<PAGE>
CONSOLIDATED 1995 ANNUAL REPORT
(Georgia Bontex logo appears here)
1995
FOR FISCAL YEAR ENDED
JUNE 30, 1995
<PAGE>
NOBODY MAKES SHOES
BONTEX(REGISTER MARK) CAN'T FILL.
(Two photos appear here showing a Reebok hiking boot and a Reebok sports
shoe both with the Georgia Bontex label.)
BONTEX(Register Mark) products received the American Podiatrist
Medical Association (APMA) seal of acceptance after undergoing stringent
clinical and laboratory tests. The APMA seal of acceptance means
BONTEX(Register Mark) products conform to APMA guidelines and were found to
assist in foot health and comfort.
All BONTEX(Register Mark) products are MORI-FRESH(Register Mark) treated
to resist mold-type growth related to bacteria and fungi which can cause odor
and foot discomfort. BONTEX(Register Mark) innersoles are light, flexible,
durable, tough, versatile and assist in foot comfort. BONTEX(Register Mark)
can be used in any type of footwear and can be combined to SUREFOAM(Register
Mark), BONFOAM(Register Mark), MAXXON(Register Mark) and custom fabrics to
meet your needs.
BONTEX(Register Mark) has created products for handbags, luggage and
handwear, too.
BONTEX(Register Mark) products are designed to be "environmentally
friendly". BONTEX(Register Mark) uses recycled and primary cellulose fibers
originally derived from trees, a renewable resource.
Please call, write or fax BONTEX(Register Mark) for samples.
(Georgia Bontex logo appears here)
(Two photos appear here of different types of boots. One with the
Rocky(Register Mark) Shoes & Boots Inc. logo underneath and one with the
Dan Post(Register Mark) Handcrafted Cushion Comfort(TM) logo underneath.
Both boots show the Bontex label.)
(American Podiatric Medical Association and SATRA Footwear Technology
Centre logos appear here)
BONTEX(Register Mark): One BONTEX(Register Mark) Drive, Buena Vista, VA
24416-0751. (703) 261-2181, Fax: (703) 261-3784 Telex: 7607542.
BONTEX(Register Mark) S.A. Stemberg, Belgium. Distributed and converted by:
BONTEX(Register Mark) Italia S.R.L., Villafranca, Verona, Italy.
BONTEX(Register Mark) de Mexico, Leon, Mexico.
<PAGE>
BONTEX
MISSION STATEMENT
OUR MISSION IS TO BE
THE GLOBAL LEADER
IN THE MARKETS WE SERVE
BY PROVIDING CUSTOMERS WITH
WORLD CLASS QUALITY
PRODUCTS AND SERVICE.
(Georgia Bontex logo appears here)
CONSOLIDATED 1995 ANNUAL REPORT
CONTENTS
2 REMEMBRANCE
3 CORPORATE AND PRODUCT PROFILE
4 FINANCIAL HIGHLIGHTS
5 MESSAGE TO SHAREHOLDERS
7 FINANCIAL REVIEW
11 FINANCIAL STATEMENTS
24 INDEPENDENT AUDITORS' REPORT
1
<PAGE>
REMEMBRANCE
MR. HUGO N. SURMONTE
MARCH 25, 1908 TO OCTOBER 10, 1994
UNFORTUNATELY, THIS WAS THE YEAR THAT THE COMPANY'S FOUNDER, MR.
HUGO N. SURMONTE, PASSED AWAY. MR. SURMONTE WAS THE RETIRED CHAIRMAN OF
THE BOARD, CHIEF EXECUTIVE OFFICER, TREASURER AND DIRECTOR OF GEORGIA
BONDED FIBERS, INC. MR. SURMONTE DEDICATED HIS LIFE TO BUILDING GEORGIA
BONDED FIBERS, INC. INTO A GLOBAL MANUFACTURING BASED COMPANY SERVING
FOOTWEAR, HEADWEAR, AUTOMOTIVE, LUGGAGE, LEATHERGOODS AND ALLIED
INDUSTRIES. THROUGH HIS LEADERSHIP AND VISION, GEORGIA BONDED FIBERS,
INC. BECAME A GLOBAL LEADER IN THE MANUFACTURING AND DISTRIBUTION OF
BONTEX(REGISTER MARK) ELASTOMERIC NONWOVEN FIBERBOARD PRODUCTS.
THE MANAGEMENT OF THE COMPANY EXPRESSES THEIR SINCERE
CONDOLENCES TO MRS. MARIE GEORGIA SURMONTE AND DAUGHTERS, MRS. DOLORES
KOSTELNI AND MRS. PATRICIA TISCHIO.
2
<PAGE>
CORPORATE PROFILE
Georgia Bonded Fibers, Inc. (Bontex) was founded by Hugo N. Surmonte in
June 1946 under the laws of the State of New Jersey. The Company originally
began as a leather processing operation, and today, Bontex is a leading
worldwide manufacturer and distributor of uncoated and coated elastomeric wet
web impregnated fiberboard products, generally described by the trademark
BONTEX(Register mark). BONTEX(Register mark) is primarily used as an insole
material in footwear, visorboard in headwear, dielectric sealing base in
automotive door panels, backing substrate, stiffener and laminating base in
luggage, leathergoods, and allied products. All BONTEX(Register mark) fiberboard
products are designed to be "environmentally-friendly," because Bontex uses
recycled and primary cellulose fibers originally derived from trees, a renewable
resource.
The Company maintains its corporate headquarters in Newark, New Jersey;
manufacturing facilities at Bontex, One Bontex Drive, Buena Vista, Virginia and
at Bontex S.A., Stembert, Belgium; a distribution and converting operation at
Bontex Italia s.r.l., Villafranca, Verona, Italy; and a distribution subsidiary,
Bontex de Mexico, S.A. de C.V., in Leon, Mexico. Bontex also maintains a network
of liaison offices and distributors globally to market Bontex products.
PRODUCT PROFILE
Bontex manufactures uncoated and coated BONTEX(Register mark) fiberboard
products; PVC breathable cushion foams, that are marketed under trademarks
BON-FOAM(Register mark), MAXXON(Register mark) and SURE-FOAM(Register mark), and
are sold in a variety of grades for use as shock absorbing insole material;
BON-PEL(Register mark), a wet web nonwoven substrate, which is exceptionally
strong and flexible; BONTEX(Register mark) 48 MA, an uncoated visorboard for use
in military headwear, which has been approved by NATICK military laboratory.
Bontex also combines certain products, such as foams, fabrics, and PVC's, with
BONTEX(Register mark) fiberboard. Additionally, Bontex is the exclusive
distributor globally to the footwear industry of an expanded polyurethane
material manufactured by E.A.R. Specialty Composites, a division of Cabot Safety
Corporation, trademarked MAXXON(Register mark) LS and CONFOR(Register mark).
Registered trademarks the Company markets products include:
BONTEX(REGISTER MARK)
BON-PEL(REGISTER MARK) NONWOVEN
BON-FOAM(REGISTER MARK) CUSHION
MAXXON(REGISTER MARK) CUSHION
SUR-V-LON(REGISTER MARK) VINYL COATED BONTEX
SIR-PEL(REGISTER MARK)
MORIMER(REGISTER MARK)
SURTEX(REGISTER MARK)
SUPERTEX(REGISTER MARK)
MORI-FLEX(REGISTER MARK)
BON-STITCH(REGISTER MARK)
VINTEX(REGISTER MARK)
BON-DOE(REGISTER MARK)
BONTEX(REGISTER MARK) 200 RECYCLED
BONTEX(REGISTER MARK) 300 RECYCLED
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following graphs indicate the Company's continued strong sales growth
over the past five years, as well as, the unprecedented volatility experienced
during fiscal year 1995 with raw material prices and foreign currency exchange
rates. These items, in addition to other pertinent financial information, are
discussed in further detail in the Message to Shareholders and Management's
Discussion and Analysis.
(Six graphs appear here with the plot points listed below.)
Net Sales
(millions of dollars)
1991 1992 1993 1994 1995
44,734 46,534 46,710 47,729 50,998
Comparison of 5-Year Cumulate Total
Return Among Georgia Bonded Fibers,
NASDAQ Market Index and MG Group Index
(in dollars)
1990 1991 1992 1993 1994 1995
MG PAPER PRODUCTS INDEX
NASDAQ MARKET INDEX
100 84.38 156.25 112.50 125.00 81.25
Market Cost of Prime Pulp Per
Ton
(in dollars)
1991 1992 1993 1994 1995
600 590 500 500 925
Market Cost of Latex Per Dry
Pound
(in dollars)
1991 1992 1993 1994 1995
.76 .74 .74 .72 1.00
Belgian Franc/US Dollar
Exchange Rate
1991 1992 1993 1994 1995
32.7 34.1 34.7 35.3 30.6
Belgian Franc/Italian Lire
Exchange Rate
1991 1992 1993 1994 1995
2.75 2.72 2.35 2.16 1.91
4
<PAGE>
(Georgia Bonded logo appears here)
MESSAGE TO SHAREHOLDERS
DEAR FELLOW SHAREHOLDER:
The Company experienced the best and worst of all worlds during fiscal
1995. Georgia Bonded Fibers, Inc. and its wholly-owned subsidiaries (Bontex) are
pleased to announce record consolidated net sales of almost $51 million for the
year ended June 30, 1995. The $3.3 million or 6.9 percent increase in sales
reflects continued sales growth of BONTEX(Register mark) products primarily
resulting from positive market penetration and improved global economic
conditions, as well as foreign currency adjustments. However, the increase in
sales did not translate into a profitable year because of significantly higher
raw material costs and foreign currency exchange losses. Consolidated gross
profits for the year decreased $1.2 million to $11.6 million. The Company posted
a consolidated net loss of $1.46 million or $.93 per share for the year ended
June 30, 1995, as compared to net income of $1.3 million or $.85 per share for
the prior year. Last year's net income was higher than normal primarily due to a
one-time gain of $400,000 resulting from the adoption of FASB 109, "Accounting
for Income Taxes." Further details regarding the effects of foreign currency
exchange rates, in addition to the Company's financial position and results of
operations, are described in Management's Discussion and Analysis.
