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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

|  |  |                                                                                                                                      
|- |  | -------------------------------------------------------------------------------------------------------------------------------------
|x |  | Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year ended November 2, 2002.      
|  |  |                                                                                                                                      
|o |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934for the transition period from
     to      .

Commission File Number: 33-27038

JPS INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)


|                                                                                                |  |                                               
|----------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|Delaware(State of other jurisdiction of
incorporation or organization)                          |  | 57-0868166(I.R.S. Employer
Identification No.)
|                                                                                                |  |                                               
|555 North Pleasantburg Drive, Suite 202, Greenville, SC(Address of principal executive offices) |  | 29607(Zip Code)                               

Registrants telephone number, including area code: (864) 239-3900

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01 per share, 22,000,000 shares authorized;
10,000,000 shares issued, 9,291,759 outstanding.

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:   x

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 the 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:   o

As of January 29, 2003, the aggregate market value of the Registrants
Common Stock held by non-affiliates, based upon the closing price of the Common
Stock on January 29, 2003, as reported by the Nasdaq National Market, was
approximately $24,251,500.

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 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:   x

As of the date hereof, 10,000,000 of the registrants Common Stock $.01
par value per share were issued and 9,291,759 were outstanding.

The Registrants Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on March 5, 2003 is incorporated by reference in Part
III of this Form 10-K to the extent stated herein.





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JPS INDUSTRIES, INC.

Table of Contents

|                                                                                              |                   |  |    |    | 
|--------------------------------------------------------------------------------------------- | ----------------- |  | -- | -- | 
|PART I                                                                                       
|Item 1. BUSINESS                                                                              |                   |  | 3  |   
|Item 2. PROPERTIES                                                                            |                   |  | 9  |   
|Item 3. LEGAL PROCEEDINGS                                                                     |                   |  | 9  |   
|Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS                                    |                   |  | 10 |   
|PART II                                                                                      
|Item 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS             |                   |  | 10 |   
|Item 6. SELECTED HISTORICAL FINANCIAL DATA                                                    |                   |  | 10 |   
|Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |                   |  | 13 |   
|Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                            |                   |  | 19 |   
|Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |                   |  | 20 |   
|Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  |                   |  | 43 |   
|PART III                                                                                     
|Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                   |                   |  | 44 |   
|Item 11. EXECUTIVE COMPENSATION                                                               |                   |  | 44 |   
|Item 12. SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT                          |                   |  | 44 |   
|Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                       |                   |  | 44 |   
|Item 14. DISCLOSURE CONTROLS AND PROCEDURES                                                   |                   |  | 44 |   
|Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K                       |                   |  | 44 |   
|                                                                                              | INDEX TO EXHIBITS |  |    | 46 | 
|                                                                                              | SIGNATURES        |  |    | 49 | 





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PART I

ITEM 1. BUSINESS

General

Unless the context otherwise requires, the terms JPS and the Company as
used in this Form 10-K mean JPS Industries, Inc. and JPS Industries, Inc.
together with its subsidiaries, respectively.

The Company is a major U.S. manufacturer of extruded urethanes, polypropylenes
and mechanically formed glass substrates for specialty industrial applications.
JPS specialty industrial products are used in a wide range of applications,
including: printed electronic circuit boards; advanced composite materials;
aerospace components; filtration and insulation products; surf boards;
construction substrates; high performance glass laminates for security and
transportation applications; plasma display screens; athletic shoes; commercial
and industrial roofing systems; reservoir covers; and medical, automotive and
industrial components. Headquartered in Greenville, South Carolina, the
Company operates manufacturing locations in Slater, South Carolina; Westfield,
North Carolina; and Easthampton, Massachusetts.

JPS is a Delaware corporation incorporated in 1986 and has been publicly held
since the completion of its financial restructuring in October 1997. The
Companys common stock is listed in the Nasdaq National Market System under the
stock symbol JPST.

The 1997 Restructuring

In 1997, JPS determined that it would be unable to meet certain debt
obligations on its public bonds that would become due commencing in June 1997.
Accordingly, on May 15, 1997, JPS, JPS Capital Corp., a wholly-owned
subsidiary of JPS (JPS Capital) and an unofficial committee (the Unofficial
Bondholder Committee) comprised of institutions that owned, or represented
owners that beneficially owned, approximately 60% of the 10.85% Senior
Subordinated Discount Notes due June 1, 1999 (the 10.85% Notes), the 10.25%
Senior Subordinated Notes due June 1, 1999 (the 10.25% Notes), and the 7%
Subordinated Debentures due May 15, 2000 (the 7% Notes) (together with the
10.85% Notes and the 10.25% Notes, the Old Debt Securities) reached an
agreement in principle on the terms of a restructuring to be accomplished under
chapter 11 of the Bankruptcy Code which culminated in a Joint Plan of
Reorganization (as amended, the Plan of Reorganization) proposed by JPS and
JPS Capital under chapter 11 of the Bankruptcy Code. Pursuant to a disclosure
statement, dated June 25, 1997 (the Disclosure Statement), on June 26, 1997,
JPS and JPS Capital commenced a prepetition solicitation of votes by the
holders of Old Debt Securities and 390,719 shares of Series A Senior Preferred
Stock (the Old Senior Preferred Stock) to accept or reject the Plan of
Reorganization. Under the Plan of Reorganization, the holders of Old Debt
Securities and Old Senior Preferred Stock were the only holders of impaired
claims and impaired equity interests entitled to receive a distribution, and
therefore, pursuant to section 1126 of the Bankruptcy Code, were the only
holders entitled to vote on the Plan of Reorganization. At the conclusion of
the 32-day solicitation period, the Plan of Reorganization had been accepted by
holders of more than 99% of the Old Debt Securities that voted on the Plan of
Reorganization and by holders of 100% of the Old Senior Preferred Stock that
voted on the Plan of Reorganization.

On August 1, 1997, JPS commenced its voluntary reorganization case under
chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Southern
District of New York (the Bankruptcy Court), and filed the Plan of
Reorganization and the Disclosure Statement. None of JPSs subsidiaries,
including JPS Capital which was a co-
proponent of the Plan of Reorganization, commenced a case under the Bankruptcy
Code. Pursuant to orders of
the Bankruptcy Court entered on September 9, 1997, the Bankruptcy Court (i)
approved the Disclosure Statement
and the solicitation of votes on the Plan of Reorganization and (ii) confirmed
the Plan of Reorganization. The
Plan of Reorganization became effective on October 9, 1997 (the Effective
Date) resulting in, among other things,

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the cancellation of the Old Senior Preferred Stock, 10,000 shares of Series B
Junior Preferred Stock (the Old Junior Preferred Stock), 490,000 shares of
Class A common stock and 510,000 shares of Class B common stock (together with
Class A common stock, the Old Common Stock), and the issuance of 10,000,000
shares of Common Stock $.01 par value per share (the Common Stock).

Through the implementation of the Plan of Reorganization, as of the Effective
Date, JPSs most significant financial obligations were restructured:
$240,091,318 in face amount of outstanding Old Debt Securities were exchanged
for, among other things, $14.0 million in cash, 99.25% of the shares of Common
Stock and $34.0 million in aggregate principal amount (subject to adjustment on
the maturity date) of contingent payment notes issued by JPS Capital (the
Contingent Notes); the Old Senior Preferred Stock, the Old Junior Preferred
Stock and the Old Common Stock were canceled; warrants (which have expired) to
purchase up to 5% of the common stock of JPS (the New Warrants) with an
initial purchase price of $98.76 per share were issued in respect of the Old
Senior Preferred Stock; and the obligations of JPS under its former working
capital facility were satisfied and the Revolving Credit Facility was obtained.
JPSs senior management received approximately 0.75% of the Common Stock in
lieu of payment under their contractual retention bonus agreements. As a
result of the restructuring, JPSs only significant debt obligation is its
guaranty of the obligations of its operating subsidiaries under the Revolving
Credit and Security Agreement with Wachovia Bank (the Revolving Credit
Facility). The equipment loan contracts, which are long-term obligations of
the operating subsidiaries, are not guaranteed by, or otherwise obligations of,
JPS. In August 1998, the Company reduced its long-term debt and related
investments by repaying all of the approximately $34.0 million in principal
amount of JPS Capitals Contingent Notes.

Business Segments

The Company currently operates in two reportable business segments (each of
which constitutes a separate and distinct division)JPS Elastomerics and JPS
Glass. Item 7 of this Form 10-K, Managements Discussion and Analysis of
Financial Condition and Results of Operation,discloses the sales,
profitability and net assets of each segment. Each division has independent
administrative, manufacturing and marketing capabilities for all material
aspects of their operations, including product design, technical development,
customer service, purchasing, and collections. JPSs corporate group is
responsible for finance, strategic planning, legal, tax, and regulatory affairs
for its subsidiaries. Corporate costs are allocated to the divisions for
segment reporting purposes. The following discussion provides general
information as it relates to each division:

JPS Elastomerics

Through its JPS Elastomerics division, the Company is a market leader in the
manufacturing and marketing of scrim-reinforced, heat-weldable, single-ply
roofing membrane that is sold globally through a network of roofing
distributors. The Company offers a polypropylene-based material, a Hypalon®
(chlorosulfonated polyethylene)-based material, and a PVC-based material.
These products, marketed under Stevens® Roofing Systems, are sold primarily to
roofing distributors and contractors who install new and retrofitted roofs for
commercial, industrial, and institutional construction. The Company is a major
manufacturer and global marketer of polyurethane film, sheet, tubing, cord, and
profile for a myriad of applications in security, athletic, automotive,
medical, industrial, and consumer products industries.

JPS Glass

Through its JPS Glass segment, the Company manufactures and markets
mechanically formed fiberglass substrates. Fiberglass substrates exhibit
dimensional stability, moisture resistance, high strength, fire and chemical
resistance, low dielectric properties and thermal conductivity, and as a result
of these many attributes, they provide an excellent platform for the
construction of printed circuit boards, substrates for exterior insulation
facing systems, filtration products, surfboard substrates, composite materials
for aircraft cabin interiors and cargo liners, and other numerous technical,
industrial applications.

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The Company is a leading producer of AstroQuartz® substrates formed from quartz
filaments to produce sophisticated electronic circuit boards and extremely high
temperature thermal insulation for the defense and civilian aerospace
industries. The Company also offers its patented AcidFlex® and UltraFlex®
filtration products to industrial manufacturers.

JPSs wholly-owned operating subsidiaries include JPS Elastomerics and JPS
Converter and Industrial Corp. (C&I). JPSs other wholly-owned subsidiaries
do not have any significant operations: JPS Capital, International Fabrics,
Inc. (Fabrics), JPS Auto, Inc. (Auto) and JPS Carpet Corp. (Carpet).

Manufacturing

JPS Elastomerics

The Elastomerics division operates two facilities and employs approximately 260
employees. Construction products are produced from raw materials, where they
are blended to proprietary specifications along with fire-retardant and UV
stabilizers and then calendered on state-of-the-art equipment.

Polyurethane products are extruded in highly engineered blown film and flat
sheet extrusion processes from urethane resins and additives. Depending on end
uses, some materials are manufactured in class 10,000 clean zone environments.

JPS Glass

The Glass division operates one facility and employs approximately 350
employees. The Company purchases fiberglass and other specialty materials to
mechanically form substrates which have proprietary finishes applied to meet
individual customer specifications. These proprietary finishes are designed to
act as the bonding agent between the fiberglass substrate and the customers
value-added application. In almost every case, the customers product would
have lower or unacceptable performance without the proprietary finish. These
finishes are customer specific and developed over years of trial and
development. All products are manufactured to customer specification and
require certification to either military or customer specification prior to
shipment.

Raw Materials

The Company maintains good relationships with its suppliers and has, where
possible, diversified its supplier base so as to avoid a disruption of supply.
In most cases, the Companys raw materials are staple goods that are readily
available from domestic and international fiberglass and chemical
manufacturers. For several products, however, branded goods or other
circumstances prevent such a diversification, and an interruption of the supply
of these raw materials could have a significant negative impact on the
Companys ability to produce certain products. The construction products group
has negotiated comprehensive supply agreements for all its polymer, chemical
and accessory products, with multiple production sites assuring an
uninterrupted supply. The urethane products group purchases under contract
from all major thermoplastic polyurethane suppliers. The Company believes that
its practice of purchasing such items from large, stable companies minimizes
the risk of interrupting the supply of raw materials.

Marketing and Competition

The following is a discussion of marketing and competitive factors as they
relate to each of the Companys divisions:

JPS Elastomerics

The commercial roofing industry is highly competitive with a number of major
participants in all segments of the industry, with many of the Companys
competitors significantly larger in terms of aggregate sales. In the Specialty

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segment of the single-ply market where the Company competes, there are more
than 10 competitors. Industry capacity additions in 2000 and 2001 are likely
to keep prices under pressure as the market demand declined in 2002 and looks
to remain weak in the coming year.

The Company markets it products under the Stevens® Roofing Systems brand name
using a push-pull strategy: pushing products through distribution to the
roofing contractor and pulling products through the market by creating demand
on the part of building owners, architects and specifiers.

The Company has approximately 35 field sales staff as well as a network of
independent representatives, distributors and distributor-representatives as
its sales force. In addition, the Company has a distribution and marketing
agreement with Trelleborg Building Systems, AB covering most of Europe and a
licensing program in Asia. Marketing efforts in the roofing industry include
(i) developing new products to meet changing market demands, (ii) providing
proprietary accessory products, (iii) implementing contractor-specific
programs, and (iv) expanding national account efforts.

Geomembrane products are sold to a select group of fabricators and installers.
The Companys marketing efforts are focused on supporting those companies in a
variety of ways.

The Companys urethane products are marketed under the Stevens® brand and
through both direct sales personnel and a nationwide network of independent
representatives. The Companys products are sold to specification and each
application has specific end-use performance requirements. As with the
construction products, marketing efforts for urethane are multifaceted with new
product development and engineering being critical factors to the success of
these products.

JPS Glass

The glass substrate business is highly competitive and globally influenced
because of the significant capacity that exists in Europe, Asia and North
America. The Company believes itself to be the third largest North American
producer of glass substrates, where the majority of its products are sold.
Importantly, it is well-positioned because of the balance between its
electrical components, fiberglass reinforced composites, construction, and
insulation product lines. Additionally, within the electrical substrate
product line (i.e., printed circuit boards), the Companys ability to commit
substantially all of its capacity to light weight substrates is a market
strength because they are used in a vast array of growing consumer product
markets, such as cell phones, computers, pagers, as well as the electronic
infrastructure for the internet.

The Companys glass products are marketed through a combination of direct sales
and distributors, with the central focus being development of customer specific
finishes that enhance their respective value added processes.

Customers

No customer accounts for more than 10% of the Companys sales. However, the
loss of certain other customers could have a material adverse effect on sales.

Product Development

The following is a discussion of product development as it relates to each of
the Companys divisions:

JPS Elastomerics

On-going product development and process improvement activities include a
constant evaluation of new advanced polymers and polymer compounds, as well as
the evaluation and analysis of material additives required in the

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manufacture of commercial roofing products, geomembranes and thermoplastic
polyurethane. As appropriate, additives are required to ensure long-term UV
stability, fire or chemical resistance or to ensure that a specific product can
be used in contact with drinking water.

For its roofing products, the Company continues to develop advanced material
products that meet fire, wind and other building code requirements on a global
basis. Such building codes vary from country to country, and even regionally,
presenting a challenge to the manufacturer. Geomembranes must also meet
stringent code requirements of several countries, particularly when used in
potable water reservoirs.

The Company offers both aliphatic and aromatic polyurethane products.
Aliphatic materials, which are used in glass clad polycarbonate laminates for
security-glazing applications, are extruded in a clean zone environment to
ensure maximum product cleanliness. Aromatic materials are extruded by blown
film and flat sheet technologies. The Company spends a considerable amount of
R&D effort to develop compounds to specifically meet customer needs. In
addition, the Company provides specific surface finishes, textures, colors,
etc. that may be required for end-use applications.

JPS Glass

R&D efforts include the continued refinement of silane chemistry and substrate
processing, for high Tg resin systems, CAF (Conductive Anodic Filamentation)
improvement and HDI (High Density Interlock) for improved laser drillability in
the printed circuit board industry, development of soft moldable finishes for
the building products industry, high-flex finishes to extend the life of
filtration substrates for the power generation industry, and new low cost
materials for the mechanically needled insulation industry. The product
development effort is an ongoing customer specific process that is enhanced by
the involvement of the divisions vendor partners with the divisions highly
skilled research department.

Backlog

Unfilled open orders, which the Company believes are firm, were $9.2 million at
November 2, 2002 and $20.0 million at October 27, 2001. The Company generally
fills its open orders in the following fiscal year and the Company expects that
all of the open orders as of November 2, 2002, will be filled in the 52-week
period ending November 1, 2003 (Fiscal 2003). The Company believes that the
amount of backlog provides limited indication of the sales volume that can be
expected in coming months, and changes in economic conditions may result in
deferral or acceleration of orders which may affect sales volume for a given
period.

No significant portion of the Companys business is subject to renegotiation of
profits, or termination of contracts or subcontracts at the election of the
government.

Patents, Licenses and Trademarks

The following is a discussion of patent licenses and trademarks as they relate
to each of the Companys divisions:

JPS Elastomerics

Products, such as commercial roofing, geomembranes and polyurethane, are
marketed under the Stevens brand name. As such, the Company is in the
process of securing U.S. trademarks for the following names: Stevens Roofing
Systems, Stevens Geomembranes and Stevens Urethane. In addition, the
Company currently holds U.S. trademarks on the names Hi-Tuff® and Hi-Tuff
Plus®. The Company also holds trademarks for the Hi-Tuff  name in Canada,
Mexico and certain European and Asian countries.

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In terms of product licensing, the Company is currently involved with two
manufacturing licensees: Tsutsunaka Plastics Industries (TPI) of Japan and
Protan A/S of Norway. The Company has licensed roofing technology to Protan
for manufacturing and marketing TPO-based roofing products in the Scandinavian
countries. In addition, Stevens roofing and geomembrane compound and
manufacturing technologies have been licensed to TPI for the production and
marketing of membranes in Japan, and the Company has entered into an agreement
with Trelleborg Building Systems AB for marketing of the Companys roofing
products in Europe.

JPS Glass

A total of four patents and 36 trademarks are secured or are in the process of
being secured by the Company for its Glass business. These include, but are
not limited to: alkali resistant meshes for Exterior Insulation Facing Systems
trademarked under the names of Versaflex®, Duraflex®, Ultraflex®,
Standardflex®, and Gorilla-Mesh; filtration products trademarked under the
names AcidFlex®, AcidBond, and Ultraflex®; substrates meeting high temperature
requirements trademarked under the names, Tempratex® and Industro-Quartz;
special laser drillable substrates under the trademark APS (Ablative Precision
Substrate); and Quartz Hybrid substrates with the Astralar® and AstroCarb®
trademarks.

Employees

As of November 2, 2002, the Company had 620 active employees of which 446 were
hourly and 174 were salaried. None of the Companys employees are represented
by unions. The Company believes it has good relations with its employees.

Environmental and Regulatory Matters

The Company is subject to various federal, state and local government laws and
regulations concerning, among other things, the discharge, storage, handling
and disposal of a variety of hazardous and non-hazardous substances and wastes.
The Companys plants generate small quantities of hazardous waste that are
either recycled or disposed of off-site by or at licensed disposal or treatment
facilities.

