SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
---------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ---------------------
33-96808
(Commission File Number)
Crain Industries, Inc.
(Exact name of Registrant as specified in charter)
Delaware
(State or other jurisdiction of incorporation or organization)
43-1714086
(I.R.S. Employer Identification No.)
101 South Hanley Road
St. Louis, MO 63105
(314) 719-0100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Outstanding at
Class March 31, 1996
---------------------- --------------
Crain Industries, Inc.
Common Stock 1,000 shares
<PAGE>
<TABLE>
CRAIN INDUSTRIES, INC.
INDEX
<CAPTION>
Page
<S> <C>
Crain Industries, Inc.
Consolidated Balance Sheets as of December 31, 1996 and March 31, 1995 1
Consolidated Statement of Operations for the three months ended 2
March 31, 1996 and Predecessor Statement of Operations for the
three months ended March 31, 1995
Consolidated Statement of Cash Flows for the three months ended 3
March 31, 1996 and Predecessor Statement of Cash Flows for the
three months ended March 31, 1995
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis of Financial Condition and Results 5
of Operations
PART II - OTHER INFORMATION 8
SIGNATURES 9
</TABLE>
<PAGE>
<TABLE>
CRAIN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<CAPTION>
December 31,
1995
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,782 $ 1,983
Accounts receivable, less allowance of $4,061
and $4,093, respectively 35,817 35,987
Inventories 32,883 33,128
Prepaid expenses and other 1,226 1,313
--------- ---------
Total current assets 71,708 72,411
Property, plant and equipment 42,403 41,975
Deferred financing costs, net 11,623 12,046
Intangible assets, net 56,010 56,341
Other assets 1,067 1,085
--------- ---------
Total assets $182,811 $183,858
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term obligations $ 123 $ 122
Accounts payable 20,544 19,919
Accrued and other liabilities 13,274 11,827
Accrued interest 1,932 5,030
Accrued payroll and personnel 3,853 3,739
Income taxes payable 130 91
--------- ---------
Total current liabilities 39,856 40,728
Long-term obligations, less current maturities 114,588 116,215
Other long-term liabilities 4,617 2,633
Stockholder's equity:
Common stock, $.01 par value, 1,000
shares authorized, 1,000 shares,
issued and outstanding -- --
Contributed capital 24,528 24,528
Retained deficit (778) (246)
--------- ---------
Total stockholder's equity 23,750 24,282
--------- ---------
Total liabilities and stockholder's equity $182,811 $183,858
========= =========
<FN>
See accompanying notes to the consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
CRAIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
The Company The Predecessor
<S> <C> <C>
Net sales $70,242 $63,916
Operating expenses:
Cost of goods sold 56,225 52,464
Selling, general and administrative 8,224 7,857
Depreciation and amortization 1,909 1,369
-------- --------
Operating income 3,884 2,226
Other expense:
Interest expense 3,969 906
Amortization of deferred financing costs 423 -
Other income, net (15) (284)
-------- --------
(Loss) income before income tax provision (493) 1,604
Income tax provision 39 -
-------- --------
Net (loss) income $ (532) $ 1,604
======== ========
<FN>
See accompanying notes to the consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
CRAIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1995
The The
Company Predecessor
<S> <C> <C>
Cash flows provided by operating activities:
Net (loss) income $ (532) $ 1,604
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation 1,578 1,260
Amortization of intangible assets 331 108
Amortization of deferred financing costs 423 0
Change in assets and liabilities:
Accounts receivable 170 (1,244)
Inventories 245 (2,033)
Prepaid expenses and other 104 1,277
Accounts payable 625 3,326
Accrued and other liabilities 1,600 470
Accrued interest (3,098) (340)
Other long-term liabilities 1,984 0
--------- ---------
Net cash from operating activities 3,430 4,428
--------- ---------
Cash flows used in investing
activities:
Capital expenditures, net (2,004) (2,086)
Dividends paid 0 (175)
--------- ---------
Net cash from investing activities (2,004) (2,261)
--------- ---------
Cash flows used in financing activities:
Proceeds from issuance of long-term obligations 20,200 20,000
Repayment of long-term obligations (21,827) (21,554)
--------- ---------
Net cash from financing activities (1,627) (1,554)
--------- ---------
Net change in cash and cash equivalents (201) 613
Cash and cash equivalents at beginning of the period 1,983 1,634
--------- ---------
Cash and cash equivalents at end of the period $ 1,782 $ 2,247
========= =========
<FN>
See accompanying notes to the consolidated financial statements
</TABLE>
<PAGE>
CRAIN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
1. THE COMPANY
Crain Industries, Inc., a Deleware corporation ("Crain" or the
"Company"), was formed on May 25, 1995 to participate in the acquisition of
Crain Industries, Inc. (an Arkansas corporation) (the "Predecessor") (the
"Acquisition") and the transactions related thereto. Crain is a wholly owned
subsidiary of Crain Holdings Corp. ("Holdings"). Prior to the Acquisition,
Crain conducted no operations other than those incident to the Acquisition.
