[FRONT COVER]
[Picture of a soccer player kicking a soccer ball]
[Bontex logo] BONTEX [R]
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CONTENTS
[Bontex Symbol] BONTEX [R]
Consolidated 2000 Annual Report
"With over 50 years of experience, Bontex is a global leader in
our core industries we serve. Almost all the branded footwear
in the world use Bontex, and during 2000, Bontex continued to
develop and introduce more new and advanced products."
2 Mission Statement, Corporate and 5 Management's Discussion and
Product Profile Analysis
3 Message to Shareholders 11 Consolidated Financial
Statements and Notes
4 Financial Highlights 26 Independent Auditors' Report
CORPORATE HIGHLIGHTS
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<S> <C> <C> <C> <C> <C> <C>
1946 Bontex was originally established as a leather 1996 The Company restructures and officially
processing operation in Newark, New Jersey. operates globally as Bontex, Inc., formerly
Georgia Bonded Fibers, Inc.
1954 Bontex elastomeric wet web cellulose materials
were first produced in Buena Vista, Virginia. 1997 Bontex export sales from USA exceed $10
million. Bontex establishes Bontex Hong
1959 Bontex goes public with stock issuance and listing Kong to further expand export sales.
on NASDAQ stock market. Bontex enters into a key strategic
partnership to market nonwoven materials.
1969 Bontex begins Bontex SA investment in Belgium, Bontex becomes the first global
then and today, one of the world's largest and manufacturer in our industry to be ISO
highest capacity factories manufacturing elastomeric 9001 certified, SATRA accredited
wet web fiberboard products. laboratory certified and SATRA Quality
Mark approval for several products.
1986 Bontex establishes a base of operations in Italy,
as Bontex Italia begins sales, marketing, and 1999-2000 Bontex begins long-term repositioning as a
converting operations. multi-dimensional Company. Bontex
introduces a broader range of footwear
1995 Bontex sales exceed $50 million. Bontex materials, including Bontex 90 Insole
establishes Bontex de Mexico to expand export Seatboard, economical insole products,
sales. Bon-Stitch linings, and Bon-Stitch next
generation nonwoven insoles. Bontex
embarks on an advanced material systems
for footwear and non-footwear applications.
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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.
CORPORATE PROFILE
Bontex, Inc. was originally founded in June 1946 under the laws of the State of
New Jersey as a leather processing operation. 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(R). BONTEX(R) is primarily used as an insole material in footwear, as
well as visorboard in headwear, dielectric sealing base in automotive door
panels, backing substrate, stiffener and laminating base in luggage,
leathergoods, and allied products. All BONTEX(R) 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 global headquarters, manufacturing and converting
facilities at Bontex USA, One Bontex Drive, Buena Vista, Virginia; European
headquarters and manufacturing at Bontex S.A., Stembert, Belgium; a distribution
and converting operation at Bontex Italia S.r.l., Villafranca, Verona, Italy;
and marketing organizations at Bontex de Mexico, S.A. de C.V., in Leon, Mexico,
Bontex Vietnam, Hochiminh City Vietnam, and Bontex Hong Kong R.O.C. Bontex also
maintains a network of liaison offices and distributors globally to market
Bontex products.
PRODUCT PROFILE
Bontex manufactures uncoated and coated BONTEX(R) fiberboard products;
breathable cushion foams, that are marketed under the trademarks BON-FOAM(R),
MAXXON(R) and SURE-FOAM(R), and are sold in a variety of grades for use as shock
absorbing insole material; BON-PEL(R), a wet web nonwoven substrate, which is
exceptionally strong and flexible; BONTEX(R) 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 vinyls, with
BONTEX(R) fiberboard. Additionally, Bontex is the exclusive distributor globally
to the footwear industry of an expanded polyurethane material manufactured by
Aearo Company-E.A.R. Specialty Composites, trademarked MAXXON(R) LS and
CONFOR(R). Bontex also markets to the footwear industry a range of nonwoven
products under the Company's trademark Bon-stitch(R), primarily used as an
insole and vamp lining. Registered trademarks under which the Company markets
products include:
BONTEX(R) SUPERTEX(R) BON-PEL(R)nonwoven
MORI-FLEX(R) BON-FOAM(R)cushion BON-STITCH(R)
MAXXON(R)cushion VINTEX(R) SUR-V-LON(R)vinyl coated Bontex
BON-DOE(R) SIR-PEL(R) BONTEX(R)200 RECYCLED
MORIMER(R) SURTEX(R) BONTEX(R)300 RECYCLED
CONTOUR(R) ASTRAL(R)foam
Bontex is embarking on repositioning the Company to manufacture and supply a
range of advanced material systems to both footwear and non-footwear
applications. During the next year, the Company anticipates introducing several
new products.
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MESSAGE TO SHAREHOLDERS
(Bontex Symbol) BONTEX [R] ONE BONTEX DRIVE
BUENA VISTA, VIRGINIA 24416-1500
email: [email protected]
http://www.bontex.com
Dear Fellow Shareholder:
I am pleased to report to you that Bontex, Inc. and its subsidiaries increased
sales and returned to profitability during the second half of fiscal 2000,
reversing a trend which started over two and half years ago. Overall, sales
volume (tons sold) for the year increased almost 10%, and consequently, if
foreign currency exchange rates had remained unchanged from the prior year,
consolidated net sales would have increased by $2.6 million or 7%. However, the
positive results from the second half were not enough to offset the losses
incurred during the first half of the fiscal year, as detailed in the financial
review in Management's Discussion and Analysis.
We are hopeful that the momentum from the second half of the year will continue
into the next fiscal year. While the increase in sales reflects positively on
our marketing efforts to grow sales of our core footwear products, in spite of
extremely challenging market conditions, we remain focused on repositioning the
Company for future sales growth and profitability from a wider range of revenue
sources.
Simply stated, the future success of Bontex remains with developing and
marketing new products. To that end, our fundamental areas of focus at this time
are:
* Footwear: Expanding our product line within our core footwear
segment in order to leverage our existing global market position
as an industry leader.
* Advanced Material Systems: Developing through a series of
complementary strategic alliances, Advanced Material Systems
(AMS) for specifically targeted applications.
* Cost Control: Implementing additional measures to control costs.
For over half a century, Bontex has been dependent primarily on Bontex cellulose
products for use as an insole in footwear, as well as for headwear, luggage,
leathergoods and allied industries. We believe that the various initiatives
which we have implemented over the course of the past two years will be
significant in repositioning the Company for long-term growth and profitability.
Maintaining our position in the footwear industry is crucial to providing a
revenue base from which to build upon for both footwear and non-footwear
products.
In order to strengthen our position in supplying footwear materials, we have
added several new footwear products to our line-up: Bontex 90G (patent pending),
an insole seat-board; Bontex 347 FF and Bontex 60 FF, a series of high volume
economical cellulose insoling materials, and a range of new Bon-Stitch nonwoven
materials for insoling and linings. Sales of the new footwear products have not
yet been significant, but based on the positive results of recent testing and
trials by several major branded footwear companies, we would expect sales of
these products to increase during fiscal 2001.
Bontex has what we believe to be the most efficient and highest capacity machine
in the world manufacturing elastomeric fiberboard products. To capitalize on
this significant asset located at Bontex S.A., Bontex has begun to target a
market category that we really did not service before: the high volume
economical cellulose insole products. We believe this market represents the
largest and fastest growing segment for Bontex-type products.
Our efforts to develop new non-footwear products also remain an important
priority. Although much progress has been made, significant work continues to be
ahead of us in order to develop new and viable specialty materials. We will
continue to utilize consultants with the technical knowledge to enable Bontex to
develop these new materials.
Some of our initial responses to address the situation at Bontex over the past
couple of years have been several major cost control initiatives. We have made
significant cost reductions in many areas of operations, including fibers,
purchase contracts for primary raw materials to provide pricing stability, staff
reductions, decreased salaries, and other restructuring of operations. We have
listed our Newark, New Jersey warehouse for sale for $860,000. We anticipate
selling it next year and using the proceeds to pay down debt. These cost cutting
measures plus realizing sales from new products will be crucial to the long-term
profitability of the Company.
As outlined in my letter to you last year, after an analysis of our business
model for the past fifty years, we realized that the long-term success of the
Company depends on changing into a multi-dimensional company. This entails an
inherently long process that requires the engagement of the entire Company. We
have begun the process and remain focused on our key initiatives, but this major
effort will take much time.
