FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Nine Months Ended March 31, 1996
Commission File No. 0-5200
GEORGIA BONDED FIBERS, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-1427551
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE BONTEX DRIVE, BUENA VISTA, VIRGINIA 24416-0751
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 540-261-2181
Indicate by checkmark whether the registrant (1) has filed all reports to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months(or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES ( X ) NO ( )
Indicate the description and number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable date.
Class Outstanding at May 10, 1996
Common Stock - $.10 par value 1,572,824
<PAGE>
GEORGIA BONDED FIBERS, INC.
FORM 10-Q
FOR THE NINE MONTHS ENDED MARCH 31, 1996
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1996 and 1995, June 30, 1995 . . . . . . . . . . . . . . .3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND RETAINED
EARNINGS
Nine Months Ended March 31, 1996 and 1995. . . . . . . . . . . . . .5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, 1996 and 1995. . . . . . . . . . . . . .6
CONDENSED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS . 7, 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. .9, 10, 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders. . . 12
Item 5. Other Information. . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 12
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements
GEORGIA BONDED FIBERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
March 31, June 30,
(unaudited)
1996 1995 1995
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 286 $ 6,153 $ 4,379
Short-term investments, at cost which
approximates market - 122 -
Trade accounts receivable, less allowance
for doubtful accounts of $ 138 ($ 147
at March '95, $156 at June '95) 13,289 13,966 15,300
Other receivables 631 772 490
Inventories 6,937 5,850 7,650
Deferred income taxes 450 97 449
Income taxes refundable 357 - 145
Other current assets 309 985 227
------- ------- -------
TOTAL CURRENT ASSETS 22,259 27,945 28,640
------- ------- -------
Property, plant and equipment:
Land 293 222 271
Buildings and building improvements 4,297 4,357 4,383
Machinery, furniture and equipment 14,211 13,877 14,256
Construction in progress 2,676 1,457 1,578
------- ------- -------
21,477 19.913 20,488
Less accumulated depreciation and amortization 11,056 10,416 10,621
------- ------- -------
Net property, plant and equipment 10,421 9,497 9,867
------- ------- -------
Deferred income taxes 846 - 333
Other assets, at cost less applicable
amortization 455 733 687
------- ------- -------
TOTAL ASSETS $ 33,981 $ 38,175 $ 39,527
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 9,241 $ 10,876 $ 11,674
Accounts payable 8,755 9,216 10,339
Accrued expenses 2,748 2,632 2,622
Capital lease obligations due currently - 60 -
Long-term debt due currently 589 739 2,189
------- ------- -------
TOTAL CURRENT LIABILITIES 21,333 23,523 26,824
<PAGE>
Capital lease obligations - 6 -
Long-term debt 2,444 3,093 1,364
Deferred income taxes - 154 -
Other long-term liabilities 35 - 153
------- ------- -------
TOTAL LIABILITIES 23,812 26,776 28,341
------- ------- -------
Stockholders' equity:
Common stock of $.10 par value. Authorized
3,000,000 shares; issued 1,572,824 shares 157 157 157
Additional capital 1,551 1,551 1,551
Retained earnings 7,382 8,408 8,213
Foreign currency translation adjustment 1,079 1,283 1,265
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY 10,169 11,399 11,186
------- ------- -------
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY $ 33,981 $ 38,175 $ 39,527
======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
GEORGIA BONDED FIBERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(LOSS)
AND RETAINED EARNINGS
(Dollars in Thousands Except for per Share Amounts)
(Unaudited)
Nine Months Ended Quarter Ended
March 31, March 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $34,389 $36,973 $13,117 $14,102
Cost of Sales 27,248 27,834 9,618 10,507
Gross Profit 7,141 9,139 3,499 3,595
Selling, General and Administrative Expenses 8,091 8,510 2,895 3,154
Operating Income (Loss) (950) 629 604 441
Other (Income) Expense:
Interest expense 919 590 293 273
Interest income (31) (36) (4) (25)
Foreign currency exchange (gain) loss (569) 1,519 25 1,171
Other, net (70) (67) (9) (8)
Total Other 249 2,006 305 1,411
Income (Loss) Before Income Taxes (1,199) (1,377) 299 (970)
Provision for Income Taxes (368) (114) 187 (24)
Net income (loss) (831) (1,263) 112 (946)
Retained earnings, beginning of period 8,213 9,671 7,270 9,354
Retained earnings, end of period $ 7,382 $ 8,408 $ 7,382 $ 8,408
Income (Loss) per share $ (.53) $ (.80) $ .07 $ (.60)
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
GEORGIA BONDED FIBERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
(unaudited)
Nine Months Ended
March 31
1996 1995
<S> <C> <C>
Cash Flows from Operating Activities:
Cash received from customers $ 38,660 $ 39,457
Cash paid to suppliers and employees (37,499) (38,371)
Interest received 106 44
Interest paid (1,014) (632)
Income taxes paid, net of refunds (248) 88
------- -------
Net cash provided by operating activities 5 586
------- -------
Cash Flows from Investing Activities:
Acquisition of property, plant and equipment (1,529) (1,273)
Other assets, net (8) (5)
------- -------
Net cash used in investing activities (1,537) (1,278)
------- -------
Cash Flows from Financing Activities:
Increase (decrease) in short-term borrowings, net (2,062) 3,888
Long-term debt incurred - 2,000
Principal payments on long-term debt and capital lease obligations (488) (282)
------- -------
Net cash provided by (used in) financing activities (2,550) 5,606
------- -------
Effect of Exchange Rate Changes on Cash (11) (123)
------- -------
Net Increase (Decrease) in Cash and Cash Equivalents (4,093) 4,791
Cash and Cash Equivalents at Beginning of Year 4,379 1,362
------- -------
Cash and Cash Equivalents at End of Year $ 286 $ 6,153
======= =======
Reconciliation of Net Loss to Net Cash Provided by
Operating Activities:
Net loss $ (831) $ (1,263)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 796 746
Provision for bad debts 10 9
Deferred income taxes (532) 154
Change in assets and liabilities:
Decrease in trade accounts and other receivables 1,325 2,036
(Increase) decrease in inventories 557 (802)
Increase in other assets (75) (681)
Increase (decrease) in accounts payable and accrued expenses (865) 1,028
Decrease in income taxes (239) (141)
Decrease in other liabilities (141) (500)
------- -------
Net cash provided by operating activities $ 5 $ 586
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
GEORGIA BONDED FIBERS, INC.
