UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------
FORM 11-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the fiscal year ended December 31, 2000
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the transition period from to
---------- ----------
Commission file number: 1-11756
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Pillowtex Corporation 401(k) Plan for Salaried Employees
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Financial Statements and Supplemental Schedule
December 31, 2000 and 1999
(With Independent Auditors' Report Thereon)
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits - December 31, 2000 and 1999 2
Statements of Changes in Net Assets Available for Benefits -
Years ended December 31, 2000 and 1999 3
Notes to Financial Statements 4
Schedule
Schedule H, 4i - Schedule of Assets Held for Investment Purposes at
End of Year - December 31, 2000 10
Independent Auditors' Report
The Employee Benefits Committee
Pillowtex Corporation 401(k) Plan for Salaried Employees:
We have audited the accompanying statements of net assets available for benefits
of the Pillowtex Corporation 401(k) Plan for Salaried Employees as of December
31, 2000 and 1999, and the related statements of changes in net assets available
for benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Pillowtex
Corporation 401(k) Plan for Salaried Employees as of December 31, 2000 and 1999,
and the changes in net assets available for benefits for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes at end of year is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
and in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ KPMG LLP
Charlotte, North Carolina
June 26, 2001
1
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Statements of Net Assets Available for Benefits
December 31, 2000 and 1999
Assets 2000 1999
---------------- ----------------
Investments, at fair value (notes 1 and 3):
Mutual funds $ 54,729,396 52,788,782
Common stock - Pillowtex Corporation 128,702 65,781
Participant loans 2,174,657 1,577,370
---------------- ----------------
Total investments 57,032,755 54,431,933
================ ================
Cash 369,613 320,282
Receivables:
Contributions (note 1) 244,051 170,306
Accrued income -- 15,799
---------------- ----------------
Total receivables 244,051 186,105
---------------- ----------------
Net assets available for benefits $ 57,646,419 54,938,320
================ ================
See accompanying notes to financial statements.
2
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2000 and 1999
2000 1999
---------------- ----------------
Additions to net assets attributed to:
Investment income (notes 1 and 3):
Net (depreciation) appreciation in fair value of investments $ (886,048) 2,514,092
Interest and dividends 1,538,420 2,947,620
---------------- ----------------
Total investment income 652,372 5,461,712
---------------- ----------------
Contributions (note 1):
Participants 3,781,704 3,189,935
Employer 996,877 744,712
---------------- ----------------
Total contributions 4,778,581 3,934,647
---------------- ----------------
Other additions:
Plan assets transferred in due to plan merger (note 1) 7,851,573 274,147
Other transfers (note 6) 30 17,129
---------------- ----------------
Total additions 13,282,556 9,687,635
---------------- ----------------
Deductions from net assets attributed to:
Benefits paid to participants 10,437,341 6,329,980
Other transfers (notes 1 and 6) -- 7,492,788
Administrative expenses 137,116 209,343
---------------- ----------------
Total deductions 10,574,457 14,032,111
---------------- ----------------
Net increase (decrease) 2,708,099 (4,344,476)
Net assets available for benefits:
Beginning of year 54,938,320 59,282,796
---------------- ----------------
End of year $ 57,646,419 54,938,320
================ ================
See accompanying notes to financial statements.
3
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Notes to Financial Statements
December 31, 2000 and 1999
(1) Description of the Plan
The following description of the Pillowtex Corporation (the Company)
401(k) Plan for Salaried Employees (the Plan) provides only general
information. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
(a) General
The Plan is a defined contribution profit sharing plan covering
all full-time salaried employees of the Company. The Plan is
subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
On November 14, 2000, the Company and substantially all of its
domestic subsidiaries, including Fieldcrest Cannon, Inc., filed
voluntary petitions for reorganization under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy
Court ("Court") for the District of Delaware. Management of the
Company is in the process of developing its plan of reorganization
for submission to the Court for approval. In connection with this
process, the possibility exists that the Court may terminate the
Plan. In the event of a Plan termination, the net assets of the
Plan would be distributed in accordance with the provisions of the
Plan document. No provision for the above uncertainty has been
made in the Plan's financial statements.
