1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 29, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________.
Commission File Number 33-27038
JPS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 57-0868166
- ------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
555 North Pleasantburg Drive, Suite 202, Greenville, South Carolina 29607
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (864) 239-3900
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 10,000,000 shares of the
Company's Common Stock were outstanding as of June 7, 2000.
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JPS INDUSTRIES, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Condensed Consolidated Balance Sheets
April 29, 2000 (Unaudited) and October 30, 1999.............................. 3
Condensed Consolidated Statements of Operations
Three Months and Six Months Ended April 29, 2000 and
May 1, 1999 (Unaudited)...................................................... 4
Condensed Consolidated Statements of Cash Flows
Six Months Ended April 29, 2000 and
May 1, 1999 (Unaudited)...................................................... 5
Notes to Condensed Consolidated Financial Statements (Unaudited)................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................... 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk....................... 12
PART II. OTHER INFORMATION ........................................................................ 13
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Item 1. Financial Statements
JPS INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands) April 29, October 30,
2000 1999
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash $ 1,643 $ 1,343
Accounts receivable 44,985 55,529
Inventories (Note 2) 33,617 36,250
Prepaid expenses and other (Note 5) 3,354 4,711
Net assets held for sale -- 504
--------- ---------
Total current assets 83,599 98,337
Property, plant and equipment, net 82,887 85,792
Reorganization value in excess of amounts allocable
to identifiable assets 30,206 31,066
Other assets 9,865 11,661
--------- ---------
Total assets $ 206,557 $ 226,856
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,201 $ 17,064
Accrued interest 688 865
Accrued salaries, benefits and withholdings 6,827 6,438
Other accrued expenses 7,633 8,984
Current portion of long-term debt (Note 3) 992 975
--------- ---------
Total current liabilities 33,341 34,326
Long-term debt (Note 3) 58,664 79,806
Deferred income taxes 99 --
Other long-term liabilities 17,297 18,071
--------- ---------
Total liabilities 109,401 132,203
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock 100 100
Additional paid-in capital 124,150 123,942
Accumulated deficit (27,094) (29,389)
--------- ---------
Total shareholders' equity 97,156 94,653
--------- ---------
Total liabilities and shareholders' equity $ 206,557 $ 226,856
========= =========
Note: The condensed consolidated balance sheet at October 30, 1999 has been
extracted from the audited financial statements.
See notes to condensed consolidated financial statements.
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JPS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
-------------------------------- ---------------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
------------ ------------ ------------ ------------
Net sales $ 72,596 $ 72,285 $ 137,345 $ 142,669
Cost of sales 58,643 61,167 111,663 120,655
------------ ------------ ------------ ------------
Gross profit 13,953 11,118 25,682 22,014
Selling, general and administrative
expenses 9,147 9,830 17,619 18,727
Other expense (income), net (50) 233 (63) 94
Charges for plant closing and
restructuring costs -- 3,718 -- 3,718
------------ ------------ ------------ ------------
Operating profit (loss) 4,856 (2,663) 8,126 (525)
Interest expense (1,625) (1,886) (3,542) (3,776)
------------ ------------ ------------ ------------
Income (loss) before income taxes
and discontinued operations 3,231 (4,549) 4,584 (4,301)
Provision (benefit) for income taxes 1,648 (1,105) 2,289 (1,250)
------------ ------------ ------------ ------------
Income (loss) before discontinued
operations 1,583 (3,444) 2,295 (3,051)
Discontinued operations (net of taxes):
Loss from discontinued operations -- (362) --
(898)
Loss on disposal of discontinued
operations -- (22,479) -- (22,479)
------------ ------------ ------------ ------------
Net income (loss) $ 1,583 $ (26,285) $ 2,295 $ (26,428)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 10,000,000 10,000,000 10,000,000 10,000,000
Basic and diluted income (loss) per common
share:
Income (loss) before discontinued
operations $ 0.16 $ (0.34) $ 0.23 $ (0.30)
Discontinued operations (net of taxes):
Loss from discontinued operations -- (0.04) -- (0.09)
Loss on disposal of discontinued
operations -- (2.25) -- (2.25)
------------ ------------ ------------ ------------
Net income (loss) $ 0.16 $ (2.63) $ 0.23 $ (2.64)
============ ============ ============ ============
See notes to condensed consolidated financial statements.