The best we can say about fiscal 1995, is that it is behind us. To say the
least, this has been a difficult year. The continual increase of raw material
costs and volatility of foreign currency markets were two major items which cost
our Company over $3.6 million in pretax profits. This situation provided an
opportunity to implement several measures within our Company's strategic plan.
These measures, coupled with present and future initiatives, should contribute
to our Company's future growth and return the Company to profitability. However,
management expects fiscal 1996 to be a challenging and difficult year in our
efforts to return the Company to profitability.
The cost of prime pulp and latex, two primary raw materials for the
Company's products, increased by approximately 85 percent and 38 percent,
respectively, during fiscal 1995. Management continues to aggressively implement
various programs in an effort to effectively manage the situation. Management
has increased prices, but the marketplace remains competitive, and this
restricts our ability to raise selling prices to offset all cost increases.
Additionally, management continues to attempt to reduce costs through
application of technology to improve process efficiencies, while maintaining
product quality, as well as through capital investments in machinery and
equipment to increase productivity. These capital investments represent an
investment in our Company's future.
The foreign currency exchange losses for fiscal 1995 totaled approximately
$1.5 million. However, subsequent to fiscal year end, the Company was able to
recover approximately $500,000 in exchange losses, which will be reported as a
gain in fiscal 1996. The higher than normal exchange losses are the result of
the decrease in value of the US dollar, Italian lire and Mexican peso. Over the
past twelve months, the Italian lire and US dollar decreased in value relative
to the Belgian franc by 13 percent and 12 percent, respectively, and the Mexican
peso reduced in value 100 percent relative to the US dollar. The largest portion
of these exchange losses occurred at Bontex S.A., the Belgium subsidiary. A
significant portion of the Belgium subsidiary's sales are denominated in US
dollars and Italian lire, and as such, are subject to the risk of foreign
exchange rate fluctuations.
5
<PAGE>
Management has revised its Risk Management Program (RMP) to better manage
the Company's exposure to foreign currency exchange rate fluctuations. The
revised RMP is a coordinated approach in the management of foreign currency
risks. The overall policy of the RMP is to match currency denominations of the
Company's assets with those of its liabilities, in a manner intended to reduce
the Company's foreign currency exposure. Additionally, Bontex S.A. will continue
to utilize forward exchange contracts and other approved hedging instruments to
manage currency risks. Management regards these international markets as
excellent opportunities for future growth and profits, and continues to monitor
the situation and evaluate various alternatives to manage exposure to such
risks.
The mission of your Company is to be the global leader in all its markets
by providing customers with world class quality BONTEX(Register mark) products
and service. This mission defines our Company's strategic plan. Significant
progress was made in 1995 toward expanding our role as a global market leader.
Even though our industry has become intensely competitive, our market position
has never been better. Additionally, the Company's converting facilities
continue to show increased volume and open new markets for coated and composite
items converted on BONTEX(Register mark) substrates.
Bontex's best measure of quality is our ability to deliver customer
satisfaction. To maintain the Company's quality leadership, Bontex has embarked
on the implementation of the International Organization for Standardization
(IOS) quality assurance system ISO 9000 at all manufacturing facilities.
Management is striving for ISO 9000 registration during fiscal year 1996.
The future of our Company relies on its ability to continue to efficiently
produce and distribute BONTEX(Register mark) products globally. The Company's
plans to establish a manufacturing subsidiary in Malaysia continue as scheduled.
Bontex Sdn Bhd is expected to improve our access to Asia, the world's largest
market for Bontex products, through better utilization of resources and higher
level of customer service. Management anticipates completing site selection
during fiscal 1996. However, construction and completion of the proposed
facility are subject to a number of significant conditions, including the
profitability of the Company, final approval by the Company's Board of
Directors, procurement of capital and Malaysian regulatory approvals.
Your Company recognizes its responsibility to protect the environment in
which we all work and live. Our pursuit for success has not lessened our
commitment to maintaining a clean environment. Concerning environmental matters,
the Company has budgeted approximately $4.0 million over the past three years to
develop and construct water treatment facilities at the Company's two plants.
These waste water treatment plants will utilize cost effective batch reactor
processes adapting innovative microbiotic technologies. Bontex will continue to
dedicate significant financial resources to environmental matters, and intends
to continue to conduct business in a fashion that will preserve our environment.
Management views the outlook for global sales of BONTEX(Register mark)
products positively, as supported by the Company's successful marketing program.
There will always be challenges, but we believe that our greatest rewards lie in
the future: We are poised to build upon the results of our past efforts in
meeting our goals.
I take this opportunity to express my personal respect and gratitude to Mr.
Hugo Surmonte, founder of Georgia Bonded Fibers, who passed away on October 10,
1994, for his guidance and sound advice over the years.
We thank our employees, representatives and distributors globally for their
outstanding teamwork. We are particularly grateful to all our customers for the
trust placed in us, and we thank you, our shareholders, for your continued
support of the Company and its management. We believe that the current
management team has the experience and skill to continue to lead the Company
toward achieving its mission, as defined in our strategic plan, to be the global
leader.
(Signature of James C. Kostelni)
JAMES C. KOSTELNI
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
BONTEX, BUENA VISTA, VA. 24416 TEL. 540-261-2181 FAX 540/261-3784 SUBSIDIARIES
(Bullet) BONTEX S.A. STEMBERT BELGIUM (Bullet) BONTEX S.R.L. 37069
VILLAFRANCA VERONA, ITALY
6
<PAGE>
GEORGIA BONDED FIBERS, INC. AND SUBSIDIARIES
SUMMARY OF SELECTED FIVE YEAR DATA
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net sales $50,998 $47,729 $46,710 $46,534 $44,734
Income (loss) before cumulative effect of change in
accounting principles (1,458) 935 193 942 212
Cumulative effect of change in accounting principles -- 400 -- -- 99
Net income (loss) $(1,458) $ 1,335 $ 193 $ 942 $ 311
Income (loss) per share:
Before cumulative effect of change in accounting
principles $ (.93) $ .60 $ .12 $ .60 $ .14
Cumulative effect of change in accounting principles -- .25 -- -- .06
Net income (loss) $ (.93) $ .85 $ .12 $ .60 $ .20
Total assets $39,527 $31,032 $28,840 $28,669 $22,753
Long-term debt $ 1,364 $ 1,511 $ 1,056 $ 1,493 $ 964
Cash dividends declared per common share* $ -- $ -- $ .05 $ -- $ --
</TABLE>
* A cash dividend of $.05 was paid during the second quarter of 1993.
COMMON STOCK AND DIVIDEND DATA
The stock of Georgia Bonded Fibers, Inc. is traded over the counter on the
NASDAQ National Market under the symbol BOTX.
At August 29, 1995 there were 855 shareholders of record. No cash dividends
have been declared or paid during fiscal years 1995 and 1994.
<TABLE>
<CAPTION>
BID PRICE RANGE
HIGH LOW
<S> <C> <C>
Fiscal Year Ended June 30,
1995
First Quarter $6.00 $5.00
Second Quarter 6.50 5.50
Third Quarter 5.50 3.50
Fourth Quarter 4.13 2.98
1994
First Quarter $4.75 $3.75
Second Quarter 5.25 4.50
Third Quarter 5.25 4.25
Fourth Quarter 5.50 4.50
</TABLE>
7
<PAGE>
GEORGIA BONDED FIBERS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales for 1995 reached a record level of $50,998,000. The $3,269,000 or
6.9 percent increase in net sales over last year reflects continued sales
growth, of both converted and nonconverted products, due mainly to positive
market penetration, improvements in overall global economic conditions, as well
as foreign currency translation adjustments. The Company's 1995 consolidated net
loss of $1,458,000 is primarily due to significantly higher raw material costs
and foreign currency exchange losses. Last year, the Company recorded
consolidated net income of $1,335,000, which was higher than normal because of a
one-time gain of $400,000 resulting from the cumulative effect of adopting of
FASB 109, "Accounting for Income Taxes." The Company's 1993 net income of
$193,000 was lower than 1994, because of high foreign currency exchange losses
and price competition.
