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 June 30, 1995
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-22138
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Triangle Pacific Corp.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
94-2998971
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(I.R.S. Employer Identification No.)
16803 Dallas Parkway, Dallas, Texas 75248
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(Address of principal executive offices) (Zip Code)
(214) 931-3000
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(Registrant's telephone number, including area code)
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(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 that 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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
14,663,365 Shares on June 30, 1995
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Statements of Operations
for the six months ended June 30, 1995
and July 1, 1994 and for the three months
ended June 30, 1995 and July 1, 1994 4
Consolidated Balance Sheets
June 30, 1995 and December 30, 1994 5
Consolidated Statements of Cash Flows
for the six months ended June 30, 1995
and July 1, 1994 7
Consolidated Statement of Changes in
Shareholders' Investment for the six months
ended June 30, 1995 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations 13
PART II OTHER INFORMATION 14
SIGNATURES 15
PART I FINANCIAL INFORMATION
Item I. Financial Statements
Triangle Pacific Corp. and Subsidiaries
Consolidated Financial Statements
for the Six Months ended June 30, 1995
The consolidated financial statements included herein have been prepared by
the Company without audit. They contain all adjustments which are, in the
opinion of the management, necessary to a fair presentaton of financial
position and results of operations for the interim periods. The operating
results for the interim periods are not necessarily indicative of results to
be expected for a full year. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and the notes thereto, included in the Company's Form 10-K as of
December 30, 1994.
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share data)
Six Months Ended Three Months Ended
-------------------- --------------------
June 30, July 1, June 30, July 1,
1995 1994 1995 1994
-------- -------- ------- --------
Net sales $ 223,801 $ 197,628 $ 116,609 $ 106,918
-------- -------- -------- --------
Costs and expenses:
Cost of sales 165,062 146,098 85,802 77,471
Selling, general
and administrative 30,861 27,720 15,413 14,607
Amortization of goodwill 760 760 380 380
Interest 9,160 9,522 4,597 4,625
-------- -------- -------- --------
205,843 184,100 106,192 97,083
-------- -------- -------- --------
Income before income taxes 17,958 13,528 10,417 9,835
Provision for income taxes 6,963 5,526 3,956 3,975
-------- -------- -------- --------
Net income $ 10,995 $ 8,002 $ 6,461 $ 5,860
======== ======== ======== ========
Net income per share $ 0.75 $ 0.55 $ 0.44 $ 0.40
======== ======== ======== ========
Weighted average shares
outstanding 14,754 14,657 14,758 14,661
The accompanying notes to consolidated financial statements are an integral
part of these statements.
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 30,
1995 1994
--------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 24,051 $ 24,906
Receivables (net of allowances
of $2,857 and $2,491 respectively) 51,916 43,303
Inventories 74,676 70,900
Prepaid expenses 4,554 3,934
-------- --------
Total current assets 155,197 143,043
-------- --------
Property, plant and equipment
Land 12,003 12,003
Buildings 44,819 43,452
Equipment, furniture and fixtures 82,748 79,568
-------- --------
139,570 135,023
Less: accumulated depreciation 25,565 21,110
-------- --------
114,005 113,913
Other assets:
Goodwill 55,857 56,617
Trademark 29,533 29,933
Other 11,290 13,237
Deferred financing costs 5,994 6,708
-------- --------
Total assets $ 371,876 $ 363,451
======== ========
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(in thousands)
June 30, December 30,
1995 1994
--------- ------------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Current portion of long-term debt $ 1,432 $ 1,527
Accounts payable 18,424 17,723
Accrued liabilities 26,490 28,112
Income taxes payable 1,261 1,327
-------- --------
Total current liabilities 47,607 48,689
-------- --------
Long-term debt, net of current portion 167,683 168,388
-------- --------
Deferred income taxes 38,695 39,480
-------- --------
Total liabilities 253,985 256,557
-------- --------
Shareholders' investment:
Common stock - $.01 par value,
authorized shares - 30,000,000
issued and outstanding shares -
14,663,365 at June 30, 1995 and
14,662,609 at December 30, 1994 147 147