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JPS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Six Months Ended
--------------------------------
April 29, May 1,
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 2,295 $(26,427)
-------- --------
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization, except amounts included
in interest expense 5,394 6,031
Interest accretion and debt issuance cost amortization 260 167
Other, net 340 475
Charges for plant closing and restructuring costs -- 3,718
Loss from discontinued operations -- 898
Loss on disposal of discontinued operations -- 22,479
Changes in assets and liabilities:
Accounts receivable 10,544 15,491
Inventories 2,633 (5,732)
Prepaid expenses and other assets 3,462 (139)
Accounts payable 137 (3,650)
Accrued expenses and other liabilities (2,107) (5,639)
-------- --------
Total adjustments 20,663 34,099
-------- --------
Net cash provided by operating activities 22,958 7,672
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions (1,531) (3,171)
Proceeds from sale of assets --
-------- --------
8,391
Net cash provided by (used in) investing activities (1,531) 5,220
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs incurred -- (250)
Revolving credit facility repayments, net (20,665) (12,190)
Borrowings (repayments) of other long-term debt (462) 9
-------- --------
Net cash used in financing activities (21,127) (12,431)
-------- --------
NET INCREASE IN CASH 300 461
CASH AT BEGINNING OF PERIOD 1,343 1,549
-------- --------
CASH AT END OF PERIOD $ 1,643 $ 2,010
======== ========
SUPPLEMENTAL INFORMATION ON CASH FLOWS
FROM CONTINUING OPERATIONS:
Interest paid $ 3,458 $ 3,176
Income taxes paid, net 187 326
Non-cash financing activities:
Capital lease obligation -- 1,307
See notes to condensed consolidated financial statements.
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JPS INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Unless the context otherwise requires, the terms "JPS" and the
"Company" as used in these condensed consolidated financial statements
mean JPS Industries, Inc. and JPS Industries, Inc. together with its
subsidiaries, respectively.
The Company has prepared, without audit, the interim condensed
consolidated financial statements and related notes. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at April 29, 2000 and for all
periods presented have been made.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the fiscal year ended
October 30, 1999. The results of operations for the interim period are
not necessarily indicative of the operating results for the full year.
2. Inventories (in thousands):
April 29, October 30,
2000 1999
------------ ------------
Raw materials and supplies $ 6,877 $ 6,640
Work-in-process 11,659 11,809
Finished goods 15,081 17,801
------------ ------------
Total $ 33,617 $ 36,250
============ ============
3. Long-Term Debt (in thousands):
April 29, October 30,
2000 1999
------------ ------------
Senior credit facility, revolving line of credit $ 54,730 $ 75,394
Equipment financing 926 1,125
Capital lease obligation 4,000 4,262
------------ ------------
Total 59,656 80,781
Less current portion (992) (975)
------------ ------------
Long-term portion $ 58,664 $ 79,806
============ ============
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4. Discontinued Operations and Certain Other Changes
During Fiscal 1999, the Company took certain actions to reposition
itself from a textile-oriented enterprise to a diversified
manufacturing and marketing company that is focused on a broad array of
industrial applications. This was accomplished by successfully
streamlining the ongoing apparel fabrics business and exiting three
other textile businesses while intensifying its focus on the two
businesses with growth potential, JPS Elastomerics and JPS Glass. On
March 2, 1999, the Company exited its home fashions woven fabrics
business by completing the sale of its Boger City manufacturing plant.