Cost of sales as a percent of net sales was 77.3 percent in 1995; 73.1
percent in 1994; and 75.3 percent in 1993. This adverse fluctuation reduced the
Company's profitability by approximately $2.1 million in 1995. The higher cost
of sales in 1995, both as a percent of net sales and in total, was largely due
to the unprecedented increase in raw material costs. The decrease in cost of
sales in 1994 was primarily the result of stable raw material costs and
efficiency gains realized from expanded volume.
Although at reduced levels in past years, cost trends during 1995 indicated
increased inflationary pressures. For example, the cost of pulp and latex, two
primary raw materials for the Company's products, increased by 85 percent and 38
percent, respectively, as shown in the graphs on page 4 of the Annual Report.
Management has implemented various measures in an attempt to manage the
situation, including raising selling prices, capital enhancements to improve
production efficiencies and several cost control measures through better
utilization of existing resources. It is difficult to implement price increases
for the Company's finished goods due to the globally competitive environment in
which the Company operates, and even more difficult to estimate future raw
material prices. Based on current information, management anticipates that raw
material prices will stabilize and possibly decline during 1996. Management
intends to continue to prudently apply technology to manufacture high quality
products while attempting to reduce costs in all areas of operations in an
effort to maintain competitive selling prices. There can be no assurance,
however, that increased raw material prices will not continue to have an adverse
effect on the Company's operations or competitive position in the future.
The Company's United States operations uses the last-in, first-out (LIFO)
method of inventory accounting; however, for comparison purposes with other
companies, if the first-in, first-out (FIFO) method of accounting had been used,
reported gross profit would have been higher by $342,000 in 1995, and lower by
$23,000 and $57,000 in 1994 and 1993, respectively. Net income would have been
higher by $212,000 or $.13 per share in 1995 and lower by $14,000 or $.01 per
share and $36,000 or $.02 per share for 1994 and 1993, respectively.
As a percent of net sales, selling, general and administrative expenses
(SG&A) were 23.3 percent in 1995; 22.8 percent in 1994; and 20.7 in 1993. The
increase in the 1995 SG&A percentage as compared to 1994 was mainly due to
certain expenses increasing at a higher rate than sales, such as costs for
marketing, travel and payroll related expenditures. The increase in the 1994
SG&A percentage as compared to 1993, was primarily due to 1993 SG&A being lower
than normal because of the reversal of a contingent liability for $363,000 and a
pension credit of $352,000, as discussed in Note 7 of the Notes to the
Consolidated Financial Statements. All salaries on a global basis have been
frozen, and various cost control measures have been implemented to reduce SG&A
costs.
The increase in interest expense in 1995, as compared to 1994 and 1993, is
mainly due to higher interest rates and increased borrowings. Proceeds from the
expanded credit facilities were utilized for planned capital additions, such as
the mandated environmental projects, as well as funding of operations. A large
portion of the Company's debt consists of short-term credit facilities with
floating interest rates. To protect the Company's financial position from future
interest rate increases, the Company entered into a number of interest rate swap
agreements during the year, to provide for fixed interest payments and stable
cash outflows. These agreements are described in Note 8 of the Notes to the
Consolidated Financial Statements.
Foreign currency exchange rates have different effects from year to year on
the translation of the income statement and balance sheet. The income statements
of foreign subsidiaries are translated using the weighted average currency
exchange rate in effect during the year, and the balance sheet is translated
using the currency exchange rate in effect at year end. The weighted average
foreign currency exchange rates were lower during 1995, as compared to 1994. The
impact of the rate
8
<PAGE>
decrease from 1994 to 1995, resulted in net sales being higher by approximately
$3,200,000. The fluctuation in foreign currency exchange from 1993 to 1994
resulted in net sales being lower by approximately $3,600,000. On the balance
sheets, the foreign currency exchange rates at June 30, 1995, were lower than
the currency exchange rates at June 30, 1994, which resulted in a translation
increase of approximately $3,000,000 in total assets, as compared to the
translation increase of approximately $700,000 last year.
International operations are subject to certain inherent risks, including
currency fluctuations, export duties, restrictions on transfer of funds and
political instability. Management continually monitors and assesses these
inherent risks, and evaluates various alternatives to manage exposure to such
risks. The exposure to foreign currency exchange losses represents the risk that
the eventual net cash flows resulting from a sale or purchase will be adversely
affected by changes in exchange rates. During 1995, the Company experienced
extreme volatility in the foreign exchange markets, as demonstrated in the
graphs on page 4 of the Annual Report. This unusual volatility resulted in
larger than normal currency exchange losses, and accordingly, management revised
its Risk Management Program (RMP). The revised RMP is a coordinated approach in
the management of foreign currency risks: The overall policy of the RMP is to
match currency denominations of the Company's assets with those of its
liabilities, in a manner intended to reduce the Company's foreign currency
exposure. The coordinated approach of the RMP is achieved by, among other
things, purchasing certain raw materials in US dollars, financing in local
currencies, as well as utilizing forward exchange contracts and other approved
hedging instruments.
Total foreign currency exchange loss in 1995 was $1,477,000, as compared to
a gain of $247,000 for the prior year. The higher than normal exchange losses
are mainly the result of the decrease in value of the US dollar, Italian lire
and Mexican peso. Over the past twelve months, the Italian lire and US dollar
decreased in value relative to the Belgian franc by 13 percent and 12 percent,
respectively, and the Mexican peso reduced in value by more than 100 percent
relative to the US dollar. The largest quantity of the exchange losses occurred
at Bontex S.A., the Belgian subsidiary. A significant portion of the Belgian
subsidiary's sales are denominated in US dollars and Italian lire, and as such,
are subject to the risk of foreign exchange rate fluctuations. The revised RMP
should greatly reduce these exchange losses; however, management cannot assure
that such exchange losses will not occur again in the future. All transactions
denominated in foreign currencies are not hedged (i.e., Mexican peso, Canadian
dollar, etc.) since the volume of such transactions is limited and therefore the
cost to hedge is considered prohibitive. The Company regards these international
markets as excellent opportunities for future growth in revenues and profits,
and will continue to attempt to manage these risks in the most cost-effective
manner. Subsequent to fiscal year end, the Company recovered approximately
$500,000 in exchange losses due to improved US dollar and Italian lire exchange
rates. This gain will be reported in the first quarter earnings of fiscal year
1996.
Total foreign currency exchange loss for 1993 was $670,000. In 1994 and
1993, the foreign exchange currency losses with the Italian subsidiary were
$227,000 and $462,000, respectively, because of the devaluation of the Italian
lire that resulted when Italy withdrew from the European Rate Mechanism in 1993.
Bontex S.A. utilizes foreign exchange contracts to manage the exposure of sales
denominated in U.S. dollars to changes in foreign exchange rates. Forward
exchange contracts are valued at market value at fiscal year end, and the
resulting unrealized foreign currency gain of $267,000 and loss of $213,000 were
recorded in 1994 and 1993, respectively. The favorable valuation of these
contracts in 1994 was largely due to the contract exchange rate being higher
than the market rate. Refer to Note 8 of the Notes to Consolidated Financial
Statements for further details regarding foreign exchange contracts.
The effective tax rate for the Company was 37.9 percent in 1995; 43.0
percent in 1994; and 43.7 percent in 1993. The tax benefit in 1995 was
attributed to the operating loss and includes $781,000 relating to net operating
loss carryforwards. The higher effective tax rates in 1994 and 1993 were
principally due to higher taxable income, disallowed expense and higher tax
rates at the Company's European subsidiaries. Refer to Note 5 of the Notes to
Consolidated Financial Statements for further details regarding income taxes.
FINANCIAL CONDITION
Cash and cash equivalents increased by $3,017,000 largely due to higher
borrowings to finance operations and planned plant and equipment additions, and
larger than normal deposits held in anticipation of improved foreign currency
exchange rates. Trade accounts receivable increased approximately $879,000 to
$15,300,000 at June 30, 1995, as compared to last year, primarily because of
currency translation adjustments, higher sales volume and extended credit terms
to meet competition in the market. Other receivables primarily consist of value
added taxes (VAT) the Company's European subsidiaries have paid for which the
Company will receive a refund. The decrease in other receivables was mainly due
to the receipt of the VAT deposits. Inventory balances at June 30, 1995 were
$7,650,000, up from $4,892,000 the prior year. The increase in inventory of
$2,758,000 was primarily at the Company's Belgium subsidiary, where raw material
inventory balances were higher than
9
<PAGE>
normal because of the procurement of certain inventories at favorable prices,
prior to the consumption of existing higher cost inventories. Management
continues to implement controls over finished goods and raw material inventories
to control costs through the reduction of stock, seconds, and scrap.
The Company invested $1,704,000 and $1,868,000 in plant and equipment
additions during 1995 and 1994, respectively. The plant and equipment additions
mainly represent capital expenditures for mandated environmental controls, and
various capital improvements to enhance the productivity of manufacturing and
converting facilities in the United States, Belgium, and Italy. Capital
expenditures for 1996 are projected not to exceed $2,600,000.
