FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
of the
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended SEPTEMBER 30, 1999 Commission File Number 1-9307
GUNDLE/SLT ENVIRONMENTAL, INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 22-2731074
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
19103 GUNDLE ROAD HOUSTON, TEXAS 77073
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (281) 443-8564
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant is
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the latest practicable date.
CLASS OUTSTANDING AT NOVEMBER 2, 1999
Common stock, par value $.01 12,865,356
<PAGE>
GUNDLE/SLT ENVIRONMENTAL, INC.
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets as of
September 30, 1999 (Unaudited) and
December 31, 1998 ............................................. 3
Consolidated Statements of Income
For the Three and Nine Months Ended
September 30, 1999 and 1998 (Unaudited) ....................... 4
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1999
and 1998 (Unaudited) .......................................... 5
Notes to Condensed Consolidated Financial
Statements .................................................... 6
Management's Discussion and Analysis of Results
of Operations and Financial Condition ......................... 8
PART II - OTHER INFORMATION ......................................... 12
2
<PAGE>
GUNDLE/SLT ENVIRONMENTAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31,
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS ............................ $ 11,834 $ 29,399
ACCOUNTS RECEIVABLE, NET ............................. 69,425 46,517
CONTRACTS IN PROGRESS ................................ 5,389 1,884
INVENTORY ............................................ 17,947 18,562
DEFERRED INCOME TAXES ................................ 4,584 5,609
PREPAID EXPENSES AND OTHER ........................... 1,315 1,039
--------- ---------
TOTAL CURRENT ASSETS ........................... 110,494 103,010
PROPERTY, PLANT AND EQUIPMENT, NET ..................... 33,279 34,838
EXCESS OF PURCHASE PRICE OVER FAIR VALUE
OF NET ASSETS ACQUIRED, NET .......................... 25,679 26,868
OTHER ASSETS ........................................... 5,328 4,604
--------- ---------
$ 174,780 $ 169,320
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES ............. $ 39,095 $ 32,486
ADVANCE BILLINGS ON CONTRACTS
IN PROGRESS ......................................... 2,263 1,861
CURRENT PORTION OF LONG-TERM DEBT .................... 5,345 5,366
INCOME TAXES PAYABLE ................................. 3,010 3,192
DEFERRED INCOME TAXES ................................ 612 536
--------- ---------
TOTAL CURRENT LIABILITIES ...................... 50,325 43,441
LONG-TERM DEBT ......................................... 26,724 32,048
DEFERRED INCOME TAXES .................................. 2,382 2,491
OTHER LIABILITIES ...................................... 1,000 1,547
STOCKHOLDERS' EQUITY:
PREFERRED STOCK, $1.00 PAR VALUE, 1,000,000 SHARES
AUTHORIZED, NO SHARES ISSUED OR
OUTSTANDING ........................................ -- --
COMMON STOCK, $.01 PAR VALUE, 30,000,000
SHARES AUTHORIZED, 18,096,211 AND 18,092,336 SHARES
ISSUED ............................................. 181 181
ADDITIONAL PAID-IN CAPITAL ........................... 69,356 69,374
RETAINED EARNINGS .................................... 55,559 50,370
ACCUMULATED OTHER COMPREHENSIVE INCOME ............... 1,089 832
UNEARNED COMPENSATION ................................ (70) (130)
--------- ---------
126,115 120,627
TREASURY STOCK AT COST, 5,201,146 and 4,964,689 SHARES (31,766) (30,834)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY ..................... 94,349 89,793
--------- ---------
$ 174,780 $ 169,320
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
GUNDLE/SLT ENVIRONMENTAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SALES AND OPERATING REVENUE ... $ 61,389 $ 57,086 $ 135,906 $ 138,041
COST OF PRODUCTS & SERVICES ... 47,093 45,108 106,557 112,204
--------- --------- --------- ---------
GROSS PROFIT .................. 14,296 11,978 29,349 25,837
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ..... 5,800 6,098 18,308 18,548
AMORTIZATION OF GOODWILL ...... 343 348 1,027 1,035
--------- --------- --------- ---------
OPERATING INCOME .............. 8,153 5,532 10,014 6,254
OTHER (INCOME) EXPENSES:
INTEREST EXPENSE ............ 583 824 2,170 2,649
INTEREST INCOME ............. (139) (206) (760) (757)
OTHER (INCOME) EXPENSE, NET.. (235) (71) (342) (129)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES .... 7,944 4,985 8,946 4,491
PROVISION FOR INCOME TAXES .... 3,337 2,143 3,757 1,931
--------- --------- --------- ---------
NET INCOME .................... $ 4,607 $ 2,842 $ 5,189 $ 2,560
========= ========= ========= =========
BASIC AND DILUTED EARNINGS
PER COMMON SHARE ........... $ 0.36 $ 0.22 $ 0.40 $ 0.19
========= ========= ========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING ......... 12,907 13,218 12,984 13,253
========= ========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
GUNDLE/SLT ENVIRONMENTAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
---------------------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME ................................................. $ 5,189 $ 2,560
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION ............................................. 6,105 5,328
AMORTIZATION ............................................. 1,100 1,001
DEFERRED INCOME TAXES .................................... 236 (972)
GAIN ON SALE OF ASSETS ................................... (98) (35)
INCREASE (DECREASE) IN CASH DUE TO
CHANGES IN ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE .................................... (23,390) (3,461)
CONTRACTS IN PROGRESS .................................. (3,576) (2,730)
INVENTORY .............................................. 269 3,478
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES ............... 6,927 (7,654)
ADVANCE BILLINGS ON CONTRACTS IN PROGRESS .............. 425 (94)
INCOME TAXES PAYABLE ................................... 443 1,423
OTHER .................................................. 164 (350)
-------- --------
NET CASH PROVIDED BY(USED IN)OPERATING ACTIVITIES ...... (6,206) (1,506)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT ................. (5,241) (5,166)
PROCEEDS FROM SALE OF EQUIPMENT ............................ 222 215
OTHER ...................................................... 0 0
-------- --------
NET CASH USED IN INVESTING ACTIVITIES .................. (5,019) (4,951)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
REPURCHASE OF COMMON STOCK ................................. (932) (106)
PROCEEDS FROM THE EXERCISE OF STOCK OPTIONS AND
PURCHASES UNDER THE EMPLOYEE STOCK PURCHASE PLAN ......... 14 25
RETIREMENT OF LONG-TERM DEBT ............................... (5,217) (5,380)
-------- --------
NET CASH PROVIDED BY(USED IN) FINANCING ACTIVITIES ..... (6,135) (5,461)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH ...................... (205) 148
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ......... (17,565) (11,770)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD ......... 29,399 24,844
-------- --------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD ............... $ 11,834 $ 13,074
======== ========
CASH PAID FOR INTEREST ....................................... $ 2,480 $ 2,766
======== ========
CASH PAID FOR INCOME TAXES ................................... $ 2,548 $ 2,082
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
GUNDLE/SLT ENVIRONMENTAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation -
General -
The accompanying unaudited, condensed consolidated financial statements
have been prepared by the Registrant ("Gundle/SLT Environmental, Inc." or the
"Company") pursuant to the rules and regulations of the Securities and Exchange
Commission. These condensed consolidated financial statements reflect all normal
recurring adjustments which are, in the opinion of management, necessary for the
fair presentation of such financial statements for the periods indicated.