This business accounted for sales of $2.0 million and operating loss of
$0.1 million in the three months ended May 1, 1999, and sales of $6.1
million and operating income of $0 in the six months ended May 1, 1999.
The Company closed its Angle manufacturing facility located in Rocky
Mount, Virginia, in its 1999 third fiscal quarter and sold the plant on
September 3, 1999, thereby streamlining the apparel fabrics business.
On July 23, 1999, the Company sold its Stanley, North Carolina plant,
thereby exiting its yarn sales textile business. This business
generated sales of $4.9 million and operating loss of $0.2 million in
the three months ended May 1, 1999 and sales of $8.1 million and
operating loss of $0.4 million in the six months ended May 1, 1999. On
August 27, 1999, the Company sold its Borden manufacturing plant
located in Kingsport, Tennessee, thereby exiting its cotton commercial
products textile business. This business generated sales of $6.1
million and operating loss of $0.1 million in the three months ended
May 1, 1999 and sales of $11.5 million and operating loss of $0.4
million in the six months ended May 1, 1999. The results of operations
for the yarn sales business and cotton commercial products business for
the three months and six months ended May 1, 1999 have been included in
the accompanying condensed consolidated financial statements as
discontinued operations.
5. Contingencies
The Company has provided for all estimated future costs associated with
certain roofing products including those sold by the Predecessor
Stevens Division operations. The liability for future costs associated
with these roofing products is subject to management's best estimate,
including factors such as expected future claims by geographic region
and roofing compound applied; expected costs to repair or replace such
roofing products; estimated remaining length of time that such claims
will be made by customers; and the estimated costs to litigate and
settle certain claims now in litigation.
At April 29, 2000, the Company had net operating loss carryforwards for
regular federal income tax purposes of approximately $51.1 million
(subject to adjustment by the Internal Revenue Service). The net
operating loss carryforwards expire in years 2003 through 2019. The
Company also has federal alternative minimum tax net operating loss
carryforwards of approximately $59.7 million (subject to adjustment)
which expire in 2004 through 2019. In addition, the Company has
alternative minimum tax credits of approximately $1.8 million that can
be carried forward indefinitely and used as a credit against regular
federal taxes, subject to limitation. The Company utilized
approximately $1.9 million of net operating losses during the six-month
period ended April 29, 2000.
The Company's ability to utilize its net operating loss carryforwards
realized prior to completion of the Plan of Reorganization is limited
under the income tax laws as a result of the change in the ownership of
the Company's stock occurring as a part of the Plan of Reorganization.
Due to the Company's operating history, it is uncertain that it will be
able to utilize all deferred tax assets. Therefore, a valuation
allowance of approximately $30.5 million has been provided.
The Company is exposed to a number of asserted and unasserted potential
claims encountered in the normal course of business. Except as
discussed below, management believes that none of this litigation, if
determined unfavorable to the Company, would have a material adverse
effect on the financial condition or results of operations of the
Company.
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In June 1997, Sears Roebuck and Co. ("Sears") filed a multi-count
complaint against JPS Elastomerics Corp. ("Elastomerics"), a
wholly-owned subsidiary of JPS, and two other defendants alleging an
unspecified amount of damages in connection with the alleged premature
deterioration of the Company's roofing membrane installed on
approximately 150 Sears stores. No trial date has been established. The
Company believes it has meritorious defenses to the claims and intends
to defend the lawsuit vigorously. Management, however, cannot determine
the outcome of the lawsuit or estimate the range of loss, if any, that
may occur. Accordingly, no provision has been made for any loss which
may result. An unfavorable resolution of the actions could have a
material adverse effect on the business, results of operations or
financial condition of the Company.
