
payable at maturity. The Subordinated Notes may be redeemed, at the
option of the Company, in whole or in part, on or after June 1, 1994,
initially at 105.813% of the principal amount thereof and declining to
100% of the principal amount thereof on and after June 1, 1997, in
each case together with accrued and unpaid interest to the redemption
date. In addition, the Company is required to redeem $31,250,000
principal amount of Subordinated Notes on each of June 1, 1997 and
June 1, 1998, at a redemption price equal to 100% of the principal
amount thereof,
(Cover Page of Prospectus Continues)
plus accrued interest to the redemption date. See "DESCRIPTION OF
THE DEBT SECURITIES -- Terms of the Subordinated Notes."
DEBENTURES. The Debentures are general, unsecured
obligations of the Company and accrue interest at 7% per annum,
payable each May 15 and November 15 through maturity. The Debentures
may be redeemed, at the option of the Company, in whole or in part, on
and after May 15, 1993, initially at 107.77% of the principal amount
thereof and declining to 100% of the principal amount thereof on and
after May 15, 1999, in each case together with accrued and unpaid
interest to the redemption date. In addition, the Company is required
to redeem $37,500,000 principal amount of Debentures on May 15, 1999,
at a redemption price equal to 100% of the principal amount thereof,
plus accrued interest to the redemption date. See "DESCRIPTION OF THE
DEBT SECURITIES -- Terms of the Debentures."
SENIOR PREFERRED STOCK. The holders of the Senior Preferred
Stock have the right, voting as a single class with the holders of the
Series B Junior Preferred Stock, $.01 par value per share, of the
Company (the "Junior Preferred Stock"), to elect two Preferred Stock
Directors (as described in "DESCRIPTION OF THE SENIOR PREFERRED STOCK
-- Voting Rights"). Dividends on shares of the Senior Preferred Stock
are payable quarterly at a rate of 6% per annum of the liquidation
preference thereof. Prior to May 15, 1998, the Company is permitted
to pay (and, to date, has paid) such dividends by issuing additional
shares of Senior Preferred Stock having a liquidation preference equal
to the amount of the dividend. The Senior Preferred Stock may be
redeemed, at the Company's option, in whole or in part, at any time or
from time to time, at 103% of the liquidation preference therefor,
plus accrued and unpaid dividends thereon to the date of such
redemption. In addition, the Company is required to redeem the
outstanding shares of Senior Preferred Stock on May 15, 2003 at a
redemption price equal to 100% of the liquidation preference thereof,
plus accrued dividends thereon to such redemption date. The Restated
Credit Agreement (as defined in "DESCRIPTION OF THE CREDIT FACILITY")
and the Indentures (as defined in "AVAILABLE INFORMATION") prohibit
the Company from paying cash dividends on the Senior Preferred Stock.
CLASS A COMMON STOCK. The holders of Class A Common Stock
have voting rights with respect to the election of two Class A
Directors and other matters properly submitted to the stockholders of
the Company. Dividends are payable on the Class A Common Stock,
participating equally with the Class B Common Stock, $.01 par value
per share, of the Company (the "Class B Common Stock"), out of funds
legally available therefor, to the extent payment or provision for the
payment of dividends on the Senior Preferred Stock has been first
made; however, the Restated Credit Agreement currently restricts such
dividend payments.
(Cover Page of Prospectus Continues)
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN MATERIAL
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
THE SECURITIES OFFERED FOR RESALE HEREBY.
--------------------
The Selling Securityholders directly, through agents
designated from time to time, or through dealers or underwriters to be
designated, may sell the Securities from time to time on terms to be
determined at the time of sale. To the extent required, the specific
amount of Securities to be sold, the names of the Selling
Securityholders, the respective purchase price and public offering
price, the names of any such agent, dealer or underwriter, and any
applicable commission or discount with respect to a particular offer
will be set forth in a Prospectus Supplement.
The Company has agreed to bear all expenses of registration
of the Securities under federal and state securities laws and to
indemnify the Selling Securityholders against certain liabilities,
including liabilities under the Securities Act. See "PLAN OF
DISTRIBUTION."
The Selling Securityholders and any broker-dealers, agents
or underwriters that participate with the Selling Securityholders in
the distribution of the Securities may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions received
by them and any profit on the resale of the Securities purchased by
them may be deemed to be underwriting commissions or discounts under
the Securities Act.
--------------------
The date of this Prospectus is April 13, 1995.
(End of Cover Page of Prospectus)
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1
(Registration No. 33-58272) (which together with any amendments
thereto is referred to herein as the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities offered for resale hereby, which
Registration Statement became effective on March 31, 1993, and which
was amended by Post-Effective Amendment No. 1, filed with the
Commission on July 23, 1993. This Prospectus, which constitutes a
part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain portions
of which have been omitted in accordance with the rules and regula-
tions of the Commission.
Copies of (i) the Indenture, dated as of April 2, 1991,
between the Company and First Trust National Association, as trustee,
pursuant to which the Discount Notes were issued (the "Discount Note
Indenture"), (ii) the Indenture, dated as of April 2, 1991, between
the Company and First Trust National Association, as trustee, pursuant
to which the Subordinated Notes were issued (the "Subordinated Note
Indenture"), (iii) the Indenture, dated as of April 2, 1991, between
the Company and First Bank National Association, as trustee, pursuant
to which the Debentures were issued (the "Debenture Indenture," and
collectively with the Discount Note Indenture and the Subordinated
Note Indenture, the "Indentures"), and (iv) the Certificate of
Designations of the Senior Preferred Stock (the "Certificate of
Designations"), pursuant to which the Senior Preferred Stock was
issued, and other documents relating to the Securities that are not
delivered herewith, are available for inspection at the principal
executive offices of the Company. Upon request, the Company will
provide, without charge to each purchaser of Securities, a copy of any
such document. Requests for such copies should be directed to the
principal executive offices of the Company at 555 North Pleasantburg
Drive, Suite 202, Greenville, South Carolina 29607, Attention:
Secretary. The Indentures also will be available for inspection at
the corporate trust offices of the respective trustees thereunder.
See "DESCRIPTION OF THE DEBT SECURITIES."
The Company presently is subject to the informational
requirements of Section 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and will remain so subject for the
remainder of the Company's fiscal year ending October 28, 1995, and
thereafter, until the earliest to occur of the date on
which (i) any securities of the Company are registered pursuant to
Section 12 of the Exchange Act, (ii) no class of securities included
in the Registration Statement of which this Prospectus constitutes a
part is held of record by 300 or more persons (or, if the Company's
total assets measured on the last day of each of the Company's three
fiscal years next preceding the date of determination have not
exceeded $5 million, less than 500 persons), or (iii) the Registration
Statement is no longer required to be updated pursuant to Section
10(a)(3) of the Securities Act. In accordance with such requirements,
the Company files periodic and current reports and other information
with the Commission. Such reports and other information concerning
the Company can be inspected and copied at the public reference
facilities and regional offices of the Commission referred to below.
Pursuant to the Indentures, the Company is required to file with the
respective trustees thereunder for forwarding to the holders of the
respective Debt Securities annual audited consolidated financial
statements of the Company and unaudited consolidated financial
statements of the Company for each of the first three quarters of each
fiscal year.
The information omitted from this Prospectus but contained
in the Registration Statement and the exhibits thereto can be
inspected and copied at the public reference facilities maintained by
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices
located at: 7 World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can also be
obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549, at prescribed rates.
If the Company is no longer subject to the requirements of
Section 15(d) of the Exchange Act by reason of the circumstances
described in clauses (ii) or (iii) above, financial and other
information regarding the Company may not be publicly available.
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION AND FINANCIAL STATEMENTS CONTAINED ELSEWHERE IN
THIS PROSPECTUS. ALL CAPITALIZED TERMS USED AND NOT DEFINED HEREIN
HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM ELSEWHERE IN THIS
PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERMS "JPS"
AND THE "COMPANY," AS USED IN THIS PROSPECTUS, MEAN JPS TEXTILE GROUP,
INC. AND ITS SUBSIDIARIES.
THE COMPANY
JPS is one of the largest domestic manufacturers of textile
and textile-related products for the apparel, industrial and home
fashion markets. JPS conducts its operations from fifteen
manufacturing plants in five states and employs approximately 5,900
people.
Apparel Fabrics and Products. The Company is a leading
----------------------------
manufacturer of greige goods (unfinished woven fabrics), yarn and
elastic products. The Company's products are used in the
manufacture of a broad range of consumer apparel products
including blouses, dresses, sportswear and undergarments. In
addition, the Company is one of the major suppliers of soft
elastic products used in the manufacture of disposable diapers.
Industrial Fabrics and Products. The Company manufactures
-------------------------------
products used by the building construction industry, and a broad
range of woven fabrics with specialty applications. Principal
construction products include single-ply membrane roofing and
fiberglass reinforcement fabrics. In addition, the Company pro-
duces membranes for use primarily in environmental containment
systems and specialty urethane products for use in the
manufacture of various products such as "bulletproof" glass,
disposable intravenous bags, seamless welded drive belts and
tubing. Other fabrics produced in this segment are used in the
manufacture of such products as flame retardant clothing,
filtration products, tarpaulins, awnings, athletic tapes, printed
circuit boards and advanced composites.
Home Fashion Textiles. The Home Fashion Textiles segment
---------------------
primarily manufactures residential and commercial carpet
generally sold to retailers under the name Gulistan and fabrics
for use in the manufacture of draperies, curtains and lampshades.
The Company was organized in December 1986 and, on May 9,
1988, acquired the businesses and substantially all the assets of five
divisions of J.P. Stevens & Co., Inc. ("J.P.
Stevens"): Converter and Yarn, Industrial Fabrics, Carpet, Automotive
Products and Elastomerics. The indebtedness incurred to finance the
acquisition, combined with a shortfall in revenues and a corresponding
decrease in operating cash flow, impaired the Company's ability to
service its debt obligations. As a result, in late 1990, the Company
determined that it needed to reorganize its debt and equity capital
structure. Therefore, to improve its financial condition and overall
creditworthiness, and to enhance its ability to compete more
effectively, the Company undertook various restructuring transactions
which resulted in the Plan of Reorganization which became effective on
April 2, 1991. See "THE COMPANY -- The Restructuring."
On June 28, 1994, as part of its plan to reduce its
outstanding indebtedness, the Company completed the sale of its
automotive products and synthetic industrial fabrics businesses (the
"Automotive Asset Sale") to JPS Automotive Products Corp., an
indirect, wholly-owned subsidiary of Foamex International Inc. See
"THE COMPANY -- The Automotive Asset Sale." The net cash proceeds of
the Automotive Asset Sale, after deductions for fees, other expenses
and amounts designated by management to satisfy possible contingent
tax liabilities, were used to pay all outstanding borrowings under its
then-existing credit facility and to redeem $24,324,000 principal
amount of Discount Notes and $20,121,000 principal amount of
Subordinated Notes. See "THE COMPANY -- The Automotive Asset Sale"
and "THE COMPANY -- Redemption of Subordinated Notes and Discount
Notes."
THE OFFERING
SECURITIES OFFERED . . . . . * $109,247,318 principal amount of
Discount Notes.
* $76,773,000 principal amount of
Subordinated Notes.
* $54,071,000 principal amount of
Debentures.
* 600,000 shares of Senior Preferred
Stock, including 390,719 shares
originally issued on April 2, 1991,
101,414 shares issued as dividends
in lieu of cash dividends, and an
additional 107,867 shares that may
be issued by the Company from time
to time in the future in lieu of
cash dividends on the Senior
Preferred Stock.
* 490,000 shares of Class A Common
Stock.
For a more complete description of the
Securities offered for resale hereby
and certain related matters, reference
is made to "DESCRIPTION OF THE DEBT
SECURITIES," "DESCRIPTION OF THE SENIOR
PREFERRED STOCK," "DESCRIPTION OF THE
JUNIOR PREFERRED STOCK," "DESCRIPTION
OF THE CLASS A COMMON STOCK,"
"DESCRIPTION OF THE CLASS B COMMON
STOCK" and "DESCRIPTION OF THE CREDIT
FACILITY" appearing elsewhere in this
Prospectus.
THE DISCOUNT NOTES
Maturity Date . . . . . . June 1, 1999.
Interest Rate . . . . . . (a) 9.85% per annum, payable semi-
annually on each June 1 and December 1
and (b) 1% per annum, payable at
maturity.
Optional Redemption . . . Redeemable in whole or in part at the
Company's option, on or after June 1,
1994, initially at 105.813% of the
principal amount thereof and declining
to 100% of the principal amount thereof
on and after June 1, 1997, in each case
together with accrued and unpaid
interest to the redemption date.
Mandatory Redemption . . . The Company is required to redeem
$37,776,829.50 aggregate principal
amount of the Discount Notes on each of
June 1, 1997 and June 1, 1998 at 100%
of the principal amount thereof, plus
accrued interest to the redemption
date.
Ranking . . . . . . . . . Pari passu in right of payment with the
Subordinated Notes, subordinated in
right of payment to the prior payment
in full of all Senior Indebtedness, and
senior in right of payment to the
Debentures. In addition, the Discount
Notes are effectively subordinated in
right of payment to the prior payment
in full of all indebtedness of the
Company's subsidiaries. See
"DESCRIPTION OF THE DEBT SECURITIES --
Ranking of the Discount Notes and the
Subordinated Notes" and "RISK FACTORS -
- Subordination."
Certain Covenants . . . . The Discount Note Indenture contains
certain covenants relating to, among
other things, (i) limitations on
restricted payments; (ii) limitations
on dividends and other payment
restrictions affecting subsidiaries;
(iii) limitations on additional
indebtedness; (iv) limitations on
material acquisitions; (v) restrictions
on sales of business segments; (vi)
limitations on transactions with
affiliates; (vii) limitations on liens;
(viii) events which constitute a change
of control of the Company; and
(ix) maintenance of a minimum Adjusted
Net Worth. See "DESCRIPTION OF THE
DEBT SECURITIES -- Certain Covenants of
the Indentures."
Change of Control . . . . Under the Discount Note Indenture, upon
the occurrence of a Change of Control
of the Company, the Company is required
to offer to purchase the Discount Notes
if holders of more than 50% in prin-
cipal amount of the Discount Notes then
outstanding tender their Discount Notes
for repurchase. In addition, certain
affiliated transactions may not be
deemed to be a Change of Control. See
"DESCRIPTION OF THE DEBT SECURITIES --
Certain Covenants of the Indentures --
Change of Control."
THE SUBORDINATED NOTES
Maturity Date . . . . . . June 1, 1999.
Interest Rate . . . . . . (a) 9.25% per annum, payable semi-
annually each June 1 and December 1 and
(b) 1% per annum, payable at maturity.
Optional Redemption . . . Redeemable in whole or in part at the
Company's option, on or after June 1,
1994, initially at 105.813% of the
principal amount thereof and declining
to 100% of the principal amount thereof
on and after June 1, 1997, in each case
together with accrued and unpaid
interest to the redemption date.
Mandatory Redemption . . . The Company is required to redeem
$31,250,000 in aggregate principal
amount of the Subordinated Notes on
each of June 1, 1997 and June 1, 1998
at 100% of the principal amount
thereof, plus accrued interest to the
redemption date.
Ranking . . . . . . . . . Pari passu in right of payment with the
Discount Notes, subordinated in right
of payment to the prior payment in full
of all Senior Indebtedness, and senior
in right of payment to the Debentures.
In addition, the Subordinated Notes are
effectively subordinated in right of
payment to the prior payment in full of
all indebtedness of the Company's
subsidiaries. See "DESCRIPTION OF THE
DEBT SECURITIES -- Ranking of the
Discount Notes and the Subordinated
Notes" and "RISK FACTORS --
Subordination."
Certain Covenants . . . . The Subordinated Note Indenture
contains certain covenants relating to,
among other things, (i) limitations on
restricted payments; (ii) limitations
on dividends and other payment
restrictions affecting
subsidiaries; (iii) limitations on
additional indebtedness; (iv) limita-
tions on material acquisitions;
(v) restrictions on sales of business
segments; (vi) limitations on trans-
actions with affiliates;
(vii) limitations on liens;
(viii) events which constitute a change
of control of the Company; and
(ix) maintenance of a minimum Adjusted
Net Worth. See "DESCRIPTION OF THE
DEBT SECURITIES -- Certain Covenants of
the Indentures."
Change of Control . . . . Under the Subordinated Note Indenture,
upon the occurrence of a Change of
Control of the Company, the Company is
required to offer to purchase the
Subordinated Notes if holders of more
than 50% in principal amount of the
Subordinated Notes then outstanding
tender their Subordinated Notes for
repurchase. In addition, certain
affiliated transactions may not be
deemed to be a Change of Control. See
"DESCRIPTION OF THE DEBT SECURITIES --
Certain Covenants of the Debt
Securities -- Change of Control."
THE DEBENTURES
Maturity Date . . . . . . May 15, 2000.
Interest Rate . . . . . . 7% per annum, payable semi-annually on
each May 15 and November 15.
Optional Redemption . . . Redeemable in whole or in part at the
Company's option, on or after May 15,
1993, initially at 107.77% of the
principal amount thereof and declining
to 100% of the principal amount thereof
on and after May 15, 1999, in each case
together with accrued and unpaid
interest to the redemption date.
Mandatory Redemption . . . The Company is required to redeem
$37,500,000 in aggregate principal
amount of the Debentures on May 15,
1999 at 100% of the principal amount
thereof, plus accrued interest to the
redemption date.
Ranking . . . . . . . . . Subordinated in right of payment to the
prior payment in full of Senior
Indebtedness, the Discount Notes and
the Subordinated Notes. In addition,
the Debentures are effectively
subordinated in right of payment to the
prior payment in full of all
indebtedness of the Company's
subsidiaries. See "DESCRIPTION OF THE
DEBT SECURITIES -- Ranking of the
Debentures" and "RISK FACTORS --
Subordination."
Certain Covenants . . . . The Debenture Indenture contains
certain covenants relating to, among
other things, (i) limitations on
restricted payments; (ii) limitations
on dividends and other payment
restrictions affecting subsidiaries;
(iii) limitations on additional
indebtedness; (iv) limitations on
material acquisitions; (v) restrictions
on sales of business segments;
(vi) limitations on transactions with
affiliates; (vii) limitations on liens;
(viii) events which constitute a change
of control of the Company; and
(ix) maintenance of a minimum Adjusted
Net Worth. See "DESCRIPTION OF THE
DEBT SECURITIES -- Certain Covenants of
the Indentures."
Change of Control . . . . Under the Debenture Indenture, upon the
occurrence of a Change of Control of
the Company, the Company is required to
offer to purchase the Debentures if
holders of more than 50% in principal
amount of the Debentures then
outstanding tender such Debentures for
repurchase. In addition,
certain affiliated transactions may not
be deemed to be a Change of Control.
See "DESCRIPTION OF THE DEBT SECURITIES
-- Certain Covenants of the Debt
Securities -- Change of Control."
THE SENIOR PREFERRED STOCK
Maturity . . . . . . . . . May 15, 2003.
Dividends . . . . . . . . Dividends are payable quarterly on each
May 15, August 15, November 15 and
February 15 at the rate of 6% per annum
of the liquidation preference of the
Senior Preferred Stock. Prior to
May 15, 1998, the Company is permitted
to pay (and, to date, has paid) such
dividends by issuing additional shares
of Senior Preferred Stock.
Mandatory Redemption . . . The Senior Preferred Stock must be
redeemed on May 15, 2003 at a
redemption price of 100% of its
liquidation preference per share, plus
accrued and unpaid dividends thereon.
Optional Redemption . . . Redeemable at the option of the
Company, in whole or in part, at any
time or from time to time, at a
redemption price of 103% of the
liquidation preference, plus accrued
and unpaid dividends.
Liquidation Preference . . $100 per share.
Ranking . . . . . . . . . The Senior Preferred Stock ranks senior
to all other equity securities of the
Company.
Exchangeability . . . . . None.
Voting Rights . . . . . . Holders of Senior Preferred Stock and
Junior Preferred Stock, voting together
as a single class, have the right to
elect two (2) directors to the Board of
Directors of the Company.
THE CLASS A COMMON STOCK
Dividends . . . . . . . . After payment or provision for the
payment of dividends on the Senior
Preferred Stock, dividends may be paid
on the Class A Common Stock and the
Class B Common Stock, participating
equally, out of funds legally available
therefor and to the extent permitted by
law.
Voting Rights . . . . . . The holders of Class A Common Stock and
Class B Common Stock, voting together
as a single class, are entitled to one
vote per share on all matters submitted
to the stockholders of the Company,
other than the election of directors.
The holders of Class A Common Stock,
voting separately as a class, have the
right to elect three (3) directors to
the Board of Directors of the Company.
Ranking . . . . . . . . . Pari passu in right of payment of
dividends with the Class B Common Stock
and the Junior Preferred Stock and
junior in right of payment of dividends
to all other equity securities of the
Company.
RISK FACTORS
PURCHASERS OF THE SECURITIES OFFERED HEREBY SHOULD CAREFULLY
CONSIDER THE FACTORS SET FORTH UNDER "RISK FACTORS" AS WELL AS THE
OTHER INFORMATION SET FORTH IN THIS PROSPECTUS.
SUMMARY HISTORICAL FINANCIAL DATA
(Dollars in Thousands)
The following table presents summary consolidated historical
financial data for the Company as of the dates and for the periods
indicated. Certain previously reported amounts have been reclassified
to conform to the current presentation and to reflect discontinued
operations of the Automotive Assets (as defined in "THE COMPANY -- The
Automotive Asset Sale"). All data presented below should be read in
conjunction with "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" and the Consolidated Financial
Statements of the Company and the Notes thereto included elsewhere in
this Prospectus.
The financial information for the three months ended January
29, 1994 and January 28, 1995 are derived from the unaudited
consolidated financial statements of the Company. In the opinion of
management, such unaudited financial statements include all material
adjustments (which consist only of normal and recurring adjustments)
necessary for a fair presentation.
Fiscal Year Ended Three Months Ended
------------------------------------------------------- ----------------------
11/3/90 11/2/91 10/31/92 10/30/93 10/29/94 1/29/94 1/28/95
INCOME STATEMENT DATA: (53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (13 Weeks) (13 Weeks)
-------- -------- -------- -------- -------- -------- --------
Net sales $625,855 $577,182 $610,985 $597,753 $603,416 $134,066 $147,233
Cost of sales (2) 518,921 486,916 514,321 510,994 516,875 116,244 126,278
-------- -------- -------- -------- -------- -------- --------
Gross profit 106,934 90,266 96,664 86,759 86,541 17,822 20,955
Selling, general and
administrative expenses (2) 63,553 58,453 59,472 60,937 62,448 15,371 15,894
-------- --------- -------- -------- -------- -------- --------
Income from operations 43,381 31,813 37,192 25,822 24,093 2,451 5,061
Interest expense 80,880 69,833 60,278 62,196 56,452 15,486 10,065
Other income (expense), net (3,814) 249 (2,100) (1,221) (2,962) 17 (394)
-------- --------- -------- -------- -------- -------- --------
Loss before reorganization
items, income taxes,
income from discontinued
operations, extraordinary
gain (loss) and cumulative
effects of accounting
changes (1) (41,313) (37,771) (25,186) (37,595) (35,321) (13,018) (5,398)
Reorganization items --
professional fees and
expenses - 10,878 - - - - -
-------- --------- -------- -------- -------- -------- --------
Loss before income taxes,
income from discontinued
operations, extraordinary
gain (loss) and cumulative
effects of accounting
changes (41,313) (48,649) (25,186) (37,595) (35,321) (13,018) (5,398)
Income taxes - - 1,446 1,782 2,800 282 300
-------- --------- -------- -------- -------- -------- --------
Loss before income from
discontinued operations,
extraordinary gain (loss)
and cumulative effects of
accounting changes (41,313) (48,649) (26,632) (39,377) (38,121) (13,300) (5,698)
Discontinued operations, net
of taxes:
Income from discontinued
operations 7,709 4,746 15,779 23,262 25,651 5,939 -
Gain on sale of dis-
continued operations - - - - 132,966 - -
Extraordinary gain (loss) - 35,265 - - (7,410) - 17,520
Cumulative effects of
accounting changes - - - (5,716) (1,000) (1,000) -
-------- --------- -------- -------- -------- -------- --------
Net income (loss) $(33,604) $ (8,638) $(10,853) $(21,831) $112,086 $ (8,361) $11,822
======== ========= ======== ======== ======== ======== ========
Fiscal Year Ended Three Months Ended
--------------------------------------------------------- ---------------------
11/03/90 11/02/91 10/31/92 10/30/93 10/29/94 01/29/94 01/28/95
(53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (13 Weeks) (13 Weeks)
---------- ---------- ---------- ---------- --------- -------- --------
Balance Sheet Data:
Working capital, excluding
net assets held for sale $ 97,799 $ 88,242 $ 87,535 $ 92,584 $ 95,944 $ 94,501 $ 100,422
Total assets 578,463 545,906 525,047 548,843 467,990 535,148 462,207
Total long-term debt, less
current portion 532,384 499,452 488,280 522,947 335,472 532,003 326,365
Senior redeemable preferred stock 35,267 15,685 18,144 21,007 24,340 21,816 25,270
Shareholders' equity (deficit) (98,746) (73,097) (86,409) (111,103) (2,350) (120,273) 8,542
(1) The following non-cash charges have been included in the
determination of loss before reorganization items, income taxes,
income from discontinued operations, extraordinary items and
cumulative effects of accounting changes for the periods shown
above.
Fiscal Year Ended Three Months Ended
--------------------------------------------------------- ---------------------
11/03/90 11/02/91 10/31/92 10/30/93 10/29/94 01/29/94 01/28/95
(53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (13 Weeks) (13 Weeks)
---------- ---------- ---------- ---------- --------- -------- --------
Income Statement Data:
Certain non-cash charges to income:
Depreciation $ 19,886 $ 21,504 $ 25,170 $ 24,702 $ 27,696 $ 6,341 $ 6,733
Amortization of goodwill
and other 993 975 975 969 964 254 241
Other non-cash charges
to income 2,812 1,622 1,000 2,253 131 160 100
Non-cash interest 24,431 25,111 18,805 12,208 11,450 2,922 2,422
---------- --------- --------- --------- --------- -------- ---------
$ 48,122 $ 49,212 $ 45,950 $ 40,132 $ 40,241 $ 9,677 $ 9,496
========== ========= ========= ========= ========= ======== =========
(2) Certain previously reported amounts have been reclassified to
conform to the current presentation.
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE SECURITIES SHOULD CAREFULLY
CONSIDER THE FOLLOWING RISK FACTORS, AS WELL AS OTHER INFORMATION SET
FORTH IN THIS PROSPECTUS, PRIOR TO MAKING AN INVESTMENT DECISION WITH
RESPECT TO THE SECURITIES. UNLESS THE CONTEXT OTHERWISE REQUIRES,
REFERENCES TO THE "COMPANY" SHALL MEAN THE COMPANY COLLECTIVELY WITH
ITS SUBSIDIARIES ON A CONSOLIDATED BASIS.
SUBSTANTIAL INDEBTEDNESS; ABILITY TO SERVICE DEBT
The Company has substantial debt in relation to stock-
holders' equity. At the end of the three-month period ended January
28, 1995 (the "1995 First Quarter"), the Company had approximately
$329 million of debt, $25.3 million of Senior Preferred Stock and $8.5
million in stockholders' equity, compared to $338 million, $24.3
million and a deficit of $2.4 million, respectively, at the end of the
Company's fiscal year ended October 29, 1994 ("Fiscal 1994") and $532
million, $21.0 million and a deficit of $111 million at the end of the
Company's fiscal year ended October 30, 1993 ("Fiscal 1993"). See
"CAPITALIZATION."
The Company's earnings before fixed charges for Fiscal 1993,
Fiscal 1994, the three-month period ended January 29, 1994 (the "1994
First Quarter") and the 1995 First Quarter were inadequate to cover
fixed charges by $37.6 million, $35.3 million, $13.0 million and $5.4
million, respectively. The Company's earnings before fixed charges
and dividends for Fiscal 1993, Fiscal 1994, the 1994 First Quarter and
the 1995 First Quarter were inadequate to cover fixed charges and
dividends by $40.5 million, $38.7 million, $13.8 million and $6.3
million, respectively. The earnings before fixed charges for such
periods, however, include total non-cash charges for depreciation,
amortization, other non-cash charges to income and non-cash interest
of $40.1 million, $40.2 million, $9.7 million and $9.5 million,
respectively. For additional information regarding the Company's cash
flows from operating, investing and financing activities, see
"FINANCIAL STATEMENTS -- Consolidated Statements of Cash Flows"
included herein.
If the Company's cash flow and capital resources are
insufficient to service the Company's debt obligations under the
Restated Credit Agreement (as defined in "DESCRIPTION OF THE CREDIT
FACILITY"), the Company may be required to seek to refinance a portion
of its outstanding indebtedness or sell assets. There can be no
assurance that any such refinancing or sale of assets would be
available on commercially reasonable terms, if at all, or that such
refinancing or sale would be
permitted by holders of Senior Indebtedness or the Securities. In
addition, the Company's available cash flow is required to be applied
to reduce borrowings outstanding under the Revolving Credit Facility
(as defined in "DESCRIPTION OF THE CREDIT FACILITY). Accordingly,
such funds are not available to service the Debt Securities or to pay
cash dividends on the Senior Preferred Stock or the Class A Common
Stock. See also " -- Subordination; Rights of Other Creditors;
Holding Company Structure" below.
HISTORICAL NET LOSSES
The Company sustained net losses before income from
discontinued operations, extraordinary items and cumulative effects of
accounting changes of $39.4 million, $38.1 million, $13.3 million and
$5.7 million, for Fiscal 1993, Fiscal 1994, the 1994 First Quarter and
the 1995 First Quarter, respectively, due primarily to interest
expense on outstanding indebtedness. See "SELECTED HISTORICAL
FINANCIAL DATA," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" and the Financial Statements of
the Company and the Notes thereto included elsewhere in this
Prospectus.
SUBORDINATION; RIGHTS OF OTHER CREDITORS; HOLDING COMPANY STRUCTURE
The Discount Notes and the Subordinated Notes are general,
unsecured obligations of the Company and are subordinated in right of
payment to the prior payment in full of all existing and future Senior
Indebtedness. The Debentures are general, unsecured obligations of
the Company and are subordinated in right of payment to the prior
payment in full of all Senior Indebtedness, the Discount Notes and the
Subordinated Notes. Payment of the Debt Securities has not been
guaranteed by the Company's subsidiaries. As a result of the
application of the net proceeds of the Automotive Asset Sale (see "THE
COMPANY -- The Automotive Asset Sale"), the Company's Senior
Indebtedness has been reduced by approximately $169 million. As of
February 28, 1995, the Company had approximately $105 million of
Senior Indebtedness outstanding. The indebtedness under the Restated
Credit Agreement, which matures on December 1, 1996 and ranks senior
in right of payment to the Discount Notes, the Subordinated Notes and
the Debentures, is secured by (i) a pledge of the capital stock of
each of the Company's operating subsidiaries and (ii) a security
interest in substantially all of the personal property and certain
real property of the Company and its operating subsidiaries. As of
February 28, 1995, the aggregate amount available for borrowings by
the Company under the Restated Credit Agreement was $39.2 million.
See "DESCRIPTION OF THE CREDIT FACILITY."
Because the Company conducts its textile operations
exclusively through its subsidiaries, the Company's ability to service
its debt obligations (including its ability to pay principal of and
interest on the Debt Securities) and to pay dividends on shares of its
capital stock (including the Senior Preferred Stock and the Class A
Common Stock) is strictly dependent upon the earnings and cash flows
of its subsidiaries and the ability of its subsidiaries to make funds
available to the Company for such purpose (whether in the form of
dividends, intercompany loans or otherwise).
As a consequence of the Company's holding company structure,
the Debt Securities and each of the Senior Preferred Stock and Class A
Common Stock effectively rank junior in right of payment to the prior
payment in full of all liabilities and obligations of the Company's
subsidiaries to their creditors, including indebtedness of such
subsidiaries to trade creditors and employees. Accordingly, the
claims of creditors of the Company's subsidiaries, in respect of the
assets of such subsidiaries, have priority over the claims of the
Company's creditors (including holders of the Debt Securities) and the
interests of the Company's equity holders (including holders of the
Senior Preferred Stock and Class A Common Stock). In the event of the
Company's insolvency, dissolution, liquidation or winding-up, or upon
the maturity of any Senior Indebtedness, whether when due, upon
acceleration or otherwise, holders of Senior Indebtedness would be
paid in full prior to any payment on account of or for the benefit of
the holders of the Discount Notes, the Subordinated Notes and the
Debentures. Accordingly, in the event of such insolvency,
dissolution, liquidation, winding-up or maturity, to the extent funds
are available after payment in full to holders of Senior Indebtedness,
holders of the Discount Notes, the Subordinated Notes and the
Debentures may recover ratably less, if anything, than holders of
Senior Indebtedness. In addition, in the event of the Company's
insolvency, dissolution, liquidation or winding-up, holders of Senior
Indebtedness, Discount Notes and Subordinated Notes must be paid in
full before the holders of Debentures can be paid. As a result, in
the event of the Company's insolvency, dissolution, liquidation or
winding-up, to the extent funds are available after payment to holders
of Senior Indebtedness, Discount Notes and Subordinated Notes, holders
of Debentures may recover ratably less, if anything, than holders of
Senior Indebtedness, Discount Notes and Subordinated Notes. See
"DESCRIPTION OF THE DEBT SECURITIES -- Ranking."
ABSENCE OF PUBLIC MARKET
There currently is no established trading market for the
Securities and no dealer or "market maker" has expressed an
interest in making a market in and for any of the Securities.
Accordingly, the Company is unable to predict whether and when a
market for such Securities would develop. See "PLAN OF DISTRIBUTION."
INFLUENCE OF PRINCIPAL STOCKHOLDER
Since the Acquisition (as defined in "THE COMPANY -- The
Acquisition"), Odyssey Partners, L.P., a Delaware limited partnership
("Odyssey Partners"), has been the Company's largest stockholder.
Odyssey Partners currently owns 340,000 shares of Class B Common
Stock, which represents 34% of the Company's outstanding common equity
securities (i.e., the Class A Common Stock and Class B Common Stock).
As a result of such ownership, certain voting, management and
corporate governance arrangements presently in effect, and the fact
that a majority of the members of the Company's Board of Directors
(the "Board of Directors") are affiliates of Odyssey Partners, Odyssey
Partners and such affiliates will continue to influence and be in a
position to control the management, policies and affairs of the
Company, including the approval of extraordinary corporate
transactions such as business combination transactions and sales of
Company assets substantially as an entirety. In addition, Odyssey
Partners, DLJ Capital Corp. ("DLJ") and Lincoln National Bank and
Trust Company of Fort Wayne ("Lincoln National") have entered into a
Stockholders' Agreement dated as of April 2, 1991 (the "Stockholders'
Agreement") with respect to their shares of Class B Common Stock
which, among other things, requires DLJ to use its best efforts to
cause its director-nominee to vote in the same manner as the director-
nominees of Odyssey Partners on all matters submitted to the Company's
Board of Directors for approval. See "MANAGEMENT" and "SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT."
CASH DIVIDENDS PROHIBITED; DIVIDEND POLICY
As a holding company, the Company's ability to pay cash
dividends is dependent on the earnings and cash flows of its
subsidiaries and the ability of its subsidiaries to make funds
available to the Company for such purpose. Under the Restated Credit
Agreement and Indentures, the Company is currently prohibited from
paying cash dividends on account of its capital stock (including
shares of Senior Preferred Stock and Class A Common Stock).
The Company presently intends to retain earnings to fund
working capital and for general corporate purposes, and, therefore,
does not intend to pay cash dividends on shares of the Senior
Preferred Stock or the Class A Common Stock in the foreseeable future.
The payment of future cash dividends, if
any, would be made only from assets legally available therefor, and
would also depend on the Company's financial condition, results of
operations, current and anticipated capital requirements, restrictions
under then existing indebtedness (including, without limitation,
indebtedness evidenced by the Restated Credit Agreement, the Debt
Securities and refundings and refinancings thereof) and other factors
deemed relevant by the Company's Board of Directors. See "DESCRIPTION
OF THE DEBT SECURITIES -- Certain Covenants" and "DESCRIPTION OF THE
CREDIT FACILITY."
REQUIRED REDEMPTIONS AND REPAYMENTS UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, subject to
certain limitations, the holders of the Debt Securities have the right
to require the Company to repurchase their securities. Before the
Company can offer to repurchase any of the Debt Securities, it must
either (i) repay in full all Indebtedness under the Restated Credit
Agreement, (ii) offer to repay in full all such Indebtedness and to
repay the Indebtedness of each lender under the Restated Credit
Agreement who has accepted such offer or (iii) obtain the requisite
consent of such lenders to make such offer to holders of the Debt
Securities. Such repurchase right may thus be of limited value if the
Company cannot obtain the requisite consent or sufficient funding to
repay such Indebtedness. Failure to offer to repurchase the Debt
Securities under such circumstances, however, would constitute an
Event of Default under each of the Indentures. In addition, pursuant
to the Indentures, to the extent holders of less than 50% of the
outstanding Debt Securities tender their Debt Securities for
repurchase, the Company is not required to purchase such Debt
Securities. See "DESCRIPTION OF THE DEBT SECURITIES -- Certain
Covenants -- Change of Control."
RESTRICTIONS ON CORPORATE ACTION
The Indentures contain covenants that limit and restrict the
Company's ability to, among other things, undertake mergers,
consolidations, acquisitions, repurchases of capital stock, pay
dividends or make other restricted payments, engage in transactions
with affiliates or make asset sales. In addition, the Company must
maintain certain levels of "adjusted net worth" as defined in the
Indentures. Furthermore, the Indentures place limitations on the
Company's ability to incur additional debt or grant a security inter-
est in its assets, and require the Company to apply the proceeds from
the sale of assets, outside the ordinary course of business, towards
reducing outstanding debt. See "DESCRIPTION OF THE DEBT SECURITIES --
Certain Covenants." The Restated Credit Agreement also contains
covenants relating to the foregoing and additional covenants relating
to minimum levels
of net worth, leverage, interest coverage and other financial ratios.
See "DESCRIPTION OF THE CREDIT FACILITY." In addition, under each of
the foregoing documents, the occurrence of certain events (including,
without limitation, failure to pay principal or interest, failure to
comply with covenants, certain defaults under or acceleration of other
indebtedness and certain events of bankruptcy or insolvency), in
certain cases after notice and grace periods, would constitute an
event of default permitting acceleration of the indebtedness covered
by such document.
INFLATION
The Company is subject to the effects of changing prices.
It has generally been able to pass along inflationary increases in its
costs by increasing the prices for its products; however, market
conditions may not allow the continuation of this practice in the
future. See "MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- Inflation and Tax Matters."
COMPETITION IN THE TEXTILE INDUSTRY
The textile and textile-related products industry is highly
competitive and fragmented. The Company is one of the largest
domestic manufacturers of textile and textile-related products for the
apparel, industrial and home fashion markets. However, there are many
manufacturers and retailers of all types of textiles and textile-
related products in the United States, some of which produce and sell
categories of products not manufactured by the Company. Certain of
the companies which compete directly with JPS have greater financial
and other resources than the Company. See "BUSINESS -- Marketing and
Competition."
SIGNIFICANT CUSTOMERS
Although no customer accounted for more than 7% of the
Company's sales, there are certain customers the loss of which could
have a material adverse effect on the Company's sales. There can be
no assurance that the Company's reliance on such customers, and
consequently the importance of the loss of such customers, will not
increase in the future. See "BUSINESS -- Customers."
POTENTIAL UNAVAILABILITY OF CERTAIN RAW MATERIALS
Certain of the Company's products are manufactured using raw
materials which, due to brand recognition or customer specification,
are not available from more than one source. If an interruption of
supply of raw materials were to occur, there
could be no assurance that the Company could obtain alternate adequate
supplies of raw materials which, in turn, could adversely affect the
Company's ability to produce, on an economic basis, certain of its
products. See "BUSINESS -- Raw Materials."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Subordinated Notes, Discount Notes and Debentures were
issued with original issue discount for federal income tax purposes.
The Senior Preferred Stock may be treated as having been issued with
an unreasonable redemption premium for federal income tax purposes.
Accordingly, purchasers of these securities may be required to realize
taxable income in advance of the receipt of cash distributions
therefrom for federal income tax purposes. See "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES -- Federal Income Tax Consequences Associated
with the Debt Securities" and "-- Federal Income Tax Consequences of
Ownership and Disposition of Class A Common Stock and Senior Preferred
Stock."
Were the Internal Revenue Service (the "Service") to assert
successfully that any class of the Debt Securities were equity for
federal income tax purposes, such class would be treated by a holder
in a manner analogous to the Senior Preferred Stock (see "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES -- Ownership and Disposition of Class
A Common Stock and Senior Preferred Stock") and the Company would not
be allowed an interest deduction in respect of interest accrued on
such class.