(b) Plan Amendment
Effective January 1, 1999, the Plan was amended and restated to
increase the maximum employee contribution percentage from 15% to
20%. In addition, the Plan appointed a new trustee and record
keeper. Citibank, N.A. was succeeded by The Charles Schwab Trust
Company (Schwab) as trustee and Mercer Associates was succeeded by
Milliman & Robertson, Inc. as record keeper. Plan assets
transferred to Schwab were transferred into funds comparable to
those offered by Citibank. Two new investment fund choices were
also added to the Plan.
(c) Plan Merger
On January 1, 2000, the salaried participants of the Pillowtex
Corporation 401(k) Plan were merged with the participants of the
Pillowtex Fieldcrest Cannon 401(k) Plan for Salaried Employees.
The merger resulted in the transfer of $7,851,573 of assets from
the Pillowtex Corporation 401(k) Plan. The name of the new plan
was changed to Pillowtex Corporation 401(k) Plan for Salaried
Employees.
Effective January 1, 1999, the salaried employees of the Dixie
Group, Inc. 401(k) Retirement Savings Plan merged into the Plan,
and all assets of the Dixie Plan were liquidated and transferred
to the Trustee of the Plan.
4 (Continuned)
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Notes to Financial Statements
December 31, 2000 and 1999
(d) Contributions
Each year participants may contribute up to 20% of pre-tax annual
compensation, as defined by the Plan. Participants may elect to
invest their contributions in any of the available investment
funds. Under the Tax Reform Act of 1986, a participating
employee's annual contribution is limited to certain amounts as
set forth by the Internal Revenue Code (IRC).
The Company matches 70% of employee contributions up to 2% of
participants' eligible compensation and 20% of employee
contributions on the next 4% of eligible compensation. (2% prior
to April 1, 2000 plan amendment.)
(e) Participant Accounts
Each participant's account is credited with the participant's and
Company's contributions and is allocated their share of Plan
earnings and administrative expenses which are based on
participant earnings or account balances, as defined. The benefit
to which a participant is entitled is the benefit that can be
provided from the participant's account.
(f) Vesting
A participant's matching Company contribution account balance
became 100% vested if the participant was participating in the
Plan on December 31, 1999 as a result of the Plan merger.
Participants who enrolled in the Plan subsequent to this date are
immediately vested in their contributions and in the Company's
contributions plus actual earnings thereon over a four year period
at 25% per year.
(g) Payment of Benefits
Upon normal retirement at age 65, death, disability, early
retirement or termination of employment, the participant's vested
benefits are paid to the member employee or his beneficiary in the
form of a lump-sum distribution.
(h) Participants' Loans
A participant may borrow from his fund accounts a minimum of $500
up to a maximum of the lesser of $50,000 or 50% of his account
balance. Loan transactions are treated as a transfer from (to) the
investment fund to (from) the loan fund. Loan terms range from 1-5
years or up to 10 years for the purchase of a primary residence.
The loans are secured by the balance in the participant's account
and bear interest at a rate of prime plus 1%. Principal and
interest are paid ratably through payroll deductions.
(i) Investment Options
A participant may currently elect any of the following eight
investment options:
Schwab Institutional Advantage Money Market Fund - The fund seeks
maximum current income by investing primarily in a diversified
portfolio of high quality short-term debt securities of major U.S.
banks and corporations.
5 (Continued)
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Notes to Financial Statements
December 31, 2000 and 1999
Strong Government Securities Fund - The fund seeks current income
with moderate share-price fluctuation by investing primarily in
U.S. Government obligations.
Gabelli Westwood Balanced Fund - The fund seeks capital
appreciation and current income by investing between 30% and 70%
of assets in common stocks or convertible securities issued by
seasoned companies with above-average historical earnings growth,
or by smaller companies with outstanding potential for capital
appreciation. It may invest the balance in investment-grade U.S.
dollar or foreign currency-denominated debt. The fund invests at
least 25% in fixed income senior securities and up to 25% in
foreign securities.