2. BASIS OF PRESENTATION
Predecessor Data
----------------
The Predecessor's Data for the three months ended March 31, 1995, reflects
adjustments made to properly reflect the performance of the Predecessor for
their fiscal year ended August 25, 1995.
Unaudited Interim Consolidated Financial Statements
---------------------------------------------------
The unaudited interim consolidated financial statements reflect all
adjustments consisting only of normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of financial
position and results of operations. The results for the three months ended
March 31, 1996, are not necessarily indicative of the results that may be
expected for a full fiscal year.
Statement of Cash Flows
-----------------------
Interest paid for the three months ended March 31, 1996 and 1995, is
approximately $6,998 and $606, respectively. Income taxes paid for the three
months ended March 31, 1996 and 1995, is $0 and $0, respectively.
Income Taxes
------------
The Company accounts for Income Taxes, in accordance with the provisions
of SFAS No. 109. The Predecessor elected to be taxed under the provisions of
Subchapter S of the Internal Revenue Code, accordingly, taxable income of the
Predecessor was allocated to the Sole Shareholder of the Predecessor who was
responsible for payments of taxes thereon.
3. INVENTORIES
The composition of inventories at March 31, 1996 is as follows:
Raw materials $ 25,034
Finished goods 7,849
Total $ 32,883
PART I
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following comments should be used in reviewing the discussion and analysis
of results of operations and liquidity and capital resources. Crain
Industries, Inc. (a Delaware corporation) (the "Company") was organized in
May, 1995 for the purpose of accomplishing the acquisition of certain assets
and liabilities of Crain Industries, Inc. (an Arkansas corporation) (the
"Predecessor") (the "Acquisition") and prior to the Acquisition, the Company
was not engaged in any activities other than those incidental to the
Acquisition. The Company has accounted for the Acquisition in accordance with
the purchase method of accounting.
The Company believes that the operating results of the Predecessor are not
directly comparable to the Company's operating results for post-Acquisition
periods due to, among other things, (i) purchase accounting adjustments
relating to the Acquisition, including the amortization of goodwill and
intangibles, (ii) increases in interest expense relating to the financing of
the Company and (iii) anticipated cost savings resulting from the elimination
of certain expenses related to the sole shareholder of the Predecessor.
Results of Operations
The following discussion and analysis is based on the historical unaudited
results of operations for the three months ended March 31, 1996 and the
unaudited results of the Predecessor's operations for the three months ended
March 31, 1995.
