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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 SECURITIES EXCHANGE ACT OF 1934
X
- --------- --------
For the Fiscal Year Ended For the transition period
October 3, 1999 from __________ to ___________
Commission File No. 1-6922
GUILFORD MILLS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-1995928
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) No.)
4925 West Market Street
Greensboro, North Carolina 27407
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (336) 316-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on which Registered
------------------- -----------------------------------------
Common Stock, $.02 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 twelve (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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]
Aggregate market value of the voting stock (which consists solely of shares of
common stock) held by non-affiliates of the registrant at November 15, 1999 (a
total of 16,123,853 shares of common stock), computed by reference to the last
reported sale price ($7.875) of the Registrant's common stock on the New York
Stock Exchange on such date: $126,975,342.
Number of shares of the Registrant's common stock outstanding as of November 15,
1999: 19,194,295.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the annual report to stockholders for the fiscal year ended
October 3, 1999 are incorporated by reference into Parts I, II and IV of this
report.
Certain portions of the Registrant's definitive proxy statement pursuant to
Regulation 14A of the Securities Exchange Act of 1934, which will be filed with
the Commission on or about December 22, 1999, are incorporated by reference into
Part III of this report.
PART I
ITEM 1. BUSINESS
GENERAL
Guilford Mills, Inc. was incorporated under the laws of Delaware in August 1971,
and is the successor by merger to businesses previously conducted since 1946.
Guilford Mills, Inc. and its predecessors and subsidiaries are referred to as
the "Company", unless the context indicates otherwise.
Guilford Mills, Inc. produces fabrics using a broad range of technologies for a
variety of customers and markets. It is the largest warp knitter in the world
and a leader in technological advances in textiles. The Company has identified
four segments in which it operates: Automotive, Apparel, Home Fashions and
Other.
Fabrics produced in the Automotive segment are sold to original equipment
manufacturers (OEMs) and their suppliers. These fabrics are fabricated into
seats and headliners of passenger cars, sport utility vehicles, conversion vans
and light and heavy trucks. Automotive products utilize warp knit, circular
knit, flat woven, woven velour and printing technologies.
The Apparel segment fabrics and laces are used predominately in women's
shapewear, swimwear, ready-to-wear and intimate apparel garments. Other uses
include sleepwear, team sportswear and linings. The Apparel segment utilizes
warp and circular knit technology.
The Home Fashions segment produces fabrics for residential and office furniture,
mattress ticking, and window treatment applications, including lace. The Company
also designs, produces and distributes directly to retail a broad line of
products for the home including window curtains, sheets, comforters,
pillowcases, bedskirts and shower curtains.
The remainder of Guilford's fabrics are sold for use in a broad range of
industrial/specialty products and are included in the Other segment. The
Company's polyester fibers spinning operations are also included in this
segment.
Reference is made to Note 16 of the Consolidated Financial Statements in the
Annual Report to Stockholders for the fiscal year ended October 3, 1999 (the
"Annual Report"), which note is incorporated herein by reference, for
information regarding revenue, profit and assets by segment.
PRODUCT DEVELOPMENT
Working closely with the Company's customers, the Company has research and
development departments in the U.S., U.K., and Mexico, consisting of
approximately 120 employees, that are primarily responsible for the creation of
new fabrics and styles. Sample warping and knitting machines are used to develop
new fabrics which can be placed into production after customer acceptance. Total
expenditures for research and development for fiscal years 1999, 1998 and 1997,
were approximately $17.2 million, $19.6 million, and $14.9 million,
respectively.
The Company has numerous trademarks, trade names, patents and certain licensing
agreements which it uses in connection with the advertising and promotion of its
products across segments. Management believes that the loss or expiration of
such trademarks, trade names and licensing agreements would not have a material
adverse effect on the Company's operations.
WORKING CAPITAL PRACTICES
The Company knits based on internal forecasts and generally dyes and finishes
based on customer orders and therefore, significant amounts of inventory are not
required to meet rapid delivery to the Company's customers or to assure a
continuous allotment of goods from suppliers. Customers are allowed to return
goods for valid reasons and customer accommodations are not significant. To
minimize the credit risk on such accounts and to obtain larger credit lines for
many customers, the Company maintains credit insurance covering $24.0 million of
certain outstanding accounts receivable as of October 3, 1999. In addition,
approximately 17% of accounts receivable are factored without recourse. The
Company has the ability to borrow against such receivables, although it has
traditionally not done so as the related borrowing terms are less favorable than
other available sources of financing. The Company generally takes advantage of
discounts offered by vendors.
The Company experiences seasonal fluctuations in its sales in the Apparel
segment, with the highest sales occurring in the period from April to September.