The Company believes that it is in substantial compliance with all existing
environmental laws and regulations to which it is subject. In addition, the
Company is subject to liability under environmental laws relating to the past
release or disposal of hazardous materials. To date, and in managements
belief for the foreseeable future,
liability under and compliance with existing environmental laws has not had and
will not have a material adverse effect on the Companys financial or
competitive positions. No representation or assurance can be made, however,
that any change in federal, state or local requirements or the discovery of
unknown problems or conditions will not require substantial expenditures by the
Company.

Seasonality

Certain portions of the business of the Company are seasonal (principally
construction products) and sales of these products tend to decline during
winter months in correlation with construction activity. These declines have
historically tended to result in lower sales and operating profits in the first
and second quarters than in the third and fourth quarters of the Companys
fiscal year.

Working Capital

Information regarding the Companys working capital position and practices is
set forth in Item 7 of this Form 10-K under the caption Liquidity and Capital
Resources.

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Financial information for the JPS Elastomerics and JPS Glass segments is set
forth in Note 10 to the Consolidated Financial Statements included in Item 8
herein.

Cautionary Statements Concerning Forward Looking Statements

Certain statements contained in this Item 1 Businessand Item 7 Managements
Discussion and Analysis of Financial Condition and Results of Operations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 Annual Report on Form 10-K that a number of
important factors could cause the Companys actual results in Fiscal 2002 and
beyond to differ materially from those expressed in any such forward-looking
statements. These factors include, without limitation, the general economic
and business conditions affecting the Companys industries, actions of
competitors, changes in demand in certain markets, the Companys ability to
meet its debt service and pension plan obligations, the seasonality of the
Companys sales, the volatility of the Companys raw material costs, claims and
energy, and the Companys dependence on key personnel and certain large
customers.

Stockholders, potential investors and other readers are urged to consider these
factors carefully in evaluating the forward-looking statements and are
cautioned not to place undue reliance on such forward-looking statements. The
forward-looking statements made herein are only made as of the date of this
report and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.

ITEM 2. PROPERTIES.

The following table sets forth certain information relating to the Companys
principal facilities (segment information relates to principal use). All of
the facilities are owned and are used for manufacturing.

|                 |  |           |         |          |  |            |  |        |         |  |  | 
|---------------- |  | --------- | ------- | -------- |  | ---------- |  | ------ | ------- |  |  | 
|                 |  | Square    |         |          |  |            |  | Square
|Location         |  | Footage   |         | Location |  | Footage   
|                 |  |           |         |          |  |           
|JPS Elastomerics |  | JPS Glass
|                 |  |          
|Westfield, NC    |  |           | 237,000 |          |  | Slater, SC |  |        | 433,000 | 
|Easthampton, MA  |  |           | 50,000  |          |  |            |  |        |         |  |  | 

The Company also leases certain other warehouse facilities, various regional
sales offices and its corporate headquarters. The Company believes that all of
its facilities are suitable and adequate for the current and anticipated
conduct of its operations.

ITEM 3. LEGAL PROCEEDINGS.

The Company is a party to lawsuits in the normal course of its business
including certain asbestos-based claims. The Company believes that it has
meritorious defenses in all lawsuits in which the Company or its subsidiaries
is a defendant. 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 Elastomerics and two other defendants alleging an unspecified amount of
damages in connection with the alleged premature deterioration of the Companys
Hypalon roofing membrane installed during the 1980s on approximately 140 Sears
stores. A trial date is expected sometime in 2003. The Company believes it
has meritorious defenses to the claims and intends to defend the lawsuit
vigorously as it has since its inception in 1997. 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 that may
result.  In July, 2002, the Companys

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insurance carrier, Liberty Mutual Insurance Company (Liberty), informed the
Company that it no longer believed it had an obligation to contribute to
settlement or defense of this matter. The Company subsequently filed a lawsuit
for declaratory, injunctive, and monetary relief against Liberty Mutual. In
January, 2003, the court found that Liberty does have a duty to defend the
Company based on the counts remaining in the case.  Further, in
January 2003, the court granted JPS' summary judgment motion on
Sears' breach of contract claim.  These orders are not final and may
be subject to reconsideration or appeal.  To the extent these rulings
remain in effect, the number of roofs involved in the case will be
substantially reduced, and the Company believes that an unfavorable
resolution of the remaining actions would not have a material adverse
effect on the business, results of operations or financial condition
of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.

No matters were submitted to a vote of securityholders during the fourth
quarter of Fiscal 2002.

PART II

ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The common stock of the Company was approved for listing and trading on the
Nasdaq National Market System under the stock symbol JPST, effective January
30, 1998. Prior to that time, there was only sporadic trading of the common
stock in the over-the-counter market. The following table presents the high
and low sales prices for the common stock for each full quarterly period for
the past two years.

|               |  |      |       |     |  |   |       | 
|-------------- |  | ---- | ----- | --- |  | - | ----- | 
|Fiscal 2001    |  | High |       | Low
|               |  |      |       |    
|First Quarter  |  | $    | 6.000 |     |  | $ | 3.250 | 
|Second Quarter |  |      | 5.125 |     |  |   | 4.370 | 
|Third Quarter  |  |      | 7.490 |     |  |   | 4.370 | 
|Fourth Quarter |  |      | 6.900 |     |  |   | 3.370 | 

|               |  |      |       |     |  |   |       | 
|-------------- |  | ---- | ----- | --- |  | - | ----- | 
|Fiscal 2002    |  | High |       | Low
|               |  |      |       |    
|First Quarter  |  | $    | 6.500 |     |  | $ | 4.280 | 
|Second Quarter |  |      | 5.850 |     |  |   | 3.750 | 
|Third Quarter  |  |      | 4.470 |     |  |   | 3.650 | 
|Fourth Quarter |  |      | 4.300 |     |  |   | 3.410 | 

As of January 21, 2003, there were approximately 35 holders of record of the
Companys common stock.

The Company has never paid a dividend on its common stock. The Company
presently intends to retain earnings to fund working capital and for general
corporate purposes and, therefore, does not intend to pay cash dividends on
shares of the common stock in the foreseeable future. The payment of future
cash dividends, if any, would depend on the Companys financial condition,
results of operations, current and anticipated capital requirements,
restrictions under the existing indebtedness (including, without limitation,
indebtedness evidenced by the Revolving Credit Facility and refundings and
refinancings thereof) and other factors deemed relevant by JPSs Board of
Directors. The Companys subsidiaries that are borrowers under certain credit
agreements are restricted from paying cash dividends to JPS with respect to
their capital stock unless, among other things, JPS and its subsidiaries
satisfy certain specified financial tests.

ITEM 6. SELECTED HISTORICAL FINANCIAL DATA.

(Dollars in Thousands Except Per Share Data)

The following table presents selected consolidated historical financial data
for the Company for the fiscal years indicated. The selected historical
financial data for the years ended October 31, 1998, October 30, 1999, October
28, 2000, October 27, 2001, and November 2, 2002 have been derived from the
Consolidated Financial Statements of the Company for such periods, which have
been audited. The presentation of certain previously reported amounts has

10



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##### 



been reclassified to conform to the current presentation and to reflect
discontinued operations of the yarn sales business (sold on July 23, 1999), the
cotton commercial products business (sold on August 27, 1999), and the Apparel
Division (sold on November 17, 2000), as discussed in Note 3 to the
Consolidated Financial Statements of the Company at Item 8 in this Form 10-K.

The financial statements for the years ended October 31, 1998, October 30,
1999, October 28, 2000, October 27, 2001, and November 2, 2002 reflect the
Companys emergence from chapter 11 on October 9, 1997 and were prepared
utilizing the principles of fresh start accounting contained in the American
Institute of Certified Public Accountants Statement of Position 90-7,
Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.
As a result of the implementation of fresh start accounting, certain of the
selected financial data for the years ended October 31, 1998, October 30, 1999,
October 28, 2000, October 27, 2001, and November 2, 2002 are not comparable to
the selected financial data of prior periods. The following information
should be read in conjunction with the Consolidated Financial Statements of the
Company and Notes thereto, and Managements Discussion and Analysis of
Financial Condition and Results of Operations presented elsewhere herein.

11



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|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |   | 
|------------------------------------------------------------- | ------------------------------------------- | ---------- | ----------- | ---------- | ----------- | ---------- | ----------- | ---------- | ----------- | ---------- | ----------- | ------- | - | - | --------- | - |  | - | --------- | - | 
|                                                              |                                             |            | Fiscal      |            | Fiscal      |            | Fiscal      |            | Fiscal      |            | Fiscal     
|                                                              |                                             |            | Year        |            | Year        |            | Year        |            | Year        |            | Year       
|                                                              |                                             |            | Ended       |            | Ended       |            | Ended       |            | Ended       |            | Ended      
|                                                              |                                             |            | October 31, |            | October 30, |            | October 28, |            | October 27, |            | November 2,
|                                                              |                                             |            | 1998        |            | 1999        |            | 2000        |            | 2001        |            | 2002       
|Statement of Operations Data:                                 |                                             | (52 Weeks) |             | (52 Weeks) |             | (52 Weeks) |             | (52 Weeks) |             | (53 Weeks)
|                                                              |                                             |            |             |            |             |            |             |            |             |           
|Net sales                                                     |                                             | $          | 155,944     |            |             | $          | 156,867     |            |             | $          | 167,978     |         |   | $ | 147,626   |   |  | $ | 126,363   |  
|Cost of sales                                                 |                                             |            | 119,727     |            |             |            | 121,579     |            |             |            | 126,380     |         |   |   | 116,888   |   |  |   | 108,099   |  
|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|Gross profit                                                  |                                             |            | 36,217      |            |             |            | 35,288      |            |             |            | 41,598      |         |   |   | 30,738    |   |  |   | 18,264    |  
|Selling, general and
administrative expenses                  |                                             |            | 25,134      |            |             |            | 26,978      |            |             |            | 27,368      |         |   |   | 21,162    |   |  |   | 18,018    |  
|Other expense (income), net                                   |                                             |            | (67         | )          |             |            | 1,663       |            |             |            | (18         | )       |   |   | (1        | ) |  |   | (2        | )
|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|Operating profit                                              |                                             |            | 11,150      |            |             |            | 6,647       |            |             |            | 14,248      |         |   |   | 9,577     |   |  |   | 248       |  
|Interest income                                               |                                             |            | 1,038       |            |             |            |            |            |             |            |            |         |   |   |          |   |  |   |          |  
|Interest expense                                              |                                             |            | (4,013      | )          |             |            | (3,511      | )          |             |            | (3,442      | )       |   |   | (2,333    | ) |  |   | (735      | )
|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|Income (loss) before income taxes and
discontinued operations |                                             |            | 8,175       |            |             |            | 3,136       |            |             |            | 10,806      |         |   |   | 7,244     |   |  |   | (487      | )
|Income taxes (benefit)                                        |                                             |            | 3,462       |            |             |            | 1,997       |            |             |            | 4,517       |         |   |   | 2,818     |   |  |   | (121      | )
|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|Income (loss) from continuing operations                      |                                             |            | 4,713       |            |             |            | 1,139       |            |             |            | 6,289       |         |   |   | 4,426     |   |  |   | (366      | )
|Discontinued operations (net of taxes):                       |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|                                                              | Loss from discontinued operations           |            |             | (15,377    | )           |            |             | (4,485     | )           |            |             | (104    | ) |   |           |  |  |   |           |  | 
|                                                              | Loss on disposal of discontinued operations |            |             |           |             |            |             | (18,096    | )           |            |             | (47,415 | ) |   |           |  |  |   |           |  | 
|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|Net income (loss)                                             |                                             | $          | (10,664     | )          |             | $          | (21,442     | )          |             | $          | (41,230     | )       |   | $ | 4,426     |   |  | $ | (366      | )
|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|Income (loss) applicable to common stock                      |                                             | $          | (10,664     | )          |             | $          | (21,442     | )          |             | $          | (41,230     | )       |   | $ | 4,426     |   |  | $ | (366      | )
|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|Weighted average number
of shares outstanding  Basic         |                                             |            | 10,000,000  |            |             |            | 10,000,000  |            |             |            | 9,940,000   |         |   |   | 9,340,466 |   |  |   | 9,277,623 |  
|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|Basic earnings (loss) per common share:                       |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|Income (loss) from continuing operations                      |                                             | $          | 0.47        |            |             | $          | 0.11        |            |             | $          | 0.63        |         |   | $ | 0.47      |   |  | $ | (0.04     | )
|Discontinued operations (net of taxes):                       |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|                                                              | Loss from discontinued operations           |            |             | (1.54      | )           |            |             | (0.44      | )           |            |             | (0.01   | ) |   |           |  |  |   |           |  | 
|                                                              | Loss on disposal of discontinued operations |            |             |           |             |            |             | (1.81      | )           |            |             | (4.77   | ) |   |           |  |  |   |           |  | 
|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  
|Net income (loss)                                             |                                             | $          | (1.07       | )          |             | $          | (2.14       | )          |             | $          | (4.15       | )       |   | $ | 0.47      |   |  | $ | (0.04     | )
|                                                              |                                             |            |             |            |             |            |             |            |             |            |             |         |   |   |           |   |  |   |           |  

|                                                    |  |             |         |             |  |             |         |             |  |             |         |  |  |   |         |  |  |   |        | 
|--------------------------------------------------- |  | ----------- | ------- | ----------- |  | ----------- | ------- | ----------- |  | ----------- | ------- |  |  | - | ------- |  |  | - | ------ | 
|                                                    |  | October 31, |         | October 30, |  | October 28, |         | October 27, |  | November 2,
|Balance Sheet Data:                                 |  | 1998        |         | 1999        |  | 2000        |         | 2001        |  | 2002       
|                                                    |  |             |         |             |  |             |         |             |  |            
|Working capital, excluding net assets
held for sale |  | $           | 29,606  |             |  | $           | 29,148  |             |  | $           | 28,734  |  |  | $ | 26,801  |  |  | $ | 23,569 | 
|Total assets                                        |  |             | 255,284 |             |  |             | 216,316 |             |  |             | 148,242 |  |  |   | 109,905 |  |  |   | 89,021 | 
|Total long-term debt, less current portion          |  |             | 98,693  |             |  |             | 79,806  |             |  |             | 51,529  |  |  |   | 19,287  |  |  |   | 12,755 | 
|Shareholders equity                                |  |             | 109,528 |             |  |             | 94,653  |             |  |             | 52,408  |  |  |   | 55,247  |  |  |   | 13,977 | 

12



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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with the Consolidated
Financial Statements of the Company and the Notes thereto included in Item 8
herein. The presentation of certain previously reported amounts has been
reclassified to conform to the current presentation and to reflect discontinued
operations of the Apparel Division (sold on November 17, 2000).

|                                                              |              |   |             |        |             |   |             |        |  |   |         |        |  
|------------------------------------------------------------- | ------------ | - | ----------- | ------ | ----------- | - | ----------- | ------ |  | - | ------- | ------ | -
|                                                              |              |   | Fiscal Year |        | Fiscal Year |   | Fiscal Year
|                                                              |              |   | Ended       |        | Ended       |   | Ended      
|                                                              |              |   | October 28, |        | October 27, |   | November 2,
|                                                              |              |   | 2000        |        | 2001        |   | 2002       
|                                                              |              |   |             |        |             |   |            
|NET SALES                                                     |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              | Elastomerics |   | $           | 86,595 |             |   | $           | 82,409 |  |   | $       | 75,466 |  
|                                                              | Glass        |   |             | 87,319 |             |   |             | 65,217 |  |   |         | 50,897 |  
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              |              |   | 173,914     |        |             |   | 147,626     |        |  |   | 126,363 |       
|Less
intersegment sales(1)                                    |              |   | (5,936      | )      |             |   |            |        |  |   |        |       
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Net sales                                                     |              | $ | 167,978     |        |             | $ | 147,626     |        |  | $ | 126,363 |       
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|OPERATING
PROFIT(2)                                           |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              | Elastomerics |   | $           | 7,458  |             |   | $           | 3,922  |  |   | $       | (256   | )
|                                                              | Glass        |   |             | 6,790  |             |   |             | 5,655  |  |   |         | 504    |  
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Operating profit                                              |              |   | 14,248      |        |             |   | 9,577       |        |  |   | 248     |       
|Interest expense, net                                         |              |   | (3,442      | )      |             |   | (2,333      | )      |  |   | (735    | )     
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Income (loss) before income taxes and
discontinued operations |              | $ | 10,806      |        |             | $ | 7,244       |        |  | $ | (487    | )     
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|OTHER DATA                                                    |              |   |             |        |             |   |             |        |  |   |         |       
|                                                             
|Cash provided by operating activities                         |              | $ | 33,977      |        |             | $ | 11,055      |        |  | $ | 7,124   |       
|Cash provided by (used in) investing activities               |              | $ | (2,609      | )      |             | $ | 21,717      |        |  | $ | (974    | )     
|Cash (used in) financing activities                           |              | $ | (29,579     | )      |             | $ | (34,444     | )      |  | $ | (6,427  | )     
|                                                             
|EBITDA(3)                                                     |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              | Elastomerics |   | $           | 10,369 |             |   | $           | 6,567  |  |   | $       | 2,327  |  
|                                                              | Glass        |   |             | 10,036 |             |   |             | 8,807  |  |   |         | 3,645  |  
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Total EBITDA                                                  |              | $ | 20,405      |        |             | $ | 15,374      |        |  | $ | 5,972   |       
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       



|(1) |  | Intersegment sales consist primarily of the transfer of certain scrim
products manufactured by the Glass segment to the Elastomerics segment
which was discontinued in Fiscal 2000. All intersegment revenues and
profits are eliminated in the 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 costs in excess of amounts allocable to identifiable
assets.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(3) |  | EBITDA represents operating income plus depreciation and amortization and
certain other charges as defined in the Companys credit agreement. EBITDA
as determined by the Company may not be comparable to the EBITDA measure
as reported by other companies. This presentation of EBITDA is not
intended to represent cash flow from operations as defined by GAAP and
should not be considered as an indicator of operating performance or an
alternative to cash flow or operating income (as measured by GAAP) or as a
measure of liquidity. In addition, this measure does not represent funds
available for discretionary use. It is included herein to provide
additional information with respect to the Companys credit agreement.
Refer to the Consolidated Statement of Cash Flows in Item 8 for additional
information regarding the Companys GAAP basis cash flows.

13



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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.

Fiscal 2002 Compared With Fiscal 2001

Consolidated net sales decreased $21.3 million, or 14.0%, from $147.6 million
in Fiscal 2001 to $126.4 million in Fiscal 2002. Consolidated operating profit
decreased $9.3 million from $9.6 million in Fiscal 2001 to $0.3 million in
Fiscal 2002. Total selling, general and administrative expenses decreased $3.1
million from Fiscal 2001 to Fiscal 2002 while remaining at 14.3% of sales. The
decrease is primarily attributed to lower variable selling costs, higher
pension income and cost savings initiatives.

JPS Elastomerics

Net sales in Fiscal 2002 in the Elastomerics segment, which includes single-ply
roofing and extruded urethane products, decreased $6.9 million, or 8.4%, from
$82.4 million in Fiscal 2001 to $75.5 million in Fiscal 2002. Sales of the
Companys roofing products were adversely affected by the dramatic decrease in
domestic commercial construction. In addition, the domestic roofing market
continues to be characterized by intense competition driven by aggressive
entrants into this segment of the market. The Company has addressed this
challenge by instituting aggressive pricing strategies, developing new products
including the introduction of PVC and 80 mil TPO single-ply membranes,
strengthening sales management in key territories, and taking actions to reduce
operating costs. Sales of urethane products were up slightly year over year.