CONDENSED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995 AND JUNE 30, 1995
(Unaudited)
1. The accompanying unaudited condensed consolidated financial
statements have been prepared by Georgia Bonded Fibers, Inc. and its
subsidiaries("Bontex" or the "Company") in accordance with generally
accepted accounting principles for interim financial reporting
information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all material adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation of the results
of operations, financial position and cash flows for each period
shown, have been included. Operating results for interim periods are
not necessarily indicative of the results for the full year. The
unaudited condensed consolidated financial statements and condensed
notes are presented as permitted by Form 10-Q and do not contain
certain information included in the Company's annual consolidated
financial statements and notes. For further information, refer to
the consolidated financial statements and notes thereto included in
the Company's annual report on Form 10-K for the year ended June 30,
1995.
2. The condensed consolidated balance sheets include the following
related to European subsidiaries:
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995 1995
(Dollars in Thousands)
<S> <C> <C> <C>
Current assets $ 15,088 $ 20,112 $ 21,192
Total assets 21,102 25,958 27,426
Current liabilities 16,458 20,324 21,734
Total liabilities 17,594 22,049 23,310
Stockholders' equity 3,508 3,909 4,116
</TABLE>
The condensed consolidated statements of income(loss) include the
following related to European subsidiaries:
<TABLE>
<CAPTION>
Nine Months Ended Quarter Ended
March 31, March 31,
1996 1995 1996 1995
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Net Sales $21,792 $22,569 $ 8,364 $ 8,950
Net loss (419) (1,136) (16) (832)
</TABLE>
<PAGE>
GEORGIA BONDED FIBERS, INC.
CONDENSED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995 AND JUNE 30, 1995
(Unaudited)
3. The last in, first out (LIFO) method of inventory pricing is used by
the United States company. Inventories of the European subsidiaries
are valued at the lower of cost or market principally using the
first-in, first-out (FIFO) method of inventory costing. Inventories
are summarized as follows:
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995 1995
(Dollars in Thousands)
<S> <C> <C> <C>
Finished goods $ 3,792 $ 3,211 $ 3,644
Raw Materials 3,218 2,465 4,148
Supplies 575 609 635
------ ------ ------
Inventories at FIFO 7,585 6,285 8,427
LIFO reserves 648 435 777
------ ------ ------
$ 6,937 $ 5,850 $ 7,650
====== ====== ======
</TABLE>
4. Per share calculations are based on shares outstanding of 1,572,824
shares for all periods.
<PAGE>
GEORGIA BONDED FIBERS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE NINE MONTHS AND QUARTER ENDED MARCH 31, 1996
(Unaudited)
RESULTS OF OPERATIONS
The results of operations for the third quarter of fiscal 1996 reflect
significant improvement. During the third quarter, the Company generated a
consolidated operating profit of $604,000, and net income of $112,000 or
$.07 per share. This represents the first quarterly consolidated operating
profit in three quarters, and the first quarter with consolidated net
income since June 1994. The Company was able to generate these improved
results through improved efficiencies even though consolidated net sales
declined $1 million or 7 percent to $13.1 million for the third quarter
ended March 31, 1996. Consolidated net sales for the nine months ended
March 31, 1996 totaled $34.4 million, which is a decrease of $2.6 million
or 7 percent relative to the corresponding prior year period. The decline
in consolidated net sales mainly reflects lower volume compared to last
year resulting from, among other things, sluggish retail sales. The
fluctuation in foreign currency exchange rates resulted in a $1.0 million
translation increase in net sales.
Consolidated net income of $112,000 or $.07 per share for the third quarter
is a significant improvement from the prior year third quarter net loss of
$946,000 or $.60 per share. This improvement is mainly due to reduced
foreign currency exchange losses. The $831,000 or $.53 per share
consolidated net loss for the nine months ended March 31, 1996 represents
an improvement of $432,000 or $.27 per share over the same period in 1995,
and is primarily due to reduced foreign currency exchange losses and cost
controls. Realized foreign exchange gains of approximately $569,000, which
represent a recovery of a large portion of the foreign currency exchange
losses, previously accrued during the prior year, reduced operating losses.
Gross margins declined from 24.7 percent during the first nine months of
fiscal 1995 to 20.8 percent during the first nine months of fiscal 1996.
This decrease is primarily due to the impact of higher raw material costs
and lower volumes during the first half of fiscal 1996. However, operating
conditions are anticipated to continue to improve during the remainder of
the fiscal year, because of higher volumes compared to the previous two
quarters, increased selling prices, and lower raw material costs.
Seasonality exists in that the first half of each year is typically lower
in volume than the second half, which is largely due to customers'
scheduled vacations, shutdowns, holidays and industry buying cycles.