Sales in the Automotive, Home Fashions and Other segments experience
insignificant seasonal fluctuations.
The Company has a large number of customers. No customer accounted for 10% or
more of total net sales during fiscal 1999, 1998 or 1997. The Company's net
sales reflect substantial direct and indirect sales to certain large automotive
original equipment manufacturers.
The backlog of orders believed to be firm as of the end of the current and
preceding fiscal years is not deemed to be material for an understanding of the
Company's business as most orders are deliverable within a few months.
EXPORT SALES
U.S. export sales, as a percentage of total worldwide sales of the Company, were
approximately 5.4% in fiscal 1999, 5.4% in fiscal 1998 and 5.5% in fiscal 1997.
RAW MATERIALS
Fabrics in all of the Company's segments are constructed primarily of synthetic
yarns: nylon and polyester. In fiscal 1999, the Company internally produced 15%
of the polyester yarns used. The Company purchases its nylon and the remaining
polyester yarns from several domestic and foreign fiber producers. During fiscal
1999, the Company experienced periods of tightness of supply of nylon fiber,
however, nylon fiber is currently readily available. Due to the price
competition resulting from the Asian crisis, the Company purchased greater
quantities of lower-priced polyester yarn from foreign suppliers during fiscal
1999. The Company's Apparel segment also uses spandex, acetate, cotton and
rayon. A small amount of spandex is used in the Home Fashions segment. Both
spandex and acetate are purchased substantially from one domestic producer. In
fiscal 1999 all yarns, except nylon, were readily available throughout the year
and either were or could be purchased from numerous sources. Management believes
that an adequate supply of yarns is available to meet the Company's
requirements.
The chemicals and dyes used in the dyeing and finishing processes in all
segments are available in large quantities from various suppliers. The foam
backing used in the automotive fabric lamination process is purchased from two
suppliers in the United States and two suppliers in Europe. In fiscal 1999,
there was an adequate supply of foam.
ENVIRONMENTAL MATTERS
The production processes, particularly dyeing and finishing operations, involve
the use and discharge of certain chemicals and dyes into the air and sewage
disposal systems. The Company installs pollution control devices as necessary to
meet existing and anticipated national, state and local pollution control
regulations. The Company, including its foreign subsidiaries, does not
anticipate that compliance with national, state, local and other provisions
which have been enacted or adopted regulating the discharge of materials into
the environment, or otherwise relating to the protection of the environment,
will have a material adverse effect upon its capital expenditures, earnings or
competitive position.
Reference is made to Note 12 of the Consolidated Financial Statements in the
Annual Report, which note is incorporated herein by reference, for information
regarding certain other environmental matters.
COMPETITION
In all of the Company's segments, the principal methods of competition are
pricing, styling and design, customer service and quality. In retail home
fashions, distribution channels are an additional principal method of
competition. The weight of each competitive factor varies by product line. In
the past few years, the Apparel and Home Fashions segments have been impacted by
imports of garments, window curtains and sheeting.
In the United States, the Company has five major warp knit competitors and many
other smaller competitors in the Apparel and Home Fashions segments. The Company
also competes with some garment manufacturers that have warp knit equipment to
manufacture their own fabrics. Some of these companies are divisions of large,
well-capitalized companies while others are small manufacturers. There are four
major and numerous smaller circular knit competitors in the Apparel segment. In
the Automotive segment, the Company has three major domestic competitors and
several smaller competitors. Guilford's automotive subsidiary in Europe competes
with seven warp knitters in the United Kingdom and several in France. It also
competes with many producers of circular knit and flat woven fabrics. The
Company's operations in Mexico compete primarily with four warp knitters in the
Apparel segment and one warp knitter in the Automotive segment. None of the
Company's competitors are deemed to be dominant with respect to their markets.
EMPLOYEES
As of November 15, 1999, the Company employed 6,251 full-time employees
worldwide. Approximately 1,258 employees (including 428 in Europe and 460 in
Mexico) are represented by collective bargaining agreements.
SAFE HARBOR-FORWARD-LOOKING STATEMENTS
From time to time, the Company may publish forward-looking statements relative
to such matters as anticipated financial performance, business prospects,
technological developments, new products, research and development activities
and similar matters. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements.