Operating profit in Fiscal 2002 for the Elastomerics segment decreased $4.2
million from $3.9 million in Fiscal 2001 to a loss of $0.3 million in Fiscal
2002. The decrease resulted principally from lower sales volumes, prices and
margins on roofing products. Cost of goods sold increased as a result of
higher insurance, energy, claims, and efficiency losses which were partially
offset with cost reduction measures and improved inventory management.
Selling, general and administrative costs decreased as a result of cost savings
initiatives and higher allocated pension income.

JPS Glass

Net sales in the Glass segment, which includes substrates constructed of
synthetics and fiberglass for lamination, insulation and filtration
applications, decreased $14.3 million, or 21.9%, from $65.2 million in Fiscal
2001 to $50.9 million in Fiscal 2002 primarily as a result of the significant
decline in demand for electronics-related substrates. The electronics industry
represents the largest customer base for the Companys fiberglass products and
dramatic demand decreases were only partly offset by higher sales of
filtration, Quartz and other industrial substrates.

Operating profit in Fiscal 2002 for the Glass segment decreased $5.2 million
from $5.7 million in Fiscal 2001 to $0.5 million in Fiscal 2002. Lower unit
sales and prices of electronic substrates combined with higher insurance and
manufacturing costs to account for the majority of the operation profit
reduction, more than offsetting the contribution from higher sales of
filtration, Quartz and industrial substrates. Selling general and
administrative costs decreased as a result of cost savings initiatives and
higher allocated pension income.

Other

Interest expense decreased $1.6 million to $0.7 million in Fiscal 2002 from
$2.3 million in Fiscal 2001. Total long-term debt was reduced by approximately
$6.5 million in Fiscal 2002 as a result of cash flow from operations.

14



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##### 



Fiscal 2001 Compared With Fiscal 2000

Consolidated net sales decreased $20.4 million, or 12.1%, from $168.0 million
in Fiscal 2000 to $147.6 million in Fiscal 2001. Consolidated operating profit
decreased $4.6 million from $14.2 million in Fiscal 2000 to $9.6 million in
Fiscal 2001. Total selling, general and administrative expenses decreased from
16.3% of sales in Fiscal 2000 to 14.3% of sales in Fiscal 2001. Fiscal 2000
included $2.5 million of incentive payments. This percentage decrease results
primarily from additional cost reduction efforts in Fiscal 2001.

JPS Elastomerics

Net sales in Fiscal 2001 in the Elastomerics segment, which includes single-ply
roofing and extruded urethane products, decreased $4.2 million, or 4.8%, from
$86.6 million in Fiscal 2000 to $82.4 million in Fiscal 2001. The domestic
roofing market continues to be characterized by intense competition driven by
aggressive entrants into this market. The Company has addressed this challenge
by instituting aggressive pricing strategies, developing new products,
strengthening sales management in key territories, and taking actions to reduce
operating costs. Sales of urethane products decreased due to lower overall
demand for certain of the Companys extruded sheet products as a result of the
general economic downturn experienced in the second half of Fiscal 2001.

Operating profit in Fiscal 2001 for the Elastomerics segment decreased $3.6
million from $7.5 million in Fiscal 2000 to $3.9 million in Fiscal 2001. The
decrease resulted principally from lower sales and margins on roofing products
partially offset with cost reduction measures and improved inventory
management.

JPS Glass

Net sales in the Glass segment, which includes substrates constructed of
synthetics and fiberglass for lamination, insulation and filtration
applications, decreased $16.2 million, or 19.9%, from $81.4 million in Fiscal
2000 to $65.2 million in Fiscal 2001 primarily as a result of the significant
decline in demand for electronics-related substrates. The electronics industry
represents the largest customer base for the Companys fiberglass products.

Operating profit in Fiscal 2001 for the Glass segment decreased $1.1 million
from $6.8 million in Fiscal 2000 to $5.7 million in Fiscal 2001 resulting from
improved manufacturing productivity and improved quality of its products and
services which have partially offset higher insurance costs as well as
declining prices and volume.

Other

Interest expense decreased $1.1 million to $2.3 million in Fiscal 2001 from
$3.4 million in Fiscal 2000. Total long-term debt was reduced by approximately
$32.6 million in Fiscal 2001 as a result of cash flow from operations and
payment received on the sale of the Companys Apparel Division. The Company
has also benefited from interest rate reductions.

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
$125.4 million in Fiscal 2000. The consideration for the sale consisted of
approximately $27.1 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 in excess of amounts allocable to identifiable assets, 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.

15



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##### 



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.
The Companys Revolving Credit Facility is with Wachovia Bank. On April 26,
2002, the Company amended the Revolving Credit Facility to increase its
flexibility and reduce the unused line fee. The facility, as amended, provides
for a revolving credit loan facility and letters of credit in a maximum
principal amount equal to the lesser of (a) $25 million or (b) a specified
borrowing base, which is based upon eligible receivables, eligible inventory,
and a specified dollar amount (currently $8.7 million subject to amortization).
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. All loans outstanding under the Revolving Credit Facility bear
interest at the 30-day LIBOR rate plus an applicable margin based upon the
Companys debt to EBITDA ratio. As of January 7, 2003, the Companys interest
rate under the Revolving Credit Facility was 3.4% and it had approximately
$15.0 million of additional availability for borrowing under the Revolving
Credit Facility.

In conjunction with the recognition of the additional minimum pension
liability, and resulting reduction to tangible net worth, as defined in the
Credit Agreement, the Company violated the minimum net worth covenant as of
November 2, 2002. The Company has obtained a waiver of any such default
through November 2, 2003. The Company expects to make contributions to its
pension plan in the amount of $4.0 million to $7.0 million in Fiscal 2003.

Year to date for 2002, cash provided by operating activities was $7.1 million.
Working capital at October 27, 2001 was $26.8 million compared with $23.6
million at November 2, 2002. From October 27, 2001 to November 2, 2002,
accounts receivable decreased by $1.5 million due to timing and sales levels,
inventories decreased $3.4 million due to management emphasis, and accounts
payable and accrued expenses decreased by $2.5 million as a result of lower
general payables.

The principal uses of cash in 2002 were for capital expenditures of $974,000 to
upgrade the Companys manufacturing operations and the repayment of long-term
debt of approximately $6.5 million. In 2001, the Company received
approximately $27.5 million in proceeds from the sale of its Apparel division
as discussed above under the caption Fiscal 2001 Compared With Fiscal 2000.
Such funds were used to reduce the Companys outstanding indebtedness under its
Revolving Credit Facility and certain equipment loans.

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.

INFLATION AND TAX MATTERS

The Company is subject to the effects of changing prices. It has historically
been able to pass along inflationary increases in its costs by increasing the
prices for its products or by increasing manufacturing efficiencies; however,
market conditions have precluded raising prices in 2001 and 2002 and, in some
cases, the Company experienced selling price decreases for its products.

For Fiscal 2002, the Company recorded a tax benefit from continuing operations
of $0.1 million, a 25% effective rate. The Company had net operating loss
carryovers of approximately $91 million as of November 2, 2002. A portion of
these losses are subject to annual limitations on usage as a result of the
ownership change that occurred as determined under the Internal Revenue Code of
1986. See Note 7 to the consolidated financial statements for additional
information. The effective tax rates for Fiscal 2001 and Fiscal 2000 were 39%
and 42%, respectively. The effective rates for all years are higher than the
combined federal and state statutory rate due to the impact of nondeductible
costs. For 2002, these costs are primarily travel costs, for 2001 and 1999, the
nondeductible costs were primarily excess reorganization costs. Although the
deferred tax asset reflected in the financial statements would not be realized
should the Company continue to have losses as in Fiscal 2002, the Company
believes it is more likely than

16



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not that the deferred tax asset will be realized utilizing future income. Such
realization requires that the Company generate on average approximately
$1,000,000 of pre-tax income increasing at approximately 5% per year. The
Company believes that such minimum level of income will be obtained through
certain cost reductions as well as improvements in profitability resulting from
increased sales. In addition, the Company believes that historical operations
clearly support the ability of current operations to generate the income needed
to realize this asset. The ability of the Company to utilize net operating
loss carryforwards, which contribute to its deferred tax asset, is enhanced by
the fact that net operating loss carryforwards sufficient to utilize the entire
deferred tax asset do not expire until the Fiscal Year ending 2021.

CRITICAL ACCOUNTING POLICIES AND OTHER MATTERS

The Companys analysis and discussion of its financial condition and results of
operations are based upon its consolidated financial statements that have been
prepared in accordance with generally accepted accounting principles in the
United States (U.S. GAAP). The preparation of financial statements in
conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses,
and the disclosure of contingent assets and liabilities. The Company evaluates
these estimates and assumptions on an ongoing basis, including but not limited
to those related to inventories, the allowance for doubtful accounts, reserve
for self-insurance liabilities, the reserve for roofing products sold under
warranties, income taxes, pension and other post retirement benefits and
contingencies. Estimates and assumptions are based on historical and other
factors believed to be reasonable under the circumstances. The results of
these estimates may form the basis of the carrying value of certain assets and
liabilities. Actual results, under conditions and circumstances different from
those assumed, may differ from estimates. The impact and any associated risks
related to estimates, assumptions, and accounting policies are discussed within
Managements Discussion and Analysis of Operations and Financial Condition, as
well as in the Notes to the Financial Statements, if applicable, where such
estimates, assumptions, and accounting policies affect the Companys reported
and expected results.

The Company believes the following accounting policies are critical to its
business operations and the understanding of results of operations and affect
the more significant judgments and estimates used in the preparation of its
consolidated financial statements:

Revenue Recognition:Revenue from product sales is recognized at the time
ownership of goods transfers to the customer and the earnings process is
complete in accordance with Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements (SAB 101). SAB 101 specifies how
existing rules should be applied to transactions in the absence of
authoritative literature. Based on the guidelines of current accounting rules
and SAB 101, revenue should not be recognized until it is realized or
realizable and earned.

Impairment of Long-Lived Assets:For all periods through November 2,
2002, the Company reviewed the recoverability of the carrying value of
long-lived assets in accordance with Statement of Financial Standard No. 121,
Accounting for the Impairment of Long-Lived Assets and for Assets to be
Disposed Of (FAS 121). The Company also reviewed long-lived assets for
impairment whenever events or changes in circumstances indicated that the
carrying amount of such assets might not be recoverable. When the future
undiscounted cash flows of the operations to which the assets relate did not
exceed the carrying value of the asset, the intangible assets were written
down, followed by the other long-lived assets, to fair value. In October 2001,
the Financial Accounting Standards Board issued Statement No. 144 Accounting
for the Impairment or Disposal of Long-Lived Assets (FAS 144). FAS 144
provides accounting guidance for financial accounting and reporting for the
impairment or disposal of long-lived assets. The statement supersedes
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of
(FAS 121). It also supersedes the accounting and reporting provisions of APB
Opinion No. 30 Reporting the Results of OperationsReporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions related to the disposal of a
segment of a business. The statement is effective for fiscal years beginning
after December 15, 2001.

17



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Accounts Receivable and Concentration of Credit Risks:Accounts
receivable potentially expose the Company to concentration of credit risk, as
defined by Statement of Financial Accounting Standards No. 105, Disclosure of
Information about Financial Instruments with Off-Balance Sheet Risk and
Financial Instruments with Concentration of Credit Risk. The Company provides
credit in the normal course of business and performs ongoing credit evaluations
on certain of its customers financial condition, but generally does not
require collateral to support such receivables. The Company also establishes
an allowance for doubtful accounts based upon factors surrounding the credit
risk of specific customers, historical trends and other information.

Income Taxes:The Company records an income tax valuation allowance when
the realization of certain deferred tax assets and net operating losses is not
likely. These deferred tax items represent expenses recognized for financial
reporting purposes, which will result in tax deductions over varying future
periods. Certain judgments, assumptions and estimates may affect the carrying
value of the valuation allowance and deferred income tax expense in the
Companys consolidated financial statements.

Off Balance Sheet Arrangements:The Company does not have transactions,
arrangements or relationships with special purpose entities, and the Company
does not have any off balance sheet debt.

Product Warranties:On certain of its products, the Company provides a
warranty against defects in materials and workmanship under separately priced
extended warranty contracts generally for a period of 10 years. Revenue from
such extended warranty contracts is deferred and recognized as income on a
straight-line basis over the contract period. The cost of servicing such
product warranties is charged to expense when claims become estimable.

RECENT ACCOUNTING PRONOUNCEMENTS

In October 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS
No. 144 replaces SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, and requires that
long-lived assets which are held for disposal be measured at the lower of
carrying amount or fair value less the cost to sell, whether reported in
continuing operations or in discontinued operations. SFAS No. 144 also broadens
the reporting of discontinued operations to include all components of an entity
with operations that can be distinguished from the rest of the entity and that
will be eliminated from the ongoing operations of the entity in a disposal
transaction. SFAS No. 144 is effective for fiscal years beginning after
December 15, 2001. The adoption of this statement is not expected to have a
material effect on our financial statements.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections,
which we are required to adopt on November 3, 2002. SFAS No. 145 rescinds SFAS
No. 4, Reporting Gains and Losses from Extinguishment of Debt, SFAS No. 44,
Accounting for Intangible Assets of Motor Carriers, and SFAS No. 64,
Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. SFAS No.
145 also amends SFAS No. 13, Accounting for Leases, to eliminate certain
inconsistencies, and amends other existing authoritative pronouncements to make
technical corrections and clarify meanings. This statement is effective for
fiscal years beginning after May 15, 2002. The adoption of this statement is
not expected to have a material effect on our financial statements.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities, which is effective for exit or disposal
activities initiated after December 31, 2002. SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). The
adoption of this statement is not expected to have a material effect on our
financial statements.

18



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In December 2002, the FASB issued FAS 148 Accounting for Stock-Based
Compensation  Transition and Disclosure  an amendment of
FAS 123.
Accounting for Stock-Based Compensation was issued to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this Statement
amends the disclosure requirements of Statement 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. The amendments to Statement 123 in paragraphs
2(a)-2(e) of this Statement shall be effective for financial statements for
fiscal years ending after December 15, 2002.

In November 2002, the FASB issued Interpretation No. 45 Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others which elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations
under certain guarantees that it has issued. It also clarifies that a
guarantor is required to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. This Interpretation does not prescribe a specific approach for
subsequently measuring the guarantors recognized liability over the term of
the related guarantee. This Interpretation also incorporates, without change,
the guidance in FASB Interpretation No. 34, Disclosure of Indirect Guarantees
of Indebtedness of Others, which is being superseded. The initial recognition
and initial measurement provisions of this Interpretation are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002 and
the disclosure requirements in this Interpretation are effective for financial
statements of interim or annual periods ending after December 15, 2002.

ITEM 7A. 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 the London Interbank Offered Rate (LIBOR). The
Company does not speculate on the future direction of interest rates.
Currently, all of the Companys debt bears interest at the 30-day LIBOR rate
plus an applicable margin based upon the Companys debt to EBITDA ratio. 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.

General Economic Conditions. Demand for the Companys products is affected by
a variety of economic factors including, but not limited to, the cyclical
nature of the construction industry, demand for electronic and aerospace
products that ultimately utilize components manufactured by the Company, and
general consumer demand. Adverse economic developments could affect the
financial performance of the Company, and these factors include, but are not
limited to, the general economic and business conditions affecting the
Companys industries, actions of competitors, changes in demand in certain
markets, the Companys ability to meet its debt service and pension plan
obligations, the seasonality of the Companys sales, the volatility of the
Companys raw material costs, claims and energy, and the Companys dependence
on key personnel and certain large customers.

19



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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Accountants

To the Board of Directors and Shareholders
of JPS Industries, Inc.:

In our opinion, the consolidated financial statements as of and for the year
ended November 2, 2002 listed in the index appearing under Item 15(a)(1) on
page 44, present fairly, in all material respects, the financial position of
JPS Industries, Inc. and its subsidiaries (the Company) at November 2, 2002
and the results of their operations and their cash flows for the year ended
November 2, 2002 in conformity with accounting principles generally accepted in
the United States of America. In addition, in our opinion, the financial
statement schedule as of and for the year ended November 2, 2002 listed in the
index appearing under Item 15(a)(2) on page 45, presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Companys
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audit. We conducted
our audit of these statements in accordance with auditing standards generally
accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion. The financial statements of the Company as of October 27, 2001, and
for the year then ended were audited by other auditors who have ceased
operations. Those auditors expressed an unqualified opinion on those financial
statements in their report dated December 6, 2001. The financial statements of
the Company for the year ended October 28, 2000 were audited by other
independent accountants whose report dated November 29, 2000 expressed an
unqualified opinion on those statements.

PricewaterhouseCoopers LLP
Spartanburg, SC
December 18, 2002, except for Note 8,
     as to which the date is January 29, 2003.

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INDEPENDENT AUDITORS REPORT

JPS Industries, Inc.

We have audited the accompanying consolidated balance sheet of JPS Industries,
Inc. (a Delaware Corporation) and subsidiaries as of October 27, 2001, and the
related statements of operations, shareholders equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit 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 audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of JPS Industries, Inc. and
subsidiaries as of October 27, 2001, and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule listed in the index of financial
statements is presented for purposes of complying with the Securities and
Exchange Commissions rules and is not part of the basic financial statements.
This scheduled has been subjected to the auditing procedures applied in our
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.

ARTHUR ANDERSEN LLP

Charlotte, North Carolina
December 6, 2001

The report is a copy of the previously issued report. Arthur Andersen LLP has
not reissued the report.

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INDEPENDENT AUDITORS REPORT

JPS Industries, Inc.

We have audited the accompanying consolidated statements of operations,
shareholders equity, and cash flows of JPS Industries, Inc. and subsidiaries
(the Company) for the year ended October 28, 2000. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit 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 audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of the Companys operations and its cash flows
for the year ended October 28, 2000 in conformity with accounting principles
generally accepted in the United States of America.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial statement schedule listed
in the index at page S-1 is presented for the purpose of additional analysis
and is not a required part of the basic financial statements. This financial
statement schedule is the responsibility of the Companys management. Such
financial statement schedule, for the year ended October 28, 2000, has been
subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.

DELOITTE & TOUCHE LLP

Charlotte, North Carolina
November 29, 2000

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JPS INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)

|                                   |                                                                      |                      |              |        |             |         |             |        |        |        | 
|---------------------------------- | -------------------------------------------------------------------- | -------------------- | ------------ | ------ | ----------- | ------- | ----------- | ------ | ------ | ------ | 
|                                   |                                                                      |                      |              |        | October 27, |         | November 2,
|                                   |                                                                      |                      |              |        | 2001        |         | 2002       
|                                   |                                                                      |                      |              |        |             |         |            
|ASSETS                             |                                                                      |                      |              |        |             |         |             |       
|CURRENT ASSETS:                    |                                                                      |                      |              |        |             |         |             |       
|                                   | Cash                                                                 |                      | $            | 544    |             |         | $           | 267    |       
|                                   | Accounts receivable, less allowance of $684
in 2001 and $554 in 2002 |                      |              | 21,656 |             |         |             | 20,160 |       
|                                   | Inventories                                                          |                      |              | 18,439 |             |         |             | 15,025 |       
|                                   | Prepaid expenses and other                                           |                      |              | 2,291  |             |         |             | 2,473  |       
|                                   | Deferred income taxes                                                |                      |              | 1,000  |             |         |             | 304    |       
|                                   |                                                                      |                      |              |        |             |         |             |       
|                                   |                                                                      | Total current assets |              |        | 43,930      |         |             |        | 38,229 |       
|PROPERTY, PLANT AND EQUIPMENT, net |                                                                      |                      | 43,707       |        |             |         | 38,971      |       
|DEFERRED INCOME TAXES              |                                                                      |                      | 10,804       |        |             |         | 11,727      |       
|OTHER ASSETS                       |                                                                      |                      | 11,464       |        |             |         | 94          |       
|                                   |                                                                      |                      |              |        |             |         |             |       
|                                   |                                                                      |                      | Total assets |        | $           | 109,905 |             |        | $      | 89,021 | 
|                                   |                                                                      |                      |              |        |             |         |             |       

See notes to consolidated financial statements.

