<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended January 3, 1998
--------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from to
-------------- -----------------
Commission File Number 0-23161
---------------------------------------------------------
TROPICAL SPORTSWEAR INT'L CORPORATION
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-3424305
- --------------------------------------- -----------------------------
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
4902 W. Waters Avenue Tampa, FL 33634-1302
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 249-4900
-----------------------------
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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 the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
As of January 30, 1998 there were 7,600,000 shares of the registrant's Common
Stock outstanding.
1
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TROPICAL SPORTSWEAR INT'L CORPORATION
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II OTHER INFORMATION
Item 1 Legal Proceedings 10
Item 2 Changes in Securities and Use of Proceeds 10
Item 3 Defaults Upon Senior Securities 11
Item 4 Submission of Matters to a Vote of Security Holders 11
Item 5 Other Information 11
Item 6 Exhibits and Reports on Form 8-K 11
</TABLE>
2
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TROPICAL SPORTSWEAR INT'L CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOURTEEN THIRTEEN
WEEKS ENDED WEEKS ENDED
JANUARY 3, DECEMBER 28,
1998 1996
-------------------------------
<S> <C> <C>
Net sales $ 35,094 $ 30,727
Cost of goods sold 27,024 23,982
-------- --------
Gross profit 8,070 6,745
Selling, general and administrative expenses 5,341 4,471
-------- --------
Operating income 2,729 2,274
Other expense:
Interest 447 648
Other, net 202 185
--------- --------
649 833
--------- --------
Income before income taxes 2,080 1,441
Provision for income taxes 775 522
--------- --------
Net income $ 1,305 $ 919
========= ========
Net income per common share (basic and diluted) $ 0.18 $ 0.15
========= ========
</TABLE>
See accompanying notes.
3
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TROPICAL SPORTSWEAR INT'L CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JANUARY 3, SEPTEMBER 27,
1998 1997
---------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 96 $ 116
Accounts receivable 24,565 24,981
Inventories 25,332 21,351
Deferred income taxes 1,594 1,495
Prepaid expenses 162 812
----------- -----------
Total current assets 51,749 48,755
Property and equipment, net 20,042 20,283
Other assets 611 620
----------- -----------
Total assets $ 72,402 $ 69,658
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,398 $ 12,828
Accrued expenses 1,698 2,322
Accrued incentive compensation 567 1,934
Income taxes payable 831 102
Current portion of long-term debt and capital leases 1,279 1,335
----------- -----------
Total current liabilities 13,773 18,521
Long-term debt 16,294 23,442
Obligations under capital leases 525 613
Deferred income taxes 431 431
Shareholders' equity:
Preferred stock, $100 par value; 10,000,000 shares
authorized; 38,630 shares issued and outstanding at
September 27, 1997 --- 3,863
Common stock, $.01 par value; 50,000,000 shares authorized;
7,600,000 and 6,000,000 shares issued and outstanding
at January 3, 1998 and September 27, 1997, respectively 76 60
Additional paid in capital 17,270 ---
Retained earnings 24,033 22,728
----------- -----------
Total shareholders' equity 41,379 26,651
----------- -----------
Total liabilities and shareholders' equity $ 72,402 $ 69,658
=========== ===========
</TABLE>
See accompanying notes.
4
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TROPICAL SPORTSWEAR INT'L CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOURTEEN THIRTEEN
WEEKS ENDED WEEKS ENDED
JANUARY 3, DECEMBER 28,
1998 1996
-------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,305 $ 919
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 637 433
Other, net (36) 30
Changes in operating assets and liabilities:
Accounts receivable 416 (4,728)
Inventories (3,981) (1,232)
Accounts payable (3,430) (3,600)
Accrued incentive compensation (1,367) (1,008)
Other, net 764 653
---------- ----------
Net cash used by operating activities (5,692) (8,533)
INVESTING ACTIVITIES
Capital expenditures (482) (3,559)
Other, net --- 3
---------- ----------
Net cash used by investing activities (482) (3,556)
FINANCING ACTIVITIES
Proceeds of long-term debt --- 2,127
Proceeds from sale of common stock 17,286 ---
Retirement of preferred stock (3,863) ---
Principal payments of long-term debt and capital leases (321) (877)
Net change in long-term revolving credit line borrowings (6,948) 10,920
---------- ----------
Net cash provided by financing activities 6,154 12,170
---------- ----------
Net increase (decrease) in cash (20) 81
Cash at beginning of period 116 261
---------- ----------
Cash at end of period $ 96 $ 342
========== ==========
</TABLE>
See accompanying notes.