All statements other than statements of historical fact included in or
incorporated by reference into this Form 10-K, including, without limitation the
statements under "Management's Discussion and Analysis of Financial Condition
and Results of Operations" are, or may be deemed to be, forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Important factors that could
cause actual results to differ materially from those discussed in such
forward-looking statements include:
1. general economic factors including, but not limited to, changes in
interest rates, foreign currency translation rates, consumer
confidence, housing starts, trends in disposable income, changes in
consumer demand for goods produced, and cyclical or other downturns
2. the overall level of automotive production and the production of
specific car models
3. fashion trends
4. information and technological advances including Year 2000 issues
5. cost and availability of raw materials, labor and natural and other
resources
6. domestic and foreign competition
7. domestic and foreign governmental regulations and trade policies
8. reliance on major customers
9. success of marketing, advertising and promotional campaigns or
10. inability to achieve cost reductions through consolidation and
restructuring of acquired companies
Item 2. PROPERTIES
Set forth below is a listing of facilities owned and leased by the Company.
- --------------------------------------------------------------------------------
Facility Location Segment(s) Leased/Owned
- --------------------------------------------------------------------------------
Sales Offices, Design Studios California (1) Apparel Leased
- --------------------------------------------------------------------------------
Michigan (1) Automotive Leased
- --------------------------------------------------------------------------------
New York (2) Apparel,
Home Fashions,
Other Leased
- --------------------------------------------------------------------------------
Texas (1) Home Fashions Leased
- --------------------------------------------------------------------------------
China (1) Apparel Leased
- --------------------------------------------------------------------------------
Germany (1) Automotive Leased
- --------------------------------------------------------------------------------
Spain (1) Automotive Leased
- --------------------------------------------------------------------------------
Manufacturing New York (5) Apparel,
Home Fashions Owned (4),
Leased (1)
- --------------------------------------------------------------------------------
North Carolina (8) Apparel,
Automotive,
Home Fashions, Owned (6),
Other Leased (2)
- --------------------------------------------------------------------------------
Pennsylvania (2) Apparel,
Home Fashions,
Other Owned
- --------------------------------------------------------------------------------
Brazil (1) Automotive Leased
- --------------------------------------------------------------------------------
Mexico (1) Apparel,
Automotive,
Home Fashions Owned
Other
- --------------------------------------------------------------------------------
United Kingdom (3) Automotive Owned
- --------------------------------------------------------------------------------
Outlet Stores New York (3) Home Fashions Leased
- --------------------------------------------------------------------------------
North Carolina (1) Home Fashions Leased
- --------------------------------------------------------------------------------
Warehouses New York (1) Apparel Leased
- --------------------------------------------------------------------------------
Mexico(5) Apparel,
Automotive,
Home Fashions Owned (2),
Other Leased (3)
- --------------------------------------------------------------------------------
United Kingdom (1) Automotive Leased
- --------------------------------------------------------------------------------
Management believes the facilities and manufacturing equipment are in good
condition, well maintained, suitable and adequate for present production. Many
of the Company's manufacturing facilities are utilized by more than one segment.
Utilization of the facilities fluctuates from time to time due to the seasonal
nature of operations and market conditions. The Company defines full utilization
as five day, three shift production. On that basis, the manufacturing facilities
are generally utilized approximately 80%. However, during fiscal 1999,
automotive only facilities in the U.S. were operating at a full seven days to
meet demand. Cut-and-sew operations in home fashions were running five days, one
to two shifts depending on the product.
ITEM 3. LEGAL PROCEEDINGS
Reference is made to Note 12 of the Consolidated Financial Statements in the
Annual Report, which note is incorporated herein by reference, for information
regarding certain environmental matters.
Several purported class action lawsuits have been filed on behalf of purchasers
of the Company's common stock against the Company and certain of its officers
and directors. These lawsuits were consolidated by order of the Court on January
8, 1999. A Consolidated and Amended Class Action Complaint (the "Consolidated
Complaint") was filed on February 8, 1999. The Consolidated Complaint purports
to allege claims under Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder, in connection with the Company's
public disclosure of accounting irregularities at the Hofmann Laces unit in
fiscal year 1998. Specifically, the Consolidated Complaint alleges that, during
the alleged class period (January 20, 1998 through October 26, 1998), defendants
materially misrepresented the Company's financial condition and overstated the
Company's reported earnings. No specific amount of damages is sought in the
Consolidated Complaint.
On April 9, 1999, defendants filed a motion to dismiss the Consolidated
Complaint. On July 21, 1999, the Court entered an order dismissing all claims
against one of the Company's officers but denied the Company and one of its
director's motion to dismiss. Plaintiffs filed their Second Amended Complaint on
September 7, 1999, and defendants answered the Second Amended Complaint on
September 24, 1999. On November 1, 1999, plaintiffs filed a motion seeking to
certify a plaintiff class consisting of all persons or entities who purchased
the common shares of Guilford Mills, Inc. from January 20, 1998 through October
26, 1998 inclusive. Guilford has until February 11, 2000, to oppose plaintiffs'
class certification motion. The Company intends to vigorously defend the
lawsuits.