The purchase of Senior Preferred Stock or Class A Common
Stock pursuant to this Offering may result in an "ownership change"
for federal income tax purposes, in which event the use of the
Company's net operating losses attributable to periods prior to the
occurrence of such ownership change, and possibly built-in losses of
the Company (if any), may be severely limited (see "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES -- Certain Federal Income Tax Consequences to
the Company").
CYCLICAL NATURE OF CERTAIN INDUSTRIES
The industries in which many of the Company's customers
compete, such as the housing industry, are cyclical in nature and are
subject to changes in general economic conditions which affect market
demand, and a significant down turn in these industries would have an
adverse effect on the Company's results of operations. See
"BUSINESS."
THE COMPANY
GENERAL
JPS is one of the largest domestic manufacturers of textile
and textile-related products for the apparel, industrial and home
fashion markets. JPS conducts its operations from fifteen
manufacturing plants in five states and employs approximately 5,900
people.
Apparel Fabrics and Products. The Company is a leading
----------------------------
manufacturer of greige goods (unfinished woven fabrics), yarn and
elastic products. The Company's products are used in the
manufacture of a broad range of consumer apparel products
including blouses, dresses, sportswear and undergarments. In
addition, the Company is one of the major suppliers of soft
elastic products used in the manufacture of disposable diapers.
Industrial Fabrics and Products. The Company manufactures
-------------------------------
products used by the building construction industry and a broad
range of woven fabrics with specialty applications. Principal
construction products include single-ply membrane roofing and
fiberglass reinforcement fabrics. In addition, the Company pro-
duces membranes for use primarily in environmental containment
systems and specialty urethane products for use in the
manufacture of various products such as "bulletproof" glass,
disposable intravenous bags, seamless welded drive belts and
tubing. Other fabrics produced in this segment are used in the
manufacture of such products as flame retardant clothing,
filtration products, tarpaulins, awnings, athletic tapes, printed
circuit boards and advanced composites.
Home Fashion Textiles. The Home Fashion Textiles segment
---------------------
primarily manufactures residential and commercial carpet
generally sold to retailers under the name Gulistan (trademark) and
fabrics for use in the manufacture of draperies, curtains and
lampshades.
The principal executive offices of the Company are located
at 555 North Pleasantburg Drive, Suite 202, Greenville, South Carolina
29607; telephone number (803) 239-3900.
THE ACQUISITION
On March 14, 1988, the Company executed a merger agreement
providing for the acquisition of J.P. Stevens. On March 15, 1988,
pursuant to such merger agreement, the Company
commenced a tender offer for all of the outstanding capital stock of
J.P. Stevens. Subsequently, the Company terminated its tender offer
and J.P. Stevens agreed to be acquired by another entity which had
sought to effect its acquisition by means of a competing tender offer
with the Company. Pursuant to a negotiated settlement of the compet-
ing tender offers, J.P. Stevens agreed to sell to the Company the
business and substantially all of the assets of five of J.P. Stevens's
operating divisions: the Converter and Yarn division; the
Automotive Products division; the Elastomerics division; the Carpet
division; and the Industrial Fabrics division (the "Predecessor
Stevens Divisions"), for approximately $527.0 million (the
"Acquisition").
THE RESTRUCTURING
On March 28, 1990, the Company engaged certain financial
advisors to advise the Company concerning a possible restructuring of
its debt and equity capitalization. In furtherance thereof, the
Company, together with its legal and financial advisors, met with
representatives of the Company's senior lenders and with the
respective legal and financial representatives of certain large insti-
tutional holders of the Company's then outstanding (i) Senior Variable
Rate notes due June 1, 1996, (ii) Senior Subordinated Discount Notes
due June 1, 1999, (iii) 15.25% Senior Subordinated Notes due June 1,
1999, and (iv) 14.25% Subordinated Debentures due May 15, 2000
(collectively, the "Old Debt Securities"), to discuss the Company's
general business and financial status, and to explore various
financial restructuring alternatives, including, without limitation,
tender offers, exchange offers, redemptions, private purchases and
other recapitalization and refinancing transactions. As a result of
these meetings, certain institutional holders of the Old Debt
Securities formed a steering committee (the "Committee") to identify
and to represent their interests on a unified basis.
In November 1990, the Company and representatives of the
Committee determined that a transaction involving the exchange of the
Old Debt Securities for a significant percentage of "new" common stock
and "new" debt securities of the Company having a fixed, lower per
annum interest rate, together with the issuance to the holders of the
Company's then-outstanding Series A Exchangeable Adjustable Rate
Preferred Stock and Series B Junior Preferred Stock (together, the
"Old Securities") of "new" preferred equity securities of the Company,
would improve the Company's financial condition and overall
creditworthiness and simplify its capital structure, and that such
transactions would best be accomplished pursuant to a pre-petition
solicitation of
acceptances for a voluntary plan of reorganization under Chapter 11.
After having formulated and negotiated the terms of a
consensual bankruptcy restructuring, on December 21, 1990, the Company
solicited votes from holders of impaired claims and impaired equity
interests for the acceptance or rejection of the Plan of
Reorganization. The solicitation was conducted prior to the filing by
the Company of the Chapter 11 Case so as to significantly shorten the
pendency of the bankruptcy proceeding and to simplify the administra-
tion of such proceeding and reduce the costs associated therewith. As
part of the Plan of Reorganization, the Company, together with its
senior bank lenders, agreed to restructure the then-existing bank debt
of the Company. Pursuant to such Plan of Reorganization, the
Company's subsidiaries assumed the term loans previously made by the
banks to the Company, and, in addition, the senior bank lenders
permitted the Company to grant to the holders of its Senior Secured
Notes due June 1, 1995 (the "Senior Notes") a junior lien on the
capital stock of the Company's subsidiaries.
The Company's solicitation was successfully completed and
the Chapter 11 Case was commenced in early February 1991 in the United
States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court"). The Plan of Reorganization was confirmed by the
Bankruptcy Court pursuant to a court order signed on March 21, 1991
and the Plan of Reorganization which, among other things, resulted in
the issuance of the Debt Securities, the Senior Preferred Stock and
the Class A Common Stock, became effective on April 2, 1991.
Pursuant to the Plan of Reorganization, the holders of Old
Debt Securities and Old Securities received the Securities, the Senior
Notes and the securities described herein under "DESCRIPTION OF THE
JUNIOR PREFERRED STOCK" and "DESCRIPTION OF THE CLASS B PREFERRED
STOCK."
THE AUTOMOTIVE ASSET SALE
General
On June 28, 1994, pursuant to the terms of the Asset
Purchase Agreement (the "Asset Purchase Agreement"), dated as of May
25, 1994, by and among the Company, JPS Auto Inc., a wholly-owned
subsidiary of the Company ("Auto"), JPS Converter and Industrial
Corp., a wholly-owned subsidiary of the Company ("C&I"), Foamex
International Inc. ("Foamex") and JPS Automotive Products Corp., an
indirect, wholly-owned subsidiary of Foamex (the "Purchaser"), the
Company consummated the sale of its Automotive Assets (as described
below) to the Purchaser.
The Automotive Assets consisted of (i) all of the business
and assets of Auto and the synthetic industrial fabrics division of
C&I and (ii) the Company's common stock in the managing general
partner of Cramerton Automotive Products, L.P., a Delaware limited
partnership. In addition, the Purchaser agreed to assume
substantially all of the liabilities and obligations associated with
the Automotive Assets.
The purchase price for the Automotive Assets was
approximately $279 million, consisting of $264 million of cash paid at
closing and $15 million of assumed debt (as of June 28, 1994), subject
to certain post-closing adjustments which may result in a gain to be
recognized in a future period.
Use of Proceeds
The net cash proceeds from the Automotive Asset Sale, after
deductions of approximately $51 million for fees, other expenses and
amounts designated by management to satisfy possible contingent tax
liabilities (see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- Inflation and Tax Matters"),
were approximately $213 million. In accordance with the terms of the
Restated Credit Agreement (as defined in "DESCRIPTION OF THE CREDIT
FACILITY") and the Indentures, the Company applied approximately $166
million of the net cash proceeds to repay all outstanding borrowings
and accrued interest under its then-existing credit facility. In
addition, the Company used approximately $47 million of such net cash
proceeds to redeem Discount Notes and Subordinated Notes. See
"-- Redemption of Subordinated Notes and Discount Notes."
REDEMPTION OF THE SENIOR NOTES
On July 15, 1994, the remaining outstanding Senior Notes, in
an aggregate principal amount of $93.47 million, were redeemed at a
redemption price of 100% of the principal amount of such securities
plus accrued interest thereon. Pursuant to the terms of the Indenture
with respect to the Senior Notes, Citibank, N.A. ("Citibank"), as
Credit Agent, consented to such redemption.
REDEMPTION OF SUBORDINATED NOTES AND DISCOUNT NOTES
On September 15, 1994, the Company used a portion of the net
cash proceeds of the Automotive Asset Sale to redeem $24,324,000
principal amount of the Discount Notes and $20,121,000 principal
amount of the Subordinated Notes. Such redemptions were made pursuant
to offers to redeem in accordance with the provisions of the Discount
Note Indenture and the Subordinated Note Indenture with respect to
certain asset sales.
OPEN-MARKET REPURCHASES OF DEBT SECURITIES
The Restated Credit Agreement permits the Company, subject
to the terms and conditions therein, to use up to $45 million of its
revolving credit loan facility for the repurchase of the Debt
Securities in open-market transactions. During the three month period
ended January 28, 1995, the Company expended $36,607,000 to repurchase
$17,536,000 principal amount of Discount Notes, $28,106,000 principal
amount of Subordinated Notes and $20,929,000 principal amount of
Debentures pursuant to such transactions. The Company has made no
further open-market purchases of Debt Securities subsequent to January
28, 1995 and is not currently seeking to make any such purchases.
CAPITALIZATION
(Dollars In Thousands)
The following table summarizes the consolidated
capitalization of the Company as of January 28, 1995. This table
should be read in conjunction with the Financial Statements of the
Company and related Notes thereto included elsewhere in this
Prospectus.
Current portion of long-term debt $ 2,875
--------
Long-term debt, less current portion(1):
Credit Facility -- Revolving Loans(2) . . . . . . . . . . . . . . . 93,966
Equipment financing . . . . . . . . . . . . . . . . . . . . . . . . 9,225
Discount Notes(3):
Face value, including accrued interest due at maturity
of $3,277 . . . . . . . . . . . . . . . . . . . . . . . . . $112,525
Less unamortized discount to present value(6) . . . . . . . . . 6,388
--------
106,137
Subordinated Notes(3):
Face value, including accrued interest
due at maturity of $3,497 . . . . . . . . . . . . . . . . . 80,270
Less unamortized discount to present value(6) . . . . . . . . . 5,569
--------
74,701
Debentures(3):
Face value . . . . . . . . . . . . . . . . . . . . . . . . . . 54,071
Less unamortized discount to present value(6) . . . . . . . . . 11,735 42,336
-------- --------
Total long-term debt . . . . . . . . . . . . . . 326,365
--------
Senior Preferred Stock: 700,000 shares authorized and 484,848 shares
issued and outstanding, including $599 of accrued dividends to be
paid in additional shares(4)(5) . . . . . . . . . . . . . . . . . . 49,084
Less unamortized discount to present value(6) . . . . . . . . . . . 23,814 25,270
-------- --------
Stockholders' equity (deficit):
Series B Junior Preferred Stock: 700,000 shares authorized and
10,000 shares issued and outstanding(4)(5) . . . . . . . . . . 250
Class A Common Stock: 700,000 shares authorized and 490,000 shares
issued and outstanding at par(4) . . . . . . . . . . . . . . . 5
Class B Common Stock: 700,000 shares authorized and 510,000
shares issued and outstanding at par(4) . . . . . . . . . . . . 5
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . 32,514
Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,232)
--------
Total stockholders' equity . . . . . . . . . . . . . . . . . . 8,542
--------
Total capitalization . . . . . . . . . . . . . . . . . . . . $363,052
========
<FN>
------------------------------------
(1) See Note 5 of the "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS" included elsewhere in this Prospectus.
(2) On June 24, 1994, the Company and its subsidiaries entered into the Restated Credit Agreement. See
"DESCRIPTION OF THE CREDIT FACILITY."
(3) See "DESCRIPTION OF THE DEBT SECURITIES."
(4) See Note 6 of the "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS" included elsewhere in this Prospectus.
(5) The aggregate number of authorized shares of preferred stock of the Company is 700,000, including both
the Senior Preferred Stock and the Junior Preferred Stock.
(6) In connection with the Plan of Reorganization and the restructuring of the securities of the Company
then outstanding, an adjustment to the carrying value of certain of such securities was recorded in
accordance with American Institute of Certified Public Accountant's Statement of Position No. 90-7,
"Financial Reporting By Entities in Reorganization Under the Bankruptcy Code" to state the securities at
the present values of amounts to be paid as determined by appropriate interest rates as of that date
(see Note 5 of the "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS" included elsewhere in this Prospectus).
/TABLE
SELECTED HISTORICAL FINANCIAL DATA
(Dollars in Thousands except Per Share Data)
The following table presents selected consolidated
historical financial data for the Company as of the dates and for the
periods indicated. Certain previously reported amounts have been
reclassified to conform to the current presentation and to reflect
discontinued operations of the Automotive Assets. All data presented
below should be read in conjunction with "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and the
Consolidated Financial Statements of the Company and the Notes thereto
included elsewhere in this Prospectus.
The financial information for the three months ended January
29, 1994 and January 28, 1995 are derived from the unaudited
consolidated financial statements of the Company. In the opinion of
management, such unaudited financial statements include all material
adjustments (which consist only of normal and recurring adjustments)
necessary for a fair presentation.
Fiscal Year Ended Three Months Ended
--------------------------------------------------------- ----------------------
11/3/90 11/2/91 10/31/92 10/30/93 10/29/94 1/29/94 1/28/95
INCOME STATEMENT DATA: (53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (13 Weeks) (13 Weeks)
-------- -------- -------- -------- -------- -------- --------
Net sales $ 625,855 $ 577,182 $ 610,985 $ 597,753 $ 603,416 $ 134,066 $ 147,233
Cost of sales (4) 518,921 486,916 514,321 510,994 516,875 116,244 126,278
--------- ---------- --------- --------- --------- --------- ----------
Gross profit 106,934 90,266 96,664 86,759 86,541 17,822 20,955
Selling, general and
administrative expenses(4) 63,553 58,453 59,472 60,937 62,448 15,371 15,894
--------- ---------- --------- --------- --------- --------- ----------
Income from operations 43,381 31,813 37,192 25,822 24,093 2,451 5,061
Interest expense 80,880 69,833 60,278 62,196 56,452 15,486 10,065
Other income (expense), net (3,814) 249 (2,100) (1,221) (2,962) 17 (394)
--------- ---------- --------- --------- --------- --------- ----------
Loss before reorganization
items, income taxes, income
from discontinued operations,
extraordinary gain (loss)
and cumulative effects of
accounting changes (1) (41,313) (37,771) (25,186) (37,595) (35,321) (13,018) (5,398)
Reorganization items --
professional fees and
expenses - 10,878 - - - - -
--------- ---------- --------- --------- --------- --------- ----------
Loss before income taxes,
income from discontinued
operations, extraordinary
gain (loss) and cumulative
effects of accounting
changes (41,313) (48,649) (25,186) (37,595) (35,321) (13,018) (5,398)
Income taxes - - 1,446 1,782 2,800 282 300
--------- ---------- --------- --------- --------- --------- ----------
Loss before income from
discontinued operations,
extraordinary gain (loss) and
cumulative effects of
accounting changes(2) (41,313) (48,649) (26,632) (39,377) (38,121) (13,300) (5,698)
Discontinued operations, net
of taxes:(2)
Income from discontinued
operations 7,709 4,746 15,779 23,262 25,651 5,939 -
Gain on sale of discontinued
operations - - - - 132,966 - -
Extraordinary gain (loss)(2) - 35,265 - - (7,410) - 17,520
Cumulative effects of
accounting changes - - - (5,716) (1,000) (1,000) -
--------- ---------- --------- --------- --------- --------- ----------
Net income (loss)(2) $ (33,604) $ (8,638) $ (10,853) $ (21,831) $ 112,086 $ (8,361) $ 11,822
========= ========== ========= ========= ========= ========= ==========
Income (loss) applicable
to common stock $ (38,903) $ (12,407) $ (13,312) $ (24,694) $ 108,753 $ (9,170) $ 10,892
========= ========== ========= ========= ========= ========= ==========
Ratio of earnings to fixed
charges (3) - - - - - - -
Ratio of earnings to fixed
charges and preferred
dividends (3) - - - - - - -
/TABLE
Fiscal Year Ended Three Months Ended
--------------------------------------------------------- ----------------------
11/3/90 11/2/91 10/31/92 10/30/93 10/29/94 1/29/94 1/28/95
BALANCE SHEET DATA: (53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (13 Weeks) (13 Weeks)
-------- -------- -------- -------- -------- -------- --------
Working capital, excluding
net assets held for sale $ 97,799 $ 88,242 $ 87,535 $ 92,584 $ 95,944 $ 94,501 $ 100,422
Total assets 578,463 545,906 525,047 548,843 467,990 535,148 462,207
Total long-term debt, less
current portion 532,384 499,452 488,280 522,947 335,472 532,003 326,365
Senior redeemable preferred stock 35,267 15,685 18,144 21,007 24,340 21,816 25,270
Shareholders' equity (deficit) (98,746) (73,097) (86,409) (111,103) (2,350) (120,273) 8,542
- --------------------------------------------
(1) The following non-cash charges have been included in the determination of
loss before reorganization items, income taxes, discontinued operations,
extraordinary items and cumulative effects of accounting changes for
the periods shown above.
Fiscal Year Ended Three Months Ended
--------------------------------------------------------- ----------------------
11/3/90 11/2/91 10/31/92 10/30/93 10/29/94 1/29/94 1/28/95
(53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (13 Weeks) (13 Weeks)
-------- -------- -------- -------- -------- -------- --------
Certain non-cash charges to income:
Depreciation $ 19,886 $ 21,504 $ 25,170 $ 24,702 $ 27,696 $ 6,341 $ 6,733
Amortization of goodwill
and other 993 975 975 969 964 254 241
Other non-cash charges
to income 2,812 1,622 1,000 2,253 131 160 100
Non-cash interest 24,431 25,111 18,805 12,208 11,450 2,922 2,422
--------- ---------- --------- ---------- --------- ---------- ----------
$ 48,122 $ 49,212 $ 45,950 $ 40,132 $ 40,241 $ 9,677 $ 9,496
========= ========== ========= ========== ========= ========== ==========
(2) Earnings (loss) per share:
Fiscal Year Ended Three Months Ended
--------------------------------------------------------- ----------------------
11/3/90 11/2/91 10/31/92 10/30/93 10/29/94 1/29/94 1/28/95
(53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (13 Weeks) (13 Weeks)
-------- -------- -------- -------- -------- -------- --------
Weighted average number of
shares outstanding 100 590,700 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
========= ========== ========= ========= ========= ========= =========
Earnings (loss) per common share:
Loss before income from
discontinued operations,
extraordinary items and
cumulative effects of
accounting changes $(466,120) $ (88.73) $ (29.09) $ (42.23) $ (41.46) $ (14.11) $ (6.63)
Discontinued operations,
net of taxes:
Income from discontinued
operations 77,090 8.03 15.78 23.26 25.65 5.94 -
Gain on sale of discontinued
operations - - - - 132.97 - -
Extraordinary gain (loss) - 59.70 - - (7.41) - 17.52
Cumulative effects of accounting
changes - - - (5.72) (1.00) (1.00) -
--------- ---------- --------- ---------- --------- --------- ----------
Net income (loss) $(389,030) $ (21.00) $ (13.31) $ (24.69) $ 108.75 $ (9.17) $ 10.89
========= ========== ========= ========== ========= ========= ==========
(3) Earnings consist of loss before income taxes, discontinued operations,
extraordinary items, cumulative effects of accounting changes and fixed
charges, and fixed charges consist of interest on indebtedness plus that
portion of lease rentals representative of the interest factor (deemed
to be one-third of lease rentals). For the fiscal years ended November 3,
1990, November 2, 1991, October 31, 1992, October 30, 1993 and October 29,
1994 and the thirteen weeks ended January 29, 1994 and January 28, 1995,
the deficiency of earnings to cover fixed charges was $41,313, $48,649,
$25,186, $37,595, $35,321, $13,018 and $5,398, respectively, and the
deficiency to cover fixed charges and preferred dividends was $46,612,
$52,418, $27,645, $40,458, $38,654, $13,827 and $6,328, respectively.
(4) Certain previously reported amounts have been reclassified to conform
to the current presentation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
the Consolidated Financial Statements of the Company and the Notes
thereto included elsewhere in this Prospectus.
Fiscal Year Ended Three Months Ended
------------------------------------------ ---------------------------
10/31/92 10/30/93 10/29/94 1/29/94 1/28/95
-------- -------- -------- ------- -------
(In Thousands)
NET SALES
Apparel fabrics and products $ 267,264 $ 262,499 $ 254,810 $ 60,443 $ 64,713
Industrial fabrics and products 166,957 156,763 169,736 33,381 43,460
Home fashion textiles 176,764 178,491 178,870 40,242 39,060
----------- ------------ ------------ ------------ -----------
$ 610,985 $ 597,753 $ 603,416 $ 134,066 $ 147,233
=========== ============ ============ ============ ===========
OPERATING PROFIT
Apparel fabrics and products $ 27,205 $ 21,791 $ 18,487 $ 4,068 $ 5,091
Industrial fabrics and products 9,014 3,582 7,618 (182) 1,392
Home fashion textiles 6,488 7,907 2,794 651 (420)
Indirect corporate expenses,
net (7,615) (8,679) (7,768) (2,069) (1,396)
----------- ------------ ------------ ------------ -----------
Operating profit 35,092 24,601 21,131 2,468 4,667
Interest expense 60,278 62,196 56,452 15,486 10,065
----------- ------------ ------------ ------------ -----------
Loss before income taxes,
discontinued operations,
extraordinary items and
cumulative effects of
accounting changes(1) $ (25,186) $ (37,595) $ (35,321) $ (13,018) $ (5,398)
=========== ============ ============ ============ ============
-----------------------------------
(1) The following non-cash charges have been included
in the determination of loss for the periods presented:
Fiscal Year Ended Three Months Ended
------------------------------------------ ---------------------------
10/31/92 10/30/93 10/29/94 1/29/94 1/28/95
-------- -------- -------- ------- -------
(In Thousands)
Depreciation $ 25,170 $ 24,702 $ 27,696 $ 6,341 $ 6,733
Amortization of goodwill
and other 975 969 964 254 241
Other non-cash charges
to income 1,000 2,253 131 160 100
Interest accretion and debt
issuance cost amortization 18,805 12,208 11,450 2,922 2,422
----------- ------------ ------------ ------------ -----------
$ 45,950 $ 40,132 $ 40,241 $ 9,677 $ 9,496
=========== ============ ============ ============ ===========
RESULTS OF OPERATIONS
1995 First Quarter Compared to 1994 First Quarter
Consolidated net sales for the 1995 First Quarter increased
9.8% to $147.2 million from $134.1 million in the 1994 First Quarter
generally due to increased sales of industrial fabrics, construction
products and apparel fabrics. Apparel Fabrics and Products sales
increased 7.1% to $64.7 million for the 1995 First Quarter from $60.4
million for the 1994 First Quarter principally due to the Company's
change in its product offering to emphasize specialty fabrics with
more fashion and styling characteristics. These specialty fabrics
command a higher average selling price than commodity-type fabrics.
The 30.2% increase in Industrial Fabrics and Products sales to $43.5
million for the 1995 First Quarter from $33.4 million for the 1994
First Quarter is due to general increased demand for the Company's
various products. Fiberglass insulation and filtration fabrics and
synthetic scrim fabrics increased $2.6 million due to increased demand
for construction-related products and due to a supply shortage in the
market for certain filtration fabrics. Single-ply roofing product
sales increased $2.1 million due to the continued increase in demand
for a new roofing product introduced by the Company in late 1993.
Cotton industrial fabric sales increased $2.9 million due to higher
selling prices and unit volume driven by improved product demand,
particularly in the book-cloth market, and the pass through of
increases in cotton raw material prices as a result of a worldwide
cotton crop shortfall. Improved demand also caused a $0.9 million
increase in extruded urethane product sales. Home Fashion Textiles
sales decreased 2.9% to $39.1 million for the 1995 First Quarter from
$40.2 million for the 1994 First Quarter due to a 5% decrease in
carpet unit volume and average selling prices. Carpet sales decreased
$3.0 million to $28.7 million for the 1995 First Quarter compared to
the 1994 First Quarter. Partially offsetting the decline in carpet
sales was a $1.9 million increase in sales of yarn to home fashion
customers for use in the manufacture of carpets and fabrics.
Operating profits in the 1995 First Quarter increased 89.1%
to $4.7 million from $2.5 million for the 1994 First Quarter. Profits
from Apparel Fabrics and Products of $5.1 million for the 1995 First
Quarter increased $1.0 million, or 25.1%, from the 1994 First Quarter
due to more favorable margins for the Company's newer specialty
fabrics than on commodity-type apparel fabrics. Operating profits for
Industrial Fabrics and Products increased $1.6 million to $1.4 million
in the 1995 First Quarter from a $0.2 million loss in the 1994 First
Quarter as a result of increased sales. Home Fashion Textiles
experienced a $1.1 million decrease in operating profits in the 1995
First
Quarter to a loss of $0.4 million from a profit of $0.7 million in the
1994 First Quarter due to weak demand for home furnishing fabrics and
increased pricing pressures resulting in lower average selling prices
for carpet.
Indirect corporate expenses declined by $0.7 million to $1.4
million for the 1995 First Quarter as compared to the 1994 First
Quarter due to lower employee compensation, professional fees and
amortization expense.
Interest expense decreased 35.0% to $10.1 million for the
1995 First Quarter from $15.5 million for the 1994 First Quarter due
to the reduction in debt resulting from the application of a portion
of the net proceeds from the Automotive Asset Sale. Giving effect to
this reduction of debt on a pro forma basis would reduce interest
expense by $5.5 million in the 1994 First Quarter to $10.0 million.
Such pro forma reduction includes $0.5 million, representing interest
accretion and debt issuance cost amortization. After giving effect to
the debt reduction described above, interest expense increased only
$0.1 million in the 1995 First Quarter. Higher average interest rates
for the revolving credit facility were offset by reductions in
outstanding principal amounts of the Company's notes and debentures as
the Company purchased a portion of its debt securities in the 1995
First Quarter on the open market. These securities were purchased at
prices less than their carrying values using loan proceeds from the
revolving credit facility (see Note 5 of the Notes to Consolidated
Financial Statements included elsewhere in this Prospectus).
Fiscal 1994 Compared to Fiscal 1993
Consolidated net sales from continuing operations increased
$5.6 million (0.9%) from $597.8 million in Fiscal 1993 to $603.4
million in Fiscal 1994. Operating profit from continuing operations
declined $3.5 million (14.1%) from $24.6 million in Fiscal 1993 to
$21.1 million in Fiscal 1994. In general, lower margins on sales of
apparel fabrics and products and home fashion textiles were partially
offset by increases in sales and margins for industrial fabrics and
products.
Net sales in Fiscal 1994 in the apparel fabrics and products
segment, which includes unfinished woven apparel fabrics (greige
goods) primarily for women's wear, yarn sales and elastic products for
various apparel uses, declined by $7.7 million (2.9%) from $262.5
million in Fiscal 1993 to $254.8 million. Increased foreign competi-
tion in the market for commodity apparel fabrics, primarily from
Eastern European and Chinese sources, resulted in lower average
selling prices and lower unit volumes in this market segment. The
recent passage of the General
Agreement on Tariffs and Trade (GATT) will likely foster such foreign
competition in the commodity apparel fabrics market in the future.
During 1994, the Company responded to these changes in its business
environment by changing its product offering dramatically, emphasizing
specialty fabrics with more fashion and styling characteristics.
These changes involve enhancing the Company's manufacturing
capabilities and responsiveness to its customers, and such changes
will continue to be made into Fiscal 1995. The markets for such
specialty-styled fabrics, in which quality, product development,
responsiveness and speed of delivery are more critical do not allow
foreign competitors the type of cost advantage which they enjoy in
commodity markets.
Operating profit in Fiscal 1994 in the apparel fabrics and
products segment declined by $3.3 million (15.2%) from Fiscal 1993
primarily as a result of the lower average selling prices for much of
the Company's apparel fabrics product line, as discussed above. In
addition, lower volume and a weaker product mix in sales of apparel
elastic products accounted for $1.1 million of the decline in
operating profit. The Company expects its continuing efforts to
enhance its manufacturing capabilities in higher margin, specialty
apparel fabrics will result in improved levels of operating profits in
the future.
Net sales in Fiscal 1994 in the industrial fabrics and
products segment, which includes single-ply roofing and environmental
membrane, woven synthetic, cotton and fiberglass fabrics for
insulation, filtration, and lamination applications, and extruded
urethane products for industrial uses, increased $12.9 million (8.3%)
to $169.7 million from $156.8 million in Fiscal 1993. This increase
was primarily the result of increased demand for fiberglass fabrics
used in commercial construction and electronic circuit boards ($6.6
million) and due to the introduction in late 1993 of the Company's new
product for the single-ply roofing market ($4.3 million). This new
product's competitive price and improved performance characteristics
have fueled its sales growth. The Company expects that sales of
roofing membrane will continue to increase as this product gains
further market acceptance.
Operating profit in Fiscal 1994 in the industrial fabrics
and products segment increased $4.0 million (112.6%) to $7.6 million
from $3.6 million in Fiscal 1993 due to the higher sales volume
discussed above and improved product mix in Fiscal 1994. The Company
continuously evaluates its manufacturing methods and capabilities in
an effort to improve its processes and performance. These efforts in-
clude modernizing plant and equipment and the optimum utilization of
human resources. Such efforts are expected to result in improved
operating margins and greater value to customers in all segments of
the Company's
operations, and particularly in the industrial segment in which a very
broad array of product lines and customers is served.
Net sales in Fiscal 1994 in the home fashion textiles
segment, which includes residential and commercial carpeting and woven
drapery fabric, increased $0.4 million to $178.9 million from $178.5
million in Fiscal 1993. Sales of carpet remained essentially flat
compared with Fiscal 1993, while carpet industry shipments increased
approximately 5% as a result of increases in industry sales of carpet
at lower price points, a segment of the market in which the Company
does not participate to a significant degree. Demand for the
Company's drapery and other home- furnishings fabrics, which has
declined over the last several years, appears to have stabilized.
Operating profit in Fiscal 1994 in the home fashion textiles
segment declined $5.1 million (64.7%) to $2.8 million from $7.9
million in Fiscal 1993 as a result of a less profitable product mix in
home fashion fabrics, combined with a number of manufacturing-related
difficulties in the carpet operations, including excessive off-quality
production and raw material price increases which, due to market
conditions, were not recoverable in price increases. In addition,
sample and promotional expenses associated with the introduction of
woven rugs to the product line detracted from Fiscal 1994
profitability. Off-quality production declined during the last half
of Fiscal 1994 and the benefits associated with the higher sample
costs are expected to be realized in Fiscal 1995.
Indirect corporate expenses in Fiscal 1994 declined $0.9
million to $7.8 million from $8.7 million in Fiscal 1993 due primarily
to lower professional fees and lower depreciation and amortization
expense.
Giving effect to the reduction of debt associated with the
use of the net proceeds from the Automotive Asset Sale on a pro forma
basis would reduce interest expense by $23.7 million in Fiscal 1992,
$25.1 million in Fiscal 1993 and $16.2 million in Fiscal 1994. Such
pro forma reductions include $3.5 million, $3.1 million and $1.3
million in Fiscal 1992, 1993 and 1994, respectively, representing
interest accretion and debt issuance cost amortization. After giving
effect to the debt reduction described above, interest expense
increased approximately $3.2 million in Fiscal 1994 from Fiscal 1993,
due primarily to higher average interest rates and the compounding
effect of accretion of debt discounts and non-cash interest.
Results of operations of the Company's Automotive Assets are
accounted for as discontinued operations and include twelve months in
Fiscal 1992 and Fiscal 1993 and eight months
(through the date of sale) in Fiscal 1994. In general, through the
date of sale, net sales and operating income in Fiscal 1994 were
substantially higher than comparable periods in Fiscal 1993 as a
result of a stronger North American automotive market, increased sales
of airbag fabric and improved productivity.
On June 28, 1994, pursuant to the terms of the Asset
Purchase Agreement, the Company consummated the Automotive Asset Sale.
In connection therewith, the Purchaser agreed to assume substantially
all of the liabilities and obligations associated with the Automotive
Assets. The purchase price for the Automotive Assets was
approximately $279 million, consisting of $264 million of cash paid at
closing and $15 million of assumed debt as of June 28, 1994, subject
to certain post-closing adjustments which may result in a gain to be
recognized in a future period. The net cash proceeds from the
disposition of the Automotive Assets (after deductions for fees, other
expenses and amounts designated by management to satisfy possible
contingent tax liabilities) were approximately $213 million and such
proceeds were used by the Company to reduce its outstanding
indebtedness.
Effective October 31, 1993, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 112, which requires that
the cost of benefits provided to former or inactive employees after
employment but before retirement be recognized on the accrual basis of
accounting instead of when paid, as had been the Company's practice.
Such change resulted in a charge to earnings of $1.0 million after
tax. The effect of adopting SFAS No. 112 on income from operations in
1994 was not significant.
Fiscal 1993 Compared to Fiscal 1992
Consolidated net sales from continuing operations decreased
$13.2 million (2.2%) from $611.0 million in Fiscal 1992 to $597.8
million in Fiscal 1993. Operating profit from continuing operations
declined $10.5 million (29.9%) from $35.1 million in Fiscal 1992 to
$24.6 million in Fiscal 1993. In general, increases in sales and
operating profits in the home fashion textiles segment were offset by
declines in sales and operating profits in the apparel fabrics and
products segment and the industrial fabrics and products segment.
Net sales in Fiscal 1993 in the apparel fabrics and products
segment declined by $4.8 million (1.8%) from Fiscal 1992 levels.
Increased unit volume of greige goods of approximately 3%, as the
Company sought to maintain or increase market share in its apparel
markets, was offset by a decline of approximately 3% in average
selling prices for the Company's greige goods
resulting from an oversupply of goods in the market and generally weak
North American apparel markets. Elastic apparel products sales
declined by $4.4 million as the Company redirected certain productive
capacity toward industrial elastic products in response to changing
customer requirements for the manufacture of disposable diapers.
Operating profit in Fiscal 1993 in the apparel fabrics and
products segment declined by $5.4 million (19.9%) primarily as a
result of the aforementioned decline in average selling prices of
greige goods and decline in sales volume of elastic apparel products.
Substantially all of the Fiscal 1993 decline in net sales and
operating income from Fiscal 1992 in the apparel fabrics and products
segment occurred during the first two fiscal quarters of Fiscal 1993.
Net sales in Fiscal 1993 in the industrial fabrics and
products segment decreased $10.2 million (6.1%) to $156.8 million from
$167.0 million in Fiscal 1992. This sales decrease was attributable
primarily to a decline in sales of roofing and environmental membrane
liner by $6.9 million in Fiscal 1993 as a result of lower sales of its
major product line. The Company introduced a new product for the
single-ply roofing market which is expected to increase roofing sales
levels due to its competitive price and improved performance
qualities. Sales of other industrial fabrics and products declined
approximately $2.9 million, primarily as a result of lower demand and
selling prices for certain cotton fabrics.
Operating profits in Fiscal 1993 in the industrial fabrics
and products segment decreased $5.4 million (60.3%) to $3.6 million
from $9.0 million in Fiscal 1992 due to lower sales volume and lower
selling prices as described above.
Net sales in Fiscal 1993 in the home fashion textiles
segment, which includes residential and commercial carpeting and woven
drapery fabric, increased $1.7 million to $178.5 million from $176.8
million in Fiscal 1992. Sales of carpet increased $5.5 million to
$140.2 million in Fiscal 1993 from $134.7 million in Fiscal 1992 due
to a continued improvement in the domestic carpet industry and the
Company's continued success in new product introductions. Sales of
home-furnishings fabrics declined by $4.7 million due to softening
market conditions.
Operating profit in Fiscal 1993 in the home fashion textiles
segment increased by $1.4 million due primarily to increased carpet
volume and cost reduction programs. The Company continued to increase
its carpet yarn capacity and efficiency during Fiscal 1992 and Fiscal
1993 through capital expenditures for modernization and expansion.
General corporate expenses in Fiscal 1993 increased $1.1
million due primarily to higher salaries and benefit costs and
professional fees. Interest expense in Fiscal 1993 increased $1.9
million to $62.2 million from $60.3 million in Fiscal 1992 due
primarily to an increase in amortization of debt issuance costs of
$1.2 million and the compounding effect of accretion of debt discounts
and non-cash interest. The effect of higher average borrowings under
the Revolving Credit Facility (as defined in "DESCRIPTION OF THE
CREDIT FACILITY") was entirely offset by lower average interest rates
in Fiscal 1993.
Effective November 1, 1992, the Company adopted SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." SFAS No. 106 requires that the projected future cost of
providing postretirement benefits, such as healthcare and life
insurance, be recognized as an expense as employees render service
instead of when claims are incurred, as the Company historically had
done. Such change resulted in a charge to earnings of approximately
$5.7 million after tax. The effect of adopting SFAS No. 106 on income
from operations in Fiscal 1993 was not significant.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity for operations
and expansion are funds generated internally and borrowings under its
$135 million Revolving Credit Facility (as defined in "DESCRIPTION OF
THE CREDIT FACILITY"). At January 28, 1995, the Company had $38.7
million available for borrowing under the Revolving Credit Facility.
Borrowings under the Revolving Credit Facility are made or repaid on a
daily basis in amounts equal to the net cash requirements or proceeds
for that business day. See "DESCRIPTION OF THE CREDIT FACILITY."
During the 1995 First Quarter, the Company obtained a $5 million
equipment loan from a commercial lender to finance certain capital
expenditures.
Working capital increased approximately 4.7% to $100.4
million at January 28, 1995 from $95.9 million at October 29, 1994. A
decline in accounts receivable reduced working capital $9.9 million
(9.6%) due to the seasonally lower sales in the first quarter of the
fiscal year than in the fourth quarter. Inventories increased $2.9
million (3.9%) from October 29, 1994 to January 28, 1995, principally
due to higher costs associated with the specialty fabrics to which the
Company has changed its focus in the Apparel Fabrics and Products
segment and also due to an increase in yarn in work in process in
anticipation of increased production needs during the next quarter.
Accrued interest, compensation and other liabilities decreased $10.4
million during the 1995 First Quarter due to the scheduled timing of
interest, annual incentive compensation and other payments.
Net cash used in operations totalled $4.3 million for Fiscal
1994 compared to $18.2 million for Fiscal 1993. An increase in other
assets resulting from contributions to the Company's defined benefit
pension plan in excess of recorded expense totalled $3.5 million in
Fiscal 1994. In addition, increases in working capital and payments
on long-term roofing liabilities totalled $4.6 million. Net receipts
from discontinued operations, which represents net cash flow from the
Company's Automotive Assets, totalled $18.0 million for the period
through June 28, 1994 compared to $15.4 million in Fiscal 1993.
Receipts from discontinued operations, and increased borrowings under
the Revolving Credit Facility, funded capital expenditures of
approximately $22.0 million.
The Automotive Asset Sale resulted in aggregate cash
proceeds of approximately $264 million. The net cash proceeds, after
deductions for fees and expenses and amounts designated by management
to satisfy possible contingent tax liabilities, were approximately
$213.1 million. In connection with the Automotive Asset Sale, the
Company's outstanding indebtedness, including accrued interest, was
reduced as follows: (i) bank debt by $71.2 million, (ii) Senior
Secured Notes by $94.8 million, (iii) Senior Subordinated Discount
Notes by $25.6 million, and (iv) Senior Subordinated Notes by $21.5
million. See Note 5 of the Notes to Consolidated Financial Statements
included elsewhere in this Prospectus.
The Company expended $36,607,000 during the 1995 First
Quarter to purchase and retire certain of its outstanding notes and
debentures with an aggregate face value of $66,571,000 and a carrying
value (including interest due at maturity) of $59,225,000. The
Company recognized a gain from early extinguishment of debt of
$17,520,000, net of expenses of $1,898,000 and income taxes of
$3,200,000. See "THE COMPANY -- Open-Market Repurchases of Debt
Securities."
Management continually reviews various options for enhancing
liquidity and its cash flow to cash requirements coverage, both
operationally and financially. Such options include strategic
dispositions and financing and refinancing activities aimed at
increasing cash flow and reducing cash requirements, the principal
items of which are interest and capital expenditures.