Accounts payable increased $2,424,000 to $10,339,000 at June 30, 1995, as
compared to the prior year, mainly because of accruals relating to capital
additions and higher raw material inventory balances. Short-term borrowing
increased $5,335,000 to $11,674,000 at June 30, 1995 and primarily corresponds
to increased cash and inventories as previously discussed. The increase in
long-term debt was primarily due to the funding of capital additions as
previously discussed. The Company believes current credit facilities will be
sufficient to meet future operating and capital requirements. Refer to Note 4 of
the Notes to Consolidated Financial Statements for further details regarding
Long-term Debt and Financing Agreements.
Working capital decreased by $3,231,000 to $1,816,000 and the current ratio
decreased from 1.30 to 1.07 at June 30, 1995. The ratio of total liabilities to
equity increased at fiscal year end to 2.53 from 1.57 the prior year. These
changes are primarily attributed to capital additions and related increased debt
and the operating loss during fiscal 1995. The Company is required to maintain
certain minimum financial ratios on a quarterly basis under the covenants of a
secured debt agreement. As a result of the decrease in various financial ratios,
the Company obtained a waiver from such requirements at June 30, 1995. There is
no assurance the Company will be able to obtain future waivers from such
requirements, and accordingly, $1,846,000 of the long-term debt has been
classified as current.
ENVIRONMENT
As with all fiberboard manufacturers, the Company is subject to regulation
by various federal, state, foreign and local agencies concerning compliance with
environmental control statutes and regulations. These regulations impose
limitations on the discharge of contaminants into the environment, including
effluent limitations, in addition to requiring the Company to obtain and operate
in compliance with the conditions of permits and other governmental
authorizations. The Company has made and intends to continue to make substantial
capital investments and operating expenditures, as well as production
adjustments, in connection with compliance with environmental laws and
regulations. Refer to Note 9 of the Notes to the Consolidated Financial
Statements for further details regarding environmental matters.
ACCOUNTING CHANGE
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109 "Accounting for Income Taxes." The
Company changed its method of accounting for income taxes effective July 1,
1993, to adopt the new accounting standard. The cumulative effect of the change
in accounting principle increased net income by $400,000 or $.25 per share, as
reported separately in the statement of income for the year ended June 30, 1994,
as described in Notes 1 and 5 of Notes to the Consolidated Financial Statements.
10
<PAGE>
GEORGIA BONDED FIBERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
YEARS ENDED JUNE 30, 1995, 1994 AND 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
NET SALES $50,998 $47,729 $46,710
COST OF SALES 39,398 34,886 35,187
Gross Profit 11,600 12,843 11,523
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 11,913 10,865 9,679
Operating income (loss) (313) 1,978 1,844
OTHER (INCOME) EXPENSES:
Interest expense 984 668 921
Interest income (219) (47) (60)
Foreign currency exchange (gain) loss 1,477 (247) 670
Other -- net (209) (35) (30)
2,033 339 1,501
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (2,346) 1,639 343
PROVISION FOR INCOME TAXES (888) 704 150
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE (1,458) 935 193
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR
INCOME TAXES -- 400 --
Net income (loss) $(1,458) $ 1,335 $ 193
INCOME (LOSS) PER SHARE:
Before cumulative effect of change in accounting principle $ (.93) $ .60 $ .12
Cumulative effect of change in accounting for income taxes -- .25 --
Net income (loss) $ (.93) $ .85 $ .12
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE>
GEORGIA BONDED FIBERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<S> <C> <C>
ASSETS 1995 1994
CURRENT ASSETS:
Cash and cash equivalents $ 4,379 $ 1,362
Short-term investments -- 123
Trade accounts receivable, less allowance for doubtful
accounts of $156 ($183 at 1994) 15,300 14,421
Other receivables 490 946
Inventories 7,650 4,892
Deferred income taxes 449 30
Income taxes refundable 145 12
Other current assets 227 131
Total current assets 28,640 21,917
PROPERTY, PLANT AND EQUIPMENT:
Land 271 224
Building and building improvements 4,383 4,122
Machinery, furniture and equipment 14,256 12,309
Construction in progress 1,578 866
20,488 17,521
Less accumulated depreciation and amortization 10,621 9,172
Net property, plant and equipment 9,867 8,349
Deferred income taxes 333 --
Other assets 687 766
Total assets $39,527 $31,032
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $11,674 $ 6,339
Accounts payable 10,339 7,915
Accrued expenses 2,622 2,223
Income taxes payable -- 62
Long-term debt due currently 2,189 331
Total current liabilities 26,824 16,870
Long-term debt 1,364 1,511
Deferred income taxes -- 121
Other long-term liabilities 153 450
Total liabilities 28,341 18,952
STOCKHOLDERS' EQUITY:
Common stock of $.10 par value. Authorized 3,000,000 shares;
issued and outstanding 1,572,824 shares 157 157
Additional paid-in capital 1,551 1,551
Retained earnings 8,213 9,671
Foreign currency translation adjustment 1,265 701
Total stockholders' equity 11,186 12,080
Total liabilities and stockholders' equity $39,527 $31,032
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE>
GEORGIA BONDED FIBERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1995, 1994 AND 1993
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL CURRENCY
COMMON PAID-IN RETAINED TRANSLATION
STOCK CAPITAL EARNINGS ADJUSTMENT TOTAL
<S> <C> <C> <C> <C> <C>
Balances, June 30, 1992 $157 $1,551 $ 8,221 $ 896 $10,825
Net income -- -- 193 -- 193
Cash dividend, ($.05 per share) -- -- (78 ) -- (78)
Aggregate translation adjustment -- -- -- (419) (419)
Balances, June 30, 1993 157 1,551 8,336 477 10,521
Net income -- -- 1,335 -- 1,335
Aggregate translation adjustment -- -- -- 224 224
Balances, June 30, 1994 157 1,551 9,671 701 12,080
Net loss -- -- (1,458 ) -- (1,458)
Aggregate translation adjustment -- -- -- 564 564
Balances, June 30, 1995 $157 $1,551 $ 8,213 $1,265 $11,186
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE>
GEORGIA BONDED FIBERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1995, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 50,133 $ 46,595 $ 45,407
Cash paid to suppliers and employees (51,227) (44,091) (44,414)
Interest received 212 47 60
Interest paid (986) (674) (921)
Income taxes paid, net of refunds (205) (799) (254)
Net cash provided by (used in) operating activities (2,073) 1,078 (122)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments -- (123) (852)
Proceeds from maturities of short-term investments 123 419 850
Proceeds from sales of property, plant and equipment 39 22 30
Acquisition of property, plant and equipment (1,704) (1,868) (1,226)
Net cash used in investing activities (1,542) (1,550) (1,198)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings, net 4,288 (265) 2,290
Long-term debt incurred 2,000 701 --
Principal payments on long-term debt and capital lease obligations (569) (287) (248)
Dividends paid -- -- (78)
Net cash provided by financing activities 5,719 149 1,964
EFFECT OF EXCHANGE RATE CHANGES ON CASH 913 24 (86)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,017 (299) 558
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,362 1,661 1,103
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,379 $ 1,362 $ 1,661
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss) $ (1,458) $ 1,335 $ 193
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activities:
Cumulative effect of change in accounting principle -- (400) --
Depreciation and amortization 1,072 821 830
Gain on sale of property, plant and equipment (15) (14) (27)
Provision for bad debts 42 34 25
Deferred income taxes (885) 220 (133)
Donated property (82) -- --
Change in assets and liabilities:
(Increase) decrease in trade accounts and other receivables 471 (1,996) (1,247)
(Increase) decrease in inventories (2,360) 575 347
(Increase) decrease in other assets 70 (550) (491)
Increase in accounts payable and accrued expenses 1,493 1,144 321
Increase (decrease) in income taxes (159) 113 --
Increase (decrease) in other liabilities (262) (204) 60
Net cash provided by (used in) operating activities $ (2,073) $ 1,078 $ (122)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Donated property $ 82 $ -- $ --
Construction in progress accrued in payables $ 178 $ 75 $ 130
</TABLE>
See accompanying notes to consolidated financial statements.
14
<PAGE>
GEORGIA BONDED FIBERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995, 1994 AND 1993
(ALL AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION-The accounts of Georgia Bonded Fibers, Inc. and its wholly-owned
subsidiaries, Bontex S.A., Belgium, Bontex Italia, s.r.l., Italy and Bontex de
Mexico C.V., Mexico, (the Company) are included in the consolidated financial
statements after elimination of significant intercompany accounts and
transactions.
FOREIGN CURRENCY TRANSLATION-Assets and liabilities of the Company's foreign
operations are translated from foreign currencies into U.S. dollars at exchange
rates in effect as of the close of the year and income statement amounts are
translated at the weighted average currency exchange rates in effect during the
year. Adjustments from financial statement translation are shown as a separate
component of stockholders' equity. Gains and losses resulting from foreign
currency transactions are included in net income.
CASH EQUIVALENTS-Cash equivalents of $791 and $794 at June 30, 1995 and 1994,
respectively, consist of collateralized overnight repurchase agreements. For
purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with original maturities of three months or less to be
cash equivalents.
INVENTORIES-Inventories are stated at the lower of cost or market. Cost of
inventories maintained in North America is determined on the last-in, first-out
(LIFO) and in Europe on the first-in, first-out (FIFO) basis.
PROPERTY, PLANT AND EQUIPMENT-Property, plant and equipment are stated at cost.