Over the past few years, Bontex has been confronted with several challenges,
including pricing pressures, environmental mandates, volatile raw material
prices, increased usage of alternative materials, and a contraction of the
domestic market. We will always face such challenges, but your management team
is attempting to establish a framework for growing Bontex into a more diverse
company, which will not be as vulnerable to these issues.
We greatly appreciate our shareholders support of our efforts to develop Bontex
into a multi-dimensional company, as well as the commitment and invaluable role
of our Board of Directors, employees and distributors globally, and the loyalty
and trust from our customers. We look forward to strengthening our relationships
as we embark on the next century.
s/James C. Kostelni
James C. Kostelni
Chairman and Chief Executive Officer
See accompanying safe harbor disclosure on page 5
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Bontex, Inc., One Bontex Drive, Buena Vista, VA 24416-1500
Telephone:(540)261-2181 o Fax: (540)261-3784 o
Email: [email protected] o http://www.bontex.com
Bontex SA (Belgium), Bontex S.r.l. (Italy), Bontex Hong Kong, Bontex de Mexico
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BONTEX, INC. AND SUBSIDIARIES
Summary of Selected Ten Year Data
(In Thousands, Except Per Share Data and Ratios)
<TABLE>
<CAPTION>
Years Ended June 30,
2000 1999 1998 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 39,455 $ 39,325 $ 43,483 $ 50,333 $ 47,618 $ 50,998 $ 47,729 $ 46,710 $ 46,534 $ 44,734
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Income (loss) before
cumulative effect of
change in accounting
principles $ (659) $ (778) $ (446) $ 1,733 $ (602) $ (1,458) $ 935 $ 193 $ 942 $ 212
Cumulative effect of
change in accounting
principles - - - - - - 400 - - 99
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net income (loss) $ (659) $ (778) $ (446) $ 1,733 $ (602) $ (1,458) $ 1,335 $ 193 $ 942 $ 311
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Income (loss) per share:
Before cumulative effect
of change in accounting
principles $ (.42) $ (.49) $ (.28) $ 1.10 $ (.38) $ (.93) $ .60 $ .12 $ .60 $ .14
Cumulative effect of change
in accounting principles - - - - - - .25 - - .06
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net income (loss) $ (.42) $ (.49) $ (.28) $ 1.10 $ (.38) $ (.93) $ .85 $ .12 $ .60 $ .20
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total assets $ 30,885 $ 31,164 $ 32,513 $ 32,906 $ 33,181 $ 39,527 $ 31,032 $ 28,840 $ 28,669 $ 22,753
Total stockholders' equity $ 8,948 $ 9,893 $ 10,891 $ 11,515 $ 10,308 $ 11,186 $ 12,080 $ 10,521 $ 10,825 $ 9,313
Capital expenditures $ 854 $ 1, 067 $ 2,334 $ 2,389 $ 2,157 $ 1,704 $ 1,868 $ 1,226 $ 1,787 $ 1,591
Cash flows provided by
(used in) operating activities $ 1,608 $ 122 $ 57 $ 3,037 $ 1,180 $ (2,073) $ 1,078 $ (122) $ 215 $ 2,024
Long-term debt,
noncurrent $ 2,327 $ 2,601 $ 2,256 $ 2,761 $ 2,330 $ 1,364 $ 1,511 $ 1,056 $ 1,493 $ 964
Book value per share $ 5.69 $ 6.29 $ 6.92 $ 7.32 $ 6.55 $ 7.11 $ 7.68 $ 6.69 $ 6.88 $ 5.92
Cash dividends per
common share $ - $ - $ - $ - $ - $ - $ - $ .05 $ - $ -
Current ratio .98 1.02 1.05 1.16 1.06 1.07 1.30 1.26 1.34 1.43
Total debt to equity ratio 2.45 2.15 1.99 1.86 2.22 2.53 1.57 1.74 1.65 1.44
Capital structure $ 11,756 $ 13,006 $ 13,791 $ 14,570 $ 12,819 $ 12,703 $ 14,162 $ 12,224 $ 12,991 $ 10,950
</TABLE>
Common Stock and Dividend Data
The stock of Bontex, Inc. was previously traded over the counter on the Nasdaq
National Market. Effective July 23, 1998, the stock of Bontex, Inc. was listed
on the Nasdaq SmallCap Market under the symbol BOTX. At September 8, 2000 there
were approximately 688 stockholders of record. No cash dividends were declared
or paid during fiscal years 1996 through 2000.
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2000 1999 1998 1997 1996
-------- ------- ------ ------ -------
High Low High Low High Low High Low High Low
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<S> <C> <C> <C> <C> <C> <C>
First Quarter $ 2.75 $ 1.75 $ 3.38 $ 2.25 $ 9.63 $ 4.25 $ 4.00 $ 3.13 $ 4.25 $ 2.75
Second Quarter 2.63 1.50 2.62 1.50 8.50 4.50 5.13 3.50 3.88 2.38
Third Quarter 5.47 1.75 4.00 1.00 5.25 3.25 5.38 4.50 3.25 2.38
Fourth Quarter 3.75 1.75 3.00 1.50 4.25 2.88 5.00 4.25 4.38 2.88
</TABLE>
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Bontex, Inc. and Subsidiaries
Management's Discussion and Analysis
GENERAL
The lack of profits in fiscal year 2000 was attributable to the increased cost
of primary raw materials, latex and pulp, and extreme competition within the
cellulose markets we serve. Bontex has continued to work to mitigate raw
materials costs and has additional expectations for improved technologies in
this area. Low sales volumes in the first part of the year also hindered the
return to overall profitability. Several new products mentioned in last year's
report are nearing the marketability stage and could add volume to our
operations. It is not possible to accurately predict the viability of any of
these products at this time.
The Company's consolidated financial statements and notes to the consolidated
financial statements should be read as an integral part of this discussion.
Except for historical data set forth herein, the following discussion contains
forward-looking statements within the meaning of the Private Securities
Litigation Act of 1995. Forward-looking statements include, for example,
statements about future results of operations or market conditions and involve
certain risks, uncertainties and assumptions. Actual results may differ
materially from these forward-looking statements. Factors that could cause or
contribute to those differences include, but are not limited to, excessive
worldwide footwear inventories, a shrinking domestic market for Bontex products,
decreased sales to key customers, increased competition from non-woven
materials, the reduction of prices by competitors, the increase in the relative
prices of Bontex's products due to foreign currency devaluations, increased pulp
and latex prices, capital illiquidity, unexpected foreign tax liabilities, and
decreases in the Company's borrowing base.
RESULTS OF OPERATIONS
Overview
In fiscal 2000, market share gains exceeded losses resulting in higher net sales
of $39.5 million or an increase of $130,000 as compared to the prior year. If
the currency exchange rates had remained unchanged for the current year, net
sales would be higher by $2.6 million as compared to a $600,000 translation
increase in the prior year. The Company's footwear business continues to exhibit
increased competition and lower margins. Management expects continued pressure
on our profit margins as a result of competition and rising prices for our
primary raw materials. The Company's development efforts to optimize products
and formulations should further mitigate some of the negative trends mentioned.
Management also recognizes the need to further diversify product lines and has
embarked on a plan to accomplish this goal.
Sales
Consolidated net sales were $39.5 million, $39.3 million, and $43.5 million, for
fiscal years 2000, 1999, and 1998, respectively. Bontex succeeded in maintaining
its position in specification footwear sales. Some declines were experienced
during 2000 for Bontex insole materials due mainly to competition from
non-wovens, particularly in the athletic footwear sector. Lower selling prices,
caused by competitive pressures and the loss of sales volume in certain markets,
offset the success of 2000 sales initiatives in Asia and South America.
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The cellulose insole market, in particular, continues to be affected by low
quality competition, especially in Far East markets. In China for instance,
oversupply of low quality materials creates abnormal downward pressure on
prices. Although most of these low-end producers are not in direct competition
with Bontex, their impact on the market is pervasive. Bontex hopes to benefit,
in upcoming years, from improved trade relations between the U.S. and China.
Bontex continues to allocate increased resources to our marketing network in
China. We have reorganized our personnel and added staff in key areas in order
to continue the momentum initiated last year in this increasingly important
market.