Vanguard Windsor II Fund - The fund seeks long-term growth of
capital by investing primarily in undervalued stocks of medium and
large companies, characterized by above-average dividend yields
and below-average price/earnings ratios relative to the stock
market.
Neuberger Berman Partners Fund - The fund seeks capital growth by
investing primarily in common stocks of established companies with
management focusing on securities that it believes are undervalued
based on low price/earnings ratios, consistent cash flow, and
support from asset values.
INVESCO Dynamics Fund - The fund seeks capital appreciation by
investing primarily in common stocks of domestic companies with
management emphasizing short-term factors when selecting
securities, including current information about a company,
investor interest, price movements of the company's securities,
general market and monetary conditions.
GAM International Fund - The fund seeks long-term capital
appreciation by investing at least 65% of assets in securities
issued in at least three foreign countries. It invests primarily
in equity securities but may also invest up to 5% of assets in
debt securities.
Common Stock - Pillowtex Corporation - Pillowtex Corporation is
the parent company of Fieldcrest Cannon, Inc. Pillowtex Common
Stock was publicly traded on the New York Stock Exchange ("NYSE").
On November 14, 2000, after the NYSE suspended trading in the
Common Stock, the Common Stock began trading on the
over-the-counter electronic bulletin board (the "OTCBB") under the
symbol "PTEXQ.OB." During the period from the time trading
commenced on the OTCBB to the last day of Pillowtex's fiscal year
2000, the reported bid price for the Common Stock on the OTCBB
ranged from a high of $0.625 to a low of $0.25. The quotations
reflect inter-dealer prices without retail mark-up, mark-down or
commission and may not represent actual transactions. Effective
November 14, 2000, Pillowtex Common Stock was no longer an
investment option for new contributions or transfers from other
funds.
6 (Continued)
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Notes to Financial Statements
December 31, 2000 and 1999
(2) Summary of Accounting Policies
(a) Basis of Accounting
The financial statements of the Plan are prepared in accordance
with accounting principles generally accepted in the United States
of America.
(b) Investment Valuation and Income Recognition
The Plan's investments in mutual funds and common stock are stated
at fair value. The mutual fund investments are valued at quoted
market prices which represent the asset values of shares held by
the Plan at year end.
The participant loans are valued at their outstanding balances,
which approximate fair value. Purchases and sales of securities
are recorded on a trade-date basis. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date.
(c) Administrative Expenses
Administrative expenses include trustee and investment manager
fees which are distributed from Plan assets by the Trustee.
Certain other administrative expenses of the Plan are paid by the
Company including accounting, legal and audit fees and other
administrative services.
(d) Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amount of net assets available for benefits
and changes therein. Actual results could differ from those
estimates.
(e) Benefit Payments
Benefits are recorded when paid.
(f) Reclassifications
Uninvested amounts of cash have been reclassified from investments
in 1999 to conform with the 2000 presentation.
(g) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133 requires that an entity
recognize all derivatives and measure those instruments at fair
value.
SFAS No. 133 is effective for fiscal years beginning after June
15, 2000. Pursuant to SFAS No. 137, the Plan is required to
adopt SFAS No. 133 effective January 1, 2001. Management
has not yet determined the impact of SFAS No. 133 on the Plan
financial statements.
7 (Continued)
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Notes to Financial Statements
December 31, 2000 and 1999
(3) Investments
In September 1999, the American Institute of Certified Public Accountants
issued Statement of Position 99-3, Accounting for and Reporting of
Certain Defined Contribution Plan Investments and Other Disclosure
Matters (SOP 99-3). SOP 99-3 simplifies the disclosure for certain
investments and is effective for plan years ending after December 15,
1999. The Plan adopted SOP 99-3 during the Plan year ending December 31,
1999.