Machinery and equipment held under capital leases are stated at the present
value of minimum lease payments at the inception of the lease.
DEPRECIATION AND AMORTIZATION-Depreciation is provided by the straight-line
method over the estimated useful lives of the related assets. Machinery and
equipment held under capital leases are amortized by the straight-line method
over the shorter of the lease term or estimated useful life of the asset.
Amortization of assets held under capital leases is included in depreciation and
amortization of property, plant and equipment.
OTHER ASSETS-Other assets consist principally of deferred loan costs,
trademarks, prepaid pension costs and various deposits. The deferred loan costs
are amortized over the life of the loans. Trademark costs are amortized on a
straight-line basis over five years.
ADVERTISING COSTS-Advertising costs consist of various marketing expenses,
including advertisements, and are expensed as incurred.
FINANCIAL INSTRUMENTS-The Company enters into interest rate swap transactions to
manage its interest rate exposure. Income or expense arising from these
transactions is accounted for as an adjustment to interest expense over the life
of the agreements. The Company also enters into forward foreign exchange
contracts to manage the exposure of sales by Bontex S.A. which are denominated
in U.S. dollars to changes in foreign currency exchange rates. The contracts
mature at various dates, are valued at market and the resulting gain or loss is
recorded in the income statement.
USE OF ESTIMATES-The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
CHANGE IN ACCOUNTING PRINCIPLE-The Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
effective July 1, 1993. Among other provisions, this standard requires the
Company to record deferred income taxes using the enacted corporate income tax
rates for the years in which the taxes will be paid. Because corporate income
tax rates at July 1, 1993, were lower than the rates that existed when the
deferred taxes were originally recorded, the cumulative effect of the adoption
of the new standard increased net income by $400, and is reported
15
<PAGE>
separately in the consolidated statement of income for the year ended June 30,
1994. Apart from this benefit, the new accounting principle had no material
effect on net income in 1994 and does not affect cash flows.
Pursuant to the deferred method under APB Opinion 11, which was applied in 1993,
and prior years, deferred income taxes were recognized for income and expense
items that were reported in different years for financial reporting purposes and
income tax purposes using the tax rate applicable for the year of the
calculation. Under the deferred method, deferred taxes were not adjusted for
subsequent changes in tax rates.
INCOME PER SHARE-Income per share has been computed on the basis of the number
of shares outstanding during each year (1,572,824 shares).
RECLASSIFICATIONS-Certain reclassifications have been made to the prior year
balances to conform with current year presentation.
2. INVENTORIES
Cost of inventories of approximately $1,881 in 1995, and $2,094 in 1994, is
determined by the last-in, first-out method (LIFO). Remaining inventories of
approximately $5,769 in 1995, and $2,798 in 1994, are determined by the
first-in, first-out method (FIFO). During 1995, a LIFO inventory layer was
reduced resulting in charging lower inventory costs to cost of sales of $173
less than June 30, 1995 prices.
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Finished goods $3,644 $3,336
Raw materials 4,148 1,439
Supplies 635 552
Inventories at FIFO 8,427 5,327
LIFO reserves 777 435
$7,650 $4,892
</TABLE>
3. BUSINESS SEGMENT INFORMATION AND INTERNATIONAL OPERATIONS
Georgia Bonded Fibers, Inc. (Bontex) and its wholly-owned subsidiaries are
predominantly engaged in the manufacturing and distribution of uncoated and
coated BONTEX(Register mark) elastomeric fiberboard products.
BONTEX(Register mark) products are primarily used as an insole material in
footwear, visorboard in headwear, stiffener and laminating base for luggage,
leathergoods and allied industries globally.
Export sales for Georgia Bonded Fibers, Inc. totaled $9,161, $8,827 and $8,910
in 1995, 1994 and 1993, respectively. Sales to Asian countries represent
approximately 86 percent of total export sales for Georgia Bonded Fibers, Inc.
during the past three years.
For the past three years, sales to one customer ranged from approximately 11
percent to 15 percent of consolidated net sales.
16
<PAGE>
Information related to the domestic and foreign operations follows:
<TABLE>
<CAPTION>
NORTH AMERICAN EUROPEAN
OPERATIONS OPERATIONS ELIMINATIONS CONSOLIDATED
<S> <C> <C> <C> <C>
1995:
Total assets $ 14,311 $ 27,426 $ (2,210) $ 39,527
Total liabilities 5,785 23,310 (754) 28,341
Net sales 19,735 31,541 (278) 50,998
Income (loss) before income taxes and cumulative
effect of change in accounting principle (933) (1,424) 11 (2,346)
Net (loss) income (615) (854) 11 (1,458)
1994:
Total assets $ 13,318 $ 19,808 $ (2,094) $ 31,032
Total liabilities 4,177 15,413 (638) 18,952
Net sales 20,635 27,341 (247) 47,729
Income before income taxes and cumulative effect
of change in accounting principle 26 1,456 157 1,639
Net income 394 784 157 1,335
1993:
Total assets $ 13,307 $ 17,476 $ (1,943) $ 28,840
Total liabilities 4,541 14,204 (426) 18,319
Net sales 20,291 26,813 (394) 46,710
Income before income taxes and cumulative effect
of change in accounting principle 91 289 (37) 343
Net income 96 134 (37) 193
</TABLE>
Net assets of European operations not available for distribution amounted to
approximately $808 and $588 at June 30, 1995 and 1994, respectively.
4. LONG-TERM DEBT AND FINANCING AGREEMENTS
The following long-term debt was outstanding as of June 30, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
10.50% loan payable to a bank in the United States in quarterly installments of $77
through June 2001; collateralized by accounts receivable and inventory in U.S. and
subject to various loan covenants $1,846 $ --
3% disaster loan payable to the Small Business Administration in monthly installments of
$2 including interest with the unpaid balance due in 1995 -- 105
7.72% loan payable to an agency of the Belgian government in six remaining annual
installments due in July 1995 590 596
9.73% loan payable to an agency of the Belgian government in one remaining annual
installment due in July 1995 58 101
7.72% loan payable to an agency of the Belgian government in ten annual installments of
$88 from September 1995 to September 2004 878 761
12.25% loan payable to a bank in Italy in monthly installments of $8 through March 1997;
collateralized by plant and equipment in Italy. 181 279
3,553 1,842
Less long-term debt due currently 2,189 331
Long-term debt $1,364 $1,511
</TABLE>
17
<PAGE>
The principal payments of long-term debt are as follows:
<TABLE>
<S> <C>
1996 $2,189
1997 269
1998 186
1999 186
2000 186
Thereafter 537
Total $3,553
</TABLE>
The loans payable to an agency of the Belgian government provide the lender the
right to request a first mortgage on Bontex S.A.'s property, plant and
equipment.
European operations have short-term credit facilities totaling approximately
$11,424 and $7,460 at June 30, 1995 and 1994, respectively. As of June 30,
borrowings under these facilities were as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Short-term bank loans with various interest rates between
8.18% and 11.38% $11,274 $5,547
Overdrafts bearing interest at prime plus 1% 150 392
$11,424 $5,939
</TABLE>
One lender has the right to request a mortgage on Bontex S.A.'s property, plant
and equipment.
Georgia Bonded Fibers, Inc. has an unsecured line of credit arrangement with a
bank whereby Georgia Bonded Fibers, Inc. may borrow up to $250 at the prime rate
of interest. Georgia Bonded Fibers, Inc. has a secured line of credit
arrangement with another bank whereby Georgia Bonded Fibers, Inc. may borrow up
to $1,000 at the prime rate or London Inter Bank Offered Rate (LIBOR) plus a
prime margin ranging from 50 to 100 basis points or a LIBOR margin ranging from
240 to 290 basis points, depending on which rate is utilized and certain
financial ratios. At June 30, 1995 and 1994, Georgia Bonded Fibers, Inc. had
borrowings of $250 and $400, respectively, outstanding under these lines of
credit.
Consolidated weighted average interest rates on short-term borrowings at June
30, 1995 and 1994 are 7.5 and 6.8 percent, respectively.
Georgia Bonded Fibers, Inc. is subject to various loan covenants under the
secured debt agreement and has pledged certain receivables and inventory of
Georgia Bonded Fibers, Inc. as security. As a result of the decrease in various
financial ratios relating to $1,846 of long-term debt, the Company obtained a
waiver from such requirements at June 30, 1995. There is no assurance the
Company will be able to obtain future waivers from such requirements, and
accordingly, $1,846 of the long-term debt has been classified as current.
18
<PAGE>
5. INCOME TAXES
As discussed in Note 1, the Company adopted Statement of Financial Accounting
Standards No. 109 as of July 1, 1993. The cumulative effect of this change in
accounting for income taxes is $400, and is reported separately in the statement
of income for the year ended June 30, 1994.
The U.S. and foreign components of the provision for income taxes are presented
as follows:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
<S> <C> <C> <C>
1995:
Federal $(136) $ (174) $(310)
State (1) (7) (8)
Foreign 134 (704) (570)
$ (3) $ (885) $(888)
1994:
Federal $ 6 $ 34 $ 40
State (13) 5 (8)
Foreign 491 181 672
$ 484 $ 220 $ 704
1993:
Federal $ 17 $ (5) $ 12
State (9) (8) (17)
Foreign 275 (120) 155
$ 283 $ (133) $ 150
</TABLE>
The deferred tax benefit of $885 in 1995 includes $781 relating to operating
loss carryforwards.