<TABLE>
<CAPTION>
Three Months Ended
(In Thousands)
March 31, March 31,
1996 1995
The Company The Predecessor
<S> <C> <C>
Net sales $70,242 63,916
Cost of goods sold 56,225 52,464
Selling, general and
administrative 8,224 7,857
Depreciation and amortization 1,909 1,369
-------- --------
Operating income 3,884 2,226
Interest expense 3,969 906
Amortization of deferred financing costs 423 0
Other income (15) (284)
-------- --------
(Loss) income before income taxes (493) 1,604
Provision for income taxes (1) 39 0
-------- --------
Net (loss) income $ (532) $ 1,604
======== ========
EBITDA (2) $ 5,793 $ 3,595
======== ========
Cash flows from operating activities $ 3,430 $ 4,428
======== ========
<FN>
(1) The predecessor elected to be taxed under the provisions of Subchapter S of
the Internal Revenue Code. Accordingly, taxable income of the Predecessor
was allocated to the sole shareholder of the Predecessor who was
responsible for the payment of taxes thereon.
(2) Earnings before interest, taxes, depreciation and amortization ("EBITDA")is
not a defined term under Generally Accepted Accounting Principles ("GAAP")
and is not an alternative to operating income or cash flow from operations
as determined under GAAP. The Company believes that EBITDA provides
additional information for determining its ability to meet future debt
requirements; however, EBITDA does not reflect cash available to fund cash
requirements. EBITDA is also one of the financial measures in the
covenants under the Company's debt instruments.
</TABLE>
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 1995
Net Sales
Net Sales for the three month period ended March 31, 1996 were $70.2 million
or a 9.9% increase over the $63.9 million of sales of the Predecessor for the
comparable period in 1995. This sales growth was due primarily to an increase in
prices, necessitated by an increase in higher raw material prices, as well as
the strong market penetration of the Company's carpet pad products.
Cost of Goods Sold
Cost of goods sold for the first quarter of 1996 increased $3.8 million,
to $56.2 million, over the comparable period of 1995 for the Predecessor. As a
percentage of sales, cost of goods sold for the three month period ended
March 31, 1996 declined to 80.0% from 82.1% for the comparable period of 1995.
The increase in cost of goods sold over the prior year was due to an increase in
sales volume and raw material costs. The decrease in cost of goods sold as a
the percentage of sales was due to the cost reduction activities put in place by
new management and a shift in product mix.
Selling, General and Administrative
Selling, general and administrative expenses for the first quarter of 1996
were $8.2 million, up $0.4 million from the comparable period of 1995.
Expressed as a percentage of sales, selling, general and administrative
expenses decreased to 11.7% for the three months ended March 31, 1996 from
12.3% for the three months ended March 31, 1995. The decrease in selling,
general and administrative expenses as a percentage of sales is due to the
absorption of fixed costs and various cost reduction activities implemented by
new management.
Interest Expense
Interest expense increased from $.9 million for the three months ended March
31, 1995 to $4.0 million for the three months ended March 31, 1996, as a
result of the higher debt levels associated with the Acquisition.
<PAGE>
Liquidity and Capital Resources
Interest payments on the Company's Senior Subordinated Notes(the "Notes"), on
the promissory note held by the Predecessor ("Predecessor Note"), and under
the Company's revolving credit agreement (the "Revolving Facility"), represent
significant obligations of the Company. The Notes and the Predecessor Note
require semiannual interest payments of approximately $6.8 million and $.7
million, respectively, on each August 15 and February 15. Borrowings under the
Revolving Facility will bear interest at floating rates and require interest
payments on varying dates. All amounts under the Revolving Facility
outstanding will mature in 2000.
In addition to its debt service obligations, the Company's remaining liquidity
demands are for capital expenditures and for working capital needs. For the
three months ended March 31, 1996, the Company spent approximately $2.0
million on capital projects, while the Predecessor spent $2.1 million on
capital projects for the comparable period of 1995. The Company expects to
spend approximately $6.0 million to $10.0 million annually on capital
projects, of which approximately $3.0 million will be used for maintaining
facilities and equipment.
Cash provided by operating activities for the three months ended March 31,
1996 was $3.4 million, a decrease of $1.0 million from the three months ended
March 31, 1995. The decline in operating cash flows compared to the three
months ended March 31, 1995 was primarily due to the increase in accounts
payable and accruals of $3.8 million by the Predecessor during the period.