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|                                     |                                                                                                                                                               |                                            |        |             |         |             |        |         |        | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ----------- | ------- | ----------- | ------ | ------- | ------ | 
|                                     |                                                                                                                                                               |                                            |        | October 27, |         | November 2,
|                                     |                                                                                                                                                               |                                            |        | 2001        |         | 2002       
|                                     |                                                                                                                                                               |                                            |        |             |         |            
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                                                                               |                                            |        |             |         |             |        |        
|CURRENT LIABILITIES:                 |                                                                                                                                                               |                                            |        |             |         |             |        |        
|                                     | Accounts payable                                                                                                                                              |                                            | $      | 10,506      |         |             | $      | 7,628   |       
|                                     | Accrued interest                                                                                                                                              |                                            |        | 57          |         |             |        | 44      |       
|                                     | Accrued salaries, benefits and withholdings                                                                                                                   |                                            |        | 2,303       |         |             |        | 1,010   |       
|                                     | Other accrued expenses                                                                                                                                        |                                            |        | 3,643       |         |             |        | 5,309   |       
|                                     | Current portion of long-term debt                                                                                                                             |                                            |        | 620         |         |             |        | 669     |       
|                                     |                                                                                                                                                               |                                            |        |             |         |             |        |        
|                                     |                                                                                                                                                               | Total current liabilities                  |        |             | 17,129  |             |        |         | 14,660 | 
|LONG-TERM DEBT                       |                                                                                                                                                               |                                            | 19,287 |             |         |             | 12,755 |        
|OTHER LONG-TERM LIABILITIES          |                                                                                                                                                               |                                            | 18,242 |             |         |             | 47,629 |        
|                                     |                                                                                                                                                               |                                            |        |             |         |             |        |        
|                                     |                                                                                                                                                               | Total liabilities                          |        |             | 54,658  |             |        |         | 75,044 | 
|                                     |                                                                                                                                                               |                                            |        |             |         |             |        |        
|COMMITMENTS AND CONTINGENCIES        |                                                                                                                                                               |                                            |        |             |         |             |        |        
|SHAREHOLDERS EQUITY:                |                                                                                                                                                               |                                            |        |             |         |             |        |        
|                                     | Common stock, $.01 par value; authorized 
22,000,000 shares; issued  10,000,000 shares;
outstanding  9,291,759 shares in 2002 and
9,271,756 shares in 2001 |                                            |        | 100         |         |             |        | 100     |       
|                                     | Additional paid-in capital                                                                                                                                    |                                            |        | 124,175     |         |             |        | 124,150 |       
|                                     | Treasury stock (at cost)  708,241 shares in 2002 and
728,244 shares in 2001                                                                                  |                                            |        | (2,835      | )       |             |        | (2,738  | )     
|                                     | Additional minimum pension liability                                                                                                                          |                                            |        |            |         |             |        | (40,976 | )     
|                                     | Accumulated deficit                                                                                                                                           |                                            |        | (66,193     | )       |             |        | (66,559 | )     
|                                     |                                                                                                                                                               |                                            |        |             |         |             |        |        
|                                     |                                                                                                                                                               | Total shareholders equity                 |        |             | 55,247  |             |        |         | 13,977 | 
|                                     |                                                                                                                                                               |                                            |        |             |         |             |        |        
|                                     |                                                                                                                                                               | Total liabilities and shareholders equity |        | $           | 109,905 |             |        | $       | 89,021 | 
|                                     |                                                                                                                                                               |                                            |        |             |         |             |        |        

See notes to consolidated financial statements.

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JPS INDUSTRIES, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands Except Share and Per Share Data)

|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |       |           |   | 
|------------------------------------------------------------- | ---------------------------------------- | ------------------------------------------- | ------------------------------------------- | ----- | ----------- | ----- | ----------- | ---- | ----------- | - | ------- | ----- | --------- | - | 
|                                                              |                                          |                                             |                                             |       | Fiscal      |       | Fiscal      |      | Fiscal     
|                                                              |                                          |                                             |                                             |       | Year        |       | Year        |      | Year       
|                                                              |                                          |                                             |                                             |       | Ended       |       | Ended       |      | Ended      
|                                                              |                                          |                                             |                                             |       | October 28, |       | October 27, |      | November 2,
|                                                              |                                          |                                             |                                             |       | 2000        |       | 2001        |      | 2002       
|                                                              |                                          |                                             |                                             |       |             |       |             |      |            
|Net sales                                                     |                                          | $                                           | 167,978                                     |       |             | $     | 147,626     |      |             | $ | 126,363 |      
|Cost of sales                                                 |                                          |                                             | 126,380                                     |       |             |       | 116,888     |      |             |   | 108,099 |      
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|Gross profit                                                  |                                          |                                             | 41,598                                      |       |             |       | 30,738      |      |             |   | 18,264  |      
|Selling, general and administrative expenses                  |                                          |                                             | 27,368                                      |       |             |       | 21,162      |      |             |   | 18,018  |      
|Other expense (income), net                                   |                                          |                                             | (18                                         | )     |             |       | (1          | )    |             |   | (2      | )    
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|Operating profit                                              |                                          |                                             | 14,248                                      |       |             |       | 9,577       |      |             |   | 248     |      
|Interest expense, net                                         |                                          |                                             | (3,442                                      | )     |             |       | (2,333      | )    |             |   | (735    | )    
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|Income (loss) before income taxes and
discontinued operations |                                          |                                             | 10,806                                      |       |             |       | 7,244       |      |             |   | (487    | )    
|Income taxes (benefit)                                        |                                          |                                             | 4,517                                       |       |             |       | 2,818       |      |             |   | (121    | )    
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|Income (loss) from continuing operations                      |                                          |                                             | 6,289                                       |       |             |       | 4,426       |      |             |   | (366    | )    
|Discontinued operations (net of taxes):                       |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|                                                              |                                          | Loss from discontinued operations           |                                             |       | (104        | )     |             |      |            |   |         |       |          |  
|                                                              |                                          | Loss on disposal of discontinued operations |                                             |       | (47,415     | )     |             |      |            |   |         |       |          |  
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|Net income (loss)                                             |                                          | $                                           | (41,230                                     | )     |             | $     | 4,426       |      |             | $ | (366    | )    
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|Weighted average number of common
shares outstanding:         |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|                                                              |                                          | Basic                                       |                                             |       | 9,940,000   |       |             |      | 9,340,466   |   |         |       | 9,277,623 |  
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|                                                              |                                          | Diluted                                     |                                             |       | 10,045,698  |       |             |      | 9,610,263   |   |         |       | 9,277,623 |  
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|Basic earnings (loss) per common share:                       |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|                                                              | Income (loss) from continuing operations |                                             | $                                           | 0.63  |             |       | $           | 0.47 |             |   | $       | (0.04 | )        
|                                                              | Discontinued operations (net of taxes):  |                                             |                                             |       |             |       |             |      |             |   |         |       |          
|                                                              |                                          | Loss from discontinued operations           |                                             |       | (0.01       | )     |             |      |            |   |         |       |          |  
|                                                              |                                          | Loss on disposal of
discontinued operations |                                             |       | (4.77       | )     |             |      |            |   |         |       |          |  
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|                                                              | Net income (loss)                        |                                             | $                                           | (4.15 | )           |       | $           | 0.47 |             |   | $       | (0.04 | )        
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|Diluted earnings (loss) per common share:                     |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|                                                              |                                          | Income (loss) from continuing operations    |                                             | $     | 0.63        |       |             | $    | 0.46        |   |         | $     | (0.04     | )
|                                                              |                                          | Discontinued operations (net of taxes):     |                                             |       |             |       |             |      |             |   |         |       |           |  
|                                                              |                                          |                                             | Loss from discontinued operations           |       |             | (0.01 | )           |      |             |  |         |       |           |  | 
|                                                              |                                          |                                             | Loss on disposal of discontinued operations |       |             | (4.72 | )           |      |             |  |         |       |           |  | 
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      
|Net income (loss)                                             |                                          | $                                           | (4.10                                       | )     |             | $     | 0.46        |      |             | $ | (0.04   | )    
|                                                              |                                          |                                             |                                             |       |             |       |             |      |             |   |         |      

See notes to consolidated financial statements.

25



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##### 



JPS INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(Dollars In Thousands)

|                                                |  |        |     |         |  |            |         |               |  |             |        |       |  |             |         |   |  |   |         |  
|----------------------------------------------- |  | ------ | --- | ------- |  | ---------- | ------- | ------------- |  | ----------- | ------ | ----- |  | ----------- | ------- | - |  | - | ------- | -
|                                                |  |        |     |         |  |            |         |               |  |             |        |       |  | Accumulated |         |   |  |  
|                                                |  |        |     |         |  | Additional |         |               |  |             |        | Other |  |             |         |  
|                                                |  | Common |     | Paid-In |  | Treasury   |         | Comprehensive |  | Accumulated
|                                                |  | Stock  |     | Capital |  | Stock      |         | Loss          |  | Deficit    
|                                                |  |        |     |         |  |            |         |               |  |            
|Balance  October 30, 1999                      |  | $      | 100 |         |  | $          | 123,942 |               |  | $           |       |       |  | $           |        |   |  | $ | (29,389 | )
|Stock compensation expense                      |  |        |     |         |  |            | 248     |               |  |             |        |       |  |             |         |   |  |   |         |  
|Shares reacquired and held in treasury          |  |        |     |         |  |            |         |               |  |             | (1,263 | )     |  |             |         |   |  |   |         |  
|Net loss                                        |  |        |     |         |  |            |         |               |  |             |        |       |  |             |         |   |  |   | (41,230 | )
|                                                |  |        |     |         |  |            |         |               |  |             |        |       |  |             |         |   |  |   |         |  
|Balance  October 28, 2000                      |  |        | 100 |         |  |            | 124,190 |               |  |             | (1,263 | )     |  |             |        |   |  |   | (70,619 | )
|Stock compensation expense                      |  |        |     |         |  |            | 102     |               |  |             |        |       |  |             |         |   |  |   |         |  
|Shares reacquired and held in treasury          |  |        |     |         |  |            |         |               |  |             | (2,309 | )     |  |             |         |   |  |   |         |  
|Exercise of stock options                       |  |        |     |         |  |            | (117    | )             |  |             | 737    |       |  |             |         |   |  |   |         |  
|Net income                                      |  |        |     |         |  |            |         |               |  |             |        |       |  |             |         |   |  |   | 4,426   |  
|                                                |  |        |     |         |  |            |         |               |  |             |        |       |  |             |         |   |  |   |         |  
|Balance  October 27, 2001                      |  |        | 100 |         |  |            | 124,175 |               |  |             | (2,835 | )     |  |             |        |   |  |   | (66,193 | )
|Additional minimum pension liability
adjustment |  |        |     |         |  |            |         |               |  |             |        |       |  |             | (40,976 | ) |  |   |         |  
|Stock compensation expense                      |  |        |     |         |  |            | 15      |               |  |             |        |       |  |             |         |   |  |   |         |  
|Exercise of stock options                       |  |        |     |         |  |            | (40     | )             |  |             | 97     |       |  |             |         |   |  |   |         |  
|Net loss                                        |  |        |     |         |  |            |         |               |  |             |        |       |  |             |         |   |  |   | (366    | )
|                                                |  |        |     |         |  |            |         |               |  |             |        |       |  |             |         |   |  |   |         |  
|Balance  November 2, 2002                      |  | $      | 100 |         |  | $          | 124,150 |               |  | $           | (2,738 | )     |  | $           | (40,976 | ) |  | $ | (66,559 | )
|                                                |  |        |     |         |  |            |         |               |  |             |        |       |  |             |         |   |  |   |         |  

See notes to consolidated financial statements.

26



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##### 



JPS INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)

|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |        |       |        |  
|------------------------------------------------------------------ | ---------------------------------------------------------------------------------------- | ------------------------------------------- | -------------------------------------- | ------- | ----------- | ----- | ----------- | ------- | ----------- | ------ | ---- | ------ | ----- | ------ | -
|                                                                   |                                                                                          |                                             |                                        |         | Fiscal      |       | Fiscal      |         | Fiscal     
|                                                                   |                                                                                          |                                             |                                        |         | Year        |       | Year        |         | Year       
|                                                                   |                                                                                          |                                             |                                        |         | Ended       |       | Ended       |         | Ended      
|                                                                   |                                                                                          |                                             |                                        |         | October 28, |       | October 27, |         | November 2,
|                                                                   |                                                                                          |                                             |                                        |         | 2000        |       | 2001        |         | 2002       
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |            
|CASH FLOWS FROM OPERATING ACTIVITIES                               |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|                                                                   | Net income (loss)                                                                        |                                             | $                                      | (41,230 | )           |       | $           | 4,426   |             |        | $    | (366   | )    
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|                                                                   | Adjustments to reconcile net income (loss)
to net cash provided by operating activities: |                                             |                                        |         |             |       |             |         |             |        |      |        |      
|                                                                   |                                                                                          | Loss from discontinued operations           |                                        |         | 104         |       |             |         |            |        |      |        |      |       
|                                                                   |                                                                                          | Loss on disposal of discontinued operations |                                        |         | 47,415      |       |             |         |            |        |      |        |      |       
|                                                                   |                                                                                          | Depreciation and amortization               |                                        |         | 6,157       |       |             |         | 5,797       |        |      |        | 5,724 |       
|                                                                   |                                                                                          | Amortization of deferred financing costs    |                                        |         | 272         |       |             |         | 320         |        |      |        | 46    |       
|                                                                   |                                                                                          | Deferred income tax provision (benefit)     |                                        |         | 2,532       |       |             |         | 2,715       |        |      |        | (227  | )     
|                                                                   |                                                                                          | Other, net                                  |                                        |         | (3,918      | )     |             |         | 420         |        |      |        | (262  | )     
|                                                                   |                                                                                          | Changes in assets and liabilities:          |                                        |         |             |       |             |         |             |        |      |        |       |       
|                                                                   |                                                                                          |                                             | Accounts receivable                    |         |             | (689  | )           |         |             | 5,984  |      |        |       | 1,496  |  
|                                                                   |                                                                                          |                                             | Inventories                            |         |             | 1,869 |             |         |             | 144    |      |        |       | 3,414  |  
|                                                                   |                                                                                          |                                             | Prepaid expenses and other assets      |         |             | (269  | )           |         |             | 502    |      |        |       | (182   | )
|                                                                   |                                                                                          |                                             | Accounts payable                       |         |             | 1,758 |             |         |             | (2,797 | )    |        |       | (2,879 | )
|                                                                   |                                                                                          |                                             | Accrued expenses and other liabilities |         |             | 2,264 |             |         |             | (6,456 | )    |        |       | 360    |  
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|                                                                   | Total adjustments                                                                        |                                             |                                        | 57,495  |             |       |             | 6,629   |             |        |      | 7,490  |      
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|                                                                   | Net cash provided by continuing operating activities                                     |                                             |                                        | 16,265  |             |       |             | 11,055  |             |        |      | 7,124  |      
|                                                                   | Net cash from discontinued operations                                                    |                                             |                                        | 17,712  |             |       |             |        |             |        |      |       |      
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|                                                                   | Net cash provided by operating activities                                                |                                             |                                        | 33,977  |             |       |             | 11,055  |             |        |      | 7,124  |      
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|CASH FLOWS FROM INVESTING ACTIVITIES                               |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|                                                                   | Property and equipment additions                                                         |                                             |                                        | (2,609  | )           |       |             | (5,822  | )           |        |      | (974   | )    
|                                                                   | Proceeds from assets held for sale                                                       |                                             |                                        |        |             |       |             | 27,539  |             |        |      |       |      
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|                                                                   | Net cash provided by (used in) investing activities                                      |                                             |                                        | (2,609  | )           |       |             | 21,717  |             |        |      | (974   | )    
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|CASH FLOWS FROM FINANCING ACTIVITIES                               |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|                                                                   | Financing costs incurred                                                                 |                                             |                                        |        |             |       |             | (197    | )           |        |      | (1     | )    
|                                                                   | Purchase of treasury stock                                                               |                                             |                                        | (1,263  | )           |       |             | (2,309  | )           |        |      |       |      
|                                                                   | Net proceeds from exercise of stock options                                              |                                             |                                        |        |             |       |             | 620     |             |        |      | 57     |      
|                                                                   | Revolving credit facility borrowings (repayments), net                                   |                                             |                                        | (27,394 | )           |       |             | (31,248 | )           |        |      | (5,863 | )    
|                                                                   | Repayment of other long-term debt                                                        |                                             |                                        | (922    | )           |       |             | (1,310  | )           |        |      | (620   | )    
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|                                                                   | Net cash used in financing activities                                                    |                                             |                                        | (29,579 | )           |       |             | (34,444 | )           |        |      | (6,427 | )    
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|NET INCREASE (DECREASE) IN CASH                                    |                                                                                          |                                             | 1,789                                  |         |             |       | (1,672      | )       |             |        | (277 | )     
|CASH AT BEGINNING OF YEAR                                          |                                                                                          |                                             | 427                                    |         |             |       | 2,216       |         |             |        | 544  |       
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|CASH AT END OF YEAR                                                |                                                                                          | $                                           | 2,216                                  |         |             | $     | 544         |         |             | $      | 267  |       
|                                                                   |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|SUPPLEMENTAL INFORMATION ON CASH
FLOWS FROM CONTINUING OPERATIONS: |                                                                                          |                                             |                                        |         |             |       |             |         |             |        |      |       
|                                                                   | Interest paid                                                                            |                                             | $                                      | 6,361   |             |       | $           | 2,715   |             |        | $    | 702    |      
|                                                                   | Income taxes paid, net                                                                   |                                             |                                        | 402     |             |       |             | 448     |             |        |      | 106    |      

See notes to consolidated financial statements.

27



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##### 



JPS INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE COMPANY



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | JPS Industries, Inc. is a major U.S. manufacturer of extruded urethanes,
polypropylenes, and mechanically formed glass substrates for specialty
industrial applications. JPS specialty industrial products are used in a
wide range of applications, including: printed electronic circuit boards;
advanced composite materials; aerospace components; filtration and
insulation products; surf board; construction substrates; high performance
glass laminates for security and transportation applications; plasma
display screens; athletic shoes; commercial and institutional roofing;
reservoir covers; and medical, automotive and industrial components.
Headquartered in Greenville, South Carolina, the Company operates
manufacturing locations in Slater, South Carolina; Westfield, North
Carolina; and Easthampton, Massachusetts.