Consequently, the results of operations during the first half of each
fiscal year historically have been losses or break-even. These financial
statements are interim reports, and the results of interim periods are not
necessarily indicative of financial results for the full year.
Selling General & Administrative (SG&A) expenses as a percent of net sales
increased from 23.0 percent to 23.5 percent during the first nine months of
fiscal 1996, as compared to the corresponding prior year period. The
increase in SG&A percentage is mainly due to the decrease in sales.
Overall, SG&A costs declined $419,000, as compared to the same period last
year. SG&A costs are expected to decline throughout the year reflecting
the impact of various cost control measures.
<PAGE>
FINANCIAL CONDITION
Consolidated equity increased from the previous quarter and totaled $10.2
million at the end of March 1996. Working capital decreased from June 30,
1995 by $890,000 to $926,000, because of cash requirements for operations
and the various planned plant and equipment additions. The fluctuation in
foreign currency exchange rates from June 30, 1995 to March 31, 1996
resulted in a translation decrease of $849,000 in consolidated total
assets.
The decrease in cash balances is mainly due to funding of operations and
planned capital additions, as well as the exchange of US dollar deposits at
favorable exchange rates.
Trade Accounts Receivables decreased by $2.0 million to $13.3 million, and
is primarily because of reduced sales. Overall, the aging of receivables
remained good with a decrease in the average number of days outstanding
from 108 days to 99 days.
The $713,000 decrease in inventories to $6.9 million mainly corresponds to
the decline in raw material inventory balances, reflecting the Company's
policy not to forward-purchase pulp during periods of declining prices.
The cost of pulp, the primary raw material for the Company's product, has
declined significantly over the previous quarter. Raw material costs are
expected to decline over the next few months due to the transition to lower
priced inventories.
The increase in deferred income taxes relate to net loss carryforwards
incurred during the first six months of fiscal 1996, which are expected to
offset future taxable income. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income.
The $989,000 increase in PP&E is largely due to the additions relating to
the wastewater treatment projects at the Company's manufacturing facilities
in the USA and Belgium.
Accounts Payable and short-term borrowings decreased $4 million, which
primarily relates to reduced cash and inventory balances. The Company was
successful in modifying certain debt covenants relating to a $1.6 million
term loan. Accordingly, $1.3 million of the term loan, which had been
previously classified as current, has been reclassified as long-term. The
Company is subject to various loan covenants under the modified debt
agreement, including, among other things, maintaining certain minimum
financial ratios, limitations on capital expenditures, and pledging of
certain current and noncurrent assets as security. The Company agreed to
use its best efforts to refinance the credit facility. As of March 31,
1996, the Company was in compliance with all revised debt covenants.
Management does not anticipate, though it has no assurance, that these
covenants will have an adverse impact on the Company.
Management is in communication with other lending institutions to explore
refinancing and expand credit facilities. Management is of the opinion
that existing credit facilities will be sufficient to meet future operating
and capital requirements.
<PAGE>
The Company currently is in the process of entering into a Consent Order
with the Virginia Department of Environmental Quality pursuant to which the
Company will commit to take appropriate corrective action with respect to
air quality emissions on a fixed time line. The Company presently is
seeking proposals from various vendors regarding the different control
technologies available to accomplish the corrective action, and,
accordingly, the cost of such corrective action cannot yet be determined.
In light of the covenants and agreements in the modification agreement
described above, the Company may be required to obtain the bank's consent
for some or all capital expenditures in connection with this project.
<PAGE>
PART II. OTHER INFORMATION
GEORGIA BONDED FIBERS, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
On April 9, 1996, the United States Patent Office assigned to
Georgia Bonded Fibers, Inc. a patent for Leather-Like Hoof Pad
of Composite Material. The product is a hoof pad adapted for
attachment between the hoof of a horse and a horseshoe.
Presently, the product is not marketable, but may be in the
future.
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibits:
10 - Modification Agreement, dated March 7, 1996, between
Georgia Bonded Fibers, Inc. and Nationsbank, National
Association
27 - Financial Data Schedule - page 11
(b.) No reports on Form 8-K have been filed during the second
quarter
<PAGE>
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.
GEORGIA BONDED FIBERS, INC.
(Registrant)
5-13-96 /s/James C. Kostelni
- ---------------- ------------------------------
(Date) James C. Kostelni
Chairman of the Board
and President
5-13-96 /s/David A. Dugan
- ---------------- ------------------------------
(Date) David A. Dugan
Controller and
Corporate Secretary
<PAGE>
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT (this "Agreement") is made this 7th day
of March, 1996, by and between GEORGIA BONDED FIBERS, INC., a New Jersey
corporation (the "Borrower"), and NATIONSBANK, NATIONAL ASSOCIATION, a
national banking association, formerly known as NationsBank of Virginia,
N.A. and successor in interest to Sovran Bank, N.A. (the "Bank").
RECITALS
--------
A. The Bank has made a $3,000,000 loan to the Borrower (the
"Loan") pursuant to the terms and conditions of a Loan Agreement dated as
----
of December 28, 1994 (as amended, restated, substituted, extended and
renewed from time to time, the "Loan Agreement"), by and between the
--------------
Borrower and the Bank. The Loan is evidenced by (i) a Term Loan Note dated
December 28, 1994, payable by the Borrower to the order of the Bank in the
original principal amount of $2,000,000 (as amended, restated, substituted,
extended and renewed from time to time, the "Term Note"); and (ii) a
---------
Revolving Loan Note dated December 28, 1994, payable by the Borrower to the
order of the Bank in the original principal amount of $1,000,000 (as
amended, restated, substituted, extended and renewed from time to time, the
"Revolving Note").
