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 28, 2001
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: 9,257,549 shares of the
Company"s Common Stock were outstanding as of June 8, 2001.
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JPS INDUSTRIES, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Condensed Consolidated Balance Sheets
April 28, 2001 (Unaudited) and October 28, 2000................ 3
Condensed Consolidated Statements of Operations
Three Months and Six Months Ended April 28, 2001 and
April 29, 2000 (Unaudited)..................................... 4
Condensed Consolidated Statements of Cash Flows
Six Months Ended April 28, 2001 and
April 29, 2000 (Unaudited)..................................... 5
Notes to Condensed Consolidated Financial Statements (Unaudited)... 6
Item 2. Management"s Discussion and Analysis of Financial Condition
and Results of Operations...................................... 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk......... 11
PART II. OTHER INFORMATION ....................................................... 13
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Item 1. Financial Statements
JPS INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share and Per Share Amounts)
April 28, October 28,
2001 2000
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash $ 1,103 $ 2,216
Accounts receivable 25,682 27,640
Inventories (Note 2) 18,630 18,583
Prepaid expenses and other (Note 5) 4,287 6,993
Net assets of discontinued operations (Note 4) -- 27,539
--------- ---------
Total current assets 49,702 82,971
Property, plant and equipment, net 45,304 43,439
Reorganization value in excess of amounts allocable
to identifiable assets 2,885 2,971
Other assets 18,983 18,861
--------- ---------
Total assets $ 116,874 $ 148,242
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,952 $ 13,303
Accrued interest 182 759
Accrued salaries, benefits and withholdings 3,221 6,776
Other accrued expenses 3,565 4,924
Current portion of long-term debt (Note 3 and Note 4) 597 936
--------- ---------
Total current liabilities 17,517 26,698
Long-term debt (Note 3 and Note 4) 27,819 51,529
Other long-term liabilities 17,955 17,607
--------- ---------
Total liabilities 63,291 95,834
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock- $.01 par value; authorized -
22,000,000 shares; issued - 10,000,000 shares; outstanding -
9,240,549 shares in 2001 and 9,732,500 shares in 2000 100 100
Additional paid-in capital 124,200 124,190
Treasury stock (at cost) - 759,451 in 2001 and
267,500 shares in 2000 (2,961) (1,263)
Accumulated deficit (67,756) (70,619)
--------- ---------
Total shareholders' equity 53,583 52,408
--------- ---------
Total liabilities and shareholders' equity $ 116,874 $ 148,242
========= =========
Note: The condensed consolidated balance sheet at October 28, 2001 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 28, April 29, April 28, April 29,
2001 2000 2001 2000
------------ ------------ ------------ ------------
Net sales $ 39,537 $ 41,039 $ 78,170 $ 76,176
Cost of sales 30,686 30,288 60,538 57,055
------------ ------------ ------------ ------------
Gross profit 8,851 10,751 17,632 19,121
Selling, general and administrative
expenses 5,654 6,889 11,458 13,056
Other income, net (2) 3 -- 6
------------ ------------ ------------ ------------
Operating profit 3,195 3,865 6,174 6,071
Interest expense 634 845 1,485 1,698
------------ ------------ ------------ ------------
Income before income taxes
and discontinued operations 2,561 3,020 4,689 4,373
Provision for income taxes 997 1,524 1,826 2,022
------------ ------------ ------------ ------------
Income from continuing operations 1,564 1,496 2,863 2,351
Income (loss) from discontinued operations -- 87 -- (56)
------------ ------------ ------------ ------------
Net income $ 1,564 $ 1,583 $ 2,863 $ 2,295
============ ============ ============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic 9,207,549 10,000,000 9,382,533 10,000,000
============ ============ ============ ============
Diluted 9,424,528 10,000,000 9,618,978 10,000,000
============ ============ ============ ============
Basic earnings (loss) per common share:
Income from continuing operations $ 0.17 $ 0.15 $ 0.31 $ 0.24
Income (loss) from discontinued
operations -- 0.01 -- (0.01)
------------ ------------ ------------ ------------
Net income $ 0.17 $ 0.16 $ 0.31 $ 0.23
============ ============ ============ ============
Diluted earnings (loss) per common share:
Income from continuing operations $ 0.17 $ 0.15 $ 0.30 $ 0.24
Income (loss) from discontinued