5
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TROPICAL SPORTSWEAR INT'L CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JANUARY 3, 1997, SEPTEMBER 27, 1997 and DECEMBER 28, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Tropical Sportswear Int'l Corporation (the "Company") have been prepared in
accordance with the instructions for Form 10-Q and, therefore, do not include
all information and footnotes required by generally accepted accounting
principles for complete financial statements. The unaudited condensed
consolidated financial statements should be read in conjunction with the
audited financial statements and related notes included in the Company's Annual
Report on Form 10-K for the year ended September 27, 1997. In the opinion of
management, the unaudited condensed consolidated financial statements contain
all necessary adjustments (which include only normal, recurring adjustments)
for a fair presentation for the interim period presented. Operating results for
the fourteen weeks ended January 3, 1998 are not necessarily indicative of
results that may be expected for the entire fiscal year ending October 3, 1998.
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards Number 128, Earnings per Share. Statement 128 replaced the
previously reported primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants, and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share. All earnings per share amounts for
all periods have been presented to conform to the Statement 128 requirements.
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
January 3, September 27,
1998 1997
------------------------------
<S> <C> <C>
Raw materials $ 2,591 $ 2,255
Work in process 3,338 5,617
Finished goods 19,403 13,479
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$25,332 $21,351
======= =======
</TABLE>
3. DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
January 3, September 27,
1998 1997
------------------------------
<S> <C> <C>
Revolving credit line $ 5,188 $12,135
Equipment loan facility 2,188 2,354
Real estate loan 9,722 9,754
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17,098 24,243
Less current maturities 804 801
------- -------
$16,294 $23,442
======= =======
</TABLE>
In January 1998, the expiration date of the Company's revolving credit line and
equipment loan facility was extended to February 1, 1999. Management is
currently negotiating a renewal or replacement of this facility.
6
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4. SHAREHOLDERS' EQUITY
The Company completed an initial public offering (the "Offering") on October
28, 1997. The Company sold 1,600,000 shares of its Common Stock at $12.00 per
share and received net proceeds of $17,286 after deducting underwriters'
discounts and offering expenses. Proceeds from the Offering were used to retire
existing Preferred Stock, reduce amounts outstanding under the Company's
revolving credit facility and for other working capital purposes.
5. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
Fourteen Thirteen
weeks ended weeks ended
January 3, December 28,
1998 1996
----------------------------
<S> <C> <C>
Numerator for basic and diluted earnings per share:
Net income $ 1,305 $ 919
----------- -----------
Denominator for basic earnings per share - weighted
average shares of common stock outstanding 7,094,000 6,000,000
Effect of dilutive stock options using the treasury stock method 6,600 15,000
----------- -----------
Denominator for diluted earnings per share 7,100,600 6,015,000
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Earnings per share - basic and diluted $ 0.18 $ 0.15
----------- -----------
</TABLE>
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected items in
the Company's consolidated statements of income expressed as a percentage of
net sales:
<TABLE>
<CAPTION>
Fourteen Thirteen
weeks ended weeks ended
January 3, December 28,
1998 1996
------------------------------
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of goods sold 77.0 78.0
------ ------
Gross profit 23.0 22.0
Selling, general and administrative expenses 15.2 14.6
------ ------
Operating income 7.8 7.4
Interest expense 1.3 2.1
Other, net 0.6 0.6
------ ------
Income before income taxes 5.9 4.7
Provision for income taxes 2.2 1.7
------ ------
Net income 3.7% 3.0%
====== ======
</TABLE>
Net Sales. Net sales for the first quarter of Fiscal 1998 were $35.1
million, a 14.2% increase over the first quarter of Fiscal 1997. This is
primarily due to a 12% increase in unit shipments and a 2% increase in the
average selling price per unit due to a change in the mix of products sold.