Cash used in investing activities was $2.0 million for the three months ended
March 31, 1996. The use of $2.0 million in cash for investing activities
represents capital expenditures and is comparable to the Predecessor's capital
expenditures of $2.1 million for the three months ended March 31, 1995. Cash
used for financing activities for the three months ended March 31, 1996 in the
amount of $1.6 million represents a pay down of the Revolving Facility, and is
comparable to the Predecessor's three months ended March 31, 1995.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K
(a) Exhibits
10.32 First Amendment to Credit Agreement, dated as of
March 22, 1996, among Crain Industries, Inc. Texas
Commerce Bank National Association, as agent, for
itself and the other lenders party to the Credit
Agreement.
27.1Financial Data Schedule of Crain Industries, Inc.
(b)Reports on Form 8-K
A form 8-K was filed on February 23, 1996 for a notification
of a change in fiscal year end to December 31.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CRAIN INDUSTRIES, INC.
Dated: May 14, 1996 By: /s/ JAMES N. MILLS
____________________________________
Name: James N. Mills
Title: Chairman of the Board of
Directors
By: /s/ JAMES G. POWERS
____________________________________
Name: James G. Powers
Title: Vice President -
Chief Financial Officer
<PAGE>
CRAIN INDUSTRIES, INC.
INDEX TO EXHIBITS
EXHIBITS
Exhibit 20.32 First Amendment to Credit Agreement, dated as of March 22, 1996,
among Crain Industries, Inc., Texas Commerce Bank National
Association, as agent, for itself and the other lenders party
to the agreement.
Exhibit 27.1 Financial Data Schedule of Crain Industries, Inc.
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
March 22, 1996, is among CRAIN INDUSTRIES, INC., a Delaware corporation
("Borrower"), each of the banks or other lending institutions which is or may
from time to time become a signatory thereto or any successor or assign
thereof (individually, a "Bank" and collectively, the "Banks"), TEXAS COMMERCE
BANK NATIONAL ASSOCIATION, a national banking association, as an issuing bank
(in such capacity, together with its successors, any other Banks or any of
their respective Affiliates acting in such capacity, an "Issuing Bank") and as
administrative agent for itself, the Issuing Banks and the other Banks (in
such capacity, together with its successors in such capacity, the "Agent").
RECITALS:
A. Borrower, the Agent, the Issuing Banks and the Banks have entered
into that certain Credit Agreement dated as of August 29, 1995 (such Credit
Agreement as the same may be amended or otherwise modified is hereinafter
referred to as the "Agreement").
B. Borrower has advised the Agent that it desires to acquire pursuant
to that certain Stock Purchase Agreement among Capital Foam Products, Inc., a
New Jersey corporation ("Capital Foam"), Bart Krupp and the Borrower (the
"Stock Purchase Agreement") all of the issued and outstanding stock of Capital
Foam for an aggregate purchase price not to exceed $7,800,000.00 (the
"Acquisition"), and has requested that the Required Banks consent to such
Acquisition.
C. Pursuant to Section 10.13 of the Agreement, the Borrower has also
given the Agent prior written notice that it has elected to change its fiscal
year to a calendar year.
D. Borrower, the Agent, the Issuing Banks and the Banks now desire to
enter into this Amendment to evidence the Required Banks' consent to the
Acquisition and to amend the Agreement to reflect the change in the Borrower's
fiscal year and as otherwise herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1. Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as set
forth in the Agreement, as amended hereby.
ARTICLE II
Amendments
Section 2.1. Amendment to Sections 11.1, 11.2, 11.3 and 11.4.
