8-K

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): August 1, 2002

POLYMER GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware	1-14330	57-1003983
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4838 Jenkins Avenue	29405
North Charleston, SC	(Zip Code)

Registrant's telephone number, including area code: (843) 566-7293

Item 9 Regulation FD Disclosure.

        On May 11, 2002, Polymer Group, Inc. (the "Company") and its domestic subsidiaries filed voluntary petitions for a "pre-negotiated" reorganization under Chapter 11 of the U.S. Bankruptcy Code. As part of the process for having the Company's Plan of Reorganization confirmed by the U.S. Bankruptcy Court in Columbia, South Carolina (the "Court"), the Company has filed a Disclosure Statement with the Court. The Company also filed certain projected financial information with the Court on August 1, 2002. A copy of such projected financial information is attached hereto as Exhibit 99.1.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	POLYMER GROUP, INC.
Dated: August 1, 2002	By:	/s/  JAMES G. BOYD James G. Boyd Executive Vice President, Treasurer, Chief Financial Officer, and Director (Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Certain projected financial information filed with the U.S. Bankruptcy Court in Columbia, South Carolina.

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Item 9 Regulation FD Disclosure.

SIGNATURES
EXHIBIT INDEX

EX-99.1

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Exhibit 99.1

PROJECTIONS

        Polymer Group, Inc. and its advisors developed a set of financial projections (summarized below) to assess the value of the Reorganized Debtors generally. The projections set forth below are based on a number of significant assumptions, including the successful reorganization, an assumed Effective Date of December 28, 2002, and no significant downturn in the specific markets in which the Debtors operate.

THE PROJECTIONS ARE BASED UPON A NUMBER OF SIGNIFICANT ASSUMPTIONS AND HAVE BEEN PREPARED ASSUMING THAT ALL OUTSTANDING SENIOR SUBORDINATED NOTES WILL BE CONVERTED INTO CLASS A COMMON STOCK AS PART OF THE PLAN. ACTUAL OPERATING RESULTS AND VALUES MAY VARY.

        Set forth below are financial projections with respect to the estimated effect of the transactions contemplated by the Plan on the Debtors' capitalization, results of operations, and cash flow as of and for the period ending December 28, 2002. The Debtors do not, as a matter of course, publicly disclose projections as to their future revenues, earnings, or cash flow. In connection with the Debtors' consideration of the Plan, certain projections of the future financial performance of the Debtors' operating businesses were prepared. Accordingly, after the Effective Date, the Reorganized Debtors do not intend to update or otherwise revise the projections. Furthermore, the Reorganized Debtors do not intend to update or review the projections to reflect changes in general economic or industry conditions. Significant assumptions underlying the financial projections are set forth below and should be read in conjunction with the Debtors' historical financial information set forth below and in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, attached as Exhibits D and E, respectively, to this Disclosure Statement.

        The projections were prepared by the Debtors to analyze their ability to meet their obligations under the Plan and to assist each holder of a claim in Class 2, 4 or 6 in determining whether to accept or reject the Plan. The projections were not prepared to conform to the guidelines established by the American Institute of Certified Public Accountants regarding financial forecasts. While presented with numerical specificity, these projections are based upon a variety of assumptions, and are subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond the control of the Debtors. Consequently, the inclusion of the projections herein should not be regarded as a representation by the Debtors or any other person that the projections will be realized, and actual results may vary materially from those presented below. Due to the fact that such projections are subject to significant uncertainty and are based upon assumptions which may not prove to be correct, neither the Debtors nor any other person assumes any responsibility for their accuracy or completeness.

        Moreover, the nonwovens industry is highly competitive and the Debtors' earnings may be significantly adversely affected by the actions of its competitors, either through price pressure, modernization or installation of equipment, or new product development. The projections generally assume that no material change in the competitive environment which presently exists will occur and that no significant changes in the nonwovens industry will occur as a result of shifting consumer demand or other factors.

SIGNIFICANT ASSUMPTIONS

1.

Revenues are expected to approximate $793.3 million in fiscal year 2002, a decrease of $22.3 million, or 2.7% in fiscal year 2002 vs. fiscal year 2001. The anticipated decline in revenue in fiscal year 2002 is attributable to a number of factors, including lower sales and reduced selling prices in certain markets in which the Debtors compete. Additionally, the uncertainty caused by the Chapter 11 filing has resulted in lower than anticipated sales volumes as customers in some instances have placed volumes with the Debtors' competitors.

Revenues in fiscal year 2003 are expected to increase to $874.5 million, an increase of $81.2 million, or 10.2% vs. fiscal year 2002 forecasted results. This anticipated increase is attributable to a number of factors including customers return to more normalized ordering patterns upon the Debtors' successful emergence from Chapter 11, the introduction of new products and increased volumes in certain regions due to increased consumer demand for nonwoven products.