Additionally, the volume of returns and sales allowances decreased from prior
year levels.
Gross Profit. Gross profit for the first quarter of Fiscal 1998 was
$8.1 million, or 23.0% of net sales, as compared with $6.7 million, or 22.0% of
net sales, for the comparable prior-year quarter. This resulted from the change
in product mix towards higher-margin styles and the decrease in returns and
sales allowances.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $5.3 million, or 15.2% of net sales for the first
quarter of Fiscal 1998 as compared to $4.5 million, or 14.6% of net sales for
the prior year's first quarter. In addition to the higher sales and
distribution costs driven by the increased sales volume, these expenses
increased as a percentage of sales due to higher levels of marketing and
promotional expenditures, additional facilities maintenance, and increased
labor in the distribution area.
Interest Expense. Interest expense of $447,000 for the first quarter
of Fiscal 1998 represents a 31% decrease from the $648,000 for the first
quarter of Fiscal 1997. The decrease was due to lower average outstanding
borrowings. The net proceeds from the Company's October 1997 Initial Public
Offering were partially used to pay down the then outstanding balance on the
revolving credit facility.
Income Taxes. The Company's effective income tax rate for the first
quarter of Fiscal 1998 was 37.3% as compared with 36.2% in the comparable
period in Fiscal 1997. These rates are based on the Company's expected
effective annual tax rate. The increase is due to the Company receiving the
remaining benefit, in Fiscal 1997, of previously non-deductible losses from a
foreign subsidiary. Additionally, in Fiscal 1998, more of the Company's income
is expected to be taxed at a higher statutory rate.
Net Income. As a result of the above factors, net income for the first
quarter of Fiscal 1998 was $1.3 million, or 3.7% of net sales, as compared to
$919,000, or 3.0% of net sales, for the comparable prior-year quarter.
8
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LIQUIDITY AND CAPITAL RESOURCES
On January 3, 1998 the Company had an additional $25.5 million in borrowings
available under its revolving credit line. In January 1998, the expiration date
of the revolving credit line and equipment loan facility was extended to
February 1, 1999. Management is currently negotiating a renewal or replacement
of this facility.
Effective February 1, 1998, the Company negotiated a reduction in the interest
rate applicable to its real estate loan. The loan now bears annual interest at
7.38%, down 1.5% from the previous rate of 8.88%. The new rate is fixed through
July 18, 2002, at which time the rate will be adjusted in accordance with the
provisions of the loan agreement.
On October 28, 1997 the Company completed an initial public offering of its
common stock, which yielded net proceeds of $17,286. The Company used $3,863 of
the proceeds to retire its Preferred Stock with the remainder used to reduce
amounts outstanding under its revolving credit facility and as working capital.
During the quarter ended January 3, 1998, the Company used $5.7 million of cash
in its operating activities, primarily due to a seasonal increase in
inventories of $4.0 million and a seasonal decrease in accounts payable of $3.4
million, which offset the $1.3 million in net income.
Capital expenditures totaled $500,000 for the first quarter of Fiscal 1998 and
are expected to approximate $7.0 million for the entire fiscal year. During
Fiscal 1998, the Company plans to spend up to $5.0 million to upgrade or
replace certain of its existing computer systems, computer hardware and
software, and for consulting and training related to new systems. See "Factors
Affecting the Company's Business and Prospects."
The Company believes that its existing working capital, credit facility, and
internally generated funds are adequate for its working capital needs through
the coming year.
FACTORS AFFECTING THE COMPANY'S BUSINESS AND PROSPECTS
The Company cautions readers that various factors could cause the actual
results of the Company to differ materially from those indicated by
forward-looking statements made from time to time in news releases, reports,
proxy statements, registration statements and other written communications
(including the preceding sections of the Management's Discussion and Analysis
of Financial Condition and Results of Operations), as well as oral statements
made from time to time by representatives of the Company. Except for historical
information, matters discussed in such oral and written communications are
forward-looking statements that involve risks and uncertainties, including, but
not limited to, economic and business conditions in the U.S. and abroad; the
level of demand for apparel products and success of planned marketing programs;
the intensity of competition and the pricing pressures that may result; changes
in labor and import and export regulations; the ability of the Company to
timely and effectively manage production levels and sourcing; the ability of
the Company to access the credit market to finance capital expenditures; and
currency fluctuations.