The Securities and Exchange Commission (the "Commission") has issued a formal
Order Directing Private Investigation and Designating Officers To Take Testimony
(the "Formal Order") with respect to accounting irregularities at the Hofmann
Laces unit which the Company had previously disclosed in press releases in
October and November 1998. Prior to the issuance of the Formal Order, the
Company had voluntarily provided certain information to the Commission
concerning the accounting irregularities at the Hofmann Laces unit. The Company
has delivered documents to, and intends to continue cooperating fully with, the
Commission.
The Company is also involved in various litigation, including the matters
described above, in the ordinary course of business. Although the final outcome
of these legal and environmental matters cannot be determined, based on the
facts presently known, it is management's opinion that the final resolution of
these matters will not have a material adverse effect on the Company's financial
position or future results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the Company's
fourth quarter of fiscal 1999.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Reference is made to the information set forth on page 39 in the section
entitled "Common Stock Market Prices and Dividends" in the Annual Report, filed
as Exhibit 13 to this report, which page is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
In thousands except per
share data) 1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Results of Operations
----------------------
Net sales $856,838 $894,534 $894,709 $830,320 $782,518
Income before extraordinary
item 10,230 33,146 43,238 33,978 33,636
Net income 10,230 30,206 43,238 33,978 33,636
Per Share Data (1)
------------------
Basic:
Income before extraordinary
item 0.47 1.32 1.92 1.59 1.60
Net income 0.47 1.20 1.92 1.59 1.60
Diluted:
Income before extraordinary
item 0.47 1.30 1.78 1.47 1.48
Net income 0.47 1.19 1.78 1.47 1.48
Cash dividends 0.44 0.44 0.42 0.40 0.40
Balance Sheet Data
------------------
Working capital 127,660 211,278 213,974 177,658 178,233
Total assets 753,431 794,500 729,796 728,830 586,371
Long-term debt 146,137 176,872 134,560 209,435 166,368
Stockholders' investment 340,945 385,177 408,896 298,059 267,549
(1) All share data has been restated to reflect the effect of a three-for-two
stock split effected in May 1997 in the form of a 50% stock dividend.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Reference is made to the information set forth on pages 13 through 21 in the
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Annual Report, which pages are incorporated
herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to the information set forth on page 20 in the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Annual Report, which page is incorporated herein
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to information set forth on pages 22 through 39 of the Annual
Report, which pages are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information to be included under the captions "Directors and Nominees" and
"Additional Information" contained in the section entitled "ELECTION OF
DIRECTORS", and under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" all as set forth in the Company's definitive proxy statement, which
will be filed with the Commission on or about December 22, 1999 pursuant to
Regulation 14A under the Securities Exchange Act of 1934 (the "Proxy
Statement"), is incorporated herein by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT (AS OF DECEMBER 13, 1999)
Name Age Office or Business Experience
- ---- --- -----------------------------
Charles A. Hayes 64 Chairman of the Board and Chief Executive Officer
(since 1976); President and Chief Operating
Officer (from 1991 to 1995); President (from 1968
to 1976) and Executive Vice President (from
1961 to 1968).
John A. Emrich 55 Member of the Board of Directors (since 1995);
President and Chief Operating Officer (since
1995); Senior Vice President and President/
Automotive Business Unit (from 1993 to 1995);
Vice President/Planning and Vice President/
Operations for the Apparel and Home Fashions
Business Unit (from 1991 to 1993); Director of
Operations with FAB Industries, Inc. (from
1990 to 1991) and holder of various executive
positions with the Company (from 1985 to 1990).
Terrence E. Geremski 52 Member of the Board of Directors (since 1993);
Executive Vice President and Chief Financial
Officer (since 1997), Senior Vice President,
Chief Financial Officer and Treasurer (from 1996
to 1997); Vice President, Chief Financial
Officer and Treasurer (from 1992 to 1996); Vice
President and Controller with Varity Corporation
(from 1989 to 1991); and Vice President, Chief
Financial Officer, Treasurer and holder of other
executive positions with Dayton Walther Corp.
(from 1979 to 1989).
Don A. Alexander 39 Vice President/Technology (since 1999);
Director of Research, Institute of Textile
Technology (from 1987 to 1999); formerly holder
of various technical and managerial positions
with Milliken & Company (from 1985 to 1987).
Mark E. Cook 40 Treasurer (since 1997); Director of Corporate
Finance, Worthington Industries, Inc. (from 1995
to 1997); Director of Corporate Finance, Blount
International, Inc. (from 1989 to 1995).