2.

Cost of goods sold are expected to approximate $656.6 million in fiscal year 2002, a decrease of $20.3 million or 3.0% vs. fiscal year 2001. This decrease is directly related to the anticipated decreased sales volumes in fiscal year 2002 vs. fiscal year 2001. As a percentage of sales, cost of goods sold are expected to decline 0.2% in fiscal year 2002 vs. fiscal year 2001. In fiscal year 2003, cost of goods sold are expected to approximate $681.3 million. As a percentage of sales, cost of goods sold are expected to decline from 82.8% in fiscal year 2002 to 77.9% in fiscal year 2003 as a result of several factors, including improved raw material purchasing, more effective capacity utilization and improved mix.



3.

Gross profits are expected to approximate $136.7 million in fiscal year 2002, or 17.2% of sales and $193.2 million, or 22.1% of sales in fiscal year 2003. The increase in gross margins in fiscal year 2003 is directly attributable to increased sales and lower cost of goods sold.



4.

Selling, general and administrative expenses are projected to decrease $1.7 million in fiscal year 2002 vs. fiscal year 2001 as a result of lower sales volumes and cost reduction initiatives. Selling, general and administrative expenses are expected to increase by $7.4 million in fiscal year 2003 vs. fiscal year 2002 as a result of increased sales volumes. As a percentage of sales, selling, general and administrative expenses are expected to decline to 13.4% of sales in fiscal year 2003 vs. 13.8% of sales in fiscal year 2002.



5.

EBITDA represents operating income plus depreciation and amortization expense and excludes unusual items consisting of plant realignment costs, asset impairment, special charges, fresh start adjustments and Chapter 11 reorganization expenses. EBITDA is presented because it is generally accepted as providing useful information regarding a company's ability to service and/or incur debt. EBITDA should not be considered in isolation from or as a substitute for net income, cash flows from operating activities and other consolidated income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of profitability or liquidity. EBITDA is expected to approximate $89.9 million in fiscal year 2002 and $118.1 million in fiscal year 2003. As a percentage of sales, EBITDA is anticipated to be 11.3% in fiscal year 2002 and is expected to increase to 13.5% of sales in fiscal year 2003. The increase in EBITDA margin is a result of a number of factors including increased sales resulting in improved manufacturing efficiencies, better product mix and a lower selling, general and administrative expense rate.



6.

Interest expense for fiscal year 2002 primarily includes interest on the Revolver, Term B, Term B-1 and Term C loans. No interest has been calculated on the senior subordinated notes after the Petition Date in accordance with SOP 90-7 (as defined herein). Interest expense has been calculated based upon the rates in the term sheet with the senior secured lenders, which, among other things, provides for a minimum LIBOR rate of 2%, plus the applicable margin of between 350 and 600 basis points.



7.

Interest expense is anticipated to approximate $69.4 million in fiscal year 2002 and $37.4 million in fiscal year 2003. The decline in interest expense is directly attributable to lower outstanding balances as a result of the elimination of interest expense on the senior subordinated notes and a $50 million reduction in bank indebtedness funded by the subscription of new preferred shares.



8.

Income taxes. The Debtors have assumed, for purposes of the financial projections, that the benefit of domestic net operating loss carry-forwards will be substantially reduced. Additionally, the accompanying projections include a reduction in the tax basis of certain

long-term assets. See "Article VI. CERTAIN UNITED STATES INCOME TAX CONSEQUENCES, Section D. CONSEQUENCES TO THE COMPANY, Item 2. Limitation on Net Operating Losses and Other Tax Attributes" for a discussion of the federal income tax consequences related to the net operating loss carryforwards. The Debtors are further evaluating the implementation of certain tax strategies and it is likely that the final reduction of the tax basis of long-term assets will vary from the projected amounts assumed herein. The combined effective tax rate for the 2003-2006 periods is projected at 39.0%.

9.

Fresh Start Accounting. The Debtors have prepared the accompanying projections using "fresh start" accounting for all periods subsequent to December 28, 2002. These principles are contained in the American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7"). Pursuant to the guidance provided by SOP 90-7, the Debtors will determine the reorganization value of the Reorganized Debtors as of the Effective Date. Under "fresh start" reporting, the reorganization value will be allocated to Reorganized Polymer Group's assets. The Debtors are in the process of further evaluating how the reorganization value will be allocated to the Reorganized Debtors' long-term assets. It is likely the final allocation will vary from the projected amounts presented herein.



10.

Rounding Differences. In the course of preparing the projections, certain rounding has occurred with respect to various amounts. As a result, the amounts shown in the projections may not total to the sums indicated. Any such differences are solely due to the effects of this rounding.