2. SIGNIFICANT ACCOUNTING POLICIES



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Principles of Consolidation  The consolidated financial statements
include JPS Industries, Inc. and its direct subsidiaries, all of which are
wholly owned. Significant intercompany transactions and accounts have
been eliminated. Unless the context otherwise requires, the terms JPS
and the Company as used in these Consolidated Financial Statements mean
JPS Industries, Inc. and JPS Industries, Inc. together with its
subsidiaries, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Use of Estimates  The preparation of financial statements in conformity
with generally accepted accounting principles in the United States
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 amounts of revenues and expenses during the reporting period.
The Companys most significant financial statement estimates include the
estimate of the allowance for doubtful accounts, reserve for
self-insurance liabilities, assumptions for pension and other
post-retirement obligations, contingencies and the reserve for roofing
products sold under warranties. Management determines its estimate of the
allowance for doubtful accounts considering a number of factors, including
historical experience, aging of the accounts and the current
creditworthiness of its customers. Management determines its estimate of
the reserve for self-insurance considering a number of factors, including
historical experience, third party claims administrator and actuarial
assessments and insurance coverages. Management determines its estimate
of the reserve for roofing products sold under warranties by reviewing
factors such as expected future claims and roofing compound applied; and
the expected costs to repair and replace such roofing products. Management
believes that its estimates provided in the financial statements are
reasonable and adequate. However, actual results could differ from those
estimates.
|
| | Inventories  Inventories are stated at the lower of cost or market.
Cost, which includes labor, material and factory overhead, is determined
on the first-in, first-out basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | Property, Plant and Equipment  Property, plant and equipment is recorded
at cost and depreciation is recorded using the straight-line method for
financial reporting purposes. The estimated useful lives used in the
computation of depreciation are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                              |  |               
|----------------------------- |  | --------------
|Land improvements             |  | 10 to 45 years
|Buildings and improvements    |  | 25 to 45 years
|Machinery and equipment       |  | 3 to 15 years 
|Furniture, fixtures and other |  | 5 to 10 years 



| |                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company assesses its long-lived assets for impairment whenever facts
and circumstances indicate that the carrying amount may not be fully
recoverable. If required, an impairment loss is measured based upon

28



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the difference between the carrying amount and the fair value of the
assets. Assets under capital leases are amortized in accordance with the
Companys normal depreciation policy and the charge to earnings is
included in depreciation expense in the accompanying consolidated
financial statements. Depreciation expense totaled $5.1 million for
Fiscal 2000, $5.5 million for Fiscal 2001, and $5.7 million for Fiscal
2002.                                                                                                                                                                                                                      
|
| | Reorganization Value in Excess of Amounts Allocable to Identifiable Assets
 Reorganization value in excess of amounts allocable to identifiable
assets (Reorganization Value) resulted from the application of fresh
start reporting in 1997 and is being amortized over a 20-year period. In
Fiscal 2000, the Reorganization Value was decreased by approximately $15.0
million in relation to the plant sales discussed in Note 3. As discussed
in Note 7, the remaining amount was retired in connection with the
year-end adjustment of the Companys deferred tax asset valuation
allowance in Fiscal 2001 and $0 remained at October 27, 2001.
|
| | Distribution Costs  A portion of the Companys distribution and shipping
and handling costs are included in cost of sales and selling, general and
administrative costs. The portion of these costs, which were included in
selling, general and administrative costs, totaled $2.4 million in Fiscal
2000, $2.0 million in Fiscal 2001, and $1.7 million in Fiscal 2002.                                                                                                                                                                                                                                                                               
|
| | Debt Issuance Costs  Costs incurred in securing and issuing long-term
debt are deferred and amortized over the terms of the related debt in
amounts which approximate the interest method of amortization.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Product Warranties  On certain of its products, the Company provides a
warranty against defects in materials and workmanship under separately
priced extended warranty contracts generally for a period of 10 years.
Revenue from such extended warranty contracts is deferred and recognized
as income on a straight-line basis over the contract period. The cost of
servicing such product warranties is charged to expense when claims become
estimable.                                                                                                                                                                                            
|
| | Fair Value of Financial Instruments  The carrying amounts of all
financial instruments approximate their estimated fair values in the
accompanying Balance Sheets. The carrying amounts of cash, accounts
receivable, accounts payable, and accrued expenses approximate fair value
because of the short maturity of these items. The carrying value of
financial instruments such as debt and notes receivable approximates fair
value because interest rates on these instruments change with market
rates.                                                                                                                                           
|
| | Revenue Recognition  Revenue from product sales is recognized at the time
ownership of goods transfers to the customer and the earnings process is
complete in accordance with Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements (SAB 101). Warranty revenue is
recognized as discussed above. SAB 101 specifies how existing rules
should be applied to transactions in the absence of authoritative
literature. Based on the guidelines of current accounting rules and SAB
101, revenue should not be recognized until it is realized or realizable
and earned.                                                     
|
| | Advertising Costs  The Company defers advertising related costs until the
advertising is first run in magazines or other publications or in the case
of brochures, until the brochures are printed and available for
distribution. Advertising costs expensed were approximately $1.5 million
in Fiscal 2000, $1.3 million in Fiscal 2001, and $0.7 million in Fiscal
2002.                                                                                                                                                                                                                                                                             
|
| | Income Taxes  Deferred tax assets and liabilities are determined based on
the difference between the financial statement bases and tax bases of
assets and liabilities using enacted tax rates. A valuation allowance is
recorded to reduce a deferred tax asset to that portion that is expected
to more likely than not be realized.                                                                                                                                                                                                                                                                                                                  
|
| | Earnings Per Share  Potentially dilutive common shares consist primarily
of stock options. For the year ended November 2, 2002, the inclusion of
additional shares assuming the exercise of stock options and warrants are
antidilutive. Therefore, basic and diluted earnings per share are the same
for that period.                                                                                                                                                                                                                                                                                                                                  

29



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Fiscal Year  The Companys operations are based on a 52 or 53-week fiscal
year ending on the Saturday closest to October 31. Fiscal years 2000 and
2001 had 52 weeks and Fiscal year 2002 had 53 weeks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Effects of Recent Accounting Pronouncements  On October 29, 2000, the
Company adopted Statement Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities. This
statement requires companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. As of October 28, 2000,
October 27, 2001, and November 2, 2002, the Company did not have any
derivatives which were required to be recorded on the balance sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | In October 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. SFAS No. 144 replaces SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and
requires that long-lived assets which are held for disposal be measured at
the lower of carrying amount or fair value less the cost to sell, whether
reported in continuing operations or in discontinued operations. SFAS No.
144 also broadens the reporting of discontinued operations to include all
components of an entity with operations that can be distinguished from the
rest of the entity and that will be eliminated from the ongoing operations
of the entity in a disposal transaction. SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001. The adoption of this
statement is not expected to have a material effect on our financial
statements.
|
| | In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections, which we are required to adopt on November 3,
2002. SFAS No. 145 rescinds SFAS No. 4, Reporting Gains and Losses from
Extinguishment of Debt, SFAS No. 44, Accounting for Intangible Assets of
Motor Carriers, and SFAS No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements. SFAS No. 145 also amends SFAS No. 13,
Accounting for Leases, to eliminate certain inconsistencies, and amends
other existing authoritative pronouncements to make technical corrections
and clarify meanings. This statement is effective for fiscal years
beginning after May 15, 2002. The adoption of this statement is not
expected to have a material effect on our financial statements.                                                                                                                 
|
| | In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which is effective for exit
or disposal activities initiated after December 31, 2002. SFAS No. 146
addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). The adoption of this
statement is not expected to have a material effect on our financial
statements.                                                                                                                                                                                                                                                                                                                                 
|
| | In December 2002, the FASB issued FAS 148 Accounting for Stock-Based
Compensation  Transition and Disclosure  an amendment of
FAS 123.
Accounting for Stock-Based Compensation was issued to provide alternative
methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition,
this Statement amends the disclosure requirements of Statement 123 to
require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The
amendments to Statement 123 in paragraphs 2(a)-2(e) of this Statement
shall be effective for financial statements for fiscal years ending after
December 15, 2002.                                                                                                                                                                
|
| | In November 2002, the FASB issued Interpretation No. 45 Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others which elaborates on the disclosures
to be made by a guarantor in its interim and annual financial statements
about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize, at the inception
of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. This Interpretation does not
prescribe a specific approach for subsequently measuring the guarantors                                                                                                                                                                                                                                                                                                                           

30



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | recognized liability over the term of the related guarantee. This
Interpretation also incorporates, without change, the guidance in FASB
Interpretation No. 34, Disclosure of Indirect Guarantees of Indebtedness
of Others, which is being superseded. The initial recognition and
initial measurement provisions of this Interpretation are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002
and the disclosure requirements in this Interpretation are effective for
financial statements of interim or annual periods ending after December
15, 2002.

3. SALE OF DISCONTINUED OPERATIONS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 $125.4 million in Fiscal 2000. The consideration for the sale
consisted of approximately $27.1 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.

4. BALANCE SHEET COMPONENTS



| |                                                                     
| | --------------------------------------------------------------------
| | The components of certain balance sheet accounts are (in thousands):

|                                    |                               |   |             |         |             |   |        |         |  
|----------------------------------- | ----------------------------- | - | ----------- | ------- | ----------- | - | ------ | ------- | -
|                                    |                               |   | October 27, |         | November 2,
|                                    |                               |   | 2001        |         | 2002       
|                                    |                               |   |             |         |            
|Inventories:                        |                               |   |             |         |             |   |        |        
|                                    | Raw materials and supplies    |   | $           | 3,415   |             |   | $      | 2,466   |  
|                                    | Work-in-process               |   |             | 4,662   |             |   |        | 3,087   |  
|                                    | Finished goods                |   |             | 10,362  |             |   |        | 9,472   |  
|                                    |                               |   |             |         |             |   |        |        
|                                    |                               | $ | 18,439      |         |             | $ | 15,025 |        
|                                    |                               |   |             |         |             |   |        |        
|Prepaid expenses and other:         |                               |   |             |         |             |   |        |        
|                                    | Prepaid insurance             |   | $           | 427     |             |   | $      | 483     |  
|                                    | Other                         |   |             | 1,864   |             |   |        | 1,990   |  
|                                    |                               |   |             |         |             |   |        |        
|                                    |                               | $ | 2,291       |         |             | $ | 2,473  |        
|                                    |                               |   |             |         |             |   |        |        
|Property, plant and equipment, net: |                               |   |             |         |             |   |        |        
|                                    | Land and improvements         |   | $           | 972     |             |   | $      | 972     |  
|                                    | Buildings and improvements    |   |             | 5,517   |             |   |        | 5,517   |  
|                                    | Machinery and equipment       |   |             | 54,957  |             |   |        | 55,920  |  
|                                    | Furniture, fixtures and other |   |             | 923     |             |   |        | 921     |  
|                                    |                               |   |             |         |             |   |        |        
|                                    |                               |   | 62,369      |         |             |   | 63,330 |        
|                                    | Less accumulated depreciation |   |             | (18,736 | )           |   |        | (24,424 | )
|                                    |                               |   |             |         |             |   |        |        
|                                    |                               |   | 43,633      |         |             |   | 38,906 |        
|                                    | Construction in progress      |   |             | 74      |             |   |        | 65      |  
|                                    |                               |   |             |         |             |   |        |        
|                                    |                               | $ | 43,707      |         |             | $ | 38,971 |        
|                                    |                               |   |             |         |             |   |        |        
|Other noncurrent assets:            |                               |   |             |         |             |   |        |        
|                                    | Deferred financing fees       |   | $           | 114     |             |   | $      | 69      |  
|                                    | Prepaid pension costs         |   |             | 11,350  |             |   |        |        |  
|                                    | Other                         |   |             |        |             |   |        | 25      |  
|                                    |                               |   |             |         |             |   |        |        
|                                    |                               | $ | 11,464      |         |             | $ | 94     |        
|                                    |                               |   |             |         |             |   |        |        

(Table continued on next page)

31



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##### 



(Table continued from previous page)

|                             |                                                                  |   |             |        |             |   |        |        | 
|---------------------------- | ---------------------------------------------------------------- | - | ----------- | ------ | ----------- | - | ------ | ------ | 
|                             |                                                                  |   | October 27, |        | November 2,
|                             |                                                                  |   | 2001        |        | 2002       
|                             |                                                                  |   |             |        |            
|Other accrued expenses:      |                                                                  |   |             |        |             |   |        |       
|                             | Roofing warranty costs                                           |   | $           | 1,754  |             |   | $      | 3,522  | 
|                             | Taxes payable other than income taxes                            |   |             | 485    |             |   |        | 429    | 
|                             | Other                                                            |   |             | 1,404  |             |   |        | 1,358  | 
|                             |                                                                  |   |             |        |             |   |        |       
|                             |                                                                  | $ | 3,643       |        |             | $ | 5,309  |       
|                             |                                                                  |   |             |        |             |   |        |       
|Other long-term liabilities: |                                                                  |   |             |        |             |   |        |       
|                             | Roofing and deferred warranty income                             |   | $           | 15,033 |             |   | $      | 15,752 | 
|                             | Accrued pension costs                                            |   |             |       |             |   |        | 28,114 | 
|                             | Accrued postretirement and postemployment
benefit plan liability |   |             | 3,209  |             |   |        | 3,763  | 
|                             |                                                                  |   |             |        |             |   |        |       
|                             |                                                                  | $ | 18,242      |        |             | $ | 47,629 |       
|                             |                                                                  |   |             |        |             |   |        |       

5. LONG-TERM DEBT



| |                                           
| | ------------------------------------------
| | Long-term debt consists of (in thousands):

|                                                 |       |   |             |        |             |   |        |        | 
|------------------------------------------------ | ----- | - | ----------- | ------ | ----------- | - | ------ | ------ | 
|                                                 |       |   | October 27, |        | November 2,
|                                                 |       |   | 2001        |        | 2002       
|                                                 |       |   |             |        |            
|Senior credit facility, revolving line of credit |       | $ | 16,752      |        |             | $ | 10,889 |       
|Capital lease obligation                         |       |   | 3,155       |        |             |   | 2,535  |       
|                                                 |       |   |             |        |             |   |        |       
|                                                 | Total |   |             | 19,907 |             |   |        | 13,424 | 
|Less current portion                             |       |   | (620        | )      |             |   | (669   | )     
|                                                 |       |   |             |        |             |   |        |       
|Long-term portion                                |       | $ | 19,287      |        |             | $ | 12,755 |       
|                                                 |       |   |             |        |             |   |        |       



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Senior Credit Facility  The Companys Revolving Credit and Security
Agreement (the Revolving Credit Facility) is with Wachovia Bank. On
April 26, 2002, the Company amended the Revolving Credit Facility to
increase its flexibility and reduce the unused line fee. The facility, as
amended, provides for a revolving credit loan facility and letters of
credit in a maximum principal amount equal to the lesser of (a) $25
million or (b) a specified borrowing base, which is based upon eligible
receivables, eligible inventory, and a specified dollar amount (currently
$8.7 million subject to amortization). 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. The Company is
currently in compliance with all of the restrictions and covenants of its
Revolving Credit Facility. All loans outstanding under the Revolving
Credit Facility bear interest at the 30-day LIBOR rate plus an applicable
margin based upon the Companys debt to EBITDA ratio. As of November 2,
2002, the Companys interest rate under the Revolving Credit Facility was
3.7%.
|
| | In conjunction with the recognition of the additional minimum pension
liability and resulting reduction to tangible net worth as defined in the
Credit Agreement, the Company violated the minimum net worth covenant as
of November 2, 2002. The Company has obtained a waiver of any such
default through November 2, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | As of November 2, 2002, unused and outstanding letters of credit totaled
$0.6 million. The outstanding letters of credit reduce the funds
available under the Revolving Credit Facility. At November 2, 2002, the
Company had approximately $15.5 million of additional availability for
borrowing under the Revolving Credit Facility. All borrowings under the
Revolving Credit Facility mature in Fiscal 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

32



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Capital Lease Obligation  In Fiscal 1998, the Company entered into a
seven-year lease agreement (classified as a capital lease) for certain
machinery and equipment. The total costs of assets under lease at October
27, 2001 and November 2, 2002 was approximately $4.8 million. The lease
provides for an early buyout option at the end of six years and includes
purchase and renewal options at the end of the lease term. The lease has
an implied interest rate of approximately 7.4%. See Note 8 for
obligations under capital leases.
|
| | Other  The loans and extensions of credit to the Company under the
Revolving Credit Facility are guaranteed by JPS Elastomerics Corp. and JPS
Converter and Industrial Corp. Substantially all of the Companys assets,
excluding real property, are pledged as collateral for the Revolving
Credit Facility or the capital lease obligation.                                                                                                                                                                                                   
|
| | Interest expense includes $272,000 in Fiscal 2000, $320,000 in Fiscal
2001, and $46,000 in Fiscal 2002 representing amortization of debt
issuance expenses. Interest expense allocated to discontinued operations
was $2.9 million in Fiscal 2000 based upon the ratio of identifiable net
assets.                                                                                                                                                                                                                                               

6. EQUITY SECURITIES



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company has one class of stock issued and outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Share Repurchase Program                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | In 2000, the Board of Directors authorized the expenditure of up to $8
million for the repurchase of the Companys common stock. In November,
2000, this authorization was increased to $10 million. As of November 2,
2002, the Company had repurchased 886,005 shares at a cost of $3.6
million. This includes Fiscal 2000 repurchases of 267,500 shares at an
aggregate cost of $1.3 million and Fiscal 2001 repurchases of 618,505
shares at a cost of $2.3 million. Management intends to make purchases of
its common stock from time to time in the open market or in negotiated
transactions, but there is no assurance that future repurchases will be
made and the repurchase program may be discontinued at any time. There is
no time limit on stock repurchases. The Company may use the stock to meet
its obligations under its employee stock option program. The Company
reissued 158,166 shares in 2001 and 20,003 shares in 2002 in connection
with its stock option program.
|
| | 1997 Incentive and Capital Accumulation Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | The 1997 Incentive and Capital Accumulation Plan (the Incentive Plan)
provides certain key employees and non-employee directors of the Company
the right to acquire shares of common stock or monetary payments based on
the value of such shares. Pursuant to the Incentive Plan, approximately
853,000 shares of common stock were initially reserved for issuance to the
participants. On April 7, 1999, the Shareholders increased the number of
shares reserved for issuance from 853,485 to 1,353,485.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | On May 12, 1999 the Compensation Committee of the Board of Directors
approved a plan to reprice stock options held by certain employees and
Directors. Effective on that date, 349,150 options with an exercise price
of $12.33 per share were reissued at an exercise price of $4.375 per
share, the fair market value per share on the date of repricing. Under
the provisions of Financial Accounting Standards Board Interpretation 44
(FIN 44) which was effective July 1, 2000, the Company is required to
record non-cash compensation expense on the repriced options if the stock
price exceeds certain threshold amounts. The provisions of FIN 44 will
continue to apply until the repriced options are exercised, expire or are
cancelled. There was $15,376 of expense in Fiscal Year 2002 and no
expense in Fiscal Year 2001 as a result of applying FIN 44. FIN 44 could
result in significant future non-cash compensation expense.                                            