Certain information relating to the Company's organization and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles has been condensed or omitted in
this Form 10-Q pursuant to Rule 10-01 of Regulation S-X for interim financial
statements required to be filed with the Securities and Exchange Commission.
However, the Company believes that the disclosures herein are adequate to make
the information presented not misleading. The results for the three and nine
months ended September 30, 1999, are not necessarily indicative of future
operating results. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
The accounting policies followed by the Company in preparing interim
consolidated financial statements are similar to those described in the "Notes
to Consolidated Financial Statements" in the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
The Company is using a cross currency principal and interest rate swap to
effectively convert a portion of its U.S. dollar denominated debt into German
Marks. The objective of this hedging strategy is the management of the foreign
currency exchange risk associated with its net investment in Germany and is
based on the projected foreign currency cash flows from Germany over the life of
the contract. The Company's investment in Germany and the foreign currency
portion of its swap are adjusted each period to reflect current foreign exchange
rates with the gains and losses recorded in the equity section of the balance
sheet as comprehensive income. The differential paid or received on the interest
rate component is recognized as an adjustment to interest expense.
The Company occasionally enters into forward contracts and cross currency
swaps in its management of foreign currency exposures. As a matter of policy,
the Company does not speculate in financial markets and therefore, does not hold
these contracts for trading purposes. The Company utilizes what it considers
straightforward instruments to accomplish its objectives.
6
<PAGE>
The foreign currency forward contracts are used to hedge specific
transactions. Gains and losses on these contracts are recognized in the same
period as the gains and losses on the underlying position.
Organization -
Gundle/SLT Environmental, Inc., a Delaware corporation, through GSE Lining
Technology, Inc. and the Company's other wholly owned subsidiaries, is primarily
engaged in the manufacture, sale and installation of polyethylene lining
systems.
(2) Inventory -
Inventory is stated at the lower of cost or market. Cost, which includes
material, labor and overhead, is determined by the weighted average cost method,
which approximates the first in, first out cost method. Inventory consisted of
the following (000's):
September 30, December 31,
1999 1998
------------ -----------
Raw materials and supplies ........ $ 4,377 $ 4,207
Finished goods .................... 13,570 14,355
------- -------
$17,947 $18,562
======= =======
(3) Income Taxes -
The Company's provision for income taxes is recorded at the statutory
rates adjusted for the effect of any permanent differences.
(4) Equity -
In September 1998, the Company announced a stock repurchase program, which
authorizes the repurchase of up to 1,000,000 shares of its common stock. As of
September 30, 1999, the company had repurchased 301,457 shares of common stock
at prices ranging from $2.50 to $4.50 per share under this program. All of these
transactions were funded with the Company's available cash. At September 30,
1999, the Company had 12,895,065 shares outstanding.
(5) Comprehensive Income -
On January 1, 1998, the Company adopted Statement 130, REPORTING
COMPREHENSIVE INCOME. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
this Statement had no impact on the Company's net income or shareholders'
equity. Statement 130 requires unrealized gains or losses on the Company's
available-for-sale securities and foreign currency translation adjustments to be
included in other comprehensive income. Prior to adoption these amounts were
reported separately in shareholders' equity. Prior year financial statements
have been reclassified, where appropriate, to conform to the requirements of
Statement 130.
7
<PAGE>
During the third quarter of 1999 and 1998, other comprehensive income (losses),
representing foreign currency translation adjustments amounted to $93,000 and
$322,000 respectively. For the nine months ended September 30, 1999 and 1998,
total conprehensive income(losses), representing foreign currency translation
adjustments amounted to $257,000 and ($320,000) respectively.