operations -- 0.01 -- (0.01)
------------ ------------ ------------ ------------
Net income $ 0.17 $ 0.16 $ 0.30 $ 0.23
============ ============ ============ ============
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 28, April 29,
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,863 $ 2,295
-------- --------
Adjustments to reconcile net income to net cash provided by
operating activities:
Loss from discontinued operations -- 56
Depreciation and amortization 2,941 3,107
Amortization of deferred financing costs 149 260
Deferred income tax provision (benefit) 1,826 3,111
Changes in assets and liabilities:
Accounts receivable 1,958 2,495
Inventories (47) (446)
Prepaid expenses and other assets 2,706 (583)
Accounts payable (3,351) (136)
Accrued expenses and other liabilities (7,317) 947
Other, net 270 (1,888)
-------- --------
Total adjustments (865) 6,923
-------- --------
Net cash provided by continuing operating activities 1,998 9,218
Net cash from discontinued operations -- 14,203
-------- --------
Net cash provided by operating activities 1,998 23,421
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions (4,650) (1,136)
Proceeds from assets held for sale 27,539 --
-------- --------
Net cash provided by (used in) investing activities 22,889 (1,136)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs incurred (161) --
Purchase of treasury stock (2,104) --
Net proceeds from exercise of stock options 314 --
Revolving credit facility repayments, net (23,329) (20,663)
Repayment of other long-term debt (720) (462)
-------- --------
Net cash used in financing activities (26,000) (21,125)
-------- --------
NET INCREASE (DECREASE) IN CASH (1,113) 1,160
CASH AT BEGINNING OF PERIOD 2,216 427
-------- --------
CASH AT END OF PERIOD $ 1,103 $ 1,587
======== ========
SUPPLEMENTAL INFORMATION ON CASH FLOWS
FROM CONTINUING OPERATIONS:
Interest paid $ 1,980 $ 3,458
Income taxes paid, net 390 187
See notes to 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 28, 2001 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 28, 2000 ("Fiscal 2000"). The results of operations for the
interim period are not necessarily indicative of the operating results
for the full year. Certain amounts have been reclassified to conform to
the current presentation, including amounts related to the sale of the
Company's Apparel Division on November 17, 2000.
2. Inventories (in thousands):
April 28, October 28,
2001 2000
------------ ------------
Raw materials and supplies $ 3,955 $ 5,796
Work-in-process 4,957 5,135
Finished goods 9,718 7,652
------------ ------------
Total $ 18,630 $ 18,583
============ ============
3. Long-Term Debt (in thousands):
April 28, October 28,
2001 2000
------------ ------------
Senior credit facility, revolving line of credit $ 24,968 $ 48,000
Equipment financing - 736
Capital lease obligation 3,448 3,729
------------ ------------
Total 28,416 52,465
Less current portion (597) (936)
------------ ------------
Long-term portion $ 27,819 $ 51,529
============ ============
On May 9, 2001, JPS, Elastomerics and C&I replaced the existing
syndicated senior revolving credit facility led by Citibank which was
scheduled to mature in November, 2001 with a new Revolving Credit and
Security Agreement with First Union National Bank. As a result of this
refinancing, the borrowings
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at April 28, 2001 have been classified as long-term. The new facility
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) $35 million or (b) a specified borrowing base (the
"Borrowing Base"), which is based upon eligible receivables, eligible
inventory, and a specified dollar amount (currently $10,000,000 subject
to reduction). The Revolving Credit Facility restricts investments,
acquisitions, and dividends. The Credit Agreement contains financial
covenants relating to minimum levels of net worth, as defined, and a
minimum debt to EBITDA ratio, as defined. As of April 28, 2001, the
Company was in compliance with all of the restrictions and all
financial covenants of its previous Credit Agreement and is currently
in compliance with all of the restrictions and covenants of its new
Revolving Credit Facility as well. All loans outstanding under the
Revolving Credit Facility bear interest at the 30-day LIBOR rate plus
an applicable margin (the "Applicable Margin") based upon the Company's
debt to EBITDA ratio. As of May 9, 2001, the Company's effective
interest rate was approximately 5.4%, and it had approximately $10
million available for borrowing under the Revolving Credit Facility.