The new or upgraded management information systems which the Company will be
implementing, among other things, will address problems associated with the
fact that certain of the Company's existing systems were designed and developed
without considering the impact of the upcoming change in the century and,
therefore, use only two digits to identify the year in the date field (the
"Year 2000 problem"). Although the Company does not intend to cease operations
of its existing systems until the new or upgraded systems are functional, if
the Company were to encounter unforeseen difficulties in implementing these new
or upgraded computer systems, such difficulties could have a material adverse
affect on the Company's business and results of operations. The Year 2000
problem impacts the Company's main operating system which includes subsystems
related to customer analysis, order processing, planning, procurement,
production, and sales. The Company plans to have all existing systems Year 2000
compliant by the first quarter of Fiscal 1999 and plans to spend up to $500,000
for this portion of its systems upgrade. The Company is in the process of
assessing the impact of third parties' Year 2000 issues on its operations.
9
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PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
On March 21, 1997, Levi Strauss & Co. ("Levi") brought suit against the Company
in U.S. District Court for the Northern District of California alleging, among
other things, that the Company's Flyers(TM) trademark and certain trade dress
used in the labeling and packaging of the Company's Flyers(TM) and Bay to
Bay(R) products infringe upon certain of plaintiff's proprietary trademark and
trade dress rights in violation of the federal Lanham Act and California law.
On December 22, 1997, Levi amended its complaint to allege that certain trade
dress used in the labeling and packaging of the Company licensed Bill Blass(R)
brand dress slack also infringes upon certain of plaintiff's proprietary
trademark and trade dress rights. The complaint seeks injunctive relief, as
well as treble damages and attorneys' fees. On December 29, 1997, the Company
filed counterclaims against Levi alleging federal Lanham Act and state law
violations relating to Levi's Dockers(R) labels. Although the outcome of the
litigation cannot be determined at this time and the Company would consider
reasonable settlement opportunities, the Company currently intends to
vigorously defend against such allegations and pursue its counterclaims.
On July 3, 1997, Out-of-Mexico Apparel, Ltd. brought suit against the Company
in California Superior Court for, among other things, breach of contract,
breach of an implied covenant of good faith and fair dealing, and violation of
the California Unfair Business Practices Act. The complaint alleges that the
Company entered into contracts for the manufacture of apparel with certain
manufacturers in contravention of a customer non-disclosure and
non-circumvention agreement between Out-of-Mexico Apparel, Ltd. and the
Company. The complaint seeks compensatory damages and prejudgment interest,
punitive damages and the costs of suit. Although the outcome of the litigation
cannot be determined at this time and the Company would consider reasonable
settlement opportunities, the Company intends to vigorously defend against such
allegations.
The Company is not involved in any other legal proceedings which the Company
believes could reasonably be expected to have a material adverse effect on the
Company's business or results of operations.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
The effective date of the Company's first registration statement filed under
the Securities Act of 1933, as amended, was October 27, 1997, and the
Commission file number assigned to said registration statement was 333-33729.
The offering date was October 28, 1997, and the managing underwriters were
Prudential Securities Incorporated and Oppenheimer & Co., Inc. Common Stock was
the only class of securities registered.
The Company registered and sold 1,600,000 shares in the offering, and the
aggregate price for such shares was $19,200,000. The selling shareholders
registered 3,000,000 shares and sold 2,750,000 shares (including 350,000 shares
pursuant to the over-allotment option granted to the underwriters). The
aggregate price to the selling shareholders without the over-allotment was
$28,800,000 and with the over-allotment was $33,000,000.
Expenses incurred by the Company from the effective date of the Securities Act
registration statement to January 3, 1998 include estimated offering expenses
of $570,000 and the underwriters' discount of $1,344,000. No payments were made
to directors, officers, general partners of the Company or their associates, to
persons owning ten percent or more of any class of equity securities of the
Company, or to affiliates of the Company.