--------------
B. The Term Note and the Revolving Note (the "Notes") are secured
-----
by a Security Agreement dated June 1, 1994, between the Borrower and the
Bank covering, among other things, all of the Borrower's accounts,
inventory and chattel paper (as amended, restated, substituted, extended
and renewed from time to time, the "Security Agreement").
------------------
C. The Term Note is further secured by, among other things, an
Assignment of Deposit Account dated February 4, 1995, by the Borrower in
favor of the Bank (as amended, restated, substituted, extended and renewed
from time to time, the "Assignment"). (The Loan Agreement, the Notes, the
----------
Security Agreement, the Assignment, the Mortgage (as defined below) and all
other documents evidencing or securing the Loan or otherwise executed in
connection therewith are herein referred to collectively as the "Loan
----
Documents").
- ---------
D. The Borrower is currently in default of certain financial
covenants set forth in the Loan Agreement and has requested the Bank to
restructure the obligations of the Borrower to the Bank, and the Bank is
willing to do so upon the terms and conditions set forth herein, which
include, without limitation, that the Borrower enter into a Mortgage and
Security Agreement of even date herewith with respect to the Property (as
defined below) as further security for the Notes (the "Mortgage").
--------
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Bank agree as follows:
1. Amendments.
----------
(a) Section 1 of the Term Loan Note is hereby modified to
replace the definition of "Margin" with the following:
"'Margin' means at any time on or after a
Margin Adjustment Date (i) zero (0) basis points if
on such Margin Adjustment Date the Company is in
compliance with all of the financial covenants set
forth in Section 7.11 of the Loan Agreement, and
(ii) otherwise, fifty (50) basis points."
(b) Section 4 of the Term Loan Note is hereby replaced in its
entirety with the following:
"The Company may prepay all or any part of
this Note at any time without premium or penalty.
Any prepayment shall be applied to the principal
installments in inverse order of their maturities."
(c) Section 1 of the Revolving Note is hereby modified to
replace the definition of "LIBOR Margin" with the following:
"'LIBOR Margin' means at any time on or after
a Margin Adjustment Date (i) 240 basis points if on
such Margin Adjustment Date the Company is in
compliance with all of the financial covenants set
forth in Section 7.11 of the Loan Agreement, and
(ii) otherwise, 290 basis points.
(d) Section 1 of the Revolving Note is hereby modified to
replace the definition of "Prime Rate Margin" with the following:
"'Prime Rate Margin' means at any time on or
after a Margin Adjustment Date (i) 50 basis points
if on such Margin Adjustment Date the Company is in
compliance with all of the financial covenants set
forth in Section 7.11 of the Loan Agreement, and
(ii) otherwise, 100 basis points."
(e) Section 4 of the Revolving Note is hereby replaced in its
entirety with the following:
"The Company may prepay all or any part of
this Note at any time without premium or penalty."
(f) The Borrower shall continue to pay principal installments
under the Notes and interest on the principal balance outstanding from time
to time under the Notes in the amounts, at the rate, in the manner and at
the times specified in the Notes.
(g) Section 1.1 of the Loan Agreement is hereby modified to
replace the definition of "Bank" with the following:
"'Bank' shall mean NationsBank, National
Association, its successors and assigns."
(h) Section 7.1 of the Loan Agreement is hereby modified to
add the following new subsections thereto and to renumber existing
subsection (e) as subsection (h):
"(e) By the 25th day of each month, and
containing information through the preceding month,
an aging of accounts payable in form and detail
satisfactory to the Bank;
(f) as soon as available, but not later
than thirty (30) days before the beginning of each
fiscal year of the Company, proforma consolidated
financial statements of the Company and its
Subsidiaries for the fiscal year to come, in form
and detail satisfactory to the Bank;
(g) promptly after the request of the Bank,
a master schedule of Accounts, listing all Accounts
and the corresponding Account Debtors, their mail
addresses, telephone numbers and contact persons;
and"
(i) Section 7.11 of the Loan Agreement is hereby replaced in
its entirety by the following:
"7.11 Financial Positions.
--------------------
(a) Have and maintain as of the end of each
of the fiscal quarters set forth below a
consolidated ratio of Current Assets to Current
Liabilities of at least the ratio corresponding to
such fiscal quarter:
Quarter Ratio
------- -----
12/31/95 0.89 to 1.0
3/31/96 0.90 to 1.0
6/30/96 0.92 to 1.0
9/30/96 0.95 to 1.0
12/31/96 0.95 to 1.0
3/31/97 1.00 to 1.0
6/30/97 and 1.20 to 1.0
thereafter
(b) Have and maintain as of the end of each
of the fiscal quarters set forth below a
consolidated ratio of Total Liabilities to Tangible
Net Worth not in excess of the ratio corresponding
to such fiscal quarters:
Quarter Ratio
------- -----
12/31/95 2.56 to 1.0
3/31/96 2.59 to 1.0
6/30/96 2.55 to 1.0
9/30/96 2.54 to 1.0
12/31/96 2.52 to 1.0
3/31/97 2.34 to 1.0
6/30/97 and 2.00 to 1.0
thereafter
(c) Have and maintain as of the end of each
of the fiscal quarters set forth below a Debt
Service Coverage Ratio of at least equal to the
ratio corresponding to such fiscal quarters:
Quarter Ratio
------- -----
12/31/95 0.27
3/31/96 0.49
6/30/96 0.65
9/30/96 0.65
12/31/96 0.65
3/31/97 0.70
6/30/97 and 1.35
thereafter"
The Bank hereby waives the Borrower's non-compliance with the Debt Service
Coverage Ratio for the fiscal quarter ended December 31, 1995.