(6) Derivative Financial Instruments -
Effective October 18, 1996, the Company swapped $10,000,000 in long-term
debt with an annual interest rate of 7.34% for 15,380,000 Deutsche Mark (DM)
denominated long-term debt with an annual interest rate of 6.32%, effectively
hedging a portion of its net investment in Germany. The DM swap agreement
requires the Company to re-exchange 3,076,000 DM for $2,000,000 each August 1
for the five year period beginning August 1, 2001. The DM swap is marked to
market as the U.S. dollar/DM exchange rate changes. These adjustments are
included as a component of accumulated other comprehensive income in
shareholders' equity. Interest payments and receipts are semi-annual on February
1 and August 1. The DM interest payment is also subject to exchange rate
fluctuations as is the US Dollar interest expense.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Quarter:
For the three months ended September 30, 1999, sales and operating
revenue was $61,389,000 compared with $57,086,000 for the same period last year.
This 8% increase in sales and operating revenue from last year was impacted by
7% higher per unit revenue. U.S. sales and operating revenue was $36,815,000,
16% higher than for the same period last year. U.S. volume was 2% higher and
overall weighted value per unit was 14% higher resulting from a change in the
mix of products sold with installation services. Foreign sales and operating
revenue was $24,574,000 this quarter, 3% lower than the same period last year.
Foreign volume was off 2%. The overall weighted value per unit was up 1%. A
decrease in the US dollar value of the Company's German Deutsche Mark and
British Pound functional currency sales resulted in approximately $800,000 of
the lower foreign sales.
Gross profit for the quarter was $14,296,000, 19% better than the prior
year. Gross profit margin, as a percentage of sales and operating revenue,
increased to 23% from 21% last year. This increase was primarily due to
decreases in resin costs and increased sales of products with value-added
services. This year's resin costs included in cost of sales were purchased in
prior periods at lower than the current quarter's costs. Last year's resin costs
included in cost of sales were purchased in prior periods at higher than the
then current quarter's costs. These timing differences resulted in a lower
margin than normal last year and a higher margin than normal this year.
8
<PAGE>
Selling, general and administrative (SG&A) expenses were $5,800,000
compared with $6,098,000 in the third quarter of 1998. Decreases in third
quarter 1999 SG&A were in the Company's U.S. operations and were lowered by the
implementation of the enterprise resource planning system earlier in the year.
The reorginization of the Company's European operations at the beginning of 1999
also contributed to this reduction in expenses.
Interest expense was $241,000 less than last year primarily due to a
decrease in outstanding debt resulting from scheduled repayments.
Other income was $164,000 more than last year primarily due to an increase
in gains on the sale of assets.
The quarterly expense for income taxes was $3,337,000 compared with
$2,143,000 in the same period last year. The tax benefit for both periods was
recorded at the statutory rates adjusted for certain nondeductible expenses.
Year-to-Date:
For the nine months ended September 30, 1999, sales and operating
revenue was $135,906,000 compared with $138,041,000 for the same period last
year. This 2% decrease in sales and operating revenue from last year was
primarily the result of 4% fewer units shipped. U.S. sales and operating revenue
was $74,775,000, 5% higher than for the same period last year. U.S. volume was
3% higher and the overall weighted value per unit was 1% higher due to a change
in the mix of products sold with installation services. Foreign sales and
operating revenue was $61,131,000 this period, 8% less than last year. Foreign
volume was off 12%, primarily due to lower activity in the South American mining
industry following declines in mineral prices. However, the overall weighted
value per unit was up 5% as the Company performed more installation activities
per unit thereby offsetting the lower volume. A decrease in the US dollar value
of the Company's German Deutsche Mark and British Pound functional currency
sales resulted in approximately $1,200,000 of the lower foreign sales.
Gross profit for the period was $29,349,000, 14% better than the prior
year. While units shipped were down 4%, gross profit margin, as a percentage of
sales and operating revenue, increased to 22% from 19% last year. This increase
was primarily due to year-on-year changes in resin costs and increased sales of
products with value-added services.
Selling, general and administrative (SG&A) expenses were $18,308,000
compared with $18,548,000 in 1998. Last years SG&A expense included
approximately $1,000,000 of contractually required severance to the Company's
former President and CEO who left the Company in April 1998. Decreases in
expenses were caused by the implementation of the enterprise resource planning
system in the US and the reorginization of the Company's European operation at
the beginning of 1999.
Interest expense was $479,000 less than last year primarily due to a
decrease in outstanding debt resulting from scheduled repayments.
9
<PAGE>
Other income was $213,000 less than last year primarily due to an increase
in gains on sales of assets in the US.
The year-to-date expense for income taxes was $3,757,000 compared with
$1,931,000 in the same period last year. The tax benefit for both periods was
recorded at the statutory rates adjusted for certain nondeductible expenses.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company had working capital of $60,169,000,
including cash and temporary investments of $11,834,000. The Company's cash,
inventory and receivable balances fluctuate from quarter-to-quarter due to the
seasonality of sales. The Company's capital structure consisted of $32,069,000
in debt and $94,349,000 in stockholders' equity as of September 30, 1999.
On September 27, 1999, the Company amended its credit facility (the
"Revolver") with Bank of America, formerly NationsBank of Texas, as agent. The
amendment included changing the facility from $35,000,000 to $25,000,000 (at the
Company's request) and extending the credit commitment date to September 30,
2002. Under the terms of the revolving credit agreement, the Company is required
to maintain certain financial ratios and a specific level of consolidated net
worth. At September 30, 1999, there was no balance outstanding on the Revolver,
but $975,000 in letters of credit issued under this facility reduced the balance
available to $24,025,000. The letter of credit issued under this facility
secures self-insurance programs.
The Company believes that its cash balance, cash generated by operations
and the balance expected to be available under the Revolver will be adequate to
meet its cash requirements over the next year.
The Company's operations are subject to seasonal fluctuation with the
greatest volume of product deliveries and installations typically occurring in
the summer and fall months. In particular, the Company's operating results are
most impacted in the first quarter as both product deliveries and installations
are at their lowest levels due to the inclement weather experienced in the
Northern Hemisphere.