Bontex has recently developed several new innovative products for footwear that
it believes, based on early marketing efforts, to have good sales potential. The
Company has also solidified its marketing relationships for stitch-bonded
non-wovens, foams, thermoplastics, and other advanced materials. Each of these
projects brings advanced technology to the footwear industry. Bontex management
believes the key to success in these areas relies upon bringing added value to
our customers. We have an aggressive strategy to locate such technologies and
rapidly bring them to the marketplace. Sales from these projects were expected
to occur during fiscal year 2000, but development was slower than anticipated.
To date, the Company has incurred a minor amount of research and development
expenses related to development of these new products. It is impossible to
accurately predict the level of sales potential or profitability at this time.
However, it is reasonable to expect one or more of these projects to generate
sales during fiscal year 2001.
Costs
Cost of sales were 72.5 percent of net sales in 2000, 74.1 percent of net sales
in 1999, and 71.5 percent of net sales in 1998. The decrease in costs as a
percentage of sales from 1999 was mainly due to improved efficiency from prior
investments and other cost control measures taken by management.
The Company's United States operations use the last in, first out (LIFO) method
of inventory accounting. For comparison with other companies, if the first-in,
first-out, (FIFO) method of accounting had been used, reported gross profit
would have been higher by $28,000 in 2000, and lower by $93,000 in 1999, and
lower by $96,000 in 1998. Net income would have been higher by $18,000 or $.01
per share in 2000, lower by $60,000 or $.04 per share in 1999 and lower by
$61,000 or $.04 per share in 1998. Footwear production in North America
continued to decline as more companies closed domestic production facilities in
favor of lower labor cost markets such as China. While Bontex has a strong
export program, selling and third party costs tend to be higher for exports than
for domestic sales. The Company continues to pursue remaining opportunities for
footwear and non-footwear sales in the United States.
As a percent of sales, selling, general and administrative (SG&A) expenses over
the previous three years were 26.1 percent in 2000, 26.0 percent in 1999, and
27.4 percent in 1998. The higher percentage in fiscal year 1998 is directly
related to sales decreasing at a higher rate than SG&A costs as opposed to 1999
and 2000 where cost reductions took stronger effect. In 1999, legal costs
associated with certain lawsuits against the Company and some of its officers
significantly increased SG&A costs. These expenses did not recur in this
magnitude during 2000, but increased shipping costs, new employees for future
growth and flat sales kept the percentage and amount approximately the same.
The decrease in interest expense over the past year was due primarily to a
decrease in long and short-term borrowing offset somewhat by higher interest
rates. Bontex has implemented more control over capital spending for the next
fiscal year with the budgeted amount being less than $250,000. The company
anticipates certain proceeds from the sale of the Newark, New Jersey facility.
These proceeds are expected
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to reduce the Company's debt and should decrease interest expense during fiscal
year 2001 as well as reduce operating costs when the Company relocates to a less
costly location.
The consolidated income tax expense for the Company was $335,000 in 2000, as
compared to an income tax benefit of $208,000 in 1999 and $137,000 in 1998. The
tax expense in 2000 is significantly higher due to a $239,000 tax accrual
established with respect to a prior years tax examination of one of the
Company's foreign subsidiaries.
During fiscal year 2000, the Ministere Des Finances, the Belgian tax authority,
completed an examination of Bontex S.A.'s, the Company's Belgian subsidiary, tax
returns for 1997, 1998 and 1999 and extended the tax examination to 1995 and
1996 based on certain items. Bontex S.A. has received notices of proposed tax
adjustments to these tax returns. The proposed tax adjustments arise from items
which are considered disallowed expenses by tax authorities, including
commissions paid to certain distributors and clients, certain travel expenses
and various smaller items including allowances for doubtful receivables and
certain insurance premiums. The proposed tax adjustments by the Belgian
authorities approximate $820,000. The Company believes, based in part on written
opinion of external counsel, it has meritorious legal defenses to many of the
claims and the Company intends to defend such claims. The Company's best
estimate of the most likely amount payable for the foregoing tax matters is
$239,000, and accordingly, a provision for this amount has been accrued at June
30, 2000. Similar deductions relating to the year ended June 30, 2000 that in
light of the current information may be disallowed have been treated as
disallowed expenses in the calculation of the current year's tax provision. The
Company's actual liability pursuant to the foregoing examination may exceed
$239,000, and such excess liability could adversely affect the Company's
financial condition.
Profitability
The net loss of $659,000 or $.42 per share generated in 2000 compares favorably
to $778,000 or $.49 per share net loss in 1999, and unfavorably to the loss of
$446,000 or $.28 per share in 1998. The unprofitable results are of major
concern to management. Typically, the financial performance of Bontex is related
directly to cycles in key raw materials, particularly pulp and latex. The lower
sales volumes of Bontex's cellulose materials have induced management to pursue
process efficiencies that better enable the Company to cope with fluctuations in
volume and raw material costs in the future. However, as previously noted,
selling price reductions offset some of the cost reductions. Management expects
its recent cost reduction and control measures, product development efforts, and
Bontex's strong market position to provide a platform for future profitability.
Nevertheless, there can be no assurances that increased raw materials prices or
decreased volume of sales will not have an adverse impact on the Company's
operations or competitive position in the future.
INTERNATIONAL SALES AND OPERATIONS
Bontex continues to export a predominant portion of its production to countries
globally. The Far East, where an estimated 70 percent of global shoe production
occurs, is the largest market for Bontex products. Sales to the Far East are
denominated in US dollars, which serves to limit the Company's exposure to
foreign exchange risk in relation to these countries. As the US domestic market
for footwear materials decreases, Bontex is pursuing non-footwear sales and
additional export opportunities. However, some foreign
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exchange exposure remains, and Bontex continues to have some gains and losses
due to currency fluctuation. The exchange losses during 1999 and 1998 are mainly
due to declines in value of the Mexican peso, Canadian dollar and the overall
strength of the US dollar during that period.
On January 1, 1999, the EURO became the official currency of the European
Economic and Monetary Union (EMU). The EURO has had an impact on the Company's
operations, as approximately 24.6 percent of the Company's consolidated sales
are to customers in the European Union. Refer to Notes 1 and 7 of the Notes to
the Consolidated Financial Statements for further details regarding currencies,
market risks, and financial instruments, as well as the following section of
this Management Discussion and Analysis titled, Market Risk of Financial
Instruments.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity and capital resources have decreased over the past year,
due to the net loss and investments in facility improvements deemed necessary by
management. Management believes that the Company's capital structure is
sufficient to finance short and long-term operations and objectives.
Cash flows from operations totaled $1.6 million, $122,000 and $57,000 in
2000,1999 and 1998, respectively. In 2000, cash flows were primarily effected by
an increase of $1,693,000 in accounts payable and accrued expenses which were
partially offset by an increase in trade accounts receivable and other
receivables. In 1999 and 1998, cash flows were effected from reductions in
inventory in 1999 and a decrease in trade accounts receivable in 1998, both
offset by lower profits. Trade accounts receivable increased $422,000 to $12.2
million at June 30, 2000 as compared to last year due primarily to improved
sales. Inventories at June 30, 2000 are lower by $333,000 over 1999 due mainly
to increased efforts to improve turnover and global stock requirements. The
Company's cash conversion efficiency, cash flows from operations divided by net
sales, increased from less than one percent in 1999 to 4.1 percent this year.
The Company's current ratio has decreased slightly from 1.02 in 1999 to .98 this
year.
Capital expenditures for property, plant and equipment of $854,000 in 2000 is
the lowest in three years due to tight controls in this area. Through targeted
capital and other investments, the Company believes that Bontex Belgium's
facility has developed into one of the most efficient and highest capacity
operation of its type in the world. Bontex USA has invested in facility
improvements that further enhance its reliability as a supplier to the markets
the Company serves.
Bontex has also invested heavily in environmental equipment at both
manufacturing facilities to protect the environment and help ensure compliance
with government mandates. Capital investments during 2000 primarily relate to
non-recurring items in production and the environment. These projects are
expected to help establish Bontex as an industry leader in quality, efficiency,
and reliability and as a responsible corporate citizen. The Company continues to
pursue plans for the sale of the Newark, New Jersey facility. The Newark
property is for sale with negotiations in progress. Bontex anticipates
completion of the Newark sale during calendar year 2001 and the Company does not
expect material costs related to this sale. Bontex plans to continue service of
its customers in the New York metropolitan area utilizing rented space.