The net offering proceeds to the Company after deducting the expenses described
in the preceding paragraph were $17,286,000.
10
<PAGE> 11
From the effective date of the Securities Act registration statement to January
3, 1998, none of the net proceeds from the offering were used for construction
of plant, building and facilities; purchase and installation of machinery and
equipment; purchase of real estate; or acquisition of other businesses. Of the
net proceeds to the Company, $3,863,000 was used to redeem outstanding shares
of preferred stock with the remainder used to reduce amounts outstanding under
its revolving credit facility and as working capital. No payments were made to
directors, officers, general partners of the Company or their associates, to
persons owning ten percent or more of any class of equity securities of the
Company, or to affiliates of the Company.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote during the fourteen weeks
ended January 3, 1998
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C>
(a) Exhibits filed herewith
Exhibit 10.1.1 Amendment and Note Modification Agreement, dated November 5, 1997 by and between
Tropical Sportswear Int'l Corporation and Fleet Capital Corporation
Exhibit 10.1.2 Amendment and Note Modification Agreement, dated January 22, 1998 by and between
Tropical Sportswear Int'l Corporation and Fleet Capital Corporation
Exhibit 10.2.1 Amendment to Construction and Term Loan Agreement, dated as of February 1, 1998, by and
between Tropical Sportswear Int'l Corporation and SouthTrust Bank of Alabama, National
Association.
Exhibit 27.3 Financial data schedule as of January 3, 1998 (for SEC
use only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
fourteen weeks ended January 3, 1998
</TABLE>
11
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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.
TROPICAL SPORTSWEAR INT'L CORPORATION
----------------------------------------
(Registrant)
/s/ Michael Kagan
----------------------------------------
Michael Kagan
Executive Vice President,
Chief Financial Officer,
and Secretary
(in the dual capacity of duly
authorized officer and
principal accounting officer)
February 10, 1998
12
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EXHIBIT 10.1.1
AMENDMENT AND NOTE MODIFICATION AGREEMENT
November 5, 1997
Tropical Sportswear Int'l Corporation
4902 West Waters
Tampa, Florida 33634-1302
Gentlemen:
Reference is made to (i) that certain Loan and Security Agreement dated
September 28, 1994 (as at any time amended, the "Loan Agreement"), between
Fleet Capital Corporation, a Rhode Island corporation, as successor to Shawmut
Capital Corporation (together with its successors and assigns, "Lender"), and
Tropical Sportswear International Corporation ("TSI"), a Florida corporation;
and (ii) that certain Master Equipment Note dated September 28, 1994, in the
original principal amount of $5,000,000 (as at any time amended or modified,
the "Master Note"), by TSI in favor of Lender. Capitalized terms used herein
and not otherwise defined herein shall have the meaning ascribed to such terms
in the Loan Agreement.
In connection with the execution of the Loan Agreement, Tropical
Acquisition Company ("TAC") and Apparel International Group, Inc. ("AIG")
executed Continuing Guarantee Agreements (the "Guaranties") to guaranty payment
and performance of TSI's obligations under the Loan Agreement and the other
Loan Documents.
Lender has been advised that TSI, AIG and TAC, have been merged into
Tropical Sportswear Int'l Corporation, a Florida corporation ("TSI/Newco"). On
September 26, 1997, AIG, the sole shareholder of TAC, was merged into
TSI/Newco. Subsequently, on October 23, 1997, TSI and TAC , the sole
shareholder of TSI, were merged into TSI/Newco. TSI/Newco, as the surviving
entity of these mergers, now holds all assets and liabilities of TSI, TAC and
AIG, including all Obligations arising under the Loan Agreement, the Master
Note and the other Loan Documents.
TSI/Newco has requested that Lender extend the date of the Original Term
from September 30, 1997 to October 31, 1998. Lender is willing to extend the
Original Term, subject to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid
each to the other and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
The Loan Agreement is hereby amended by deleting the reference to
"September 30, 1997" that is contained in Section 4.1 of the Loan Agreement and
by substituting in lieu thereof a reference to October 31, 1998."
The Master Note is hereby amended by deleting the reference to
"September 30, 1997" that is contained in paragraphs (b) and (b) (vi) of the
Master Note and by substituting in lieu thereof, in each instance, a reference
to "October 31, 1998."