Provisions of the Indentures place significant restrictions
on certain corporate acts such as mergers, consolidations,
acquisitions, repurchases of stock, the making of certain restricted
payments, including the payment of cash dividends on the Company's
capital stock, transactions with affiliates and the sale of assets.
The Company must maintain
minimum levels of "net worth," defined to be total assets minus
liabilities plus the subordinated notes and debentures and other
adjustments. The Indentures place limitations on the Company's
ability to incur additional debt, grant a security interest in its
assets and require the Company to apply the proceeds from the sale of
assets, outside the ordinary course of business, towards reducing
outstanding debt. Other customary covenants, conditions and default
provisions are also present. The Company was in compliance with the
restrictions and financial covenants of its debt agreements at January
28, 1995.
Management believes that expected cash flows and capital
resources, including any necessary refinancings, will be adequate to
meet future debt service requirements and working capital needs. The
utilization of the Company's Revolving Credit Facility for purchases
of the Company's notes and debentures in the open market has and will
continue to reduce the amounts (up to the amount of such purchases)
that would otherwise be available for borrowing had such purchases not
been made. The Company expects that its planned capital expenditures
in Fiscal 1995 of approximately $26 million will be funded by cash
from operations, bank and other equipment financing sources. Should
such capital resources be inadequate or unavailable, however,
management would defer certain of its planned capital expenditures or
take other appropriate actions to preserve liquidity.
INFLATION AND TAX MATTERS
The Company is subject to the effects of changing prices.
It has generally been able to pass along inflationary increases in its
costs by increasing the prices for its products; however, market
conditions sometimes preclude this practice. The application of
purchase accounting in connection with the Acquisition mitigates the
effects of changing costs on the Company's Consolidated Financial
Statements because assets and liabilities were adjusted to fair values
at the date of the Acquisition, and costs of sales and depreciation
have been adjusted accordingly.
The Company provided $2.8 million for income taxes on
continuing operations in Fiscal 1994. No tax expense resulted from
applying the statutory tax rate to the loss before income taxes.
However, the Company was not able to fully offset subsidiary income in
all tax jurisdictions with net operating losses of the Company or
other subsidiaries or operating loss carryovers and, as a result, a
provision for state income taxes was required. During the year, the
Company utilized approximately $141 million of net operating loss
carryforwards to offset the gain on sale of the Automotive Assets.
Income tax
expense incident to the sale has been reduced by approximately $49
million as a result of such utilization. Federal alternative minimum
and state taxes of approximately $2.8 million were recognized as a
result of the sale. The Company has provided a 100% valuation
allowance of $12 million for its remaining deferred tax asset, net of
existing taxable "temporary differences." This asset relates
primarily to the benefit of the net operating loss carryforward. In
the Company's opinion, the valuation allowance is required as
realization of the tax benefit is not assured based on prior operating
history. In addition, the Company's ability to utilize its net
operating losses may be significantly limited under the income tax
laws should there be future changes in the ownership of the Company's
stock which constitute an ownership change for tax purposes. The
effect of such an ownership change would be to significantly limit the
annual utilization of the remaining net operating loss to an amount
equal to the value of the Company immediately prior to the time of the
change (subject to certain adjustments) multiplied by the federal
long-term tax exempt rate. The Company believes that it is more
likely than not that the net operating loss carryforwards, net of the
related valuation allowance, recorded at October 29, 1994, will be
fully realized.
Although the Company believes the use of its net operating
losses to offset the gain on the Automotive Asset Sale will more
likely than not be sustained under existing tax laws, uncertainty
exists primarily due to the fact that applicable regulations under
Section 382 of the Internal Revenue Code of 1986, as amended (the
"Code") have not been issued. Therefore, in accordance with
provisions of the Indentures, the Company has set aside, in a special-
purpose, wholly owned subsidiary, a portion ($39.5 million) of the net
proceeds from the Automotive Asset Sale to satisfy, if necessary,
these possible contingent tax liabilities. These funds have been
invested in U.S. Government securities and are classified as other
assets in the Company's Consolidated Financial Statements.
BUSINESS
GENERAL
The Company is one of the largest diversified domestic
manufacturers of textile and textile-related products, principally for
the apparel fabric, industrial and home fashion markets. On May 9,
1988, the Company acquired the Predecessor Stevens Divisions, which
had accounted for approximately 50% of the total sales of J.P. Stevens
for its fiscal year ended October 31, 1987. The Company competes in
three industry segments: Apparel Fabrics and Products, Industrial
Fabrics and Products and Home Fashion Textiles. See "NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS."
APPAREL FABRICS AND PRODUCTS
The Company is a leading manufacturer of greige goods
(unfinished woven fabrics), yarn and elastic products. The Company's
products are used in the manufacture of a broad range of consumer
apparel products including blouses, dresses, sportswear, undergarments
and disposable diapers.
Greige Goods. The Company produces fabrics from spun and
------------
filament yarns that are used ultimately in the manufacture of apparel
such as blouses, dresses and sportswear. Greige goods are produced
from rayon, acetate, polyester and cotton yarns, and are primarily
sold to other textile manufacturers for use in producing printed and
dyed fabrics.
Yarn. The Company produces a variety of rayon and polyester
----
spun yarns for its own use and for sale to manufacturers of knitted
apparel.
Elastic Products. The Company manufactures a number of
----------------
elastic products from natural and synthetic rubber compounds. Elastic
thread is sold to manufacturers of undergarments for use in waistbands
and similar applications, while other elastic products are used in the
manufacture of disposable infant diapers.
INDUSTRIAL FABRICS AND PRODUCTS
Commercial Roofing Products. The Company is a well
---------------------------
-established manufacturer of single-ply membrane roofs that are made
from woven synthetic fabrics and rubber-based or polypropylene
specialty polymer compounds which are sold principally to roofing
distributors for use in both the new and replacement commercial
markets.
Other Building Construction Products. The Company is a
------------------------------------
producer of fabrics made from glass and synthetic fibers that are used
in a number of applications in the building construction industry.
Products include various scrims used for wallboard tapes and certain
roofing applications, and reinforcement substrates used for the
installation of internal and external tiles and synthetic wall
surfaces. The Company produces and sells membrane products (similar
to commercial roofing products) for use in environmental containment
applications such as reservoir liners and covers.
Other Industrial Products. The Company produces a wide
-------------------------
variety of other industrial textile products that are used in many
industries for many different end uses. Many of these products have
characteristics that provide insulation or filtration properties.
These specialty fabrics are used in the manufacture of such products
as flame-retardant clothing, filtration products, tarpaulins, awnings,
athletic tapes, printed circuit boards and advanced composites.
In addition, the Company produces urethane products for use in the
manufacture of various products such as "bulletproof" glass, disposable
intravenous bags, seamless welded drive belts and tubing.
HOME FASHION TEXTILES
Carpets. The Company manufactures both residential and
-------
commercial carpet products. The Company's tufted carpet for home use
is sold under the name Gulistan and competes in the moderate price
range. The Company is also a supplier of private-label carpets to
major retail department stores, to cooperative retail buying groups
and to independent retailers. Residential carpet products are sold to
retailers and distributors on a nationwide basis. The Company's
commercial carpet is sold primarily to builders, contractors and
designers for use in offices, institutions, airports and hotels. In
addition, the Company purchases and resells woven rugs to its carpet
customers.
Fabrics. The Company produces a variety of unfinished woven
-------
fabrics for use in the manufacture of draperies, curtains and
lampshades and is a major producer of solution-dyed drapery fabrics.
OPERATIONS
Each operating unit of the Company has individual
administrative, manufacturing and marketing capabilities and all
material aspects of operations, including product design, customer
service, purchasing, credit and collection are coordinated by each
operating unit. Corporate support services
include finance, strategic planning, legal, tax and regulatory
affairs.
Following the Acquisition and through the date hereof,
management's business plans have included many cost- reduction
activities aimed at improving return on assets. These activities
included consolidating manufacturing operations, exiting unprofitable
product lines, more aggressive capital spending programs to improve
quality and productivity and reorganizing certain manufacturing
operations. The Company plans to continue its manufacturing
modernization program to improve efficiency and productivity and
further reduce its cost structure.
The Company's corporate headquarters is located in
Greenville, South Carolina. The Company maintains a sales office in
New York City for certain of its operations. Seven additional
regional sales offices and three distribution centers are maintained
by the Company, principally for its carpet and building construction
products. See "-- Property."
MANUFACTURING
The Company's experienced work force and wide variety of
yarn-making, fabric-forming and other manufacturing equipment allow
the Company to rapidly and efficiently change its product mix to meet
style and seasonal requirements. The Company's activities generally
encompass all phases of manufacturing its products.
In the manufacture of woven textile products, the Company
purchases synthetic and natural fibers and spins them into yarn or
purchases filament yarn for processing. In addition, the Company
purchases certain spun yarns. Yarns are then coated, sized or
directly woven into unfinished fabric. Upon completion of the weaving
process, fabric is generally shipped to customers who dye, finish,
coat and cut those fabrics for resale.
In the manufacture of tufted carpet, the Company purchases
various face fibers and then spins these fibers into yarn or purchases
filament yarn for processing. Yarn is then shipped to the Company's
tufting facility where it is tufted into primary carpet backing,
finished and dyed at a dyeing facility, and completed with an
application of secondary carpet backing.
The Company's elastic products are manufactured from natural
and synthetic rubber compounds that are purchased from outside
suppliers and are processed through a variety of production
operations, including slitting and calendering. Single-ply membrane
roofing is made by processing a
Company-manufactured woven substrate with specialty polymers. Other
industrial fabric products are produced from either woven fiberglass
or cotton and synthetic fibers, which fibers are processed into yarn,
woven and finished into fabrics by the Company. Other specialty
industrial products are produced by extrusion of urethane resins.
The Company believes that its manufacturing facilities are
sufficient for its present, and reasonably foreseeable future,
production requirements.
RAW MATERIALS
The Company generally has good relationships with its
suppliers and has, where possible, diversified its supplier base so as
to avoid a disruption of supply. In most cases, the Company's raw
materials are staple goods that are readily available from numerous
domestic fiber and chemical manufacturers. For several products,
however, branded goods or other circumstances prevent such a diversi-
fication, and an interruption of the supply of these raw materials
could have a significant negative impact on the Company's ability to
produce certain products. The Company believes that its practice of
purchasing such items from large, stable companies minimizes the risk
of such an interruption in supply.
MARKETING AND COMPETITION
The textile industry is highly competitive and includes a
number of participants with aggregate sales and financial resources
greater than the Company's. The Company generally competes on the
basis of price, quality, design and customer service. Many companies
compete in limited segments of the textile market and the Company's
operations are relatively broad-based. The Company is well positioned
due to its ability to respond quickly to changing styling and fashion
trends. This ability generally provides advantages for domestic
textile manufacturers. Although no single company dominates the
industry, most market segments are dominated by a small number of
competitors. The Company believes it has a significant market share
in the market for rayon and acetate apparel fabrics, rayon yarn,
solution-dyed satin fabrics and quartz fabrics.
The Company's marketing efforts include the development of
new product designs and styles which meet customer needs. Each of the
Company's operating units has been an established supplier to each of
its markets for many years and is taking advantage of well-established
customer relationships to increase product development with its
customers. The "J.P. Stevens" trade name, which the Company has a
non-exclusive, royalty-free license
to use (see "-- Patents, Licenses and Trademarks"), is widely
recognized throughout the textile industry. The Company believes that
its relatively broad base of manufacturing operations provides it with
a competitive advantage in developing new textile products. In
addition to its direct marketing capabilities, the Company markets
certain of its products through distributors.
The following is a discussion of marketing and competitive
factors as they relate to each of the Company's segments.
Apparel Fabrics and Products
Greige Goods. The Company markets its spun and filament
------------
fabrics to converters who finish and/or dye these products prior to
shipping to finished apparel manufacturers. The Company has sought to
maintain a relatively high proportion of such sales in product areas
where its manufacturing flexibility can provide a competitive
advantage.
Yarn. The Company competes with a large number of companies
----
which sell yarn to woven and knit goods manufacturers. Yarns are
generally sold on a direct basis, and the Company believes that
quality and price are the primary competitive factors.
Elastic Products. The Company's elastic products are sold
----------------
on a direct basis primarily to diaper and undergarment manufacturers
as well as to outerwear manufacturers. The Company believes that
price is the primary competitive factor in this market. For certain
of its elastic products, the Company believes it has a significant
market share.
Industrial Fabrics and Products
Construction Products. The Company markets its single-ply
---------------------
roofing products on a direct basis to roofing distributors. The
Company competes with manufacturers of this and other types of roofing
products. The Company believes that its products' ease of
installation and warranty are important competitive factors.
Other Products. Other industrial fabrics and products are
--------------
marketed directly to other manufacturers and distributors. The
Company believes that price and its ability to meet customer technical
specifications are important competitive factors.
Home Fashion Textiles
The Company's home fashion textile operations compete with a
large number of manufacturers of similar carpet and woven fabric
products. In general, products are differentiated on the basis of
price and quality. The Company believes that in addition to price and
quality, design and style features are important competitive factors.
CUSTOMERS
No customer accounts for more than 7% of the Company's
sales. There are customers the loss of which could have a material
adverse effect on sales.
PRODUCT DEVELOPMENT
In general, the textile industry expends its efforts on
design innovation and capital expenditures for process enhancements
rather than on basic research, relying on fiber suppliers or machinery
manufacturers for basic research.
The Company's research and development activities are
directed toward the development of new fabrics and styles which meet
specific styling requirements (in the case of apparel and home-
furnishing fabrics and products) or other specific properties such as
insulation, weight, strength, filtration or laminate adherence (in the
case of industrial fabrics and products). Significant time is spent
by employees in activities such as meeting with stylists, designers,
customers, suppliers and machinery manufacturers, as well as producing
samples and running trials in order to develop new products and
markets. These activities are performed at various levels and at
various locations, and their specifically identifiable incremental
costs are not material in relation to the Company's total operating
costs.
BACKLOG
Unfilled open orders, which the Company believes are firm,
were $89.0 million at October 29, 1994 and $73.9 million at
October 30, 1993 (1993 amounts are adjusted to exclude the
discontinued operations of the Automotive Assets sold in June 1994).
The Company generally fills its open orders in the following fiscal
year and the Company expects that all of the open orders as of October
29, 1994 will be filled in the 52-week period ending October 28, 1995
("Fiscal 1995"). The increase in open orders at October 29, 1994 is
due to a general increase in customer demands across most business
lines compared to October 30, 1993. Unfilled open orders, which the
Company believes are
firm, were $80.5 million at January 28, 1995 compared to $85.8 million
at January 29, 1994. The decrease in open orders at January 28, 1995
as compared to January 29, 1994 is representative of a change in the
timing of the acceptance of certain orders by the Company. The
Company believes that the amount of backlog provides some indication
of the sales volume that can be expected in coming months, although
changes in economic conditions may result in deferral or acceleration
of orders which may affect sales volume for a period.
No significant portion of the Company's business is subject
to renegotiation of profits, or termination of contracts or
subcontracts at the election of the government.
PATENTS, LICENSES AND TRADEMARKS
Certain of the Company's products are sold under registered
trademarks which have been licensed royalty-free to the Company from
J.P. Stevens until May 2013, including trademarks for certain products
using the "J.P. Stevens" name. Patented processes used in the
manufacturing process are not a significant part of the Company's
business. The Company does not license its name or products to
others.
EMPLOYEES
The Company currently has approximately 5,900 employees, of
which approximately 5,000 are hourly and approximately 900 are
salaried. The Company's employees are not represented by unions. The
Company believes its relations with its employees are good and has not
had any work stoppages or strikes.
ENVIRONMENTAL AND REGULATORY MATTERS
The Company is subject to various federal, state and local
environmental laws and regulations concerning, among other things, the
discharge, storage, handling and disposal of a variety of hazardous
and non-hazardous substances and wastes. The Company's plants
generate small quantities of hazardous waste that are either recycled
or disposed of off-site by or at licensed disposal or treatment
facilities.
The Company believes that it is in substantial compliance
with all existing environmental laws and regulations to which it is
subject. In addition, the Company is subject to liability under
environmental laws relating to the past release or disposal of
hazardous materials. To date, and in management's belief for the
foreseeable future, liability under and compliance with existing
environmental laws has not had and will not have a
material adverse effect on the Company's financial or competitive
positions. No representation or assurance can be made, however, that
any change in federal, state or local requirements or the discovery of
unknown problems or conditions will not require substantial
expenditures by the Company.
SEASONALITY
Certain portions of the business of the Company are seasonal
(principally construction products and carpet) and sales of these
products tend to decline during winter months in correlation with
construction activity. These declines have historically tended to
result in lower sales and operating profits in the first and second
quarters than in the third and fourth quarters of the Company's fiscal
year.
PROPERTY
The following table sets forth certain information relating
to the Company's principal facilities (segment information relates to
principal use). All of the facilities owned or leased by the Company
are used for manufacturing, except for the facility in New York, New
York, which is used for sales offices. Except as noted, all of the
Company's facilities are owned:
Apparel Fabrics and Industrial Fabrics
Products and Products
---------------------- --------------------
Square Square
Location Footage Location Footage
-------- ------- -------- -------
Greenville, SC 399,000 Kingsport, TN 625,000
Laurens, SC 475,000 Slater, SC 433,000
Greenville, SC 460,000 Westfield, NC 237,000
Stanley, NC 338,000 Easthampton, MA 50,000
S. Boston, VA 286,000
Stuart, VA 133,000
Rocky Mount, VA 81,000
Home Fashion Textiles All Segments
--------------------- ------------
Square Square
Location Footage Location Footage
-------- ------- -------- -------
Aberdeen, NC 658,000 New York, NY(2) 10,000
Lincolnton, NC 387,000
Turnersburg, NC 267,000
Wagram, NC(1) 84,000
<FN>
-----------------
(1) The Company occupies a portion of the Wagram, North Carolina
facility pursuant to a sharing agreement with J.P. Stevens.
(2) The New York, New York facility is leased by the Company under a
lease agreement which was extended for two years on June 1, 1993
and expires on May 30, 1995.
The Company also leases certain other warehouse facilities,
various regional sales offices and its corporate headquarters. The
Company believes that all of its facilities are suitable and adequate
for the current and anticipated conduct of its operations.
LEGAL PROCEEDINGS
The Company is involved in various legal proceedings which
are routine litigations incidental to the conduct of its business.
Management believes that none of this litigation, if determined
adversely to the Company, would have a material adverse effect on the
financial condition or results of operations of the Company.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with
respect to the persons who are members of the Board of Directors or
executive officers of the Company. Each director serves until a
successor is elected and qualified. Directors receive no compensation
for their services.
Name Age Position(s) Held
---- --- ----------------
Steven M. Friedman 40 Director and Chairman of the
Board
Jerry E. Hunter 58 Director, Chief Executive
Officer and President
David H. Taylor 40 Director, Executive Vice
President - Finance and
Secretary
Muzzafar Mirza 37 Director
Alain M. Oberrotman 44 Director
Marc C. Particelli 50 Director
The business experience of each of the directors and
executive officers during the past five years is as follows:
Steven M. Friedman was elected as the Chairman of the Board
and Chief Executive Officer of the Company in April 1991. He resigned
his position as Chief Executive Officer on November 29, 1994. He has
been a director of the Company since May 1988. Mr. Friedman became a
general partner of Eos Partners, L.P. (a private investment firm) on
January 1, 1994. Prior thereto, he was a general partner of Odyssey
Partners, a private investment partnership with substantial capital
invested in marketable securities and closely-held businesses, since
April 1988. He is also a director of Forstmann & Company, Inc., a
manufacturer of textiles and textile-related products; Micom
Communications, Corp., a supplier of data communications and
networking products; Gundle Environmental Systems, Inc.; Eagle Food
Centers, Inc., a chain of grocery stores; The Leslie Fay Companies,
Inc., a women's wear designer and manufacturer; Black Box Corp., a
supplier of data communications products; The Caldor Corporation, a
chain of discount retail stores; and Rickel Home Centers, Inc., a home
center retailer.
Jerry E. Hunter was appointed as a director of the Company
on April 6, 1993 and as Chief Executive Officer of the Company on
November 29, 1994. Mr. Hunter has served as President of the Company
since September 1988. Prior to that time, from May 1988 to September
1988, he was Executive Vice-President - Operations. In addition, on
January 18, 1994, Mr. Hunter was appointed as Chief Operating Officer
of JPS Converter and Industrial Corp., a wholly owned subsidiary of
the Company, and he also serves as a Vice-President of each of the
Company's subsidiaries. From April 1986 to May 1988, he was Vice-
President - Technical Services at J.P. Stevens. From March 1983 to
March 1986, he was Senior Vice-President at Cannon Mills, Inc., a
textile manufacturer. Prior to March 1983, he was employed by Springs
Industries, a textile manufacturer, for 21 years.
David H. Taylor was appointed as a director of the Company
on April 15, 1993. Mr. Taylor has served as Executive Vice-President
- Finance and Secretary of the Company since June 1991, and prior
thereto he was Controller and Assistant Secretary of the Company since
May 1988. Prior to that time, he was a Senior Manager at Deloitte
Haskins & Sells, a public accounting firm, by which he was employed
from June 1977 through May 1988. In addition, Mr. Taylor serves as a
Vice-President and Assistant Secretary of each of the Company's
subsidiaries.
Muzzafar Mirza was appointed as a director of the Company on
October 25, 1993. He has been a principal of Odyssey Partners since
July 1993. From May 1988 to June 1993, he was employed by General
Electric Capital Corporation ("GECC") as head of Merchant Banking for
the GE Capital Corporate Finance Group. From 1983 to 1988, he was a
Vice President of Marine Midland Bank, N.A. Mr. Mirza is also a
director of The Scotsman Group, Inc., a lessor of mobile office units.
Alain M. Oberrotman was appointed as a director of the
Company on January 25, 1994. He has been a principal of Odyssey
Partners since October 1992. From September 1990 to October 1992, he
was a principal of Hambro International Equity Partners, a venture
capital firm. Prior thereto, Mr. Oberrotman was the President of TVI
Group, Inc., an interim management and consulting firm.
Marc C. Particelli was appointed as a director of the
Company on November 29, 1994. He has been a principal of Odyssey
Partners since October 1, 1994. Prior thereto, he was worldwide
Practice Leader for the Consumer Products group at Booz, Allen &
Hamilton, an international management consulting firm by which he was
employed from 1974 to 1994.
The Company's directors serve until the next annual meeting
of stockholders or until their successors have been elected and
qualified.
None of the directors or executive officers listed herein is
related to any other such director or executive officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not have a compensation committee or other
board committee performing equivalent functions thereto. However,
Odyssey Investors, Inc., a Delaware corporation and an affiliate of
Odyssey Partners ("Odyssey Investors"), as part of its duties under
the Management Agreement (as defined below in "-- Management
Agreement") from time to time during the past fiscal year has partici-
pated in certain discussions with Jerry E. Hunter, the Chief Executive
Officer, President and a director of the Company, and David H. Taylor,
Executive Vice President - Finance, Secretary and a director of the
Company, in determining certain business and financial objectives and
other criteria to enable the Company to set compensation awards for
the Company's executive officers.
MANAGEMENT AGREEMENT
Pursuant to a management agreement (the "Management
Agreement"), dated as of April 2, 1991, between the Company and
Odyssey Investors, the Company agreed to pay Odyssey Investors a $1.25
million fee for Fiscal 1994 and $1.0 million annually for Fiscal 1995
and for each fiscal year thereafter through April 2, 2001, in exchange
for certain management services provided by Odyssey Investors. Such
services include continual financial advisory and business management
services in order to maximize the efficiency of operations and to
enhance profitability.
EXECUTIVE COMPENSATION
Summary of Compensation
The following summary compensation table sets forth
information concerning compensation for the last three fiscal years
for services in all capacities awarded to, earned by or paid to (i)
the Company's Chief Executive Officer, (ii) the four other most highly
compensated executive officers of the Company who were serving in such
capacities at the end of Fiscal 1994 and (iii) two additional
executive officers who terminated their employment with the Company
during Fiscal 1994 but whose compensation would place them among the
four highest paid executive officers.
SUMMARY COMPENSATION TABLE
--------------------------
Long-Term
Annual Compensation Incentive All Other
Name and -------------------
Principal Position Year Salary Bonus Plan Payouts(2) Compensation(3)
------------------ ---- ------ ----- ------------ ------------
Steven M. Friedman, 1994 $ 0 $ 0 $ 0 $ 0
Chairman of the Board (1) 1993 0 0 0 0
1992 0 0 0 0
Jerry E. Hunter, 1994 291,500 292,793 0 5,219
Chief Executive Officer and 1993 265,000 108,942 0 8,823
President 1992 265,000 138,423 0 8,585
David H. Taylor, 1994 187,000 162,631 0 3,271
Executive Vice President - 1993 170,000 48,921 0 6,704
Finance and Secretary 1992 170,000 62,160 0 6,609
Carl Rosen, 1994 217,708 60,000 0 4,354
President of JPS Converter 1993 175,500 50,000 0 7,076
and Industrial Corp.(4) 1992 116,917 35,000 0 351
Bruce R. Wilby, 1994 136,250 75,000 0 2,500
President of 1993 123,369 15,000 0 5,184
JPS Elastomerics Corp.(4) 1992 103,226 4,500 0 18
Jerry A. Burns, 1994 156,667 260,116 1,275,155 3,299
Chief Executive Officer of 1993 191,250 370,000 0 7,693
JPS Auto Inc. (4)(5) 1992 170,000 184,374 0 7,101
Robert B. Sparks, 1994 120,833 230,541 900,109 2,289
President of 1993 175,000 350,000 0 6,833
JPS Auto Inc.(4)(5) 1992 160,000 173,528 0 6,405
<FN>
------------------------------------
(1) Steven M. Friedman served as Chief Executive Officer during all of Fiscal 1994 and resigned from such
position on November 29, 1994. He does not receive, and has no arrangement with respect to,
compensation from the Company for services rendered by him for or on behalf of the Company.
(2) Payouts under the Company's long-term incentive plan (see below).
(3) Employer matching 401(k) plan contribution and employer-provided life insurance premiums.
(4) Such executive officers of the Company's subsidiaries perform certain policy-making functions for the
Company and are therefore included herein pursuant to Item 402(a)(3) of Regulation S-K and Rule 3b-7
under the Exchange Act.
(5) Jerry A. Burns and Robert B. Sparks terminated their employment with the Company on June 28, 1994, in
connection with the Automotive Asset Sale.
LONG-TERM INCENTIVE PLANS
In 1994, the Company made payouts to Jerry A. Burns and
Robert B. Sparks under its prior Long-Term Incentive Plan. No other
employees earned an award under the plan and such plan expired in
1994. Payouts of awards were tied to the Company's subsidiaries
achieving specified aggregate earnings levels during the period from
Fiscal 1992 through its fiscal year ending in 1994.
The Company and certain of its subsidiaries (the "Subsidiary
Participants") have adopted a new Long-Term Incentive Plan for certain
officers and key employees effective November 1, 1994. The new plan
provides for annual awards which are to be paid to employee
participants in cash installments over a period of years commencing
after the end of the Company's 1996 fiscal
year. Awards are based on the achievement of certain financial
performance targets by the Company and the Subsidiary Participants.
Such financial performance targets are established on a rolling 3-year
basis and are subject to change at the discretion of the Boards of
Directors of the Company and the Subsidiary Participants.
The following employees named in the Summary Compensation
Table are currently employee participants in the new Long-Term
Incentive Plan: Jerry E. Hunter, David H. Taylor, Carl Rosen and
Bruce R. Wilby. As of January 28, 1995, there have been no awards
granted under the new plan.
RETIREMENT PENSION PLAN
The Company maintains a Retirement Pension Plan for all
employees (the "Pension Plan"), including its salaried employees. The
Pension Plan is a defined benefit pension plan providing a formula
benefit with contributions determined on an actuarial basis. The
Pension Plan generally covers all employees 21 years of age or older
who have completed one year of service with the Company. The Pension
Plan generally takes into account annual compensation earned under
certain predecessor plans of J.P. Stevens.
The following table indicates the approximate amounts of
annual retirement income that would be payable to a salaried employee
under the Pension Plan based on the compensation levels and years of
credited service shown. There would be no social security or other
offset deducted from the amounts shown.
PENSION PLAN TABLE*
Years of Service
-----------------------------------------------
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
------------ -------- -------- -------- -------- --------
$125,000 $20,456 $27,274 $34,093 $40,911 $47,730
150,000 24,956 33,274 41,593 49,911 58,230
175,000 29,456 39,274 49,093 58,911 68,730
200,000 33,956 45,274 56,593 67,911 79,230
225,000 38,456 51,274 64,093 76,911 89,730
250,000 40,407 53,876 67,345 80,814 94,282
300,000 40,407 53,876 67,345 80,814 94,282
400,000 40,407 53,876 67,345 80,814 94,282
450,000 40,407 53,876 67,345 80,814 94,282
500,000 40,407 53,876 67,345 80,814 94,282
---------------
* Assumes individual retires at age 65 in 1994 with the indicated
years of service and compensation. The social security
integration level of such individuals would be $24,312. The social
security integration level is adjusted annually.
Credited years of service for benefit accrual under the
Pension Plan, as of October 29, 1994, for the following executive
officers are:
Steven M. Friedman . . . . . . 0 years
Jerry E. Hunter . . . . . . . . 8 years
David H. Taylor . . . . . . . . 5 years
Carl Rosen . . . . . . . . . . 3 years
Bruce R. Wilby . . . . . . . . 19 years
Jerry A. Burns . . . . . . . . 5 years
Robert B. Sparks . . . . . . . 19 years
Annual retirement benefits for salaried employees are
generally computed as the sum of 0.6% of a participant's average
compensation (the annual average of five consecutive, complete plan
years of highest compensation during the last 10 plan years of
service) multiplied by the years of benefit service plus 0.6% of a
participant's compensation which exceeds the Participant's Social
Security Integration Level (equal to $24,312 in 1994) multiplied by
the participant's years of benefit service. The Pension Plan provides
that participants' benefits fully vest after five years of service or
the attainment of age 65.
The above table may understate the benefits available to
certain participants because salaried employees who were covered by
the Pension Plan before July 1, 1989 are entitled to the greater of
the benefit formula noted above or the prior benefit formula, plus
additional accrued benefits under the new formula since July 1, 1989.
Under the prior formula, a participant's annual pension payable as of
normal retirement age was equal to 1% of the portion of "final average
compensation" which was equal to the "social security integration
level" in effect for the year of retirement, plus 1.5% of the portion
of the participant's final average compensation in excess of the
social security integration level, the sum of which was multiplied by
the number of years of credited service not exceeding 35.
Compensation covered by the Pension Plan consists of all
payments made to a participant for personal services rendered as an
employee of the Company which are subject to federal income tax
withholding, excluding imputed income attributable to certain fringe-
benefit programs. With respect to salaried employees, plan
compensation covers up to a maximum of $235,840 per individual for the
plan year, beginning November 1, 1993. In accordance with the Revenue
Reconciliation Act of 1993, plan compensation will be limited to
$150,000, as adjusted effective
November 1, 1994. The amounts shown are also subject to possible
maximum limitations under Section 415 of the Code and are subject to
possible reduction for amounts payable under other JPS qualified
plans.
COMPENSATION OF DIRECTORS
Members of the Board of Directors receive no compensation
for their services.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth information as of March 1,
1995 with respect to the beneficial ownership of shares of (i) Senior
Preferred Stock, (ii) Junior Preferred Stock, (iii) Class A Common
Stock, and (iv) Class B Common Stock by (a) each person or group that
is known to the Company to be the beneficial owner of more than 5% of
the outstanding shares, (b) each director of the Company, and (c) all
directors and executive officers of the Company as a group.
Senior Preferred Stock Junior Preferred Stock Class A Common Stock Class B Common Stock
---------------------- ---------------------- -------------------- --------------------
Name of 5% Number of Percent of Number of Percent of Number of Percent of Number of Percent of
Beneficial Owner Shares Class Shares Class Shares Class(1) Shares Class(1)
- ---------------- --------- ---------- --------- ---------- --------- ---------- --------- ----------
Lewco Securities 76,099 15.46%
Corporation (4)
P.O. Box 999
Bowling Green Station
New York, NY 10024
Presidential Life 55,022 11.18%
Insurance Company
c/o The Bank of New York
Post Office Box 16203
New York, NY 10249
Citibank, N.A. (4) 53,867 10.94%
PO Box 1530, Grand
Central
111 Wall Street,
20th FL, Zone 9
New York, NY 10043
Franklin Funds 49,211 10.00%
c/o Smog & Co.
P.O. Box 910
Wall Street Station
New York, NY 10005
Executive Life Ins. Co. 49,211 10.00% 73,605 7.36%
Base Assets Trust
11444 Olympic Blvd.
Los Angeles, CA 90064
State Street Research
and Management
Company(4) 48,885 9.93%
One Financial Center
30th Fl.
Boston, MA 02111
Prudential Bache (4) 44,463 9.03%
111 Eighth Avenue
New York, NY 10011
Bear Stearns Securities
Corp.(4) 41,221 8.37%
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Lehman Brothers (4) 25,000 5.08%
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Odyssey Partners, L.P.(2) 5,000 50.00% 340,000 34.00%
31 West 52nd Street
New York, NY 10019
DLJ Capital Corp.(3) 170,000 17.00%
140 Broadway
New York, NY 10005-1285
Messrs. Grant M. Wilson, 5,000 50.00%
William J. DeBrule
and Yehochai Schneider
Everest Capital Fund, L.P. 51,223 5.12%
c/o Morgan Stanley & Co.,
Inc.
One Pierrepont Plaza
Brooklyn, NY 11201
Lutheran Brotherhood 70,180 7.02%
Research Corp.
625 Fourth Avenue South
Minneapolis, MN 55415
Directors and executive 510,000 51.00%
officers as a group(5)
(7 persons)
- -------------------------------------------
(1) Percentages represented hereunder are based on the combined Class A Common Stock and Class B Common Stock issued and
outstanding.
(2) Represents shares of Class B Common Stock and Junior Preferred Stock owned by Odyssey Partners. In addition, Odyssey
Partners has voting control with respect to the 5,000 shares of Junior Preferred Stock held by Grant M. Wilson, William J.
DeBrule and Yehochai Schneider. The Class B Common Stock shares are subject to a Stockholders' Agreement, which provides,
among other things, for certain restrictions on the voting and transfer of such shares. Leon Levy, Jack Nash, Stephen
Berger, Joshua Nash and the Nash Family Partnership, by virtue of being general partners of Odyssey Partners, share voting
and dispositive power with respect to the Class B Common Stock and Junior Preferred Stock owned by Odyssey Partners and,
accordingly, may each be deemed to own beneficially such stock owned by Odyssey Partners. Each of such persons has
expressly disclaimed any such beneficial ownership (within the meaning of Rule 13d-3(a) under the Exchange Act) which
exceeds the proportionate interest in the Class B Common Stock and Junior Preferred Stock which he or it may be deemed to
own as a general partner of Odyssey Partners. Mr. Friedman has an indirect fractional financial interest in the shares of
Class B Common Stock owned by Odyssey Partners; however, he has no voting or dispositive power over any shares owned by
Odyssey Partners.
(3) Such shares are subject to the Stockholders' Agreement, which provides, among other things, for certain restrictions on
the voting and transfer of such shares. In addition, pursuant to the Voting Trust Agreement, dated as of April 2, 1991,
between DLJ and Lincoln National, DLJ conferred the right to vote 120,000 of such shares of Class B Common Stock to
Lincoln National, as voting trustee. Such shares include shares held by DLJ First ESC L.L.C., which is an "employee
securities corporation" formed to hold securities on behalf of participants in certain DLJ incentive compensation plans.
(4) Shown is the custodian of such shares. With respect to Lewco Securities Corporation and State Street Research and
Management Company, such custodians hold shares for more than one beneficial owner, but such owners have not been
identified. With respect to each other custodian listed herein, it is not known if each such custodian holds shares for
more than one beneficial owner, as each such custodian has not provided ownership information.
(5) None of Jerry E. Hunter, David H. Taylor, Carl Rosen, Bruce Wilby, Jerry A. Burns or Robert B. Sparks, the executive
officers listed above in " -- Executive Compensation -- Summary Compensation Table," beneficially own, or may be deemed to
own, any shares of capital stock of the Company, and therefore are not listed in this table.
/TABLE
DESCRIPTION OF THE DEBT SECURITIES
The terms of the Debt Securities include those stated in the
Indentures and those made part of the Indentures by reference to the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
as in effect on the date of the Indentures. The Debt Securities are
subject to all such terms, and holders of the Debt Securities are
referred to the Indentures and the Trust Indenture Act for a statement
thereof. The following summary of certain provisions of the
Indentures does not purport to be complete and is qualified in its
entirety by reference to the respective Indentures, including the
definitions therein of certain terms used below, and the respective
Debt Securities. Copies of the Indentures will also be made
available, at the Company's expense, upon request to the Company at
its principal executive offices located at 555 North Pleasantburg
Drive, Suite 202, Greenville, South Carolina 29607. Except where
otherwise noted, capitalized terms used in this section and not
otherwise defined below under "-- Certain Definitions" shall have the
respective meanings assigned to them elsewhere in this Prospectus, or
if not defined in the Prospectus, the meanings given such terms in the
Indentures.
PAYING AGENTS AND REGISTRARS
Principal, premium, if any, and interest on the Debt
Securities are payable, and the Debt Securities may be presented for
registration of transfer or exchange, at the offices or agencies of
the respective Paying Agents and Registrars in New York City, New
York. Holders must surrender the Debt Securities to a Paying Agent to
collect principal payments. The Company may pay principal and
interest by issuing its check and may mail interest checks to the
registered holders of the Debt Securities. The Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection with certain transfers or
exchanges. The Company or any of its subsidiaries may act as Paying
Agent or Registrar and the Company may change the Paying Agent or
Registrar without prior notice to holders.
TERMS OF THE DISCOUNT NOTES
The Discount Notes are general unsecured obligations of the
Company limited to an aggregate principal amount of $151,107,318.
Interest on the Accreted Value of the Discount Notes accrues at a rate
equal to the sum of (a) 9.85% per annum, payable in cash each June 1
and December 1, to holders of record of the Discount Notes at the
close of business on the May 15 or November 15 next preceding the
interest payment date, and (b) 1%
per annum, payable on June 1, 1999. Interest on the accrued but
unpaid interest described in clause (b) above compounds semi-annually
at the rate of 10.85% per annum each June 1 and December 1, and is
payable at maturity. Interest is computed on the basis of a 360-day
year of twelve 30-day months. The Discount Notes will mature on June
1, 1999 and are issued in denominations of $1,000 and integral
multiples thereof.
Optional Redemption
On or after June 1, 1994, the Discount Notes are redeemable,
at the option of the Company, in whole or in part, on at least 15 but
not more than 60 days' notice to each holder of Discount Notes to be
redeemed, at the redemption prices (expressed as percentages of the
principal amount) set forth below, plus accrued and unpaid interest to
the redemption date, if redeemed during the 12-month period beginning
June 1 of the years indicated below.
YEAR PERCENTAGE
---- ----------
1994 . . . . . . . . . . . . 105.813%
1995 . . . . . . . . . . . . 103.875%
1996 . . . . . . . . . . . . 101.938%
1997 and thereafter . . . . . 100.000%
Mandatory Redemption
The Company is required to redeem, on each of June 1, 1997
and June 1, 1998, pursuant to a sinking fund, $37,776,829.50 aggregate
principal amount of Discount Notes, at a redemption price equal to
100% of the principal amount thereof, plus accrued interest to the
redemption date. The Company, at its option, may reduce the principal
amount of Discount Notes required to be redeemed on any mandatory
redemption date by subtracting 100% of the principal amount of
Discount Notes that the Company has delivered to the trustee under the
Discount Note Indenture for cancellation (other than those Discount
Notes purchased by the Company or any of its Subsidiaries with
borrowed money at prices determined by the Board of Directors in its
sole discretion) or that the Company has redeemed (other than pursuant
to any mandatory redemptions and certain mandatory repurchases) on or
prior to the applicable mandatory redemption date and which have not
previously been used as a credit against a mandatory redemption
payment or repurchase.
The Company may be required under certain circumstances to
offer to redeem (a) a portion of the Discount Notes if (i) the
Company's Adjusted Net Worth falls below a certain specified level or
(ii) the Company or any Subsidiary consummates an Asset
Sale or (b) all of the Discount Notes, if a Change of Control occurs.
See
"-- Certain Covenants of the Indentures" and "THE COMPANY --
Redemption of Subordinated Notes and Discount Notes."
TERMS OF THE SUBORDINATED NOTES
The Subordinated Notes are general unsecured obligations of
the Company limited to an aggregate principal amount of $125 million.