Nathan M. Dry 54 Vice President/Apparel/Home Fashions (since
1999); Vice President/Commercial Products (from
1998 to 1999); Vice President/Product
Development and Research (from 1996 to 1998);
President of Dyeing and Printing Lumberton, Inc.
(from 1990 to 1996).
Robert A. Emken, Jr. 36 General Counsel and Secretary (since 1999);
Associate Counsel (from 1991 to 1999); Associate,
Womble Carlyle Sandridge & Rice, PLLC (from 1988
to 1991).
Phillip D. McCartney 57 Vice President/Technical Operations (since
1989); formerly holder of various executive
positions with FAB Industries, Inc. (from 1984 to
1989).
Byron McCutchen 52 Senior Vice President and President/Fibers
(since 1995); Senior Vice President of Fibers
(from 1994 to 1995); Worldwide Business
Manager-Dacron(R) Filament-E.I. DuPont Co.
(from 1991 to 1994); and Specialty Business
Manager- Dacron(R)-E.I. DuPont Co. (from 1990 to
1991).
Richard E. Novak 56 Vice President/Human Resources (since 1996);
Principal of Nova Consulting Group (from 1994 to
1996); Senior Vice President/Human Resources of
Joseph Horne Company, Inc. (from 1987 to 1994).
Richard J. Redpath 60 Vice President/Engineering (since 1999);
Principal of The Evans Group (from 1997 to
1998); Director of Engineering, Binney & Smith
(from 1994-1997); Director of Engineering of
Worldwide Johnson & Johnson (from 1988 to 1994).
Christopher J. Richard 43 Senior Vice President (since 1999);Vice President
(from 1998-1999) and President/U.S. Automotive
(since 1997); Vice President of Sales and
Marketing, Garden State Tanning (from 1994 to
1997); holder of various executive positions with
Collins & Aikman Corporation (from 1983 to 1994).
Kim A. Thompson 41 Vice President/Corporate Controller (since
1997); Director of Financial Reporting (from
1994 to 1997); holder of various executive
positions with Collins and Aikman Corporation
(from 1980 to 1994).
No family relationships exist between any executive officers of the Company.
Item 11. EXECUTIVE COMPENSATION
The information to be included in the section "EXECUTIVE COMPENSATION" in the
Proxy Statement is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information to be included in the section "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT" in the Proxy Statement is incorporated herein
by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information to be included in the section "CERTAIN TRANSACTIONS" in the
Proxy Statement is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS A PART OF THIS REPORT:
1. FINANCIAL STATEMENTS (reference is made to pages 22 through 38 of the
Annual Report, which pages are incorporated herein by reference):
Consolidated Balance Sheets as of October 3, 1999 and September 27,
1998
Consolidated Statements of Income for the Years Ended October 3, 1999,
September 27, 1998 and September 28, 1997
Consolidated Statements of Stockholders' Investment for the Years Ended
October 3, 1999, September 27, 1998 and September 28, 1997
Consolidated Statements of Cash Flows for the Years Ended October 3,
1999, September 27, 1998 and September 28, 1997
Notes to Consolidated Financial Statements
Statement of Management's Responsibility
Report of Independent Public Accountants
2. FINANCIAL STATEMENT SCHEDULE:
Schedule II - Analysis of Valuation and Qualifying Accounts for the
Years Ended October 3, 1999, September 27, 1998 and September 28,
1997
3. EXHIBITS:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
(3) (a) Restated Certificate of Incorporation of the Company,
dated June 8, 1999 (incorporated by reference to Exhibit 3
to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended July 4, 1999 (the "7/4/99 10-Q")).
(3) (b) By-Laws of the Company, as amended through November 5,
1998 (incorporated by reference to Exhibit (3)(b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended September 27, 1998 (the "1998 Annual. Report")).
(4) (a) Rights Agreement dated as of August 23, 1990 between
the Company and The First National Bank of Boston, as
Rights Agent (incorporated by reference to Exhibit 1 to
the Company's Current Report on Form 8-K filed with the
SEC on September 7, 1990).
(4) (b) Appointment of Successor Rights Agent, dated April 1,
1999, between the Company and American Stock Transfer &
Trust Company (incorporated by reference to Exhibit
(4)(a) to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended April 4, 1999).
(4) (c) Form of Note Purchase Agreement, dated December 18, 1998,
entered into by and between Guilford Mills, Inc. and each
of the purchasers named in the purchasers' schedule
thereto.
(10) (a)* Guilford Mills, Inc. Non-Qualified Profit Sharing Plan for
Certain of its Executive Officers and Key Employees,
effective July 1, 1989 (incorporated by reference to
Exhibit (10) (a) (7) to the Company's Annual Report on
Form 10-K for the fiscal year ended July 1, 1990 (the
"1990 Annual Report")).