(j) Section 8.2 of the Loan Agreement is hereby replaced in
its entirety by the following:
"8.2 Capital Expenditures. Make any capital
---------------------
expenditures, exceeding in the aggregate for the
Company and its Subsidiaries, (i) $2,600,000 in the
fiscal year ending June 30, 1996; and (ii) an
amount to be set by mutual agreement of the parties
in each subsequent fiscal year.
(k) Section 9.1(b) of the Loan Agreement is hereby replaced
in its entirety by the following:
"(b) The Company shall breach or fail to
perform any term, covenant, representation warranty
or agreement (i) herein (other than the failure to
make any payment due under the Notes) and such
default shall continue for thirty (30) days after
written notice thereof has been given to the
Company by the Bank, except that the breach of or
failure to perform the Company's obligations under
Section 4.3 and Section 7.11 shall be an immediate
Event of Default without regard to any notice or
cure period; or (ii) under any other Loan
Document;"
(l) Section 10.1 of the Loan Agreement is hereby modified to
provided that notices to the Bank shall be sent to the following address:
NationsBank, N.A.
Special Assets
8300 Greensboro Drive, Suite 800
McLean, Virginia 22102
Attention: Mr. Lindsey Rheaume
(m) Part B of the Security Agreement is hereby modified to
provide that the term "Collateral" as used in the Security Agreement shall
include any and all "equipment" (as such term is defined in the Virginia
Uniform Commercial Code) of the Borrower, including, without limitation,
furnishings, fixtures and equipment, wherever located, whether now owned or
hereafter acquired, together with all increases, parts, fittings,
accessories, equipment and special tools now or hereafter affixed to any
part thereof or used in connection therewith, and all products, additions,
substitutions, accessions, and all cash and non-cash proceeds, including
proceeds from insurance thereof and thereto. Accordingly, to further
secure the Borrower's indebtedness, liabilities and obligations to the Bank
under this Agreement and the Loan Documents, the Borrower hereby grants and
assigns to the Bank a continuing first priority security interest in and
lien on all right, title and interest of the Borrower in and to any and all
"equipment" (as such term is defined in the Virginia Uniform Commercial
Code) and the proceeds and products thereof.
(n) To the extent required to conform to the terms of this
Agreement and the changes to the Notes, the Loan Agreement and the Security
Agreement set forth herein, the terms and conditions of the other Loan
Documents shall be and the same hereby are so modified, and such Loan
Documents shall be construed consistently and in conformity with this
Agreement, the Notes, the Loan Agreement and the Security Agreement as so
modified. The term "this Note" or "the Term Loan Note" as used in the Term
Note or in any of the other Loan Documents shall mean the Term Note as
modified herein unless the context clearly indicates or dictates a contrary
meaning. The term "this Note" or "the Revolving Loan Note" as used in the
Revolving Note or in any of the other Loan Documents shall mean the Term
Note as modified herein unless the context clearly indicates or dictates a
contrary meaning. The term "this Agreement" or "the Loan Agreement" as
used in the Loan Agreement or in any of the other Loan Documents shall mean
the Loan Agreement as modified herein unless the context clearly indicates
or dictates a contrary meaning. The term "this agreement" or "the Security
Agreement" as used in the Security Agreement or in any of the other Loan
Documents shall mean the Security Agreement as modified herein unless the
context clearly indicates or dictates a contrary meaning.
2. Covenants. In consideration for the Bank agreeing to
---------
restructure the Borrower's obligations to the Bank, the Borrower agrees as
follows:
(a) The Borrower shall notify and direct its Account Debtors
(as defined in the Loan Agreement) to make all payments with respect to the
Accounts (as defined in the Loan Agreement) to a lockbox/assignee account
maintained at the Bank from which the Bank alone has power of access and
withdrawal (the "Lockbox Account"). Notwithstanding this, payments with
---------------
respect to letters of credit issued by the Bank shall continue to be
cleared through the Bank's international department in Atlanta, Georgia
before being deposited in the Lockbox Account. Until the occurrent of an
Event of Default (as defined in the Loan Agreement), monies will be
transferred from the Lockbox Account to the Borrower's operating account
with the Bank on a daily basis. The Borrower shall deposit all checks,
drafts, cash and other remittances in payment of the Accounts in the
Lockbox Account not later than the next banking day after the receipt
thereof, in precisely the form received, except for the appropriate
endorsements of the Borrower where necessary to permit the collection of
any such items of payment. Notwithstanding this, the Borrower may
withhold from depositing in the Lockbox Account any items of payment with
respect to any disputed Account that is marked "payment in full" until the
settlement of such dispute, provided that the Borrower promptly provides
the Bank with a copy of such item of payment. Pending the deposit to the
Lockbox Account, the Borrower shall not to commingle any such items of
payment with any of its other funds or property but shall hold them
separate and apart therefrom in trust and for the account of the Bank.
(b) The Borrower shall maintain all of its operating and
depository accounts, as well as all other funds, with the Bank.
Notwithstanding this, the Borrower may maintain payroll and accounts with
balances of less than $30,000.00 at other financial institutions, provided
that the Borrower and such other financial institutions execute and deliver
to the Bank assignments of such non-payroll accounts in form and detail
satisfactory to the Bank.
(c) To further secure the Borrower's indebtedness,
liabilities and obligations to the Bank under this Agreement and the Loan
Documents, the Borrower shall execute and deliver to the Bank the Mortgage
pursuant to which the Borrower shall grant the Bank a first lien in the
Borrower's property located in Newark, New Jersey known as 15 Nuttman
Street, Newark, New Jersey (the "Property").