The Subordinated Notes accrue interest at a rate equal to the sum of
(a) 9.25% per annum, payable each June 1 and December 1 in cash to
holders of record of the Subordinated Notes at the close of business
on the May 15 or November 15 next preceding the interest payment date,
and (b) 1% per annum, payable at maturity. Interest on the accrued
but unpaid interest described in clause (b) above compounds
semiannually at the rate of 10.25% per annum each June 1 and December
1, and is payable at maturity. Interest is computed on the basis of a
360-day year of twelve 30-day months. The Subordinated Notes will
mature on June 1, 1999 and are issued in denominations of $1,000 and
integral multiples thereof.
Optional Redemption
On or after June 1, 1994, the Subordinated Notes are
redeemable, at the option of the Company, in whole or in part, on at
least 15 but not more than 60 days' notice to each holder of Subordi-
nated Notes to be redeemed, at the redemption prices (expressed as
percentages of the principal amount) set forth below, plus accrued and
unpaid interest to the redemption date, if redeemed during the 12-
month period beginning June 1 of the years indicated below.
YEAR PERCENTAGE
---- ----------
1994 . . . . . . . . . . . . 105.813%
1995 . . . . . . . . . . . . 103.875%
1996 . . . . . . . . . . . . 101.938%
1997 and thereafter . . . . . 100.000%
Mandatory Redemption
The Company is required to redeem on each of June 1, 1997
and June 1, 1998, pursuant to a sinking fund, $31.25 million aggregate
principal amount of Subordinated Notes, at a redemption price equal to
100% of the principal amount thereof, plus accrued interest to the
redemption date. The Company, at its option, may reduce the principal
amount of Subordinated Notes required to be redeemed on any mandatory
redemption date by subtracting 100% of the principal amount of
Subordinated Notes that the Company has
delivered to the Subordinated Note Trustee for cancellation (other
than those Subordinated Notes purchased by the Company or any of its
Subsidiaries with borrowed money at prices determined by the Board of
Directors in its sole discretion) or that the Company has redeemed
(other than pursuant to any mandatory redemptions and certain
mandatory repurchases) on or prior to the applicable mandatory
redemption date and which have not previously been used as a credit
against a mandatory redemption payment or repurchase.
The Company may be required under certain circumstances to
offer to redeem (a) a portion of the Subordinated Notes if (i) the
Company's Adjusted Net Worth falls below a certain specified level or
(ii) the Company or any Subsidiary consummates an Asset Sale or (b)
all of the Subordinated Notes, if a Change of Control occurs. See
"-- Certain Covenants of the Indentures" and "THE COMPANY -- Redemp-
tion of Subordinated Notes and Discount Notes."
TERMS OF THE DEBENTURES
The Debentures are general unsecured obligations of the
Company limited to an aggregate principal amount of $75 million. The
Debentures accrue interest at the rate per annum of 7%, payable semi-
annually in cash on each May 15 and November 15 to holders of record
of Debentures at the close of business on the May 1 or November 1 next
preceding the interest payment date. Interest is computed on the
basis of a 360-day year of twelve 30-day months. The Debentures will
mature on May 15, 2000 and are issued in denominations of $1,000 and
integral multiples thereof.
Optional Redemption
On or after May 15, 1993, the Debentures are redeemable, at
the option of the Company, in whole or in part, on at least 15 but not
more than 60 days' notice to each holder of Debentures to be redeemed,
at the redemption prices (expressed as percentages of the principal
amount) set forth below, plus accrued and unpaid interest to the
redemption date, if redeemed during the 12-month period beginning May
15 of the years indicated below.
YEAR PERCENTAGE
---- ----------
1993 . . . . . . . . . . . . 107.77%
1994 . . . . . . . . . . . . 106.47%
1995 . . . . . . . . . . . . 105.18%
1996 . . . . . . . . . . . . 103.88%
1997 . . . . . . . . . . . . 102.59%
1998 . . . . . . . . . . . . 101.29%
1999 . . . . . . . . . . . . 100.00%
Mandatory Redemption
The Company is required to redeem on May 15, 1999, pursuant
to a sinking fund, $37.5 million aggregate principal amount of
Debentures at a redemption price equal to 100% of the principal amount
thereof, plus accrued interest to the redemption date. The Company,
at its option, may reduce the principal amount of Debentures required
to be redeemed on any mandatory redemption date by subtracting 100% of
the principal amount of Debentures that the Company has delivered to
the Debenture Trustee for cancellation (other than those Debentures
purchased by the Company or any of its Subsidiaries with borrowed
money at prices determined by the Board of Directors in its sole
discretion) or that the Company has redeemed (other than pursuant to
any mandatory redemptions and certain mandatory repurchases) on or
prior to the applicable mandatory redemption date and which have not
previously been used as a credit against a mandatory redemption
payment or repurchase.
The Company may be required under certain circumstances to
offer to redeem (a) a portion of the Debentures if (i) the Company's
Adjusted Net Worth falls below a certain specified level, or (ii) the
Company or any Subsidiary consummates an Asset Sale or (b) all of the
Debentures, if a Change of Control occurs. See "-- Certain Covenants
of the Indentures."
CERTAIN COMMON PROVISIONS OF THE DEBT SECURITIES
Selection and Notice
In the event of a redemption of less than all of the
outstanding face amount of any class of the Debt Securities, the
respective Debt Securities will be chosen for redemption by the
applicable Trustee pro rata or by any other method that the applicable
Trustee considers fair and appropriate that complies with applicable
legal requirements and, if the Debt Securities are listed on any
securities exchange, by a method that complies with the requirements
of such exchange. The Indentures provide that the notice of
redemption shall specify, among other things, the redemption date, the
redemption price, the name and address of the Paying Agent, and the
section of the respective Indenture pursuant to which such redemption
shall occur. Also, in the event that any Debt Security is to be
redeemed in part only, the notice of redemption relating to such Debt
Security will state the portion of the principal amount (in integral
multiples of $1,000) to be redeemed and that on or after the date
fixed for redemption upon surrender of such Debt Security, a new Debt
Security or Debt Securities in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder
thereof.
On and after the redemption date, interest will cease to
accrue on the Debt Securities or portions thereof called for
redemption.
RANKING OF THE DISCOUNT NOTES AND THE SUBORDINATED NOTES
The Discount Notes rank pari passu in right of payment,
including a payment made in accordance with the terms of the mandatory
redemption provisions of the Discount Note Indenture and the
Subordinated Note Indenture, respectively, with the Subordinated
Notes. The payment of the principal of, premium, if any, and interest
on the Discount Notes and the Subordinated Notes is subordinated in
right of payment, as set forth in the Discount Note Indenture and the
Subordinated Note Indenture, to the prior payment in full of all
Senior Indebtedness (including any mandatory redemption payments),
whether outstanding on the date of the Discount Note Indenture or the
Subordinated Note Indenture, as the case may be, or thereafter
created, and all permissible renewals, extensions, refundings or
refinancings thereof.
Upon (i) the final maturity of any Senior Indebtedness,
including by lapse of time, acceleration or otherwise, (ii) a default
in the payment of principal or interest on or the payments of other
amounts due under or in connection with any Senior Indebtedness,
whether at maturity, upon redemption or otherwise (a "Payment
Default") or (iii) any distribution of assets of the Company in any
liquidation or dissolution or in a bankruptcy, reorganization or
similar proceeding relating to the Company or its properties, holders
of Senior Indebtedness will be entitled to receive payment in full of
all amounts due in respect of such indebtedness before the Company may
make any payment to holders of Discount Notes or Subordinated Notes.
Upon receipt by the Company and the Discount Note Trustee
and the Subordinated Note Trustee of written notice from the Agent of
any default (including an unmatured event of default) under any Senior
Indebtedness, other than a Payment Default, and unless such default
will have been cured or waived in writing in accordance with the terms
of such Senior Indebtedness, no direct or indirect payment or
distribution will be made by or on behalf of the Company for or on
account of the Obligations with respect to the Discount Notes or the
Subordinated Notes, as the case may be, and neither the respective
Trustee nor any holder of Discount Notes or Subordinated Notes, as the
case may be, will receive from the Company, directly or indirectly,
any payment or distribution in respect of the Obligations with respect
to the Discount Notes or the Subordinated Notes, as the case may be,
during a period (the "Payment Blockage Period") commencing on the
receipt of such
notice and ending on the earlier of (i) 179 days thereafter or (ii)
until such default will have been cured or waived. Any number of such
notices of default may be given; provided, however, that during any
360-day period, the aggregate number of days during which a Payment
Blockage Period will be in effect will not exceed 179 days and there
will be a period of at least 181 consecutive days in each 360-day
period when no Payment Blockage Period is in effect. For the purpose
of this provision, no default which, to the knowledge of the person
giving such notice, existed or was continuing on the date of
commencement of any Payment Blockage Period will be the basis for the
commencement of a second Payment Blockage Period, whether or not
within a period of 360 consecutive days unless such default will have
been cured or waived for a period of not less than 90 consecutive
days.
If payment of the Discount Notes or the Subordinated Notes
has been accelerated because of an Event of Default (as defined), the
Company will promptly notify holders of Senior Indebtedness of such
acceleration.
As a result of these subordination provisions, in the event
of the Company's insolvency, holders of Discount Notes and
Subordinated Notes may recover ratably less than holders of Senior
Indebtedness and other general creditors of the Company.
The Discount Note Indenture and the Subordinated Note
Indenture limit, subject to certain financial tests, the amount of
additional Indebtedness, including Senior Indebtedness, that the
Company or any of its subsidiaries can create, incur, assume or
guarantee and prohibit the Company from creating, incurring, assuming
or guaranteeing any Indebtedness that is subordinate to Senior
Indebtedness but senior in right of payment to Discount Notes and the
Subordinated Notes.
In certain specified circumstances, the Company can incur
additional Indebtedness that may rank senior to the Discount Notes and
the Subordinated Notes. See "-- Certain Covenants of the Indentures
-- Restrictions on Additional Indebtedness and Liens" below for a
description of the provisions that would permit such additional
Indebtedness.
RANKING OF THE DEBENTURES
The payment of the principal of, premium, if any, and
interest on the Debentures is subordinated in right of payment,
including any payments made in accordance with the terms of the
mandatory redemption provisions of the Discount Note Indenture and the
Subordinated Note Indenture, as set forth in the Debenture Indenture,
to the prior payment in full of all Senior
Indebtedness (as defined in the Debenture Indenture), whether
outstanding on the date of the Debenture Indenture or thereafter
created, and all permissible renewals, extensions, refundings or
refinancings thereof.
The terms of the subordination set forth in the Debenture
Indenture are virtually identical to those described above with
respect to the Discount Notes and the Subordinated Notes, except that
the Discount Notes and the Subordinated Notes constitute "Senior
Indebtedness" for purposes of the Debenture Indenture. As of
January 28, 1995, there was approximately $287 million of Senior
Indebtedness (as defined in the Debenture Indenture) of the Company
outstanding.
As a result of these subordination provisions, in the event
of the Company's insolvency, holders of Debentures may recover ratably
less than holders of Senior Indebtedness (as defined in the Debenture
Indenture) and other general creditors of the Company.
The Debenture Indenture will limit, subject to certain
financial tests, the amount of additional Indebtedness, including
Senior Indebtedness (as defined in the Debenture Indenture), that the
Company or any of its subsidiaries can create, incur, assume or
guarantee and will prohibit the Company from creating, incurring,
assuming or guaranteeing any Indebtedness that is subordinate to
Senior Indebtedness (as defined in the Debenture Indenture) but senior
in right of payment to the Debentures.
In certain specified circumstances, the Company can incur
additional Indebtedness that may rank senior to the Debentures. See
"-- Certain Covenants of the Indentures -- Restrictions on Additional
Indebtedness and Liens" for a description of the provisions that would
permit such additional Indebtedness.
CERTAIN DEFINITIONS
Set forth below is a summary of certain terms used in this
Section and defined in the Indentures. Reference is made to the
Indentures for the full definition of all of such terms as well as any
other capitalized terms used herein for which no definition is
provided.
"Accreted Value" of the Discount Notes means on any given
date the sum of (i) the Initial Price of the Discount Notes, (ii) the
aggregate of the portion of the original issue discount that shall be
added cumulatively on each Semiannual Accrual Date for each semiannual
period terminated prior to the date of the transaction or event giving
rise to the need to
calculate the Accreted Value (the "Date of Transaction") and (iii)
accrued amortization of the original issue discount (in accordance
with the effective interest method on a basis consistent with clause
(ii) above) from the preceding Semiannual Accrual Date to the Date of
Transaction. The portion of the original issue discount added on each
Semiannual Accrual Date in respect of each such semiannual period
shall be one-half the yield to maturity multiplied by the Accreted
Value at the immediately preceding Semiannual Accrual Date. Accrued
amortization of the original discount on any Discount Note since any
Semiannual Accrual Date and to any Date of Transaction shall be
calculated based on the yield to maturity, the actual number of days
elapsed since such Semiannual Accrual Date and a 360-day year. As of
the Final Accrual Date, the Accreted Value of the Discount Notes shall
be equal to the principal amount (excluding premiums) thereof.
"Acquisition" means the acquisition by the Company or its
designees of the Predecessor Stevens Divisions pursuant to the Asset
Purchase Agreement.
"Adjusted Net Worth" with respect to the Company means, as
of any date, the Tangible Net Worth of the Company (A) plus the sum
----
of: (i) the amount of all Intangible Assets (as defined in the
definition of Tangible Net Worth); (ii) the respective amounts
reported on the Company's most recent balance sheet with respect to
any preferred stock (other than Disqualified Stock); (iii) the amount
of any Senior Preferred Stock and any Junior Preferred Stock as
reflected on the Company's most recent balance sheet; (iv) the amount
of any loss realized upon the sale or other disposition of any
Business Segment, to the extent such loss was included in the
calculation of Tangible Net Worth and Tangible Net Worth is less than
it would otherwise be as a result of such inclusion; (v) the amount of
any gain realized upon the sale or other disposition of any Business
Segment, to the extent such gain was not included in the calculation
of Tangible Net Worth; (vi) the amount of any dividends or
distributions on account of the capital stock (preferred or common) of
the Company paid (or declared but unpaid) other than in cash, to the
extent not otherwise included in the calculation of Adjusted Net
Worth; (vii) amortized closing costs to the extent not already
included in the calculation of Adjusted Net Worth, including bond
discount amortization; (viii) any charges to expense from significant
items which were based on conditions existing prior to the
Acquisition; (ix) any consolidated depreciation and amortization
(including amortization of intangibles and depreciation and amortiza-
tion resulting from write-ups in the book value of assets required or
permitted by APB Opinion Nos. 16 or 17), but only to the extent that
any such depreciation or amortization was included in the calculation
of Tangible Net Worth and Tangible
Net Worth was lower as a result of such inclusion; and (x) any write-
up of assets (tangible or intangible), including accumulated
amortization, required or permitted by APB Opinion Nos. 16 or 17, but
only to the extent that any such write-up was not included in the
calculation of Tangible Net Worth; and (B) excluding any amount
---------
reflecting any changes in the amount which, in accordance with
generally accepted accounting principles, would constitute an equity
adjustment resulting from a foreign currency translation on a balance
sheet.
"Affiliate" means any person who directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is
under direct or indirect common control with, the Company.
"Asset Purchase Agreement" means the Asset Purchase
Agreement, dated April 24, 1988, among the Company, JPS Holding Corp.,
Grant M. Wilson, William J. DeBrule, Yohochai Schneider, Odyssey
Partners, West Point-Pepperell, Inc., Magnolia Partners, L.P., STN
Holding Inc. and J.P. Stevens & Co., Inc.
"Asset Sale" means (x) the sale, lease, conveyance or other
disposition by the Company or a subsidiary of any Business Segment or
(y) the receipt of all proceeds of insurance paid on account of the
loss of or damage to any Business Segment and awards of compensation
for any such Business Segment taken by condemnation or eminent domain
which results in Net Proceeds to the Company of $10 million or more,
in each case, excluding proceeds to be used for replacement of such
Business Segment (provided the Trustee has received notice from the
Company, within 90 days of such receipt, of its intention to use such
proceeds for such purpose).
"Business Segment" means each of the Company's Significant
Subsidiaries or any group of assets acquired by the Company or any
subsidiary subsequent to the date of the Indentures which constitutes
a Material Acquisition, or any group of assets within each such
business or group of assets the sale (other than the sale of inventory
in the ordinary course of business), lease, conveyance or other
disposition of which in a single transaction or group of related
transactions results in, or which the Board of Directors, in good
faith, determines will result in, Net Proceeds to the Company of $10
million or more; provided, however, that in the event that all of the
Class A Directors disagree with the determination of the Board of
Directors, the Class A Directors may require the Company to obtain an
opinion of an independent investment banking firm, public accounting
firm or other person or entity expert in the valuation or appraisal of
assets or securities, chosen by the Company, to determine the value of
the Net Proceeds to be
received by the Company pursuant to such sale, lease, conveyance or
other disposition.
"Class A Director" means any member of the Board of
Directors elected by the holders of the Class A Common Stock.
"Consolidated Net Income" with respect to any person means,
for any period, the aggregate of the Net Income of such person and its
subsidiaries for such period, on a consolidated basis, determined in
accordance with generally accepted accounting principles, provided
that (i) the Net Income of any person which is not a subsidiary or is
accounted for by such person by the equity method of accounting will
be included only to the extent of the amount of dividends or
distributions paid to the referent person or a subsidiary, (ii) the
Net Income of any person which is a subsidiary (other than a
subsidiary of which at least 80% of the capital stock having ordinary
voting power for the election of directors or other governing body of
such subsidiary is owned by the referent person directly or indirectly
through one or more subsidiaries) shall be included only to the extent
of the lesser of (a) the amount of dividends or distributions paid to
the relevant person or a subsidiary of the referent person or (b) the
Net Income of such person, and (iii) the Net Income of any person
acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded.
"Contributions" means any loans, cash advances, capital
contributions or other transfers of assets from the Company to any
Affiliate or any subsidiary (other than to a wholly owned subsidiary)
and any guarantee and the assumption of any liability (primary or
contingent) by the Company with respect to any obligations of any kind
of any Affiliate or any subsidiary (other than of a wholly owned
subsidiary).
"Credit Agreement" means the Credit Agreement dated as of
May 6, 1988, among the Company, the Borrowing Subsidiaries named
therein, Citibank, as Agent, and the other banks named therein or
which become parties from time to time thereto, as amended and
restated by the Restated Credit Agreement (as defined in "DESCRIPTION
OF THE CREDIT FACILITY"), and as it may be further amended (in whole
or in part, and without limitation as to terms, conditions or
covenants), modified, renewed or extended from time to time, any other
agreement with any party which is a successor or replacement thereto
or relating to any refunding or refinancing of all or any portion
thereof as any such agreement may be further amended (in whole or in
part, and without limitation as to terms, conditions or covenants),
modified, renewed or extended from time to time, and any related
notes, collateral documents, instruments and agreements executed in
connection with any of the foregoing, as any such notes, collateral
documents, instruments and agreements may be amended, modified or
supplemented from time to time; provided, however, that all refundings
-------- -------
or refinancings thereof shall be in aggregate principal amounts which
would be permitted to be outstanding or incurred under the Credit
Agreement as if the same were not refunded or refinanced, any related
notes, collateral documents, instruments and agreements executed in
connection therewith, and all Obligations of the Company incurred
thereunder.
"Default" means any event that is, or after notice or
passage of time or both would be, an Event of Default.
"Disqualified Stock" means any capital stock that, by its
terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the maturity date of the
applicable Debt Security.
"Equity Interests" means capital stock or warrants, options
or other rights to acquire capital stock (but excluding any debt
security that is convertible into, or exchangeable for, capital
stock).
"Fixed Charge Coverage Ratio" means, with respect to any
person, for a given period, the ratio of (x) Consolidated Net Income
of such person (A) plus the sum of: (i) an amount equal to any net
----
loss realized upon the sale or other disposition of any Business
Segment (to the extent such loss was deducted in computing
Consolidated Net Income); (ii) provision for taxes based on income or
profits to the extent such income or profits were included in comput-
ing Consolidated Net Income and any provision for taxes utilized in
computing net loss under clause (i) hereof; (iii) consolidated cash
interest expense; and (iv) depreciation and amortization (including
amortization of goodwill and other intangibles) to the extent required
under generally accepted accounting principles, (B) less (i) capital
----
expenditures to the extent such expenditures are paid in cash and (ii)
roofing liabilities to the extent such expenditures are paid in cash,
all on a consolidated basis, to (y) consolidated cash interest
expense.
"Indebtedness" with respect to any person, means any
indebtedness, whether or not contingent, in respect of borrowed money
or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof) or
representing the balance deferred and unpaid of the purchase price of
any property (including pursuant to
capital leases), except any such balance that constitutes an accrued
expense or a trade payable, if and to the extent such indebtedness
would appear as a liability upon a balance sheet of such person
prepared on a consolidated basis in accordance with generally accepted
accounting principles, and also includes, to the extent not otherwise
included, the guarantee of items which would be included within this
definition.
"Interest Charge Coverage Ratio" means, with respect to any
person, for a given period, the ratio of (x) Consolidated Net Income
of such person plus (a) an amount equal to any net loss realized upon
the sale or other disposition of any Business Segment (to the extent
such loss was deducted in computing Consolidated Net Income), plus (b)
provision for taxes based on income or profits to the extent such
income or profits were included in computing Consolidated Net Income
and any provision in computing net loss under clause (a) hereof, plus
(c) consolidated interest expense (including amortization of any
original issue discount and non-cash interest payment and the interest
component of capital leases, but excluding the amortization of
original issue discount pursuant to the application of the AICPA
Statement of Position No. 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code"), plus (d) depreciation and
amortization (including amortization of goodwill and other
intangibles) to the extent required under generally accepted
accounting principles, less (e) capital expenditures to the extent
such expenditures are paid in cash, less (f) roofing liability to the
extent such expenditures are paid in cash, all on a consolidated
basis, to (y) consolidated interest expense (including amortization of
any original issue discount and non-cash interest payments and the
interest component of capital leases, but excluding the amortization
of original issue discount pursuant to the application of the AICPA's
Statement of Position No. 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code").
"Junior Preferred Stock" means the shares of Series B Junior
Preferred Stock of the Company, $.01 par value per share.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any
option or other agreement to sell and any filing of or agreement to
give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Material Acquisition" means any merger, consolidation,
acquisition or lease of assets, acquisition of securities or other
business combination or acquisition, or any two or more such
transactions if part of a common plan to acquire a business or group
of related businesses, if the assets thus acquired in the aggregate
would constitute a Significant Subsidiary of the Company immediately
preceding such transaction.
"Net Income" of any person means the net income (loss) of
such person, determined in accordance with generally accepted
accounting principles, excluding, however, any gain (but not loss),
together with any related provision for taxes on such gain (but not
loss), realized upon the sale or other disposition (including, without
limitation, dispositions pursuant to sale and leaseback transactions)
of any Business Segment and any gain (but not loss) realized upon the
sale or other disposition by such person of any capital stock or
marketable securities.
"Net Proceeds" with respect to any sale or other disposition
of a Business Segment, means (i) cash (freely convertible into U.S
dollars) received by the Company or any subsidiary from such sale or
other disposition, after (a) provision for all income or other taxes
measured by or resulting from such sale or other disposition, (b)
payment of all brokerage commissions and other fees and expenses
related to such sale or other disposition and (c) deduction of
appropriate amounts to be provided by the Company as a reserve, in
accordance with generally accepted accounting principles, against any
liabilities associated with such Business Segment and retained by the
Company after such sale or other disposition thereof, including,
without limitation, pension and other post-employment benefit
liabilities and liabilities related to environmental matters or
against any indemnification obligations associated with the sale or
other disposition of such Business Segment, (ii) interest, principal
or other cash proceeds from any promissory notes received by the
Company or any subsidiary from such sale or other disposition and
(iii) cash distributions or other cash proceeds from any equity or
other interests in earnings from the Business Segment for up to seven
years following the closing of the Asset Sale.
"Net Worth" with respect to the Company means, as of any
date, the Tangible Net Worth of the Company plus the sum of: (i) the
amount of all Intangible Assets (as defined in the definition of
Tangible Net Worth); (ii) the respective amounts reported on the
Company's most recent balance sheet with respect to any preferred
stock (other than Disqualified Stock); (iii) the amount of any Senior
Preferred Stock and any Junior Preferred Stock as reflected on the
Company's most recent balance sheet; (iv) amortized closing costs to
the extent not already included in the calculation of Net Worth,
including bond discount
amortization; (v) any consolidated depreciation and amortization
(including amortization of intangibles and depreciation and
amortization resulting from write-ups in the book value of assets
required or permitted by APB Opinion No. 16 or 17), but only to the
extent that any such depreciation or amortization was included in the
calculation of Tangible Net Worth and Tangible Net Worth was lower as
a result of such inclusion; and (vi) any write-up of assets (tangible
or intangible), including accumulated amortization, required or
permitted by APB Opinion No. 16 or 17, but only to the extent that any
such write-up was not included in the calculation of Tangible Net
Worth.
"Obligations" means, with respect to any Indebtedness, any
principal, interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable under the
documentation governing such Indebtedness.
"Permitted Joint Venture" means a joint venture (i) which is
in the same or similar line of business as then being conducted by the
Company, (ii) in which the Company or any subsidiary has at least a
33-1/3% equity interest and (iii) where the equity interest in the
joint venture held by the Company or any subsidiary has, in the
reasonable judgment of the Board of Directors, a value which
represents the fair value of the assets contributed by the Company or
any subsidiary to the joint venture; provided, however, that in the
event that all of the Class A Directors disagree with the
determination of the Board of Directors, all of the Class A Directors
may require the Company to obtain an opinion of an independent invest-
ment banking firm, public accounting firm or other person or entity
expert in the valuation or appraisal of assets and securities chosen
by the Company to determine that the equity interest held by the
Company or such subsidiary has a value which represents the fair value
of the assets contributed by the Company or such subsidiary to the
joint venture.
"Permitted Transferees" means (i) Odyssey Partners, or any
corporation, partnership or other entity controlled by, controlling or
under common control with Odyssey Partners (collectively, the "Odyssey
Affiliates") (the term "control" being the same as that term is
defined under Rule 12b-2 of the Exchange Act), (ii) any managing
director, general partner, director, limited partner, officer or
employee of Odyssey (collectively, "Odyssey Associates"), (iii) any of
the Investors, or any combination of two or more of them, or any
corporation, partnership or other entity controlled by, controlling or
under common control with any one or more of any of the Investors
(collectively, "Investor Affiliates"), (iv) the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of
any Odyssey Associate or Investor, (v) a trust, the
beneficiaries of which, or a corporation or partnership, the
stockholders or general or limited partners of which, include only an
Odyssey Associate or an Investor, his spouse or his lineal
descendants, to whom Odyssey Partners, an Odyssey Affiliate, an
Odyssey Associate, an Investor or an Investor Affiliate has
transferred securities of the Company, and (vi) any person or entity,
as pledgee, from whom Odyssey Partners, any Odyssey Affiliate, any
Odyssey Associate, an Investor or an Investor Affiliate has borrowed
funds to make his or its investment in securities of the Company (or
any refinancing thereof).
"Registration Rights Agreement" means the Registration
Rights Agreement dated as of April 2, 1991, by and among the Company
and the holders of the Senior Notes, the Discount Notes, the
Subordinated Notes, the Debentures, the Senior Preferred Stock and the
Class A Common Stock.
"Restructuring" means the transfer by the Company or any
subsidiary of the Company of all or any portion of its assets or
properties to one or more wholly-owned subsidiaries, it being
understood that such transfer may occur in one, two or more phases.
"Senior Indebtedness" under the Discount Note Indenture and
the Subordinated Note Indenture means (i) all Indebtedness outstanding
pursuant to the Credit Agreement and all Obligations of the Company
with respect thereto, (ii) all other Indebtedness of the Company
permitted pursuant to the covenant restricting the incurrence of
additional Indebtedness (as described below) that is not expressly
pari passu with or subordinated to the Discount Notes and the
Subordinated Notes, and all permissible renewals, extensions or
refundings thereof; provided, however, that any Indebtedness not
permitted to be incurred pursuant to the covenant restricting the
incurrence of additional Indebtedness will not constitute Senior
Indebtedness; provided, further, however, that with respect to any
Indebtedness incurred under the revolving loan facilities of the
Credit Agreement, such Indebtedness will continue to constitute Senior
Indebtedness if such Indebtedness was permissible pursuant to such
covenant as of the date such Indebtedness was incurred, without regard
to any subsequent events and (iii) all obligations of the Company with
respect to foreign currency contracts and interest rate hedging
agreements. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness will not include (x) any Indebtedness
of the Company to any of its subsidiaries, (y) Indebtedness incurred
for the purchase of goods or materials or for services (other than
services provided by the Agent or any other financial institution that
is a party to the Existing Credit Agreement) obtained in the ordinary
course of business and
(z) Indebtedness represented by the Debentures. Senior Indebtedness
outstanding under the Credit Agreement will continue to constitute
Senior Indebtedness for all purposes of the Discount Note Indenture
and the Subordinated Note Indenture, and the subordination provisions
will continue to apply to such Senior Indebtedness, notwithstanding
that such Senior Indebtedness or any claim in respect thereof may be
disallowed, avoided or subordinated pursuant to any Bankruptcy Law or
other applicable insolvency law or equitable principles (i) as a claim
for unmatured interest, or (ii) as a fraudulent transfer or conveyance
arising in connection with the Plan of Reorganization. As of
January 28, 1995 there was approximately $106.1 million of Senior
Indebtedness of the Company outstanding.
"Significant Subsidiary" means any subsidiary of the Company
which is a "significant subsidiary" as defined in Rule 1-02(v) of
Regulation S-X under the Securities Act and the Exchange Act (as such
Regulation is amended from time to time).
"Stockholder Letter" means the letter, dated as of April 2,
1991, from Odyssey Partners, L.P. and DLJ to the holders of the Class
A Common Stock providing for, among other things, certain rights of
inclusion in resales of Securities.
"Tangible Net Worth" with respect to any person means, as of
any date, the consolidated equity of the common stockholders of such
person (excluding the cumulated foreign currency translation
adjustment) less their consolidated Intangible Assets, all determined
on a consolidated basis in accordance with generally accepted
accounting principles. For purposes of this definition "Intangible
Assets" means the amount (to the extent reflected in determining such
consolidated equity of the common stockholders) of (i) all write-ups,
deferred expenses and transaction fees (other than write-ups, deferred
expenses and transaction fees (x) resulting from foreign currency
translations and (y) incurred in connection with the purchase
accounting treatment of the Acquisition and other than write-ups of
tangible assets of a going concern business made within 12 months
after the acquisition of such business), subsequent to the date hereof
in the book value of any asset owned by such person or a consolidated
subsidiary, (ii) all investments in unconsolidated subsidiaries and in
persons which are not subsidiaries (other than marketable securities
and other assets held for sale outside of the ordinary course of
business and long-term receivables resulting from the sale of assets
or businesses), and (iii) all unamortized debt discount and expense,
unamortized deferred charges (excluding deferred income taxes),
goodwill, patents, trademarks, service marks, trade names, copyrights,
organization and developmental expenses and other intangible items,
all of the foregoing as determined in
accordance with generally accepted accounting principles; provided,
however, that with respect to the Company, (a) "Tangible Net Worth"
shall not include the amounts reported on the Company's most recent
balance sheet (or the date of calculation) with respect to the
Company's Preferred Stock, and (b) "Intangible Assets" shall not
include any write-up of Intangible Assets (including, without
limitation, patents, goodwill, deferred expenses and transactions
fees) in connection with the purchase accounting treatment of the
Acquisition and shall not include any unamortized debt discount and
expense created in connection with the offering of the Senior Notes,
the Discount Notes, the Subordinated Notes and the Debentures.
"Weighted Average Life to Maturity" means, when applied to
any Indebtedness at any date, the number of years obtained by dividing
(i) the then-outstanding aggregate principal amount of such
Indebtedness into (ii) the total of the product obtained by
multiplying (a) the amount of each then remaining installment, sinking
fund, serial maturity or other required payment of principal,
including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) which will
elapse between such date and the making of such payment.
CERTAIN COVENANTS OF THE INDENTURES
Dividend, Stock Purchase and Debt Repayment Restrictions
Each of the Indentures provides that the Company will not,
and will not permit any of its subsidiaries to, directly or
indirectly, (i) declare or pay any dividend or make any distribution
on account of the capital stock or other Equity Interests of the
Company or of any of the subsidiaries (other than dividends or
distributions payable in Equity Interests (other than Disqualified
Stock) of the Company or a subsidiary or dividends or distributions
payable to the Company, or a wholly owned subsidiary of the Company),
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company, any subsidiary or other Affiliate of
the Company (other than any such Equity Interests owned by any
subsidiary of the Company), (iii) voluntarily purchase, redeem or
otherwise acquire or retire for value any Indebtedness that is pari
passu with, or subordinated to, such issue of Debt Securities, other
than as specifically permitted by the terms of the respective
Indentures or (iv) make any Contributions (all such dividends,
distributions, purchases, redemptions or other acquisitions,
retirements, prepayments or contributions being collectively referred
to as "Restricted Payments"), if, at the time of such Restricted
Payment:
(a) a Default or Event of Default will have occurred and be
continuing or will occur as a consequence thereof;
(b) immediately after such Restricted Payment and after
giving effect thereto on a pro forma basis, Net Worth of the
Company will not exceed $150 million; or
(c) such Restricted Payment, together with the aggregate of
all other Restricted Payments (valued as set forth below) made
after the Company's Net Worth exceeded $150 million, exceeds (x)
25% of the amount of the Consolidated Net Income of the Company
for the period (taken as one accounting period) from the
beginning of the first quarter immediately after the first date
on which the Company's Net Worth exceeded $150 million to the end
of the Company's most recently ended fiscal quarter at the time
of such Restricted Payment, plus (y) 100% of the aggregate net
cash proceeds and the fair market value of marketable securities
received by the Company from the issue or sale, after the date of
the Indentures, of capital stock of the Company (other than
capital stock issued or sold to a subsidiary of the Company and
other than Disqualified Stock), or any Indebtedness or other
security convertible into any such capital stock that has been so
converted.
Notwithstanding the foregoing, each of the Indentures
permits (i) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment
would comply with the provisions thereof; (ii) the retirement of any
shares of the Company's capital stock in exchange for, or out of the
net proceeds of the substantially concurrent sale (other than to a
subsidiary of the Company) of, other shares of the Company's capital
stock (other than any Disqualified Stock); (iii) the payment by the
Company of a management fee to Odyssey Investors, Inc. and/or their
Affiliates during the fourth quarter of each fiscal year in an annual
amount not to exceed $1,250,000 for the fiscal years ending 1993 and
1994 and $1,000,000 for each fiscal year thereafter; provided,
however, that no management fees may accrue or be paid to Odyssey
Investors, Inc. and/or their Affiliates in any fiscal year in which a
payment default has occurred under the Credit Agreement or an Event of
Default has occurred under Section 6.01(1) or 6.01(2) of the
respective Indentures; provided, further, however, that the payment of
such fees will, be subordinated in right of payment to the payment of
the respective Debt Securities in the manner set forth in the
respective Indentures; (iv) the payment of dividends on the Company's
Senior Preferred Stock (A) on or prior to the end of May 15, 1998 only
in additional shares of Senior Preferred Stock and (B) after May 15,
1998 in cash; and (v) the purchase by the Company or any subsidiary of
the Senior
Notes, the Discount Notes, the Subordinated Notes or the Debentures at
prices determined by the Board of Directors in its sole discretion;
provided, however, that the Company may make such repurchases only if
the Interest Coverage Ratio for its four full fiscal quarters next
preceding the date such repurchase occurs (determined on a pro forma
basis, taking into account the incurrence of additional Indebtedness
and the application of the proceeds of such Indebtedness) is greater
than the actual Interest Coverage Ratio for such period.
Restrictions on Additional Indebtedness and Liens
Each of the Indentures provides that, subject to the other
provisions of the applicable Indenture, (x) the Company will not, and
will not permit any of its subsidiaries, directly or indirectly, to
create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable with respect to any Indebtedness (other than
Indebtedness between the Company and a subsidiary or between
subsidiaries of the Company), (y) the Company will not issue any
Disqualified Stock, and (z) the Company will not permit any of its
subsidiaries to issue any capital stock having a preference in
liquidation or with respect to the payment of dividends, unless: (A)
the Company's Fixed Charge Coverage Ratio for its four full fiscal
quarters next preceding the date such additional Indebtedness is
created, incurred, assumed or guaranteed would have been at least (a)
1.45 to 1, if such date is between the date of the Indenture and
October 31, 1991, (b) 1.5 to 1, if such date is between November 1,
1991 and October 31, 1992, (c) 1.55 to 1, if such date is between
November 1, 1992 and October 31, 1993, and (d) 1.65 to 1, if such date
is on or after November 1, 1993, in each case determined on a pro
forma basis (including a pro forma application of the proceeds of such
Indebtedness or such issuance of stock) as if the additional
Indebtedness had been created, incurred, assumed or guaranteed at the
beginning of such four-quarter period; (B) such Indebtedness is
expressly subordinated in right of payment to the Debt Securities, as
the case may be, unless the Company's Fixed Charge Coverage Ratio,
determined as set forth in clause (A) above, would have been at least
1.75 to 1; and (C) the Weighted Average Life to Maturity of such
Indebtedness is greater than the Weighted Average Life to Maturity of
the Debt Securities, respectively.
The foregoing limitations notwithstanding, the Company or
any of its subsidiaries may incur (x) any Indebtedness incurred
pursuant to the Credit Agreement (including any permissible refunding
or refinancing thereof); provided, however, that the principal amount
of such Indebtedness incurred pursuant to the Credit Agreement for the
purposes of this clause (x) will not exceed (A) term loans in an
aggregate principal amount not to
exceed $50.5 million, less the amount of all repayments of such term
loans after the date thereof; (B) revolving loans in an aggregate
principal amount not to exceed the greater of (i) the aggregate amount
of revolving loans, not to exceed $100 million, which amount will be
reduced from time to time by the amount of all mandatory revolving
loan prepayments made pursuant to the sale of assets covenant (the
"Initial Revolving Loan Base") or (ii) the aggregate amount of "the
Borrowing Base" (as defined in the Credit Agreement as of the date of
the Indentures and without giving effect to any amendments or
modifications thereto) of the Company and its subsidiaries at the date
such Indebtedness is incurred (the "Initial Borrowing Base");
provided, however, that in the event the aggregate principal amount of
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Indebtedness outstanding under the revolving loan facilities and
permitted to be incurred pursuant to this clause (ii) exceeds the
aggregate amount of a subsequent "Borrowing Base" by 20% of the
Initial Borrowing Base, the Company shall, within 90 days, reduce the
amount of outstanding revolving loans to an amount which is less than
the greater of (a) the Initial Revolving Loan Base or (b) the sum of
(i) 20% of the Initial Borrowing Base and (ii) the aggregate amount of
the subsequent "Borrowing Base"; and (y) any Indebtedness represented
by the Senior Notes, the Discount Notes, the Subordinated Notes or the
Debentures or the Obligations with respect to such Indebtedness set
forth in the Indentures; and (z) the Indebtedness in an aggregate
principal amount of up to $20 million assumed pursuant to the Asset
Purchase Agreement.
The foregoing limitations notwithstanding, the Company and
its subsidiaries may create, incur, assume or guarantee additional
Indebtedness pursuant to the Credit Agreement or otherwise (i) in
connection with or arising out of sale and lease-back transactions,
capital lease obligations, purchase money obligations for property
acquired in the ordinary course of business or other similar financing
transactions or in connection with capital expenditures of up to an
aggregate of $40 million at any one time outstanding,
(ii) constituting reimbursement obligations with respect to letters of
credit issued for the account of the Company or any subsidiary in the
ordinary course of its business, (iii) constituting additional
Indebtedness in an aggregate principal amount not to exceed $50
million for purposes of repurchasing the Senior Notes, the Discount
Notes, the Subordinated Notes or the Debentures at prices determined
by the Board of Directors in its sole discretion, and (iv) that serves
to refund or refinance the Debt Securities or any other Indebtedness
that is not subordinated to the Debt Securities, subject to the
limitations set forth in the Indentures.
The foregoing limitations notwithstanding, any
unconsolidated subsidiary of the Company created after the date of the
Indentures, may create, incur, issue, assume, guarantee or
otherwise become liable with respect to any additional Indebtedness,
provided that such Indebtedness is expressly non-recourse to the
Company and its consolidated subsidiaries, and the Company and its
consolidated subsidiaries have no liability with respect thereto.
Each of the Indentures provides that, subject to certain
exceptions, the Company shall not, and shall not permit any
subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien upon any asset now owned or hereafter
acquired, except with respect to Liens existing on the date of the
applicable Indenture, Liens permitted pursuant to the Credit
Agreement, Liens relating to judgments to the extent permitted under
the Indentures, and Liens arising in connection with certain other
circumstances provided for in the Indentures.