Additional paid-in capital 93,100 93,098
Retained earnings 24,644 13,649
-------- --------
Total shareholders' investment 117,891 106,894
-------- --------
Total liabilities and shareholders' investment $ 371,876 $ 363,451
======== ========
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
--------------------
June 30, July 1,
1995 1994
--------- --------
Cash flows from operating activities:
Net income $ 10,995 $ 8,002
Adjustments:
Depreciation 4,456 3,994
Deferred income taxes (785) (2,609)
Amortization of goodwill and trademark 1,160 1,160
Amortization of deferred financing costs 714 716
Provision for doubtful accounts 379 402
Changes in assets and liabilities:
Receivables (8,993) (8,949)
Inventories (3,776) 1,387
Prepaid expenses (621) (525)
Other assets 168 1,917
Accounts payable 725 4,479
Accrued liabilities (845) 4,110
Accrued liabilities - interest (801) 785
Income taxes payable (66) 4,992
-------- --------
Net cash provided by operating activities 2,710 19,861
-------- --------
Cash flows from investing activities:
Additions to property, plant & equipment (4,547) (6,174)
Construction deposits - (1,852)
Acquisition of Premier Wood Floors - (5,123)
-------- -------
Net cash used in investing activities (4,547) (13,149)
-------- --------
Cash flows from financing activities:
Long-term debt borrowings - 7,000
Long-term debt payments (800) (733)
Exercise of stock options 2 41
Refinancing costs - (14)
Reimbursement of construction deposits 1,780 -
-------- --------
Net cash provided by financing activities 982 6,294
-------- --------
Net increase (decrease) in cash $ (855) $ 13,006
Cash and cash equivalents, beginning of period 24,906 785
-------- --------
Cash and cash equivalents, end of period $ 24,051 $ 13,791
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 9,507 $ 8,412
Income taxes 7,798 146
The accompanying notes to consolidated financial statements are an integral
part of these statements.
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' INVESTMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(in thousands)
Additional
Common Paid-In Retained
Stock Capital Earnings Total
------- ------- --------- -------
Balance,
December 30, 1994 $ 147 $ 93,098 $ 13,649 $106,894
Net income - - 10,995 10,995
Exercise of stock
options - 2 - 2
------- ------- ------- -------
Balance,
June 30, 1995 $ 147 $ 93,100 $ 24,644 $117,891
======= ======= ======= =======
The accompanying notes to consolidated financial statements are an integral
part of this statement.
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -INVENTORIES:
Inventories are valued at the lower of cost or market. The last-in,
first-out (LIFO) method is used for certain lumber inventories and the first-
in, first-out (FIFO) method is used for all other inventories. Inventories
valued by the LIFO method were $22,557,000 at June 30, 1995 and $20,870,000 at
December 30, 1994. Had all inventories been valued by the FIFO method, which
approximates current cost, inventories would have been increased by $1,761,000
at June 30, 1995 and $2,069,000 at December 30, 1994. Raw materials
inventories include purchased parts and supplies to be used in manufactured
products. Work-in-process and finished goods inventories include material,
labor and overhead costs incurred in the manufacturing process. The major
components of inventories are as follows:
June 30, December 30,
1995 1994
-------------------------
(in thousands)
Raw materials $ 37,059 $ 39,092
Work-in-process 4,331 3,640
Finished goods 33,286 28,168
-------- --------
Total $ 74,676 $ 70,900
======== ========
NOTE 2 - LONG-TERM DEBT:
Long-term debt consists of the following:
June 30, December 30,
1995 1994
-------------------------
(in thousands)
Mortgages payable $ 9,115 $ 9,915
Senior Notes, 10 1/2% due 8-1-2003 160,000 160,000
-------- --------
169,115 169,915
Less: Current portion of long-term debt (1,432) (1,527)
-------- --------
$ 167,683 $ 168,388
======== ========
Letters of credit outstanding at June 30, 1995 were $8.3 million and $9.8
million at December 30, 1994 under a facility pursuant to which they can be
renewed or replaced.
Senior Notes
The Senior Notes are senior unsecured obligations of the Company with an
aggregate principal amount of $160 million. The Senior Notes mature on August
1, 2003 and bear interest at an annual rate of 10 1/2%, payable in two equal
semi-annual installments of $8,400,000 each, with each semi-annual period
deemed to have 180 days. The Senior Notes were issued under an Indenture (the
"Indenture") between the Company and a predecessor to Texas Commerce Bank
National Association, as Trustee (the "Trustee"). The Senior Notes rank pari
passu with all present and future senior indebtedness of the Company and
senior to all present and future subordinated indebtedness of the Company.