On June 30, 2000, the Company had loans of $11.2 million outstanding consisting
of $8.2 million short-term and $3.0 million long-term. Short-term borrowings
decreased by $1 million while accounts payable and accrued expenses increased by
$1.7 million compared to 1999 amounts. The decrease in short-term
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borrowings relates to cash flow from operations. The weighted average interest
rate on short-term borrowings during 2000 and 1999 was 7.3 and 6.0 percent,
respectively. Financial instruments and market risk are discussed in more detail
below under Market Risk and Sensitivity.
On January 26, 2000, Bontex paid off and terminated its credit facility with
Wachovia Bank, N.A., and entered into a loan and security agreement with
Congress Financial Corporation providing for a credit facility and a term loan.
The new credit facility provides for a revolving loan in an amount up to $4
million, based on a lending formula that evaluates, among other items, the
current accounts receivable and inventory of Bontex. The lending availability
fluctuates daily. Based on the lending formula, from the inception of the loan
through June 30, 2000, an average amount of approximately $3.1 million has been
available to Bontex under the revolving loan. Further, on five days notice to
Bontex, Congress may change the lending formula and in effect reduce the amount
available to Bontex under the revolving loan. The new credit facility also
requires Bontex to maintain a specified adjusted tangible net worth. During 2000
and 1999, Bontex was subject to various loan covenants under its secured debt
agreements and has pledged certain assets as collateral. Bontex was in
compliance with the applicable covenants at June 30, 2000 and 1999. Please refer
to Note 4 of Notes to the Consolidated Financial Statements for further details
on Bontex's indebtedness.
Year 2000
Over the past two years Bontex has invested approximately $200,000 in modern
information systems to improve data efficiency. Bontex did not experience any
material disruptions due to the year 2000 computer issue.
MARKET RISK AND SENSITIVITY
As previously discussed, the Company is exposed to certain risks related to
interest rates and commodity positions. Market risk is defined as the risk of
loss arising from adverse changes in market rates and prices. The following
disclosures provide certain forward-looking data concerning potential exposures
to market risk. The Company has risk associated with its international sales or
foreign exchange risk, interest rate risk and commodity prices. In general, our
policy is not to speculate on interest rates and commodities in the markets.
Fair Value of Financial Instruments (dollars in thousands):
<TABLE>
<CAPTION>
Face Amount/
Carrying Amount Fair Value
<S> <C> <C>
June 30, 2000
Interest Rate Exposure:
Long-term debt $ 2,953 $ 2,695
Short-term debt $ 8,251 $ 8,251
June 30, 1999
Interest Rate Exposure:
Long-term debt $ 3,382 $ 3,382
Short-term debt $ 9,215 $ 9,215
Interest rate swap $ 1,000 $ (8)
</TABLE>
9
<PAGE>
The table below provides information about the Company's financial instruments
that are sensitive to changes in interest rates. For debt obligations, the table
presents principal cash flows and related weighted average interest rates by
expected maturity dates. Weighted average variable rates are based on implied
forward rates in the yield curve at the reporting date.
Financial Instruments held for other than trading purposes at June 30, 2000
(dollars in thousands).
<TABLE>
<CAPTION>
Expected Maturity Date
There- Fair
2001 2002 2003 2004 2005 after Total Value
<S> <C> <C> <C> <C> <C> <C>
Liabilities
Long-term debt:
Fixed Rate $ 426 $ 425 $ 425 $ 424 $ 336 --- $ 2,036 $ 1,778
Average Interest Rate 4.97% 4.97% 4.97% 4.97% 5.27% --- 5.02%
Variable Rate $ 200 $ 200 $ 200 $ 200 $ 117 --- $ 917 $ 917
Average Interest Rate 10.5% 10.5% 10.5% 10.5% 10.5% --- 10.5%
</TABLE>
Approximately $9.2 million of variable rate debt is not covered by interest rate
swaps and is subject to the risk of interest rate changes. The market risk
sensitivity analysis above does not fully reflect the potential net market risk
exposure, because other market risk exposures may exist in other transactions.
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," was to be effective for periods
beginning after June 15, 1999, but implementation has been delayed by the
Financial Accounting Standards Board to be effective for periods beginning after
June 15, 2000. This statement requires that the Company recognize all
derivatives as either assets or liabilities in the balance sheet, and measure
those instruments at fair value. At June 30, 2000, the Company did not have any
derivative instruments or hedging. Because the Company has used in the past and
continues to consider in the future the use of derivative instruments and
hedging activities this statement could have an impact on the Company's future
financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
BONTEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) and COMPREHENSIVE INCOME (LOSS) and
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended June 30, 2000, 1999 and 1998
(In Thousands, Except Per Share Data)
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss):
2000 1999 1998
<S> <C> <C> <C>
NET SALES $ 39,455 $ 39,325 $ 43,483
COST OF SALES 28,598 29,152 31,080
----------- ----------- ------------
Gross Profit 10,857 10,173 12,403
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 10,293 10,224 11,903
----------- ----------- ------------
Operating income (loss) 564 (51) 500
----------- ----------- ------------
OTHER (INCOME) EXPENSES:
Interest expense 834 923 1,056
Interest income (2) (3) (76)
Foreign currency exchange (gain) loss (29) 40 115
Other - net 85 (25) (12)
----------- ----------- ------------
888 935 1,083
----------- ----------- ------------
LOSS BEFORE INCOME TAXES (324) (986) (583)
INCOME TAX EXPENSE (BENEFIT) 335 (208) (137)
----------- ----------- ------------
NET LOSS (659) (778) (446)
----------- ----------- ------------
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment (286) (220) (178)
----------- ----------- ------------
COMPREHENSIVE LOSS $ (945) $ (998) $ (624)
=========== =========== ============
NET LOSS PER SHARE $ (.42) $ (.49) $ (.28)
=========== =========== ============
Consolidated Statements of Changes in Stockholders' Equity: 2000 1999 1998
Stockholders' Equity, beginning balance $ 9,893 $ 10,891 $ 11,515
Net loss (659) (778) (446)
Other comprehensive loss
Foreign currency translation adjustment (286) (220) (178)
----------- ----------- ------------
Stockholders' Equity, ending balance $ 8,948 $ 9,893 $ 10,891
=========== =========== ============
See accompanying notes to consolidated financial statements
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
BONTEX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2000 and 1999
(In Thousands, Except Per Share Data)
2000 1999
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 457 $ 336
Trade accounts receivable, less allowance for doubtful
accounts of $170 ($128 at 1999) 12,187 11,765
Other receivables 378 278
Inventories 5,465 5,798
Deferred income taxes 135 124
Income taxes refundable 49 67
Other current assets 120 152
----------- ------------
Total current assets 18,791 18,520
----------- ------------
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 350 361
Building and building improvements 5,525 5,953
Machinery, furniture and equipment 17,797 17,885
Construction in progress 526 239
----------- ------------
24,198 24,438
Less accumulated depreciation and amortization 13,491 12,915
----------- ------------
Net property, plant and equipment 10,707 11,523
Deferred income taxes 736 599
Other assets, net 651 522
----------- ------------
Total assets $ 30,885 $ 31,164
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 8,251 $ 9,215
Long-term debt due currently 626 781
Accounts payable 7,756 6,375
Accrued expenses 1,902 1,590
Income taxes payable 594 197
----------- ------------
Total current liabilities 19,129 18,158
Long-term debt, less current portion 2,327 2,601
Deferred income taxes 42 48
Other long-term liabilities 439 464
----------- ------------
Total liabilities 21,937 21,271
----------- ------------
STOCKHOLDERS EQUITY:
Preferred stock of no par value. Authorized 10,000,000
shares; none issued - -
Common stock of $.10 par value. Authorized 10,000,000
shares; issued and outstanding 1,572,824 shares 157 157
Additional capital 1,551 1,551
Retained earnings 7,461 8,120
Accumulated other comprehensive income (221) 65
----------- ------------
Total stockholders' equity 8,948 9,893
----------- ------------
Total liabilities and stockholders' equity $ 30,885 $ 31,164
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
BONTEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2000, 1999 and 1998
(In Thousands)
2000 1999 1998
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 37,378 $ 39,152 $ 44,499
Cash paid to suppliers and employees (34,886) (38,237) (43,245)
Interest received 4 10 76
Interest paid (814) (931) (1,063)
Income taxes received (paid), net (74) 128 (210)
----------- ----------- ------------
Net cash provided by operating activities 1 ,608 122 57
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and equipment - - 15
Purchases of property, plant and equipment (854) (1,067) (2,334)
----------- ----------- ------------
Net cash used in investing activities (854) (1,067) (2,319)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings, net (404) 898 888
Long-term debt incurred 545 547 1,000
Principal payments on long-term debt (752) (669) (594)
----------- ----------- ------------
Net cash provided by (used in) financing activities (611) 776 1,294
----------- ----------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (22) (12) 112
----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH 121 (181) (856)
CASH AT BEGINNING OF YEAR 336 517 1,373
----------- ----------- ------------
CASH AT END OF YEAR $ 457 $ 336 $ 517
=========== =========== ============
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net loss $ (659) $ (778) $ (446)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 1,322 1,372 1,272
Gain on sale of property, plant and equipment - - (8)
Provision for bad debts 92 (39) 252
Deferred income taxes (154) (191) (271)
Change in assets and liabilities:
(Increase) decrease in trade accounts and other receivables (1,226) (522) 1,495
(Increase) decrease in inventories (5) 547 (1,290)
(Increase) decrease in other assets (186) 146 (322)
Increase (decrease) in accounts payable and accrued
expenses 1,988 (367) (856)
Increase (decrease) in income taxes payable 421 143 (77)
Increase (decrease) in other liabilities 15 (189) 308
----------- ----------- ------------
Net cash provided by operating activities $ 1,608 $ 122 $ 57
=========== =========== ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Construction in progress accrued in accounts payable - - 122
$ =========== $ =========== $ ============
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE>
BONTEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000, 1999 and 1998
(All amounts in thousands, except share data)
[1] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation - The accounts of Bontex, Inc. and its wholly-owned subsidiaries,
Bontex S.A., Belgium, Bontex Italia, S.r.l., Italy and Bontex de Mexico C.V.,
Mexico, and its majority-owned subsidiary, Bontex Hong Kong Limited, (the
Company) are included in the consolidated financial statements after elimination
of significant intercompany accounts and transactions. Bontex Hong Kong
Limited's minority interest is not presented separately because it is not
material to the Company's consolidated financial statements.