The provision for income taxes differs from the expected tax expense (benefit)
(computed by applying the U.S. Federal corporate rate to income or loss before
income taxes and cumulative effect of change in accounting principle) as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Federal income tax at statutory rate $(798) $557 $117
Increase (reduction) in income taxes resulting from:
Foreign Sales Corporation (23) (75) (70)
Foreign income (loss) at other than U.S. rates (115) 161 69
State and local taxes, net of federal income tax benefit (5) (12) (12)
Other differences, net 53 73 46
Provision for income taxes $(888) $704 $150
Effective income tax rate 38% 43% 44%
U.S. Federal statutory income tax rate 34% 34% 34%
</TABLE>
19
<PAGE>
The components of deferred tax assets and liabilities at June 30, 1995 and 1994
are presented below:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts $ 29 $ 78
Inventories, principally due to additional costs capitalized for tax purposes 94 120
Other assets, due to difference in amortization of trademarks 100 79
Accrued pension and retirement benefits 205 198
Net operating loss carryforwards 813 32
Alternative minimum tax credit carryforwards 99 36
Other 5 23
Total gross deferred tax assets 1,345 566
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation and capital gain
recognition 542 492
Foreign exchange contracts, due to difference in income recognition -- 125
Other 21 40
Total gross deferred tax liabilities 563 657
Net deferred tax asset (liability) $ 782 $(91)
</TABLE>
The U.S. and foreign components of the net deferred tax asset (liability) at
June 30, 1995 and 1994 are presented below:
<TABLE>
<CAPTION>
CURRENT NONCURRENT TOTAL
<S> <C> <C> <C>
1995:
U.S. $ 277 $ 26 $ 303
Belgium 148 307 455
Italy 24 -- 24
$ 449 $ 333 $ 782
1994:
U.S. $ 135 $ (13) $ 122
Belgium (125) (103) (228)
Italy 20 (5) 15
$ 30 $ (121) $ (91)
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Based upon the level of
historical taxable income, anticipation of future taxable income over the
periods which the deferred tax assets are deductible, reversal of the temporary
differences which gave rise to the deferred tax liabilities, and available tax
planning strategies, management believes it is more likely than not the Company
will realize these deferred tax assets.
As part of the fiscal year end adjustments to the provision for income taxes,
approximately $400 of the tax benefits related to net loss carryforwards was
incurred prior to the fourth quarter. At June 30, 1995, the Company has $2,089
of net operating loss carryforwards to offset taxable income. These
carryforwards expire on various dates ranging from $67 in 1998, $618 in 2010 and
$1,404 do not expire. Net operating losses of $600 have been carried back to
offset prior years taxable income.
20
<PAGE>
The sources of deferred income taxes not restated to reflect the new accounting
standard for 1993 and their tax effect are as follows:
<TABLE>
<CAPTION>
1993
<S> <C>
Inventory capitalization $ (42)
Depreciation 11
Vacation and other payroll related accruals 28
Provision for bad debts (9)
Pension expense (9)
Forward exchange contracts 2
Deferred compensation (49)
Other, net (65)
$(133)
</TABLE>
At June 30, 1995, the Company has not recognized a deferred tax liability of $75
for the cumulative amount of undistributed income of its foreign subsidiaries,
because there are no plans to pay dividends in the foreseeable future. As of
June 30, 1995, undistributed income of the foreign subsidiaries was
approximately $1,480.
6. PENSION PLANS
The Company has pension plans covering substantially all full-time domestic
employees and certain foreign employees. The benefits from the Company's
domestic defined benefit plan are based upon years of service and the employee's
average earnings for the five highest consecutive years of compensation during
the ten years immediately preceding retirement. The Company's funding policy is
to contribute amounts to the plan sufficient to meet the minimum funding
requirements set forth in the Employee Retirement Income Security Act of 1974,
and any such additional amounts as the Company may determine to be appropriate
from time to time. Annual provisions for accrued pension costs are based on
independent actuarial valuations.
The Plan's funded status and amounts recognized in the Company's consolidated
financial statements at June 30 for its United States pension plan are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
(1995, $3,610; 1994, $3,679 and 1993, $3,547) $ 3,649 $(3,713) $(3,572)
Projected benefit obligation for service rendered to date $(4,882) $(5,043) $(5,267)
Plan assets 4,138 3,784 3,740
Plan assets less than projected benefit obligation (744) (1,259) (1,527)
Unrecognized prior service cost 192 207 315
Unrecognized net loss from past experience different from that assumed 435 1,105 1,418
Unrecognized net asset at July 1, 1986, net of amortization (148) (164) (181)
Prepaid (accrued) pension cost $ (265) $ (111) $ 25
</TABLE>
The Company's net periodic pension expense for the years ended June 30, 1995,
1994 and 1993 include the following components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Net periodic pension cost included the following components:
Service cost-benefits earned during the period $243 $ 233 $159
Interest cost on projected benefit obligation 344 345 328
Net amortization and deferral 180 (162) 77
767 416 564
Less actual return on assets and employee contributions 530 176 421
Net periodic pension cost $237 $ 240 $143
</TABLE>
21
<PAGE>
The weighted average discount rates used in determining the actuarial present
value of the projected benefit obligations were 7.75 percent for 1995 and 7.0
percent for 1994 and 1993. The rate of increase for future compensation levels
used in determining the obligation was 5.5 percent for 1995, 1994 and 1993. The
expected long-term rate of return on plan assets in 1995, 1994 and 1993 was 9.0
percent.
Pension assets are held under a group annuity contract with an insurance
company. Certain amounts are commingled with the general assets of the insurance
company and the remainder is invested in separate accounts, which include
domestic equity, domestic government, corporate and private placement bonds and
domestic real estate equity, of the insurance company. These amounts are valued
at contract value and fair value, respectively.
The pension expense relating to the foreign subsidiary's insured pension and
disability plan amounted to $76, $69 and $103 in 1995, 1994 and 1993,
respectively. Benefits are based on years of service and the average of the last
five years annual earnings.
The Company provides certain supplemental retirement benefits to the President.
Expenses related to these benefits were approximately $132 in 1995 and in 1994.
The agreement contains a change in control provision that would accelerate the
payment of these benefits. The maximum liability under this agreement, in such
event, would be approximately $650,000.
On October 3, 1994, the Board of Directors adopted a deferred compensation
agreement, which supersedes the previous arrangement dated November 1, 1985,
with Hugo N. Surmonte, Chairman of the Board of Directors. The deferred
compensation agreement requires the Company pay Mr. Surmonte $150 per year,
after his retirement from the Company and during his lifetime, and if Mr.
Surmonte's death precedes his spouse's death, that such amounts shall be paid to
his spouse for the remainder of her life. On October 5, 1994, Mr. Surmonte
retired from the Company. On October 10, 1994, Mr. Surmonte died and per the
agreement his widow, Marie G. Surmonte, age 84, receives the benefit. During
fiscal year 1995, the Company paid $113 to Mr. Surmonte's widow and at June 30,
1995, the Company has recorded a liability of $297 for this obligation.
7. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company's subsidiary, Bontex S.A., was a defendant in a lawsuit filed by a
former employee of Georgia Bonded Fibers, Inc. who claimed termination
indemnities. The Company accrued $363 in prior years with respect to this
lawsuit. On June 28, 1993, the Company was advised that the case had been closed
with no award for damages to the former employee. Accordingly, selling, general
and administrative expenses for 1993 include a credit resulting from the
reversal of the related contingency accrual.
Further, Bontex S.A. was granted a credit totaling $352 from their pension
insurance carrier related to the Bontex S.A.'s pension contributions paid in
prior years on behalf of the former employee. Accordingly, selling, general and
administrative expenses for 1993 have been reduced by the amount of the credit.
8. FINANCIAL INSTRUMENTS
The Company uses various financial instruments in the normal course of business.
By their nature, all such instruments involve risk, and the Company's maximum
potential loss may exceed amounts recorded in the balance sheet. As is customary
for these types of instruments, the Company does not require collateral or other
security from other parties to these instruments. However, because the Company
manages exposure to credit risk through credit approvals, credit limits and
monitoring procedures, the Company believes that reserves for losses are
adequate.
FOREIGN EXCHANGE CONTRACTS-Bontex S.A. enters into a number of foreign exchange
contracts, including forward and option contracts, to manage the exposure of
sales denominated in U.S. dollars to changes in foreign currency exchange rates.
The foreign exchange contracts mature at various dates and the maximum risk of
loss on these contracts is limited to the amount of the difference between a
higher market rate and the contract rate at the date of contract delivery.