However, because borrowings under the Credit Facility are secured by inventory
and accounts receivable of the Company and the proceeds thereof, the Senior
Notes are effectively subordinated to such borrowings to the extent of such
security interest.
The Senior Notes are not redeemable prior to August 1, 1998. Thereafter,
the Senior Notes are redeemable at the option of the Company at redemption
prices specified in the Indenture. The Senior Notes are not subject to any
mandatory sinking fund requirements.
Upon a "change of control" (as defined in the Indenture), the Company is
required to offer to purchase all outstanding Senior Notes at 101% of the
principal amount thereof, plus accrued interest to the date of repurchase. In
addition, the Company may be required to offer to purchase the Senior Notes at
100% of the principal amount plus accrued interest with the net cash proceeds
of certain sales or other dispositions of assets.
The Indenture contains covenants which limit, among other things, the
incurrence of additional indebtedness by the Company and its subsidiaries, the
payment of dividends on or the purchase of the capital stock of the Company
("Restricted Payments"), the creation of liens on the assets of the Company
and its subsidiaries, the creation of certain restrictions on the payment of
dividends and other distributions by the Company's subsidiaries, the issuance
of preferred stock by the Company's subsidiaries, and certain mergers, sales
of assets and transactions with affiliates.
Based on the Company's operations through June 30, 1995, the amount of
Restricted Payments that the Company could make under the Indenture was
$20,938,000.
The Indenture specifies a number of events of default including, among
others, the failure to make timely principal and interest payments or to
perform the covenants contained therein. The Indenture contains a cross-
default to other indebtedness of the Company aggregating more than $5,000,000
and certain customary bankruptcy and insolvency defaults. Upon the occurrence
of an event of default under the Indenture, the Trustee or the holders of not
less than 25% in principal amount of the outstanding Senior Notes may declare
all amounts thereunder immediately due and payable, except that such amounts
automatically become immediately due and payable in the event of a bankruptcy
or insolvency default.
Credit Facility:
The Company has entered into the Credit Facility, which provides for up
to $70 million of revolving loans for working capital and general corporate
purposes and for letters of credit. Availability of borrowings under the
Credit Facility is based upon a formula related to inventory and accounts
receivable. At June 30, 1995, the Company had no borrowings under the Credit
Facility and had $61.7 million of borrowing capacity under this facility.
Borrowings under the Credit Facility bear interest at the agent's prime rate
plus 1% (10.0% at June 30, 1995) or, at the Company's option, at certain
alternate floating rates and is secured by a pledge of the Company's inventory
and accounts receivable. The Credit Facility expires on August 4, 1996.
The Credit Facility contains covenants which restrict, among other
things, the incurrence of additional indebtedness and rental obligations by
the Company and its subsidiaries, the payment of dividends and other
distributions in respect of the capital stock of the Company, the creation of
liens on the assets of the Company and its subsidiaries, the creation of
certain restrictions on the payment of dividends and other distributions by
the Company's subsidiaries, the making of investments and capital expenditures
by the Company and its subsidiaries, the creation of new subsidiaries by the
Company, and certain mergers, sales of assets and transactions with
affiliates.
The Credit Facility also contains certain financial covenants relating to
the consolidated financial condition of the Company and its subsidiaries,
including covenants relating to their net worth, the ratio of their earnings
to their fixed charges, the ratio of their earnings to their interest expense,
the ratio of their current assets to their current liabilities, and the ratio
of their indebtedness to their total capitalization. At June 30, 1995, the
Company was in compliance with all financial covenants.
The Credit Facility specifies a number of events of default including,
among others, the failure to make timely payments of principal, fees, and
interest, the failure to perform the covenants contained therein, the failure
of representations and warranties to be true, the occurrence of a "change of
control" (as defined in the Credit Facility, to include, among other things,
the ownership by any person or group of more than 25% (or, in case of The TCW
Group, Inc. and its affiliates, 50%) of the total voting securities of the
Company), and certain impairments of the security for the Credit Facility.
The Credit Facility also contains a cross-default to other indebtedness of the
Company aggregating more than $2,000,000 and certain customary bankruptcy,
insolvency and similar defaults. Upon the occurrence of an event of default
under the Credit Facility, at least three of the lenders holding at least 60%
in amount of the principal indebtedness outstanding under the Credit Facility
may declare all amounts thereunder immediately due and payable, except that
such amounts automatically become immediately due and payable in the event of
certain bankruptcy, insolvency or similar defaults.