TSI/Newco hereby ratifies and reaffirms each of the Loan Documents and
all of TSI's covenants, duties, indebtedness and liabilities thereunder.
TSI/Newco hereby acknowledges that it is liable for all Obligations, whether
heretofore or hereafter incurred. TSI/Newco acknowledges and stipulates that
the Loan Agreement, the Master Note and all other Loan Documents are legal,
valid and binding obligations enforceable against TSI/Newco in accordance with
the terms thereof and nothing contained herein, except as expressly provided
herein, shall be deemed to amend or modify any provision of any Loan Document,
all of which shall remain in full force and effect. TSI/Newco hereby
acknowledges that (i) TSI/Newco is
<PAGE> 2
the "Borrower" under the Loan Agreement and the other Loan Documents and (ii)
Lender has a first priority Lien in the Collateral. TSI/Newco hereby grants a
Lien upon the Collateral to Lender as security for the Obligations.
TSI/Newco hereby agrees to take such further actions as Lender shall
reasonably request from time to time in connection herewith to evidence the
amendments set forth herein on the foregoing Mergers.
This Amendment shall be governed by and construed in accordance with the
internal laws of the State of Georgia and shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
This Amendment may be executed in any number of counterparts and by
different parties to this Amendment on separate counterparts, each of which,
when so executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. Any signature delivered by a party by
facsimile transmission shall be deemed to be an original signature hereto.
Very truly yours,
FLEET CAPITAL CORPORATION
By: /S/ Elizabeth L. Waller
-------------------------------
Title: V.P.
-------------------------
Acknowledged and agreed to:
TROPICAL SPORTSWEAR
INT'L CORPORATION
("TSI/Newco")
By: /S/ Sharon L. Perdue
--------------------------------
Title: Sr. V.P. of Finance
-------------------------
[CORPORATE SEAL]
<PAGE> 1
EXHIBIT 10.1.2
AMENDMENT AND NOTE MODIFICATION AGREEMENT
January 22, 1998
Tropical Sportswear Int'l Corporation
4902 West Waters
Tampa, Florida 33634-1302
Gentlemen:
Reference is made to (i) that certain Loan and Security Agreement dated
September 28, 1994, as amended by that certain First Amendment to Loan and
Security Agreement dated May 26, 1995, that certain Second Amendment to Loan
and Security Agreement dated October 1, 1995, that certain Third Amendment to
Loan and Security Agreement dated December 4, 1995, that certain Fourth
Amendment to Loan and Security Agreement dated January 18, 1996, that certain
Fifth Amendment to Loan and Security Agreement dated February 27, 1996, that
certain Sixth Amendment to Loan and Security Agreement dated May 7, 1996, that
certain Seventh Amendment to Loan and Security Agreement dated September 10,
1996 and that certain Eight Amendment to Loan and Security Agreement dated
November 25, 1996, that certain Ninth Amendment to Loan and Security Agreement
dated July 18, 1997, and that certain Amendment and Note Modification Agreement
dated November 5, 1997 (as at any time amended, the "Loan Agreement"), between
Fleet Capital Corporation, a Rhode Island corporation, as successor to Shawmut
Capital Corporation (together with its successors and assigns, "Lender"), and
Tropical Sportswear Int'l Corporation ("Borrower"), a Florida corporation, as
successor to Tropical Sportswear International Corporation; and (ii) that
certain Master Equipment Note dated September 28, 1994, in the original
principal amount of $5,000,000, as amended by that certain First Note
Modification Agreement dated November 25, 1996 and that certain Amendment and
Note Modification Agreement dated November 5, 1997 (as at any time amended or
modified, the "Master Note"), by Borrower in favor of Lender. Capitalized terms
used herein and not otherwise defined herein shall have the meaning ascribed to
such terms in the Loan Agreement.
Borrower has requested that Lender extend the date of the Original Term
from October 31, 1998 to January 31, 1999. Lender is willing to extend the
Original Term, subject to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid
each to the other and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
The Loan Agreement is hereby amended by deleting the reference to
"October 31, 1998" that is contained in Section 4.1 of the Loan Agreement and
by substituting in lieu thereof a reference to "January 31, 1999."