POLYMER GROUP, INC.
REFLECTING REORGANIZATION ADJUSTMENTS
PROJECTED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(IN THOUSANDS OF US DOLLARS)

			December 28, 2002 Estimated Post- Consummation Balance Sheet
					Fiscal Years
					2003		2004		2005		2006
ASSETS
Current assets
	Cash and equivalents		$	30,088	$	40,688	$	47,157	$	38,682	$	40,200
	Short term investments			12,500		—		—		—		—
	Accounts receivable, net			134,514		147,680		152,983		158,859		167,455
	Inventories			115,539		120,526		124,736		129,318		135,651
	Other			37,214		36,686		36,168		35,662		35,165
		Current assets		329,854		345,579		361,044		362,520		378,471
Property, plant & equipment, net				410,460		406,320		398,680		387,540		372,900
Intangibles and loan acquisition costs, net				23,239		17,275		11,311		5,346		1,482
Other noncurrent assets				25,975		25,455		24,946		24,447		23,958
	Total Assets		$	789,528	$	794,630	$	795,981	$	779,854	$	776,812
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current liabilities
	Accounts payable		$	53,083		57,577		59,588		61,777		64,802
	Accrued liabilities			45,359		52,267		55,270		60,183		68,107
	Short term borrowings			9,461		9,272		9,086		8,905		8,726
	Current portion of debt			25,000		50,000		50,000		50,000		259,369
		Current liabilities		132,903		169,116		173,945		180,864		401,005
Long term debt, less current portion				423,279		373,001		322,729		272,461		12,831
Other noncurrent liabilities				41,086		41,936		42,828		43,765		44,749
Senior subordinated convertible debt				—		—		25,000		25,000		25,000
Shareholders' (Deficit) Equity
	Preferred stock			50,000		54,080		58,493		63,266		68,428
	Common stock			142,260		142,260		142,260		142,260		142,260
	Retained earnings (deficit)			0		14,237		30,727		52,238		82,539
	Other comprehensive (income) loss			—		—		—		—		—
				192,260		210,577		231,480		257,763		293,227
	Total Liabilities and Shareholders' (Deficit) Equity		$	789,528	$	794,630	$	795,981	$	779,854	$	776,812

POLYMER GROUP, INC.
REORGANIZED UNAUDITED
PRO FORMA BALANCE SHEET
REFLECTING REORGANIZATION ADJUSTMENTS
(IN THOUSANDS OF US DOLLARS)

			As of December 28, 2002
						Reorganization Adjustments
			Estimated Pre- Consummation Balance Sheet			Debt Discharge			Fresh-Start Adjustments			Estimated Post- Consummation Balance Sheet
ASSETS
Current assets
	Cash and equivalents		$	39,088		$	(9,000	)	$	—		$	30,088
	Short term investments			12,500			—			—			12,500
	Accounts receivable, net			134,514			—			—			134,514
	Inventories			115,539			—			—			115,539
	Other			42,223			—			(5,009	)		37,214
		Current assets		343,863			(9,000	)		(5,009	)		329,854
Property, plant & equipment, net				667,566			—			(257,106	)		410,460
Intangibles and loan acquisition costs, net				130,274			(17,112	)		(89,923	)		23,239
Other noncurrent assets				58,780			—			(32,805	)		25,975
	Total Assets		$	1,200,483		$	(26,112	)	$	(384,843	)	$	789,528
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current liabilities
	Accounts payable		$	53,083		$	—		$	—		$	53,083
	Accrued liabilities			88,062			(42,187	)		(516	)		45,359
	Short term borrowings			9,461			—			—			9,461
	Current portion of debt			1,071,851			(1,046,851	)		—			25,000
		Current liabilities		1,222,457			(1,089,038	)		(516	)		132,903
Long term debt, less current portion				13,910			409,369			—			423,279
Other noncurrent liabilities				65,592			159,236			(183,742	)		41,086
Senior subordinated convertible debt				—			—			—			—
Shareholders' (Deficit) Equity
	Preferred stock			—			50,000			—			50,000
	Common stock			244,042			137,992			(239,774	)		142,260
	Retained earnings (deficit)			(320,836	)		306,329			14,507			0
	Other comprehensive (income) loss			(24,682	)		—			24,682			—
				(101,476	)		494,321			(200,585	)		192,260
	Total Liabilities and Shareholders' (Deficit) Equity		$	1,200,483		$	(26,112	)	$	(384,843	)	$	789,528

POLYMER GROUP, INC.
REFLECTING REORGANIZATION ADJUSTMENTS
PROJECTED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(IN THOUSANDS OF US DOLLARS)