The Credit Facility generally prohibits the Company from prepaying the
Senior Notes whether the prepayment would result from the redemption of the
Senior Notes, an offer by the Company to purchase the Senior Notes following a
change of control or a sale or other disposition of assets, or the
acceleration of the due date for payment of the Senior Notes.
Mortgages payable represent primarily various Industrial Revenue Bond
(IRB) notes. The IRB notes vary in interest rate, with several notes dependent
upon the prime rate. At June 30, 1995 and December 30, 1994 the interest
rates ranged up to 9.0%.
These notes are payable through 2001 and are collateralized by the
related underlying assets.
NOTE 3 - INCOME TAXES:
The components of the deferred tax liability and asset are as follows:
June 30, December 30,
1995 1994
------------------------
(in thousands)
Deferred Tax Liability:
Property, plant and equipment $ 22,680 $ 22,511
Trademark 11,607 11,764
Other 8,644 8,527
-------- --------
Total $ 42,931 $ 42,802
======== ========
Deferred Tax Asset:
Other 4,236 3,322
-------- --------
Total $ 4,236 $ 3,322
======== ========
The provision for income taxes consists of the following:
Six Months Ended
--------------------
June 30, July 1,
1995 1994
--------------------
(in thousands)
Current:
Federal $ 6,831 $ 4,497
State and local 856 552
-------- -------
$ 7,687 $ 5,049
======== =======
Deferred:
Federal $ (645) $ 425
State and local (79) 52
-------- -------
$ (724) $ 477
======== =======
Total $ 6,963 $ 5,526
======== =======
The tax provision for the periods ending June 30, 1995 and July 1, 1994
is 38.8% and 40.9% of pre-tax income, respectively. The factors causing the
rate to vary from the U.S. Federal statutory rate are as follows:
Six Months Ended
--------------------
June 30, July 1,
1995 1994
--------------------
(in thousands)
Computed (expected) tax provision $ 6,285 $ 4,733
State and local taxes 772 582
Amortization of goodwill 299 299
Other book to tax differences (net) (393) (88)
------- ------
$ 6,963 $ 5,526
======= ======
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NET SALES
Net sales for the six months ended June 30, 1995 were $223.8 million
compared to $197.6 million for the six months ended July 1, 1994, representing
a 13.2% increase.
Cabinet Division sales were up 28.2% over those of the same period in
1994.
Hardwood Floors sales for the six months ended June 30, 1995 increased
6.8% over the comparable period in 1994.
Net sales for the three months ended June 30, 1995 were $116.6 million
compared to $106.9 million for the three months ended July 1, 1994,
representing a 9.1% increase.
GROSS PROFIT
Gross profit for the six months ended June 30, 1995 amounted to $58.7
million, or 26.3% of net sales, compared to $51.5 million or 26.1% of net
sales in the same period in 1994.
Gross profit for the three months ended June 30, 1995 were $30.8 million
or 26.4% of net sales, compared to $29.4 million or 27.5% of net sales in the
same period in 1994.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses amounted to $30.9 million
for the six months ended June 30, 1995 compared to $27.7 million for the six
months ended July 1, 1994. As a percent of net sales, selling, general and
administrative expenses were 13.8% for the six months ended June 30, 1995,
compared to 14.0% for the same period in 1994.
Selling, general and administrative expenses amounted to $15.4 million or
13.2% of net sales for the three months ended June 30, 1995 compared to $14.6
million or 13.7% of net sales for the three months ended July 1,1994.
OPERATING INCOME
Operating income for the six months ended June 30, 1995 was $27.1 million
compared to $23.1 million for the six months ended July 1, 1994. The
increased operating income in the first six months of 1995 compared to the
same period in 1994 was attributable to higher net sales and improved
operating margins.
Operating income for the three months ended June 30, 1995 was $15.0
million compared to $14.5 million in the same period in 1994.
INTEREST EXPENSE
Interest expense for the six months ended June 30, 1995 was $9.2 million
compared to $9.5 million for the six months ended July 1, 1995.
Interest expense for the three months ended June 30, 1995 was $4.6
million, the same as the three month period ended July 1, 1994.
NET INCOME
Net income for the six months ended June 30, 1995 was $11.0 million or
$0.75 per share compared to $8.0 million or $0.55 per share for the six months
ended July 1, 1994. The 1995 period benefited from higher net sales and
operating income.