6. Business Segments
The following details summarized information by reportable segments:
Three Months Ended Six Months Ended
----------------------------- -----------------------------
April 29, May 1, April 29, May 1,
2000 1999 2000 1999
--------- --------- --------- ---------
Net sales:
Elastomerics $ 20,745 $ 21,049 $ 39,053 $ 38,886
Glass 21,800 21,434 39,866 40,613
Apparel 31,863 32,572 61,852 68,180
-------- --------- --------- ---------
74,408 75,055 140,771 147,679
Less intersegment sales (1,812) (2,770) (3,426) (5,010)
-------- --------- --------- ---------
Net sales $ 72,596 $ 72,285 $ 137,345 $ 142,669
======== ========= ========= =========
Operating profit (loss):
Elastomerics $ 2,376 $ 1,599 $ 3,928 $ 2,802
Glass 1,892 (715) 2,946 380
Apparel 588 (3,547) 1,252 (3,707)
-------- --------- --------- ---------
Operating profit (loss) 4,856 (2,663) 8,126 (525)
Interest expense (1,625) (1,886) (3,542) (3,776)
-------- --------- --------- ---------
Income (loss) before income taxes
and discontinued operations $ 3,231 $ (4,549) $ 4,584 $ (4,301)
======== ========= ========= =========
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The statements contained in this quarterly report on Form 10-Q that are not
historical facts are forward-looking statements subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. The Company
cautions readers of this quarterly report on Form 10-Q that a number of
important factors could cause the Company's actual results in Fiscal 2000 and
beyond to differ materially from those expressed in any such forward-looking
statements. These factors include, without limitation, the general economic and
business conditions affecting the textile industry, the Company's ability to
meet its debt service obligations, competition from a variety of large textile
mills and foreign textile manufacturers which export to the United States, the
seasonality of the Company's sales, the volatility of the Company's raw
materials cost and the Company's dependence on key personnel.
The following should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing in Item 7
of the Company's Annual Report on Form 10-K for the fiscal year ended October
30, 1999.
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RESULTS OF OPERATIONS
Introduction
The Company has repositioned itself from one that was largely textile-oriented
to a diversified manufacturing and marketing company that is focused on a broad
array of industrial applications. This has been accomplished by successfully
streamlining the ongoing apparel fabrics business and exiting three other
textile businesses, while intensifying its focus on the two businesses with
growth potential, JPS Glass and JPS Elastomerics. On March 2, 1999, the Company
sold its Boger City manufacturing plant, thereby exiting the home fashions woven
fabrics business. The Company closed its Angle manufacturing facility in the
third quarter of 1999 and sold the remaining plant on September 3, 1999, thereby
streamlining the apparel business. On July 23, 1999, the Company sold its
Stanley manufacturing plant, thereby exiting its yarn sales segment. On August
27, 1999, the Company sold its Borden manufacturing plant, thereby exiting its
cotton commercial products segment. The yarn sales and cotton commercial
products segments are reported in the accompanying condensed consolidated
financial statements as discontinued operations. The Company changed its name
from JPS Textile Group, Inc. to JPS Industries, Inc. and is now focusing solely
on improving the performance and profitability of its remaining core businesses:
JPS Elastomerics, JPS Glass and JPS Apparel.
Three Months Ended April 29, 2000 (the "2000 Second Quarter") Compared to the
Three Months Ended May 1, 1999 (the "1999 Second Quarter")
Consolidated net sales increased $0.3 million, or 0.4%, from $72.3 million in
the 1999 second quarter to $72.6 million in the 2000 second quarter. Operating
profit increased $7.5 million from an operating loss of $2.7 million in the 1999
second quarter to an operating profit of $4.8 million in the 2000 second
quarter. The 1999 second quarter includes charges for plant closing and
restructuring costs of approximately $3.7 million. Excluding such charges for
comparative purposes, operating profit in the 1999 second quarter was $1.0
million compared to $4.8 million in the 2000 second quarter.