Restrictions on Dividends and Other Payment Restrictions Affecting
Subsidiaries
Each of the Indentures provides that the Company will not,
and will not permit any of its subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any
subsidiary to (i) pay dividends or make any other distributions on its
capital stock or any other interest or participation in, or measured
by, its profits, owned by the Company or any subsidiary of the
Company, or pay any Indebtedness owed to the Company or any subsidiary
or the Company, (ii) make loans or advances to the Company or any
subsidiary of the Company, or (iii) transfer any of its properties or
assets to the Company, except for such encumbrances or restrictions
existing under or by reasons of (a) applicable law, (b) the
Indentures, (c) the Credit Agreement, (d) customary provisions
restricting subletting or assignment of any lease governing a
leasehold interest of the Company or any subsidiary of the Company,
(e) any instrument governing Indebtedness of a person acquired by the
Company or any subsidiary of the Company at the time of such
acquisition, which encumbrance or restriction is not applicable to any
person, or the properties or assets of any person, other than the
person, or the property or assets of the person, so acquired, (f) with
respect to clause (iii) above, purchase money obligations for property
acquired in the ordinary course of business or (g) Indebtedness
existing on the date of the Indentures.
Restrictions on Sale of Business Segments
Each of the Indentures provides that neither the Company nor
any subsidiary will consummate an Asset Sale unless at least (i) 80%
of the consideration therefor received by the
Company or such subsidiary is in the form of cash, notes or an equity
or other interest in the earnings of the Business Segment for a period
no longer than seven years following the closing of the Asset Sale and
(ii) at least 25% of the consideration therefor received by the
Company or such subsidiary is in the form of cash; provided, however,
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that the amount of any liabilities (as shown on the Company's or such
subsidiary's most recent balance sheet or in the notes thereto), of
the Company or any subsidiary that are assumed by the transferee of
any Business Segment will be deemed to be cash for purposes of this
provision; provided, further, however, that the limitations referred
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to in clauses (i) and (ii) above will not apply to (x) any Asset Sale
in which the cash portion of the consideration received therefor is
equal to or greater than what the net after-tax proceeds would have
been had such Asset Sale complied with the aforementioned limitations
and (y) any Asset Sale which consists of the transfer of any Business
Segment to a Permitted Joint Venture or wholly-owned subsidiary. The
Board of Directors will determine in good faith the total value of the
consideration to be received by the Company or any subsidiary for the
purpose of determining whether the requirements of this covenant have
been complied with; provided, however, that in the event that all of
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the Class A Directors disagree with the determination of the Board of
Directors, the Class A Directors may require the Company to obtain an
opinion of an independent investment banking firm, public accounting
firm or other person or entity expert in the valuation or appraisal of
assets or securities, chosen by the Company, to determine the value of
the Net Proceeds to be received by the Company pursuant to such sale,
lease, conveyance or other disposition chosen by the Company to
determine that the total value of consideration to be received by the
Company or any subsidiary complies with this covenant.
The Company will apply 100% of the Net Proceeds from an
Asset Sale received at the closing of such Asset Sale first to the
prepayment of any Indebtedness outstanding pursuant to the Credit
Agreement as of the time of the consummation of such Asset Sale. If
at the time of the consummation of an Asset Sale no Indebtedness is
outstanding pursuant to the Credit Agreement or the application of Net
Proceeds from such sale or other disposition results in the complete
prepayment of all Indebtedness outstanding pursuant to the Credit
Agreement, then such Net Proceeds or any remaining portion thereof
shall be applied by the Company to an Offer to Redeem (i) any
outstanding Discount Notes and Subordinated Notes, on a pro rata
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basis, and thereafter (ii) any outstanding Debentures, in the manner
set forth in the applicable Indenture. An application of Net Proceeds
to repay or prepay Indebtedness outstanding pursuant to the Credit
Agreement shall be applied either (x) to repay or prepay the term loan
facility under the Credit Agreement and
permanently reduce the amount that may be borrowed thereunder or (y)
to repay or prepay the revolving loan facilities thereunder and
permanently reduce the amount of the Initial Revolving Loan Base for
revolving loans thereunder; provided, that after the amount of the
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Initial Revolving Loan Base has been reduced to zero, such Net
Proceeds, together with any other available funds, shall be applied,
within 30 days of such Asset Sale, to reduce the aggregate principal
amount of Indebtedness represented by such revolving loans to an
amount not in excess of the amount of the sum of (i) 20% of the
Initial Borrowing Base, plus (ii) the aggregate amount of the
subsequent "Borrowing Base" (as defined in the Credit Agreement as of
the date hereof and without giving effect to any amendments or
modifications thereto) of the Company and its subsidiaries at such
time. The Company will apply 100% of the Net Proceeds received
subsequent to the closing of an Asset Sale in the same manner as
provided in the preceding sentence; provided, however, that the
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Company shall only be required to make an Offer to redeem the Debt
Securities at such time as the Company or any subsidiary is in receipt
of Net Proceeds in an amount at least equal to $10 million. The
foregoing provisions will not apply if the Net Proceeds from an Asset
Sale are reinvested in another asset or business in the same or
similar line of business as the Company, and such reinvestment occurs
within 180 days after the Asset Sale.
Restrictions on Transactions with Affiliates
Each of the Indentures provides that, except as otherwise
set forth therein, neither the Company nor its subsidiaries may sell,
lease, transfer or dispose of any properties or assets to, or purchase
any property or asset from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of,
an Affiliate (an "Affiliate Transaction"), except on terms that are no
less favorable to the Company or the relevant subsidiary than those
that would have been obtained in a comparable transaction by the
Company or such subsidiary with an unrelated person; provided,
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however, that (i) any transaction between the Company and any wholly
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owned subsidiary or between wholly owned subsidiaries of the Company,
(ii) any employment agreements that provide for annual aggregate
consideration not in excess of $500,000, (iii) the payment by the
Company of management fees to Odyssey Investors and the Investors
and/or their Affiliates during the fourth quarter of each fiscal year
in an annual amount not to exceed $1,250,000 in the aggregate;
provided, however, that no management fees may be paid to Odyssey
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Investors and the Investors and/or their affiliates in any fiscal year
in which a payment default has occurred under the Credit Agreement or
an Event of Default has occurred under Section 6.01(1) or 6.01(2) of
the Indentures, (iv) any transaction or series of transactions in
any twelve-month period that do not exceed an aggregate value of
$500,000 and (v) any transactions permitted pursuant to the covenant
governing Restricted Payments, shall not be deemed to be an Affiliate
Transaction.
The Indentures further provide that all Affiliate
Transactions involving or having a potential value of more than
$500,000 must be approved by 66-2/3% of the Board of Directors;
provided, however, that if there are less than three Class A
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Directors, such transaction must be also approved by all of the Class
A Directors.
Restrictions on Material Acquisitions
Each of the Indentures provides that neither the Company nor
any subsidiary of the Company may participate as the acquiring party
in a Material Acquisition unless, immediately after the consummation
of the Material Acquisition, the following conditions are met: (i) no
Default or Event of Default exists as a result of giving effect to the
Material Acquisition; and (ii) after giving effect to the Material
Acquisition and immediately thereafter, the Company shall be permitted
to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio tests set forth in the Indentures.
Maintenance of Adjusted Net Worth
Each of the Indentures provides that, if the Company's
Adjusted Net Worth at the end of each of any two consecutive fiscal
quarters (the last day of the second such fiscal quarter being
referred to as a "Deficiency Date") is less than $15 million (the
"Minimum Equity"), the Company will be required to, no later than 80
days after a Deficiency Date (or 140 days if a Deficiency Date is also
the end of the Company's fiscal year), offer to purchase (the "Offer")
an amount of Debt Securities equal to 20% of the aggregate principal
amount of Debt Securities originally issued under the respective
Indentures (or such lesser amount as may be outstanding at the time
the Offer is made) (the "Offer Amount"), at a purchase price equal to
(i) 100% of the principal amount of the Debt Securities, plus accrued
interest to the date of purchase. The Company's Adjusted Net Worth,
as defined, was $297 million as of January 28, 1995. The Offer will
remain open for a period of 20 Business Days, unless a longer period
is required by law. Within five Business Days after the termination
of such 20 Business Day period, the Company will purchase the Offer
Amount of Debt Securities tendered or, if less than the Offer Amount
has been tendered, all Debt Securities tendered in response to the
Offer, and shall mail or deliver payment therefor within five days
after the date of purchase. There can be no assurances, however, that
at such time as the
Company is required to offer to purchase such Debt Securities, it will
have the funds necessary to enable it to purchase such amount of Debt
Securities. As a result of the Offer, a Holder will be entitled to
his share of the Offer Amount (to the extent funds are available)
approximately 115 days after a Deficiency Date (or 175 days if a
Deficiency Date is also the end of the Company's fiscal year). In no
event will the Company's failure to meet the Minimum Equity at the end
of any fiscal quarter be counted towards the making of more than one
Offer. Subject to certain limitations set forth in the Indentures,
the principal amount of Debt Securities to be purchased pursuant to an
Offer may be reduced by the principal amount of Debt Securities
previously delivered to the applicable Trustee for cancellation or
otherwise purchased or redeemed after the making of the Offer (other
than pursuant to a mandatory redemption or an Offer). Any payments
under this provision will be restricted pursuant to the Credit
Agreement. Under each of the Indentures, a failure by the Company to
make any required purchases pursuant to the Offer will result in an
Event of Default. See " -- Events of Default and Remedies."
Merger, Consolidation, or Sale of Assets
Each of the Indentures provides that the Company will not
consolidate or merge with or into or sell, lease, convey or otherwise
dispose of all or substantially all of its assets, in one or more
related transactions, to any person unless: (i) the successor entity
or the person to which such sale or conveyance shall have been made is
a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the
successor entity or the person to which such sale or conveyance is
made assumes the obligations of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the
applicable Trustee, under the respective Debt Securities and the
respective Indentures; (iii) immediately after such transaction no
Default or Event of Default exists; and (iv) (a) the entity formed by
or surviving any such consolidation or merger, or to which such sale
or conveyance shall have been made shall have Tangible Net Worth
(immediately after the transaction but prior to any purchase
accounting adjustments resulting from the transaction) equal to or
greater than the Tangible Net Worth of the Company immediately
preceding the transaction and (b) the Consolidated Net Income of such
corporation and the Company for its four full fiscal quarters
immediately preceding such transactions (on a pro forma basis) as if
such transaction had occurred at the beginning of the applicable four-
quarter period shall be equal to or greater than the Consolidated Net
Income of the Company for such four quarter period.
Change of Control
Under the Indentures, as set forth in more detail in the
immediately following paragraph, a Change of Control of the Company
will be deemed to have occurred, subject to certain exceptions and
other limitations, if any of (i) the assets of the Company are sold or
otherwise transferred, (ii) the Company is merged into or with another
corporation such that the then stockholders of the Company hold less
than 50% of the resulting corporation's stock after the merger, (iii)
a person acquires a majority of the stock or voting power of the
Company or (iv) a person acquires stock in the Company and holds more
total voting power than Odyssey Partners.
Each of the Indentures provides that, if at any time (the
"Change of Control Date") (i) all or substantially all of the
Company's assets are sold as an entirety to any person or related
group of persons other than an Odyssey Affiliate (or Odyssey
Affiliates), an Affiliate (or Affiliates) of the Company, an Odyssey
Associate (or Odyssey Associates) or an Investor Affiliate (or
Investor Affiliates); (ii) the Company is merged with or into another
corporation or another corporation is merged into the Company with the
effect that immediately after such transaction the stockholders of the
Company immediately prior to such transaction hold less than a
majority in interest of the total voting power entitled to vote in the
election of directors, managers or trustees of the person surviving
such transaction; (iii) any person or related group of persons
acquires a majority in interest of the total voting power or voting
stock of the Company; (iv) any person or related group of persons
other than Odyssey Partners, Odyssey Associates, Odyssey Affiliates or
Investor Affiliates, collectively, acquires by way of merger,
consolidation or other business combination, greater than 50% of the
total voting power entitled to vote in the election of directors,
managers or trustees of the Company or such other person surviving the
transaction; or (v) any person or related group of persons will at any
time, prior to the time any shares of voting stock of the Company are
registered under the Securities Act (other than pursuant to the
Registration Rights Agreement or pursuant to an employee benefit
plan), be the beneficial owner of a greater percentage of the total
voting power entitled to vote in the election of directors, managers
or trustees of the Company than Odyssey, DLJ and their Permitted
Transferees, collectively, but in no event, will Odyssey, Odyssey
Affiliates, Odyssey Associates, DLJ, DLJ Associates or DLJ Affiliates,
collectively, be the beneficial owner of less than 20% of such total
voting power (each, a "Change of Control"), then the Company will
notify the Holders in writing of such occurrence and will make an
offer to purchase all of the Debt Securities, in the manner set forth
in the Indentures, at a
purchase price equal to (i) 100% of the principal amount of the Debt
Securities, plus accrued interest to the purchase date; provided,
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however, that the Company will not be obligated to purchase any issue
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of Debt Securities unless holders of greater than 50% of the principal
amount of such issue of Debt Securities outstanding at the Change of
Control Date will have tendered such Senior Notes, Discount Notes,
Subordinated Notes or Debentures for repurchase, as the case may be;
provided, further, however, that there has been no acceleration by the
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Agent pursuant to the Credit Agreement prior to the time of notice of
an offer to purchase Debt Securities or as a result of a Change of
Control. Prior to the mailing of the notice to Securityholders
provided for above, the Company covenants to (i) repay in full all
Indebtedness under the Credit Agreement or to offer to repay in full
all such Indebtedness and to repay the Indebtedness of each lender who
has accepted such offer or (ii) obtain the requisite consent under the
Credit Agreement to permit the repurchase of the Debt Securities.
There can be no assurances, however, that after the payment
of the amounts required to be paid in the immediately preceding
paragraph there will be sufficient funds available to the Company to
make the required repurchase payments to such holders who have
tendered their Debt Securities for payment. To the extent the Company
fails to make any required repurchases under the Indentures in the
event of a Change of Control, such failure to repurchase will not
become an Event of Default until holders of at least 25% of the Debt
Securities notify the Company and the Company does not cure such
default within 30 days of such notice.
In addition, prior to mailing of the notice to holders of
the Debentures, the Company shall offer to redeem the Discount Notes
and the Subordinated Notes outstanding at the time of the Change of
Control event until all the Discount Notes and the Subordinated Notes
sought to be redeemed by the holders thereof have been redeemed. The
Company will first comply with the covenants in the preceding sentence
before it will be permitted to repurchase the Discount Notes, the
Subordinated Notes or the Debentures, as the case may be, pursuant to
this provision. In the event a Change of Control occurs and the
holders of the Debt Securities exercise their right to require the
Company to repurchase the Debt Securities, and assuming that such a
repurchase constitutes a "tender offer" for purposes of Rule 14e-1
under the Exchange Act at the time it is required, the Company will
comply with the procedural requirements of Rule 14e-1 as then in
effect with respect to such repurchase. Securityholders should be
aware, however, that whether or not a Change of Control has occurred
may depend on certain facts and circumstances and in certain instances
may be subject to the interpretation of the
Company. Prior to receiving a notice of Change of Control pursuant to
which the Company would be required to purchase a Holder's Debt
Securities, the Company has certain obligations with respect to the
lenders under the Restated Credit Agreement. Until such obligations
by the Company are satisfied Holders may not know whether a repurchase
of their securities may occur. Notwithstanding the foregoing, the
occurrence of the events set forth in subsections (iii), (iv), or (v)
of this covenant will not constitute a Change of Control (a) from and
after the date that (x) 25% of the outstanding common stock of the
Company has been publicly registered pursuant to one or more effective
registration statements under the Securities Act (excluding shares
registered pursuant to an employee benefit plan); provided, that at
least 15% of such common stock is registered pursuant to one or more
underwritten primary public offerings of the common stock by the
Company and (y) as a result of such registration or registrations, the
Company meets the criteria set forth in Section 12(g)(1)(A) or Section
12(g)(1)(B) of the Exchange Act for a period of 60 consecutive days or
(B) in the event that holders of the Class A Common Stock are given
rights of inclusion in accordance with the terms of the Stockholder
Letter upon the occurrence of such events.
EVENTS OF DEFAULT AND REMEDIES
Each of the Indentures provides that an Event of Default is:
default for 30 days in payment of interest on any of the Debt
Securities, as the case may be; default in payment when due of
principal; failure by the Company to comply with certain provisions of
the applicable Indenture; failure by the Company for 30 days after
notice to comply with any of its other agreements in the applicable
Indenture; default under any other indebtedness of the Company
aggregating in excess of $10 million if either (i) such default
results from the failure to pay principal upon the expressed maturity
of such indebtedness (after giving effect to any applicable grace
periods) or (ii) as a result of such default the maturity of such
indebtedness has been accelerated prior to its expressed maturity;
failure by the Company or a subsidiary to pay certain final judgments
aggregating in excess of $10 million which judgments are not
rescinded, annulled or stayed within 60 days after the entry by a
competent tribunal; and certain events of bankruptcy or insolvency.
If an Event of Default occurs and is continuing with respect
to (a) the Subordinated Notes or the Debentures, the Trustee under the
Subordinated Note Indenture or the Trustee under the Debenture
Indenture, as the case may be, or the holders of at least 25% in
principal amount of the Subordinated Notes or the Debentures then out-
standing may declare 100% of the principal
amount of the Subordinated Notes or the Debentures, as the case may
be, to be due and payable immediately, or (b) the Discount Notes, the
Discount Note Trustee or the holders of at least 25% in principal
amount of the Discount Notes then outstanding may declare a principal
amount of the Discount Notes to be due and payable equal to 100% of
the Accreted Value of the Discount Notes, provided, however, that if
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any Indebtedness is outstanding pursuant to the Credit Agreement, all
the Securities will be due and payable upon the earlier of (x) the day
which is five Business Days after the provision to the Company and the
Agent of such written notice of acceleration and (y) the date of
acceleration of any Indebtedness under the Credit Agreement. In the
event of a declaration of acceleration because an Event of Default
under any mortgage, indenture or instrument has occurred and is
continuing, such declaration of acceleration will be automatically
annulled if such payment default is cured or waived or the holders of
the Indebtedness which is the subject of such Event of Default have
rescinded their declaration of acceleration in respect of such
Indebtedness within 90 days thereof and the applicable Indenture
Trustee has received written notice of such cure, waiver or rescission
and no other Event of Default has occurred during such 90-day period
that has not been cured or waived. In the event of a declaration of
acceleration solely on account of an Event of Default arising from
certain events of bankruptcy or insolvency, such amounts become due
and payable without further action or notice. Holders of the Debt
Securities may not enforce the Indentures or the Debt Securities
except as provided in the Indentures. Subject to certain limitations,
holders of a majority in aggregate principal amount of any issue of
Debt Securities then outstanding may direct the respective Trustee in
its exercise of any trust or power. The Trustees may withhold from
holders of the Debt Securities notice of any continuing Default or
Event of Default (except a Default or Event of Default in payment of
principal or interest) if it determines that withholding notice is in
their interest.
The holders of a majority in aggregate principal amount of
any issue of the Debt Securities then outstanding may on behalf of the
holders of all of such issue, waive any past Default or Event of
Default under the Indentures and its consequences, except a continuing
Default in the payment of interest on, or the principal of, such issue
of the Debt Securities.
The Company is required to deliver to the respective
Trustees an annual statement regarding compliance with the respective
Indentures, and, upon an officer of the Company becoming aware of any
Default or Event of Default, a statement specifying such Default or
Event of Default.
NO PERSONAL LIABILITY OF OFFICERS, DIRECTORS, EMPLOYEES, AND
STOCKHOLDERS
An officer, employee, director or stockholder, as such, of
the Company will not have any liability for any obligations of the
Company or the Trustee under the Debt Securities or the Indentures, or
for any claim based on, in respect of, or by reason of such
obligations or their creation. Each holder of the Debt Securities by
accepting a Debt Security will be deemed to have waived and released
all such liability. Such waiver and release will be deemed to
constitute part of the consideration for issuance of the Debt
Securities.
SATISFACTION AND DISCHARGE OF THE INDENTURES
Each of the Indentures provides that the Company may
terminate its obligations under the respective Indenture at any time
by delivering all outstanding Debt Securities issued under any such
Indenture to the respective Trustee for cancellation and paying all
sums owed pursuant to the terms of such Indenture. The Company may
terminate all of its obligations under any Indenture, other than its
obligations to pay the principal of, and interest on, the Debt
Securities issued under such Indenture and certain other obligations,
at any time, by irrevocably depositing with the respective Trustee
money or non-callable U.S. Government Obligations sufficient to pay
all remaining indebtedness on such Debt Securities and all other sums
payable pursuant to the terms of such Indenture and after complying
with certain other procedures set forth in such Indenture.
TRANSFER AND EXCHANGE
Each of the Indentures provides that a holder may transfer
or exchange Debt Securities in accordance with the terms of the
respective Indenture. The Registrar may require a holder, among other
things, to furnish appropriate endorsements and transfer documents,
and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar is not required to transfer or exchange any
Debt Security selected for redemption in whole or in part, except the
unredeemed portion of any Debt Security being redeemed in part. Also,
the Registrar is not required to transfer or exchange any Debt
Security for a period of 15 days before a selection of Debt Securities
to be redeemed or between a record date and the next succeeding
interest payment date.
The registered holder of a Debt Security will be treated as
its owner for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indentures and the Debt
Securities may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the respective
issue of Debt Securities then outstanding, and any existing Default or
compliance with any provision may be waived (other than a continuing
Default or Event of Default, in the payment of principal or interest
on any Debt Security) with the consent of any holder of the Debt
Securities, the Company and the Trustee may amend or supplement the
Indentures or the Debt Securities to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Debt Securities in
addition to or in place of certificated securities, to provide for the
assumption of the Company's obligations in the case of a merger or
acquisition, to comply with the Trust Indenture Act, or to make any
change that does not adversely affect the rights of any holder of the
Debt Securities.
Without the consent of each Securityholder affected, the
Company may not reduce the principal amount of Debt Securities whose
holders are necessary to consent to an amendment of the Indentures;
reduce the rate or change the interest payment time of any Debt
Security or alter the redemption provision with respect thereto;
reduce the principal of or change the fixed maturity of any Debt
Security; make any change in the provisions concerning waiver of
Defaults or Events of Default by holders of the Debt Securities, or
rights of holders to receive payment of principal or interest; waive a
Default in the payment of principal or interest on any Debt
Securities; or make any change that adversely affects certain
subordination rights for the holders of the Discount Notes, the
Subordinated Notes or the Debentures.
CONCERNING THE TRUSTEES
The Trustee under the Discount Note Indenture and the
Subordinated Note Indenture is First Trust National Association and
the Trustee under the Debenture Indenture is First Bank National
Association. Each of the Indentures contains certain limitations on
the rights of the applicable Trustee, should they, or any of them,
become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. Each Trustee will be
permitted to engage in other transactions; however, if it acquires any
conflicting interest (as defined) it must eliminate such conflict or
resign.
The holders of a majority in principal amount of any issue
of Debt Securities then outstanding will have the right to
direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee of such Debt
Securities, subject to certain exceptions. The Indentures provide
that in case an Event of Default shall occur (which shall not be
cured), the respective Trustee thereunder will be required, in the
exercise of its power, to use the degree of care of a prudent person
in similar circumstances in the conduct of his own affairs. Subject
to such provisions, such Trustee will be under no obligation to
exercise any of its rights or powers under the respective Indenture at
the request of any of the holders of the Debt Securities, unless they
shall have offered to the Trustee security and indemnity satisfactory
to such Trustee.
DESCRIPTION OF THE SENIOR PREFERRED STOCK
The following description of the terms of the Senior
Preferred Stock does not purport to be complete and is subject to and
is qualified in its entirety by reference to the Certificate of
Designations for the Senior Preferred Stock, which is filed as Exhibit
3.3 to the Registration Statement of which this Prospectus is a part.
DIVIDENDS
Dividends are paid to the holders of the shares of Senior
Preferred Stock as declared by the Board from any assets legally
available therefor. The holders of the Senior Preferred Stock are
entitled to receive cumulative dividends payable quarterly (on May 15,
August 15, November 15 and February 15 of each year) at a rate per
annum equal to 6% of the liquidation preference of the Senior
Preferred Stock. The Company must pay dividends on the Senior
Preferred Stock, through and including May 15, 1998, only by means of
the issuance of additional shares of Senior Preferred Stock, which
shares will have a liquidation preference equal to the aggregate
dollar value of dividends to be paid on such dividend payment date.
Thereafter, dividends, if declared, will be payable in cash. Holders
of shares of the Senior Preferred Stock will be entitled to receive
dividends in preference to and in priority over holders of the Class A
Common Stock, the Class B Common Stock and the Junior Preferred Stock.
The Restated Credit Agreement (as defined in "DESCRIPTION OF
THE CREDIT FACILITY") and the Indentures restrict the Company's
ability to pay dividends on its capital stock except for dividends
payable-in-kind on the Senior Preferred Stock, and after May 15, 1998,
the Indenture permits the payment of cash dividends on the Senior
Preferred Stock. See "DESCRIPTION OF THE CREDIT FACILITY" and
"DESCRIPTION OF THE DEBT
SECURITIES -- Certain Covenants of the Indentures -- Dividend, Stock
Purchase and Debt Repayment Restrictions."
LIQUIDATION, DISSOLUTION, ETC.
In the event of any liquidation, dissolution or winding up
of the Company, the holders of shares of Senior Preferred Stock will
be entitled to a liquidation preference of $100 per share, plus an
amount in cash equal to the sum of all accrued but unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding-up,
before any payment shall be made or any assets distributed to the
holders of any Class A Common Stock or Junior Preferred Stock.
VOTING RIGHTS
The holders of the Senior Preferred Stock will not have any
voting rights except as described in the Certificate of Designations
or as otherwise provided by law. Pursuant to the Certificate of
Designations, the holders of the Senior Preferred Stock will have the
right, voting as a single class with the holders of the Junior
Preferred Stock (with each holder of Senior Preferred Stock and Junior
Preferred Stock having one vote per share), to elect two directors
(the "Preferred Stock Directors"). Pursuant to the terms of the By-
laws, the category of persons that will be eligible to serve as a
Preferred Stock Director will be limited to (i) then current holders
of record of Junior Preferred Stock who are natural persons, (ii) any
director or executive officer of any then current holder of record of
Junior Preferred Stock that is a corporation, (iii) any general
partner of any then current holder of record of Junior Preferred Stock
that is a partnership, and (iv) any general partner, principal or
associate of Odyssey Partners, if Odyssey Partners is then a current
holder of record of Junior Preferred Stock.
In addition to the election of the Preferred Stock
Directors, if and whenever (i) dividends payable on the Senior
Preferred Stock have been in arrears and unpaid in an aggregate amount
equal to or exceeding the amount of dividends payable thereon for four
quarterly periods or (ii) the Company fails to meet any mandatory
redemption obligation thereon, then the number of directors
constituting the Board will be increased by one (not including the
additional director to be separately elected by the holders of the
Junior Preferred Stock) and the holders of Senior Preferred Stock will
have the exclusive right, voting separately as a series, to elect one
director of the Company to fill the newly created directorship. Such
additional voting rights will continue until all dividends accumulated
on the Senior Preferred Stock have been paid in full and any mandatory
redemption obligation has been satisfied, at which time such
additional
voting rights of the holders of the Senior Preferred Stock will
terminate.
REDEMPTION
On May 15, 2003, to the extent the Company has Legally
Available Funds (as defined in the Certificate of Designations)
therefor, the Company is required to redeem the remaining outstanding
shares of Senior Preferred Stock, at a cash redemption price of 100%
of its liquidation preference per share, plus an amount equal to the
sum of accrued and unpaid dividends thereon. The Senior Preferred
Stock is redeemable at the option of the Company, in whole or in part,
at any time or from time to time, at a redemption price of 103% of the
liquidation preference of such stock, plus an amount equal to the sum
of accrued and unpaid dividends thereon to the date fixed for
redemption.
DESCRIPTION OF THE JUNIOR PREFERRED STOCK
The following description of the terms of the Junior
Preferred Stock does not purport to be complete and is subject to and
is qualified in its entirety by reference to the Certificate of
Designations for the Junior Preferred Stock, which is filed as Exhibit
3.4 to the Registration Statement of which this Prospectus is a part.
The shares of Junior Preferred Stock are not being registered
hereunder.
DIVIDENDS
The Junior Preferred Stock ranks pari passu with the Class A
Common Stock and Class B Common Stock with respect to dividends. In
the event that the Board declares a dividend of any kind on either the
Class A Common Stock or the Class B Common Stock, the holders of
Junior Preferred Stock are entitled to receive dividends in an equal
per share amount, except that, in the case of stock dividends, the
holders of Junior Preferred Stock are entitled to receive dividends in
kind in a ratable amount. Dividends on the Junior Preferred Stock are
subject to the prior rights of holders of the Senior Preferred Stock
and to any dividend preferences which may be granted to any series of
new securities that may be authorized and issued by the Company in the
future. In addition, payment of dividends to holders of the Junior
Preferred Stock are restricted under the Restated Credit Agreement and
the Indentures.
LIQUIDATION, DISSOLUTION, ETC.
In the event of any liquidation, dissolution or winding up
of the Company, the holders of shares of the Junior Preferred
Stock are entitled to a liquidation preference of $100 per share;
provided, however, that such liquidation preference per share may not
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exceed the sum of (i) $25.00 and (ii) $15.00 for each of the first
five fiscal years of the Company ending after April 2, 1991 with
respect to which the Company shall have satisfied the following
financial performance criteria: earnings before depreciation,
amortization of goodwill and certain acquisition-related and financing
fees and expenses, interest and taxes ("EBITDA") of $54.8 million for
the seven-month period ending November 2, 1991; EBITDA of $90.5
million for the fiscal year ending 1992; EBITDA of $95.4 million for
the fiscal year ending 1993; EBITDA of $57.7 million for the fiscal
year ending 1994; and EBITDA of $60.2 million for the fiscal year
ending 1995; and provided, further, that EBITDA will be adjusted as
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necessary for any fiscal year to reflect sales of assets in such year
or a preceding fiscal year.
VOTING RIGHTS
The holders of the Junior Preferred Stock have the identical
voting rights as, and vote together with, the holders of the Senior
Preferred Stock. See "DESCRIPTION OF THE SENIOR PREFERRED STOCK --
Voting Rights." Odyssey Partners owns 5,000 shares of Junior
Preferred Stock and, pursuant to a letter agreement dated March 21,
1991 among Odyssey Partners, Grant M. Wilson, William J. DeBrule and
Yehochai Schneider, has been granted an irrevocable proxy to vote the
remaining 5,000 shares of Junior Preferred Stock held by Messrs.
Wilson, DeBrule and Schneider.
DESCRIPTION OF THE CLASS A COMMON STOCK
The Company's Restated Certificate of Incorporation
authorizes the issuance of 700,000 shares of Class A Common Stock, par
value $.01 per share, of which 490,000 shares are issued and
outstanding as of the date hereof.
VOTING RIGHTS
Except as described below with respect to the election of
directors of the Company or otherwise required by law, the holders of
the Class A Common Stock and the Company's Class B Common Stock, par
value $.01 per share (the "Class B Common Stock"), voting together as
a single class, are entitled to one vote per share on all matters
properly submitted to the stockholders of the Company. The holders of
the Class A Common Stock, voting separately as a class (with each such
holder having the right to one vote per share), have the right to
elect three
(3) directors (the "Class A Directors") to the Board of Directors of
the Company.
LIQUIDATION, DISSOLUTION, ETC.
Each share of Class A Common Stock is entitled to share
ratably, with the Class B Common Stock, in the net worth of the
Company upon dissolution.
DIVIDENDS
After payment or provision for the payment of dividends on
the Senior Preferred Stock, the Board of Directors of the Company may
declare and the Company may pay dividends on the Class A Common Stock
out of funds legally available therefor as and to the extent permitted
by law. Each share of Class A Common Stock and Class B Common Stock
is entitled to participate equally in any dividend declared by the
Board of Directors and paid by the Company. The Class A Common Stock
along with the Class B Common Stock rank pari passu in right of
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payment of dividends with the Junior Preferred Stock. As of the date
hereof, the Company has not declared any dividends on the Class A
Common Stock.
In addition to the foregoing, the Restated Credit Agreement
(as defined in "DESCRIPTION OF THE CREDIT FACILITY") and the
Indentures restrict the payment of dividends on the Common Stock.
DESCRIPTION OF THE CLASS B COMMON STOCK
The Company's Restated Certificate of Incorporation
authorizes the issuance of 700,000 shares of Class B Common Stock, par
value $.01 per share, of which 510,000 shares are issued and
outstanding as of the date hereof. The shares of Class B Common Stock
are not being registered hereunder.
The terms of the Class B Common Stock are identical to the
terms of the Class A Common Stock other than with respect to the
election of directors. The holders of the Class B Common Stock,
voting separately as a class (with each such holder having the right
to one vote per share), have the right to elect two (2) directors (the
"Class B Directors") to the Board of Directors of the Company.
CONTRACTUAL CORPORATE GOVERNANCE ARRANGEMENTS
INTER-CLASS AGREEMENT
Pursuant to the terms of a certain letter agreement (the
"Inter-class Agreement") dated April 2, 1991 entered into by Odyssey
Partners, DLJ and Lincoln National, as voting trustee for DLJ, in
favor of the holders of Class A Common Stock, such parties have agreed
not to limit, restrict or otherwise interfere with the rights of the
holders of Class A Common Stock to elect a number of directors of the
Company equal to (n-1)/2, where "n" equals the total number of
directors of the Company (other than additional directors elected by
the holders of Preferred Stock by reason of a dividend arrearage or
redemption default). In addition, each of Odyssey Partners, DLJ and
Lincoln National has agreed to provide the holders of Class A Common
Stock with a right of co-sale (or "tag-along") in the event it enters
into an agreement for the sale of its Class B Common Stock, if, upon
consummation of any such sale, Odyssey Partners, DLJ and Lincoln
National would, in the aggregate, own less than 25% of the outstanding
Class B Common Stock.
The foregoing arrangements terminate from and after the time
that (a) 25% or more of the Common Stock (excluding shares registered
as part of an employee benefit plan) has been registered under the
Securities Act, (b) at least 15% of the Common Stock has been sold in
one or more underwritten, primary public offerings, and (c) for a
period of at least 60 days, the Company meets both the size of person
and record holders criteria specified in Section 12(g)(1)(B) of the
Securities Exchange Act of 1934, as amended.
CLASS B STOCKHOLDERS' AGREEMENT
Pursuant to the terms of a certain stockholders' agreement
dated April 2, 1991, between Odyssey Partners, DLJ and Lincoln
National (the "Stockholders Agreement"), the foregoing parties have
agreed to certain arrangements regarding the voting, disposition and
ownership of their respective shares of Class B Common Stock.
Generally, the parties have agreed that DLJ is entitled to
elect one Class B Director and Odyssey Partners is entitled to elect
all remaining Class B Directors; provided, however, if DLJ fails to
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designate a Class B Director nominee (as has been the case since
April 2, 1991), Odyssey Partners is entitled to designate and elect
all Class B Directors. Odyssey Partners and DLJ have further agreed
to vote their shares of Class B Common Stock for the election of the
other's directors (and to similarly vote to fill Class B Directorship
vacancies).
Moreover, DLJ and Lincoln National have each agreed to vote
(or abstain from voting) in the manner Odyssey Partners votes (or so
abstains) with respect to matters submitted to a vote of the holders
of Class B Common Stock.
With respect to the sale, transfer or other disposition of
their shares of Class B Common Stock, DLJ and Lincoln National have
agreed to provide Odyssey Partners with a 15-Business Day right of
first refusal to purchase all or any portion of such shares. If
Odyssey Partners does not exercise its right within such time period,
DLJ and Lincoln National may dispose of their shares on terms no more
favorable to them than those originally contemplated, but must
complete such disposition within 30 days after the 15-Business Day
period expires.
Odyssey Partners has granted DLJ and Lincoln National a 15-
Business Day right of co-sale (or "tag-along") in the event it seeks
to sell its shares of Class B Common Stock to a non-affiliate. If the
foregoing right is not timely exercised by DLJ and/or Lincoln
National, Odyssey Partners has 30 days (commencing on the first day
after the expiration of the 15-Business Day period) within which to
complete its intended disposition, provided such disposition is on
terms no more favorable to Odyssey Partners than those originally
contemplated. Also, should Odyssey Partners seek to sell its entire
Class B Common Stock position, DLJ and Lincoln National have agreed to
be subject to a "bring-along" right in favor of Odyssey Partners.
REGISTRATION RIGHTS AGREEMENT
Pursuant to the terms of a certain shelf registration rights
agreement dated April 2, 1991 (the "Registration Rights Agreement"),
among the Company and holders of the Debt Securities, the Senior
Preferred Stock and the Class A Common Stock (collectively, the
"Registrable Securities"), the Company has agreed to provide such
stockholders with a one-time demand registration right.
Generally, any holder (or holders) of not less than $15
million in aggregate value of the Registrable Securities is entitled
to make a one-time request to the Company for the Securities Act
registration of all or part of his or its Registrable Securities.
Within 10 Business Days after receipt of such request, the Company
must provide written notice thereof to all holders of Registrable
Securities and the Company must include in such registration all
additional Registrable Securities as to which the Company has received
written requests for inclusion within 15 Business Days after the date
of the Company's notice. The Company may delay registration under
certain circumstances, but generally must prepare and file with
the Commission, as soon as practicable after receipt of the written
registration requests, a registration statement relating to the
Registrable Securities. The Company must also keep the registration
statement current for a period of two years after effectiveness.
In addition, each holder whose Registrable Securities are
covered by the registration statement would (if requested by a
managing underwriter) not be permitted to effect a public sale or
distribution of Registrable Securities of the same class of securities
included in the registration statement during the 10-day period prior
to, and during the 45-day period commencing on, the closing date of
the offering made pursuant to such registration statement. The
Company is similarly restricted from selling any class of its capital
stock or debt securities during (i) the 10-day period prior to, and
during the 45-day period commencing on, the effective date of a
registration statement and (ii) the 20-day period next following
receipt by the Company of written notice from a holder to sell his or
its Registrable Securities pursuant to an effective registration
statement.
DESCRIPTION OF THE CREDIT FACILITY
As described below, the Company and its three operating
subsidiaries, JPS Carpet Corp. ("JCC"), JPS Converter and Industrial
Corp. ("JCIC"), and JPS Elastomerics Corp. ("JEC," and JEC, together
with JCC and JCIC, being hereinafter collectively referred to as the
"Borrowing Subsidiaries"), are parties to a Fourth Amended and
Restated Credit Agreement (the "Restated Credit Agreement"), dated as
of June 24, 1994 (the "Effective Date"), as amended, among the
financial institutions party thereto (the "Senior Lenders"), Citibank,
as administrative agent and co-agent (in such capacities, the
"Agent"), and GECC, as collateral agent and co-agent (in such
capacities, the "Collateral Agent").
Pursuant to the terms of the Restated Credit Agreement, the
Senior Lenders have provided the Borrowing Subsidiaries with (i) a
revolving credit loan facility (the "Revolving Credit Facility")
providing for revolving credit loans (the "Revolving Loans") in an
amount up to the lesser of (i) $135 million (with a $20 million
sublimit for fixed asset purchases and financings) and (ii) the sum of
a specified borrowing base, which is based upon eligible receivables
and inventory of the Borrowing Subsidiaries (the "Borrowing Base") and
an additional amount of $25 million, except that no Borrowing
Subsidiary may borrow an amount greater than the Borrowing Base
attributable to it. All Revolving Loans have a final maturity date of
December 1, 1996. The interest rate for the Revolving Loans, at the
Company's
election, is either (i) the Base Rate (as defined in the Restated
Credit Agreement) plus 1.50% per annum, or (ii) the Eurodollar Rate
(as defined in the Restated Credit Agreement) plus 3.00% per annum.
If certain events of default have occurred and are continuing under
the Restated Credit Agreement, then the applicable interest rate for
the Revolving Loans will increase by 2%.
Pursuant to the terms of the Restated Credit Agreement and
related loan documents, (i) the Company has guaranteed all of the
obligations thereunder of the Borrowing Subsidiaries and (ii) each
Borrowing Subsidiary has guaranteed all of the obligations thereunder
of each other Borrowing Subsidiary. The obligations of the Company in
respect of the Restated Credit Agreement are secured by (i) a first
priority pledge of the capital stock of each of the Borrowing
Subsidiaries and (ii) a lien on all of the assets of the Company. The
obligations of each Borrowing Subsidiary in respect of the Restated
Credit Agreement are secured by a lien on substantially all of the
personal property, including inventory and receivables, and certain
real property, of such Borrowing Subsidiary.