Contract amounts and unrealized gain (loss) of the Company's foreign exchange
contracts at June 30, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Forward contracts amount $ -- $4,000
Purchased option contract 5,000 --
Unrealized gain $ -- $ 267
</TABLE>
22
<PAGE>
INTEREST RATE SWAPS-During 1994, the Company entered into a number of interest
rate swap agreements for $2,782 of its debt. These swap agreements provide for
the payment of interest based on fixed rates ranging from 6.15 percent to 8.62
percent, and remain unchanged over the term of the agreements. The floating
rates of the debt agreements are based on the Brussels Inter Bank Offering Rate
(BIBOR) or the London Inter Bank Offered Rate (LIBOR) and are reset every 90
days based on market conditions. The agreements expire in December 1996 and June
1997 and 1999. The nature of the swap agreements changes certain variable rate
debt to fixed rate debt. Interest rate differentials paid or received under
these swaps are recognized over the life of the contracts as adjustments are
made to the effective yield of the underlying debt. An interest premium of $20
was paid during 1995. In the event of lowering BIBOR or LIBOR rates, the Company
may be exposed to the higher fixed rates. Furthermore, the Company may be
exposed to a credit loss in the event of nonperformance by the other party to an
interest rate swap agreement. However, the Company does not anticipate such
nonperformance.
FAIR VALUE OF FINANCIAL INSTRUMENTS-The following assumptions were used by the
Company to estimate the fair value of its financial instruments: The carrying
amounts reported in the balance sheet for cash, cash equivalents, notes payable
and long-term debt to banks approximate fair value. The fair value of long-term
debt is estimated using discounted cash flows based on the Company's incremental
borrowing rates. Unrealized gains or losses on the fair value of foreign
exchange contracts and interest rate swap agreements are estimated based on
current interest and foreign exchange rates.
The contract or notional amounts and estimated fair value of the Company's
material off balance sheet financial instruments at June 30, 1995 are as
follows:
<TABLE>
<CAPTION>
CONTRACT OR
NOTIONAL
AMOUNT FAIR VALUE
<S> <C> <C>
Interest rate swaps $ 2,782 $ (57)
Purchased option contract $ 5,000 $ 68
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL MATTERS-As with all fiberboard manufacturers, the Company is
subject to various federal, state, foreign and local agencies concerning
compliance with environmental control statutes and regulations. These
regulations impose limitations on the discharge of contaminants into the
environment, including effluent and emission limitations, as well as require the
Company to obtain and operate in compliance with the conditions of permits and
other government authorizations. Failure to comply with applicable environmental
control standards could result in additional expenditures, interruption or
suspension of operations at the affected facilities.
The Company has made and intends to continue to make capital investments,
operating expenditures, and production adjustments in connection with compliance
to environmental laws and regulations. Since the Company is essentially
comprised of two fiberboard plants, water quality discharge remains the primary
environmental concern. A private water quality consulting firm has completed an
extensive analysis and plans for compliance at both plants have been
implemented.
On July 22, 1994, the Company entered into a Special Consent Order with the
Virginia Department of Environmental Quality committing the Company to construct
a waste water treatment facility to address certain effluent limitations in its
Virginia Pollution Discharge Elimination Permit. This waste treatment facility
is estimated to cost a total of $1,400 and is scheduled to be completed by
January 1, 1996, in accordance with the construction schedule in the Consent
Order.
The Belgium government has imposed new regulations requiring a formal water
treatment plant to be installed at Bontex S.A. The first phase for the
construction of the waste treatment facility in Belgium is anticipated to be
completed in February 1996 at an estimated cost of $1,400.
Estimates of future costs for environmental compliance may differ from final
costs due to, among other things, continued emergence of new environmental laws
and regulations, as well as technological developments. At the present time, the
Company anticipates that consolidated capital expenditures for environmental
compliance during fiscal 1996 will aggregate $2,200, however, this estimate
could change due to ultimate circumstances. Compliance with existing
environmental regulations is not expected to have a materially adverse effect on
the Company's earnings, financial or competitive position.
LITIGATION-In the normal course of business, the Company is subject to
proceedings, lawsuits and other claims. Such matters are subject to many
uncertainties, and outcomes are not predictable with assurance. There are no
legal proceedings, lawsuits or other claims pending against or involving the
Company which, in the opinion of management, will have a material adverse impact
upon the consolidated results of operations or financial condition of the
Company.
LEASES-Rental expenses for all operating leases amounted to $112, $84 and $20 in
1995, 1994 and 1993, respectively.
23
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
of Georgia Bonded Fibers, Inc.:
We have audited the accompanying consolidated balance sheets of
Georgia Bonded Fibers, Inc. and subsidiaries as of June 30, 1995 and
1994, and the related consolidated statements of income (loss),
changes in stockholders' equity, and cash flows for each of the years
in the three-year period ended June 30, 1995. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Georgia Bonded Fibers, Inc. and subsidiaries as of June 30, 1995
and 1994, and the results of their operations and their cash flows for
each of the years in the three-year period ended June 30, 1995, in
conformity with generally accepted accounting principles.
As discussed in notes 1 and 5 to the consolidated financial
statements, the Company changed its method of accounting for income
taxes on July 1, 1993 to adopt the provisions of Statement of
Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES.
(Signature of KPMG Peat Marwick LLP)
Roanoke, Virginia
August 11, 1995, except for
note 4, as to which the date
is August 25, 1995
24
<PAGE>
<TABLE>
<C> <S>
DIRECTORS AND EXECUTIVE OFFICERS
JAMES C. KOSTELNI (|) Chairman of the Board, President, Chief
Executive Officer, Director
JEFFREY C. KOSTELNI Treasurer and Chief Financial Officer
DAVID A. DUGAN Controller and Corporate Secretary, Director
LARRY E. MORRIS Technical and Sales Director, Director
MICHAEL J. BRETON Corporate Director of International Operations,
Director
CHARLES W. J. KOSTELNI Assistant Controller
PATRICIA S. TISCHIO Assistant Corporate Secretary, Director
WILLIAM J. BINNIE * Director
W. J. BINNIE ASSOCIATES
WILLIAM B. D'SURNEY Director
PRIVATE INVESTOR
FRANK B. MAYORSHI (|)* Director
PRIVATE INVESTOR
DR. JOSEPH F. RAFFETTO Director
RETIRED PHYSICIAN
ROBERT J. WEEKS (|)* Director
PRIVATE INVESTOR
(|) Member of Executive Committee
* Member of Audit Committee
COUNSEL
WOODS, ROGERS & HAZELGROVE, Roanoke, Virginia
P.L.C.
ATTORNEYS AT LAW
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP Roanoke, Virginia
CERTIFIED PUBLIC ACCOUNTANTS
TRANSFER AGENT
RESISTRAR & TRANSFER COMPANY Cranford, New Jersey
</TABLE>
25
<PAGE>
LOCATIONS
UNITED STATES MANUFACTURING
BONTEX
ONE BONTEX DRIVE
BUENA VISTA, VIRGINIA 24416-0751
800-733-4234
EUROPEAN HEADQUARTERS AND MANUFACTURING
BONTEX S.A.
RUE SLAR
4801 STEMBERT, BELGIUM
SALES AND DISTRIBUTION CENTERS
BONTEX ITALIA S.R.L.
VIA FRANCA. L
37069 VILLAFRANCA (VERONA)
ITALY
BONTEX DE MEXICO, S. A. DE C. V.
BOULEVARD MARIANO EXCOBEDO #801
COLONIA ANDRADE, C. P. 37370
LEON, GUANAJUATO
MEXICO
INTERNATIONAL LIAISON OFFICES
BONTEX AUSTRALIA
20 MUNRO STREET
MACLEOD VIC 3085
AUSTRALIA
BONTEX KOREA
RM. 601, SONG NAM BLDG.
76-1, 4GA, CUNG ANG-DONG
CHUNG-GU, BUSAN, KOREA
BONTEX TAIWAN
8F1, NO. 52, SEC. 2
CHUNG SHAN N. RD.
TAIPEI, 10419, TAIWAN
NORTH AMERICAN WAREHOUSE FACILITIES
NEWARK, NEW JERSEY
FRANKLIN, TENNESSEE
ST. LOUIS, MISSOURI
CAMBRIDGE, ONTARIO, CANADA
MONTREAL, QUEBEC, CANADA
VILLAGE HURON, QUEBEC, CANADA
SHAREHOLDERS' INFORMATION
CORPORATE HEADQUARTERS, SALES
AND DISTRIBUTION CENTER
GEORGIA BONDED FIBERS, INC.
15 NUTTMAN STREET
NEWARK, NEW JERSEY 07103
ANNUAL MEETING
11:00 A.M. OCTOBER 19, 1995
BEST WESTERN INN AT HUNT RIDGE
WILLOW SPRINGS DRIVE
LEXINGTON, VIRGINIA 24450
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
213 SOUTH JEFFERSON STREET
ROANOKE, VIRGINIA 24011
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER COMPANY
10 COMMERCE DRIVE
POST OFFICE BOX 1010
CRANFORD, NEW JERSEY 07106
FORM 10-K
A COPY OF THE COMPANY'S 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
IS AVAILABLE WITHOUT CHARGE TO ANY SHAREHOLDER. REQUESTS SHOULD BE SENT TO THE
ATTENTION OF:
CONTROLLER
GEORGIA BONDED FIBERS, INC.
ONE BONTEX DRIVE
BUENA VISTA, VIRGINIA 24416-0751
(Georgia Bontex logo appears here)
(Georgia Bontex logo appears here)IS A REGISTERED TRADEMARK OF GEORGIA
BONDED FIBERS, INC.