Investments as of December 31, 2000 and 1999 are summarized as follows:
2000 1999
----------------- -----------------
Investments at fair value:
Schwab Institutional Advantage Money Market Fund $ 9,955,245 * 10,083,243 *
Strong Government Securities Fund 2,236,084 3,013,754 *
Gabelli Westwood Balanced Fund 10,455,783 * 9,955,462 *
Vanguard Windsor II Fund 13,002,607 * 15,115,527 *
Neuberger Berman Partners Fund 4,088,150 * 2,590,509
INVESCO Dynamics Fund 14,623,703 * 11,546,648 *
GAM International Fund 367,824 483,639
Common stock - Pillowtex Corporation 128,702 65,781
Participant loans 2,174,657 1,577,370
----------------- -----------------
$ 57,032,755 54,431,933
================= =================
*Represents 5% or more of total net assets available for benefits.
The components of net appreciation (depreciation) in fair value of
investments for the year ended December 31, 2000 and 1999 and reported by
the Plan Trustee are as follows:
2000 1999
----------------- -----------------
Net (depreciation) appreciation in fair value of investments:
Mutual funds $ 587,637 2,729,137
Common stock - Pillowtex Corporation (1,473,685) (215,045)
----------------- -----------------
$ (886,048) 2,514,092
================= =================
(4) Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time, and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become vested to the extent of the
balance in their account.
8 (Continued)
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Notes to Financial Statements
December 31, 2000 and 1999
(5) Income Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated February 18, 1997, that the Plan and the related trust are
designed in accordance with applicable requirements of the IRC. The Plan
has been amended since receiving the determination letter. However, the
Plan administrator and Plan's management believe that the Plan is
designed and is currently operating in compliance with the applicable
requirements of the IRC.
(6) Other Transfers
Assets are transferred between the Plan and the Pillowtex Corporation
401(k) Plan for Hourly Employees for participants who have transferred
between the hourly and salaried payrolls of the Company.
(7) Related Party Transactions
Certain Plan investments are shares of common stock of Pillowtex
Corporation and units of a money market fund managed by The Charles
Schwab Trust Company. The Charles Schwab Trust Company is the trustee as
defined by the Plan. Therefore, these transactions qualify as
party-in-interest.
9 (Continued)
PILLOWTEX CORPORATION
401(k) PLAN FOR SALARIED EMPLOYEES
Schedule H, 4i - Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2000
Description of Units/ Current
Identity of issue investments shares value
- ----------------------------------------------------- ------------------------ ----------------- ------------------
Schwab Institutional Advantage Money
Market Fund* Money market fund 9,955,245 $ 9,955,245
Strong Government Securities Fund Mutual fund 211,151 2,236,084
Gabelli Westwood Balanced Fund Mutual fund 899,809 10,455,783
Vanguard Windsor II Fund Mutual fund 478,037 13,002,607
Neuberger Berman Partners Fund Mutual fund 186,418 4,088,150
INVESCO Dynamics Fund Mutual fund 615,217 14,623,703
GAM International Fund Mutual fund 18,373 367,824
Common stock - Pillowtex Corporation* Common stock 459,648 128,702
Participant loans* ** Loans to participants -- 2,174,657
------------------
Total investments $ 57,032,755
==================
*Party-in-interest
** Interest rates ranged from 6.7% to 10.5% during 2000.
See accompanying independent auditors' report.
10
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Employee Benefits Committee which administers the Plan has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
PILLOWTEX CORPORATION 401(K) PLAN
By Employee Benefits Committee Appointed
Pursuant to the Plan:
Date: June 28, 2001 /s/ Donald Mallo
--------------------------------------------
Donald Mallo, Committee Member
Date: June 28, 2001 /s/ Janet F. Earnhardt
--------------------------------------------
Janet F. Earnhardt, Committee Member
Date: June 28, 2001 /s/ Pat Ruiz
--------------------------------------------
Pat Ruiz, Committee Member
Date: June 28, 2001 /s/ Henry T. Pollock
--------------------------------------------
Henry T. Pollock, Committee Member
Date: June 28, 2001 /s/ John F. Sterling
--------------------------------------------
John F. Sterling, Committee Member
Date: June 28, 2001 /s/ Nicole Hale
---------------------------------------------
Nicole Hale, Committee Member
Exhibit Index
Exhibit
Number Document Description
------ --------------------
23.1 Consent of Independent Auditors