The Company's foreign subsidiaries routinely accept contracts in
currencies different than their functional currency. The Company recognizes that
such practices are subject to the risk of foreign currency fluctuations not
present in U.S. operations. Foreign exchange gains and losses to date have not
been material to the Company's operations as a whole. The creation of the
European Monetary Union and the adoption of the Euro currency is not expected to
have a significant effect on the Company's operations.
10
<PAGE>
The Company recently installed the JDEdwards suite of systems to replace all
U.S. legacy operating systems as part of a program to improve its customer
service and general administrative efficiency. The initial implementation of
this enterprise resource planning system was made in the first quarter of 1999.
The Company's German operation has installed a new financial operating system as
well. The Company's world-wide cost of these new systems, which are year 2000
compliant, is estimated to be approximately $5.2 million with $5.0 million spent
through September 30, 1999. The systems in use at the Company's other foreign
operations are year 2000 compliant.
The Company has conducted a review of its other administrative, manufacturing
and installation systems and has received assurances from its vendors that their
systems are year 2000 compliant. The Company is in the process of evaluating the
year 2000 status of its major customers and suppliers and believes that all
significant customers and suppliers should be compliant by the end of 1999. The
Company believes that any non-compliant situations can be handled by the company
without any major disruption of service or revenues.
Since the Company has nearly completed the replacement of year 2000
non-compliant systems, no specific contingency plans have been made regarding
its operations and systems. The Company uses at least two suppliers for its
primary raw materials in each operational area. Accordingly, the Company
believes any major interruption in raw materials supply due to year 2000 issues
would be unlikely.
Pricing for the Company's products and services is primarily driven by
worldwide manufacturing capacity in the industry, and raw material costs. The
Company's primary raw material, polyethylene, is occasionally in short supply
and subject to substantial price fluctuation in response to market demand. Any
increase in the industry's worldwide manufacturing capacity, interruption in raw
material supply, or abrupt raw material price increases could have an adverse
effect upon the Company's operations and financial performance. Inflation has
not had a significant impact on the Company's operations.
The Company has experienced raw material price increases in the first nine
months of 1999 and has been notified of more price increases later in the year.
As the Company has a number of fixed price contracts, these raw material price
increases is expected to lower the Company's gross profit margin in later
quarters. The Company is attempting to increase its prices on all new orders to
offset the effect of these raw material price increases.
* * *
11
<PAGE>
Forward-looking information:
This Form 10-Q contains certain forward-looking statements as such is
defined in the Private Securities Litigation Reform Act of 1995, and information
relating to the Company and its subsidiaries that are based on beliefs of the
Company's management, as well as assumptions made by and information currently
available to the Company's management. When used in this report, the words,
"anticipate", "believe", "estimate", "expect", "intend" and words of similar
import, as they relate to the Company or its subsidiaries or Company management,
are intended to identify forward-looking statements. Such statements reflect the
current risks, uncertainties and assumptions related to certain factors
including, without limitations, competitive market factors, world-wide
manufacturing capacity in the industry, general economic conditions around the
world, raw material pricing and supply, governmental regulation and supervision,
seasonality, distribution networks, and other factors described herein. Based
upon changing conditions, should any one or more of these risks or uncertainties
materialize, or should any underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended.
PART II - OTHER INFORMATION
None
PART IV - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPROTS ON FORM 8-K
(a) (3) EXHIBITS
Exhibit No.
10-M - Amendment dated September 27, 1999, to the Credit Facility between
the Company and Bank of America
12
<PAGE>
SIGNATURE
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.
GUNDLE/SLT ENVIRONMENTAL, INC.
DATE NOVEMBER 9, 1999 BY /s/ ROGER J. KLATT
ROGER J. KLATT,
EXECUTIVE VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
13
Exhibit 10.M
AMENDMENT NO. 4
This Amendment No. 4 dated as of September 28, 1999 ("Agreement"), is
among Gundle/SLT Environmental, Inc., a Delaware corporation ("Company"), the
Banks parties to the Credit Agreement described below, and Bank of America,
N.A., formerly known as NationsBank, N.A., successor in interest by merger to
NationsBank of Texas, N.A., as Agent (the "Agent") for the Banks.
INTRODUCTION
The Company, the Banks, and NationsBank of Texas, N.A., predecessor in
interest to the Agent, are parties to the Credit Agreement dated as of July 27,
1995 (as amended, the "Credit Agreement"). The Company, the Agent, and the Banks
have agreed to make certain amendments to the Credit Agreement.
THEREFORE, in connection with the foregoing and for other good and
valuable consideration, the Company, the Agent, and the Banks hereby agree as
follows:
1. Section DEFINITIONS; REFERENCES. Unless otherwise defined in this Agreement,
each term used in this Agreement which is defined in the Credit Agreement has
the meaning assigned to such term in the Credit Agreement.
1. Section AMENDMENT.
2.
(a) Section 1.1 of the Credit Agreement is amended by replacing or the following
definitions, as appropriate, in the appropriate order:
(b)
"ADJUSTED DEBT TO ADJUSTED EBITDA RATIO" shall be calculated as set
forth in Section 5.5(a).
"AGENT" means Bank of America in its capacity as an agent pursuant
to Article 7 and any successor agent pursuant to Section 7.7.
"AGENT FEE LETTER" means the confidential letter agreement dated as
of September 28, 1999, between the Company and the Agent regarding
certain fees owed by the Borrower to the Agent in connection with this
Agreement.
<PAGE>
"APPLICABLE COMMITMENT FEE" means, as of any date of its
determination:
(a) as of the date of this Agreement through the time when the
Applicable Commitment Fee may be calculated by the Agent pursuant to
paragraph (b) below from the September 30, 1999, financial statements of
the Company, 0.250%; and
(b) thereafter, the percentage amount set forth in the table below
opposite the applicable Adjusted Debt to Adjusted EBITDA Ratio of the
Company as of the end of the fiscal quarter then most recently ended.
