UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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
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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 Hourly 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 HOURLY EMPLOYEES
Financial Statements and Supplemental Schedule
December 31, 2000 and 1999
(With Independent Auditors' Report Thereon)
PILLOWTEX CORPORATION
401(k) PLAN FOR HOURLY EMPLOYEES
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits at - 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 Hourly Employees:
We have audited the accompanying statements of net assets available for benefits
of the Pillowtex Corporation 401(k) Plan for Hourly 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 Hourly 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,
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 HOURLY 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 $ 70,175,511 $ 63,773,827
Common stock - Pillowtex Corporation 74,761 180,623
Participant loans 7,089,162 5,460,912
---------------- ----------------
Total investments 77,339,434 69,415,362
---------------- ----------------
Cash 307,874 406,335
Receivables:
Contributions (note 1) 506,726 439,255
Accrued income -- 17,846
---------------- ----------------
Total receivables 506,726 457,101
---------------- ----------------
Net assets available for benefits $ 78,154,034 $ 70,278,798
================ ================
See accompanying notes to financial statements.
2
PILLOWTEX CORPORATION
401(k) PLAN FOR HOURLY 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 appreciation in fair value of investments $ 656,473 $ 2,009,504
Interest and dividends 3,024,438 3,647,723
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Total investment income 3,680,911 5,657,227
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Contributions (note 1):
Participants 5,492,477 5,373,108
Employer 1,946,146 1,738,831
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Total contributions 7,438,623 7,111,939
--------------- ----------------
Other additions:
Plan assets transferred in due to plan merger (note 1) 8,755,273 549,541
Other transfers (note 6) 2,310 7,527,113
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Total additions 19,877,117 20,845,820
--------------- ----------------
Deductions from net assets attributed to:
Benefits paid to participants 11,832,020 7,959,155
Administrative expenses 169,861 243,242
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Total deductions 12,001,881 8,202,397
--------------- ----------------
Net increase 7,875,236 12,643,423
Net assets available for benefits:
Beginning of year 70,278,798 57,635,375
--------------- ----------------
End of year $ 78,154,034 $ 70,278,798
=============== ================
See accompanying notes to financial statements.
3
PILLOWTEX CORPORATION
401(k) PLAN FOR HOURLY 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 Hourly 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 hourly 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 hourly participants of the Pillowtex
Corporation 401(k) Plan were merged with the participants of the
Pillowtex Fieldcrest Cannon 401(k) Plan for Hourly Employees. The
merger resulted in the transfer of $8,755,273 of assets from the
Pillowtex Corporation 401(k) Plan. The name of the new plan was
changed to the Pillowtex Corporation 401(k) Plan for Hourly
Employees.
Effective January 1, 1999, the hourly 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.
(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
4 (Continued)
PILLOWTEX CORPORATION
401(k) PLAN FOR HOURLY EMPLOYEES
Notes to Financial Statements
December 31, 2000 and 1999
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).
Except for employees covered by collective bargaining agreements,
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.) The employer match for employees
covered by collective bargaining agreements is calculated as
negotiated within those agreements.
(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 or 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.
Strong Government Securities Fund - The fund seeks current income
with moderate share-price fluctuation by investing primarily in
U.S. government obligations.
5 (Continued)
PILLOWTEX CORPORATION
401(k) PLAN FOR HOURLY EMPLOYEES
Notes to Financial Statements
December 31, 2000 and 1999
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 P/E 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.
(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.
6 (Continued)
PILLOWTEX CORPORATION
401(k) PLAN FOR HOURLY EMPLOYEES
Notes to Financial Statements
December 31, 2000 and 1999
(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. Purchase 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 amounts 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 HOURLY 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
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Investments at fair value:
Schwab Institutional Advantage Money Market Fund $26,810,595* $25,278,638*
Strong Government Securities Fund 3,738,805 3,403,776
Gabelli Westwood Balanced Fund 10,227,964* 8,860,517*
Vanguard Windsor II Fund 14,614,094* 13,948,735*
Neuberger Berman Partners Fund 2,750,972 1,236,931
INVESCO Dynamics Fund 11,641,244* 10,667,361*
GAM International Fund 391,837 377,869
Common stock - Pillowtex Corporation 74,761 180,623
Participant loans 7,089,162* 5,460,912*
----------- -----------
$77,339,434 $69,415,362
=========== ===========
*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 as determined and reported by the
Plan Trustee are as follows:
2000 1999
---------- ---------
Net appreciation (depreciation) in fair value of investments:
Mutual funds $1,506,369 $2,641,887
Common stock - Pillowtex Corporation (849,896) (632,383)
---------- ----------
$ 656,473 $2,009,504
========== ==========
(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 HOURLY 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
letter dated February 18, 1997 that the Plan and 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 being operated in compliance with the applicable requirements of
the IRC.
(6) Other Transfers
Assets are transferred between the Plan and Pillowtex Corporation 401(k)
Plan for Salaried 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 HOURLY 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 Money market fund 26,810,595 $26,810,595
Market Fund*
Strong Government Securities Fund Mutual fund 353,051 3,738,805
Gabelli Westwood Balanced Fund Mutual fund 880,203 10,227,964
Vanguard Windsor II Fund Mutual fund 537,283 14,614,094
Neuberger Berman Partners Fund Mutual fund 125,443 2,750,972
INVESCO Dynamics Fund Mutual fund 489,745 11,641,244
GAM International Fund Mutual fund 19,572 391,837
Common stock - Pillowtex Corporation* Common stock 267,007 74,761
Participant loans* ** Loans to participants -- 7,089,162
-----------------
Total investments $77,339,434
=================
*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 FOR HOURLY EMPLOYEES
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