(10) (b)* First Amendment, dated September 1, 1993, to the
Guilford Mills, Inc. Non-Qualified Profit-Sharing Plan
(incorporated by reference to Exhibit (10)(b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended September 28, 1997 (the "1997 Annual Report")).
(10) (c)* Second Amendment, dated November 1, 1996, to the
Guilford Mills, Inc. Non-Qualified Profit-Sharing Plan
(incorporated by reference to Exhibit (10)(c) to the 1997
Annual Report).
(10) (d)* Guilford Mills, Inc. 1991 Stock Option Plan (the "1991
Plan") (incorporated by reference to Exhibit 28 (a) to
the Company's Registration statement on Form S-8
(Registration No. 33-47109)filed with the SEC on April 10,
1992 (the "Form S-8")).
(10) (e)* Amendment to the 1991 Plan (incorporated by reference to
Exhibit (10) (a) to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended March 30, 1997 (the
"3/30/97 10-Q")).
(10) (f)* Amendment to the 1991 Plan (incorporated by reference to
Exhibit (10)(f) to the 1998 Annual Report).
(10) (g)* Amendment to the 1991 Plan (incorporated by reference to
Exhibit (10)(d) to the 7/4/99 10-Q).
(10) (h)* Form of Stock Option Contract for key employees in
the 1991 Plan (relating to incentive stock options)
(incorporated by reference to Exhibit 28 (b) to the Form
S-8).
(10) (i)* Form of Stock Option Contract for Director participants
in the 1991 Plan (incorporated by reference to Exhibit
28 (d) to the Form S-8).
(10) (j)* Form of Stock Option Contract between the Company and
certain of its officers pursuant to the 1991 Plan
(incorporated by reference to Exhibit (10) (b) to the
Quarterly Report on Form 10-Q for the fiscal quarter
ended June 29, 1997 (the "6/29/97 10-Q")).
(10) (k)* Guilford Mills, Inc. 1989 Restricted Stock Plan (the
"Restricted Plan") (incorporated by reference to Exhibit
10 (b) (2) to the 1990 Annual Report).
(10) (l)* Amendment to the Restricted Plan (incorporated by
reference to Exhibit (10)(g) to the Annual Report on Form
10-K for the fiscal year ended October 2, 1994 (the "1994
Annual Report")).
(10) (m)* Amendment to the Restricted Plan (incorporated by
reference to Exhibit (10) (b) to the 3/30/97 10-Q).
(10) (n)* Form of Restricted Stock Agreement between the Company
and certain of its officers pursuant to the Restricted
Plan (incorporated by reference to Exhibit (10) (a) to the
6/29/97 10-Q).
(10) (o)* Amended and Restated Phantom Stock Agreement between the
Company and Charles A. Hayes dated September 21, 1994
(incorporated by reference to Exhibit (10) (m) to the 1994
Annual Report).
(10) (p)* Form of Executive Retirement and Death Benefit Agreements
between the Company and certain of its executive
officers and key employees (incorporated by reference
to Exhibit (10) (d) (1) to the 1990 Annual Report).
(10) (q)* Form of Pension and Death Benefit Agreement between
the Company and certain of its executive officers and key
employees (incorporated by reference to Exhibit (10) (d)
(2) to the 1990 Annual Report).
(10) (r)* Form of Deferred Compensation Agreement between the
Company and certain of its officers and key employees
(incorporated by reference to Exhibit (10) (d) (3) to the
1990 Annual Report).
(10) (s)* Guilford Mills, Inc. Excess Benefit Plan (incorporated by
reference to Exhibit (10) (a) to the Quarterly Report
on Form 10-Q for the fiscal quarter ended December 29,
1996 ("12/29/96 10-Q")).
(10) (t)* Guilford Mills, Inc. Trust for Non-Qualified Plans
(incorporated by reference to Exhibit (10) (b) to the
12/29/96 10-Q).
(10) (u)* Guilford Mills, Inc. Senior Managers' Life Insurance Plan
and related Plan Agreement (incorporated by reference
to Exhibit (10) (r) to the Annual Report on Form 10-K for
the fiscal year ended June 28, 1992 ("1992 Annual
Report")).
(10) (v)* Guilford Mills, Inc. Senior Managers' Pre-Retirement
Life Insurance Agreement (incorporated by reference to
Exhibit (10) (s) to the 1992 Annual Report).
(10) (w)* Guilford Mills, Inc. Senior Managers' Supplemental
Retirement Plan and related Plan Agreement (incorporated
by reference to Exhibit (10) (t) to the 1992 Annual
Report).