ADJUSTED DEBT TO
----------------
ADJUSTED EBITDA APPLICABLE COMMITMENT FEE
-----------------------------------------
less than 1.50 0.250%
greater than or equal to 1.50 but less than 2.00 0.300%
greater than or equal to 2.00 but less than 2.50 0.300%
greater than or equal to 2.50 0.375%
The Agent shall determine the Applicable Commitment Fee based upon the
most recent financial statements dated as of the end of a fiscal quarter
delivered to the Agent pursuant to Section 5.2(b). Any adjustments to the
Applicable Commitment Fee shall become effective three Business Days
following the date of delivery of such financial statements to the Agent;
provided, however, that if such financial statements are not delivered
when required hereunder, the Applicable Commitment Fee shall increase to
the maximum percentage amount set forth in the table above from date when
such financial statements were required to be delivered to the Agent
hereunder until received by the Agent. Upon any change in the Applicable
Commitment Fee, the Agent shall promptly notify the Company and the Banks
of the new Applicable Commitment Fee.
"APPLICABLE INTEREST MARGIN" means, for any LIBOR Borrowing or Prime
Rate Borrowing and as of any date of its determination:
(a) as of the date of this Agreement through the time when the
Applicable Interest Margin may be calculated by the Agent pursuant to
paragraph (b) below from the September 30, 1999, financial statements of
-2-
<PAGE>
the Company, 1.250% for LIBOR Borrowings and 0.00% for Prime Rate
Borrowings; and
(b) thereafter, an amount equal to the percentage amount for LIBOR
Borrowings or Prime Rate Borrowings set forth in the table below opposite
the applicable Adjusted Debt to Adjusted EBITDA Ratio of the Company as of
the end of the fiscal quarter then most recently ended.
<TABLE>
<CAPTION>
ADJUSTED DEBT TO APPLICABLE INTEREST MARGIN APPLICABLE INTEREST MARGIN
---------------- -------------------------- --------------------------
ADJUSTED EBITDA LIBOR BORROWING PRIME RATE BORROWING
------------------------------- --------------------
<S> <C> <C> <C> <C>
less than 1.50 1.250% 0.000%
greater than or equal to 1.50 but less than 2.00 1.500% 0.000%
greater than or equal to 2.00 but less than 2.50 1.750% 0.000%
greater than or equal to 2.50 2.000% 0.250%
</TABLE>
The Agent shall determine the Applicable Interest Margin based upon the
most recent financial statements dated as of the end of a fiscal quarter
delivered to the Agent pursuant to Section 5.2(b). Any adjustments to the
Applicable Interest Margin shall become effective three Business Days
following the date of delivery of such financial statements to the Agent;
provided, however, that if such financial statements are not delivered
when required hereunder, the Applicable Interest Margin shall increase to
the maximum percentage amount set forth in the table above from date when
such financial statements were required to be delivered to the Agent
hereunder until received by the Agent. Upon any change in the Applicable
Interest Margin, the Agent shall promptly notify the Company and the Banks
of the new Applicable Interest Margin.
"AVAILABLE CURRENCIES" means Dollars, Pounds Sterling, German Marks,
French Francs, Italian Lira, Dutch Guilders, Japanese Yen, Canadian
Dollars, Australian Dollars, Singapore Dollars, Thailand Bahts, and from
and after becoming generally available in the international currency and
exchange markets, European Union Euros, and any other currency approved by
the Banks which is freely transferable and convertible into Dollars and in
which dealings in deposits are carried out in the London interbank market.
"BANK OF AMERICA" means Bank of America, N.A., in its individual
capacity.
-3-
<PAGE>
"BUSINESS DAY" means any Monday through Friday during which
commercial banks are open for business in Houston, Texas, Dallas, Texas,
and, if the applicable Business Day relates to any LIBOR Borrowing, on
which dealings in the Applicable Currency for such LIBOR Borrowing are
carried on in the London interbank market in such Applicable Currency.
"COMMITMENT" means, for any Bank, the amount set opposite such
Bank's name on the signature pages of Amendment No.4 dated as of September
28, 1999, among the Borrower, the Agent and the Banks as its Commitment,
or if such Bank has entered into any Assignment and Acceptance, as set
forth for such Bank as its Commitment in the Register maintained by the
Agent pursuant to Section 8.5(c), as such amount may be reduced or
terminated pursuant to Section 2.1(a)(ii) or Section 6.2.
"FINANCIAL STATEMENTS" means the audited financial statements of the
Company referred to in Section 4.7(a).
"HIGHEST LAWFUL RATE" means the maximum lawful interest rate, if
any, that at any time or from time to time may be contracted for, charged,
or received under the laws applicable to the relevant Bank which are
presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
"INTERIM FINANCIAL STATEMENTS" means the quarter end financial
statements of the Company referred to in Section 4.7(b).
"ISSUING BANK" means Bank of America and any successor issuing bank
pursuant to Section 7.7.
"LIBOR" means, for any LIBOR Borrowing for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 or 3740, as the case
may be (or any successor page), as the London interbank offered rate for
deposits in the Applicable Currency at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period. If for any reason such rate is
not
-4-
<PAGE>
available, the term "LIBOR" shall mean, for any LIBOR Borrowing for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters as the London
interbank offered rate for deposits in the Applicable Currency at
approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Reuters,
the applicable rate shall be the arithmetic mean of all such rates.
"LETTER OF CREDIT SUBLIMIT" means $10,000,000, or such greater
amount as may be agreed to in writing by the Issuing Bank, the Agent, and
the Majority Banks from time to time.