The Restated Credit Agreement requires the Company and its
subsidiaries to satisfy, among other things, certain minimum
consolidated net worth levels, ratios of total consolidated earnings
to fixed charges, leverage ratios, maximum capital expenditure levels
and maximum consolidated liability levels for warranty costs
associated with certain products. In addition, the Company and its
subsidiaries are restricted from, among other things, the incurrence
of indebtedness or guarantees by the Company and its subsidiaries, the
sale of assets, the incurrence of liens, the making of junior
payments, the making of certain specified investments, the making of
certain fundamental corporate changes, and the amendment of their
Certificate of Incorporation and By-laws, subject to certain
exceptions specified therein, including (a) an exception for asset
sales (including in a sale and leaseback transaction) and indebtedness
incurred to finance or refinance fixed assets, in an aggregate amount
up to $35 million, since March 18, 1993, for all such sales and
indebtedness, subject to specified sublimits for each Borrowing
Subsidiary, and subject (1) in the case of any such sale (other than
in a sale and leaseback transaction) resulting in more than $10
million in net cash proceeds, to the consent of the requisite lenders
to the terms thereof, (2) in the case of any such indebtedness, to
compliance with a specified minimum loan to value test and a specified
maturity date requirement, and (3) in any such case, to the continued
compliance with all covenants and the accuracy of all representations;
and (b) an exception for additional capital expenditure and capital
lease indebtedness, subject to certain limitations set forth in the
capital expenditure financial covenant in the Restated Credit
Agreement. The Restated Credit Agreement also specifies certain
events of default, including any breach of the covenants contained
therein, which if not waived by the Requisite Senior Lenders (as
defined in the Restated Credit Agreement), would give rise to a right
of acceleration of the Revolving Loans by the Senior Lenders.
The Restated Credit Agreement was amended on November 4,
1994, and further amended on December 21, 1994, in order to allow the
Company to use a portion of the Revolving Credit Facility for the
repurchase of Debt Securities in the open market. See "THE COMPANY --
Open-Market Repurchases of Debt Securities."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion, except as it relates to the
calculation and accrual of original issue discount on the Debt
Securities, the calculation and accrual of redemption premium on the
Senior Preferred Stock and the treatment of the Debt Securities as
indebtedness for federal income tax purposes, represents the opinion
of Weil, Gotshal & Manges (a partnership including professional
corporations), counsel to the Company ("Counsel"), as to the material
federal income tax consequences of the ownership and disposition of
the Debt Securities, the Class A Common Stock and the Senior Preferred
Stock. No opinion is expressed as to (a) the calculation and accrual
of original issue discount on the Debt Securities because the final
Treasury Regulations interpreting and implementing the original issue
discount provisions of the Code, do not, by their terms, apply to debt
instruments such as the Debt Securities, that were issued before April
4, 1994 and may not be relied upon in respect of debt instruments such
as the Debt Securities that were issued before December 22, 1992, or
(b) the treatment of the Debt Securities as indebtedness for federal
income tax purposes because of the inherently factual nature of the
issues and the absence of Treasury Regulations under the applicable
Code provision. Further, no opinion is expressed as to the
calculation and accrual of redemption premium on the Senior Preferred
Stock because such premium is taken into account under principles
similar to those applicable to original issue discount. In addition,
in the discussion below under the caption "Certain Federal Income Tax
Consequences to the Company," no opinion is expressed with respect to
the federal income tax consequences of the consummation of the Plan of
Reorganization because of the inherently factual nature of certain of
the related issues and the absence of final Treasury regulations under
the applicable Code provisions.
The following discussion is based upon the provisions of the
Code, the applicable Treasury Regulations promulgated and proposed
thereunder, judicial authority and current administrative rulings and
practice. Legislative, judicial or administrative changes or
interpretations may be forthcoming that could alter or modify the
statements and conclusions set forth below, possibly on a retroactive
basis. This discussion does not purport to deal with all aspects of
federal income taxation that may be relevant to particular holders in
light of their personal circumstances, or to certain types of holders
subject to special treatment under the federal income tax laws (for
example, life insurance companies, tax-exempt organizations, banks,
dealers in securities, foreign corporations, nonresident alien indi-
viduals and holders of Securities held as part of a straddle with
other investments or a "conversion transaction" within the meaning of
Section 1258 of the Code), nor does it discuss the effect of any
applicable state, local or foreign tax laws. This discussion also
assumes that the Debt Securities, Class A Common Stock and Senior
Preferred Stock are held as capital assets (as defined in Section 1221
of the Code) by the holders thereof.
Further, although their treatment is not free from doubt,
the Company has treated each series of Debt Securities as indebtedness
for federal income tax purposes, and the balance of this discussion is
based on the assumption that such treatment will be respected. Were
any series of the Debt Securities deemed to be equity for federal
income tax purposes, such series likely would be treated in a manner
analogous to the Senior Preferred Stock (although the Service might
assert that a holder would not be allowed a dividends-received
deduction), and the Company would not be allowed a deduction for
federal income tax purposes for interest expense in respect of such
series. Moreover, although all of the Debt Securities were issued
simultaneously in connection with the same transaction, the Company
has treated each such series as a separate series of debt instruments,
rather than treat the Debt Securities as a single class of debt
instruments, for purposes of the calculation and accrual of original
issue discount; such treatment was based on the fact that each series
of Debt Securities originally was issued in exchange for a separate
series of debt securities held to a significant extent by different
holders.
The Service published two successive sets of proposed
Treasury Regulations under the original issue discount provisions of
the Code, one in 1986 and the other in 1992, and published final
regulations (the "Final Regulations") in February 1994. The Final
Regulations are effective for debt instruments issued on or after
April 4, 1994; accordingly, by their terms they do not apply to the
Debt Securities. Further, prior to issuance in temporary or final
form, proposed regulations have no binding
effect and may be withdrawn or revised at any time on a retroactive
basis. Proposed regulations are, however, indicative of the initial
position of the Service at the time of their issuance with regard to
their subject matter and the 1986 proposed regulations,
notwithstanding their withdrawal, provide authority for avoiding
certain penalties imposed by the Code for debt instruments, such as
the Debt Securities, which were issued before the date of their
withdrawal. The following discussion of the Debt Securities is based
in part upon the principles contained in the foregoing proposed
regulations and the Final Regulations. No assurance can be given,
however, that the treatment described below of the Debt Securities
will be accepted by the Service.
Because the Selling Securityholders acquired the Debt
Securities and the Senior Preferred Stock for their own account and
not as agents of the Company, the sale of the Debt Securities and
Senior Preferred Stock should be treated as a resale thereof, and not
as a continuation of their original issuance. Accordingly, no
additional "original issue discount" (within the meaning of Section
1273 of the Code) or "redemption premium" (within the meaning of
Section 305 of the Code), respectively, should be created as a result
of any purchase of the Debt Securities or Senior Preferred Stock
registered hereunder from the Selling Securityholders at a price which
is less than their issue price. See the discussions below under the
captions "Federal Income Tax Consequences Associated with the Debt
Securities -- Interest and Original Issue Discount -- In General,"
"Federal Income Tax Consequences Associated with the Debt Securities -
- Market Discount" and "Federal Income Tax Consequences of Ownership
and Disposition of Class A Common Stock and Senior Preferred Stock --
Redemption Premium."
FEDERAL INCOME TAX CONSEQUENCES ASSOCIATED WITH THE DEBT SECURITIES
Interest and Original Issue Discount -- In General
As discussed below, the Company has treated the Subordinated
Notes, the Discount Notes and the Debentures as having been issued
with original issue discount. The amount of original issue discount
on a Debt Security will equal the excess, if any, of (i) its "stated
redemption price at maturity" over (ii) its "issue price," provided
such excess is not less than a statutorily-defined de minimis amount
(i.e., the product of (i) 0.25% of the stated redemption price at
maturity of such Debt Security and (ii) the number of complete years
to maturity of such Debt Security).
Stated Redemption Price at Maturity
Under the 1986 proposed regulations, the "stated redemption
price at maturity" of a Debt Security includes all payments to be made
in respect of such Debt Security other than "qualified periodic
interest payments" (i.e., payments of interest which are actually and
unconditionally payable at fixed, periodic intervals of one year or
less at a single fixed rate of interest, or a variable rate tied to a
single objective index of market interest rates, applied to the
outstanding principal amount of the debt during the entire term of the
debt instrument).
A portion of the stated interest on the Subordinated Notes
and the Discount Notes accrues without being paid in cash. The
portion of the interest on the Subordinated Notes paid currently in
cash should constitute "qualified periodic interest payments" under
the 1986 proposed regulations. Accordingly, the stated redemption
price at maturity of a Subordinated Note should equal the sum of (i)
its stated principal amount and (ii) all interest payments that may be
made thereon other than the currently paid cash interest. Because
interest on the Discount Notes accrued without being paid for the
period before May 31, 1992, the stated redemption price at maturity of
a Discount Note should equal the sum of all cash payments required to
be made on such Discount Note, whether denominated as interest or
principal.
Issue Price
The Company has taken the position that neither the Old Debt
Securities nor the Debt Securities were traded on an established
securities market at the time of the issuance of the Debt Securities.
Based on such position, and because all the Debt Securities other than
the Debentures bore an interest rate at least equal to the applicable
federal rate then in effect, the Company has treated the Subordinated
Notes and Discount Notes as having an issue price equal to their
respective stated principal amounts, and the Debentures as having an
issue price equal to their imputed principal amount, which is less
than their stated principal amount. (If any series of the Old Debt
Securities or of the Debt Securities received in exchange therefor
were traded on an established securities market at the time of
issuance, the issue price of such series of the Debt Securities would
be their fair market value thereof on the date of issuance.)
Inclusion of Interest and Original Issue Discount in Income
Pursuant to Section 1272 of the Code, the holder of a debt
obligation issued with original issue discount must include in gross
income for federal income tax purposes the amount of
original issue discount using the constant interest method and the
debt instrument's yield to maturity, subject to adjustments for any
acquisition premium as discussed below.
As discussed above, the Discount Notes, the Subordinated
Notes and the Debentures were issued with original issue discount.
Accordingly, a holder must include such original issue discount in
gross income for federal income tax purposes in the manner described
above in advance of the receipt of cash in respect of such income. In
addition to original issue discount, a holder of a Subordinated Note
or a Debenture will be required to include in its gross income for
federal income tax purposes in accordance with the holder's method of
tax accounting those cash interest payments which constitute qualified
periodic interest payments on such Subordinated Note or Debenture.
The Company has taken the position that none of the
mandatory, optional or contingent redemption provisions applicable to
the Debt Securities affect the calculation of original issue discount
on the Debt Securities. There can be no assurance, however, that the
Service will not take a contrary position. Were the Service to do so
(e.g., by asserting, contrary to the rule in the Final Regulations,
that the mandatory redemption provisions cause the Debt Securities to
be regarded as maturing serially), a holder would be required to
include in income greater amounts of original issue discount in the
earlier years and smaller amounts in later years than described above.
The optional redemption provisions likewise may affect the
calculation of the yield to maturity on the Discount Notes and the
Subordinated Notes. Under the 1986 proposed regulations, an issuer
was presumed to exercise a call option in respect of a debt obligation
if the "testing amount" of such debt obligation on the date of
issuance, assuming that the call option were exercised, was less than
the testing amount of such debt obligation assuming that the call
option were not exercised. The testing amount for a debt obligation
is the sum of the present values of all payments (including interest)
due under the debt obligation, discounted at the appropriate
applicable federal rate. (A similar rule is provided by the Final
Regulations).
The testing amount of the Discount Notes and the
Subordinated Notes on the date of issuance, assuming the call options
were exercised, was less than the testing amount assuming that the
call options were not exercised. Accordingly, under a literal
application of the 1986 proposed regulations, the Company would be
deemed to have exercised its options to redeem the Discount Notes and
the Subordinated Notes on the first date on which such options could
be exercised. Because, however, exercising such options would require
the Company to pay call
premiums and, were the options not exercised, the interest rates on
the Discount and Subordinated Notes would not increase, the Company
has taken the position that the call options should not be treated as
so exercised and, accordingly, that the optional redemption provisions
of the Discount Notes and the Subordinated Notes will have no effect
on the computation of the amount or accrual of original issue
discount. The Service, however, may assert that a literal application
of the rules set forth in the 1986 proposed regulations and the Final
Regulations is required for such purposes. Were such view to prevail,
the maturity dates of the Discount Notes and the Subordinated Notes
would be the dates of the deemed exercises of the call options and
their stated redemption prices would be the deemed call prices
(including the call premium). In such case, original issue discount
would accrue more quickly and, to the extent of the call premium, in a
greater amount than otherwise would be the case. Further, were the
call options in fact never exercised, the Company would be deemed to
have issued new debt obligations on the dates of the deemed exercise
for an amount of cash equal to the deemed call prices, which deemed
new debt obligations would mature at the stated maturity dates of the
Discount Notes and the Subordinated Notes and probably would be deemed
issued with bond premium.
Further, although the 1986 proposed regulations do not
expressly address the computation of original issue discount in the
case of debt instruments issued subject to contingent redemption
provisions (such as the obligation of the Company, under certain
instances, to offer to purchase a certain percentage of Debt
Securities prior to maturity), such provisions also could be viewed as
affecting the computation of the yield to maturity on each of the Debt
Securities. If so viewed, the amount of original issue discount which
must be included in income might be accelerated. Under the Final
Regulations, however, such provisions would not have such effect. Any
actual redemption under these provisions also would not affect the
calculation of original issue discount. See "--Sale or Redemption."
Acquisition Premium
The amount of original issue discount required to be
included in gross income by a holder that acquired a Debt Security
other than upon its original issuance would be reduced under the
"acquisition premium" rules if such holder's purchase price of the
Debt Security exceeds the "adjusted issue price" of the Debt Security
but does not exceed the stated redemption price at maturity of the
Debt Security (reduced by the amount of any payment made on the Debt
Security prior to the date of purchase, other than a payment of
qualified periodic interest). The
"adjusted issue price" of a debt obligation generally equals the sum
of its issue price and the total amount of original issue discount
includible in the gross income of all holders (without regard to any
reduction in such income resulting from any prior purchase at a price
higher than the original issue price plus previously accrued original
issue discount) and, as clarified in the Final Regulations, less any
cash payments in respect of such debt obligation other than payments
of qualified periodic interest. Under the 1986 proposed regulations,
but not under the Final Regulations, a donee or other holder whose
basis in a Debt Security is determined by reference to the basis in
the hands of the person from whom the Debt Security was acquired would
not be considered to have acquired the Debt Security by purchase for
purposes of this rule.
The amount of the reduction in original issue discount would
be equal to the amount of the daily portion of original issue discount
multiplied by a fraction, the numerator of which is the amount of
acquisition premium on the date of purchase and the denominator of
which is the excess of the stated redemption price at maturity of the
Debt Security (reduced by the amount of any payment made on the Debt
Security prior to the date of purchase, other than a payment of
qualified periodic interest) over the adjusted issue price on the date
of purchase. If the subsequent holder acquired the Debt Security for
a price lower than the adjusted issue price, such holder's original
issue discount would not exceed that of the original holder. See,
however, the discussion below under the caption "Market Discount."
Tax Basis
Generally, a holder's tax basis in a Debt Security will be
increased by the amount of original issue discount and of any market
discount (if the election discussed below has been made) that is
included in such holder's income through the day preceding the day of
disposition and will be decreased by the amount of any cash payments
received, other than payments of qualified periodic interest, and the
amount, if any, of amortizable bond premium allowable to such holders
as deductions (if the election discussed below has been made).
Information Reporting
The Company will furnish annually to the Service and to
record holders of Debt Securities (to whom it is required to furnish
such information) information relating to the original issue discount
accruing during the calendar year. Holders will be required to
determine for themselves whether, by reason of the acquisition premium
rules described above, they are eligible to
report a reduced amount of original issue discount for federal income
tax purposes.
Sales or Redemption
Unless otherwise governed by a nonrecognition provision, the
sale, exchange, redemption (including pursuant to an offer by the
Company) or other disposition of a Debt Security generally will be a
taxable event for federal income tax purposes. A holder generally
will recognize gain or loss for federal income tax purposes equal to
the difference between (i) the amount of cash plus the fair market
value of any property received upon such sale, exchange, redemption or
other taxable disposition of a Debt Security (other than in respect of
accrued and unpaid qualified periodic interest thereon) and (ii) the
holder's adjusted tax basis in such Debt Security (other than any tax
basis attributable to accrued and unpaid qualified periodic interest).
Provided that no intention to call prior to maturity existed at the
time of original issue of a Debt Security, and subject to the
discussion below under the caption "Market Discount", such gain or
loss will be long-term capital gain or loss if the Debt Security has
then been held by the holder for more than one year.
The provisions requiring the Company to offer to purchase
Debt Securities upon certain contingent events could be considered
evidence of an intention at the time of their original issue to call
the Debt Securities before maturity. Further, although the Company is
not obligated to call the Debt Securities before maturity, the
requirement that the Company redeem a portion of the Debt Securities
under the mandatory redemption provision could be considered evidence
of such intention. Finally, the provision allowing the Company to
redeem the Debt Securities prior to maturity also could be considered
evidence of an intention at the time of the original issue to call the
Debt Securities before maturity. Although in the 1986 proposed
regulations the Treasury Department expressly reserved issuing regula-
tions concerning the existence of an "intention to call before
maturity," the Final Regulations provide that such provisions will not
be considered evidence of an intention to call before maturity. Other
than what might be imputed from the contingent redemption provisions,
the optional call provisions and the mandatory redemption provisions,
none of which has been viewed as an intention to call in the Final
Regulations, the Company has not had (and continues not to have) any
present intention to call the Debt Securities before their maturity.
If an intention to call prior to maturity were found to have
existed at the time of the original issue of any Debt Security, any
gain on the sale, exchange, redemption or other
taxable disposition of such Debt Security would be considered ordinary
income to the extent that the entire amount of original issue discount
(which might, in that instance, include any call premium) with respect
to the Debt Security exceeded the amount of original issue discount
previously includible in the income of all holders of such Debt
Security. For this purpose, the original issue discount includible in
the income of all holders of the Debt Security would be determined
without regard to any reduction thereof by reason of the purchase rule
discussed above under the caption "Acquisition Premium."
Market Discount
"Market discount" is defined generally as the excess (if
any) of (i) in the case of a debt obligation, such as the Debt
Securities, issued with original issue discount, its "adjusted issue
price," as defined above, over (ii) the tax basis of the debt
obligation in the hands of the holder immediately after its
acquisition. Gain recognized on the disposition of a Debt Security
that has accrued market discount will be treated as ordinary income,
and not capital gain, to the extent of the accrued market discount,
provided the amount of market discount thereon exceeds a statutorily-
defined de minimis amount.
Under the de minimis exception, there would be no market
discount if the excess of the adjusted issue price of the obligation
over the holder's tax basis in the obligation is less than 0.25% of
the adjusted issue price multiplied by the number of complete years
after the acquisition date to the obligation's date of maturity.
Unless the holder elects otherwise, the accrued market discount
generally would be the amount calculated by multiplying the market
discount by a fraction, the numerator of which is the number of days
the Debt Security has been held by the taxpayer and the denominator of
which is the number of days after the holder's acquisition of the Debt
Security up to and including its maturity date.
If a holder of a Debt Security acquired at market discount
disposes of such Debt Security in any transaction other than a sale,
exchange or involuntary conversion, such holder nevertheless generally
will be deemed to have realized an amount equal to the fair market
value of the Debt Security and will be required to recognize as
ordinary income any accrued market discount. See the discussion under
the caption "Sale or Redemption" above for a description of the
consequences of a sale, exchange or involuntary conversion. Partial
principal payments (if any) on a Debt Security also will be includible
as ordinary income upon receipt to the extent of any accrued market
discount thereon. A holder of a Debt Security acquired at market
discount additionally may be required to defer the deduction of
all or a portion of the interest on any indebtedness incurred or
maintained to purchase or carry the Debt Security until it is disposed
of in a taxable transaction.
A holder of a Debt Security acquired at a market discount
may elect to include the market discount in income as it accrues.
This election would apply to all market discount obligations acquired
on or after the first day of the first taxable year to which the
election applies and may be revoked only with the consent of the
Service. If a holder of a Debt Security elects to include market
discount in income currently in accordance with the preceding
sentences, the above-discussed rules with respect to ordinary income
recognition resulting from sale and certain other disposition
transactions and to deferral of interest deductions would not apply.
Bond Premium
If a subsequent holder's initial tax basis in a Debt
Security exceeds the "amount payable on maturity" (such excess being
the "bond premium"), the holder may elect, under Section 171 of the
Code, to amortize the bond premium over the period from its
acquisition date to the maturity date of such Debt Security. If a
holder purchases a Debt Security at a price greater than its adjusted
issue price but less than or equal to its stated redemption price at
maturity (reduced by certain payments as discussed above under the
caption "Acquisition Premium"), the acquisition premium rules
(discussed above), and not the bond premium rules, should apply to
such purchase.
Except as may otherwise be provided in any Treasury
Regulations ultimately promulgated, amortizable bond premium may be
offset against interest realized in respect of the taxable year of the
holder in an amount that is based upon the holder's yield to maturity
determined by using the holder's basis in the Debt Security and
compounding at the close of each "accrual period" within the meaning
of Section 1272(a)(5) of the Code. The "amount payable on maturity"
is determined as of an earlier call date, using the call price payable
at the call date, rather than the maturity date, if the amount payable
at such date results in smaller bond premium than the amount payable
at the maturity date. If an earlier call date is used and the debt
instrument is not called, such debt instrument will be treated as
having matured on such call date for the amount so payable and then as
having been reissued on such date for such amount.
A holder who elects to amortize bond premium must reduce its
adjusted basis in the Debt Security by the amount of such allowable
amortization. An election to amortize bond premium would apply to
amortizable bond premium on all taxable
bonds held at or acquired after the beginning of the holder's taxable
year as to which the election is made, and may be revoked only with
the consent of the Service.
FEDERAL INCOME TAX CONSEQUENCES OF OWNERSHIP AND DISPOSITION OF CLASS
A COMMON STOCK AND SENIOR PREFERRED STOCK
Distributions -- In General
The amount of a distribution (if any) by the Company in
respect of the Class A Common Stock or Senior Preferred Stock
ordinarily would be equal to the amount of cash and the fair market
value as of the date of distribution of any property distributed,
except to the extent of possible alternative treatment under Section
305 of the Code of distributions paid in shares of Senior Preferred
Stock. Subject to the discussion below under the caption
"Redemption," distributions generally will be treated for federal
income tax purposes first as a dividend to the extent the Company has
current or accumulated earnings and profits (as determined for federal
income tax purposes), and then as a tax-free return of capital which
reduces the holder's tax basis in the Class A Common Stock or Senior
Preferred Stock (to the extent thereof), with any excess treated as
gain from the sale or exchange of such stock.
Dividends to Corporate Stockholders
In general, a distribution to a corporate stockholder which
is treated as a dividend will qualify for the 70% dividends-received
deduction that is available to corporate stockholders that own less
than 20% of the voting power or value of the outstanding stock of the
distributing corporation (other than certain non-voting, non-
convertible, non-participating preferred stock). (A corporate stock-
holder holding 20% or more of the voting power and value of the
outstanding stock of the distributing corporation (other than certain
non-voting, nonconvertible, non-participating preferred stock) may be
eligible for an 80% dividends-received deduction.) No assurance can
be given that the Company will have sufficient earnings and profits
(as determined for federal income tax purposes) to cause distributions
to be eligible for a dividends-received deduction. Additionally, the
availability of the dividends-received deduction is subject to certain
holding period and taxable income requirements imposed by the Code.
Furthermore, to the extent that a corporation incurs indebtedness that
is directly attributable to an investment in the stock on which the
dividend is paid, all or a portion of the dividends-received deduction
may be disallowed. In addition, dividend income that is not subject
to regular federal income tax as a consequence of the dividends-
received deduction may be subject to the federal alternative minimum
tax.
Under Section 1059 of the Code, the tax basis of stock that
has been held by a corporate stockholder for two years or less (ending
on the earliest of the date on which the issuer declares, announces or
agrees to the payment of the dividend) is reduced (but not below zero)
by the non-taxed portion of any "extraordinary dividend" received with
respect to such stock (generally, the dividends-received deduction
portion of an "extraordinary dividend"). To the extent a corporate
holder's tax basis would have been reduced below zero but for the
foregoing limitation, such holder must increase the amount of gain
recognized on the ultimate sale or exchange of such stock for the
taxable year in which such sale or exchange occurs. Generally, an
"extraordinary dividend" is a dividend that (i) equals or exceeds 10%
of the holder's adjusted basis in common stock (or, with respect to
preferred stock, 5% of the holder's adjusted basis therein) (treating
all dividends having ex-dividend dates within an 85-day period as a
single dividend) or (ii) exceeds 20% of the holder's adjusted basis in
the stock (treating all dividends having ex-dividend dates within a
365-day period as a single dividend). If an election is made by the
holder, under certain circumstances the fair market value of the stock
as of the day before the ex-dividend date may be substituted for the
holder's basis in applying these tests.
Sale or Exchange
Upon a sale or exchange of Class A Common Stock or Senior
Preferred Stock, a holder generally will recognize gain or loss for
federal income tax purposes in an amount equal to the difference
between (i) the amount of cash plus the fair market value of any
property received upon such sale or exchange and (ii) the holder's
adjusted tax basis in the stock being sold. Such gain or loss will be
long-term capital gain or loss if the stock then has been held by the
holder for more than one year.
Redemption
In general, a redemption of Class A Common Stock or Senior
Preferred Stock for cash will be a taxable transaction. The federal
income tax treatment of a redemption to a stockholder depends on the
particular facts relating to such holder at the time of redemption.
Under Section 302 of the Code, if the redemption (i) is "not
essentially equivalent to a dividend" with respect to a holder, (ii)
results in a "substantially disproportionate" redemption, or (iii)
results in a "complete termination" of all of such holder's equity
interest in the corporation, then the receipt of cash or other
property by such
holder will be treated as an exchange of its stock on which gain or
loss will be recognized and taxed in substantially the same manner as
the sale or exchange of such stock (as discussed in the preceding
paragraph). In applying those tests, certain attribution and option
rules apply to determine stock ownership.
If none of the tests under Section 302 of the Code giving
rise to exchange treatment is satisfied in respect of a redemption of
Class A Common Stock or Senior Preferred Stock, the holder will be
treated as having received a taxable distribution with respect to its
stock. Such distribution will be taxable first as a dividend, in an
amount that generally will be equal to the amount of cash and the fair
market value of the property received in the redemption, to the extent
of the holder's allocable share of the Company's then-current and
accumulated earnings and profits, and then as a tax-free return of
capital which reduces the holder's basis in such stock, with any
excess treated as gain from the sale or exchange of such stock. If
such distribution is taxable as a dividend to a corporate stockholder,
it will be subject to the "extraordinary dividend" provisions of the
Code discussed above under the caption "Dividends to Corporate
Stockholders" and, if such a redemption is non pro-rata or is in
partial liquidation of the Company, the "extraordinary dividend"
provisions will apply irrespective of whether the holder held the
stock for more than two years.
Redemption Premium
Under Section 305 of the Code and Treasury Regulations
authorized thereunder, to the extent that the redemption price of
preferred stock exceeds its issue price (i.e., its fair market value
----
at its date of issue) by an amount which is greater than a reasonable
redemption premium (determined under the statutorily-defined de
minimis exception to the original issue discount rules discussed
above), the holder is deemed to receive such excess amount as
distributions on the preferred stock. Such constructive distributions
are treated as dividends to the extent of current and accumulated
earnings and profits of the issuing corporation (as determined for
federal income tax purposes) in accordance with the discussion above
and would be includible in the income of the holder in a manner
similar to original issue discount (as discussed above). The Company
has taken the position that the Senior Preferred Stock, as well as the
additional shares of Senior Preferred Stock distributed in respect
thereof (if treated as part of a single instrument with the Senior
Preferred Stock in respect of which they were issued), were issued
with a redemption premium for purposes of Section 305 of the Code.
TAX WITHHOLDING
Under the Code, a holder of Debt Securities, Class A Common
Stock or Senior Preferred Stock may be subject, under certain
circumstances, to "backup withholding" at a 31% rate with respect to
cash payments in respect of original issue discount, interest or
dividends thereon or the gross proceeds thereof. This withholding
generally applies only if the holder (i) fails to furnish its social
security or other taxpayer identification number ("TIN") within a
reasonable time after the request therefor, (ii) furnishes an
incorrect TIN, (iii) fails to report properly interest or dividends,
or (iv) fails, under certain circumstances, to provide a certified
statement, signed under penalty of perjury, that the TIN provided is
its correct number and that it is not subject to backup withholding.
Any amount withheld from a payment to a holder under the backup
withholding rules is allowable as a credit against such holder's
federal income tax liability, provided that the required information
is furnished to the Service. Corporations and certain other entities
described in the Code and Treasury Regulations are exempt from such
withholding if their exempt status is properly established. Holders
of Debt Securities, Class A Common Stock and Senior Preferred Stock
should consult their tax advisors as to their qualification for
exemption from withholding and the procedure for obtaining such an
exemption.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY
The Company believes that the consummation of the Plan of
Reorganization resulted in an "ownership change" within the meaning of
Section 382 of the Code. In general, following an ownership change,
the use of a corporation's net operating losses ("NOLs"), NOL
carryforwards, net unrealized built-in losses (if any) and certain
other favorable tax attributes (collectively, "losses") is limited, in
general, to an annual amount (the "section 382 limitation") equal to
the product of the then-applicable long-term tax-exempt rate
(prescribed monthly by the Service) and the value of the loss
corporation's outstanding stock immediately before the ownership
change (excluding certain capital contributions). The Company has
taken the position, however, that the Title 11 exception to the
section 382 limitation applies to its ownership change, and, if such
position is respected, the Company would not be subject to the section
382 limitation on the use of its losses arising before such ownership
change. Were a second ownership change to have occurred within two
years of the effective date of the Plan of Reorganization, the section
382 limitation in respect of losses arising before the date of such
change would be zero. The Company has taken the position that a
second ownership change did not occur during such two-year period.
There can be no assurance, however, that the
Service will agree with the Company's positions. For a discussion of
the federal income tax consequences of the Automotive Asset Sale, see
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS -- Inflation and Tax Matters."
If an ownership change occurs after the expiration of the
two years following the effective date of the Plan of Reorganization,
the use by the Company of pre-change losses following the date of such
ownership change will be subject to the section 382 limitation
described above, determined at the time of such ownership change.
Whether another ownership change will occur by reason of sales of
Senior Preferred Stock and Common Stock will depend on a number of
factors, including the percentage of stock owned by the seller and the
purchaser and the occurrence of transactions beyond the control of the
Company. Accordingly, the Company is unable to determine whether an
ownership change will occur by reason of such future sales. Were an
ownership change to occur, the amount of the limitation on the use by
the Company of losses arising before such change would depend on,
among other things, the value of the stock of the Company at the time
of the ownership change. The occurrence of such an ownership change
may severely limit the utilization by the Company of its pre-change
losses.
THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL
INFORMATION ONLY. ACCORDINGLY, EACH HOLDER OF DEBT SECURITIES, CLASS
A COMMON STOCK, AND SENIOR PREFERRED STOCK SHOULD CONSULT WITH ITS OWN
TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER
ASSOCIATED WITH THE OWNERSHIP AND DISPOSITION OF THE DEBT SECURITIES,
THE CLASS A COMMON STOCK AND THE SENIOR PREFERRED STOCK, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND OTHER
TAX LAWS.
SELLING SECURITYHOLDERS
The following tables provide certain information with
respect to the Securities held by each Selling Securityholder as of
March 1, 1995. Except as otherwise noted elsewhere in this
Prospectus, none of the Selling Securityholders has held any position,
office, or other material relationship with the Company or any of its
predecessors or affiliates within the past three years other than as a
result of the ownership of the Securities. The Securities registered
under the Registration Statement of which this Prospectus is a part
may be offered from time to time by the Selling Securityholders named
below:
THE DISCOUNT NOTES
PRINCIPAL
AMOUNT
OWNED AND
REGISTERED
SELLING SECURITYHOLDER HEREUNDER
---------------------- -----------
Dean Witter High Yield Fund $ 14,669,000
Northeast Investors Trust 14,592,000
Franklin Resources/Custodian Income Fund 8,390,000
First National Bank of Chicago* 8,390,000
Allstate Insurance 8,000,000
High Income Advantage Trust II 7,313,000
High Income Advantage Trust 5,034,000
TCW Asset Management (corporate pension account) 4,195,000
Franklin Resources/Income Securities Fund 4,195,000
Bank of New York* 4,194,000
High Income Fund 3,356,000
Dean Witter Mutual Fund 3,034,000
Universal Trust Fund 2,567,000
High Income Shares, Inc. 2,517,000
First Boston Income Fund 1,049,000
Franklin Resources/Multi Income Trust 957,000
Everest Capital 839,000
<FN>
- --------------------------
* Shown is the custodian of such shares. It is not known if all shares
are held for one beneficial owner, as the custodian has not provided
ownership information.
PRINCIPAL
AMOUNT
OWNED AND
REGISTERED
SELLING SECURITYHOLDER HEREUNDER
---------------------- -----------
PNC Bank/Trust Account 839,000
Allstate Insurance 810,000
Bank of New York* 419,000
Amir Development Pension Plan 168,000
Lewco Securities High Yield Trading #1 99,810
Adelson, Andrew 84,000
Alifia Limited 84,000
Bainbridge Partners 84,000
Pattiz, Norman 84,000
Moore, Tallulah 71,000
Alesia, Frank 52,000
Kirk, Joseph (IRA) 52,000
Miller, Fred (IRA) 50,000
Davies, John 49,000
King, Leslie (IRA) 48,000
Adelson, Andrew 45,000
Carosella, Joseph 42,000
Grodin, Charles (IRA) 42,000
Florea, Alan 38,000
Mazirow, Arthur 35,000
Burbank Airport Industrial Center 34,000
Bessell, Ted 30,000
Feuerstein, Howard 30,000
Mangels, Robert 28,000
Phillips, Joseph 26,000
Lambert, Dennis 25,000
McCabe, Judy 25,000
Struthers, Sally (IRA) 25,000
<FN>
- ---------------------------
* Shown is the custodian of such shares. It is not known if all shares
are held for one beneficial owner, as the custodian has not provided
ownership information.
PRINCIPAL
AMOUNT
OWNED AND
REGISTERED
SELLING SECURITYHOLDER HEREUNDER
---------------------- -----------
Kelly, John (IRA) 24,000
DeCarlo, Joe 22,000
Knee, Howard 21,000
Sheldon Family Trust 21,000
Transworld Bank 21,000
Waddell & Reed Mutual Fund 21,000
Harris, Hida (IRA) 20,000
Johnson, Edith 20,000
Siegal, Jacob 13,000
THE SUBORDINATED NOTES
PRINCIPAL
AMOUNT
OWNED AND
REGISTERED
SELLING SECURITYHOLDER HEREUNDER
---------------------- ----------
Franklin Income Fund $ 25,141,000
Franklin High Income Fund 10,056,000
Northeast Investors Trust 6,143,000
Citibank* 5,000,000
Allstate Insurance 5,000,000
Franklin Income Securities Fund 3,981,000
Eaton Vance Income Fund 3,596,000
Grace Brothers LTD 2,514,000
Chase Manhattan Bank* 2,017,000
Bear Stearns Securities Corp.* 1,250,000
CBG Partners L.P. 1,000,000
Mellon Bank Corporation 670,000
Prudential High Yield 484,000
Smith Barney Mutual Funds 419,000
First Union Bank* 419,000
Mellon Bank* 168,000
Andrews, Coleman T. 101,000
Sims, Donald S. 100,000
Safeco High Yield Bond Fund 84,000
Fields, Ralph 76,000
TFI Retail Sales 50,000
Vocon Account 42,000
Jespersen, Carl 38,000
Bell, Thomas 29,000
Habib, Edmund 26,000
Loel Hein Profit Sharing Trust 25,000
Hein, Joel DDS Pension Plan 25,000
Wolfe, Frederick 23,000
<FN>
- ---------------------------
* Shown is the custodian of such shares. It is not known if all shares
are held for one beneficial owner, as the custodian has not provided
ownership information.
PRINCIPAL
AMOUNT
OWNED AND
REGISTERED
SELLING SECURITYHOLDER HEREUNDER
---------------------- ----------
Naflulin, Donald 22,000
Fields, Patricia 19,000
Santaniello, Felix 11,000
Santaniello Carmel 10,000
Foreign Correspondent Bank 8,000
Anthony, Harriel 3,000
THE DEBENTURES
PRINCIPAL
AMOUNT
OWNED AND
REGISTERED
SELLING SECURITYHOLDER HEREUNDER
---------------------- ----------
Franklin Resources/Custodian Income Fund $ 30,000,000
Franklin Resources/Income Securities Fund 5,000,000
Lewco Securities Corporation* 3,000,000
Security Mutual Life Insurance Company 2,000,000
WSGP International Diversified Funding Plan 2,000,000
Romulus Holdings Inc. 1,500,000
TransAmerica Investment Services 1,200,000
Bank of America 1,000,000
Prudential Insurance Co. of America 1,000,000
Paresco, Inc. Pension Fund 1,000,000
General American Life Insurance (investment account) 500,000
Prudential High Yield 500,000
Tobey, William 300,000
Romulus Holdings Corporation 200,000
DLJ* 150,000
Elsie, George 125,000
Sims, Donald 100,000
Stoddart, Nancy 100,000
Ratliff, William 100,000
Davidow, Diana 100,000
Davidow Foundation 100,000
Green, Bert 83,000
Drazich, Joseph 77,000
Glory Heart Corporation 75,000
Paine Webber* 70,000
Citibank* 50,000
Laden, Steven 50,000
<FN>
- ---------------------------
* Shown is the custodian of such shares. It is not known if all shares
are held for one beneficial owner, as the custodian has not provided
ownership information.
/TABLE
PRINCIPAL
AMOUNT
OWNED AND
REGISTERED
SELLING SECURITYHOLDER HEREUNDER
---------------------- ----------
John F. Kennedy High School 50,000
Skomaroske, Jo Ann 50,000
Bustad, Leo 45,000
Mohundro, Lavone 45,000
Phillips, Joseph 40,000
Kaminsky, Mario 40,000
Peterson, Ruth 36,000
Ellstrom, Kerstin 36,000
Nicholas, Michael 30,000
Peonio, Joseph 30,000
Wickham, Laura 30,000
Lionel Bell (IRA) 25,000
Bourdon, Melany 25,000
Davidow, Meredith 25,000
Drazich, Lynn 24,000
High Yield Trading #1 20,000
Joseph B. Garron (IRA) 20,000
John F. Kennedy Development Account #1 19,000
Marijke Vanbodengrave (IRA) 15,000
Peter Melillo 15,000
Ecology & Environment Inc. 15,000
Rosemarie McKelvey 12,000
Gelband, Scott 10,000
Harriet Anthony (Profit Sharing) 10,000
Charles A. Winans (IRA) 10,000
Ruwe Albin 10,000
Catherine Birks (IRA) 10,000
Tova Aminoff (IRA) 7,000
THE SENIOR PREFERRED STOCK
NUMBER OF
SHARES
OWNED AND
REGISTERED
SELLING SECURITYHOLDER HEREUNDER
---------------------- ----------
Lewco Securities Corporation* 76,099
Presidential Life Insurance 55,022
Citibank* 53,867
Executive Life Insurance Co. 49,211
Franklin Funds 49,211
State Street Research and Management Company* 48,885
Prudential Bache* 44,463
Bear Stearns Securities Corp.* 41,221
Lehman Brothers* 25,000
Bank of New York* 7,964
CSL Investments 2,610
Crescent Shared Opportunity Fund, L.P. 127
<FN>
- ---------------------------
* Shown is the custodian of such shares. With respect to Lewco
Securities Corporation and State Street Research and Management Company,
such custodians hold shares for more than one beneficial owner, but such
owners have not been identified. With respect to each other custodian
listed herein, it is not known if each such custodian holds shares for more
than one beneficial owner, as each such custodian has not provided
ownership information.