Foreign Currency Translation - The financial statements of the Company's
subsidiaries outside the United States are measured using the local currency as
the functional currency. Assets and liabilities of these foreign subsidiaries
are translated into U.S. dollars at the rates of exchange as of the balance
sheet date. The resulting translation adjustments are included in other
comprehensive income as foreign currency translation adjustment and in
accumulated other comprehensive income. Income and expense items are translated
at weighted average monthly exchange rates in effect during the year. Gains and
losses from foreign currency transactions are included in net income (loss).
Cash Equivalents - 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) method and in Europe on the first-in, first-out (FIFO) and weighted
average methods.
Property, Plant and Equipment - Property, plant and equipment are stated at
cost. Depreciation and amortization are provided by the straight-line method
over the estimated useful lives of the related assets. Estimated useful lives
are 10 to 40 years for buildings and building improvements, and 3 to 25 years
for machinery, furniture and equipment.
Other Assets - Other assets consist principally of cash surrender value of life
insurance, trademarks and various deposits. Trademark costs are amortized on a
straight-line basis over five years.
Revenue Recognition - Sales and cost of sales are recognized at the time of
product shipment or delivery to the customer, based on sales terms.
Stock Options - The Company uses the disclosure provisions of SFAS No. 123,
"Accounting for Stock Based Compensation" (Note 6). The Company continues to
measure compensation expense for its stock-based compensation plans using the
intrinsic value based method of accounting prescribed by Accounting Principles
Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees."
14
<PAGE>
Earnings Per Share - Net loss per share has been computed on the basis of the
weighted average number of common shares outstanding during each year (1,572,824
shares). Diluted earnings per share is not presented because the effect of stock
options is anti-dilutive. See note 6 for information relating to stock options
that could potentially dilute basic earnings per share in the future.
Derivative Instruments and Hedging Activities - When appropriate, 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 term of the agreements. On a limited
basis, the Company manages its exposure to pulp price changes with pulp futures.
In accordance with hedge accounting, gains or losses are recorded as a component
of the underlying inventory purchase, since these contracts effectively meet the
risk reduction and correlation criteria. Gains or losses on hedges that are
terminated prior to the execution of the inventory purchase are recorded in
inventory until the inventory is sold. Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities," was issued in June 1998. This Statement addresses the accounting
for derivative instruments, including certain derivative instruments embedded in
other contracts, and hedging activities. The Statement, as amended, will be
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000. Because the Company has used in the past and continues to consider in the
future the use of derivative instruments and hedging activities this statement
could have an impact on the Company's future financial statements.
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of - The
Company reviews its long-lived assets and certain identifiable intangibles for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future undiscounted net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
estimated fair value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or estimated fair value less costs to sell.
Income Taxes - Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
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 and
the disclosure of contingent 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.
15
<PAGE>
[2] INVENTORIES
Cost of inventories of approximately $1,873 in 2000 and $1,740 in 1999, is
determined by the last-in, first-out method (LIFO). Replacement cost for LIFO
inventories approximated $2,187 in 2000 and $2,082 in 1999. Inventories of
approximately $3,592 in 2000 and $4,058 in 1999, are determined by the first-in,
first-out (FIFO) and weighted average bases.
Inventories are summarized as follows:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Finished goods $ 3,849 $ 3,341
Raw materials 1,222 2,025
Supplies 708 774
---------- ----------
Inventories at FIFO and weighted average cost 5,779 6,140
LIFO reserves 314 342
---------- ----------
$ 5,465 $ 5,798
========== ==========
</TABLE>
During 1999 and 1998, LIFO layers were reduced resulting in charging lower
inventory costs to cost of sales of $255 and $55, respectively. In 2000, LIFO
layers were not reduced.
[3] BUSINESS SEGMENT INFORMATION AND INTERNATIONAL OPERATIONS
Bontex, Inc. and all majority-owned subsidiaries are predominantly engaged in
the manufacturing and distribution of uncoated and coated BONTEX(R) elastomeric
fiberboard products. The Company operates manufacturing facilities at Bontex USA
in North America and Bontex S.A. in Belgium. BONTEX(R) products are primarily
used as an insole material in footwear, as well as visorboard in headwear,
stiffener and laminating base for luggage, leathergoods and allied industries
globally.
Information related to net sales by geographic area follows:
<TABLE>
<CAPTION>
North America Asia/Pacific Europe/Middle East Latin America Total
<S> <C> <C> <C> <C> <C> <C>
2000 $ 6,731 $ 16,366 $ 14,264 $ 2,094 $ 39,455
1999 7,086 15,301 15,315 1,623 39,325
1998 7,790 18,115 16,473 1,105 43,483
</TABLE>
No single customer accounts for 10 percent or more of the Company's consolidated
net sales for 2000, 1999 and 1998. One distributor accounted for 19.2 percent in
2000, 15.2 percent in 1999 and 10.8 percent in 1998 of the Company's
consolidated net sales.
Information related to the North American and European operations follows:
<TABLE>
<CAPTION>
North American European
Operations Operations Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
2000:
Total assets $ 16,046 $ 16,904 $ 2,065 $ 30,885
Net loss (508) (151) - (659)
Operating income (loss) (733) 1,297 - 564
Net sales 16,861 22,990 (396) 39,455
Interest expense 372 462 - 834
Depreciation and amortization 815 507 - 1,322
Income tax expense (benefit) (151) 486 - 335
Total expenditures for additions to
property, plant and equipment 381 473 - 854
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1999:
Total assets $ 14,817 $ 18,345 $ (1,998) $ 31,164
Net income (loss) (829) 51 - (778)
Operating income (loss) (1,327) 1,276 - (51)
Net sales 15,661 23,954 (290) 39,325
Interest expense 308 615 - 923
Depreciation and amortization 794 578 - 1,372
Income tax expense (benefit) (402) 194 - (208)
Total expenditures for additions to
property, plant and equipment 389 678 - 1,067
1998:
Total assets $ 16,550 $ 17,961 $ (1,998) $ 32,513
Net income (loss) (789) 343 - (446)
Operating income (loss) (1,524) 2,024 - 500
Net sales 18,382 25,560 (459) 43,483
Interest expense 286 770 - 1,056
Depreciation and amortization 763 509 - 1,272
Income tax expense (benefit) (444) 307 - (137)
Total expenditures for additions to
property, plant and equipment 1,175 1,159 - 2,334
</TABLE>
Retained earnings of foreign operations not available for distribution amounted
to approximately $757 and $763 at June 30, 2000 and 1999, respectively.