"MATURITY DATE" means September 30, 2002, as such date may be
extended pursuant to Section 2.1(a)(iii).
(a) Section 1.1 of the Credit Agreement is amended by deleting the definition of
"COMMITMENT LETTER" in its entirety.
(b)
(c) Section 1.1 of the Credit Agreement is amended by deleting the definition of
"NATIONSBANK" in its entirety.
(d)
(e) Section 1.1 of the Credit Agreement is amended by replacing Section
(f) of the definition "Permitted Debt" in its entirety with the following:
(f)
(f) Debt of GSE Lining Technology GmbH in the aggregate principal
amount of not to exceed DM 11,000,000 consisting of letters of credit,
bank guarantees, revolving credits, trade bill credits or any or all
thereof and secured by land and improvements securing the Debt referred to
in clause (e) above; and
(a) Section 1.1 of the Credit Agreement is amended by deleting the definition of
"REVOLVING CREDIT COMMITMENT TERMINATION DATE" in its entirety.
(b)
(c) Section 2.1(a)(i) of the Credit Agreement is amended by replacing such
section in its entirety with the following:
(d)
-5-
<PAGE>
(i) Each Bank severally agrees, on the terms and conditions set
forth in this Agreement and for the purposes set forth in Section 5.4, to
make Advances to each Borrower requesting Borrowings under this Agreement
as such Bank's ratable share of such Borrowings requested by such Borrower
from time to time on any Business Day during the period from the date of
this Agreement until the Maturity Date provided that the aggregate
outstanding Dollar Equivalent principal amount of Advances made by such
Bank plus such Bank's ratable share of the Letter of Credit Exposure shall
not exceed such Bank's Commitment. Borrowings may be made in any Available
Currency. Borrowings must be made in an amount equal to or greater than
the Dollar Equivalent of the Minimum Borrowing Amount and be made in
multiples of the Minimum Borrowing Multiple for the Applicable Currency.
Within the limits expressed in this Agreement, each Borrower may from time
to time borrow, prepay, and reborrow Borrowings. The indebtedness of each
Borrower to the Banks resulting from the Advances made by the Banks shall
be evidenced by Notes made by such Borrower.
(a) Section 2.1(a)(iii) of the Credit Agreement is amended by replacing such
section in its entirety with the following:
(b)
(iii) Not earlier than 365 days prior but not later than 90 days
prior to the then current Maturity Date, the Borrowers may by written
notice to the Agent request the Banks to extend the then current Maturity
Date by one year. Each Bank's determination whether or not to extend shall
be in such Bank's sole discretion. If the Borrowers provide such notice to
the Agent, the Agent shall consult with the Banks and notify the Borrowers
in writing not later than 60 days after such request whether the Banks
have elected to extend such date for such additional period. If the Agent
does not notify the Borrowers, the Banks shall be deemed to have elected
not to extend such date. If the Banks elect to extend such date, the
Agent's written notice to the Borrowers to such effect shall automatically
constitute an extension of such date without any further action by any
Person.
(a) Section 2.1(c)(iii) of the Credit Agreement is amended by deleting such
section in its entirety.
(b)
-6-
<PAGE>
(c) Section 2.1 (d) of the Credit Agreement is amended by replacing such section
in its entirety with the following:
(d)
(d) REPAYMENT. Each Borrower shall pay to the Agent for the ratable
benefit of the Banks the aggregate outstanding principal amount of the
Borrowings on the Maturity Date.
(a) Section 2.2 (a) of the Credit Agreement is amended by replacing such section
in its entirety with the following:
(b)
(a) COMMITMENT FOR LETTERS OF CREDIT. The Issuing Bank shall, on the
terms and conditions set forth in this Agreement and for the purposes set
forth in Section 5.4, issue, increase, and extend Letters of Credit
payable in any Available Currency at the request of any Borrower from time
to time on any Business Day during the period from the date of this
Agreement until the Maturity Date provided that (i) the outstanding Dollar
Equivalent amount of the Letter of Credit Exposure shall not exceed the
Letter of Credit Sublimit and (ii) the aggregate outstanding Dollar
Equivalent principal amount of Borrowings plus the Letter of Credit
Exposure shall not exceed the aggregate amount of the Commitments. No
Letter of Credit may have an expiration date later than 13 months after
its issuance date, and each Letter of Credit which is self-extending
beyond its expiration date must be cancelable upon at least 30 days notice
given by the Issuing Bank to the beneficiary of such Letter of Credit. No
Letter of Credit may have an expiration date later than 13 months after
the Maturity Date unless approved by the Issuing Bank, the Agent, and the
Banks. Each Letter of Credit must be in form and substance acceptable to
the Issuing Bank. The indebtedness of each Borrower to the Issuing Bank
resulting from Letters of Credit requested by such Borrower shall be
evidenced by the Letter of Credit Applications made by such Borrower.
(a) Section 2.2 (c) of the Credit Agreement is amended by replacing such section
in its entirety with the following:
(b)
(c) PREPAYMENTS OF LETTERS OF CREDIT. In the event that any Letters
of Credit shall be outstanding according to their terms after the Maturity
Date, upon request of the Agent each Borrower which requested any such
Letter of Credit shall pay to the Agent an amount equal to the
-7-
<PAGE>
Letter of Credit Exposure allocable to such Letters of Credit requested by
such Borrower to be held in the Letter of Credit Collateral Account. At
any time, at the request of the Issuing Bank, the Agent shall apply such
cash collateral to any reimbursement obligation or other obligation of
such Borrower to the Issuing Bank under any Letter of Credit Application
related to such Letters of Credit.