Net sales in the 2000 second quarter in the Elastomerics segment, which includes
single-ply roofing, environmental membrane and extruded urethane products,
decreased $0.3 million, or 1.4%, to $20.7 million from $21.0 million in the 1999
second quarter. This decrease is primarily attributable to decreased sales of
environmental membranes. The domestic roofing market continues to be
characterized by intense competition and slow market growth. The Company has
addressed these factors with aggressive pricing strategies, introduction of two
new roofing systems, and has strengthened its sales management in key
territories. Sales of extruded urethane products were higher in the 2000 second
quarter as a result of higher demand for certain of the Company's blown film
products, as well as ongoing product introductions.
Operating profit for the Elastomerics segment increased $0.8 million from $1.6
million in the 1999 second quarter to $2.4 million in the 2000 second quarter.
The increase is due to ongoing cost reduction initiatives, improved operating
efficiencies, and a reduction of warranty reserves for roofing systems.
Net sales in the Glass segment, which includes mechanically-formed substrates
constructed of synthetics and fiberglass for electronic components, construction
products, reinforced composites, industrial insulation, and filtration
applications increased $0.4 million, or 1.9%, from $21.4 million in the 1999
second quarter to $21.8 million in the 2000 second quarter.
Operating profit for the Glass segment increased $2.6 million from a loss of
$0.7 million in the 1999 second quarter to $1.9 million in the 2000 second
quarter. This increase reflects ongoing cost reduction and product quality
improvement initiatives and improved operating efficiencies.
Net sales of apparel fabrics, which are principally cellulosic woven fabrics
used primarily for women's wear, decreased $0.7 million, or 2.2%, from $32.6
million in the 1999 second quarter to $31.9 million in the 2000 second quarter,
primarily as a result of market conditions.
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Operating profit for the Apparel segment increased $4.1 million from an
operating loss of $3.5 million in the 1999 second quarter to an operating profit
of $0.6 million in the 2000 second quarter. The 1999 second quarter includes
charges for plant closing and restructuring costs which totaled approximately
$2.4 million. Excluding such charges for comparative purposes, operating loss in
the 1999 second quarter was $1.1 million compared to operating profit of $0.6
million in the 2000 second quarter. This increase is primarily attributable to
ongoing cost reduction initiatives, product mix and operating efficiencies.
Intersegment sales consist primarily of the transfer of certain scrim products
manufactured by the Glass segment to the Elastomerics segment. All intersegment
sales and profits are eliminated in the accompanying condensed consolidated
financial statements.
Interest expense in the 2000 second quarter was $0.3 million less than the 1999
second quarter as a result of lower debt levels.
Six Months Ended April 29, 2000 (the "2000 Six-Month Period") Compared to the
Six Months Ended May 1, 1999 (the "1999 Six-Month Period")
Consolidated net sales decreased $5.3 million, or 3.7%, from $142.7 million in
the 1999 six-month period to $137.4 million in the 2000 six-month period.
Operating profit (loss) increased $8.6 million from an operating loss of $0.5
million in the 1999 six-month period to an operating profit of $8.1 million in
the 2000 six-month period. The 1999 six-month period includes charges for plant
closing and restructuring costs of approximately $3.7 million. Excluding such
charges for comparative purposes, operating profit in the 1999 six-month period
was $3.2 million compared to $8.1 million in the 2000 six-month period.
Net sales in the 2000 six-month period in the Elastomerics segment increased
$0.2 million, or 0.5%, to $39.1 million from $38.9 million in the 1999 six-month
period. This increase is primarily attributable to increases in sales of
extruded products partially offset by a reduction in the sales of environmental
membranes.
Operating profit for the Elastomerics segment increased $1.1 million from $2.8
million in the 1999 six-month period to $3.9 million in the 2000 six-month
period. This increase is due to ongoing cost reduction initiatives, improved
operating efficiencies in urethane production, and a reduction of warranty
reserves for roofing systems.
Net sales in the Glass segment decreased $0.7 million, or 1.7%, from $40.6
million in the 1999 six-month period to $39.9 million in the 2000 six-month
period. The decrease is primarily attributable to lower sales of scrim.