[4] LONG-TERM DEBT AND FINANCING AGREEMENTS
The following long-term debt was outstanding as of June 30, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C> <C> <C> <C> <C>
10.5%(prime rate plus 1%) loan payable to a United States bank in monthly
installments of $17 through January 2005; collateralized by property and
equipment located in the U.S. and subject to various loan
covenants. $ 917 $ -
8.50%loan payable to a United States bank in quarterly installments of $80
through July 2001; collateralized by accounts receivable, inventory and
other noncurrent assets in the U.S. and subject to various loan covenants.
Refinanced January 2000. - 720
4.70% loan payable to a Belgian bank in quarterly
installments of $8 through June 2005. 166 215
4.70% loan payable to a Belgian bank in quarterly
installments of $15 through June 2005. 296 384
5.20% loan payable to a Belgian bank in quarterly
installments of $30 through June 2005. 592 768
5.50% loan payable to a Belgian bank in quarterly
installments of $7 through June 2005. 148 192
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
5.85% loan payable to a Belgian bank in quarterly
installments of $23 through June 2005. $ 455 $ 591
3.95% loan payable to a Belgian bank in quarterly
installments of $24 through April 2004. 379 512
------------ --------------
2,953 3,382
Less long-term debt due currently 626 781
------------ --------------
Long-term debt $ 2,327 $ 2,601
============ ==============
</TABLE>
The principal payments of long-term debt are as follows:
2001 $ 626
2002 625
2003 625
2004 624
2005 453
----------
Total $ 2,953
==========
The loans payable to a Belgian bank are collateralized with a mortgage on Bontex
S.A.'s buildings and the right to request a second mortgage on the buildings.
European operations have short-term credit facilities totaling approximately
$7,186 and $8,633 at June 30, 2000 and 1999, respectively. As of June 30,
borrowings under these facilities were as follows:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C> <C> <C> <C> <C>
Short-term bank loans with variable interest rates, ranging
from 4.77% to 7.45% at June 30, 2000 $ 5,100 $ 6,642
Overdrafts - 2
-------- ---------
$ 5,100 $ 6,644
======== =========
</TABLE>
18
<PAGE>
Three banks in Belgium share a security interest in most of the assets of Bontex
S.A. for 37.5 percent of the credit facilities granted, and the right to request
additional security interest of another 37.5 percent of the credit facilities
granted. As of June 30, 2000 and 1999 one of the banks under these facilities
had the right to request a security interest up to $1,184 and $1,280,
respectively. Bontex S.A. committed to one of the banks to maintain certain
covenants which were met at June 30, 2000.
Bontex USA has a line of credit arrangement whereby Bontex USA may borrow up to
$4,000, based on the value of certain assets, at prime plus 1.00 percent (10.5
percent at June 30, 2000). At June 30, 2000, Bontex USA had borrowings of $3,151
outstanding under this line of credit. The secured line of credit is
collateralized by trade accounts receivable, inventory and other noncurrent
assets. At June 30, 1999, Bontex USA had a line of credit arrangement whereby
Bontex USA could borrow up to $ 2,750 at prime plus 1.25 percent (9.0 percent at
June 30, 1999). At June 30, 1999, Bontex USA had borrowings of $2,750
outstanding under this line of credit.
Consolidated weighted average interest rates on short-term borrowings at June
30, 2000 and 1999 are 6.9 and 6.0 percent, respectively.
During 2000 and 1999, Bontex USA was subject to various loan covenants under its
secured debt agreements and has pledged certain current and noncurrent assets as
collateral. Bontex USA was in compliance with the applicable covenants at June
30, 2000 and 1999. In January 2000, Bontex USA refinanced its previous long and
short-term debt with a new secured debt agreement.
[5] INCOME TAXES
The U.S. and foreign components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
Current Deferred Total
<S> <C> <C> <C> <C> <C> <C>
2000:
Federal $ - $ (136) $ (136)
State - (15) (15)
Foreign 489 (3) 486
----------- ----------- ----------
$ 489 $ (154) $ 335
=========== =========== ==========
1999:
Federal $ (151) $ (210) $ (361)
State (17) (24) (41)
Foreign 151 43 194
----------- ----------- ----------
$ (17) $ (191) $ (208)
=========== =========== ==========
1998:
Federal $ (72) $ (334) $ (406)
State (18) (41) (59)
Foreign 224 104 328
----------- ----------- ----------
$ 134 $ (271) $ (137)
=========== =========== ==========
</TABLE>
19
<PAGE>
Income tax expense (benefit) differs from the expected tax expense (benefit),
computed by applying the U.S. Federal corporate rate to loss before income
taxes, as follows:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C> <C>
Federal income tax at statutory rate (34%) $ (110) $ (334) $ (198)
Increase (reduction) in income taxes
resulting from:
Foreign income at other than
U.S. rates 82 25 33
State and local taxes, net of federal
income tax benefit (10) (27) (27)
Accrual for tax examination 239 - -
Other differences, net 134 128 55
---------- --------- ----------
Income tax expense (benefit) $ 335 $ (208) $ (137)
========== ========= ==========
</TABLE>
During fiscal year 2000, the Ministere Des Finances, the Belgian tax authority,
completed an examination of Bontex S.A.'s, the Company's Belgian subsidiary, tax
returns for 1997, 1998 and 1999 and extended the tax examination to 1995 and
1996 based on certain items. Bontex S.A. has received notices of proposed tax
adjustments to these tax returns. The proposed tax adjustments arise from items
which are considered disallowed expenses by tax authorities, including
commissions paid to certain distributors and clients, certain travel expenses
and various smaller items including allowances for doubtful receivables and
certain insurance premiums. The proposed tax adjustments by the Belgian
authorities approximate $820,000. The Company believes, based in part on written
opinion of external counsel, it has meritorious legal defenses to many of the
claims and the Company intends to defend such claims. The Company's best
estimate of the most likely amount payable for the foregoing tax matters is
$239,000, and accordingly, a provision for this amount has been accrued at June
30, 2000. Similar deductions relating to the year ended June 30, 2000 that in
light of the current information may be disallowed have been treated as
disallowed expenses in the calculation of the current year's tax provision.
The components of deferred tax assets and liabilities at June 30, 2000 and 1999
are presented below:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C> <C> <C> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance
for doubtful accounts $ 15 $ 10
Inventories, principally due to additional costs
capitalized for tax purposes 101 95
Other assets, due to difference in amortization of
trademarks 170 161
Accrued pension and retirement benefits 117 119
Net operating loss carryforwards 1,263 1,077
Alternative minimum tax credit carryforwards 36 36
Other 81 90
--------- ----------
Total gross deferred tax assets 1,783 1,588
--------- ----------
Deferred tax liabilities:
Plant and equipment, principally due to differences
in depreciation and capital gain recognition (942) (900)
Other (12) (13)
--------- ----------
Total gross deferred tax liabilities (954) (913)
--------- ----------
Net deferred tax assets $ 829 $ 675
========= ==========
</TABLE>
20
<PAGE>
The U.S. and foreign components of the net deferred tax asset at June 30, 2000
and 1999 are presented below:
<TABLE>
<CAPTION>
Current Noncurrent Total
<S> <C> <C> <C> <C> <C> <C>
2000:
U.S. Operations $ 103 $ 736 $ 839
European Operations 32 (42) (10)
---------- -------------- -----------
$ 135 $ 694 $ 829
========== ============== ===========
1999:
U.S. Operations $ 92 $ 599 $ 691
European Operations 32 (48) (16)
---------- -------------- -----------
$ 124 $ 551 $ 675
========== ============== ===========
</TABLE>
At June 30, 2000, in addition to an alternative minimum tax credit carryforward
of $36 at Bontex USA, the Company had approximately $3,473 at Bontex USA in net
operating loss carryforwards to offset future taxable income, of which $258,
$361, $851, $1,491 and $512 at Bontex USA expire in 2010, 2011, 2013, 2019 and
2020, respectively.