		Fiscal Years
		2002			2003			2004			2005			2006
Net sales		$	793,280		$	874,500		$	905,900		$	940,700		$	991,600
Cost of goods sold			656,611			681,340			705,140			731,040			766,840
	Gross profit		136,669			193,160			200,760			209,660			224,760
Operating costs and expenses:
	Selling, general and administrative expenses		109,824			117,200			121,500			125,700			129,600
	Plant realignment costs		557			—			—			—			—
	Asset impairment		—			—			—			—			—
	Special charges		3,634			—			—			—			—
	Fresh start adjustments		351,522			—			—			—			—
	Chapter 11 reorganization items		43,216			—			—			—			—
Operating income (loss)			(372,084	)		75,960			79,260			83,960			95,160
Other expense
	Interest expense, net		69,364			37,433			36,493			32,373			28,523
	Foreign currency and other		14,104			8,500			8,500			8,500			8,500
			83,468			45,933			44,993			40,873			37,023
Income (loss) before income taxes and extraordinary item			(455,552	)		30,027			34,267			43,087			58,137
Income taxes (benefit)			(154,236	)		11,711			13,364			16,804			22,674
Income before extraordinary item			(301,316	)		18,317			20,903			26,283			35,464
Extraordinary item, gain on debt discharge, net of tax expense of $159,236			336,459			—			—			—			—
Net income (loss)			35,143			18,317			20,903			26,283			35,464
Less: preferred stock dividends			—			(4,080	)		(4,413	)		(4,773	)		(5,163	)
Income attributable to common stock		$	35,143		$	14,237		$	16,490		$	21,510		$	30,301
EBITDA
Operating income before unusual items		$	26,845		$	75,960		$	79,260		$	83,960		$	95,160
Plus:
	Depreciation expense		59,996			39,140			42,640			46,140			49,640
	Amortization expense		3,028			3,000			3,000			3,000			900
		$	89,869		$	118,100		$	124,900		$	133,100		$	145,700

POLYMER GROUP, INC.
REFLECTING REORGANIZATION ADJUSTMENTS
PROJECTED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(IN THOUSANDS OF US DOLLARS)

			Fiscal Years
			2003			2004			2005			2006
Operating Activities
	Net income (loss)		$	18,317		$	20,903		$	26,283		$	35,464
	Adjustments to reconcile net income (loss) to cash flows provided by (used in) operating activities
		Depreciation expense		39,140			42,640			46,140			49,640
		Amortization expense—intangibles		3,000			3,000			3,000			900
				42,140			45,640			49,140			50,540
		Amortization expense included in interest expense		2,964			2,964			2,964			2,964
		Deferred income taxes		—			—			—			—
	Changes in operating assets and liabilities
		(Increase) / decrease in accounts receivable		(13,166	)		(5,303	)		(5,877	)		(8,596	)
		(Increase) / decrease in inventories		(4,987	)		(4,210	)		(4,582	)		(6,333	)
		(Increase) / decrease in income taxes receivable		—			—			—			—
		(Increase) / decrease in other current assets		528			517			507			497
		(Increase) / decrease in other noncurrent assets		519			509			499			489
		(Decrease) / increase in accounts payable		4,494			2,011			2,189			3,025
		(Decrease) / increase in accrued liabilities		7,322			3,053			4,962			7,974
		(Decrease) / increase in other current liabilities		(413	)		(50	)		(50	)		(50	)
		(Decrease) / increase in other noncurrent liabilities		850			893			937			984
		Net cash provided by (used in) operating activities		58,567			66,928			76,973			86,959
Investing Activities
	(Purchases) of property, plant and equipment			(35,000	)		(35,000	)		(35,000	)		(35,000	)
	(Purchases) sales of intangibles			—			—			—			—
	(Purchases) sales of marketable securities classified as available for sale			12,500			—			—			—
		Net cash provided by (used in) investing activities		(22,500	)		(35,000	)		(35,000	)		(35,000	)
Financing Activities
	Proceeds (payments) of short term borrowings			(189	)		(185	)		(182	)		(178	)
	Proceeds (payments) of senior debt			(25,000	)		(50,000	)		(50,000	)		(50,000	)
	Proceeds (payments) of other debt			(278	)		(273	)		(267	)		(262	)
	Loan acquisition costs			—			—			—			—
	Issuance of Class A & B common stock			—			—			—			—
	Preferred stock dividends			—			—			—			—
	Proceeds (payments) of senior subordinated convertible debt			—			25,000			—			—
	Other changes in shareholders equity			—			—			—			—
		Net cash provided by (used in) financing activities		(25,467	)		(25,458	)		(50,449	)		(50,440	)
Net change in cash and equivalents				10,600			6,469			(8,476	)		1,519
Cash and equivalents at beginning of period				30,088			40,688			47,157			38,682
Cash and equivalents at end of period			$	40,688		$	47,157		$	38,682		$	40,200

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Exhibit 99.1

PROJECTIONS
SIGNIFICANT ASSUMPTIONS
PROJECTED CONSOLIDATED BALANCE SHEET (UNAUDITED)
PRO FORMA BALANCE SHEET
PROJECTED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
PROJECTED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)