--------
(d) Within 45 days after the execution of this Agreement, the
Borrower shall provide the Bank with a title policy insuring that the
Mortgage is the first lien on the Property, and otherwise in form and
detail satisfactory to the Bank.
(e) The Borrower shall not sell, lease, sublease, assign, or
otherwise transfer or dispose of, or enter into any agreement to sell,
lease, sublease, assign or otherwise transfer or dispose, in one or more
transactions, any of its assets or property or any legal or beneficial
interest therein, whether tangible or intangible and whether now owned or
hereafter acquired, except for the sale of (1) the Property in accordance
with the terms of the Mortgage, (2) assets disposed of in the ordinary
course of business; and (3) assets sold with the Bank's prior written
consent. Any consent of the Bank may be conditioned upon the application
of the sales proceeds to the payment of all indebtedness, liabilities and
obligations of the Borrower to the Bank, in such order and manner as the
Bank shall elect.
(f) The Borrower shall not alter or amend its capital
structure, dissolve, merge or consolidate with or into any other entity, or
acquire all or substantially all of the assets or obligations of any other
person or entity.
(g) The Borrower shall not permit any change in the positions
held by David Dugan, Jim Kostelni and Charles Kostelni at the Borrower.
(h) The Borrower shall not change the method of accounting
employed in the preparation of the financial statements most recently
submitted to the Bank, unless required to conform to generally accepted
accounting principles and to regulations of the Securities Exchange
Commission.
(i) Until repayment in full of all sums due the Bank, the
Borrower shall continue to comply with all of its other obligations
hereunder and under the Loan Documents.
(j) The Borrower hereby assigns, pledges and grants a
security interest to the Bank in and to all right, title and interest of
the Borrower in and to the accounts with the Bank described as follows:
Georgia Bonded Fibers, Inc., Account Number 0002307662 and Account Number
0012400116, together with all interest and other income earned thereon, all
additions thereto and renewals, substitutions or replacements thereof
(collectively, the "Account"), as security and collateral for (1) the
-------
prompt payment of all indebtedness, liabilities and obligations of the
Borrower to the Bank of every kind and nature whatsoever, whether direct,
indirect, contingent, primary, secondary, joint, several, joint and
several, due, to become due, future advances, now existing, hereafter
created, principal, interest, expense payments, liquidation costs, and
attorney's fees and expenses (collectively, the "Obligations"); and (2) the
-----------
performance of all of the terms and conditions of the Term Note, the
Revolving Note, the Loan Agreement, this Agreement and all of the other
Loan Documents. In the event any of the Obligations are not paid when and
as due and payable (whether by acceleration, declaration, extension or
otherwise) or upon occurrence of a default under any of the Loan Documents,
or upon the maturity of the Account, if the Account consists in whole or in
part of a time deposit, the Bank may and is hereby irrevocably authorized
to withdraw any and all funds and moneys now or hereafter on deposit to the
Account at such times and in such amounts as the Bank in its sole
discretion shall determine. The Bank shall apply such funds or any portion
thereof to the Obligations in such order and manner as the Bank may elect.
The Bank may at any time or from time to time take any and all actions with
respect to the Account (and the funds and moneys or portions thereof
deposited thereto) as authorized herein, by law and by the terms of any of
the Loan Documents.
(k) In order to satisfy its obligations to the Bank under the
Loan, the Borrower shall use its best efforts to refinance the Loan. The
Borrower shall keep the Bank fully informed regarding all steps taken to
refinance the Loan. In the event a commitment to refinance the Loan is
received, the Borrower shall promptly deliver a copy thereof to the Bank.
3. Affirmation of Obligations. The Borrower and the Bank each
--------------------------
agree that nothing contained in this Agreement shall be construed to in any
manner affect, impair, lessen, release, cancel, terminate or extinguish the
indebtedness, liabilities or obligations of the Borrower to the Bank under
the Notes, the Loan Agreement or any of the other Loan Documents. In no
event shall this Agreement be deemed a waiver, discharge, novation,
substitution or replacement of the Notes, the Loan Agreement or any of the
other Loan Documents. The Borrower hereby ratifies and confirms in all
respects all of its indebtedness, liabilities and obligations under the
Notes, the Loan Agreement and the other Loan Documents and agrees that,
except as expressly modified by this Agreement, the Notes, the Loan
Agreement and the other Loan Documents continue in full force and effect as
if set forth specifically herein. The Borrower further acknowledges and
agrees that (a) the Notes are, and shall continue to be, secured by all of
the collateral described in the Security Agreement and the Assignment; and
(b) the Bank has a duly perfected, continuing, valid first priority
security interest in, and lien on, such collateral.