At June 30, 2000, the Company has not recognized a deferred tax liability of
$106 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, 2000, undistributed income of the foreign subsidiaries
was approximately $2,122, of which approximately $757 is not available for
distribution.
In assessing the reliability 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 and available tax planning strategies, management believes it is
more likely than not the Company will realize these deferred tax assets.
[6] RETIREMENT AND COMPENSATION PLANS
The Company has pension plans covering substantially all full-time domestic
employees and certain foreign employees. The benefits from the Company's
domestic contributory 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. Participant
contributions to the plan were 3.5 percent of employee annual earnings for
fiscal years ending June 30, 2000, 1999 and 1998. 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.
21
<PAGE>
The Plan's change in benefit obligation, change in plan assets, 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>
2000 1999
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits (2000, $4,436 and 1999, $4,289) $ 4,491 $ 4,351
========== ==========
Change in Benefit Obligation:
Benefit obligation at beginning of year $ 5,240 $ 5,582
Service cost 111 110
Interest cost 381 384
Plan participants' contributions 68 83
Actuarial (gain) loss (91) (476)
Benefits paid (438) (443)
---------- ----------
Benefit obligation at end of year $ 5,271 $ 5,240
========== ==========
Change in Plan Assets:
Fair value of plan assets at beginning of year $ 5,710 $ 5,553
Actual return on plan assets 89 517
Plan participants' contributions 68 83
Benefits paid (438) (443)
---------- ----------
Fair value of plan assets at end of year $ 5,429 $ 5,710
========== ==========
Funded status $ 158 $ 470
Unrecognized net actuarial loss (533) (847)
Unrecognized prior service cost 118 132
Unrecognized transition obligation (65) (82)
---------- ----------
Accrued benefit costs $ (322) $ (327)
========== ==========
</TABLE>
The Company's net periodic benefit costs for its United States pension plan for
the years ended June 30, 2000, 1999 and 1998 include the following components:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Service cost $ 179 $ 193 $ 182
Interest cost 381 384 397
Expected return on plan assets (496) (517) (766)
Net amortization and deferral (29) (20) 330
----------- ----------- -----------
Net periodic benefit cost $ 35 $ 40 $ 143
=========== =========== ===========
</TABLE>
The weighted average discount rate used in determining the actuarial present
value of the projected benefit obligations was 7.75 percent for 2000, 1999 and
1998. The rate of increase for future compensation levels used in determining
the obligation was 5.0 percent for 2000, 1999, and 1998. The expected long-term
rate of return on plan assets in 2000, 1999 and 1998 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, managed by the
insurance company, which include domestic equity, domestic government, corporate
and private placement bonds and domestic real estate equity.
The pension expense relating to the foreign subsidiary's insured pension and
disability plan amounted to $96, $62, and $45 in 2000, 1999 and 1998,
respectively. Benefits are based on years of service and the average of the last
five years annual earnings.
22
<PAGE>
The Company provides a tax deferred compensation benefit plan for certain
executives. The plan allows the employee to defer up to four percent of his
compensation with a Company match of up to one percent of compensation. The
Company's contribution funds life insurance policies on each executive, with the
Company as owner and beneficiary. The Company's expense for the plan in 2000,
1999 and 1998 was $3, $4, and $6, respectively.
The Company provides certain supplemental retirement benefits to the President
of the Company. Expenses related to these benefits were approximately $49 in
1999 and $112 in 1998. There was no expense for 2000. 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 $226.
The Company has granted stock options to certain key executives to purchase
shares of the Company's common stock. These options generally vest in six months
or less and expire 10 years from the grant date. Additional information with
respect to stock option activity is as follows:
<TABLE>
<CAPTION>
Number Weighted Average
Of Shares Exercise Price
<S> <C> <C> <C>
Outstanding at June 30, 1998 - $ -
Granted 112,000 4.90
--------------
Outstanding at June 30, 1999 112,000 4.90
Granted 59,997 2.00
Cancelled (60,000) 4.90
--------------
Outstanding at June 30, 2000 111,997 3.35
==============
Options exercisable at June 30, 1999 112,000 4.90
==============
Options exercisable at June 30, 2000 52,000 4.90
==============
</TABLE>
The following table summarizes information about stock options outstanding and
exercisable at June 30, 2000:
<TABLE>
<CAPTION>
Stock Options Outstanding
Weighted Average
Range of Number of Remaining Weighted
Exercise Options Contractual Average
Prices Outstanding Life in Years Exercise Price
<S> <C> <C> <C> <C> <C> <C>
$ 2.00 - $5.63 111,997 8.75 $ 3.35
</TABLE>
<TABLE>
<CAPTION>
Stock Options Exercisable
Range of Number of Weighted
Exercise Shares Average
Prices Exercisable Exercise Price
<S> <C> <C> <C> <C> <C> <C>
$4.50 - $5.63 52,000 $ 4.90
</TABLE>
The Company applies APB Opinion No. 25 in accounting for its stock-based
compensation and, accordingly, no compensation cost has been recognized for its
stock options in the consolidated financial statements. Had compensation cost
for the stock options been determined consistent with SFAS No. 123, the
Company's net loss and net loss per share would have been increased to the pro
forma amounts shown below:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C> <C> <C> <C> <C>
Net Loss:
As reported $ 659 $ 778
Pro forma $ 709 $ 826
Net Loss Per Share:
As Reported $ .42 $ .49
Pro forma $ .46 $ .52
</TABLE>
23
<PAGE>
The weighted average fair value of stock options granted during 2000 and 1999
was $1.29 and $.67 per share, respectively. These amounts were determined using
the Black-Scholes option-pricing model. The assumptions used in the model were
as follows for stock options granted in 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C> <C> <C> <C> <C>
Risk-free interest rate 6.30% 5.93%
Expected volatility of common stock 55.3% 44.5%
Dividend yield - -
Expected life of options 10 8 to 8.8 years
</TABLE>
[7] 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.
The Company has periodically used derivative instruments for the purpose of
hedging commodity and interest rate exposures. As a policy, the Company does not
engage in speculative transactions, nor does the Company hold or issue financial
instruments for trading purposes.
Interest Rate Swaps - At June 30, 2000, the Company had no outstanding interest
rate swap agreements. At June 30, 1999, the Company had one outstanding interest
rate swap agreement with a bank having a notional amount of $1,000, which
terminated January 20, 2000. This swap agreement provided for the payment of
interest based on a fixed rate of 6.35 percent, and remained unchanged over the
term of the agreement. The floating rate of the swap agreement was based on the
London Inter Bank Offered Rate (LIBOR) and was reset every 90 days based on
market conditions. The nature of the swap agreement changed variable rate debt
to fixed rate debt. The interest rate differential paid or received under a swap
is recognized over the term of the contract as adjustments are made to the
effective yield of the underlying debt. An interest premium of $6, $44, and $41
was paid during 2000, 1999, and 1998, respectively.
The contract or notional amounts and estimated fair value of the Company's
interest rate swaps at June 30, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
2000 1999
Contract or Notional Estimated Contract or Notional Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
Interest rate swap $ - $ - $ 1,000 $ (8)
</TABLE>
As of June 30, 2000, approximately $9.2 million of variable rate debt is not
covered by interest rate swaps and is therefore subject to market risk of rate
changes.
Commodities - During the first quarter of fiscal year 1998, the Company began on
a limited basis to manage its exposure to pulp price changes with pulp futures.
In accordance with hedge accounting, gains or losses are recorded as a component
of the underlying purchase, since these contracts effectively meet the risk
reduction and correlation criteria. Gains or losses on hedges that are
terminated prior to the execution of the inventory purchase are recorded in
inventory until the inventory is sold. During fiscal years 2000 and 1999, the
Company did not hold any related derivatives for pulp futures.
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 sheets for cash, cash equivalents, trade
accounts receivable, other receivables, short-term borrowings, accounts payable
and accrued expenses approximate fair value because of the short maturity of
these instruments. The fair value of long-term debt is estimated using
discounted cash flows based on the Company's incremental borrowing rates, and
approximates $2,695 at June 30, 2000. Unrealized gains or losses on the fair
value of interest rate swap agreements are estimated based on current interest
rates.