(10) (x)* Form of Severance Agreement between the Company and
certain of its officers and employees (incorporated by
reference to Exhibit (10) (u) to the 1992 Annual Report).
(10) (y)* Form of Amendment to Severance Agreement between the
Company and certain of its officers and employees
(incorporated by reference to Exhibit (10) (v) to the 1994
Annual Report).
(10) (z)* Form of Second Amendment to Severance Agreement between
the Company and certain of its officers and employees
(incorporated by reference to Exhibit (10) (w) to the 1994
Annual Report).
(10) (a)(a)* Form of Amendment to Severance Agreement between the
Company and certain of its officers and employees.
(10) (b)(b) Stockholders' Agreement, dated as of April 30, 1991 by
and among the Company, Maurice Fishman and Charles A.
Hayes (the "1991 Stockholders' Agreement") (incorporated
by reference to Exhibit (10) (e) to the Company's
Annual Report on Form 10-K for the fiscal year ended
June 30, 1991).
(10) (c)(c) Amendment, dated June 29, 1994, to the 1991 Stockholders'
Agreement (incorporated by reference to Exhibit (10)
(y) to the 1994 Annual Report).
(10) (d)(d) Second Amendment, dated January 1, 1995, to the 1991
Stockholders' Agreement, (incorporated by reference to
Exhibit (10)(y) to the Company's Annual Report on Form
10-K for the fiscal year ended October 1, 1995 (the
"1995 Annual Report")).
(10) (e)(e) Third Amendment, dated June 22, 1995, to the 1991
Stockholders' Agreement (incorporated by reference to
Exhibit(10)(z) to the 1995 Annual Report).
(10) (f)(f) Fourth Amendment, dated May 23, 1997, to the 1991
Stockholders' Agreement (incorporated by reference to
Exhibit (10)(e) to the 6/29/97 10-Q).
(10) (g)(g) Fifth Amendment, dated June 22, 1999, to the 1991
Stockholders' Agreement (incorporated by reference to
Exhibit (10)(b) to the 7/4/99 10-Q).
(10) (h)(h) Stockholders' Agreement, dated as of June 22, 1990, by
and among the Company, Charles A. Hayes, George
Greenberg and Maurice Fishman (the "1990 Stockholders'
Agreement") (incorporated by reference to Exhibit (10)
(f) to the 1990 Annual Report).
(10) (i)(i) Amendment, dated January 1, 1995, to the 1990
Stockholders' Agreement (incorporated by reference to
Exhibit (10) (b)(b) to the 1995 Annual Report).
(10) (j)(j) Second Amendment, dated June 22, 1995, to the 1990
Stockholders' Agreement (incorporated by reference to
Exhibit (10)(c)(c) to the 1995 Annual Report).
(10) (k)(k) Third Amendment, dated May 23, 1997, to the 1990
Stockholders' Agreement (incorporated by reference to
Exhibit (10)(d) to the 6/29/97 10-Q).
(10) (l)(l) Fourth Amendment, dated June 22, 1999, to the 1990
Stockholders' Agreement (incorporated by reference to
Exhibit (10)(c) to the 7/4/99 10-Q).
(10) (m)(m)* Summary of Short Term Incentive Plan (incorporated by
reference to Exhibit (10) (f)(f) to the 1997 Annual
Report).
(10) (n)(n)* Management Compensation Trust Agreement between the
Company and North Carolina Trust Company dated July 1,
1991 (incorporated by reference to Exhibit (10) (y) to the
1992 Annual Report).
(10)(o)(o)* Amendment to the Management Compensation Trust
Agreement between the Company and North Carolina Trust
Company dated April 1, 1992 (incorporated by reference to
Exhibit (10) (z) to the 1992 Annual Report).
(10) (p)(p)* Second Amendment to the Management Compensation Trust
Agreement between the Company and North Carolina Trust
Company dated July 1, 1992 (incorporated by reference to
Exhibit (10) (a) (a) to the 1992 Annual Report).
(10) (q)(q) Revolving Credit Agreement, dated September 26, 1995, by
and between the Company, as borrower, Gold Mills, Inc.
as Guarantor, and the banks listed therein (incorporated
by reference to Exhibit (10)(I) (i) to the 1995 Annual
Report).
(10) (r)(r) First Amendment to Revolving Credit Agreement, dated
May 5, 1999, by and between the Company, as borrower, and
Gold Mills, Inc., Raschel Fashion Interknitting, Ltd.
and Curtains and Fabrics, Inc., as guarantors, and the
banks listed therein (the "Credit Agreement")(incorporated
by reference to Exhibit (10)(a) to the 7/4/99 10-Q).
(10) (s)(s) Second Amendment, dated November 19, 1999, to the Credit
Agreement.