4. Representations and Warranties. The Borrower hereby
------------------------------
represents, warrants and agrees that: (a) the Recitals to this Agreement
are true and accurate in each and every respect and are all incorporated by
reference herein; (b) each and every representation and warranty set forth
in the Loan Documents continues to remain true, accurate and complete as of
the date hereof; (c) this Agreement and the Loan Documents as modified
hereby are the valid and legally binding obligations of the Borrower, fully
enforceable against the Borrower in accordance with their terms; (d) as of
February 7, 1996, the Borrower is justly indebted to the Bank with respect
to the Term Note in the aggregate amount of $1,711,953.53, consisting of
$1,692,304 in principal and $19,649.53 in interest, and with respect to the
Revolving Note in the aggregate amount of $1,001,544.67, consisting of
$1,000,003 in principal and $1,541.67 in interest; (e) the Borrower has no
defenses, counterclaims or offsets to the payment of such amounts; (f) the
terms of the Loan Documents have not heretofore been amended or modified by
any action or omission or course of conduct on the part of the Bank (other
than by a formal written agreement executed by the Bank) nor has the Bank
heretofore waived or relinquished any of its rights, powers or remedies
under any of the Loan Documents; (g) other than the defaults that the Bank
has notified the Borrower of in writing, there is no other default under
the Loan Documents, and no event has occurred and no condition exists that
with the giving of notice or the passage of time, or both, could or would
constitute a default under the Loan Documents; (h) there are no actions,
suits or proceedings pending or, to the knowledge of the Borrower,
threatened before any court, arbitrator or governmental body that would
prevent the execution or delivery of this Agreement by the Borrower, or
that might, either individually or in the aggregate, materially affect the
financial condition of the Borrower, or the ability of the Borrower to pay
and perform its obligations under this Agreement and under the Loan
Documents; and (i) the Borrower has good and marketable title to, and is
lawfully seized and possessed of, the Property, and the Property is free
and clear of all liens and encumbrances except those in favor of the Bank.
5. Expenses of Bank. The Borrower agrees to reimburse the Bank
----------------
upon demand for all expenses of the Bank (including the reasonable fees and
expenses of its legal counsel) in connection with (a) the preparation of
this Agreement and the other documents contemplated hereby; (b) the
evaluation, monitoring, protection and liquidation of the Property and the
other collateral for the Loan (including, without limitation, title review
and abstract fees, lien search fees and appraisal, inspection and audit
fees); (c) the creation, perfection, preservation and continuation of the
Bank's security interests in, and liens on, the Property and the other
collateral for the Loan (including, without limitation, filing fees,
recordation taxes and other costs and taxes incident to recording); (d) the
enforcement of any provision of this Agreement, the Notes, the Loan
Agreement or any of the other Loan Documents; and (e) the collection of the
indebtedness of the Borrower hereunder and under the Notes, the Loan
Agreement and the other Loan Documents.
6. Release. The Borrower hereby waives, releases and forever
-------
discharges the Bank, its parent corporations, subsidiaries, affiliates,
predecessors, successors, assigns, officers, directors, agents, employees
and representatives (the "Released Parties"), jointly and severally, of and
----------------
from any and all Claims (as defined below) arising, directly or indirectly,
out of or in connection with any act, omission, representation or any other
matter whatsoever or thing done, omitted or suffered to be done by any of
the Released Parties that has occurred in whole or in part at any time up
to and immediately preceding the moment of the execution of this Agreement,
including, but not limited to,: (a) the negotiation, making, borrowing,
administration, enforcement and/or collection of the Loan; (b) the
execution, delivery and/or performance by the Bank of the Loan Documents;
and/or (c) any of the transactions contemplated thereby or taken in
connection therewith (collectively, the "Released Matters"). The Borrower
----------------
hereby agrees to indemnify and hold harmless each of the Released Parties
from and against, and not to assert by way of a defense, counterclaim or
otherwise to any suit, action or proceeding brought by the Bank, any Claim
arising, directly or indirectly, out of or in connection with any of the
Released Matters this Agreement, any other document executed in connection
herewith or the transactions contemplated hereby.
7. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN THE PARTIES
-----------
HERETO, INCLUDING, BUT NOT LIMITED TO, THOSE ARISING OUT OF THIS AGREEMENT
OR ANY OF THE LOAN DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM
AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE
WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE
STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR ARBITRATION OF
COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF
(J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF AN
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY
PARTY TO THIS AGREEMENT MAY BRING ANY ACTION, INCLUDING A SUMMARY OR
EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO
WHICH THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS APPLIES IN ANY COURT
HAVING JURISDICTION OVER SUCH ACTION.
(A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE
-------------
COUNTY OF ANY OBLIGOR'S DOMICILE, OR, IF THERE IS REAL OR PERSONAL PROPERTY
COLLATERAL, IN THE COUNTY WHERE ANY SUCH REAL OR PERSONAL PROPERTY
COLLATERAL IS LOCATED, AT THE TIME OF THIS AGREEMENT'S EXECUTION, AND
ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS
SHALL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER,
THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND
THE COMMENCEMENT OF SUCH HEARING FOR AN ADDITIONAL 60 DAYS.
(B) RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL
---------------------
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
AGREEMENT; OR (Il) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT
BY 12 U.S.C. SECTION 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
LIMIT THE RIGHT OF THE BANK HERETO (1) TO EXERCISE SELF HELP REMEDIES SUCH
AS (BUT NOT LIMITED TO) SETOFF, OR (2) TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY COLLATERAL, OR (3) TO OBTAIN FROM A COURT PROVISIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE SUCH
SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL
OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THE
EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF ANY
ACTION FOR FORECLOSURE OR FOR PROVISIONAL OR ANCILLARY REMEDIES SHALL
CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN
SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
8. Waiver of Jury Trial. IN THE EVENT THAT ANY CONTROVERSY OR
--------------------
CLAIM IS UNABLE OR LEGALLY PRECLUDED FROM BEING DETERMINED BY BINDING
ARBITRATION, THEN IN SUCH INSTANCE(S) AND ONLY IN SUCH INSTANCE(S), THE
BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH
IT AND THE BANK MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO
(A) THIS AGREEMENT, OR (B) ANY OF THE LOAN DOCUMENTS. IT IS AGREED AND
UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL
CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS
AGAINST PARTIES WHO ARE NOT PARTIES HERETO. THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY MADE BY THE BORROWER, AND THE BORROWER HEREBY
REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY
INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY
OR NULLIFY ITS EFFECT. THE BORROWER FURTHER REPRESENTS THAT IT HAS HAD THE
OPPORTUNITY TO BE REPRESENTED IN THE EXECUTION OF THIS AGREEMENT AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN
FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
COUNSEL.