The Master Note is hereby amended by deleting the reference to "October
31, 1998" that is contained in paragraphs (b) and (b) (vi) of the Master Note
and by substituting in lieu thereof, in each instance, a reference to "January
31, 1999."
Borrower hereby ratifies and reaffirms each of the Loan Documents and
all of Borrower's covenants, duties, indebtedness and liabilities thereunder
and acknowledges that it is liable for all Obligations, whether heretofore or
hereafter incurred. Borrower acknowledges and stipulates that the Loan
Agreement, the Master Note and all other Loan Documents are legal, valid and
binding obligations enforceable against Borrower in accordance with the terms
thereof and nothing contained herein, except as expressly provided herein,
shall be deemed to amend or modify any provision of any Loan Document, all of
which shall remain in full force and effect. Borrower hereby agrees to take
such further actions as
<PAGE> 2
Lender shall reasonably request from time to time in connection herewith to
evidence the amendments set forth herein.
To induce Lender to enter into this Amendment, Borrower hereby releases,
acquits and forever discharges Lender, and all officers, directors, agents,
employees, successors and assigns of Lender, from any and all liabilities,
claims, demands, actions or causes or actions of any kind or nature (if there
be any), whether absolute or contingent, disputed or undisputed, at law or in
equity, or known or unknown, that Borrower now has or ever had against Lender
arising under or in connection with any of the Loan Documents or otherwise.
This Amendment shall be governed by and construed in accordance with the
internal laws of the State of Georgia and shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
This Amendment may be executed in any number of counterparts and by
different parties to this Amendment on separate counterparts, each of which,
when so executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. Any signature delivered by a party by
facsimile transmission shall be deemed to be an original signature hereto.
Very truly yours,
FLEET CAPITAL CORPORATION
By:
----------------------------
Title:
--------------------------
Acknowledged and agreed to:
TROPICAL SPORTSWEAR
INT'L CORPORATION
("Borrower")
By: /S/ Sharon L. Perdue
----------------------------
Title: Sr. V.P. of Finance
----------------------
[CORPORATE SEAL]
<PAGE> 1
EXHIBIT 10.2.1
SIXTH AMENDMENT TO
CONSTRUCTION AND TERM LOAN AGREEMENT
This Sixth Amendment to Construction and Term Loan Agreement (this
"Amendment") is executed as of February 1, 1998, by TROPICAL SPORTSWEAR INTL.
CORPORATION, a Florida corporation, as successor-in-interest by merger to
Tropical Sportswear International Corporation ("Borrower"), and SOUTHTRUST
BANK, NATIONAL ASSOCIATION, a national banking association formerly known as
SouthTrust Bank of Alabama, National Association ("Bank"), to amend the
Construction and Term Loan Agreement executed by them on May 10, 1996, as
amended by the First Amendment to Construction and Term Loan Agreement dated as
of May 10, 1996, as further amended by the Second Amendment to Construction and
Term Loan Agreement dated as of July 2, 1996, as further amended by the Third
Amendment to Construction and Term Loan Agreement dated as of September 30,
1996, as further amended by the Fourth Amendment to Construction and Term Loan
Agreement dated as of July 18, 1997 and as further amended by the Fifth
Amendment to Construction and Term Loan Agreement dated as of July 18, 1997 (as
amended to date, the "Agreement").
1. Definitions. Unless otherwise expressly defined in this Amendment,
all terms used in this Amendment have the same meanings ascribed to them in the
Agreement, and the definitions of those terms contained in the Agreement are
incorporated by reference into this Amendment for all purposes.
2. Amendment to Interest Rate. Beginning on February 1, 1998, and
continuing until July 18, 2002, which is the fifth anniversary of the Loan
conversion date, interest shall be fixed at an annual rate of 7.38%, which rate
is equal to 200 basis points above the Bank's five-year "Treasury Constant
Rate" in effect on January 23, 1998. In accordance with the Agreement, the
interest rate shall be adjusted again on July 18, 2002.