Net income for the three months ended June 30, 1995 was $6.5 million or
$0.44 per share compared to $5.9 million or $0.40 per share for the three
months ended July 1, 1994.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1995, cash decreased by $.9 million.
Cash provided from operating activities was $2.7 million and cash received
from the reimbursement of construction deposits was $1.8 million. Cash of
$4.5 million was used for additions to property, plant and equipment and $.8
million for long-term debt payments.
On June 30, 1995, the Company had working capital of $107.6 million or
28.9% of total assets, and $61.7 million of unused bank borrowing capacity.
The Company believes that borrowing availability under the Credit
Facility and cash generated from operations will be adequate to fund working
capital requirements, debt service payments and planned capital expenditures
for the foreseeable future.
During the first six months of 1995 there were declines in several
economic indicators which impact the Company's industry, including single-
family housing starts, sales of existing homes, and the level of consumer
confidence. These trends are cause for concern about the strength of the
economy in the second half of 1995. Management has taken precautionary
measures in the Company's operations to minimize the impact of these trends on
the Company's business.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
Exhibit No.
4.5 - Admendment No. 5 to the Credit Agreement
dated as of June 1, 1995.
27 - Financial Data Schedule for the six month
interim period ended June 30, 1995.
(Submitted only in EDGAR filing to Securities
and Exchange Commission)
b) No reports on Form 8-K have been filed during the quarter
ended June 30, 1995.
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.
TRIANGLE PACIFIC CORP.
Date: August 11, 1995 By: /s/ M. Joseph McHugh
----------------- -----------------------------------
M. Joseph McHugh
President and Chief Operating Officer
(duly authorized officer)
Date: August 11, 1995 By: /s/ Robert J. Symon
----------------- -----------------------------------
Robert J. Symon
Executive Vice President,
Treasurer and Chief Financial Officer
(principal financial and accounting officer)
15
EXHIBIT 4.5
-----------
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT, dated as of June 1, 1995
(herein called this "Amendment"), is entered into by and among TRIANGLE
PACIFIC CORP., a Delaware corporation (herein called the "Borrower"),
the various financial institutions as are or may become parties to the
Credit Agreement referenced below (collectively, the "Lenders"), and THE
BANK OF NOVA SCOTIA, as agent (in such capacity, the "Agent") for the
Lenders. Unless otherwise defined, terms defined in the Credit
Agreement are used herein with the same meaning.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower, the Lenders, the Co-Agent and the Agent
have heretofore entered into a certain Credit Agreement, dated as of
August 4, 1993, as amended by Amendment No. 1 to Credit Agreement dated
as of August 9, 1993, Amendment No. 2 to Credit Agreement dated as of
August 11, 1993, Amendment No. 3 to Credit Agreement dated as of August
13, 1993 and Fourth Amendment to Credit Agreement dated as of December
2, 1994 (such agreement, as so amended, herein called the "Credit
Agreement"); and
WHEREAS, the Borrower and the Lenders now desire to amend the
Credit Agreement in certain respects, as hereinafter provided,
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Borrower, the Lenders, and the Agent
hereby agree as follows:
1. Amendment of Section 1.1. Effective as of the date this
Amendment is effective pursuant to Section 6 hereof, Section 1.1 of the
Credit Agreement is hereby amended as follows:
(i) The definition of "LIBO Rate Margin" is hereby amended to
read in its entirety as follows:
"LIBO Rate Margin" means, with respect to any LIBO Rate
Loan, a per annum rate based on reference to the Leverage
Ratio and Interest Coverage Ratio, in each case as
indicated in the Compliance Certificate most recently
delivered pursuant to clause (d) of Section 7.1.1, equal
to:
(a) 0.875% per annum, if the Leverage Ratio is less than
0.50:1 and the Interest Coverage Ratio is greater
than 4.00:1;
(b) 1.375% per annum, if the Leverage Ratio is less than
0.60:1 and the Interest Coverage Ratio is greater
than 3.00:1 and the foregoing clause (a) does not
apply;
(c) 1.75% per annum, if the Leverage Ratio is less than
0.65:1 and the Interest Coverage Ratio is greater
than 2.75:1 and the foregoing clauses (a) and (b) do
not apply;
(d) 1.875% per annum, if the Leverage Ratio is less than
0.71:1 and the Interest Coverage Ratio is greater
than 2.50:1 and the foregoing clauses (a), (b) and
(c) do not apply; and
(e) 2.375% per annum, if the Leverage Ratio is 0.71 or
greater and the Interest Coverage Ratio is 2.50:1 or
less.