33



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Options grants totaling 133,400 shares were made in Fiscal 2002 at an
option price of $4.83. There were exercises of 20,003 options. There
were cancellations of 16,698 options during Fiscal 2002 as a result of
employees voluntarily terminating employment with the Company or lapses in
options following terminations where an exercise period was allowed. As
of November 2, 2002 option prices ranged from $2.94 to $4.83 per share.
|
| | A summary of the activity in the Companys stock options for the years
ended October 28, 2000, October 27, 2001, and November 2, 2002 is
presented below:                                                                                                                                                                                                                                                                                   

|                                                                        |  |           |           |                  |  |   |      | 
|----------------------------------------------------------------------- |  | --------- | --------- | ---------------- |  | - | ---- | 
|                                                                        |  | Number of |           | Weighted Average
|                                                                        |  | Shares    |           | Exercise Price  
|                                                                        |  |           |           |                 
|Outstanding at October 30, 1999                                         |  |           | 998,316   |                  |  | $ | 4.16 | 
|Options granted                                                         |  |           | 206,500   |                  |  |   | 3.16 | 
|Options cancelled                                                       |  |           | (160,831  | )                |  |   | 6.80 | 
|                                                                        |  |           |           |                  |  |   |      | 
|Outstanding at October 28, 2000                                         |  |           | 1,043,985 |                  |  |   | 3.56 | 
|Options granted                                                         |  |           | -0-       |                  |  |   |     | 
|Options cancelled                                                       |  |           | (79,664   | )                |  |   | 4.20 | 
|Options exercised                                                       |  |           | (158,166  | )                |  |   | 3.96 | 
|                                                                        |  |           |           |                  |  |   |      | 
|Outstanding at October 27, 2001                                         |  |           | 806,155   |                  |  |   | 3.41 | 
|Options granted                                                         |  |           | 133,400   |                  |  |   | 4.83 | 
|Options cancelled                                                       |  |           | (16,698   | )                |  |   | 2.94 | 
|Options exercised                                                       |  |           | (20,003   | )                |  |   | 3.77 | 
|                                                                        |  |           |           |                  |  |   |      | 
|Outstanding at November 2, 2002                                         |  |           | 902,854   |                  |  | $ | 3.63 | 
|                                                                        |  |           |           |                  |  |   |      | 
|Exercisable at November 2, 2002                                         |  |           | 737,159   |                  |  |   |      | 
|                                                                        |  |           |           |                  |  |   |      | 
|Exercisable at October 27, 2001                                         |  |           | 704,828   |                  |  |   |      | 
|                                                                        |  |           |           |                  |  |   |      | 
|Exercisable at October 28, 2000                                         |  |           | 644,320   |                  |  |   |      | 
|                                                                        |  |           |           |                  |  |   |      | 
|Weighted average remaining
contractual life (years)
at November 2, 2002 |  |           | 6.66      |                  |  |   |      | 
|                                                                        |  |           |           |                  |  |   |      | 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company applies the principles of APB Opinion 25 in accounting for
employee stock option plans. The time vesting options are fixed as to the
number of shares that may be acquired and the amount to be paid by the
employee. Under APB Opinion 25, the Company generally recognizes no
compensation expense with respect to such awards because the quoted market
price and the amount to be paid by the employee are the same on the date
of grant. The Companys Chief Executive Officer was granted 500,000
options on February 28, 1999; however, the measurement date was April 7,
1999, the date the shareholders approved an amendment to the Incentive
Plan increasing the number of shares that could be offered. As such,
compensation expense was measured as the difference in the market value of
the Companys stock between the grant date and the measurement date and
the expense was recognized over the two-year vesting period. The Company
recognized compensation expense of approximately $0.2 million in Fiscal
2000 and $0.1 million in Fiscal 2001 relating to these options. There was
no compensation expense in Fiscal 2002 related to these options.
|
| | The fair value of options granted has been estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted
average assumptions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

34



---



##### 



|                                              |  |                   |      |        |     |   |      | 
|--------------------------------------------- |  | ----------------- | ---- | ------ | --- | - | ---- | 
|                                              |  | Stock Option Plan
|                                              |  |                  
|                                              |  | Fiscal            |      | Fiscal
|                                              |  | 2001              |      | 2002  
|                                              |  |                   |      |       
|Option life (in years)                        |  | No                |      |        | 3.0 |  
|Risk-free interest rate                       |  | Grants            |      |        | 3.8 | %
|Stock price volatility                        |  |                   | 2001 |        |     |   | .86  | 
|Dividend yield                                |  |                   |      |        |     |   |     | 
|Proforma weighted average value using formula |  |                   |      |        |     | $ | 2.74 | 
|Actual weighted average exercise price        |  |                   |      |        |     | $ | 4.83 | 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Had the Company determined compensation expense based on the fair value at
the grant date for its options under SFAS No. 123, for Fiscal 2000 and
Fiscal 2002 the Companys net loss and net loss per share would have been
increased. As a result of cancellation of options that were expensed in
previous years, for Fiscal 2001, the Companys net income and net income
per share would have been increased. The proforma impact of determining
compensation expense under SFAS No. 123 is indicated below (in thousands):

|                            |             |  |        |         |        |  |        |       |  |  |   |       |  
|--------------------------- | ----------- |  | ------ | ------- | ------ |  | ------ | ----- |  |  | - | ----- | -
|                            |             |  | Fiscal |         | Fiscal |  | Fiscal
|                            |             |  | 2000   |         | 2001   |  | 2002  
|                            |             |  |        |         |        |  |       
|Net (loss) income           |             |  |        |         |        |  |        |       |  |  |   |      
|                            | As reported |  | $      | (41,230 | )      |  | $      | 4,426 |  |  | $ | (366  | )
|                            | Pro forma   |  | $      | (41,330 | )      |  | $      | 4,681 |  |  | $ | (435  | )
|Net (loss) income per share |             |  |        |         |        |  |        |       |  |  |   |      
|                            | As reported |  | $      | (4.15   | )      |  | $      | 0.47  |  |  | $ | (0.04 | )
|                            | Pro forma   |  | $      | (4.16   | )      |  | $      | 0.50  |  |  | $ | (0.05 | )

7. INCOME TAXES



| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The provision (benefit) for income taxes on continuing operations included
in the consolidated statements of operations consists of the following (in
thousands):

|                                     |  |        |       |        |  |        |       |  |  |   |      |  
|------------------------------------ |  | ------ | ----- | ------ |  | ------ | ----- |  |  | - | ---- | -
|                                     |  | Fiscal |       | Fiscal |  | Fiscal
|                                     |  | 2000   |       | 2001   |  | 2002  
|                                     |  |        |       |        |  |       
|Current federal provision            |  | $      | 10    |        |  | $      |      |  |  | $ |     |  
|Current state provision              |  |        | 303   |        |  |        | 103   |  |  |   | 106  |  
|Deferred federal provision (benefit) |  |        | 4,150 |        |  |        | 2,664 |  |  |   | (133 | )
|Deferred state provision (benefit)   |  |        | 54    |        |  |        | 51    |  |  |   | (94  | )
|                                     |  |        |       |        |  |        |       |  |  |   |      |  
|Provision (benefit) for income taxes |  | $      | 4,517 |        |  | $      | 2,818 |  |  | $ | (121 | )
|                                     |  |        |       |        |  |        |       |  |  |   |      |  



| |                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A reconciliation between income taxes at the 35% statutory Federal income
tax rate and the provision (benefit) for income taxes for Fiscal 2000,
Fiscal 2001, and Fiscal 2002 is as follows (in thousands):

35



---



##### 



|                                                            |                                             |   |        |       |        |   |        |       |  |   |      |      |  
|----------------------------------------------------------- | ------------------------------------------- | - | ------ | ----- | ------ | - | ------ | ----- |  | - | ---- | ---- | -
|                                                            |                                             |   | Fiscal |       | Fiscal |   | Fiscal
|                                                            |                                             |   | 2000   |       | 2001   |   | 2002  
|                                                            |                                             |   |        |       |        |   |       
|Income tax provision (benefit)
at Federal statutory rate    |                                             | $ | 3,782  |       |        | $ | 2,535  |       |  | $ | (169 | )   
|Increase (decrease) in income taxes arising
from effect of: |                                             |   |        |       |        |   |        |       |  |   |      |     
|                                                            | State and local income taxes                |   |        | 357   |        |   |        | 154   |  |   |      | (15  | )
|                                                            | Amortization of excess reorganization value |   |        | 295   |        |   |        | 61    |  |   |      |     |  
|                                                            | Other                                       |   |        | 83    |        |   |        | 68    |  |   |      | 63   |  
|                                                            |                                             |   |        |       |        |   |        |       |  |   |      |     
|                                                            | Provision for income taxes                  |   | $      | 4,517 |        |   | $      | 2,818 |  |   | $    | (121 | )
|                                                            |                                             |   |        |       |        |   |        |       |  |   |      |     



| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | Presented below are the elements which comprise deferred tax assets and
liabilities (in thousands):

|                            |                                                                                |  |             |        |             |  |         |        |  
|--------------------------- | ------------------------------------------------------------------------------ |  | ----------- | ------ | ----------- |  | ------- | ------ | -
|                            |                                                                                |  | October 27, |        | November 2,
|                            |                                                                                |  | 2001        |        | 2002       
|                            |                                                                                |  |             |        |            
|Gross deferred assets:      |                                                                                |  |             |        |             |  |         |       
|                            | Estimated allowance for doubtful accounts                                      |  | $           | 837    |             |  | $       | 790    |  
|                            | Excess of tax over financial statement basis of inventory                      |  |             | 527    |             |  |         | 547    |  
|                            | Accruals deductible for tax purposes when paid                                 |  |             | 320    |             |  |         | 314    |  
|                            | Deferred stock option expense deductible for tax purposes
when paid            |  |             | 412    |             |  |         | 404    |  
|                            | Pension liability deductible for tax purposes when paid                        |  |             |       |             |  |         | 10,674 |  
|                            | Postretirement benefits deductible for tax purposes when paid                  |  |             | 1,514  |             |  |         | 1,430  |  
|                            | Alternative minimum tax credit carryforward available                          |  |             | 1,809  |             |  |         | 1,809  |  
|                            | Deferred warranty income recognized for tax purposes
when received             |  |             | 6,383  |             |  |         | 7,324  |  
|                            | Excess of tax basis of intangibles over financial statement basis              |  |             | 3,483  |             |  |         | 3,167  |  
|                            | Miscellaneous                                                                  |  |             | 128    |             |  |         | 3      |  
|                            | Net operating loss carryforwards                                               |  |             | 33,874 |             |  |         | 35,810 |  
|Less valuation allowance    |                                                                                |  | (26,397     | )      |             |  | (43,440 | )     
|                            |                                                                                |  |             |        |             |  |         |       
|Gross deferred assets       |                                                                                |  | 22,890      |        |             |  | 18,832  |       
|                            |                                                                                |  |             |        |             |  |         |       
|Gross deferred liabilities: |                                                                                |  |             |        |             |  |         |       
|                            | Pension asset recognized for book purposes                                     |  |             | (4,313 | )           |  |         |       |  
|                            | Excess of financial statement over tax basis of property, plant,
and equipment |  |             | (6,773 | )           |  |         | (6,801 | )
|                            |                                                                                |  |             |        |             |  |         |       
|Gross deferred liabilities  |                                                                                |  | (11,086     | )      |             |  | (6,801  | )     
|                            |                                                                                |  |             |        |             |  |         |       
|                            | Net deferred tax asset                                                         |  | $           | 11,804 |             |  | $       | 12,031 |  
|                            |                                                                                |  |             |        |             |  |         |       



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For Fiscal 2002, the Company recorded a tax benefit of $0.1 million. The
tax benefit is less than the benefit on continuing operations at the
statutory rate due to the impact of expenses not deductible for tax
purposes, primarily meals and entertainment. A current State provision
is recorded due to the inability to offset income from profitable
subsidiaries with those having a loss, in all jurisdictions. Although
the Company did not generate income during the year at a level necessary
to utilize its net deferred tax asset, we believe that income from future
operations will more likely than not be sufficient to utilize the
deferred tax asset, net of valuation allowance. We evaluate the
realizability of our deferred tax asset by assessing the need for a
valuation allowance on a quarterly basis. If we determine that it is
more likely than not that our deferred tax

36



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##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | assets will not be recovered, a valuation allowance will be established
against some or all of our deferred tax
assets. This could have a significant effect on our future results of
operation and financial position. As a result of a valuation allowance,
no benefit was recorded on the additional pension liability recorded as
an adjustment to equity (See Note 9). A significant portion of the $17
million increase in the valuation allowance resulted from the valuation
allowance on the additional pension liability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | For Fiscal 2001, the Company recorded a tax expense of $2.8 million. The
Company evaluated its valuation allowance on its deferred tax asset.
Based on historical and expected income of the continuing operations, a
determination was made that the valuation allowance established in fresh
start accounting should be decreased by $2.8 million. Under applicable
accounting guidelines such reduction is first applied to reduce
Reorganization Value. Accordingly, Reorganization Value was eliminated
(see Note 2).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | For Fiscal 2000, the Company recorded a tax expense on continuing
operations of $4.5 million. In conjunction with the sale of the Apparel
Division, the Company evaluated the valuation allowance on its deferred
tax asset. Based on historical and expected income of the continuing
operations, a determination was made that the valuation allowances
established in fresh start accounting should be reversed. Accordingly,
the Company reduced Reorganization Value by $11.4 million. The Company
also recorded a tax benefit of $4.2 million on the loss on sale of
discontinued operations. A valuation allowance was recorded on the
remainder of this loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | At November 2, 2002, the Company had regular federal net operating loss
carryforwards for tax purposes of approximately $91 million. 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 $10.7 million that expire in 2004 through
2021. Alternative minimum tax credits of $1.8 million can be carried
forward indefinitely and used as a credit against regular federal taxes,
subject to limitation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | The Companys future ability to utilize a portion of its net operating
loss carryforwards is limited under the income tax laws as a result of
being treated as having a change in the ownership of the Companys stock
as of December 2000 under Federal income tax laws. 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 adjustments)
multiplied by the Federal long-term tax exempt rate. Based on the
expiration dates for the loss carryforwards and fair market value at the
time of ownership change, the Company does not believe that the
limitations imposed as a result of prior ownership changes will result in
any Federal loss carryforward expiring unutilized. Uncertainties
surrounding income tax law changes, shifts in operations between state
taxing jurisdictions and future operating income levels may, however,
affect the ultimate realization of all or some portion of these deferred
income tax assets. In addition, a future change in ownership could
result in additional limitations on the ability of the Company to utilize
its net operating loss carryforwards. Under applicable accounting
guidelines, these future uncertainties, combined with factors giving rise
to losses, requires a valuation allowance be recognized.

8. COMMITMENTS AND CONTINGENCIES



| |                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Leases  The Company leases office facilities, machinery and computer
equipment under noncancellable operating leases and capital leases. Rent
expense from continuing operations was approximately $2.1 million in
Fiscal 2000, $0.9 million in Fiscal 2001, and $0.7 million in Fiscal
2002.

37



---



##### 





| |                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Future minimum payments, by year and in the aggregate, under the
noncancellable capital and operating leases with terms of one year or
more consist of the following at November 2, 2002 (in thousands):

|                                                                                      |  |         |       |           |  |   |     | 
|------------------------------------------------------------------------------------- |  | ------- | ----- | --------- |  | - | --- | 
|                                                                                      |  | Capital |       | Operating
|Fiscal Year Ending                                                                    |  | Lease   |       | Leases   
|                                                                                      |  |         |       |          
|2003                                                                                  |  | $       | 840   |           |  | $ | 226 | 
|2004                                                                                  |  |         | 1,587 |           |  |   | 47  | 
|2005                                                                                  |  |         | 380   |           |  |   | 33  | 
|2006                                                                                  |  |         |      |           |  |   | 21  | 
|                                                                                      |  |         |       |           |  |   |     | 
|Total future minimum lease payments                                                   |  |         | 2,807 |           |  | $ | 327 | 
|                                                                                      |  |         |       |           |  |   |     | 
|Less: amount representing interest                                                    |  |         | (272  | )         |  |   |     | 
|                                                                                      |  |         |       |           |  |   |     | 
|Present value of net minimum lease payments
(included in long-term debt  see Note 5) |  | $       | 2,535 |           |  |   |     | 
|                                                                                      |  |         |       |           |  |   |     | 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Litigation  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. The Company believes it has meritorious
defenses in all lawsuits in which the Company or its subsidiaries is a
defendant. 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 Elastomerics and two other defendants alleging an
unspecified amount of damages in connection with the alleged premature
deterioration of the Companys Hypalon roofing membrane installed during
the 1980s on approximately 140 Sears stores. A trial date is expected
sometime in 2003. The Company believes it has meritorious defenses to the
claims and intends to defend the lawsuit vigorously as it has since its
inception in 1997. 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 that may
result.  In July, 2002, the Companys
insurance carrier, Liberty Mutual Insurance Company (Liberty), informed
the Company that it no longer believed it had an obligation to contribute
to settlement or defense of this matter. The Company subsequently filed a
lawsuit for declaratory, injunctive, and monetary relief against Liberty
Mutual. In January, 2003, the court found that Liberty does have a duty
to defend the Company based on the counts remaining in the case.   Further, in
January 2003, the court granted JPS' summary judgment motion on
Sears' breach of contract claim.  These orders are not final and may
be subject to reconsideration or appeal.  To the extent these rulings
remain in effect, the number of roofs involved in the case will be
substantially reduced, and the Company believes that an unfavorable
resolution of the remaining actions would not have a material adverse
effect on the business, results of operations or financial condition
of the Company.