(a) Section 2.3(a) of the Credit Agreement is amended by replacing such section
in its entirety with the following:
(a) AGENT FEES. The Company shall pay to the Agent for the benefit
of the Agent the fees specified in the Agent Fee Letter in accordance with
the confidential terms of the Agent Fee Letter.
(a) Section 2.3(b) of the Credit Agreement is amended by replacing such section
in its entirety with the following:
(b)
(b) COMMITMENT FEE. The Company shall pay to the Agent for the
ratable benefit of the Banks a commitment fee equal to the Applicable
Commitment Fee per annum on the average daily amount by which (i) the
aggregate amount of the Commitments exceeds (ii) the aggregate outstanding
Dollar Equivalent principal amount of the Borrowings plus the Letter of
Credit Exposure, from the date of this Agreement until the termination of
the Commitments under this Agreement, whether by agreement, maturity,
under Section 2.1(a)(ii), under Section 6.2, or otherwise. The commitment
fee shall be due and payable in arrears following the last day of each
calendar quarter and the Maturity Date or any earlier date any of the
Commitments hereunder are terminated, in each case within ten days after
demand for payment by the Agent.
(a) Sections 2.3(c) and (d) of the Credit Agreement are amended by replacing
such sections in their entirety with the following:
(b)
(c) (c) FEES FOR LETTERS OF CREDIT.
(d)
(i) For each Letter of Credit issued by the Issuing
Bank, the Borrower requesting the Letter of Credit shall pay to the Agent
for the ratable benefit of the Banks a letter of credit fee equal to the
Applicable Interest Margin for LIBOR Borrowings in effect at the time of
determination less 0.125% per annum on the face amount of such Letter of
-8-
<PAGE>
Credit for the stated term of such Letter of Credit. Such Borrower shall
pay the letter of credit fee for such Letter of Credit, including any
increased amount due in respect of any increase or extension of such
Letter of Credit, in advance within ten days after demand for payment by
the Agent.
(ii) For each Letter of Credit issued by the Issuing
Bank, the Borrower requesting the Letter of Credit shall pay to the Agent
for the benefit of the Issuing Bank a letter of credit fee equal to 0.125%
per annum on the face amount of such Letter of Credit for the stated term
of such Letter of Credit, with a minimum fee of $150. Such Borrower shall
pay such letter of credit fee for the Issuing Bank for such Letter of
Credit, including any increased amount due in respect of any increase or
extension of such Letter of Credit in advance within ten days after demand
for payment by the Agent.
(iii) In the event any Borrower which has established
any Letter of Credit and the beneficiary thereof reduce the amount of such
Letter of Credit or cancel such Letter of Credit prior to its expiration
date, each Bank and the Issuing Bank shall refund to such Borrower the
unearned portion of the letter of credit fees paid pursuant to Sections
2.3(d)(i) and (ii) above with respect to such Letter of Credit. Each such
refund shall be made within ten days after demand for payment by such
Borrower.
(a) Section 3.1 of the Credit Agreement is amended by replacing such section in
its entirety with the following:
(b)
3.1 CONDITION PRECEDENT TO INITIAL EXTENSIONS OF CREDIT . The
obligation of each Bank to make the initial extension of credit under this
Agreement, including the making of any Advances and the issuance of any
Letters of Credit, shall be subject to the condition precedent that the
Borrowers shall have delivered or shall have caused to be delivered the
documents and other items listed on the Closing Documents list dated as of
September 28, 1999, together with any other documents requested by the
Agent to document the agreements and intent of the Credit Documents, each
in form and with substance satisfactory to the Agent.
-9-
<PAGE>
(a) Section 4.7 of the Credit Agreement is amended by replacing such section in
its entirety with the following:
(b)
4.7 FINANCIAL CONDITION.
(a) The Company has delivered to the Agent the annual audited
financial statements of the Company dated as of December 31, 1998,
including therein the balance sheet of the Company as of such date and the
statements of income, stockholders' equity, and cash flows for the Company
for the fiscal year ending on such date. Such financial statements present
fairly in all material respects the financial condition of the Company as
of such date in accordance with generally accepted accounting principles.
(b) The Company has delivered to the Agent the unaudited
financial statements of the Company, dated as of June 30, 1999, including
therein the balance sheet of the Company as of such date and the
statements of income, stockholders' equity, and cash flows for the Company
for the fiscal quarter ending on such date. Such financial statements
present fairly in all material respects the financial condition of the
Company as of such date in accordance with generally accepted accounting
principles, except that such financial statements may lack the complete
financial notes required by generally accepted accounting principles.
(c) As of the respective dates of the Financial Statements and
the Interim Financial Statements, there were no material contingent
obligations, liabilities for taxes, unusual forward or long-term
commitments, or unrealized or anticipated losses of the Company or any of
its Subsidiaries, except as disclosed in the Financial Statements or the
Interim Financial Statements, and adequate reserves for such items have
been made in accordance with generally accepted accounting principles. No
Material Adverse Change has occurred. No Default exists.
(a) Article 4 of the Credit Agreement is amended by inserting the following
Section 4.16 in the appropriate alphabetical order:
(b)
4.16 YEAR 2000 .
-10-
<PAGE>
(a) The Company (i) has begun analyzing the operations of the
Company and each of its Subsidiaries and Affiliates that could be
adversely affected by failure to become Year 2000 compliant (that is, that
computer applications, imbedded microchips and other systems will be able
to perform date-sensitive functions prior to and after December 31, 1999);
and (ii) is developing a plan for becoming Year 2000 compliant in a timely
manner. Each Borrower reasonably believes that the Company and each
Borrower will become Year 2000 compliant for its operations and those of
its Subsidiaries and Affiliates on a timely basis except to the extent
that a failure to do so could not reasonably be expected to cause a
Material Adverse Change.