/TABLE
THE CLASS A COMMON STOCK
NUMBER OF
SHARES
OWNED AND
REGISTERED
SELLING SECURITYHOLDER HEREUNDER
---------------------- ----------
Executive Life Insurance Co. 73,605
Lutheran Brotherhood 70,180
Everest Capital Fund, L.P. 51,223
Northeast Investors Trust 48,877
Lewco Securities Corp.* 39,330
Dina Partners 17,000
Oppenheimer & Company 13,713
Loews Corporation - Tisch Family 13,200
Bear Stearns Securities Corp.* 12,051
Dean Witter High Yield Fund 12,000
Heeschen, Paul 8,004
Libra Wilshire Partners L.P. 6,000
J&W Seligman Mutual Fund 5,067
Security Mutual Life Insurance Company 5,066
Guaranty Reassurance Corporation 5,066
Greenstreet Partners 4,061
Welsh, Patrick 4,000
Fidelity Bankers Life Insurance Company 3,546
Bubrosky, Harrison 3,544
Green Family 2,406
Greenblatt, Joel 2,133
Strauss, Neil 2,060
Ginsberg, Gerald 2,000
Solomon, Robert 1,974
Gelber Investment Properties 1,650
H.S. Divine 1,633
H.S. Divine 1,626
<FN>
- --------------------------
* Shown is the custodian of such shares. It is not known if all shares
are held for one beneficial owner, as the custodian has not provided
ownership information.
/TABLE
NUMBER OF
SHARES
OWNED AND
REGISTERED
SELLING SECURITYHOLDER HEREUNDER
---------------------- ----------
Ross Trust 1,565
Marroni, Lisa J. 1,500
General American Life Insurance 1,267
ASK Company 1,200
CBG Partners L.P. 1,200
Morris Ostin 1,122
Karen Carpenter Testamentary Trust 1,122
Freedman Communications Inc. 1,114
Joseph Phillips (IRA) 1,009
Wells Fargo Index Fund 760
PLAN OF DISTRIBUTION
The Company will not receive any proceeds from the
Offering. The Securities may be sold from time to time to
purchasers directly by any of the Selling Securityholders.
Alternatively, any of the Selling Securityholders may from time
to time offer the Securities through underwriters, dealers or
agents who may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling
Securityholders and/or the purchasers of Securities for whom they
may act as agent. The Selling Securityholders and any such
underwriters, dealers or agents who participate in the
distribution of the Securities may be deemed to be underwriters,
and any profits on the sale of the Securities by them and any
discounts, commissions or concessions received by any such under-
writers, dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act. To the
extent Selling Securityholders may be deemed to be underwriters,
such Selling Securityholders may be subject to certain statutory
liabilities of the Securities Act, including, but not limited to,
Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under
the Exchange Act. At any time a particular offer of the
Securities is made, if required, a Prospectus Supplement will be
distributed that will set forth the aggregate amount of the
Securities being offered and the terms of the offering, including
the name or names of any underwriters, dealers or agents, any
discounts, commissions and other items constituting compensation
from the Selling Securityholders and any discounts, commissions
or concessions allowed or reallowed or paid to dealers. Under
guidelines adopted by the National Association of Securities
Dealers, Inc. ("NASD"), the maximum commission that any NASD
member firm can receive in connection with a distribution of the
Securities, without further approval from the NASD, is 8%. Such
Prospectus Supplement and, if necessary, a post-effective
amendment to the Registration Statement of which this Prospectus
is a part will be filed with the Commission to reflect the
disclosure of additional information with respect to the
distribution of the Securities.
The Securities may be sold from time to time in one or
more transactions at a fixed offering price, which may be
changed, or at varying prices determined at the time of sale or
at negotiated prices. Such prices will be determined by the
Selling Securityholders or by agreement between the Selling
Securityholders and underwriters or dealers. The Securities are
not, and it is not anticipated that they will be, listed on any
exchange or quoted on NASDAQ or any other quotation system.
The Selling Securityholders and any other person par-
ticipating in such distribution will be subject to applicable
provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation Rules 10b-2, 10b-3,
10b-6, 10b-7 and 10b-21(T), which provisions may limit the timing
of purchases and sales of any of the Securities by the Selling
Securityholders and any other such person. Furthermore, under
Rule 10b-6 under the Exchange Act, any person engaged in a
distribution of the Securities may not simultaneously engage in
market making activities with respect to the particular Securi-
ties being distributed for a period of nine business days prior
to the commencement of such distribution. All of the foregoing
may affect the marketability of the Securities and the ability of
any person or entity to engage in market-making activities with
respect to the Securities.
To the Company's knowledge, no firm presently intends
to make a market in the Securities. Prior to this offering,
there has been no public or secondary market for the Securities,
and there can be no assurance that an active public or secondary
market will develop for any of the Securities.
Pursuant to the Registration Rights Agreement, the
Company will pay substantially all of the expenses incident to
the registration, offering and sale of the Securities to the
public other than commissions, fees and discounts of
underwriters, dealers or agents. Under the Registration Rights
Agreement, the Selling Securityholders and any underwriter they
may utilize will be indemnified by the Company against certain
civil liabilities, including liabilities under the Securities
Act.
LEGAL MATTERS
Certain legal matters in connection with this offering
will be passed upon for the Company by Weil, Gotshal & Manges (a
partnership including professional corporations), 767 Fifth
Avenue, New York, New York 10153.
EXPERTS
The Consolidated Financial Statements for each of the
three years in the period ended October 29, 1994, included in
this Prospectus and the related financial statement schedule
included elsewhere in the Registration Statement have been
audited by Deloitte & Touche LLP, independent public accountants,
as stated in their report appearing herein, and have been so
included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
JPS TEXTILE GROUP, INC.
Page
----
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of October 30, 1993,
October 29, 1994 and January 28, 1995 (unaudited) . . . . . . . F-3
Consolidated Statements of Operations for the fifty-two weeks
ended October 31 1992, October 30, 1993 and October 29, 1994,
and the unaudited three months ended January 29, 1994 and
January 28, 1995 . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Senior Redeemable Preferred Stock and
Shareholders' Equity (Deficit) for the fifty-two weeks ended
October 31, 1992, October 30, 1993, October 29, 1994 and
the unaudited three months ended January 29, 1995 . . . . . . . F-6
Consolidated Statements of Cash Flows for the fifty-two weeks
ended October 31, 1992, October 30, 1993 and October 29, 1994
and the unaudited three months ended January 29, 1994 and
January 28, 1995 . . . . . . . . . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . F-8
F-1
INDEPENDENT AUDITORS' REPORT
JPS Textile Group, Inc.:
We have audited the accompanying consolidated balance sheets of
JPS Textile Group, Inc. and subsidiaries (the "Company") as of
October 30, 1993 and October 29, 1994, and the related
consolidated statements of operations, senior redeemable
preferred stock and shareholders' equity (deficit), and cash
flows for each of the three years in the period ended October 29,
1994. Our audits also included the financial statement schedule
listed in the index at page S-1. These financial statements and
financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company at October 30, 1993 and October 29, 1994, and the results
of its operations and its cash flows for each of the three years
in the period ended October 29, 1994 in conformity with generally
accepted accounting principles. Also, in our opinion, such
financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.
As discussed in Note 9 to the consolidated financial statements,
the Company changed its method of accounting for other
postretirement benefits, effective November 1, 1992, to conform
with Statement of Financial Accounting Standards ("SFAS") No. 106
and also changed its method of accounting for other
postemployment benefits, effective October 31, 1993, to conform
with SFAS No. 112.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
January 4, 1995
F-2
JPS TEXTILE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
October 30, October 29, January 28,
1993 1994 1995
----------- ----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 2,080 $ 2,873 $ 3,576
Accounts receivable, less allowance of
$5,759 in 1993, $6,223 in 1994 and
$6,082 in 1995 (Note 5) 104,834 102,804 92,902
Inventories (Notes 4 and 5) 73,628 74,966 77,897
Prepaid expenses and other 1,718 1,783 3,267
Net assets held for sale (Note 3) 114,981 - -
--------- --------- ---------
Total current assets 297,241 182,426 177,642
PROPERTY, PLANT AND EQUIPMENT,
net (Notes 4 and 5) 210,784 204,094 203,737
EXCESS OF COST OVER FAIR VALUE
OF NET ASSETS ACQUIRED, less
accumulated amortization of
$4,947 in 1993, $5,912 in 1994
and $6,154 in 1995 33,419 32,454 32,213
OTHER ASSETS (Notes 4, 8 and 9) 7,399 49,016 48,615
-------- --------- ---------
Total $548,843 $ 467,990 $ 462,207
======== ========= =========
F-3
October 30, October 29, January 28,
1993 1994 1995
---------- ---------- ----------
(Unaudited)
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 40,477 $ 41,013 $ 41,574
Accrued interest 16,258 12,448 5,328
Accrued salaries, benefits and
withholdings (Note 8) 13,784 15,271 13,953
Other accrued expenses
(Notes 4, 7, 8 and 10) 10,154 15,403 13,490
Current portion of long-term debt (Note 5) 9,003 2,347 2,875
-------- -------- --------
Total current liabilities 89,676 86,482 77,220
LONG-TERM DEBT (Note 5) 522,947 335,472 326,365
DEFERRED INCOME TAXES (Note 7) 2,585 3,565 4,865
OTHER LONG-TERM LIABILITIES
(Notes 4, 8 and 9) 23,731 20,481 19,945
-------- -------- --------
Total liabilities 638,939 446,000 428,395
-------- -------- --------
COMMITMENTS AND CONTINGENCIES
(Notes 3, 5, 7 and 8)
SENIOR REDEEMABLE PREFERRED STOCK,
redemption value of $45,567
in 1993, $48,374 in 1994
and $49,084 in 1995 (Note 6) 21,007 24,340 25,270
-------- -------- --------
SHAREHOLDERS' EQUITY (DEFICIT) (Note 6):
Junior preferred stock 250 250 250
Common stock:
Class A, 490,000 shares issued 5 5 5
Class B, 510,000 shares issued 5 5 5
Additional paid-in capital 36,777 33,444 32,514
Deficit (148,140) (36,054) (24,232)
-------- -------- --------
Total shareholders' equity (deficit) (111,103) (2,350) 8,542
-------- -------- --------
Total $548,843 $467,990 $462,207
======== ======== ========
See notes to consolidated financial statements.
F-4
JPS TEXTILE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
Year Ended Three Months Ended
---------------------------------- ------------------------
October 31, October 30, October 29, January 29, January 28,
1992 1993 1994 1994 1995
----------- ----------- ----------- ----------- ----------
(Unaudited)
Net sales $ 610,985 $ 597,753 $ 603,416 $ 134,066 $ 147,233
Cost of sales 514,321 510,994 516,875 116,244 126,278
---------- --------- ----------- --------- ----------
Gross profit 96,664 86,759 86,541 17,822 20,955
Selling, general and administrative expenses (Note 10) 59,472 60,937 62,448 15,371 15,894
---------- --------- ----------- --------- ----------
Income from operations 37,192 25,822 24,093 2,451 5,061
Interest expense (Note 5) 60,278 62,196 56,452 15,486 10,065
Other income (expense), net (2,100) (1,221) (2,962) 17 (394)
---------- --------- ----------- --------- ----------
Loss before income taxes, income from discontinued
operations, extraordinary loss and cumulative effects
of accounting changes (25,186) (37,595) (35,321) (13,018) (5,398)
Income taxes (Note 7) 1,446 1,782 2,800 282 300
---------- --------- ----------- --------- ----------
Loss before income from discontinued operations,
extraordinary loss and cumulative effects of
accounting changes (26,632) (39,377) (38,121) (13,300) (5,698)
Discontinued operations:
Income from discontinued operations, net of taxes 15,779 23,262 25,651 5,939 -
Gain on sale of discontinued operations,
net of taxes of $2,800 (Note 3) - - 132,966 - -
Extraordinary gain (loss) on early extinguishment of debt,
net of taxes (Note 5) - - (7,410) - 17,520
Cumulative effects of accounting changes,
net of taxes (Note 9) - (5,716) (1,000) (1,000) -
---------- --------- ----------- --------- ----------
Net income (loss) (10,853) (21,831) 112,086 (8,361) 11,822
Senior redeemable preferred stock in-kind
dividends and discount accretion (Note 6) (2,459) (2,863) (3,333) (809) (930)
---------- --------- ----------- --------- ----------
Income (loss) applicable to common stock $ (13,312) $ (24,694) $ 108,753 $ (9,170) $ 10,892
========== ========= =========== ========= ==========
Weighted average number of common shares
outstanding 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
========== ========= =========== ========= ==========
Earnings (loss) per common share:
Loss before income from discontinued operations,
extraordinary loss and cumulative effects of
accounting changes $ (29.09) $ (42.23) $ (41.46) $ (14.11) $ (6.63)
Discontinued operations, net of taxes:
Income from discontinued operations 15.78 23.26 25.65 5.94 -
Gain on sale of discontinued operations - - 132.97 - -
Extraordinary gain (loss) on early extinguishment of debt - - (7.41) - 17.52
Cumulative effects of accounting changes - (5.72) (1.00) (1.00) -
---------- --------- ----------- --------- ----------
Net income (loss) $ (13.31) $ (24.69) $ 108.75 $ (9.17) $ 10.89
========== ========= =========== ========= ==========
See notes to consolidated financial statements.
F-5
JPS TEXTILE GROUP, INC.
CONSOLIDATED STATEMENTS OF SENIOR REDEEMABLE PREFERRED STOCK
AND SHAREHOLDERS' EQUITY (DEFICIT)
(In Thousands)
Shareholders' Equity (Deficit)
--------------------------------------------------
Senior
Redeemable Junior Additional
Preferred Common Preferred Paid-In
Stock Stock Stock Capital Deficit
----------- ---------- ---------- ---------- ------------
Balance - November 2, 1991 $ 15,685 $10 $ 250 $ 42,099 $ (115,456)
Net loss for 52 weeks (10,853)
Preferred stock in-kind dividends
and discount accretion 2,459 (2,459)
-------- --- ------- -------- ------------
Balance - October 31, 1992 18,144 10 250 39,640 (126,309)
Net loss for 52 weeks (21,831)
Preferred stock in-kind dividends
and discount accretion 2,863 (2,863)
-------- --- ------- -------- ------------
Balance - October 30, 1993 21,007 10 250 36,777 (148,140)
Net income for 52 weeks 112,086
Preferred stock in-kind dividends
and discount accretion 3,333 (3,333)
-------- --- ------- -------- ------------
Balance - October 29, 1994 24,340 10 250 33,444 (36,054)
Net income for 13 weeks (unaudited) 11,822
Preferred stock in-kind dividends
and discount accretion (unaudited) 930 (930)
-------- --- ------- -------- ------------
Balance - January 28, 1995 (unaudited) $ 25,270 $10 $ 250 $ 32,514 $ (24,232)
======== === ======= ======== ============
See notes to consolidated financial statements.
F-6
JPS TEXTILE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Ended Three Months Ended
---------------------------------------- ---------------------------
October 31, October 30, October 29, January 29, January 28,
1992 1993 1994 1994 1995
------------ ---------- ------------ ------------ ------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (10,853) $ (21,831) $ 112,086 $ (8,361) $ 11,822
------------ ---------- ------------ ------------ ------------
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Income from discontinued operations (15,779) (23,262) (25,651) (5,939) -
Gain on sale of discontinued operations - - (132,966) - -
Extraordinary (gain) loss on early
extinguishment of debt - - 7,410 - (17,520)
Cumulative effects of accounting changes - 5,716 1,000 1,000 -
Depreciation and amortization, except
amounts included in interest expense 26,145 25,671 28,660 6,595 6,974
Interest accretion and debt issuance cost
amortization 18,805 12,208 11,450 2,922 2,422
Deferred income taxes 846 1,082 1,227 99 100
Other, net 1,259 2,701 (2,953) 1,389 (282)
Changes in assets and liabilities:
Accounts receivable (3,257) (3,389) 2,030 18,347 9,902
Inventories 942 (10,325) (1,338) (3,912) (2,931)
Prepaid expenses and other assets 624 (1,714) (1,220) (532) (907)
Accounts payable (5,660) 459 (1,084) (4,867) 561
Accrued expenses and other liabilities 4,766 (5,563) (2,987) (10,988) (9,822)
------------ ---------- ------------ ------------ ------------
Total adjustments 28,691 3,584 (116,422) 4,114 (11,503)
------------ ---------- ------------ ------------ ------------
Net cash provided by (used in)
operating activities 17,838 (18,247) (4,336) (4,247) 319
------------ ---------- ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions (21,063) (24,445) (22,025) (7,228) (6,375)
Receipts from discontinued operations, net 30,914 15,362 17,978 6,006 -
Proceeds from sale of discontinued
operations, net - - 259,044 - -
Purchase of long-term investments - - (39,500) - -
------------ ---------- ------------ ------------ ------------
Net cash provided by (used in)
investing activities 9,851 (9,083) 215,497 (1,222) (6,375)
------------ ---------- ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs incurred (735) (6,016) (2,943) (61) (25)
Proceeds from issuance of long-term debt 3,406 5,898 285 - 5,000
Revolving credit facility borrowings
(repayments), net (17,613) 30,463 (41,666) 7,194 44,048
Repayment of other long-term debt (11,901) (2,569) (166,044) (585) (42,264)
------------ ---------- ------------ ------------ ------------
Net cash provided by (used in)
financing activities (26,843) 27,776 (210,368) 6,548 6,759
------------ ---------- ------------ ------------ ------------
NET INCREASE IN CASH 846 446 793 1,079 703
Cash at beginning of year 788 1,634 2,080 2,080 2,873
------------ ---------- ------------ ------------ ------------
Cash at end of year $ 1,634 $ 2,080 $ 2,873 $ 3,159 $ 3,576
============ ========== ============ ============ ============
SUPPLEMENTAL CASH
FLOW INFORMATION FROM
CONTINUING OPERATIONS:
Interest paid $ 34,278 $ 50,649 $ 49,783 $ 20,435 $ 15,428
Income taxes paid 51 480 376 421 830
Reorganization items paid 1,636 162 - - -
Non-cash financing activities:
Senior redeemable preferred
stock dividends-in-kind 2,454 2,604 2,765 676 718
See notes to consolidated financial statements.
F-7
JPS TEXTILE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. BUSINESS AND BASIS OF PRESENTATION
JPS Textile Group, Inc. (the "Company") purchased from J.P.
Stevens & Co., Inc. ("J.P. Stevens") substantially all of
the property, plant and equipment, inventories, certain
other assets and the business of five former divisions of
J.P. Stevens (the "Predecessor Stevens Divisions") on May 9,
1988 (the "Acquisition"). The purchase was financed through
long-term borrowings and the sale of preferred and common
stock. The Company operates principally as a manufacturer
of apparel fabrics and products, industrial fabrics and
products and home fashion textiles.
A Plan of Reorganization (the "Plan") which was distributed
to the Company's bondholders and preferred stockholders (the
"Securityholders") on December 21, 1990, was approved by the
securityholders in early February 1991 and in accordance
with the Plan, the Company filed a voluntary petition for
reorganization under Chapter 11 of the United States
Bankruptcy Code. Subsequently, in March 1991, the
bankruptcy court confirmed the Plan and it became effective
April 2, 1991. The Plan provided for, among other things,
the cancellation of certain existing debt and preferred
stock securities in exchange for 490,000 shares of new Class
A common stock along with new debt instruments and new
preferred stock with lower interest and dividend rates.
Since the Company's reorganization did not meet the criteria
for "fresh-start" accounting, the primary adjustment to
historical carrying values as a result of the reorganization
was to state the new long-term debt and senior redeemable
preferred stock at present values of amounts to be paid
determined at appropriate current interest rates as of April
2, 1991, the effective date of the Plan. The resulting
present value discount is amortized as interest expense or
dividends over the life of the related debt or senior
redeemable preferred stock instrument using the interest
method.
As described in Note 3, on June 28, 1994, the Company sold
the businesses and assets of its wholly-owned subsidiary,
JPS Auto Inc., and its 80% owned joint venture and the
synthetic industrial fabrics division of JPS Converter &
Industrial Corp. (another of the Company's wholly-owned
subsidiaries).
F-8
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial
---------------------------
statements include JPS Textile Group, Inc. and its
subsidiaries, all of which are wholly owned. Significant
intercompany transactions and accounts have been eliminated.
Inventories - Inventories are stated at the lower of cost or
-----------
market. Cost, which includes labor, material and factory
overhead, is determined on the first-in, first-out basis.
Property, Plant and Equipment - Property, plant and
-----------------------------
equipment is recorded at cost and depreciation is recorded
using the straight-line method for financial reporting
purposes. The estimated useful lives used in the
computation of depreciation are as follows:
Land improvements 10 to 45 years
Buildings and improvements 25 to 45 years
Machinery and equipment 3 to 15 years
Furniture, fixtures and other 5 to 10 years
For tax reporting purposes, the Company uses the Modified
Accelerated Cost Recovery System to compute depreciation.
Excess of Cost Over Fair Value of Net Assets Acquired -
-----------------------------------------------------
Excess of cost over fair value of net assets acquired is
being amortized on a straight-line basis over a period of
forty years. Periodically, the Company evaluates the
realizability of the excess of cost over fair value of net
assets acquired based upon expectations of nondiscounted
cash flows.
Debt Issuance Costs - Costs incurred in securing and issuing
-------------------
long-term debt are deferred and amortized over the terms of
the related debt in amounts which approximate the interest
method of amortization.
Product Warranties - On certain of its products, the Company
------------------
provides a warranty against defects in materials and
workmanship under separately priced extended warranty
contracts generally for a period of ten years. Revenue from
such extended warranty contracts is deferred and recognized
as income on a straight-line basis over the contract period.
The cost of servicing such product warranties is charged to
expense as incurred.
Postretirement Benefits - Effective November 1, 1992, the
-----------------------
Company adopted Statement of Financial Accounting Standards
F-9
("SFAS") No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." SFAS No. 106 requires that
the projected future cost of providing postretirement
benefits, such as health care and life insurance, be
recognized as an expense as employees render service instead
of when claims are incurred, as had been the Company's
practice. See Note 9 for a further description of the
accounting for postretirement benefits.
Postemployment Benefits - Effective October 31, 1993, the
-----------------------
Company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." SFAS No. 112 requires that the
cost of benefits provided to former or inactive employees
after employment but before retirement be recognized on the
accrual basis of accounting instead of when paid, as had
been the Company's practice. See Note 9 for a further
description of the accounting for postemployment benefits.
Revenue Recognition - The Company recognizes revenue from
-------------------
product sales when it has shipped the goods or ownership has
been transferred to the customer for goods to be held for
future shipment at the customer's request.
Income Taxes - The Company accounts for income taxes using
------------
the principles of SFAS No. 109, "Accounting for Income
Taxes." Under SFAS No. 109, deferred taxes represent the
future income tax effect of temporary differences between
the book and tax bases of the Company's assets and
liabilities, assuming they will be realized and settled at
the amount reported in the Company's financial statements.
Earnings Per Share - Earnings per share is computed by
------------------
dividing earnings applicable to common stock (net income or
loss adjusted by senior redeemable preferred stock
dividends) by the weighted average number of shares of
common stock outstanding during the period.
Cash Flows - For purposes of reporting cash flows, cash
----------
includes cash on hand and in banks. The Company has no
investments that are deemed to be cash equivalents.
Interim Financial Information - The consolidated balance
-----------------------------
sheet as of January 28, 1995 and the consolidated statements
of operations and cash flows for the three months ended
January 29, 1994 and January 28, 1995 and the consolidated
statement of senior redeemable preferred stock and
shareholders' equity (deficit) for the three months ended
January 28, 1995 are unaudited. In the opinion of
F-10
management, these statements contain all adjustments
necessary to present fairly the financial position of the
Company as of January 28, 1995 and the results of its
operations and its cash flows for the three months ended
January 29, 1994 and January 28, 1995. All such adjustments
are of a normal recurring nature. The results of operations
for interim periods are not necessarily indicative of the
results to be expected for its fiscal year.
Fiscal Year - The Company's operations are based on a fifty
-----------
two or fifty-three week fiscal year ending on the Saturday
closest to October 31. The 1992, 1993 and 1994 fiscal years
each consisted of 52 weeks.
Reclassifications - Certain previously reported amounts have
-----------------
been reclassified to conform to the current presentation.
In addition, see Note 3 regarding reclassifications of 1992
and 1993 amounts for discontinued operations.
3. SALE OF DISCONTINUED OPERATIONS
On June 28, 1994, pursuant to the terms of an Asset Purchase
Agreement dated May 25, 1994 (the "Asset Purchase
Agreement"), by and among the Company, JPS Auto Inc., a
wholly-owned subsidiary of the Company ("Auto"), JPS
Converter and Industrial Corp., a wholly-owned subsidiary of
the Company ("C&I"), Foamex International Inc. ("Foamex")
and JPS Automotive Products Corp., an indirect, wholly-owned
subsidiary of Foamex ("Purchaser"), the Company consummated
the disposition of its Automotive Assets (as described
below) to the Purchaser. The Consolidated Balance Sheet and
Statements of Operations and Cash Flows for 1992 and 1993
have been reclassified to reflect the Automotive Assets and
the related automotive operations as discontinued
operations.
The Automotive Assets consisted of the businesses and assets
of Auto and the synthetic industrial fabrics division of
C&I, and the Company's investment in common stock of the
managing general partner of Cramerton Automotive Products,
L.P. (an 80% owned joint venture). Net sales from
discontinued operations were $241.3 million and $287.9
million in fiscal years 1992 and 1993, respectively, and
$224.9 million for the eight months ended June 28, 1994.
Pursuant to the terms of the Asset Purchase Agreement, the
Purchaser agreed to assume substantially all of the
liabilities and obligations associated with the Automotive
Assets. In addition, the Company and its affiliates agreed,
for a period of four years, not to directly or indirectly
F-11
compete with the sold businesses in North, Central and South
America.
The purchase price for the Automotive Assets was
approximately $279 million, consisting of $264 million of
cash paid at closing and $15 million of assumed debt as of
June 28, 1994, subject to certain post-closing adjustments
which may result in a gain to be recognized in a future
period. The sale of the Automotive Assets resulted in an
approximate gain of $133 million, net of income taxes of
$2.8 million.
The net cash proceeds from the disposition of the Automotive
Assets (after deductions for fees, other expenses and
amounts designated by management to satisfy possible
contingent tax liabilities) were approximately $213 million
and such proceeds were used by the Company to reduce its
outstanding indebtedness. See Note 5 herein.
The Company has allocated to the discontinued operations a
pro rata portion of the interest expense of its senior
credit facility, which pro rata portions were approximately
$2.5 million, $2.5 million and $1.8 million for the years
1992, 1993 and 1994, respectively.
F-12
4. BALANCE SHEET COMPONENTS
The components of certain balance sheets accounts are (in
thousands):
October 30, October 29, January 28,
1993 1994 1995
----------- ----------- -----------
Inventories:
Raw materials and supplies $ 12,523 $ 17,104 $ 16,482
Work-in-process 29,287 29,060 32,113
Finished goods 31,818 28,802 29,302
---------- ---------- ----------
$ 73,628 $ 74,966 $ 77,897
========== ========== ==========
Property, plant and equipment, net:
Land and improvements $ 11,058 $ 11,581 $ 11,581
Buildings and improvements 64,107 67,676 67,676
Machinery and equipment 224,845 243,366 242,923
Furniture, fixtures and other 7,317 7,958 7,446
---------- ---------- ----------
307,327 330,581 329,626
Less accumulated depreciation (111,177) (129,750) (135,510)
---------- ---------- ----------
196,150 200,831 194,116
Construction in progress 14,634 3,263 9,621
---------- ---------- ----------
$ 210,784 $ 204,094 $ 203,737
========== ========== ==========
Other noncurrent assets:
Unamortized debt issuance costs $ 4,779 $ 2,012 $ 1,803
Prepaid pension costs 1,233 5,100 5,483
Investments (see Note 8) - 40,238 40,887
Other 1,387 1,666 442
---------- ---------- ----------
$ 7,399 $ 49,016 $ 48,615
========== ========== ==========
Other accrued expenses:
Roofing product liability costs $ 4,300 $ 4,300 $ 4,000
Taxes payable other than income 1,684 1,907 1,009
taxes
Income taxes 569 4,816 4,115
Other 3,601 4,380 4,366
---------- ---------- ----------
$ 10,154 $ 15,403 $ 13,490
========== ========== ==========
Other long-term liabilities:
Roofing product liability costs
and deferred warranty income $ 17,373 $ 13,987 $ 13,550
Accrued other postretirement and
postemployment benefits 5,936 6,494 6,395
Other 422 - -
---------- ---------- ----------
$ 23,731 $ 20,481 $ 19,945
========== ========== ==========
F-13
5. LONG-TERM DEBT
Long-term debt consists of (in thousands):
October 30, October 29, January 28,
1993 1994 1995
------------ ----------- ----------
Senior credit facilities:
Bank term loan $ 17,700 - -
Revolving line of credit 91,584 $ 49,918 $ 93,966
Senior secured notes 100,000 - -
Senior subordinated discount notes (including
interest due at maturity of $2,250,
$3,395 and $3,277, respectively) 153,357 130,179 112,525
Senior subordinated notes (including
interest due at maturity of $3,594,
$4,404 and $3,497, respectively) 128,594 109,283 80,270
Subordinated debentures 75,000 75,000 54,071
Equipment financing 9,847 7,658 12,100
--------- ---------- ----------
Total 576,082 372,038 352,932
Less reorganization discount:
Senior subordinated discount notes (11,764) (8,109) (6,388)
Senior subordinated notes (12,688) (8,723) (5,569)
Subordinated debentures (19,680) (17,387) (11,735)
--------- ---------- ----------
Total long-term debt 531,950 337,819 329,240
Less current portion (9,003) (2,347) (2,875)
--------- ---------- ----------
Long-term portion $ 522,947 $ 335,472 $ 326,365
========= ========== ==========
Senior Credit Facilities - In connection with the sale of
------------------------
the Automotive Assets (see Note 3) in June 1994, the Company
repaid the $17.7 million term loan and amended its senior
credit facility to provide for a $135 million revolving line
of credit and modify existing restrictive covenants. The
senior credit facility, as amended, is scheduled to
terminate on December 1, 1996. The Company pays a fee of
1/2 of 1% per annum of the average unused line of credit.
All senior borrowings bear interest at a Base Rate (as
defined) plus 1-1/2% per annum (9.25% at October 29, 1994)
or at the Eurodollar Rate (as defined) plus 3.0% per annum
(approximately 8.3% at October 29, 1994). Borrowings under
the revolving line of credit are limited to specified
percentages of eligible accounts receivable and inventories,
as defined, plus an additional amount of $25,000,000. As of
October 29, 1994, unused letters of credit issued and
outstanding totalled $2,311,000. The outstanding unused
letters of credit reduce the funds available under the
revolving line of credit. At October 29, 1994 and January
28, 1995, the Company had $82,771,000 and $38,700,000,
respectively, available for borrowing under the revolving
credit agreement.
In November 1994, the Company's bank credit agreement was
amended to permit expenditures of up to $45 million for
purchases of the Company's notes and debentures in the open
market. During the first quarter of fiscal 1995, the
Company expended $36,607,000 to make open market purchases
F-14
of certain of its outstanding notes and debentures with an
aggregate face value of $66,571,000 and a carrying value
(including interest due at maturity) of $59,225,000. The
Company recognized a gain from early extinguishment of debt
of $17,520,000, net of expenses of $1,898,000 and income
taxes of $3,200,000. The effect of such transactions on the
debt maturities is to increase the bank debt which matures
in December 1996 and reduce note and debenture indebtedness
due in 1999 and thereafter.
The credit agreement also provides that net cash proceeds
from the sale of assets (as defined and excluding the sale
of the Automotive Assets) will be used to permanently repay
obligations thereunder to the extent such proceeds from
March 1993 forward cumulatively exceed $35 million. No such
asset sales occurred during fiscal 1994.
Senior Secured Notes - The senior secured notes (the
--------------------
"Notes") bore interest at 11.75% and were issued in the 1991
reorganization. Notes totalling $6,530,000 matured on June
1, 1994 and were redeemed on that date. In connection with
the sale of the Automotive Assets, the Company redeemed the
remaining $93,470,000 outstanding balance of the Notes on
July 15, 1994.
Senior Subordinated Discount Notes - The Company issued the
----------------------------------
discount notes in the 1991 reorganization. The $151,107,000
of discount notes began accruing interest on June 1, 1992 at
10.85% with 9.85% paid semi-annually and 1% payable at
maturity. Interest payable at maturity compounds semi-
annually at the annual rate of 10.85%. In connection with
the 1991 reorganization, the carrying value of the discount
notes was reduced by $15,182,000 to its estimated net
present value using an effective interest rate of 13%.
Mandatory redemption payments equal to $37,777,000, plus
accrued interest, are due on each of June 1, 1997 and June
1, 1998 prior to maturity on June 1, 1999 with optional
early redemption available on or after June 1, 1994. On
September 15, 1994, the Company redeemed $24,938,000 of
principal and interest due at maturity with a portion of the
proceeds received from the Automotive Assets sale.
Senior Subordinated Notes - The senior subordinated notes
-------------------------
bear interest at 10-1/4% with 9-1/4% paid semi-annually and
1% payable at maturity and were issued in the 1991
reorganization. Interest payable at maturity compounds
semi-annually at the annual rate of 10.25%. In connection
with the 1991 reorganization, the notes were adjusted to
F-15
their estimated net present value by recording a discount of
$16,596,000 resulting in an effective interest rate of 13%.
Mandatory redemption payments equal to $31,250,000, plus
accrued interest, are due on each of June 1, 1997 and June
1, 1998 with optional early redemption available on or after
June 1, 1994. On September 15, 1994, the Company redeemed
$20,932,000 of principal and interest due at maturity with a
portion of the proceeds received from the Automotive Assets
sale.
Subordinated Debentures - The subordinated debentures bear
-----------------------
interest at 7%, payable semi-annually, with a mandatory
redemption payment of principal of $37,500,000 due May 15,
1999, prior to maturity on May 15, 2000, with optional early
redemption available after May 15, 1993. The subordinated
debentures were issued in the 1991 reorganization. In
connection with the 1991 reorganization, the debentures were
adjusted to an estimated net present value by recording a
discount of $24,390,000 resulting in an effective interest
rate of 13.5%.
Equipment Financing - The Company has financed a portion of
-------------------
its equipment purchases with loans from a finance company
and certain equipment vendors at fixed interest rates
ranging from 7.6% to 9.7%. Monthly principal payments are
due in various amounts as determined by the terms of the
loans which have final maturity dates ranging from July 1995
through December 1998.
Restrictive Covenants - Provisions of the senior credit
---------------------
agreement and the Company's other debt indentures place
significant restrictions on certain corporate acts such as
mergers, consolidations, acquisitions, repurchases of stock,
the making of certain other restricted payments,
transactions with affiliates and the sale of assets and
prohibit the payment of cash dividends. The Company must
maintain minimum levels of "net worth," defined to be total
assets (excluding investments designated by management to
satisfy possible contingent tax liabilities) minus total
liabilities plus the subordinated notes and debentures and
other adjustments, which vary quarterly from $268 million at
October 29, 1994 to $205 million in the fourth quarter of
1996. In addition, the senior credit agreement contains
requirements to meet certain financial ratios which vary
quarterly or annually and place limitations on the Company's
ability to incur additional debt or grant a security
interest in its assets. Other customary covenants,
conditions and default provisions are also present in the
agreement and indentures. The Company was in compliance
F-16
with the restrictions and financial covenants of its senior
credit agreement and its long-term debt indentures at
October 29, 1994.
Fair Value - The fair value of the Company's long-term debt
----------
based on estimated quoted prices, compared to the carrying
values (at discounted amounts), is as follows (in
thousands):
October 30, 1993 October 29, 1994
-------------------- --------------------
Carrying Fair Carrying Fair
Value Value Value Value
--------- -------- --------- --------
11.75% Senior Secured Notes $100,000 $100,500 - -
10.85% Senior Subordinated
Discount Notes 141,593 144,922 $122,070 $ 93,186
10.25% Senior Subordinated
Notes 115,906 120,235 100,560 77,086
7% Subordinated Debentures 55,320 56,250 57,613 33,750
Other - Substantially all of the Company's assets are
-----
pledged as collateral for the senior credit facilities or
the equipment financing.
Interest expense includes $18,805,000 in 1992, $12,208,000
in 1993, and $11,450,000 in 1994 representing amortization
of debt issuance expenses and accretion of interest on the
discounted notes and accrued product liability costs (see
Note 8).
The Company recorded a $7,410,000 loss on early
extinguishment of debt in connection with the retirement of
certain debt with a portion of the proceeds of the
Automotive Assets sale as discussed above. The loss
represents deferred financing fees and reorganization
discounts associated with the retired debt along with
expenses of the transactions.
Maturities - Aggregate principal maturities of all long-term
----------
debt at October 29, 1994 are as follows (in thousands):
Fiscal Year Ending
------------------
1995 $ 2,347
1996 2,143
1997 123,467
1998 72,269
1999 134,312
Thereafter 37,500
---------
$ 372,038
=========
F-17
6. SENIOR REDEEMABLE PREFERRED STOCK AND EQUITY SECURITIES
Certain information on senior redeemable preferred stock and
equity securities at October 29, 1994 is as follows:
Shares
Par Value Issued and
Per Share Authorized Outstanding
--------- ---------- -----------
Series A Senior Redeemable
Preferred Stock $.01 700,000(1) 477,673
Series B Junior Preferred Stock .01 700,000(1) 10,000
Class A Common Stock .01 700,000 490,000
Class B Common Stock .01 700,000 510,000
(1) The aggregate number of authorized shares of preferred
stock is 700,000, including both the senior redeemable
preferred stock and the junior preferred stock.
The senior redeemable preferred stock must be redeemed on
May 15, 2003. Its holders vote with the junior preferred
stockholders as a single class to elect two directors,
otherwise, except in the event of default, the senior
redeemable preferred stock is non-voting. The senior
redeemable preferred stock is redeemable at the option of
the Company prior to maturity at 103% of the liquidation
preference of $100 per share. Dividends are cumulative and
are calculated based on an annual rate of 6% of the
liquidation preference and are paid quarterly. Under the
terms of various credit agreements, dividends must be in the
form of additional shares until 1998. In connection with
the 1991 reorganization, the senior redeemable preferred
stock was discounted to its estimated net present value with
the net discount of $23,351,000 reflected as an adjustment
of additional paid-in capital. The difference between the
net carrying value of the senior redeemable preferred stock
and its mandatory redemption value is being amortized using
the interest method of amortization over the life of the
shares by charges to additional paid-in capital or, if
available, by charges to retained earnings. The effective
dividend rate on the senior redeemable preferred stock is
15.0%. The unamortized discount was approximately
$24,560,000 at October 30, 1993 and $24,034,000 at October
29, 1994. The estimated fair value of senior redeemable
preferred stock was $42.50 per share, or approximately
$19,126,000, at October 30, 1993 based on trading
information available as of that date. Because of the lack
of recent trading activity and disparities in potential
valuation methodologies, determination of the fair value of
F-18
the Company's senior redeemable preferred stock is
impractical at October 29, 1994.
The junior preferred stock has a liquidation preference of
$25 per share. Its holders vote with the senior redeemable
preferred stockholders as a single class to elect two
directors, otherwise, except in the event of default, the
junior preferred stock is non-voting. The liquidation
preference increases $15 per share for each year that the
Company attains certain specified earnings levels for each
of the first five fiscal years ending after April 2, 1991.
No increase in the liquidation preference has yet occurred
because actual earnings have been less than the specified
earnings levels in each of the years. Dividends are non-
cumulative and are payable at the same rate as is paid on
the common stock, if any. As of October 29, 1994, no
dividends had been paid. The Company's senior credit
agreement prohibits the payment of cash dividends.
The Class A and Class B common stocks have substantially the
same voting rights except in the election of directors. The
Class A common stockholders, voting separately as a class,
have the right to elect three out of the seven Company
directors.
7. INCOME TAXES
The provision for income taxes on continuing operations
included in the consolidated statements of operations
consists of the following (in thousands):
Three Months
Year Ended
----------------------- ---------------
1992 1993 1994 1/29/94 1/28/95
---- ---- ---- ---------------
Current:
Federal $ 79 $ 34
State 521 666 $1,573 $ 183 $ 200
Deferred state 846 1,082 1,227 99 100
------ ------ ------ ----- -----
Provision for income taxes $1,446 $1,782 $2,800 $ 282 $ 300
====== ====== ====== ===== =====
The 1992 and 1993 current Federal income tax provisions
relate to alternative minimum taxes and these amounts can be
carried forward indefinitely and be claimed as credits
against Federal income taxes in subsequent years.