The LIBO Rate Margin shall only be increased or decreased from
the then existing LIBO Rate Margin if each of the Interest
Coverage Ratio and Leverage Ratio (as reflected in the most
recently delivered Compliance Certificate) is contained within
the ranges set forth in the same clause (a), (b), (c), (d) or
(e) above.
(ii) The following definition is hereby added to Section 1.1
of the Credit Agreement immediately preceding the
definition of "Commitment Termination Date":
"Commitment Fee Rate" means, with respect to the
commitment fee set forth in Section 3.3.1, a per annum
rate determined by reference to the Leverage Ratio and
Interest Coverage Ratio, in each case as indicated in the
Compliance Certificate most recently delivered pursuant
to clause (d) of Section 7.1.1, equal to:
(a) 0.25% per annum, if the Leverage Ratio is less than
0.50:1 and the Interest Coverage Ratio is greater
than 4.00:1;
(b) 0.375% per annum, if the Leverage Ratio is less than
0.65:1 and the Interest Coverage Ratio is greater
than 2.75:1 and the foregoing clause (a) does not
apply; and
(c) 0.50% per annum, if the Leverage Ratio is 0.65:1 or
greater and the Interest Coverage Ratio is 2.75:1 or
less.
The Commitment Fee Rate shall only be increased or decreased
from the then existing Commitment Fee Rate if each of the
Interest Coverage Ratio and Leverage Ratio (as reflected in
the most recently delivered Compliance Certificate) is
contained within the ranges set forth in the same clause (a),
(b) or (c) above.
(iii) The following definition is hereby added to Section 1.1
of the Credit Agreement immediately preceding the
definition of "Leverage Ratio":
"Letter of Credit Rate" means, with respect to any Letter
of Credit, a per annum rate based on reference to the
Leverage Ratio and Interest Coverage Ratio, in each case
as indicated in the Compliance Certificate most recently
delivered pursuant to clause (d) of Section 7.1.1, equal
to:
(a) 0.875% per annum, if the Leverage Ratio is less than
0.50:1 and the Interest Coverage Ratio is greater
than 4.00:1;
(b) 1.375% per annum, if the Leverage Ratio is less than
0.60:1 and the Interest Coverage Ratio is greater
than 3.00:1 and the foregoing clause (a) does not
apply;
(c) 1.75% per annum, if the Leverage Ratio is less than
0.65:1 and the Interest Coverage Ratio is greater
than 2.75:1 and the foregoing clauses (a) and (b) do
not apply;
(d) 1.875% per annum, if the Leverage Ratio is less than
0.71:1 and the Interest Coverage Ratio is greater
than 2.50:1 and the foregoing clauses (a), (b) and
(c) do not apply; and
(e) 2.375% per annum, if the Leverage Ratio is 0.71 or
greater and the Interest Coverage Ratio is 2.50:1 or
less.
The Letter of Credit Rate shall only be increased or decreased
from the then existing Letter of Credit Rate if each of the
Interest Coverage Ratio and Leverage Ratio (as reflected in
the most recently delivered Compliance Certificate) is
contained within the ranges set forth in the same clause (a),
(b), (c), (d) or (e) above.
2. Amendment of Section 3.3.1. Effective as of the date this
Amendment is effective pursuant to Section 6 hereof, Section 3.3.1 of
the Credit Agreement is hereby amended by deleting the phrase "1/2 of 1%
per annum" appearing in the first sentence of such Section and inserting
in its place the phrase "the applicable Commitment Fee Rate".
3. Amendment of Section 3.3.3. Effective as of the date this
Amendment is effective pursuant to Section 6 hereof, Section 3.3.3 of
the Credit Agreement is hereby amended by deleting the phrase "2.50% per
annum" appearing in the first sentence of such Section and inserting in
its place the phrase "the applicable Letter of Credit Rate".
4. Removal of Citicorp USA, Inc. as a Lender and as Co-Agent;
Reduction of Revolving Loan Commitment Amount and Reallocation of
Percentages.