(10) (t)(t)* Amended and Restated Employment Agreement, dated February
25, 1998, by and among Raschel Fashion Interknitting,
Ltd., Hofmann Laces, Ltd., Curtains and Fabrics, Inc.
and Bruno Hofmann (incorporated by reference to Exhibit
(10) (a) to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 29, 1998).
(10) (u)(u) Stock Purchase Agreement, dated August 6, 1999, between
Victor Posner and Guilford Mills, Inc.
(13) Annual Report to Stockholders of the Company for the
fiscal year ended October 3, 1999 (only those portions of
such report incorporated by reference to the Annual Report
on Form 10-K are filed herewith).
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Public Accountants.
(27) Financial Data Schedule.
*Items denoted with an asterisk represent management contracts or compensatory
plans or arrangements.
(b) REPORTS ON FORM 8-K
Not Applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GUILFORD MILLS, INC.
By: /s/ Terrence E. Geremski
------------------------
Terrence E. Geremski
Executive Vice President and
Chief Financial Officer
Dated: December 22, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Chairman of the Board
of Directors and Chief
Executive Officer
(Principal Executive
/s/ Charles A. Hayes Officer) December 22, 1999
- ------------------------
Charles A. Hayes
Director; President
and Chief Operating
/s/ John A. Emrich Officer December 22, 1999
- ------------------------
John A. Emrich
Director; Executive
Vice President and
Chief Financial Officer
(Principal Financial and
/s/ Terrence E. Geremski Accounting Officer) December 22, 1999
- -------------------------
Terrence E. Geremski
Vice Chairman of the
/s/ George Greenberg Board of Directors December 22, 1999
- -------------------------
George Greenberg
/s/ Tomokazu Adachi Director December 22, 1999
- ------------------------
Tomokazu Adachi
/s/ Donald B. Dixon Director December 22, 1999
- -------------------------
Donald B. Dixon
/s/ Paul G. Gillease Director December 22, 1999
- -------------------------
Paul G. Gillease
/s/ Stephen C. Hassenfelt Director December 22, 1999
- --------------------------
Stephen C. Hassenfelt
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Bruno Hofmann Director December 22, 1999
- --------------------------
Bruno Hofmann
/s/ Sherry R. Jacobs Director December 22, 1999
- --------------------------
Sherry R. Jacobs
Director December 22, 1999
- ---------------------------
Stig A. Kry
/s/ Grant M. Wilson Director December 22, 1999
- ----------------------------
Grant M. Wilson
Director December 22, 1999
- ----------------------------
Jacobo Zaidenweber
INDEX TO FORM 10-K SCHEDULE
Report of Independent Public Accountants................................... F-1
Schedule II - Analysis of Valuation and Qualifying Accounts for the Years
Ended October 3, 1999, September 27, 1998 and September 28, 1997........... F-2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Stockholders and Board of Directors of Guilford Mills, Inc.:
We have audited in accordance with generally accepted auditing standards, the
financial statements included in the Guilford Mills, Inc. Annual Report to
Stockholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated November 11, 1999. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedule on page
F-2 is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Greensboro, North Carolina,
November 11, 1999.
GUILFORD MILLS, INC.
SCHEDULE II
ANALYSIS OF VALUATION AND
Qualifying Accounts For the Years Ended October 3, 1999, September 27, 1998
and September 28, 1997
(In Thousands)
Additions
Balance Charged to
Beginning Cost and Balance End
of Period Expenses Deductions Other of Period
------------ ---------- ---------- ----- ---------
(1) (2)
For the Year Ended
September 28, 1997:
Reserve deducted from
assets to which it
applies -
Allowance for doubtful
accounts.............. $9,487 $3,262 $(3,303) $42 $9,488
====== ====== ======== ==== ======
For the Year Ended
September 27, 1998:
Reserve deducted from
assets to which it
applies -
Allowance for doubtful
accounts............... $9,488 $2,578 $(2,564) $(52) $9,450
======= ====== ======== ===== ======
Restructuring reserve... -- $2,962 $(286) -- $2,676
======= ======= ======== ===== =======
For the Year Ended
October 3, 1999:
Reserve deducted from
assets to which it
applies -
Allowance for doubtful
accounts.............. $9,450 $15,344 $(7,442) $41 $17,393
====== ======= ======== ===== =======
Restructuring reserve... $2,676 -- $(2,676) -- --
====== ======= ======== ===== =======
(1) Deductions are for the purpose for which the reserve was created. Fiscal
1999 includes reversal of $470 of excess reserve into income.
(2) Other amounts represent the effect of exchange rate fluctuations and the
purchase of a business.