Operating profit for the Glass segment increased $2.6 million from $0.4 million
in the 1999 six-month period to $3.0 million in the 2000 six-month period as a
result of cost reduction efforts, quality enhancements and improved operating
efficiencies.
Net sales of apparel fabrics decreased $6.3 million, or 9.2%, from $68.2 million
in the 1999 six-month period to $61.9 million in the 2000 six-month period due
to the elimination of certain product offerings.
Operating profit for the Apparel segment increased $5.0 million from an
operating loss of $3.7 million in the 1999 six-month period to an operating
profit of $1.3 million in the 2000 six-month period. The 1999 six-month period
includes charges for plant closing and restructuring costs which totaled
approximately $2.4 million. Excluding such charges for comparative purposes,
operating loss in the 1999 six-month period was $1.3 million compared to
operating profit of $1.3 million in the 2000 six-month period. Performance
improved as a result of cost reduction initiatives and operating efficiencies.
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Intersegment sales consist of the transfer of certain scrim products
manufactured by the Glass segment to the Elastomerics segment. All intersegment
sales and profits are eliminated in the accompanying condensed consolidated
financial statements.
Interest expense in the 2000 six-month period was $3.5 million compared to $3.8
million in the 1999 six-month period, reflecting lower debt levels.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity for operations and expansion are
funds generated internally and borrowings under its Revolving Credit Facility
(as defined below). On October 9, 1997, JPS Elastomerics and JPS C&I (the
"Borrowing Subsidiaries") and JPS entered into the Credit Facility Agreement. As
amended, the Credit Agreement provides for a revolving credit loan facility and
letters of credit (the "Revolving Credit Facility") in a maximum principal
amount equal to the lesser of (a) $100 million and (b) a specified borrowing
base (the "Borrowing Base"), which is based upon eligible receivables, eligible
inventory and a specified dollar amount (currently $29,500,000 (subject to
reduction) based on fixed assets of the Borrowing Subsidiaries), except that (i)
no Borrowing Subsidiary may borrow an amount greater than the Borrowing Base
attributable to it (less any reserves as specified in the Credit Agreement) and
(ii) letters of credit may not exceed $20 million in the aggregate. The Credit
Agreement contains restrictions on investments, acquisitions and dividends. The
Credit Agreement also restricts, among other things, indebtedness, liens,
affiliate transactions, operating leases, fundamental changes and asset sales.
The Credit Agreement contains financial covenants relating to minimum levels of
EBITDA, minimum interest coverage ratio, minimum fixed charge coverage ratio,
and maximum capital expenditures. The maturity date of the Revolving Credit
Facility is October 9, 2002. Subsequent to October 9, 1997, the Credit Agreement
has been amended to, among other things (i) modify the financial covenants
relating to minimum levels of EBITDA, minimum interest coverage ratio, minimum
fixed charge coverage ratio, and maximum capital expenditures, (ii) modify the
interest rate margin and unused commitment fees, (iii) provide additional
reduction of fixed asset portion of the Borrowing Base, and (iv) allow the
Company to repurchase shares of its common stock subject to certain limitations.
As of April 29, 2000, the Company was in compliance with these restrictions and
all financial covenants, as amended. All loans outstanding under the Revolving
Credit Facility, as amended, bear interest at either the Eurodollar Rate (as
defined in the Credit Agreement) or the Base Rate (as defined in the Credit
Agreement) plus an applicable margin (the "Applicable Margin") based upon the
Company's fixed charge coverage ratio (which margin will not exceed 2.50% for
Eurodollar Rate borrowings and 1.00% for Base Rate borrowings). The weighted
average interest rate at April 29, 2000 is approximately 8.7%. At April 29,
2000, the Company had approximately $25.7 million available for borrowing under
the Revolving Credit Facility.