(a) On the date of the payment by the Borrower to Citicorp
USA, Inc. ("Citicorp") pursuant to Section 6.B. hereof (such date, the
"Payoff Date"), the Commitments of Citicorp shall terminate, Citicorp
shall cease to be the "Co-Agent" and shall cease to be a "Lender",
Citicorp shall relinquish its rights and be released from its
obligations under the Credit Agreement (except for rights and
obligations under those provisions of the Credit Agreement specified in
Section 10.5 to survive termination thereof with respect to obligations
(contingent or otherwise) existing, or related to or arising out of
events or conditions occurring, while it was a Co-Agent or Lender), and
Citicorp shall deliver to the Agent (for delivery to the Borrower), the
Note then held by Citicorp marked "cancelled." Notwithstanding Section
4.8 of the Credit Agreement, Citicorp shall not be required to purchase
participations from the other Lenders on account of the payment received
by Citicorp from the Borrower in accordance with the Section 6.B. of
this Agreement, and Citicorp shall be entitled to retain such payment.
(b) In addition, on the Payoff Date pursuant to Section
2.2.1 of the Credit Agreement the Revolving Loan Commitment Amount shall
be irrevocably reduced to $70,000,000, and the respective Percentages of
the Lenders shall be adjusted as set forth opposite each Lender's
signature hereto.
5. Representations and Warranties. To induce the Lenders and the
Agent to enter into this Amendment, the Borrower hereby reaffirms, as of
the date hereof, the representations and warranties contained in Article
VI of the Credit Agreement (except to the extent such representations
and warranties relate solely to an earlier date) and additionally
represents and warrants as follows:
(i) The Borrower and each of its Subsidiaries is a corporation
validly organized and existing and in good standing under the
laws of the State or jurisdiction of its incorporation, is
duly qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction where the
failure so to qualify could have a Material Adverse Effect and
has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter
into and perform its Obligations under this Amendment and each
Loan Document to which it is a party and to own and hold under
lease its property and to conduct its business substantially
as currently conducted by it.
(ii) The execution, delivery and performance by the Borrower of
this Amendment are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action,
and do not
(A) contravene the Borrower's Organic Documents;
(B) contravene any contractual restriction, law or
governmental regulation or court decree or order
binding on or affecting the Borrower; or
(C) result in, or require the creation or imposition of,
any Lien on any of the Borrower's properties.
(iii) Except for those which have been received or made, no
authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory
body or other Person is required for the due execution,
delivery or performance by the Borrower of this Amendment.
(iv) This Amendment is the legal, valid and binding obligation of
the Borrower enforceable against the Borrower in accordance
with its terms, subject to the effect of (i) bankruptcy,
insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights and remedies of creditors
generally and (ii) general principles of equity, whether
applied by a court of law or equity.
(v) Except as disclosed by the Borrower to the Agent and the
Lenders pursuant to Section 6.7 of the Credit Agreement, no
labor controversy, litigation, arbitration or governmental
investigation or proceeding is pending or, to the knowledge of
the Borrower, threatened against the Borrower or any of its
Subsidiaries which could have a Material Adverse Effect, and
no development has occurred in any labor controversy,
litigation, arbitration or governmental investigation or
proceeding disclosed pursuant to Section 6.7 of the Credit
Agreement which could have a Material Adverse Effect. Other
than any liability incident to such labor controversy,
litigation, arbitration or proceedings, none of the Borrower
or its Subsidiaries has any material contingent liabilities
not disclosed in writing to the Agent.
(vi) The Revolving Loan Commitment Amount, after giving effect to
the reduction thereof on the Payoff Date pursuant to Section 4
of this Amendment, will not be less than (x) the then
aggregate outstanding principal amount of all Revolving Loans,
Swing Line Loans and Letter of Credit Outstandings or (y) the
then existing Letter of Credit Commitment Amount.
6. Conditions to Effectiveness. The effectiveness of this
Amendment (including without limitation the effectiveness of Sections 1
through 3 hereof) is conditioned upon (A) receipt by the Agent of all
the following documents, each in form and substance satisfactory to the
Agent:
(i) A certificate of the Secretary or an Assistant Secretary
of the Borrower as to resolutions of its Board of
Directors (or an authorized committee thereof) then in
full force and effect authorizing the execution, delivery
and performance of this Amendment and the incumbency and
signatures of those of its officers authorized to act
with respect to this Amendment;
(ii) The opinion of Darryl Marchand, Esq., counsel to the
Borrower, in form and substance satisfactory to the
Agent;
(iii) A Consent and Acknowledgment, substantially in the form
of Exhibit A hereto, duly executed by Worldwide
Kitchens;
(iv) Such other documents as the Agent shall have reasonably
requested; and
(B) Payment in full by the Borrower to Citicorp of all monetary
Obligations then owing to Citicorp.