9. RETIREMENT PLANS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Defined Benefit Pension Plan  Substantially all of the Companys
employees are covered by a Company-sponsored defined benefit pension plan.
The plan also provides benefits to individuals employed by the businesses
which were sold or plants which were closed by the Company. The benefits
of these former employees were frozen at the respective dates of sale of
the businesses or closure of the plants. Accordingly, these former
employees will retain benefits earned through the respective disposal
dates; however, they will not accrue additional benefits. The plan
provides pension benefits that are based on the employees compensation
during the last 10 years of employment. The Companys policy is to fund
the annual contribution required by applicable regulations.
|
| | Assets of the pension plan are invested in a bond portfolio covering
specific liabilities and in common and preferred stocks, government and
corporate bonds, and various short-term investments. During Fiscal 1999,
the pension plan also purchased approximately 1.9 million shares of the
Companys common stock in open market and negotiated transactions. This
common stock accounted for less than 10% of the pension plans total
assets at the time of purchase.                                                                                                                                                                                                                                                                                                                        

38



---



##### 





| |                                                                              
| | -----------------------------------------------------------------------------
| | Components of net periodic pension cost include the following (in
thousands):

|                                               |  |        |        |        |  |        |        |   |  |   |        |  
|---------------------------------------------- |  | ------ | ------ | ------ |  | ------ | ------ | - |  | - | ------ | -
|                                               |  | Fiscal |        | Fiscal |  | Fiscal
|                                               |  | 2000   |        | 2001   |  | 2002  
|                                               |  |        |        |        |  |       
|Components of net periodic
pension cost:       |  |        |        |        |  |        |        |   |  |   |        |  
|Service cost-benefits earned
during the period |  | $      | 1,678  |        |  | $      | 900    |   |  | $ | 417    |  
|Interest cost on projected
benefit obligation  |  |        | 7,455  |        |  |        | 7,532  |   |  |   | 7,751  |  
|Expected return on plan assets                 |  |        | (9,264 | )      |  |        | (9,378 | ) |  |   | (9,394 | )
|Recognized actuarial loss                      |  |        |       |        |  |        |       |   |  |   | 311    |  
|                                               |  |        |        |        |  |        |        |   |  |   |        |  
|Net periodic pension cost
(income)             |  | $      | (131   | )      |  | $      | (946   | ) |  | $ | (1,093 | )
|                                               |  |        |        |        |  |        |        |   |  |   |        |  



| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | The weighted-average rates used in determining pension cost for the plan
are as follows:

|                                                 |  |             |      |             |  |  |      |   |  |  |      |  
|------------------------------------------------ |  | ----------- | ---- | ----------- |  |  | ---- | - |  |  | ---- | -
|Discount rate                                    |  |             | 7.75 | %           |  |  | 7.25 | % |  |  | 7.00 | %
|Expected long-term rate of return
on plan assets |  |             | 9.00 | %           |  |  | 9.00 | % |  |  | 9.00 | %
|Rate of compensation increase                    |  | Age-related |      | Age-related |  |  | 3.50 | %



| |                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A reconciliation of the plans projected benefit obligation, fair value of
plan assets, funding status, and other applicable information is as
follows (in thousands):

|                              |                                                                              |                                     |        |             |        |             |         |         |         |  
|----------------------------- | ---------------------------------------------------------------------------- | ----------------------------------- | ------ | ----------- | ------ | ----------- | ------- | ------- | ------- | -
|                              |                                                                              |                                     |        | October 27, |        | November 2,
|                              |                                                                              |                                     |        | 2001        |        | 2002       
|                              |                                                                              |                                     |        |             |        |            
|Change in benefit obligation: |                                                                              |                                     |        |             |        |             |         |        
|                              | Projected benefit obligation at beginning of year                            |                                     | $      | 101,195     |        |             | $       | 104,261 |        
|                              |                                                                              | Service cost                        |        |             | 900    |             |         |         | 417     |  
|                              |                                                                              | Interest cost                       |        |             | 7,532  |             |         |         | 7,751   |  
|                              |                                                                              | Benefits paid                       |        |             | (8,043 | )           |         |         | (8,212  | )
|                              |                                                                              | Actuarial (gain) loss               |        |             | 2,677  |             |         |         | 9,739   |  
|                              |                                                                              |                                     |        |             |        |             |         |        
|                              | Projected benefit obligation at end of year                                  |                                     | $      | 104,261     |        |             | $       | 113,956 |        
|                              |                                                                              |                                     |        |             |        |             |         |        
|Change in plan assets:        |                                                                              |                                     |        |             |        |             |         |        
|                              | Fair value of plan assets at beginning of year                               |                                     | $      | 106,164     |        |             | $       | 104,828 |        
|                              |                                                                              | Actual return (loss) on plan assets |        |             | 6,707  |             |         |         | (11,910 | )
|                              |                                                                              | Employer contributions              |        |             |       |             |         |         |        |  
|                              |                                                                              | Benefits paid                       |        |             | (8,043 | )           |         |         | (8,212  | )
|                              |                                                                              |                                     |        |             |        |             |         |        
|                              | Fair value of plan assets at end of year                                     |                                     | $      | 104,828     |        |             | $       | 84,706  |        
|                              |                                                                              |                                     |        |             |        |             |         |        
|                              | Projected benefit obligation (greater than) less than
Plan assets            |                                     |        | 567         |        |             |         | (29,250 | )      
|                              | Unrecognized actuarial loss                                                  |                                     |        | 10,783      |        |             |         | 42,137  |        
|                              | Additional minimum liability recognized as a reduction
of shareholder equity |                                     |        |            |        |             |         | (40,976 | )      
|                              |                                                                              |                                     |        |             |        |             |         |        
|                              | Net asset (liability) in accompanying consolidated balance sheets            |                                     | $      | 11,350      |        |             | $       | (28,089 | )      
|                              |                                                                              |                                     |        |             |        |             |         |        
|Recognized in:                |                                                                              |                                     |        |             |        |             |         |        
|                              | Other noncurrent assets                                                      |                                     | $      | 11,350      |        |             | $       | 25      |        
|                              | Accrued pension costs                                                        |                                     |        |            |        |             |         | (28,114 | )      
|                              |                                                                              |                                     |        |             |        |             |         |        
|Net asset (liability)         |                                                                              | $                                   | 11,350 |             |        | $           | (28,089 | )      
|                              |                                                                              |                                     |        |             |        |             |         |        

39



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition to the changes shown above in the weighted average rates used
in determining pension costs, the Company also changed the mortality table
to a table considered more accurate under current guidance. The change in
mortality table increased pension liabilities by approximately $5.0
million. The change in the discount rate more closely approximates
current interest rates on long-term high quality obligations and the
change in the rate of compensation increase more closely reflects Company
historical experience and projections. The provisions of SFAS No. 87,
Employers Accounting for Pensions, required the Company to record an
accrued pension cost of approximately $28.1 million at November 2, 2002.
The liability represents the amount by which the accumulated benefit
obligation exceeds the sum of the fair market value of plan assets and
accrued amounts previously recorded. This amount combined with the
elimination of the Companys prepaid pension asset is recorded as a
reduction to a separate component of shareholders equity labeled
Additional minimum pension liability in the amount of $41.0 million on
the accompanying consolidated balance sheet as of November 2, 2002.
|
| | 401(k) Savings Plan  The Company also has a savings, investment and
profit sharing plan available to employees meeting eligibility
requirements. The plan is a tax qualified plan under Section 401(k) of
the Internal Revenue Code. The Company makes a matching contribution of
25% of each participants contribution with a maximum matching
contribution of 1-1/2% of the participants base compensation. Company
contributions were approximately $199,000 in Fiscal 2000, $187,000 in
Fiscal 2001, and $171,000 in Fiscal 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Postretirement Benefits  The Company has several unfunded postretirement
plans that provide certain health care and life insurance benefits to
eligible retirees. The plans are contributory, with retiree contributions
adjusted periodically, and contain cost-sharing features such as
deductibles and coinsurance. The Companys life insurance plan provides
benefits to both active employees and retirees. Active employee
contributions in excess of the cost of providing active employee benefits
are applied to reduce the cost of retirees life insurance benefits. The
following table sets forth the status of the Companys postretirement
plans as recorded in the accompanying consolidated financial statements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Net periodic postretirement benefit expense included the following
components (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                                 |  |        |     |        |  |        |     |   |  |   |     | 
|-------------------------------- |  | ------ | --- | ------ |  | ------ | --- | - |  | - | --- | 
|                                 |  | Fiscal |     | Fiscal |  | Fiscal
|                                 |  | 2000   |     | 2001   |  | 2002  
|                                 |  |        |     |        |  |       
|Service cost for benefits earned |  | $      | 34  |        |  | $      | 10  |   |  | $ | 14  | 
|Interest cost on APBO            |  |        | 207 |        |  |        | 229 |   |  |   | 283 | 
|Recognized actuarial loss (gain) |  |        | 286 |        |  |        | (4  | ) |  |   | 18  | 
|                                 |  |        |     |        |  |        |     |   |  |   |     | 
|Net periodic postretirement cost |  | $      | 527 |        |  | $      | 235 |   |  | $ | 315 | 
|                                 |  |        |     |        |  |        |     |   |  |   |     | 



| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | The weighted-average rates used in determining postretirement medical and
life insurance costs are as follows:

|              |  |             |      |             |  |             |      |   |  |  |      |  
|------------- |  | ----------- | ---- | ----------- |  | ----------- | ---- | - |  |  | ---- | -
|              |  | Fiscal 2000 |      | Fiscal 2001 |  | Fiscal 2002
|              |  |             |      |             |  |            
|Discount rate |  |             | 7.75 | %           |  |             | 7.25 | % |  |  | 7.25 | %



| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | A reconciliation of the postretirement medical and life insurance plans
projected benefit obligation and funding status is as follows (in
thousands):

40



---



##### 



|                                 |                                                   |                                   |   |             |        |             |   |        |        |  
|-------------------------------- | ------------------------------------------------- | --------------------------------- | - | ----------- | ------ | ----------- | - | ------ | ------ | -
|                                 |                                                   |                                   |   | October 27, |        | November 2,
|                                 |                                                   |                                   |   | 2001        |        | 2002       
|                                 |                                                   |                                   |   |             |        |            
|Change in benefit obligation:    |                                                   |                                   |   |             |        |             |   |       
|                                 | Projected benefit obligation at beginning of year |                                   | $ | 3,574       |        |             | $ | 3,569  |       
|                                 |                                                   | Service cost                      |   |             | 10     |             |   |        | 14     |  
|                                 |                                                   | Interest cost                     |   |             | 229    |             |   |        | 283    |  
|                                 |                                                   | Net benefits paid                 |   |             | (240   | )           |   |        | (327   | )
|                                 |                                                   | Actuarial (gain) or loss          |   |             | (4     | )           |   |        | 18     |  
|                                 |                                                   |                                   |   |             |        |             |   |       
|                                 | Projected benefit obligation at end of year       |                                   | $ | 3,569       |        |             | $ | 3,557  |       
|                                 |                                                   |                                   |   |             |        |             |   |       
|Reconciliation of funded status: |                                                   |                                   |   |             |        |             |   |       
|                                 | Funded status                                     |                                   | $ | (3,569      | )      |             | $ | (3,557 | )     
|                                 | Unrecognized actuarial (gain) or loss             |                                   |   | 0           |        |             |   | 0      |       
|                                 |                                                   |                                   |   |             |        |             |   |       
|                                 |                                                   | Net amount recognized at year-end |   | $           | (3,569 | )           |   | $      | (3,557 | )
|                                 |                                                   |                                   |   |             |        |             |   |       



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Since the Company has capped its annual liability per person and all
future cost increases will be passed on to retirees, the annual rate of
increase in health care costs does not affect the postretirement benefit
obligation.                                                                                                                                                                                                                              
|
| | Postemployment Benefits  The Company provides certain benefits to former
or inactive employees after employment but before retirement. In
accordance with SFAS No. 112, these benefits are recognized on the accrual
basis of accounting. The liability for postemployment benefits at October
27, 2001 of $0.4 million and November 2, 2002 of $0.2 million is included
in other long-term liabilities in the accompanying consolidated financial
statements.

10. 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 materials for a
variety of applications such as printed circuit boards, filtration,
advanced composites, building products, defense, and aerospace.
|
| | The Company previously identified three other segments which met its
criteria as reportable segments (the cotton commercial products, yarn
sales and apparel segments), all of which have been exited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | 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:                                                                                                                                                                                                                                                                                                                                                                           

41



---



##### 





| |                                             
| | --------------------------------------------
| | Industry segment information (in thousands):

|                                                              |              |   |             |        |             |   |             |        |  |   |         |        |  
|------------------------------------------------------------- | ------------ | - | ----------- | ------ | ----------- | - | ----------- | ------ |  | - | ------- | ------ | -
|                                                              |              |   | Fiscal      |        | Fiscal      |   | Fiscal     
|                                                              |              |   | Year        |        | Year        |   | Year       
|                                                              |              |   | Ended       |        | Ended       |   | Ended      
|                                                              |              |   | October 28, |        | October 27, |   | November 2,
|                                                              |              |   | 2000        |        | 2001        |   | 2002       
|                                                              |              |   |             |        |             |   |            
|Net sales:                                                    |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              | Elastomerics |   | $           | 86,595 |             |   | $           | 82,409 |  |   | $       | 75,466 |  
|                                                              | Glass        |   |             | 87,319 |             |   |             | 65,217 |  |   |         | 50,897 |  
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              |              |   | 173,914     |        |             |   | 147,626     |        |  |   | 126,363 |       
|Less
intersegment sales(1)                                    |              |   | (5,936      | )      |             |   |            |        |  |   |        |       
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Net sales                                                     |              | $ | 167,978     |        |             | $ | 147,626     |        |  | $ | 126,363 |       
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Operating
profit (loss)(2)                                    |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              | Elastomerics |   | $           | 7,458  |             |   | $           | 3,922  |  |   | $       | (256   | )
|                                                              | Glass        |   |             | 6,790  |             |   |             | 5,655  |  |   |         | 504    |  
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Operating profit                                              |              |   | 14,248      |        |             |   | 9,577       |        |  |   | 248     |       
|Interest expense, net                                         |              |   | (3,442      | )      |             |   | (2,333      | )      |  |   | (735    | )     
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Income (loss) before income taxes and
discontinued operations |              | $ | 10,806      |        |             | $ | 7,244       |        |  | $ | (487    | )     
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Depreciation and amortization expense:                        |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              | Elastomerics |   | $           | 2,911  |             |   | $           | 2,645  |  |   | $       | 2,583  |  
|                                                              | Glass        |   |             | 3,246  |             |   |             | 3,152  |  |   |         | 3,141  |  
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              |              | $ | 6,157       |        |             | $ | 5,797       |        |  | $ | 5,724   |       
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Capital expenditures:                                         |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              | Elastomerics |   | $           | 1,593  |             |   | $           | 1,644  |  |   | $       | 547    |  
|                                                              | Glass        |   |             | 1,016  |             |   |             | 4,178  |  |   |         | 427    |  
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              |              | $ | 2,609       |        |             | $ | 5,822       |        |  | $ | 974     |       
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|Identifiable assets:                                          |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              | Elastomerics |   | $           | 74,801 |             |   | $           | 54,684 |  |   | $       | 45,651 |  
|                                                              | Glass        |   |             | 74,569 |             |   |             | 55,221 |  |   |         | 43,370 |  
|                                                              | Eliminations |   |             | (1,128 | )           |   |             |       |  |   |         |       |  
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       
|                                                              |              | $ | 148,242     |        |             | $ | 109,905     |        |  | $ | 89,021  |       
|                                                              |              |   |             |        |             |   |             |        |  |   |         |       



|(1) |  | Intersegment sales consist primarily of the transfer of
certain scrim products manufactured by the Glass segment to the
Elastomerics segment which was discontinued in Fiscal 2000. All
intersegment revenues and profits are eliminated in the accompanying
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.

11. UNAUDITED INTERIM FINANCIAL DATA (in thousands except per share amounts)



| |                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The results for each quarter include all adjustments which are, in the
opinion of management, necessary for a fair presentation of the results
for interim periods. The consolidated financial results on an interim
basis are

42



---



##### 





| |                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | not necessarily indicative of future financial results on either an
interim or annual basis. Selected consolidated
financial data for each quarter within Fiscal 2001 and Fiscal 2002 are as
follows:

|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|-------------------------------------------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ | - |  | - | ------ | -
|                                             |  | First   |        | Second  |  | Third   |        | Fourth 
|                                             |  | Quarter |        | Quarter |  | Quarter |        | Quarter
|                                             |  |         |        |         |  |         |        |        
|Year Ended October 27, 2001:                 |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Net sales                                    |  | $       | 38,633 |         |  | $       | 39,537 |         |  | $ | 34,925 |   |  | $ | 34,531 |  
|Cost of sales                                |  |         | 29,852 |         |  |         | 30,686 |         |  |   | 28,005 |   |  |   | 28,345 |  
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Gross profit                                 |  |         | 8,781  |         |  |         | 8,851  |         |  |   | 6,920  |   |  |   | 6,186  |  
|Selling, general and administrative expenses |  |         | 5,804  |         |  |         | 5,654  |         |  |   | 4,830  |   |  |   | 4,874  |  
|Other expense (income), net                  |  |         | (2     | )       |  |         | 2      |         |  |   | (1     | ) |  |   |       |  
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Operating profit                             |  |         | 2,979  |         |  |         | 3,195  |         |  |   | 2,091  |   |  |   | 1,312  |  
|Interest expense, net                        |  |         | (851   | )       |  |         | (634   | )       |  |   | (463   | ) |  |   | (385   | )
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Income before income taxes                   |  |         | 2,128  |         |  |         | 2,561  |         |  |   | 1,628  |   |  |   | 927    |  
|Income taxes (benefit)                       |  |         | 829    |         |  |         | 997    |         |  |   | 634    |   |  |   | 358    |  
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Net income                                   |  | $       | 1,299  |         |  | $       | 1,564  |         |  | $ | 994    |   |  | $ | 569    |  
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Diluted earnings per common share            |  | $       | 0.13   |         |  | $       | 0.17   |         |  | $ | 0.10   |   |  | $ | 0.06   |  
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  

|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|-------------------------------------------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- |  | - | ------ | - |  | - | ------ | -
|                                             |  | First   |        | Second  |  | Third   |        | Fourth 
|                                             |  | Quarter |        | Quarter |  | Quarter |        | Quarter
|                                             |  |         |        |         |  |         |        |        
|Year Ended November 2, 2002:                 |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Net sales                                    |  | $       | 27,131 |         |  | $       | 31,927 |         |  | $ | 32,662 |   |  | $ | 34,643 |  
|Cost of sales                                |  |         | 22,833 |         |  |         | 27,646 |         |  |   | 27,717 |   |  |   | 29,903 |  
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Gross profit                                 |  |         | 4,298  |         |  |         | 4,281  |         |  |   | 4,945  |   |  |   | 4,740  |  
|Selling, general and administrative expenses |  |         | 4,811  |         |  |         | 4,297  |         |  |   | 4,514  |   |  |   | 4,396  |  
|Other expense (income), net                  |  |         | 1      |         |  |         |       |         |  |   | (1     | ) |  |   | (2     | )
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Operating profit (loss)                      |  |         | (514   | )       |  |         | (16    | )       |  |   | 432    |   |  |   | 346    |  
|Interest expense, net                        |  |         | 215    |         |  |         | 194    |         |  |   | 155    |   |  |   | 171    |  
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Income (loss) before income taxes            |  |         | (729   | )       |  |         | (210   | )       |  |   | 277    |   |  |   | 175    |  
|Income taxes (benefit)                       |  |         | (284   | )       |  |         | (82    | )       |  |   | 108    |   |  |   | 137    |  
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Net income (loss)                            |  | $       | (445   | )       |  | $       | (128   | )       |  | $ | 169    |   |  | $ | 38     |  
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  
|Diluted earnings (loss) per common share     |  | $       | (0.05  | )       |  | $       | (0.01  | )       |  | $ | 0.02   |   |  | $ | 0.00   |  
|                                             |  |         |        |         |  |         |        |         |  |   |        |   |  |   |        |  

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

43



---



##### 



PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information required by Item 10 of Form 10-K with respect to identification
of directors and executive officers is incorporated by reference from the
information contained in the Companys definitive Proxy Statement for the
Annual Meeting of Stockholders to be held March 5, 2003 (the Proxy
Statement).

Item 11. EXECUTIVE COMPENSATION.

The information required by Item 11 of Form 10-K is incorporated by reference
from the information contained in the Proxy Statement.

Item 12. SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

The information required by Item 12 of Form 10-K is incorporated by reference
from the information contained in the Proxy Statement.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

None.

Item 14. DISCLOSURE CONTROLS AND PROCEDURES

(a)  Evaluation of disclosure controls and procedures.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We maintain a set of disclosure controls and procedures designed to
ensure that information required to be disclosed by the Company in reports
that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods
specified in Security and Exchange Commission rules and forms. The Company
has evaluated the effectiveness of the design and operation of these
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14(c)
and 15d-14(c) within 90 days of the filing date of this Annual Report on Form
10-K. Based on the evaluation, under the supervision and with the
participation of the Companys management, the Companys chief executive
officer and chief financial officer have concluded that these disclosure
controls and procedures are effective.

(b)  Changes in internal controls.



| |                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | There were no significant changes in the Companys internal controls or
in other factors that could significantly affect these controls, nor were
there any significant deficiencies or material weaknesses in the Companys
internal controls subsequent to the date of their evaluation. As a result,
no corrective actions were required or undertaken.

Item 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.

|    |  |  |     |  |  |                                                           
|--- |  |  | --- |  |  | ----------------------------------------------------------
|(a) |  |  | (1) |  |  | The following financial statements are included in Item 8:



| | (i)   |  | Report of Independent Accountants.                                                                                        
| | ----- |  | --------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | Consolidated Balance Sheets as of November 2, 2002
and October 27, 2001.                                                  
|
| | (iii) |  | Consolidated Statements of Operations for the
fiscal years ended November 2, 2002, October 27, 2001, and
October 28, 2000.