4. Discontinued Operations
Apparel Fabric Business - On November 17, 2000, the Company sold the
assets of its greige apparel fabric business which included three
manufacturing facilities in South Boston, Virginia; Greenville, South
Carolina; and Laurens, South Carolina; and administrative offices in
Greenville, South Carolina, New York and Los Angeles, thereby exiting
its apparel business. The business accounted for sales of $61.1 million
and operating income of $2.0 million in the Six Months Ended April 29,
2000. The Company allocated interest expense of $1.6 million for
purposes of determining loss from discontinued operations for the six
months ended April 29, 2000. The consideration for the sale consisted
of approximately $27.5 million in cash and future consideration in the
form of an earn-out based on earnings before interest, depreciation and
amortization, as defined, for the 24-month period following the
transaction plus certain assumed liabilities. The Company has accounted
for the results of the Apparel Fabric Business as a discontinued
operation and a charge for loss on disposal of discontinued operations
of $47.4 million was recorded in Fiscal 2000 related primarily to the
writedown of disposed plant assets and related Reorganization Value to
realizable value and other exit costs. The net proceeds from the sale
of $26.2 million were used to reduce the Company's outstanding
indebtedness on its Revolving Credit Facility which was amended in
connection with the transaction to reflect the Company's lower
borrowing requirements.
5. Contingencies
At April 28, 2001, the Company had net operating loss carryforwards for
regular federal income tax purposes of approximately $90.0 million
(subject to adjustment by the Internal Revenue Service). The net
operating loss carryforwards expire in years 2003 through 2021. The
Company also has federal alternative minimum tax net operating loss
carryforwards of approximately $107.0 million (subject to adjustment)
which expire in 2004 through 2021. 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 increase in net operating
loss carryforwards from year end results primarily from the sale of the
Apparel Division which was recorded in the first quarter for tax
purposes.
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.
The effect of such an ownership change is to limit the annual
utilization of the net operating loss carryforwards to an amount equal
to the value of the Company immediately after the time of the change
(subject to certain
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adjustments) multiplied by the Federal long-term tax exempt rate. In
addition, a future change in ownership will result in substantial
additional limitations on the Company's remaining net operating loss
carryforwards. Due to this and the Company"s operating history, it is
uncertain that it will be able to utilize all of its deferred tax
assets. Therefore, a valuation allowance of approximately $29.2 million
has been provided.
The Company is exposed to a number of asserted and unasserted potential
claims encountered in the normal course of business including certain
asbestos-based claims. 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.
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 Company's reportable segments are JPS Elastomerics and JPS Glass.
The reportable segments were determined using the Company's method of
internal reporting, which divides and analyzes the business by the
nature of the products manufactured and sold, the customer base,
manufacturing process, and method of distribution. The Elastomerics
segment principally manufactures and markets extruded products
including high performance roofing products, environmental
geomembranes, and various polyurethane products. The Glass segment
produces and markets specialty substrates mechanically formed from
fiberglass and other specialty synthetics for a variety of applications
such as printed circuit boards, filtration, advanced composites,
building products, defense, and aerospace.
The Company evaluates the performance of its reportable segments and
allocates resources principally based on the segment"s operating
profit, defined as earnings before interest and taxes. Indirect
corporate expenses allocated to each business segment are based on
management's analysis of the costs attributable to each segment. The
following table presents certain information regarding the business
segments (in thousands):
Three Months Ended Six Months Ended
------------------------ ------------------------
April 28, April 29, April 28, April 29,
2001 2000 2001 2000
-------- -------- -------- --------
Net sales:
Elastomerics $ 21,840 $ 20,745 $ 40,816 $ 39,053
Glass 17,697 21,800 37,354 39,866
-------- -------- -------- --------
39,537 42,545 78,170 78,919
Less intersegment sales(1) -- (1,506) -- (2,743)
-------- -------- -------- --------
Net sales $ 39,537 $ 41,039 $ 78,170 $ 76,176
======== ======== ======== ========
(Table continued on next page)
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(Table continued from previous page)
Three Months Ended Six Months Ended
----------------------- -----------------------
April 28, April 29, April 28, April 29,
2001 2000 2001 2000
------ ------ ------ ------
Operating profit(2):
Elastomerics $1,245 $2,138 $2,192 $3,456
Glass 1,950 1,727 3,982 2,615
------ ------ ------ ------
Operating profit 3,195 3,865 6,174 6,071
Interest expense 634 845 1,485 1,698
------ ------ ------ ------
Income before income taxes
and discontinued operations $2,561 $3,020 $4,689 $4,373
====== ====== ====== ======
April 28, October 28,
2001 2000
--------- ---------
Identifiable assets:
Elastomerics $ 57,024 $ 74,801
Glass 59,850 74,569
Eliminations -- (1,128)
--------- ---------
Total assets $ 116,874 $ 148,242
========= =========
(1) Intersegment sales consisted primarily of the transfer of certain scrim
products manufactured by the Glass segment to the Elastomerics segment and
were discontinued in Fiscal 2000. All intersegment revenues and profits are
eliminated in the accompanying condensed consolidated financial statements.