9. Miscellaneous.
-------------
(a) Upon the request of the Bank, the Borrower, at its sole
cost and expense, shall execute and deliver to the Bank such further
instruments and shall do and cause to be done such further acts with
respect to the Loan Documents, this Agreement and any other document
executed in connection herewith as the Bank may deem necessary or desirable
in the Bank's sole discretion to carry out more effectively the provisions
and purposes of this Agreement and the Loan Documents.
(b) This Agreement and the Loan Documents contain the entire
agreement between the Bank and the Borrower regarding the subject matter
hereof and completely and fully supersede all other prior agreements, both
written and oral, between the Bank and the Borrower relating to the subject
matter hereof. Neither the Bank nor the Borrower shall hereafter have any
rights under such prior agreements but shall look solely to this Agreement
and the Loan Documents for the definition and determination of all of their
respective rights, liabilities and responsibilities relating to the subject
matter hereof. The headings in this Agreement are for convenience only and
shall not limit or otherwise affect any of the terms hereof.
(c) No modification or waiver of any of the provisions of
this Agreement, nor any consent to any departure by the Borrower therefrom,
shall be effective until and unless it is in writing and signed by the
Bank, and any such waiver shall be effective only in the specific instance
and for the specific purpose for which it is given. This Agreement may be
executed in any number of counterparts, all of which when taken together
shall constitute but a single instrument.
(d) All of the terms and conditions of this Agreement shall
survive the execution and delivery of this Agreement and the performance
and repayment of the indebtedness, obligations and liabilities of the
Borrower under this Agreement, the Notes, the Loan Agreement and the other
Loan Documents.
(e) In the event that any provision of this Agreement is for
any reason held to be invalid, illegal or unenforceable, in whole or in
part or in any respect, then such provision only shall be deemed null and
void and shall not affect any other provision hereof, and the remaining
provisions shall remain operative and in full force and effect.
(f) This Agreement shall be construed in accordance with, and
governed by, the laws of the Commonwealth of Virginia and shall be binding
upon and inure to the benefit of the Borrower and the Bank and their
respective successors and assigns. Time is of the essence with regard to
this Agreement.
IN WITNESS WHEREOF, the Borrower and the Bank have each caused this
Agreement to be duly executed as of the date first above written.
ATTEST: GEORGIA BONDED FIBERS, INC.
s/David A. Dugan By: s/James C. Kostelni
- -------------------------- ------------------------------
James Kostelni
President
WITNESS: NATIONSBANK, NATIONAL ASSOCIATION
s/David A. Dugan By: s/Lindsey Rheaum
- -------------------------- -------------------------------
Lindsey Rheaum
Vice President
COMMONWEALTH OF VIRGINIA, AT LARGE, SS:
I HEREBY CERTIFY, that on this 7th day of March, 1996, before me, in
Fairfax County, Virginia, personally appeared James Kostelni, known to me
or satisfactorily proven to be the person whose name is subscribed to the
foregoing instrument, who acknowledged that he is the president of Georgia
Bonded Fibers, Inc., a New Jersey corporation, who acknowledged that he has
executed the same for the purposes therein set forth as the duly authorized
president of said corporation by signing the name of the corporation by
himself as president.
IN WITNESS WHEREOF, I have set my hand and Notarial Seal, the day and
year first above written.
s/Illegible
---------------------------------
Notary Public
My commission expires on: 8-31-96
COMMONWEALTH OF VIRGINIA, AT LARGE, SS:
I HEREBY CERTIFY, that on this 7th day of March, 1996, before me, in
Fairfax County, Virginia, personally appeared Lindsey Rheaume, known to me
or satisfactorily proven to be the person whose name is subscribed to the
foregoing instrument, who acknowledged that he is the vice president of
NationsBank, National Association, a national banking association, who
acknowledged that he has executed the same for the purposes therein set
forth as the duly authorized vice president of said association by signing
the name of the association by himself as vice president.
IN WITNESS WHEREOF, I have set my hand and Notarial Seal, the day and
year first above written.
s/Illegible
-----------------------------------
Notary Public
My commission expires on: 8-31-96
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEORGIA
BONDED FIBERS, INC.'S UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT FOR
THE QUARTER ENDED MARCH 31, 1996, AS SET FORTH IN THE COMPANY'S QUARTERLY REPORT
ON FORM 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 286
<SECURITIES> 0
<RECEIVABLES> 13,289
<ALLOWANCES> 138
<INVENTORY> 6,937
<CURRENT-ASSETS> 22,259
<PP&E> 21,477
<DEPRECIATION> 11,056
<TOTAL-ASSETS> 33,981
<CURRENT-LIABILITIES> 21,333
<BONDS> 2,444
157
0
<COMMON> 0
<OTHER-SE> 1,551
<TOTAL-LIABILITY-AND-EQUITY> 33,981
<SALES> 34,389
<TOTAL-REVENUES> 34,389
<CGS> 27,248
<TOTAL-COSTS> 35,339
<OTHER-EXPENSES> (249)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 919
<INCOME-PRETAX> (1,199)
<INCOME-TAX> (368)
<INCOME-CONTINUING> (831)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (831)
<EPS-PRIMARY> (.53)
<EPS-DILUTED> (.53)
</TABLE>