44



---



##### 





| | (iv) |  | Consolidated Statements of Shareholders Equity for
the fiscal years ended November 2, 2002, October 27, 2001, and
October 28, 2000.
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------
|
| | (v)  |  | Consolidated Statements of Cash Flows for the
fiscal years ended November 2, 2002, October 27, 2001, and
October 28, 2000.          
|
| | (vi) |  | Notes to Consolidated Financial Statements.                                                                                         

Notice Regarding Arthur Andersen LLP.

Arthur Andersen LLP audited our consolidated financial statements for the
fiscal year ended October 27, 2001 and issued a report thereon dated December
6, 2001. Arthur Andersen has not reissued its report. Effective August 5,
2002, we terminated the engagement of Arthur Andersen LLP and engaged
PricewaterhouseCoopers LLP to serve as our independent accountants for the
fiscal year ended November 2, 2002.

The registrant is primarily a holding company and all direct subsidiaries are
wholly owned.



| | (2) |  | The financial statement schedule required by Item 8 is listed
on Index to Financial Statement Schedule, starting at page S-1 of
this report.                                                                                                                                                                                               
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (3) |  | The exhibits required by Item 601 of Regulation S-K are listed
in the accompanying Index to Exhibits. Registrant will furnish to
any securityholder, upon written request, any exhibit listed in the
accompanying Index to Exhibits upon payment by such securityholder of
registrants reasonable expenses in furnishing any such exhibit.



|(b) |  | Form 8-K relating to change in registrants certifying accountant, filed
on August 7, 2002.
|--- |  | -------------------------------------------------------------------------------------------
|   
|(c) |  | Reference is made to Item 14(a)(3) above.                                                  
|   
|(d) |  | Reference is made to Item 14(a)(2) above.                                                  

45



---



##### 



INDEX TO EXHIBITS

The following is a complete list of Exhibits filed as part of this report,
which are incorporated herein:

|        |  |                                                                                                                                                                                                                                                                                                                        
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                        
|Number  |  | Description                                                                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                        
|2.1(i)  |  | Joint Plan of Reorganization for JPS Textile Group, Inc., a Delaware
corporation (JPS), proposed by JPS and JPS Capital Corp., a Delaware
corporation, pursuant to chapter 11 of title 11 United States Code (the
Bankruptcy Code), dated August 1, 1997 (as amended, the Plan).(F)                              
|2.1(ii) |  | Revised Technical and Conforming Amendment to the Plan, dated September 4, 1997.(G)                                                                                                                                                                                                                                    
|3.1     |  | Amended and Restated By-laws of JPS.(H)                                                                                                                                                                                                                                                                                
|3.2     |  | Certificate of Incorporation of JPS Industries, Inc. (L)                                                                                                                                                                                                                                                               
|10.7    |  | Trademark License Agreement, dated as of May 9, 1988, by and between J.P.
Stevens and JPS Acquisition Corp. (predecessor to the Company.)(A)                                                                                                                                                                           
|10.8    |  | Omnibus Real Estate Closing Agreement, dated as of May 9, 1988, by and
among J.P. Stevens, JPS Acquisition Corp., JPS Acquisition Automotive
Products Corp., JPS Acquisition Carpet Corp., JPS Acquisition Industrial
Fabrics Corp., JPS Acquisition Converter and Yarn Corp. and JPS
Acquisition Elastomerics Corp.(A)
|10.9    |  | Purchase Agreement, dated as of April 24, 1988, by and among JPS Holding
Corp., the Company, Odyssey Partners, West Point-Pepperell, Inc., STN
Holdings Inc., Magnolia Partners, L.P. and J.P. Stevens.(A)                                                                                                             
|10.10   |  | Asset Purchase Agreement, dated as of May 25, 1994, by and among the
Company, JAPC, JCIC, JPS Auto Inc., a Delaware corporation, and Foamex
International Inc., a Delaware corporation.(B)                                                                                                                             
|10.19   |  | Asset Transfer Agreement, dated as of November 16, 1995, by and among
the Company, JPS Carpet Corp., a Delaware corporation, Gulistan Holdings
Inc. (GHI), a Delaware corporation and Gulistan Carpet Inc., a Delaware
Corporation and wholly-owned subsidiary of GHI.(E)                                            
|10.26   |  | Employment Agreement dated October 9, 1997, between the Company and
Monnie L. Broome.(H)                                                                                                                                                                                                                               
|10.29   |  | Asset Purchase Agreement, dated as of September 30, 1996 between
Elastomer Technologies Group, Inc. a Delaware Corporation, and JPS
Elastomerics Corp., a Delaware Corporation and wholly-owned subsidiary of
the Company.(D)                                                                                          
|10.31   |  | Registration Rights Agreement, dated as of October 9, 1997, by and among
JPS and the holders of JPSs Common Stock.(H)                                                                                                                                                                                                 
|10.36   |  | 1997 Incentive and Capital Accumulation Plan dated as of October 9,
1997.(H)                                                                                                                                                                                                                                           
|10.39   |  | Asset Purchase Agreement, dated as of January 11, 1999, by and between
C&I and Belding Hausman, Incorporated.(I)                                                                                                                                                                                                       

46



---



##### 



|        |  |                                                                                                                                                                                                                             
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                             
|Number  |  | Description                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                             
|10.40   |  | Amendment No. 1 to Asset Purchase Agreement, dated as of February 8,
1999, by and between C&I and Belding Hausman, Incorporated.(I)                                                                                         
|10.41   |  | JPS Guaranty Letter, dated as of January 11, 1999, by and between JPS
and Belding Hausman, Incorporated.(I)                                                                                                                 
|10.44   |  | Employment Agreement, dated February 29, 1999, between the Company and
Michael L. Fulbright.(J)                                                                                                                             
|10.45   |  | Stock Option Agreement, dated February 28, 1999, between the Company and
Michael L. Fulbright.(J)                                                                                                                           
|10.46   |  | Amendment to the JPS Textile Group, Inc. 1997 Incentive and First Capital
Accumulation Plan.(J)                                                                                                                             
|10.49   |  | Asset Purchase Agreement, dated as of July 2, 1999, by and between C&I
and Belding Hausman, Incorporated.(L)                                                                                                                
|10.50   |  | Asset Purchase Agreement, dated as of June 24, 1999, by and between C&I
and Chiquola Fabrics, LLC.(L)                                                                                                                       
|10.51   |  | Special Warranty Deed, dated as of August 30, 1999, by and between C&I
and Richard N. Hodges and Jimmy Law.(M)                                                                                                              
|10.55   |  | Asset Purchase Agreement dated as of November 16, 2000, by and among JPS
Industries, Inc., JPS
Converter and Industrial Corp. and JPSA Acquisition Corp.(O)                                                                 
|10.56   |  | Employment Agreement dated May 31, 2000, between the Company and Charles
R. Tutterow.(N)                                                                                                                                    
|10.58   |  | Revolving Credit and Security Agreement dated May 9, 2001, by and among
JPS, C&I, Elastomerics
and First Union National Bank.(P)                                                                                            
|10.59   |  | Employment Agreement Amendment dated July 31, 2001 between the Company
and Michael L.
Fulbright.(Q)                                                                                                                         
|10.60   |  | First Amendment to the Revolving Credit & Security Agreement, dated as
of April 26, 2002, by and
among JPS, C&I, Elastomerics and Wachovia Bank, National Association
(successor by merger to
First Union National Bank).(R)
|10.61   |  | Employment Agreement Amendment dated May 8, 2002 between the Company and
Charles R
Tutterow.(R)                                                                                                                             
|10.62   |  | Employment Agreement Amendment dated December 19, 2002 between the
Company and Charles R.
Tutterow. (Filed Herein).                                                                                                         
|10.63   |  | Indemnification Agreement between the Company and certain officers and
directors. (Filed Herein).                                                                                                                           
|10.64   |  | Letter of Waiver of Default dated December 31, 2002 under the Revolving
Credit and Security Agreement dated May 9, 2001 and among JPS, C&I,
Elastomerics and Wachovia Bank, N.A. (Filed Herein).                            

47



---



##### 



|        |  |                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                       
|Number  |  | Description                                                                                                                                           
|        |  |                                                                                                                                                       
|11.1    |  | Statement re: Computation of Per Share Earnings  not required since such
computation can be clearly
determined from the material contained herein.   
|12.1    |  | Computation of Ratio of Earnings to Fixed Charges  not required for Form
10-K per Item 503(d) of Regulation S-K.                                     
|12.2    |  | Computation of Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividendsnot required for Form 10-K per Item 503(d) of Regulation
S-K.
|21.1    |  | List of Subsidiaries of the Company.(C)                                                                                                               
|23.1    |  | Consent of PricewaterhouseCoopers LLP, independent auditors. (Filed Herein).                                                                          
|23.2    |  | Consent of Deloitte & Touche LLP. (Filed Herein).                                                                                                     
|24.1    |  | Power of Attorney relating to JPS (included as part of the signature page hereof).                                                                    
|99.1    |  | Certification of the Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of
2003. (Filed Herein).                               
|99.2    |  | Certification of the Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of
2003. (Filed Herein).                               



---

|(A) |  | Previously filed as an exhibit to the Companys Annual Report on Form
10-K for the year ended October 30, 1993.      
|--- |  | ---------------------------------------------------------------------------------------------------------------------
|   
|(B) |  | Previously filed as an exhibit to the Companys Quarterly Report on Form
10-Q for the quarter ended April 30, 1994.  
|   
|(C) |  | Previously filed as an exhibit to the Companys Annual Report on Form
10-K for the year ended October 29, 1994.      
|   
|(D) |  | Previously filed as an exhibit to the Companys Annual Report on Form
10-K for the year ended November 2, 1996.      
|   
|(E) |  | Previously filed as an exhibit to the Companys Current Report on Form
8-K dated December 1, 1995.                   
|   
|(F) |  | Previously filed as an exhibit to the Companys Current Report on Form
8-K dated July 2, 1997.                       
|   
|(G) |  | Previously filed as an exhibit to the Companys Registration Statement on
Form 8-A filed on September 8, 1997        
|   
|(H) |  | Previously filed as an exhibit to the Companys Annual Report on Form 10-K
for the year ended November 1, 1997.      
|   
|(I) |  | Previously filed as an exhibit to the Companys Annual Report on Form
10-K for the year ended October 31, 1998.      
|   
|(J) |  | Previously filed as an exhibit to the Companys Current Report on Form
8-K dated March 4, 1999.                      
|   
|(K) |  | Previously filed as an exhibit to the Companys Quarterly Report on Form
10-Q for the quarter ended May 1, 1999.     
|   
|(L) |  | Previously filed as an exhibit to the Companys Quarterly Report on Form
10-Q for the quarter ended July 31, 1999.   
|   
|(M) |  | Previously filed as an exhibit to the Companys Quarterly Report on Form
10-Q for the quarter ended
January 29, 2000.
|   
|(N) |  | Previously filed as an exhibit to the Companys Annual Report on Form 10-K
for the year ended October
28, 2000.      

48



---



##### 



|(O) |  | Previously filed as an exhibit to the Companys Current Report on Form 8-K
dated December 4, 2000.                 
|--- |  | -------------------------------------------------------------------------------------------------------------------
|   
|(P) |  | Previously filed as an exhibit to the Companys Quarterly Report on Form
10-Q for the quarter ended April
28, 2001.
|   
|(Q) |  | Previously filed as an exhibit to the Companys Annual Report on Form 10-K
for the year ended October
27, 2001.    
|   
|(R) |  | Previously filed as an exhibit to the Companys Quarterly Report on Form
10-Q for the quarter ended April
27, 2002.

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.

|                       |  |                      |  |                                                                                    
|---------------------- |  | -------------------- |  | -----------------------------------------------------------------------------------
|                       |  | JPS INDUSTRIES, INC.
|                       |  |                      |  |                                                                                    
|Date: January 29, 2003 |  | By:                  |  | /s/ Charles R. Tutterow                                                            
|                       |  |                      |  |                                                                                    
|                       |  |                      |  | Charles R. Tutterow
Executive Vice President, Chief Financial
Officer and Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.

|                                               |  |                                                                                                                        |  |                 
|---------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----------------
|Signature                                      |  | Title                                                                                                                  |  | Date            
|                                               |  |                                                                                                                        |  |                 
|                                              
|                                              
|/s/ Michael L. FulbrightMichael L. Fulbright   |  | Director, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)                   |  | January 29, 2003
|                                              
|/s/ Robert J. CapozziRobert J. Capozzi         |  | Director                                                                                                               |  | January 29, 2003
|                                              
|/s/ Nicholas P. DiPaoloNicholas P. DiPaolo     |  | Director                                                                                                               |  | January 29, 2003
|                                              
|/s/ John M. Sullivan, Jr.John M. Sullivan, Jr. |  | Director                                                                                                               |  | January 29, 2003
|                                              
|/s/ Charles R. TutterowCharles R. Tutterow     |  | Director, Executive Vice President,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer) |  | January 29, 2003

49



---



##### 



CERTIFICATIONS

I, Michael L. Fulbright, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-K of JPS Industries,
Inc.;                                                                                                                                                                                                                                                
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this annual report;                   
|
| | 4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                  

|   |  |                                                                                                                                                                                                                                                                                             
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities,
particularly during the period in which this annual report is
being prepared;
|   |  |                                                                                                                                                                                                                                                                                             
|b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90
days prior to the filing date of this annual report (the
Evaluation Date); and                                                                                                  
|   |  |                                                                                                                                                                                                                                                                                             
|c) |  | presented in this annual report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent functions):
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|   |  |                                                                                                                                                                                                                                                                                               
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a) |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the
registrants auditors any material weaknesses in internal
controls; and
|   |  |                                                                                                                                                                                                                                                                                               
|b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrants internal controls; and                                                                                                                                        



| | 6. |  | The registrants other certifying officers and I have indicated in
this annual report whether there were any significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |                                                                   
|---------------------- |  | ------------------------------------------------------------------
|Date: January 29, 2003 |  | /s/ Michael L. Fulbright                                          
|                       |  |                                                                   
|                       |  | Title: Chairman of the Board, President andChief Executive Officer

50



---



##### 



CERTIFICATIONS

I, Charles R. Tutterow, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-K of JPS Industries, Inc.;                                                                                                                                                                                                                                                
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with
respect to the period covered by this annual report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report,
fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods
presented in this annual report;                   
|
| | 4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls  and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                 

|   |  |                                                                                                                                                                                                                                                                                             
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities,
particularly during the period in which this annual report is
being prepared;
|   |  |                                                                                                                                                                                                                                                                                             
|b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90
days prior to the filing date of this annual report (the
Evaluation Date); and                                                                                                  
|   |  |                                                                                                                                                                                                                                                                                             
|c) |  | presented in this annual report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the
registrants auditors and the audit committee of registrants board of
directors (or persons performing the equivalent functions):
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|   |  |                                                                                                                                                                                                                                                                                               
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the
registrants auditors any material weaknesses in internal
controls; and
|   |  |                                                                                                                                                                                                                                                                                               
|b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant
role in the registrants internal controls; and                                                                                                                                        



| | 6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were any
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |                                                                      
|---------------------- |  | ---------------------------------------------------------------------
|Date: January 29, 2003 |  | /s/ Charles R. Tutterow                                              
|                       |  |                                                                      
|                       |  | Title: Executive Vice President, Chief Financial Officerand Secretary

51



---



##### 





|                     |                  
|-------------------- | -----------------
|JPS INDUSTRIES, INC. | INDEX TO SCHEDULE

INDEX TO FINANCIAL STATEMENT SCHEDULE

For the fiscal years ended October 28, 2000,
October 26, 2001, and November 2, 2002.


FINANCIAL STATEMENT SCHEDULE

|    |  |                                                |  |    
|--- |  | ---------------------------------------------- |  | ---
|II. |  | Valuation and Qualifying Accounts and Reserves |  | S-2



|      |                                                                                                                                                                                                                   
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note: | All other schedules are omitted because they are
    not applicable or not required, or because the required
    information is shown either in the consolidated financial
    statements or in the notes thereto.

S-1



---



##### 





|                     |            
|-------------------- | -----------
|JPS INDUSTRIES, INC. | SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


(IN THOUSANDS)


|                                                        |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |     | 
|------------------------------------------------------- | ------------------------------------ | ---------- | ----- | ---------- |  | ---------- | --- | ---------- |  | ---------- | --- | --- |  | - | --- | --- |  | - | ----- | --- | 
|                                                        |                                      |            |       |            |  |            |     |           
|Column A                                                |                                      | Column B   |       | Column C   |  | Column D   |     | Column E  
|                                                        |                                      |            |       |            |  |            |     |           
|                                                        |                                      |            |       |            |  | Charged to |     |            |  |           
|                                                        |                                      | Balance at |       | Charged to |  | Other      |     |            |  | Balance at
|                                                        |                                      | Beginning  |       | Costs and  |  | Accounts   |     | Deductions |  | End of    
|Classification                                          |                                      | of Period  |       | Expenses   |  | Describe   |     | Describe   |  | Period    
|                                                        |                                      |            |       |            |  |            |     |            |  |           
|                                                        |                                      |            |       |            |  | (a)        |     | (b)        |  |           
|                                                       
|                                                       
|                                                       
|                                                       
|Allowances Deducted from Asset to Which They
    Apply: |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |    
|Fiscal Year Ended October 28, 2000
    (52 Weeks)       |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |    
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Allowance for doubtful accounts      |            | $     | 405        |  |            | $   | 843        |  |            | $   |    |  |   | $   | 548 |  |   | $     | 700 | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Claims, returns and other allowances |            |       | 254        |  |            |     |           |  |            |     | 331 |  |   |     | 261 |  |   |       | 324 | 
|                                                        |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |    
|                                                        |                                      | $          | 659   |            |  | $          | 843 |            |  | $          | 331 |     |  | $ | 809 |     |  | $ | 1,024 |    
|                                                        |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |    
|Fiscal Year Ended October 27, 2001
    (52 Weeks)       |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |    
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Allowance for doubtful accounts      |            | $     | 700        |  |            | $   | 2          |  |            | $   |    |  |   | $   | 449 |  |   | $     | 253 | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Claims, returns and other allowances |            |       | 324        |  |            |     | 214        |  |            |     | 77  |  |   |     | 184 |  |   |       | 431 | 
|                                                        |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |    
|                                                        |                                      | $          | 1,024 |            |  | $          | 216 |            |  | $          | 77  |     |  | $ | 633 |     |  | $ | 684   |    
|                                                        |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |    
|Fiscal Year Ended November 2, 2002
    (53 Weeks)       |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |    
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Allowance for doubtful accounts      |            | $     | 253        |  |            | $   | 6          |  |            | $   |    |  |   | $   | 69  |  |   | $     | 190 | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Claims, returns and other allowances |            |       | 431        |  |            |     | 52         |  |            |     | 116 |  |   |     | 235 |  |   |       | 364 | 
|                                                        |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |    
|                                                        |                                      | $          | 684   |            |  | $          | 58  |            |  | $          | 116 |     |  | $ | 304 |     |  | $ | 554   |    
|                                                        |                                      |            |       |            |  |            |     |            |  |            |     |     |  |   |     |     |  |   |       |    

(a) Change in various reserves charged to net sales.



|    |                                                        
|--- | -------------------------------------------------------
|(b) | Uncollected receivables written off, net of recoveries.