24
<PAGE>
[8] COMMITMENTS AND CONTINGENCIES
Regulatory and Environmental Matters - As with other related manufacturers, the
Company is subject to regulations by various federal, state, foreign and local
agencies concerning compliance with environmental control statutes. These
regulations impose limitations on the use of chemicals in manufacturing
processes and discharge of effluent and emissions into the environment, and
establish standards for solid and hazardous waste disposal, treatment, and
storage, as well as require the Company to obtain and operate in compliance with
the conditions of environmental permit. The Company believes that it is in
substantial compliance with such existing domestic and foreign environmental
statues and regulations. Failure to comply with applicable environmental control
standards could result in interruption of operations or could require additional
expenditures at these facilities.
In recent years, various agencies have increased their screening and testing the
effects of chemicals or mixtures, including those that occur naturally. The
Company's product formulations, in some instances, may include compounds that
are or will be subject to these tests. The Company continually devotes
significant resources to improve product formulation for, among other things,
comfort, health, cost, quality and other performance features.
The Company has made and intends to continue to make capital investments,
operating expenditures, and production adjustments in connection with compliance
with environmental laws and regulations. Since the Company is essentially
comprised of two fiberboard plants, Bontex USA and Bontex S.A., water quality
discharge remains the primary environmental concern. Both plants are operating
new waste water treatment facilities, which the Company believes to be operating
within compliance of applicable environmental requirements. The actual costs of
future environmental compliance may differ from projected costs due to, among
other things, continued emergence of newer environmental laws and regulations
and improving efficiencies in environmental control or process technology
developments.
Litigation - In the normal course of business, the Company is subject to
proceedings, lawsuits and other claims which are subject to many uncertainties,
for which their outcomes are not predictable with assurance. There are no legal
proceedings, lawsuits or other claims pending, other than those discussed in
note 5, against or involving the Company that, in the opinion of management,
will have a material adverse impact upon the financial condition of the Company.
Purchase Commitments - In connection with purchasing certain commodities (pulps
and latex) for future manufacturing requirements, the Company enters into a
number of purchase commitments, as deemed appropriate, to manage the effects of
market price fluctuations and to secure adequate raw material supplies. These
purchase commitments have limited terms and the Company expects future sales
will be sufficient to meet these requirements. Refer to Note 7 of the Notes to
Consolidated Financial Statements for further details regarding commodities.
EURO Currency Conversion - On January 1, 1999, the EURO became the official
currency of the Economic and Monetary Union (EMU). Accordingly, the EURO had a
significant affect on the Company's operations, as approximately 25 percent of
the Company's consolidated sales are to customers located in the Europe Union.
Additionally, a large portion of the Company's manufacturing and marketing
operations are based in Belgium and Italy. The Company has implemented a change
over plan which convert, among other things, pricing, financial reporting,
banking facilities, financing, currency hedging, and information systems.
Leases - Rental expenses for all operating leases amounted to $106, $117 and
$127 in 2000, 1999 and 1998, respectively. The Company anticipates future rental
expenses for operating leases to approximate $130 each year for the next five
years.
25
<PAGE>
INDEPENDENT AUDITORS' REPORT
KPMG LLP [logo]
10 S. Jefferson Street, Suite 1710
Roanoke, VA 24011-1331
The Board of Directors and Stockholders of Bontex, Inc.:
We have audited the accompanying consolidated balance sheets of Bontex, Inc. and
subsidiaries as of June 30, 2000 and 1999, and the related consolidated
statements of income (loss) and comprehensive income (loss), changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended June 30, 2000. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 Bontex, Inc. and
subsidiaries as of June 30, 2000 and 1999, and the results of their operations
and their cash flows for each of the years in the three-year period ended June
30, 2000, in conformity with accounting principles generally accepted in the
United States of America.
KPMG LLP
August 25, 2000
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------
DIRECTORS, EXECUTIVES & OFFICERS
----------------------------------------------------
James C. Kostelni + Chairman of the Board, President,
Chief Executive Officer and Director
William J. Binnie +* Director
Michael J. Breton Director of International Operations
William B. D'Surney Director
David A. Dugan Controller and Assistant
Corporate Secretary
Charles W. J. Kostelni Senior Vice President, Corporate Controller,
Corporate Secretary and Director
Jeffrey C. Kostelni Senior Vice President, Treasurer,
Chief Financial Officer and Director
Frank B. Mayorshi +* Director
Larry E. Morris Technical Sales Director and Director
Dr. Joseph F. Raffetto Director
Patricia S. Tischio Director
Robert J. Weeks +* Director
+Member of Executive Committee
*Member of Audit Committee
----------------------------------------------------
COUNSEL
----------------------------------------------------
Woods, Rogers & Hazlegrove, P.L.C.
Attorneys at Law Roanoke, Virginia
----------------------------------------------------
INDEPENDENT AUDITORS
----------------------------------------------------
KPMG LLP
Certified Public Accountants Roanoke, Virginia
----------------------------------------------------
TRANSFER AGENT
----------------------------------------------------
Registrar & Transfer Company Cranford, New Jersey
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------- -----------------------------------------------------
LOCATIONS STOCKHOLDERS' INFORMATION
------------------------------------------------------- -----------------------------------------------------
World Headquarters and North American Annual Meeting
Manufacturing 10:30 a.m. November 2, 2000
Bontex, Inc. Best Western Inn at Hunt Ridge
One Bontex Drive Willow Springs Drive
Buena Vista, Virginia 24416-1500 U.S.A. Lexington, Virginia 24450
800-733-4234 / 540-261-2181
E-mail: [email protected]
Website: http://www.bontex.com
European Headquarters and Manufacturing Independent Auditors
Bontex S. A. KPMG LLP
Rue Slar 10 S. Jefferson Street, Suite 1710
4801 Stembert, Belgium Roanoke, Virginia 24011-1331
E-mail: [email protected]
Website: http://www.bontex.be
Sales and Distribution Centers Registrar and Transfer Agent
Bontex Italia s.r.l. Registrar and Transfer Company
Via Francia 10 Commerce Drive
37069 Villafranca (Verona) Post Office Box 1010
Italy Cranford, New Jersey 07106
Bontex De Mexico, S. A. De C. V. Form 10-K
Boulevard Mariano Excobedo #801 Interior 2 A copy of the Company's 10-K filed with the
Colonia Andrade, C. P. 37370 Securities and Exchange Commission is
Leon, Guanajuato available without charge to any stockholder.
Mexico Requests should be sent to the attention of:
Bontex Hong Kong Corporate Controller
301 International Trade Centre Bontex, Inc.
11 Sha Tsui Road, Tsuen Wan One Bontex Drive
Hong Kong Buena Vista, Virginia 24416-1500
Bontex Vietnam
Floor 2, Room 204, 99 Pasteur St.
Dist.1, HCMC Vietnam
International Liaison Offices Bontex logo
Bontex Australia
20 Munro Street The Bontex(R) logo is a registered trademark of
Macleod VIC 3085 Bontex, Inc.
Australia
Bontex, Inc. is an equal opportunity employer.
Bontex Korea
Rm. 601, Songnam Bldg. Accepted by the American Podiatric Medical
76-1, 4Ga, Chung Angdong Association (LOGO)
Chung-Gu, Busan, 600-014, Korea
Bontex Taiwan BS EN ISO 9001 Registered Company SATRA
8FL., No. 52, Sec. 2 (Logo)
Chung Shan N. Rd. National Accreditation of Certification Bodies
Taipei, 10419, Taiwan (Logo)
North American Warehouse Facilities SATRA - Footwear Technology Centre (Logo)
Paterson, New Jersey
St. Louis, Missouri
Cambridge, Ontario, Canada
Montreal, Quebec, Canada (RECYCLE LOGO) Recycled Paper
</TABLE>
<PAGE>
[BACK COVER]
[Bontex Logo] BONTEX [R]
One Bontex Drive, Buena Vista, Virginia 24416-1500
Telephone: 540-261-2181 Fax: 540-261-3784
e-mail: [email protected] http://www.bontex.com
Manufactured by: BONTEX [R] Buena Vista, VA BONTEX S.A., Stembert, Belgium
Distributed and Converted by: BONTEX [R] Italia S.R.L.,
Villafranca, Verona, Italy.
BONTEX [R] de Mexico, Leon, Mexico, BONTEX [R] Hong Kong