Promptly upon the satisfaction of those conditions set forth
in clauses (A) and (B) above, the Agent shall notify each
Lender and the Borrower that such conditions have been
satisfied and that this Amendment is effective as of the date
of such notice.
7. Effect of Amendment. This Amendment shall be deemed to be an
amendment to the Credit Agreement, and the Credit Agreement, as amended
hereby, is hereby ratified, approved and confirmed in each and every
respect. All references to the Credit Agreement in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to
the Credit Agreement as amended hereby.
8. Governing Law; Etc. THIS AMENDMENT SHALL BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. All
obligations of the Borrower and rights of the Agent and the Lenders
expressed herein shall be in addition to and not in limitation of those
provided by applicable law. Whenever possible each provision of this
Amendment shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Amendment shall
be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Amendment.
9. Counterpart Execution. This Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one
and the same instrument, and any party hereto may execute this Amendment
by signing one or more counterparts.
10. Successors and Assigns. This Amendment shall be binding upon
the Borrower, the Agent and each Lender and their respective successors
and assigns, and shall inure to the benefit of the Borrower, the Agent
and each Lender and the successors and assigns of each.
11. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AMENDMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE
BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF
THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT
MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO
THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY,
THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
12. WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AMENDMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE
BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED
FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS
ENTERING INTO THIS AMENDMENT.
[SIGNATURES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereto duly authorized as
of the day and year first written above.
TRIANGLE PACIFIC CORP.
By
Title
PERCENTAGE THE BANK OF NOVA SCOTIA, as Agent
and Lender
42.8571429% By
Title
BANK OF AMERICA NT&SA
28.5714286% By
Title
By
Title
BANQUE PARIBAS
14.2857143% By
Title
By
Title
COMERICA BANK - TEXAS
14.2857143% By
Title
For purposes of Section 4 of
this Amendment:
CITICORP USA, INC.
By
Title
CONSENT AND ACKNOWLEDGMENT
The undersigned, by its signature hereto, acknowledges and agrees
to the terms and conditions of that certain Fifth Amendment to Credit
Agreement, dated as of June 1, 1995 (the "Amendment"). The undersigned
acknowledges and reaffirms its obligations owing under its Subsidiary
Guaranty and agrees that such Guaranty shall remain in full force and
effect. Although the undersigned has been informed by the Borrower of
the matters set forth in the Amendment, and the undersigned has
acknowledged and agreed to same, the undersigned understands that the
Lenders have no duty to notify Subsidiary Guarantor or to seek
Subsidiary Guarantor's acknowledgment or agreement, and nothing
contained herein shall create such a duty as to any transactions
hereafter.
Capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement dated as of
August 4, 1993 among Triangle Pacific Corp., as the Borrower, certain
commercial lending institutions, as the Lenders, Citicorp USA, Inc., as
the Co-Agent for the Lenders and The Bank of Nova Scotia, as the Agent
for the Lenders.
WORLDWIDE KITCHENS, INC.
By:
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-END> JUN-30-1995
<CASH> 24,051,000
<SECURITIES> 0
<RECEIVABLES> 54,773,000
<ALLOWANCES> 2,857,000
<INVENTORY> 74,676,000
<CURRENT-ASSETS> 155,197,000
<PP&E> 139,570,000
<DEPRECIATION> 25,565,000
<TOTAL-ASSETS> 371,876,000
<CURRENT-LIABILITIES> 47,607,000
<BONDS> 0
<COMMON> 147,000
0
0
<OTHER-SE> 117,744,000
<TOTAL-LIABILITY-AND-EQUITY> 371,876,000
<SALES> 223,801,000
<TOTAL-REVENUES> 223,801,000
<CGS> 165,062,000
<TOTAL-COSTS> 165,062,000
<OTHER-EXPENSES> 31,242,000
<LOSS-PROVISION> 379,000
<INTEREST-EXPENSE> 9,160,000
<INCOME-PRETAX> 17,958,000
<INCOME-TAX> 6,963,000
<INCOME-CONTINUING> 10,995,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,995,000
<EPS-PRIMARY> .75
<EPS-DILUTED> .75
</TABLE>