Effective as of the date hereof, Sections 11.1, 11.2, 11.3 and 11.4 of the
Agreement are hereby amended in their entirety to read as follows:
Section 11.1 Interest Coverage Ratio. The Borrower will not permit its
Interest Coverage Ratio, calculated quarterly (beginning December 31, 1995)
for the four fiscal quarters of Borrower ending as of the last day of each of
the fiscal quarters of each fiscal year set forth below, to be less than the
ratio set forth opposite each such fiscal year below. For the purposes of
determining the Interest Coverage Ratio for the first two fiscal quarters of
Borrower following the Closing Date, Consolidated EBITDA for the fiscal
quarters ending in June 1995 and September 1995 shall be deemed to be
$6,300,000 for each such quarter. The Interest Coverage Ratio for the four
quarters ending in December 1995 shall be calculated using (i) the deemed
amounts of Consolidated EBITDA for the quarters ending in June 1995 and
September 1995 and the actual amount of Consolidated EBITDA for the fiscal
quarter ending in December 1995 multiplied by two, and (ii) the actual
annualized amount of Interest Expense for the quarter or quarters then ended.
QUARTERS ENDING DURING FISCAL YEAR INTEREST COVERAGE
---------------------------------- -----------------
1996 1.40 to 1.0
1997 1.60 to 1.0
1998 and thereafter 1.75 to 1.0
Section 11.2 Consolidated Net Worth. The Borrower will maintain
Consolidated Net Worth in an amount not less than the sum of (i) $20,000,000,
plus (ii) 50% of the Consolidated Net Income (to the extent positive) of
Borrower for each fiscal year ending after December 31, 1995 to the extent
that such fiscal year has been completed (which shall include for the current
fiscal year, the year-to-date Consolidated Net Income for such fiscal year),
plus (iii) 75% of the net proceeds of any Permitted Issuance, calculated
quarterly (beginning December 31, 1995) as of the last day of each March,
June, September and December.
Section 11.3 Maintenance of Consolidated EBITDA. The Borrower will not
permit Consolidated EBITDA for the Borrower and its Subsidiaries calculated as
of the last day of each fiscal quarter of Borrower set forth below for the
four fiscal quarters then ended to be less than the amount set forth opposite
each such fiscal quarter. Consolidated EBITDA of the Borrower and its
Subsidiaries for the fiscal quarters ending in June 1995 and September 1995
shall be deemed to be $6,300,000 for each such quarter. Consolidated EBITDA
for the four fiscal quarters ending in December 1995 shall be calculated using
the deemed amounts of Consolidated EBITDA for the quarters ending in June 1995
and September 1995 and the actual amount of Consolidated EBITDA for the fiscal
quarter ending in December 1995 multiplied by two.
QUARTER ENDING AMOUNT
-------------------- ----------
1995 December 20,000,000
1996 March 20,800,000
June 21,800,000
September 22,300,000
December 22,850,000
1997 March 23,400,000
June 23,950,000
September 24,500,000
December 25,000,000
1998 March 25,500,000
June 26,000,000
September 26,500,000
December 27,125,000
1999 March 27,750,000
June 28,375,000
September 29,000,000
December 29,625,000
2000 March 30,250,000
June 30,875,000
September 31,500,000
Section 11.4 Capital Expenditures. The Borrower will not make or
commit to make any Capital Expenditures, except for the expenditures in the
ordinary course of business not exceeding, in the aggregate for the Borrower
and its Subsidiaries during any fiscal year of the Borrower set forth below,
the amount set forth opposite such fiscal year, provided that 100% of any
amount not used in any fiscal year may be carried forward only into the next
succeeding fiscal year:
FISCAL YEAR AMOUNT
----------- -----------
1996 $12,400,000
1997 $ 8,000,000
1998 $ 7,000,000
1999 and thereafter $ 6,500,000
ARTICLE III
Conditions Precedent
Section 3.1. Conditions. The effectiveness of this Amendment is subject to
the satisfaction of the following conditions precedent:
(a) The Agent shall have received all of the following, each dated (unless
otherwise indicated) the date of this Amendment, in form and substance
satisfactory to the Agent:
(1) Resolutions. Resolutions of the Board of Directors of Borrower
certified by its Secretary or an Assistant Secretary which authorize
the execution, delivery, and performance by Borrower of this
Amendment and the other Loan Documents to which Borrower is or is to
be a party hereunder;
(2) Incumbency Certificate. A certificate of incumbency certified by the
Secretary or an Assistant Secretary of Borrower certifying the names
of the officers of Borrower authorized to sign this Amendment and
each of the other Loan Documents to which Borrower is or is to be a
party hereunder (including the certificates contemplated herein)
together with specimen signatures of such officers;
(3) Additional Information. The Agent shall have received such
additional documents, instruments and information as the Agent or
its legal counsel, Winstead Sechrest & Minick P.C., may reasonably
request; and
(b) The representations and warranties contained herein and in all other
Loan Documents, as amended hereby, shall be true and correct as of the
date hereof as if made on the date hereof, except for those
representations and warranties that are expressly made as of a specific
date.