A reconciliation between income taxes at the statutory
Federal income tax rate (34% for 1992, 34.83% for 1993 and
35% for 1994) and the provision for income taxes for the
years ended 1992, 1993 and 1994 is as follows (in
thousands):
F-19
1992 1993 1994
---- ---- ----
Income tax benefit at Federal statutory rate $ (8,563) $ (13,096) $ (12,362)
Increase in income taxes arising from effect of:
State and local income taxes 1,367 1,748 2,800
Amortization of goodwill 328 314 316
Other 138 308 250
Losses not resulting in tax benefits 8,176 12,508 11,796
---------- --------- ---------
Provision for income taxes $ 1,446 $ 1,782 $ 2,800
========== ========= =========
Presented below are the elements which comprise deferred tax
assets and liabilities (in thousands):
1993 1994
---- ----
Gross deferred assets:
Estimated allowance for doubtful accounts $ 1,051 $ 1,505
Excess of tax over financial statement basis of inventory 1,210 1,197
Accruals deductible for tax purposes when paid 2,724 2,910
Deferred compensation deductible for tax purposes when paid 575 178
Postretirement benefits deductible for tax purposes when paid 2,121 1,927
Miscellaneous 22 50
Alternative minimum tax credit carryforward available - 2,100
Deferred financial statement income recognized for tax purposes
when received 7,063 6,757
Excess of tax basis of intangibles over financial statement basis 10,570 9,372
Net operating loss carryover 79,164 22,928
Less valuation allowance (58,346) (12,097)
---------- ---------
Gross deferred assets 46,154 36,827
---------- ---------
Gross deferred liabilities:
Pension asset recognized for book purposes (450) (1,641)
Excess of financial statement over tax basis of property, plant,
and equipment (28,298) (29,105)
Excess of tax over financial statement basis of debt instruments
(net of deferred financing fees) (13,087) (6,266)
Excess of financial statement over tax basis of discontinued
operations (4,304) -
Alternative minimum tax deferred (400) -
Deferred state taxes resulting from filing separate subsidiary
returns in some jurisdictions (2,200) (3,165)
Miscellaneous - (215)
---------- ---------
Gross deferred liabilities (48,739) (40,392)
---------- ---------
Net deferred tax liability $ (2,585) $ (3,565)
========== =========
The net deferred tax liability is included in the accompany-
ing consolidated balance sheet as a non-current liability.
At October 29, 1994, the Company had net operating loss
carryforwards for tax purposes of approximately $62,000,000.
The net operating losses expire $27,000,000 in 2006,
$25,400,000 in 2007 and $9,600,000 in 2008. The Company
also has alternative minimum tax net operating losses of
approximately $10,500,000 which expire in 2006. During the
year, the Company utilized approximately $141,000,000 and
$95,500,000 of regular tax and alternative minimum tax net
operating loss carryovers, respectively, to offset income
from the disposition of discontinued operations. The
Company incurred approximately $2,800,000 in Federal
alternative minimum and state taxes on the sale. As
previously noted, alternative minimum taxes can be carried
F-20
forward indefinitely and used as a credit against regular
federal taxes. Due to the Company's operating history, it
is uncertain that it will be able to utilize all deferred
tax benefits. Therefore, a valuation allowance has been
provided.
The Company's ability to utilize its net operating losses
may be significantly limited under the income tax laws
should there be future changes in the ownership of the
Company's stock which constitute an ownership change for tax
purposes. Transactions in the Company's stock have
significantly increased the possibility that there could be
an ownership change for tax purposes if certain future
transactions in the Company's stock occur. The effect of
such an ownership change would be to significantly limit the
annual utilization of the net operating loss carryforwards
to an amount equal to the value of the Company immediately
prior to the time of the change (subject to certain
adjustments) multiplied by the Federal long-term tax exempt
rate. Despite this potential restriction on utilization of
the net operating loss carryforwards, the Company believes
that it is more likely than not that the net operating loss
carryforwards, net of the related valuation allowance,
recorded at October 29, 1994 will be fully realized.
8. COMMITMENTS AND CONTINGENCIES
The Company leases office facilities, machinery and computer
equipment under noncancellable operating leases. Rent
expense was approximately $3,961,000 in 1992, $3,593,000 in
1993 and $4,040,000 in 1994.
Future minimum payments, by year and in the aggregate, under
the noncancellable operating leases with terms of one year
or more consist of the following at October 29, 1994 (in
thousands):
1995 $ 2,452
1996 1,623
1997 742
1998 349
1999 5
--------
$ 5,171
========
The Company has planned expenditures of approximately $26
million for property, plant and equipment additions in
fiscal 1995.
The Company has established incentive compensation plans for
certain of its key executives. One plan provides for
F-21
payments to participants at retirement or termination based
on the increase of the fair value, as defined, of the common
stock of the Company over certain established levels, as
determined by the Company's Board of Directors. No amounts
have been earned under the provisions of this plan, except
for termination and death benefits accrued and paid of
$99,000 and $203,000 in fiscal 1993 and 1994, respectively.
A second plan provides for payments to participants, who are
not covered by the previously described plan, based on the
achievement of specified levels of cumulative operating
earnings for the three years ending in 1994. The Company's
policy is to accrue the cost of the plans as the fair value
of the common stock increases over the established levels or
as actual earnings occur if the earnings for the three year
period are expected to reach the specified levels. At
October 30, 1993, approximately $1,556,000 was accrued for
this plan. No amount has been earned or accrued under this
plan for employees of the Company's continuing operations as
of October 29, 1994.
The Company has provided for all estimated future costs
associated with certain defective roofing products sold by
the Predecessor Stevens Division operations. The liability
for such defective products was $11,743,000 at October 30,
1993 and $8,207,000 at October 29, 1994, which represents
the estimated future costs. The estimated future costs
include providing services and materials over a period
extending into 1997. The Company records the costs of
meeting these obligations as a reduction of the balance of
the recorded liability and, accordingly, such costs are not
reflected in results of operations. Payments on accrued
product liability claims were $4,429,000, $5,240,000 and
$3,870,000 in the fiscal years 1992, 1993 and 1994,
respectively. The Company periodically reevaluates the
estimates used to determine the liability based on recent
experience. Variances from the current estimates, which may
occur, will be considered in determining if an adjustment of
the liability is necessary in the future.
In connection with the sale of the Automotive Assets in June
1994, the Company invested $39.5 million of the sale
proceeds in long-term securities (principally United States
Treasury Securities maturing in 1997) designated by
management to be available to satisfy possible contingent
tax liabilities. The investments are classified as "held-
to-maturity" and recorded at amortized cost. As of October
29, 1994, their aggregate fair value was approximately
$39,600,000 and gross unrealized holding losses were
approximately $600,000.
F-22
The Company is exposed to a number of asserted and
unasserted potential claims encountered in the normal course
of business. In the opinion of management, the resolution
of these matters will not have a material adverse effect on
the Company's financial position or future results of
operations.
9. RETIREMENT PLANS
Defined Benefit Pension Plan - Substantially all of the
----------------------------
Company's employees are covered by a company-sponsored
defined benefit pension plan. The plan also provides
benefits to individuals employed by the Automotive
businesses which were sold by the Company on June 28, 1994.
The benefits of these former employees were "frozen" at the
date of sale. Accordingly, these former employees will
retain benefits earned through June 28, 1994; however, they
will not accrue additional benefits. The plan provides
pension benefits that are based on the employees'
compensation during the last ten years of employment. The
Company's policy is to fund the annual contribution required
by applicable regulations.
Assets of the pension plan are invested in common and
preferred stocks, government and corporate bonds, real
estate and various short-term investments.
A reconciliation as of the most recent measurement date
(November 1, 1993) of the funded status of the plan with
amounts reported in the Company's consolidated balance
sheets follows (in thousands):
October 30, October 29,
1993 1994
---------- ----------
Actuarial present value of benefit obligations:
Vested $ 79,803 $ 79,185
Non-vested 1,003 710
-------- --------
Accumulated benefit obligation 80,806 79,895
Provision for future pay increases 7,763 8,926
-------- --------
Total projected benefit obligation 88,569 88,821
Plan assets at fair value 83,729 80,072
-------- --------
Projected benefit obligation greater than plan assets (4,840) (8,749)
Unrecognized net loss 1,860 7,611
Prior service cost not yet recognized in net periodic
pension cost 4,213 6,238
-------- --------
Pension asset in accompanying financial statements $ 1,233 $ 5,100
======== ========
1992 1993 1994
---- ---- ----
Components of net periodic pension cost:
Service cost-benefits earned during the period $ 1,620 $ 2,123 $ 2,925
Interest cost on projected benefit obligation 6,874 7,135 6,987
Return on plan assets (7,403) (9,998) 3,802
Net amortization and deferral 549 3,317 (10,291)
--------- -------- --------
Net periodic pension cost 1,640 2,577 3,423
Cost allocated to discontinued operations 191 484 664
--------- -------- --------
Net periodic pension cost for continuing
operations $ 1,449 $ 2,093 $ 2,759
========= ======== ========
F-23
The weighted-average discount rate used in determining the
actuarial present value of the projected benefit obligation
at October 30, 1993 was 7.8% and at October 29, 1994 was
8.4%. The expected long-term rate of return on assets was
9% at October 30, 1993 and October 29, 1994. The assumed
rate of increase in compensation levels was based on an age-
related table at October 30, 1993 and October 29, 1994.
Effective November 1, 1993, the Company amended the benefit
formula for salaried employees to provide for an additional
benefit on compensation in excess of the average social
security wage base.
401(k) Savings Plan - The Company also has a savings,
-------------------
investment and profit-sharing plan available to employees
meeting eligibility requirements. Effective January 1,
1994, the Company amended the plan to include coverage of
hourly wage employees (previously the plan covered
substantially only salaried employees). The plan is a tax
qualified plan under Section 401(k) of the Internal Revenue
Code. The Company makes a matching contribution of 25% of
each participant's contribution with a maximum matching
contribution of 1-1/2% of the participant's base
compensation. Company contributions were approximately
$329,000 in 1992, $332,000 in 1993 and $705,000 in 1994.
Postretirement Benefits - Effective November 1, 1992, the
-----------------------
Company adopted SFAS No. 106, which requires that the
projected future cost of providing postretirement benefits,
such as health care and life insurance, be recognized as an
expense as employees render service instead of when claims
are incurred, as had been the Company's practice. The
cumulative effects as of November 1, 1992 of adopting SFAS
No. 106 were to increase accrued postretirement benefit
costs by approximately $5,936,000 and charge income in 1993
for approximately $5,716,000 after income taxes. The
effect of adopting SFAS No. 106 on income from operations in
1993 was not significant.
The Company has several unfunded defined benefit
postretirement plans that provide certain health care and
life insurance benefits to eligible retirees. The plans are
contributory, with retiree contributions adjusted
periodically, and contain cost-sharing features such as
deductibles and coinsurance. The Company's life insurance
plan provides benefits to both active employees and
retirees. Active employee contributions in excess of the
cost of providing active employee benefits are applied to
reduce the cost of retirees' life insurance benefits. The
following table sets forth the status of the company's
F-24
postretirement plans as recorded in the accompanying
financial statements (in thousands):
Accumulated postretirement benefit obligation (APBO):
October 30, October 29,
1993 1994
---------- ----------
Retirees $ 3,452 $ 3,160
Fully eligible active plan participants 1,897 1,703
Other active plan participants 445 743
Unrecognized gain 609 579
------- --------
Accrued postretirement benefit plan cost $ 6,403 $ 6,185
======= ========
Net periodic postretirement benefit expense included the following
components (in thousands):
1993 1994
---- ----
Service cost for benefits earned $ (15) $ 6
Interest cost on APBO 413 420
----- ----
Net periodic postretirement cost $ 398 $426
===== ====
Since the Company has capped its annual liability per person
and all future cost increases will be passed on to retirees,
the annual rate of increase in health care costs does not
affect the postretirement benefit obligation.
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7.2% and
8.0% as of October 30, 1993 and October 29, 1994,
respectively.
Prior to November 1, 1992, the net cost of providing health
care and life insurance benefits to retired employees was
recognized as costs were paid. These costs totalled
approximately $550,000 in 1992.
Postemployment Benefits - Effective October 31, 1993, the
-----------------------
Company adopted SFAS No. 112, which requires that the cost
of benefits provided to former or inactive employees after
employment but before retirement be recognized on the
accrual basis of accounting instead of when paid, as had
been the Company's practice.
The cumulative effects as of October 31, 1993 of adopting
SFAS No. 112 were to increase accrued postemployment benefit
costs by approximately $1,000,000 and charge income for
approximately $1,000,000 after income taxes. The effect of
adopting SFAS No. 112 on income from operations in 1994 was
not significant.
F-25
10. RELATED PARTIES
The Company incurred fees of $1,500,000 in 1992 and
$1,250,000 each year in 1993 and 1994 for management
services provided by certain shareholders pursuant to a
management services agreement. The balance sheets as of
October 30, 1993 and October 29, 1994 include accrued fees
of $1,250,000 in other accrued expenses. The agreement
provides for payments of fees to a shareholder of $1,000,000
in 1995 and annually thereafter through the year 2001.
An investment banking company that owns common stock of the
Company charged the Company approximately $361,000 in 1993
for various services.
11. BUSINESS SEGMENTS
The Company competes in three industry segments: Apparel
Fabrics and Products, Industrial Fabrics and Products and
Home Fashion Textiles. The apparel fabrics and products
segment manufactures a broad range of apparel fabrics and
apparel related products, including unfinished woven apparel
fabrics (greige goods) for men's, women's and children's
wear, and spun yarns for use in apparel and elastic products
for use in undergarments and diapers. The industrial
fabrics and products segment manufactures commercial roofing
products made from woven synthetic fabrics and rubber-based
specialty polymer compounds, other building construction
products made from glass and synthetic fibers, various
industrial products which generally have insulation or
filtration characteristics, and other rubber products and
various extruded polyurethane products. The home fashion
textiles segment manufactures both residential and
commercial carpet products and a variety of unfinished woven
fabrics for use in the manufacturing of draperies, curtains
and lampshades and is a major producer of solution-dyed
drapery fabrics.
Export sales are an immaterial percentage of net sales and
the Company has no significant foreign operations. Earnings
by business segment represent operating profit, excluding
net unallocated corporate operating expenses. Identifiable
segment assets are those assets used in the operations of
the segment. Corporate assets are cash and other assets.
F-26
Industry segment information (in thousands):
1992 1993 1994
---- ---- ----
Net sales:
Apparel fabrics and products $ 267,264 $ 262,499 $254,810
Industrial fabrics and products 166,957 156,763 169,736
Home fashion textiles 176,764 178,491 178,870
--------- --------- --------
$ 610,985 $ 597,753 $603,416
========= ========= ========
Operating profit:
Apparel fabrics and products $ 27,205 $ 21,791 $ 18,487
Industrial fabrics and products 9,014 3,582 7,618
Home fashion textiles 6,488 7,907 2,794
--------- --------- --------
Total operating profit of segments 42,707 33,280 28,899
Interest expense 60,278 62,196 56,452
Indirect corporate expenses and other 7,615 8,679 7,768
--------- --------- --------
Loss before income taxes, discontinued operations,
extraordinary items, and cumulative effects of
accounting changes $ (25,186) $(37,595) $(35,321)
========= ======== ========
Identifiable assets:
Apparel fabrics and products $ 165,543 $173,304 $171,164
Industrial fabrics and products 103,197 103,323 106,124
Home fashion textiles 108,298 117,127 109,615
--------- -------- --------
Total segments 377,038 393,754 386,903
Corporate and other 42,834 40,108 81,087
--------- -------- --------
419,872 433,862 467,990
Net assets held for sale 105,175 114,981 -
--------- -------- --------
$ 525,047 $548,843 $467,990
========= ======== ========
Depreciation and amortization expense:
Apparel fabrics and products $ 10,951 $ 11,357 $ 13,329
Industrial fabrics and products 5,339 4,939 6,103
Home fashion textiles 7,734 7,270 7,813
--------- --------- --------
Total segments 24,024 23,566 27,245
Corporate and other 2,121 2,105 1,415
--------- --------- --------
$ 26,145 $ 25,671 $ 28,660
========= ========= ========
Capital expenditures:
Apparel fabrics and products $ 10,720 $ 9,966 $ 8,120
Industrial fabrics and products 3,082 5,556 6,171
Home fashion textiles 7,255 8,904 7,724
--------- --------- --------
Total segments 21,057 24,426 22,015
Corporate and other 6 19 10
--------- --------- --------
$ 21,063 $ 24,445 $ 22,025
========= ========= ========
F-27
---------------------------------------
TABLE OF CONTENTS JPS TEXTILE GROUP, INC.
Page ---------------------------------------
Available Information . . . . . . .5
Prospectus Summary . . . . . . . . 7 $109,247,318 AGGREGATE PRINCIPAL AMOUNT
Risk Factors . . . . . . . . . . .18 OF 10.85% SENIOR SUBORDINATED DISCOUNT
The Company . . . . . . . . . . . .25 NOTES DUE JUNE 1, 1999
Capitalization . . . . . . . . . .30
Selected Historical Financial Data 31 $76,773,000 AGGREGATE PRINCIPAL AMOUNT
Management's Discussion and OF 10.25% SENIOR SUBORDINATED NOTES DUE
Analysis of Financial Condition JUNE 1, 1999
and Results of Operations . . . .33
Business . . . . . . . . . . . . .44 $54,071,000 AGGREGATE PRINCIPAL AMOUNT
Management . . . . . . . . . . . .53 OF 7% SUBORDINATED DEBENTURES DUE
Security Ownership of Principal MAY 15, 2000
Stockholders and Management . . . 60
Description of the Debt Securities 62 600,000 SHARES OF SERIES A SENIOR
Description of the Senior PREFERRED STOCK, $.01 PAR VALUE PER
Preferred Stock . . . . . . . . . 94 SHARE
Description of the Junior
Preferred Stock . . . . . . . . . 96 490,000 SHARES OF CLASS A COMMON STOCK,
Description of the Class A $.01 PAR VALUE PER SHARE
Common Stock . . . . . . . . . . .97
Description of the Class B ---------------------------------------
Common Stock . . . . . . . . . . .98 PROSPECTUS
Contractual Corporate Governance ---------------------------------------
Arrangements . . . . . . . . . . .99
Description of the Credit Facility 101
Certain Federal Income Tax
Consequences . . . . . . . . . . 103
Selling Securityholders . . . . . .118
Plan of Distribution . . . . . . .128
Legal Matters . . . . . . . . . . .129
Experts . . . . . . . . . . . . . .130
April 13, 1995
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13. Other Expenses of Distribution.
------------------------------
The following table sets forth an estimate of the
expenses that will be incurred by the Registrant in connection
with the distribution of the securities being registered hereby:
SEC registration fee . . . . $161,927.60
NASD filing fees . . . . . . .00
Legal fees and expenses . . . 240,000.00
Accounting fees and expenses 80,000.00
Miscellaneous . . . . . . . . 53,000.00
-----------
Total . . . . . . . . . $534,927.60*
===========
<FN>
----------------
* 476,927.60 has been previously paid.
Item 14. Indemnification and Limitation of Liability of
----------------------------------------------
Directors and Officers.
----------------------
Generally, Section 145 of the General Corporation Law
of the State of Delaware (the "GCL") permits a corporation to
indemnify certain persons made a party to an action, by reason of
the fact that such person is or was a director, officer, employee
or agent of the corporation or is or was serving at the request
of the corporation as a director, officer, employee or agent of
another corporation or enterprise. In the case of an action by
or in the right of the corporation, no indemnification may be
made in respect of any matter as to which such person was
adjudged liable for negligence or misconduct in the performance
of such person's duty to the corporation unless the Delaware
Court of Chancery or the court in which such action was brought
determines that despite the adjudication of liability such person
is fairly and reasonably entitled to indemnity for proper
expenses. To the extent such person has been successful in the
defense of any matter, such person shall be indemnified against
expenses actually and reasonably incurred by him.
Section 102(b)(7) of the GCL enables a Delaware
corporation to include a provision in its certificate of
incorporation limiting a director's liability to the corporation
or its stockholders for monetary damages for breaches of
II-1
fiduciary duty as a director. The Company has adopted a
provision in its Restated Certificate of Incorporation which
provides for indemnification of its officers and directors to the
full extent permitted under Delaware law.
Item 15. Recent Sales of Unregistered Securities.
---------------------------------------
None.
Item 16. Exhibits and Financial Statement Schedule.
-----------------------------------------
(a) Exhibits
--------
The following is a complete list of Exhibits filed as
part of this Registration Statement, which are incorpo-
rated herein:
Exhibit
Number Description
------- -----------
2.1(i) Plan of Reorganization of JPS Textile Group, Inc., a
Delaware corporation (the "Company"), filed pursuant to
Chapter 11 of the United States Bankruptcy Code, dated
February 7, 1991 (the "Plan").*
2.1(ii) Revised Technical and Conforming Amendment to the
Company's Plan, dated March 20, 1991.*
3.1 Restated Certificate of Incorporation of the Company,
filed with the Secretary of State of the State of
Delaware on April 1, 1991.*
3.2 By-laws of the Company.*
3.3 Certificate of Designations of the Company's Series A
Senior Preferred Stock (the "Senior Preferred Stock").*
3.4 Certificate of Designations of the Company's Series B
Junior Preferred Stock.*
4.1 Indenture, dated as of April 2, 1991 (the "Discount
Note Indenture"), between the Company and First Trust
National Association ("First Trust"), as Trustee,
relating to the Company's Senior Subordinated Discount
Notes due June 1, 1999 (the "Discount Notes").*
II-2
4.2 Form of Discount Note, incorporated by reference to
Exhibit A to the Discount Note Indenture.*
4.3 Indenture, dated as of April 2, 1991 (the "Subordinated
Note Indenture"), between the Company and First Trust,
as Trustee, relating to the Company's 10.25% Senior
Subordinated Notes due June 1, 1999 (the "Subordinated
Notes").*
4.4 Form of Subordinated Note, incorporated by reference to
Exhibit A to the Subordinated Note Indenture.*
4.5 Indenture, dated as of April 2, 1991 (the "Debenture
Indenture"), between the Company and First Bank
National Association, as Trustee, relating to the
Company's 7% Subordinated Debentures due May 15, 2000
(the "Debentures").*
4.6 Form of Debenture, incorporated by reference to Exhibit
A to the Debenture Indenture.*
4.7 Stockholders' Agreement, dated as of April 2, 1991,
among Odyssey Partners, L.P. ("Odyssey Partners"), DLJ
Capital Corp. ("DLJ Capital") and Lincoln National Bank
and Trust Company of Fort Wayne ("Lincoln National").*
4.8 Letter Agreement, dated April 2, 1991, regarding
certain rights of "co-sale" granted by Odyssey
Partners, DLJ Capital and Lincoln National to the
holders of the Company's Class A Common Stock.*
4.9 Letter Agreement, dated April 2, 1991, among Odyssey
Partners, Grant M. Wilson, William J. DeBrule and
Yehochai Schneider.*
5.1 Opinion of Weil, Gotshal & Manges with respect to the
legality of the Securities (as defined below).*
7.1 Opinion of Weil, Gotshal & Manges with respect to the
liquidation preference of the Senior Preferred Stock.*
8.1 Opinion of Weil, Gotshal & Manges with respect to
Federal Income Tax Consequences.********
9.1 Voting Trust Agreement, dated as of April 2, 1991,
between DLJ Capital and Lincoln National.*
10.1 Management Agreement, dated as of April 2, 1991,
between the Company and Odyssey Investors, Inc.*
II-3
10.2 Registration Rights Agreement, dated as of April 2,
1991, by and among the Company and the holders of the
Company's Senior Notes, Discount Notes, Subordinated
Notes, Senior Preferred Stock and Class A Common Stock
(collectively, the "Securities").*
10.3 Loan and Security Agreement, dated as of October 30,
1991 (the "CIT Loan Agreement"), between JPS Converter
and Industrial Corp., a Delaware corporation ("JCIC")
and The CIT Group/Equipment Financing, Inc. ("CIT").*
10.4 First Amendment to the CIT Loan Agreement, dated as of
June 26, 1992, by and between JCIC and CIT.*
10.5 Second Amendment to the CIT Loan Agreement, dated as of
December 22, 1992, by and between JCIC and CIT.*
10.6 Agreement of Lease, dated as of June 1, 1988, by and
between 1185 Avenue of the Americas Associates ("1185
Associates") and JCIC.*
10.7 Lease Modification and Extension Agreement, dated as of
April 2, 1991, by and between 1185 Associates and
JCIC.*
10.8 Third Amendment to the CIT Loan Agreement, dated as of
August 6, 1993, by and between JCIC and CIT.***
10.9 Trademark License Agreement, dated as of May 9, 1988,
by and between J.P. Stevens and JPS Acquisition Corp.
(predecessor to the Company).***
10.10 Omnibus Real Estate Closing Agreement, dated as of May
9, 1988, by and among J.P. Stevens, JPS Acquisition
Corp., JPS Acquisition Automotive Products Corp., JPS
Acquisition Carpet Corp., JPS Acquisition Industrial
Fabrics Corp., JPS Acquisition Converter and Yarn Corp.
and JPS Acquisition Elastomerics Corp.***
10.11 Purchase Agreement, dated as of April 24, 1988, by and
among JPS Holding Corp., the Company, Odyssey Partners,
West Point-Pepperell, Inc., STN Holdings Inc., Magnolia
Partners, L.P. and J.P. Stevens.***
10.12 Asset Purchase Agreement, dated as of May 25, 1994, by
and among the Company, JAPC, JCIC, JPS Auto Inc., a
Delaware corporation, and Foamex International Inc., a
Delaware corporation.****
II-4
10.13 Fourth Amended and Restated Credit Agreement (the
"Existing Credit Agreement"), dated as of June 24,
1994, by and among the Company, JCIC, JPS Elastomerics
Corp., a Delaware corporation ("JEC"), JPS Carpet
Corp., a Delaware corporation ("JCC"), the financial
institutions listed on the signature pages thereof,
Citibank, N.A. ("Citibank"), as Agent and
Administrative Agent, and General Electric Capital
Corporation ("GECC"), as Co-Agent and Collateral Agent.*****
10.14 First Amendment to the Existing Credit Agreement, dated
as of November 4, 1994, by and among the Company, JCIC,
JEC, JCC, the financial institutions listed on the
signature pages thereof, Citibank, as Agent and
Administrative Agent, and GECC, as Co-Agent and
Collateral Agent. ******
10.15 Second Amendment to the Existing Credit Agreement,
dated as of December 21, 1994, by and among the
Company, JCIC, JEC, JCC, the financial institutions
listed on the signature pages thereof, Citibank, as
Agent and Administrative Agent, and GECC, as Co-Agent
and Collateral Agent. ******
10.16 Fourth Amendment to CIT Loan Agreement, dated as of
December 29, 1994, by and between JCIC and CIT.******
10.17 Lease Modification and Extension Agreement, dated as of
April 30, 1993, by and between 1585 Associates and
JCIC.******
10.18 Long-Term Incentive Plan of the Company effective
November 1, 1994.*******
12.1 Computation of Ratio of Earnings to Fixed Charges.**
12.2 Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.**
21.1 List of Subsidiaries of the Company.******
23.1 Consent of Deloitte & Touche LLP.**
24.1 Power of Attorney relating to the Company
(included as part of the signature page hereof).
25.1 Statement of Eligibility and Qualification, on Form
T-1, of CNB as Trustee (initially filed with the
II-5
Securities and Exchange Commission (the "SEC") on
January 2, 1991, and amended by Amendment No. 1 thereto
filed with the SEC on March 15, 1991, each in
connection with the Company's Form T-3, and each
incorporated herein by reference).
25.2 Statement of Eligibility and Qualification, on Form
T-1, of First Trust as Trustee (re: Discount Note
Indenture) (initially filed with the SEC on January 2,
1991, and amended by Amendment No. 1 thereto filed with
the SEC on March 15, 1991, each in connection with the
Company's Form T-3, and each incorporated herein by
reference).
25.3 Statement of Eligibility and Qualification, on Form
T-1, of First Trust as Trustee (re: Subordinated Note
Indenture) (initially filed with the SEC on January 2,
1991, and amended by Amendment No. 1 thereto filed with
the SEC on March 15, 1991, each in connection with the
Company's Form T-3, and each incorporated herein by
reference).
25.4 Statement of Eligibility and Qualification, on Form
T-1, of First Bank National Association as Trustee
(initially filed with the SEC on January 2, 1991, and
amended by Amendment No. 1 thereto filed with the SEC
on March 15, 1991, each in connection with the
Company's Form T-3, and each incorporated herein by
reference).
27.1 Financial data schedule.*******
--------------------
* Previously filed.
** Filed herewith.
*** Previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended October 30, 1993.
**** Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended April 30, 1994.
***** Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended July 30, 1994.
****** Previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended October 29, 1994.
******* Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended January 28,
1995.
******** To be filed by amendment hereto.
II-6
(b) Financial Statement Schedule:
----------------------------
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not
required or are not applicable, or the required information is
shown in the Consolidated Financial Statements or Notes thereto.
Item 17. Undertakings.
------------
Insofar as indemnification for liabilities arising
under the Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the provisions in
Item 14 above, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Company of expenses incurred or paid by a director or
officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public
policy as expressed in such act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement;
(i) To include any prospectus required by
Section 10(a)(3) of the Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) To include any material information with
respect to the Plan of Distribution not previously disclosed in
II-7
the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability
under the Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant has duly caused this Post-Effective
Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City
of New York, State of New York, on April 13, 1995.
JPS TEXTILE GROUP, INC.
By:/s/ Jerry E. Hunter
-------------------
JERRY E. HUNTER
Chief Executive
Officer and President
KNOW ALL MEN BY THESE PRESENTS that each person whose
signature appears below constitutes and appoints Jerry E. Hunter
and Alain M. Oberrotman, and each of them, such person's true and
lawful attorneys-in-fact and agents, with full power of substitution
and revocation, for such person and in such person's name, place and
stead, in any and all capacities to sign any and all amendments
(including additional post-effective amendments to this Registration
Statement) and to file the same with all exhibits thereto, and the
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully
to all intents and purposes as such person might or could do in
person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
II-9
Pursuant to the requirements of the Securities Act of
1933, this Post-Effective Amendment No. 2 to the Registration
Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Steven M. Friedman Director and April 13, 1995
--------------------------
STEVEN M. FRIEDMAN Chairman of
the Board
/s/ Jerry E. Hunter Director, April 13, 1995
--------------------------
JERRY E. HUNTER Chief Executive
Officer and
President
/s/ David H. Taylor Director, April 13, 1995
--------------------------
DAVID H. TAYLOR Executive
Vice President --
Finance, Principal
Financial Officer
and Secretary
/s/ Muzzafar Mirza Director April 13, 1995
--------------------------
MUZZAFAR MIRZA
/s/ Alain M. Oberrotman Director April 13, 1995
--------------------------
ALAIN M. OBERROTMAN
/s/ Marc C. Particelli Director April 13, 1995
--------------------------
MARC C. PARTICELLI
/s/ Allen A. Hodges Controller April 13, 1995
--------------------------
ALLEN A. HODGES
II-10
JPS TEXTILE GROUP, INC. INDEX TO SCHEDULE
INDEX TO FINANCIAL STATEMENT SCHEDULE
For the Years Ended October 31, 1992, October 30, 1993 and
October 29, 1994
FINANCIAL STATEMENT SCHEDULE
II. Valuation and Qualifying Accounts and Reserves S-2
Note: All other schedules are omitted because they are not
applicable or not required, or because the required
information is shown either in the consolidated financial
statements or in the notes thereto.
S-1
JPS TEXTILE GROUP, INC. SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN THOUSANDS)
Column A Column B Column C Column D Column E
-------- -------- ----------------------- -------- --------
Additions
-----------------------
(1) (2)
Charged to Balance
Balance at Charged to Other at
Beginning Costs and Accounts - Deductions End of
Classification of Period Expenses Describe - Describe Period
--------------------------- ----------- ---------- ------------ ---------- ------
Allowance Deducted from Asset to Which (a) (b)
They Apply:
Year Ended October 31, 1992 (52 Weeks)
Allowance for doubtful accounts $1,694 $ 727 $ 365 $2,056
Claims, returns and other allowances 2,126 $ 802 2,928
------ ------ ------ ------ ------
$3,820 $ 727 $ 802 $ 365 $4,984
====== ====== ====== ====== ======
Year Ended October 30, 1993 (52 Weeks)
Allowance for doubtful accounts $2,056 $1,107 $ (93) $ 740 $2,330
Claims, returns and other allowances 2,928 501 3,429
------ ------ ------ ------ ------
$4,984 $1,107 $ 408 $ 740 $5,759
====== ====== ====== ====== ======
Year Ended October 29, 1994 (52 Weeks)
Allowance for doubtful accounts $2,330 $1,313 $ 846 $1,965 $2,524
Claims, returns and other allowances 3,429 (73) 4,138 3,795 3,699
------ ------ ------ ------ ------
$5,759 $1,240 $4,984 $5,760 $6,223
====== ====== ====== ====== ======
<FN>
(a) Change in various reserves charged to net sales.
(b) Uncollected receivables written off, net of recoveries.
S-2
EXHIBIT INDEX
-------------
Exhibit
Number Description
------- -----------
2.1(i) Plan of Reorganization of JPS Textile Group, Inc., a
Delaware corporation (the "Company"), filed pursuant to
Chapter 11 of the United States Bankruptcy Code, dated
February 7, 1991 (the "Plan").*
2.1(ii) Revised Technical and Conforming Amendment to the
Company's Plan, dated March 20, 1991.*
3.1 Restated Certificate of Incorporation of the Company,
filed with the Secretary of State of the State of
Delaware on April 1, 1991.*
3.2 By-laws of the Company.*
3.3 Certificate of Designations of the Company's Series A
Senior Preferred Stock (the "Senior Preferred Stock").*
3.4 Certificate of Designations of the Company's Series B
Junior Preferred Stock.*
4.1 Indenture, dated as of April 2, 1991 (the "Discount
Note Indenture"), between the Company and First Trust
National Association ("First Trust"), as Trustee,
relating to the Company's Senior Subordinated Discount
Notes due June 1, 1999 (the "Discount Notes").*
4.2 Form of Discount Note, incorporated by reference to
Exhibit A to the Discount Note Indenture.*
4.3 Indenture, dated as of April 2, 1991 (the "Subordinated
Note Indenture"), between the Company and First Trust,
as Trustee, relating to the Company's 10.25% Senior
Subordinated Notes due June 1, 1999 (the "Subordinated
Notes").*
4.4 Form of Subordinated Note, incorporated by reference to
Exhibit A to the Subordinated Note Indenture.*
4.5 Indenture, dated as of April 2, 1991 (the "Debenture
Indenture"), between the Company and First Bank
National Association, as Trustee, relating to the
Company's 7% Subordinated Debentures due May 15, 2000
(the "Debentures").*
4.6 Form of Debenture, incorporated by reference to Exhibit
A to the Debenture Indenture.*
4.7 Stockholders' Agreement, dated as of April 2, 1991,
among Odyssey Partners, L.P. ("Odyssey Partners"), DLJ
Capital Corp. ("DLJ Capital") and Lincoln National Bank
and Trust Company of Fort Wayne ("Lincoln National").*
4.8 Letter Agreement, dated April 2, 1991, regarding
certain rights of "co-sale" granted by Odyssey
Partners, DLJ Capital and Lincoln National to the
holders of the Company's Class A Common Stock.*
4.9 Letter Agreement, dated April 2, 1991, among Odyssey
Partners, Grant M. Wilson, William J. DeBrule and
Yehochai Schneider.*
5.1 Opinion of Weil, Gotshal & Manges with respect to the
legality of the Securities (as defined below).*
7.1 Opinion of Weil, Gotshal & Manges with respect to the
liquidation preference of the Senior Preferred Stock.*
8.1 Opinion of Weil, Gotshal & Manges with respect to
Federal Income Tax Consequences.********
9.1 Voting Trust Agreement, dated as of April 2, 1991,
between DLJ Capital and Lincoln National.*
10.1 Management Agreement, dated as of April 2, 1991,
between the Company and Odyssey Investors, Inc.*
10.2 Registration Rights Agreement, dated as of April 2,
1991, by and among the Company and the holders of the
Company's Senior Notes, Discount Notes, Subordinated
Notes, Senior Preferred Stock and Class A Common Stock
(collectively, the "Securities").*
10.3 Loan and Security Agreement, dated as of October 30,
1991 (the "CIT Loan Agreement"), between JPS Converter
and Industrial Corp., a Delaware corporation ("JCIC")
and The CIT Group/Equipment Financing, Inc. ("CIT").*
10.4 First Amendment to the CIT Loan Agreement, dated as of
June 26, 1992, by and between JCIC and CIT.*
10.5 Second Amendment to the CIT Loan Agreement, dated as of
December 22, 1992, by and between JCIC and CIT.*
10.6 Agreement of Lease, dated as of June 1, 1988, by and
between 1185 Avenue of the Americas Associates ("1185
Associates") and JCIC.*
10.7 Lease Modification and Extension Agreement, dated as of
April 2, 1991, by and between 1185 Associates and
JCIC.*
10.8 Third Amendment to the CIT Loan Agreement, dated as of
August 6, 1993, by and between JCIC and CIT.***
10.9 Trademark License Agreement, dated as of May 9, 1988,
by and between J.P. Stevens and JPS Acquisition Corp.
(predecessor to the Company).***
10.10 Omnibus Real Estate Closing Agreement, dated as of May
9, 1988, by and among J.P. Stevens, JPS Acquisition
Corp., JPS Acquisition Automotive Products Corp., JPS
Acquisition Carpet Corp., JPS Acquisition Industrial
Fabrics Corp., JPS Acquisition Converter and Yarn Corp.
and JPS Acquisition Elastomerics Corp.***
10.11 Purchase Agreement, dated as of April 24, 1988, by and
among JPS Holding Corp., the Company, Odyssey Partners,
West Point-Pepperell, Inc., STN Holdings Inc., Magnolia
Partners, L.P. and J.P. Stevens.***
10.12 Asset Purchase Agreement, dated as of May 25, 1994, by
and among the Company, JAPC, JCIC, JPS Auto Inc., a
Delaware corporation, and Foamex International Inc., a
Delaware corporation.****
10.13 Fourth Amended and Restated Credit Agreement (the
"Existing Credit Agreement"), dated as of June 24,
1994, by and among the Company, JCIC, JPS Elastomerics
Corp., a Delaware corporation ("JEC"), JPS Carpet
Corp., a Delaware corporation ("JCC"), the financial
institutions listed on the signature pages thereof,
Citibank, N.A. ("Citibank"), as Agent and
Administrative Agent, and General Electric Capital
Corporation ("GECC"), as Co-Agent and Collateral Agent.
*****
10.14 First Amendment to the Existing Credit Agreement, dated
as of November 4, 1994, by and among the Company, JCIC,
JEC, JCC, the financial institutions listed on the
signature pages thereof, Citibank, as Agent and
Administrative Agent, and GECC, as Co-Agent and
Collateral Agent. ******
10.15 Second Amendment to the Existing Credit Agreement,
dated as of December 21, 1994, by and among the
Company, JCIC, JEC, JCC, the financial institutions
listed on the signature pages thereof, Citibank, as
Agent and Administrative Agent, and GECC, as Co-Agent
and Collateral Agent. ******
10.16 Fourth Amendment to CIT Loan Agreement, dated as of
December 29, 1994, by and between JCIC and CIT.******
10.17 Lease Modification and Extension Agreement, dated as of
April 30, 1993, by and between 1585 Associates and
JCIC.******
10.18 Long-Term Incentive Plan of the Company effective
November 1, 1994.*******
12.1 Computation of Ratio of Earnings to Fixed Charges.**
12.2 Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.**
21.1 List of Subsidiaries of the Company.******
23.1 Consent of Deloitte & Touche LLP.**
24.1 Power of Attorney relating to the Company
(included as part of the signature page hereof).
25.1 Statement of Eligibility and Qualification, on Form
T-1, of CNB as Trustee (initially filed with the
Securities and Exchange Commission (the "SEC") on
January 2, 1991, and amended by Amendment No. 1 thereto
filed with the SEC on March 15, 1991, each in
connection with the Company's Form T-3, and each
incorporated herein by reference).
25.2 Statement of Eligibility and Qualification, on Form
T-1, of First Trust as Trustee (re: Discount Note
Indenture) (initially filed with the SEC on January 2,
1991, and amended by Amendment No. 1 thereto filed with
the SEC on March 15, 1991, each in connection with the
Company's Form T-3, and each incorporated herein by
reference).
25.3 Statement of Eligibility and Qualification, on Form
T-1, of First Trust as Trustee (re: Subordinated Note
Indenture) (initially filed with the SEC on January 2,
1991, and amended by Amendment No. 1 thereto filed with
the SEC on March 15, 1991, each in connection with the
Company's Form T-3, and each incorporated herein by
reference).
25.4 Statement of Eligibility and Qualification, on Form
T-1, of First Bank National Association as Trustee
(initially filed with the SEC on January 2, 1991, and
amended by Amendment No. 1 thereto filed with the SEC
on March 15, 1991, each in connection with the
Company's Form T-3, and each incorporated herein by
reference).
27.1 Financial data schedule.*******
- --------------------
* Previously filed.
** Filed herewith.
*** Previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended October 30, 1993.
**** Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended April 30, 1994.
***** Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended July 30, 1994.
****** Previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended October 29, 1994.
******* Previously filed as an exhibit to the Company's Quarterly
Report on Form 10-Q for the quarter ended January 28,
1995.
******** To be filed by amendment hereto.