3. Amendment to Loan Balance and Payment Schedule. Upon payment of the
scheduled February 1, 1998 Loan installment, the principal balance of the Loan
will be $9,693,292.12. Assuming prompt and full payment of that installment, on
February 1, 1998, the Loan shall be re-amortized in accordance with the
Agreement at the interest rate set forth in Section 2 of this Amendment. The
resulting amortized monthly payment of principal and interest shall be
$81,280.07 through July 1, 1002. On July 18, 2002, the interest rate shall be
adjusted in accordance with the Agreement.
4. Continued Effectiveness. Except as modified by this Amendment, the
Agreement continues in full force and effect in accordance with its terms, and
Borrower and Bank reserve all their respective rights and remedies under the
Agreement.
5. Complete Agreement. This Amendment contains the final, complete, and
exclusive expression of the understanding between the parties regarding the
modification of the Agreement described in this Amendment and supersedes any
prior or contemporaneous agreement or understanding regarding that subject,
oral or written, by either of them.
6. Execution. Borrower and Bank may execute this Amendment in
counterparts. Each executed counterpart will be considered an original
document, and all executed counterparts, together, will constitute the same
agreement. This Amendment will become effective when each party has executed
and delivered to the other party a counterpart of it.
<PAGE> 2
EXECUTED: January 29, 1998.
<TABLE>
<CAPTION>
WITNESSES: TROPICAL SPORTSWEAR
INTL. CORPORATION
<S> <C>
/S/ Beverly Lindstrom By: /S/ Sharon L. Perdue
- -------------------------------------------- ----------------------------------
Name: Beverly Lindstrom Sharon L. Perdue
--------------------------------------- Senior Vice President
/S/ Cheri E. Zieman
- --------------------------------------------
Name: Cheri E. Zieman
---------------------------------------
ATTEST:
By: /S/ Michael Kagan
-----------------------------------------
Michael Kagan, Secretary
SOUTHTRUST BANK, NATIONAL
ASSOCIATION
/S/ Beverly Lindstrom By: /S/ Dean Chakalos
- -------------------------------------------- ---------------------------------
Name: Beverly Lindstrom Name: Dean Chakalos
--------------------------------------- --------------------------
Title: Vice President
--------------------------
/S/ Cheri E. Zieman
- --------------------------------------------
Name: Cheri E. Zieman
---------------------------------------
</TABLE>
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 29th day of
January, 1998, by Sharon L. Perdue, as Senior Vice President of Tropical
Sportswear Intl. Corporation, a Florida Corporation, on behalf of the
corporation. She is personally known to me or produced _______________________
as identification.
/S/ Deborah M. Chartrand
-----------------------------------
Print Name: Deborah M. Chartrand
Notary Public, State at Large
Notarial Seal or Stamp:
STATE OF: Florida
----------------------------
COUNTY OF: Hillsborough
----------------------------
The foregoing instrument was acknowledged before me this 29th day of
January, 1998 by Dean Chakalos, as Vice President of SouthTrust Bank, National
Association, a national banking association, on behalf of the association.
He/She is personally known to me or produced Georgia Drivers License as
identification.
Notary Public Stamp Here
/S/ Deborah M. Chartrand
-----------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE FOURTEEN WEEKS ENDED JANUARY 3, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-27-1997
<PERIOD-START> SEP-28-1997
<PERIOD-END> JAN-03-1998
<CASH> 96
<SECURITIES> 0
<RECEIVABLES> 24,565
<ALLOWANCES> 647
<INVENTORY> 25,332
<CURRENT-ASSETS> 51,749
<PP&E> 25,511
<DEPRECIATION> 5,469
<TOTAL-ASSETS> 72,402
<CURRENT-LIABILITIES> 13,773
<BONDS> 18,098
0
0
<COMMON> 76
<OTHER-SE> 24,033
<TOTAL-LIABILITY-AND-EQUITY> 72,402
<SALES> 35,094
<TOTAL-REVENUES> 35,094
<CGS> 27,024
<TOTAL-COSTS> 27,024
<OTHER-EXPENSES> 5,990
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 447
<INCOME-PRETAX> 2,080
<INCOME-TAX> 775
<INCOME-CONTINUING> 1,305
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,305
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