(2) The operating profit of each business segment includes a proportionate
share of indirect corporate expenses. The Company's corporate group is
responsible for finance, strategic planning, legal, tax, and regulatory
affairs for the business segments. Such expense consists primarily of
salaries and employee benefits, professional fees, and amortization of
Reorganization Value.
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 2001 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 manufacturing businesses, actions of a variety of
domestic and foreign competitors, changes in demand in the primary markets of
JPS, the seasonality of the Company's sales, changes in the Company's costs of
claims, raw materials and energy, 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 the
Company's Annual Report on Form 10-K for the fiscal year ended October 28, 2000.
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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. On November 17, 2000, the Company sold its
Apparel Division, thereby completely exiting the textile business. The Company
is now focusing solely on improving the performance and profitability of its
remaining core businesses: JPS Elastomerics and JPS Glass.
Three Months Ended April 28, 2001 (the "2001 Second Quarter") Compared to the
Three Months Ended April 29, 2000 (the "2000 Second Quarter")
Consolidated net sales decreased $1.5 million, or 3.7%, from $41.0 million in
the 2000 second quarter to $39.5 million in the 2001 second quarter. Operating
profit decreased $0.7 million from $3.9 million in the 2000 second quarter to
$3.2 million in the 2001 second quarter.
Net sales in the 2001 second quarter in the Elastomerics segment, which includes
single-ply roofing, environmental membrane and extruded urethane products,
increased $1.1 million, or 5.3%, to $21.8 million from $20.7 million in the 2000
second quarter. This increase is primarily attributable to higher sales of
urethane products as well as roofing accessories and services which offset lower
roofing membrane sales resulting from the lower overall demand and resulting
lower prices in the commercial roofing market.
Operating profit for the Elastomerics segment decreased $0.9 million from $2.1
million in the 2000 second quarter to $1.2 million in the 2001 second quarter.
The decrease is due to lower roofing pricing and manufacturing efficiencies, as
well as overall higher energy costs in addition to a one-time gain experienced
in Fiscal Year 2000 as a result of the adjustment of certain warranty reserves.
Net sales in the Glass segment, which includes mechanically-formed substrates
constructed of synthetics and fiberglass for electronic components, construction
products, aerospace components, industrial insulation, and filtration
applications decreased $2.6 million, or 12.8%, from $20.3 million in the 2000
second quarter to $17.7 million in the 2001 second quarter, excluding all
intersegment sales. The decrease is caused by lower sales of electronic
substrates as a result of lower market demand partially offset by higher sales
of the Company's other industrial products.
Operating profit for the Glass segment increased $0.2 million from $1.7 million
in the 2000 second quarter to $1.9 million in the 2001 second quarter. This
increase reflects ongoing cost reduction and product quality improvement
initiatives which offset margin decreases and lower manufacturing efficiencies.
Interest expense in the 2001 second quarter was $0.2 million less than the 2000
second quarter as a result of lower debt levels.
Six Months Ended April 28, 2001 (the "2001 Six-Month Period") Compared to the
Six Months Ended April 29, 2000 (the "2000 Six-Month Period")
Consolidated net sales increased $2.0 million, or 2.6%, from $76.2 million in
the 2000 six-month period to $78.2 million in the 2001 six-month period.
Operating profit increased $0.1 million from $6.1 million in the 2000 six-month
period to $6.2 million in the 2001 six-month period.
Net sales in the 2001 six-month period in the Elastomerics segment increased
$1.7 million, or 4.3%, to $40.8 million from $39.1 million in the 2000 six-month
period. This increase is primarily attributable to higher sales of urethane
products as well as roofing accessories and services which offset lower roofing
membrane sales resulting from lower prices and the lower overall demand in the
commercial roofing market.