(c) No Default shall have occurred and be continuing.
(d) All corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments, and other
legal matters incident thereto shall be reasonably satisfactory to the
Agent and its legal counsel, Winstead Sechrest & Minick P.C.
ARTICLE IV
Consents, Ratifications, Representations and Warranties
Section 4.1. Consents. Sections 10.3 and 10.5 of the Credit Agreement
prohibit the Borrower from consummating the Acquisition without the consent of
the Required Banks. The Required Banks hereby consent to the Acquisition by
the Borrower upon the terms set forth in the Recitals hereto and agree that
the consummation of the Acquisition upon such terms shall not constitute an
Event of Default under Section 10.3 or 10.5 of the Agreement. The Required
Banks hereby further acknowledge and agree that in connection with the change
of the Borrower's fiscal year to the calendar year as described in the
Recitals hereto, the Borrower shall not be required to deliver quarterly
financial statements or a Certificate of No Default as required by subsections
9.1 (b) and (c) of the Agreement for the quarter ending February 29, 1996, but
instead shall be required to deliver quarterly financial statements and
Certificates of No Default for each of the quarters ending December 31, 1995,
March 31, 1996 and each fiscal quarter of Borrower thereafter.
Section 4.2. Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and other Loan Documents
are ratified and confirmed and shall continue in full force and effect.
Borrower, the Agent, the Banks and the Issuing Banks agree that the Agreement
as amended hereby and the other Loan Documents shall continue to be legal,
valid, binding and enforceable in accordance with their respective terms.
Section 4.3. Representations and Warranties. Borrower hereby
represents and warrants to the Agent, the Banks and the Issuing Banks that (i)
the execution, delivery and performance of this Amendment and any and all
other Loan Documents executed and/or delivered in connection herewith have
been authorized by all requisite corporate action on the part of Borrower and
will not violate the articles of incorporation or bylaws of Borrower, (ii) the
representations and warranties contained in the Agreement, as amended hereby,
and in each other Loan Document are true and correct on and as of the date
hereof as though made on and as of the date hereof, (iii) no Default has
occurred and is continuing, and (iv) Borrower is in full compliance with all
covenants and agreements contained in the Agreement as amended hereby and the
other Loan Documents to which it is a party.
ARTICLE V
Miscellaneous
Section 5.1. Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other Loan
Document furnished in connection with this Amendment shall survive the
execution and delivery of this Amendment and the other Loan Documents, and no
investigation by the Agent, any Bank, any Issuing Bank or any closing shall
affect the representations and warranties or the right of the Agent, the Banks
and the Issuing Banks to rely upon them.
Section 5.2. Reference to Agreement. Each of the Loan Documents,
including the Agreement and any and all other agreements, documents, or
instruments now or hereafter executed and delivered pursuant to the terms
hereof or pursuant to the terms of the Agreement as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Agreement shall
mean a reference to the Agreement as amended hereby.
Section 5.3. Expenses of the Agent. As provided in the Agreement,
Borrower agrees to pay on demand all reasonable costs and expenses incurred by
the Agent in connection with the preparation, negotiation, and execution of
this Amendment and the other Loan Documents executed pursuant hereto and any
and all amendments, modification, and supplements thereto, including without
limitation the costs and reasonable fees of the Agent's legal counsel, and all
costs and expenses incurred by the Agent, the Banks and the Issuing Banks in
connection with the enforcement or preservation of any rights under the
Agreement, as amended hereby, or any other Loan Document, including without
limitation the costs and reasonable fees of legal counsel for the Agent and
the Issuing Banks and at any time following and during the continuance of
the Event of Default, of one legal counsel to each Bank.