GEORGIA BONDED FIBERS, INC, IS AN EQUAL OPPORTUNITY EMPLOYER.
(Recycle logo appears here) Printed on recycled paper
26
<PAGE>
BONTEX(Register Mark) On
The Environment.
(Cartoon appears here showing a man and woman talking about the
BONTEX(Register Mark) 200 recycled and the BONTEX(Register Mark) 300 recycled)
BONTEX(Register Mark) through significant R&D efforts has perfected
BONTEX(Register Mark) 200 RECYCLED and BONTEX(Register Mark) 300 RECYCLED
insole materials from 100% recovered paper, with a minimum 80% "post-
consumer waste".
BONTEX(Register Mark) 200 RECYCLED and BONTEX(Register Mark) 300
RECYCLED have high performance qualities such as internal bond, perspiration
resistance, flexibility, resistance to aging, stability in hot, cold or wet
conditions.
All BONTEX(Register Mark) products are MORI-FRESH(Register Mark)
treated to resist mold-type growth related to bacteria and fungi.
BONFOAM(Register Mark), SUREFOAM(Register Mark), MAXXON(Register Mark)
cushion insole products can be combined to any BONTEX(Register Mark) product.
BONTEX(Register Mark) 200 RECYCLED has been designed for all types of
light and medium durability footwear while BONTEX(Register Mark) 300 RECYCLED
has been designed for high performance footwear such as men's, women's,
children's athletic outdoor and heavy duty footwear. BONTEX(Register Mark)
300 can be used in any type of footwear, including GOODYEAR WELT applications
without a full sockliner.
BONTEX(Register Mark) 200 RECYCLED and BONTEX(Register Mark) 300
RECYCLED cut and skive easily and can be used in handbags, luggage,
leathergoods, backing stiffener, laminating base, plumper stock, and
headwear visorboard, brims and sizebands.
BONTEX(Register Mark) products are distributed globally through
representatives and distributors in 72 markets. Liaison offices:
BONTEX(Register Mark) Korea-Pusan, Korea; BONTEX(Register Mark) Taiwan -
Taipei, Taiwan; BONTEX(Register Mark) Philippines - Metro Manila,
Philippines; BONTEX(Register Mark) Indonesia - Jakarta, Indonesia;
BONTEX(Register Mark) Thailand - Bangkok, Thailand;
BONTEX(Register Mark) Hong Kong - Central District, Hong Kong.
Please call, write or fax BONTEX(Register Mark) for samples.
(Georgia Bontex logo appears here)
(American Podiatric Medical Association and SATRA Footwear Technology
Centre logos appear here)
BONTEX(Register Mark): One BONTEX(Register Mark) Drive, Buena Vista, VA
24416-0751. (703) 261-2181, Fax: (703) 261-3784 Telex: 7607542.
Manufactured: BONTEX(Register Mark) Buena Vista, VA 24416-0751.
BONTEX(Register Mark) S.A. Stemberg, Belgium. Distributed and converted by:
BONTEX(Register Mark) Italia S.R.L., Villafranca, Verona, Italy.
BONTEX(Register Mark) de Mexico, Leon, Mexico.
<PAGE>
Q. WHAT IS COSSETTING?
A. CONSUMERS CALL IT COMFORTABLE!
(Photo of the bottom insole of a shoe with the following call-outs:
BONTEX(Register Mark) 244W, Dual Density Bonfoam(Register Mark) Cushion,
Contour(Register Mark)-Maxxon(Register Mark) Cushion, Fabric Cover,
BONFOAM(Register mark) Cushion Heel Pad and Fabric Heel Pad Cover.)
BONFOAM(Register Mark)/CONTOUR(Register Mark)-MAXXON(Register Mark)
BONFOAM(Register Mark)/CONTOUR(Register Mark)-MAXXON(Register Mark)
DUAL DENSITY CUSHION INSOLES from BONTEX(Register Mark) meets the challenge
of providing comfort and protecting feet from harsh environmental discomforts.
Whether the footwear you manufacture is bound for hard ground, wet and cold
conditions, high impact and abrasive conditions or just leisure wear,
BONFOAM(Register Mark)/CONTOUR(Register Mark)-MAXXON(Register Mark) DUAL
DENSITY CUSHION INSOLES combined with BONTEX(Register Mark) reduces internal
shoe discomforts and provides cossetting.
BONFOAM(Register Mark)/CONTOUR(Register Mark)-MAXXON(Register Mark)
DUAL DENSITY CUSHION INSOLES combined with BONTEX(Register Mark) enables the
shoe bottom to conform elastically to the shape of the foot and distribute
pressure during any activity.
The dynamic interaction between the foot and weight transfer is
accommodated and high pressure points are minimized. Also,
BONFOAM(Register Mark)-MAXXON(Register Mark) CUSHION INSOLES have
moisture vapor transmission properties.
With BONFOAM(Register Mark)/CONTOUR(Register Mark)-MAXXON(Register Mark)
DUAL DENSITY CUSHION INSOLES combined with BONTEX(Register Mark) consumers
will see and feel comfort at the point of purchase when trying on your
footwear in the store.
BONTEX(Register Mark) has created materials for handbags, luggage and
headwear, too. BONTEX(Register Mark) products are designed to be
"environmentally friendly". BONTEX(Register Mark) uses recycled and primary
cellulose fibers originally derived from trees, a renewable resource.
Please call, write, or fax BONTAX(Register Mark) for samples.
(Georgia Bontex logo appears here)
(American Podiatric Medical Association and SATRA Footwear Technology
Centre logos appear here)
BONTEX(Register Mark): One BONTEX(Register Mark) Drive, Buena Vista, VA
24416-0751. (703) 261-2181, Fax: (703) 261-3784 Telex: 7607542.
Manufactured: BONTEX(Register Mark) Buena Vista, VA 24416-0751.
BONTEX(Register Mark) S.A. Stemberg, Belgium. Distributed and converted by:
BONTEX(Register Mark) Italia S.R.L., Villafranca, Verona, Italy.
BONTEX(Register Mark) de Mexico, Leon, Mexico.
<PAGE>
BONTEX(Register Mark)/SUR-V-LON(Register Mark)
(Photo of luggage with the Bontex tag)
hangs tough!
When you hang a BONTEX(Register Mark)/SUR-V-LON(Register Mark) tag on
your luggage, attache, portfolio, or handbag, you get high performance products
that hang tough.
BONTEX(Register Mark)/SUR-V-LON(Register Mark) have traveled the world
over for many years and make reliable first class traveling companions.
BONTEX(Register Mark) products are designed to be "environmentally
friendly" because we use primary and recycled cellulose fibers originally
derived from trees, a renewable natural resource.
All BONTEX(Register Mark) products are MORI-FRESH(Register Mark)
treated to resist mold-type growth related to bacteria and fungi.
(A picture of the SUR-V-LON tag appears here)
Please call, write, or fax BONTAX(Register Mark) for samples.
(Georgia Bontex logo appears here)
(American Podiatric Medical Association and SATRA Footwear Technology
Centre logos appear here)
BONTEX(Register Mark): One BONTEX(Register Mark) Drive, Buena Vista, VA
24416-0751. (703) 261-2181, Fax: (703) 261-3784 Telex: 7607542.
Manufactured: BONTEX(Register Mark) Buena Vista, VA 24416-0751.
BONTEX(Register Mark) S.A. Stemberg, Belgium. Distributed and converted by:
BONTEX(Register Mark) Italia S.R.L., Villafranca, Verona, Italy.
BONTEX(Register Mark) de Mexico, Leon, Mexico.
<PAGE>
BONTEX(Register Mark) PRODUCTS
A World Class
Tag
Team.
(Five pictures of tags of MAXXON(Register Mark), BONTEX(Register Mark),
BON-FOAM(Register Mark) 400, BONTEX(Register Mark) VISOR and
SUR-V-LON appear on this page)
When you tag your products with BONTEX(Register Mark),
BONFOAM(Register Mark), MAXXON(Register Mark), or SUR-V-LON(Register Mark),
you would have a world class tag team in your corner.
BONTEX(Register Mark) products are tough, durable, light, and flexible.
Every BONTEX(Register Mark) product is designed to be "environmentally
friendly".
All BONTEX(Register Mark) products are MORI-FRESH(Register Mark)
treated to resist mold-type growth related to bacteria and fungi.
BONTEX(Register Mark) uses primary and recycled cellulose fibers
originally derived from trees, a renewable natural resource.
Please call, write or fax BONTEX(Register Mark) today for samples.
(Georgia Bontex logo appears here)
(American Podiatric Medical Association and SATRA Footwear Technology
Centre logos appear here)
BONTEX(Register Mark): One BONTEX(Register Mark) Drive, Buena Vista, VA
24416-0751. (703) 261-2181, Fax: (703) 261-3784 Telex: 7607542.
Manufactured: BONTEX(Register Mark) Buena Vista, VA 24416-0751.
BONTEX(Register Mark) S.A. Stemberg, Belgium. Distributed and converted by:
BONTEX(Register Mark) Italia S.R.L., Villafranca, Verona, Italy.
BONTEX(Register Mark) de Mexico, Leon, Mexico.