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Operating profit for the Elastomerics segment decreased $1.3 million from $3.5
million in the 2000 six-month period to $2.2 million in the 2001 six-month
period. This decrease is due to lower roofing pricing and manufacturing
efficiencies, as well as higher overall energy costs in addition to a one-time
gain experienced in Fiscal Year 2000 as a result of the adjustment of certain
warranty reserves.
Net sales in the Glass segment increased $0.3 million, or 0.8%, from $37.1
million in the 2000 six-month period to $37.4 million in the 2001 six-month
period, excluding all intersegment sales. The increase is primarily attributable
to higher sales of the Company's industrial products which offset the lower
sales of electronics substrates late in the second quarter of 2001.
Operating profit for the Glass segment increased $1.4 million from $2.6 million
in the 2000 six-month period to $4.0 million in the 2001 six-month period as a
result of cost reduction efforts, quality enhancements and higher operating
efficiencies through the first five months of 2001.
Interest expense in the 2001 six-month period was $1.5 million compared to $1.7
million in the 2000 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.
See Note 3 for additional discussion of the revolving credit facility.
Year to date for 2001, cash provided by operating activities was $2.0 million.
Working capital, excluding assets held for sale, at October 28, 2000 was $28.7
million compared with $32.2 million at April 28, 2001. Accounts receivable
decreased by $2.0 million from October 28, 2000 to April 28, 2001 due to timing.
Inventories remained flat from October 28, 2000 to April 28, 2001 despite
challenging market conditions as a result of the Company's attention to
inventory management. Prepaid and other assets decreased $2.7 million due to
timing. Accounts payable and accrued expenses decreased by $8.8 million from
October 28, 2000 to April 28, 2001 as a result of payment of Fiscal 2000
Incentive Compensation and lower general payables.
The principal use of cash in 2001 was for capital expenditures of $4.7 million
for upgrade of the Company's manufacturing operations and the repayment of
long-term debt of approximately $24.1 million. The Company also used $2.1
million to repurchase outstanding shares of its common stock. On November 17,
2000, the Company received approximately $27.5 million in proceeds from the sale
of its Apparel division as discussed under the caption "Fiscal 2000 Compared
With Fiscal 1999" in the Company's Annual Report on Form 10-K for the fiscal
year ended October 28, 2000. Such funds were used to further reduce the
Company's outstanding indebtedness under its Revolving Credit Facility and
certain equipment loans. The Company anticipates that its total capital
expenditures in Fiscal 2001 will be $5.0 million to $6.0 million and expects
such amounts to be funded by cash from operations and bank financing sources.
Based upon the ability to generate working capital through its operations and
its new 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.
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Currently, all of the Company"s debt bears interest at variable rates. The
Company believes that the effect, if any, of reasonably possible near-term
changes in interest rates on the Company"s consolidated financial position,
results of operations, or cash flows would not be material.
Raw material price risk. A portion of the Company"s raw materials are
commodities 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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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 27, 2001
in New York, New York for the following purposes:
(1) To elect six (6) members of the Board of Directors to serve
for a one year term expiring at the 2002 Annual Meeting of
Stockholders:
For Against
--- -------
Michael L. Fulbright 8,601,443 12,849
Robert J. Capozzi 8,601,443 12,849
Jeffrey S. Deutschman 8,601,443 12,849
Nicholas P. DiPaolo 8,601,443 12,849
John M. Sullivan, Jr. 8,601,443 12,849
Charles R. Tutterow 8,601,443 12,849
(2) To ratify the appointment of Arthur Andersen LLP as the
Company's independent auditors for the 2001 fiscal year:
For Against Abstain
--- ------- -------
8,610,292 1,000 3,000
5. Other Information None
6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
(10) Revolving Credit and Security Agreement dated May 9, 2001, by
and among JPS, C&I, Elastomerics and First Union National
Bank.
(11) Statement re: Computation of Per Share Earnings - not required
since such computation can be clearly determined from the
material contained herein.
(b) Current Reports on Form 8-K:
(i) No reports on Form 8-K were filed for the Second Quarter ended
April 28, 2001.
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 8, 2001 /s/ Charles R. Tutterow
-----------------------------------------
Charles R. Tutterow
Executive Vice President, Chief Financial
Officer and Secretary
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