Section 5.4. Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Amendment and the effect thereof
shall be confined to the provision so held to be invalid or unenforceable.
Section 5.5. Applicable Law. This Amendment and all other Loan
Documents executed pursuant hereto shall be deemed to have been made and to be
performable in Dallas, Dallas County, Texas and shall be governed by and
contrued in accordance with the laws of the State of Texas.
Section 5.6. Successors and Assigns. This Amendment is binding upon
and shall inure to the benefit of the Agent, the Banks, the Issuing Banks and
Borrower and their respective successors and assigns, except Borrower may not
assign or transfer any of its rights or obligations hereunder without the
prior written consent of the Agent and all of the Banks.
Section 5.7. Counterparts. This Amendment may be executed in one or
more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the
same instrument.
Section 5.8. Effect of Waiver. No consent or waiver, express or
implied, by the Agent and/or any of the Banks to or for any breach of or
deviation from any covenant, condition or duty by Borrower or any Obligated
Party shall be deemed a consent or waiver to or any other breach of the same
or any other covenant, condition or duty.
Section 5.9. Headings. The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 5.10 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER
INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION
WITH THIS AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES
HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
BORROWER:
CRAIN INDUSTRIES, INC.
By: /s/ James G. Powers
Name: James G. Powers
Title: Vice President, Chief Financial Officer
AGENT:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as agent
By: /s/ Michael J. Lister
Name: Michael J. Lister
Title: Vice President
ISSUING BANK:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ Michael J. Lister
Name: Michael J. Lister
Title: Vice President
BANKS:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ Michael J. Lister
Name: Michael J. Lister
Title: Vice President
FIRST INTERESTATE BANK OF CALIFORNIA
By: /s/ Charles C. Warner
Name: Charles C. Warner
Title: Vice President
NBD BANK
By: /s/ Larry L. Schuster
Name: Larry L. Schuster
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/Bianca Hemmen
Name: Bianca Hemmen
Title: Senior Vice President
HELLER FINANCIAL, INC.
By: /s/Kelli J. O'Connell
Name: Kelli J. O'Connell
Title: Assistant Vice President
THE BANK OF NEW YORK
By: /s/John C. Lambert
Name: John C. Lambert
Title: Vice President
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/Christopher J. Speltz
Name: Christopher J. Speltz
Title: Vice President
The undersigned Guarantor hereby consents and agrees to this Amendment and
agrees that the Subsidiary Guaranty shall remain in full force and effect and
shall continue to be the legal, valid and binding obligation of such Guarantor
enforceable against such guarantor in accordance with its terms.
GUARANTOR:
CRAIN AERO, INC.
By: /s/James G. Powers
Name: James G. Powers
Title: Vice President, Chief Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
financial statements contained in the body of the accompanying Form 10-Q and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<CIK> 0001000458
<NAME> CRAIN INDUSTRIES, INC.
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> Mar-31-1996
<CASH> 1,782
<SECURITIES> 0
<RECEIVABLES> 39,878
<ALLOWANCES> 4,061
<INVENTORY> 32,883
<CURRENT-ASSETS> 71,708
<PP&E> 46,077
<DEPRECIATION> 3,674
<TOTAL-ASSETS> 182,811
<CURRENT-LIABILITIES> 39,856
<BONDS> 114,588
0
0
<COMMON> 0
<OTHER-SE> 23,750
<TOTAL-LIABILITY-AND-EQUITY> 182,811
<SALES> 70,242
<TOTAL-REVENUES> 70,242
<CGS> 56,225
<TOTAL-COSTS> 66,358
<OTHER-EXPENSES> 408
<LOSS-PROVISION> 330
<INTEREST-EXPENSE> 3,969
<INCOME-PRETAX> (493)
<INCOME-TAX> 39
<INCOME-CONTINUING> (532)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (532)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