During the 2000 second quarter, cash provided by operating activities was $23.0
million. Working capital decreased from $64.0 million at October 30, 1999 to
$50.3 million at April 29, 2000. Accounts receivable decreased by $10.5 million
from October 30, 1999 to April 29, 2000. Inventories decreased by $2.6 million,
primarily in finished goods, during the 2000 second quarter, prepaid and other
assets decreased $3.5 million, accounts payable increased by $0.1 million, and
other accrued expenses decreased $1.4 million.
The principal use of cash in the 2000 second quarter was for capital
expenditures of $1.1 million and net repayment of borrowings under the Revolving
Credit Facility of $9.6 million. As of April 29, 2000, the Company had
commitments of $1.1 million for capital expenditures. The Company anticipates
making capital expenditures in Fiscal 2000 of approximately $5.0 million and
expects such amounts to be funded by cash from operations,
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bank and other equipment financing services. Also, on February 29, 2000, the
Company announced a stock repurchase program for up to $8 million of its
outstanding common stock. Repurchases under this program will be made from time
to time in open market or privately negotiated transactions consistent with the
Credit Agreement. The actual number of shares purchased, the timing of purchases
and the prices paid will depend on future market conditions and compliance with
applicable legal requirements.
Based upon the Company's ability to generate working capital through its
operations and its Revolving Credit Facility, the Company believes that it has
the financial resources necessary to pay its capital obligations and implement
its business plan.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest rate risk. The Company has exposure to interest rate changes primarily
relating to interest rate changes under its Revolving Credit Facility. The
Company's Revolving Credit Facility bears interest at rates which vary with
changes in (i) the London Interbank Offered Rate (LIBOR) or (ii) a rate of
interest announced publicly by Citibank in New York, New York. The Company does
not speculate on the future direction of interest rates. As of April 29, 2000,
approximately $54.7 million of the Company's debt bore interest at variable
rates.
Raw material price risk. A portion of the Company's raw materials are staple
goods that are affected by raw material pricing and are, therefore, subject to
price volatility caused by weather, production problems, delivery difficulties,
and other factors which are outside the control of the Company. In most cases,
essential raw materials are available from several sources. For several raw
materials, however, branded goods or other circumstances may prevent such
diversification and an interruption of the supply of these raw materials could
have a significant impact on the Company's ability to produce certain products.
The Company has established long-term relationships with key suppliers and may
enter into purchase contracts or commitments of one year or less for certain raw
materials. Such agreements generally include a pricing schedule for the period
covered by the contract or commitment. The Company believes that any changes in
raw material pricing which cannot be adjusted for by changes in its product
pricing or other strategies, would not be significant.
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13
JPS INDUSTRIES, INC.
PART II - OTHER INFORMATION
Item
1. Legal Proceedings None
2. Changes in Securities None
3. Defaults Upon Senior Securities None
4. Submission of Matters to a Vote of Stockholders
The Company's Annual Meeting of Stockholders was held on February 29, 2000
in New York, New York for the following purposes:
(1) To elect five (5) members of the Board of Directors to serve for a one
year term expiring at the 2001 Annual Meeting of Stockholders:
For Withheld
--- --------
Michael L. Fulbright 7,905,708 5,055
Robert J. Capozzi 7,881,208 29,535
Jeffrey S. Deutschman 7,905,708 5,055
Nicholas P. DiPaolo 7,881,208 29,555
John M. Sullivan, Jr. 7,905,708 5,055
(2) To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the 2000 fiscal year:
For Against Abstain
--- ------- -------
7,908,963 800 1,000
5. Other Information
None
6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
(11) Statement re: Computation of Per Share Earnings - not
required since such computation can be clearly determined
from the material contained herein.
(27) Financial Data Schedule (for SEC use only)
(b) Current Reports on Form 8-K:
(i) No reports on Form 8-K were filed for the Second Quarter ended
April 29, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JPS INDUSTRIES, INC.
Date: June 12, 2000 /s/ Charles R. Tutterow
-----------------------------------------
Charles R. Tutterow
Executive Vice President, Chief Financial
Officer and Secretary
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