(b) Each Borrower reasonably believes any suppliers and
vendors that are material to the operations of such Borrower or its
Subsidiaries and Affiliates will be Year 2000 compliant for their own
computer applications except to the extent that a failure to do so could
not reasonably be expected to cause a Material Adverse Change.
(c) Each Borrower will promptly notify the Agent in the event
such Borrower determines that any computer application which is material
to the operations of such Borrower, its Subsidiaries or Affiliates or any
of its material vendors or suppliers will not be fully Year 2000 compliant
on a timely basis, except to the extent that such failure could not
reasonably be expected to cause a Material Adverse Change.
(a) Section 5.5(a) of the Credit Agreement is amended by replacing such section
in its entirety with the following:
(b)
(a) ADJUSTED DEBT TO ADJUSTED EBITDA RATIO. As of the last day of
each fiscal quarter, the Company shall not permit the ratio of (i) the
difference of (A) the consolidated Debt of the Company as of the end of
such fiscal quarter minus (B) the cash and cash equivalents in excess of
$5,000,000, in the aggregate, held by the Company on a consolidated basis
-11-
<PAGE>
as of the end of such fiscal quarter to (ii) the difference of (A) the
consolidated EBITDA of the Company for the preceding four fiscal quarters
then ended minus (B) consolidated interest income of the Company for such
period attributable to interest earned with respect to cash and cash
equivalents in excess of $5,000,000, in the aggregate, held by the Company
on a consolidated basis, to be greater than 3.00 to 1.00.
(a) Section 5.5(b) of the Credit Agreement is amended by replacing such section
in its entirety with the following:
(b)
(b) NET WORTH. The Company shall not permit the consolidated Net
Worth of the Company (i) during its fiscal year ending December 31, 1999,
to be less than $76,300,000, and (ii) during any fiscal year thereafter,
to be less than an amount equal to the sum of (A) the amount that was
required to be maintained during the previous fiscal year plus (B) an
amount equal to 75% of consolidated net income of the Company for such
previous fiscal year (excluding consolidated net income for any fiscal
year during which consolidated net income is not a positive number), plus
(C) 100% of the net proceeds received by the Company after December 31,
1998, without duplication, from any sale or issuance of equity interests
in, or any other similar additions to capital by, the Company or its
Subsidiaries (excluding any such equity interests sold or issued by any
such Subsidiary to the Company).
(a) Section 6.9 of the Credit Agreement is amended by replacing such section in
its entirety with the following:
(b)
6.9 APPLICATION OF PAYMENTS. Prior to the Maturity Date and when no
Event of Default exists, all payments made hereunder shall be applied to
the Credit Obligations as directed by the Borrower, subject to the rules
regarding the application of payments to certain Credit Obligations
provided for hereunder and in the Credit Documents. Following the Maturity
Date or while any Event of Default exists, all payments and collections
shall be applied to the Credit Obligations in the following order:
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<PAGE>
First, to the payment of the costs, expenses, reimbursements
(other than reimbursement obligations with respect to draws
under Letters of Credit), and indemnifications of the Agent
that are due and payable under the Credit Documents;
Then, ratably to the payment of the costs, expenses,
reimbursements (other than reimbursement obligations with
respect to draws under Letters of Credit), and
indemnifications of the Banks that are due and payable under
the Credit Documents;
Then, ratably to the payment of all outstanding principal and
reimbursement obligations for draws under Letters of Credit
due and payable under the Credit Documents;
Then, ratably to the payment of any other amounts due and
owing with respect to the Credit Obligations; and
Finally, any surplus held by the Agent and remaining after
payment in full of all the Credit Obligations and reserve for
Credit Obligations not yet due and payable shall be promptly
paid over to the Company or to whomever may be lawfully
entitled to receive such surplus. All applications shall be
distributed in accordance with Section 2.9(a).
(a) Section 8.10 of the Credit Agreement is amended by replacing such section in
its entirety with the following:
(b)
8.10 FORUM SELECTION . EACH BORROWER IRREVOCABLY CONSENTS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATED
THERETO. EACH BORROWER AGREES AND SHALL NOT CONTEST THAT PROPER FORUM AND
VENUE FOR ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE
CREDIT
-13-
<PAGE>
DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO ARE IN THE COURTS OF THE
STATE OF TEXAS IN HARRIS COUNTY, TEXAS, AND THE FEDERAL COURTS LOCATED IN
HARRIS COUNTY, TEXAS. EACH BORROWER IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE FOREGOING BASED UPON CLAIMS THAT THE
FOREGOING COURTS ARE AN INCONVENIENT FORUM.
(a) Section 8.11 of the Credit Agreement is amended by replacing such section in
its entirety with the following:
(b)
8.11 SERVICE OF PROCESS. IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO,
EACH BORROWER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, OR OTHER
PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN
RECEIPT REQUESTED, TO SUCH BORROWER AT ITS ADDRESS FOR NOTICES HEREUNDER,
OR ANY OTHER FORM OF SERVICE PROVIDED FOR IN THE TEXAS CIVIL PRACTICE LAW
AND RULES THEN IN EFFECT SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON
SUCH BORROWER.
(a) Article 8 of the Credit Agreement is amended by inserting the following
section 8.12 in the appropriate numerical order:
(b)
8.12 WAIVER OF JURY TRIAL . EACH BORROWER IRREVOCABLY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO.
(a) Article 8 of the Credit Agreement is amended by inserting the following
section 8.13 in the appropriate numerical order:
(b)
8.13 NO FURTHER AGREEMENTS . THIS WRITTEN AGREEMENT AND THE
CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
-14-
<PAGE>
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
(a) Exhibit A of the Credit Agreement is amended by replacing such exhibit in
its entirety with EXHIBIT A attached hereto.
(b)
(c) Schedule II of the Credit Agreement is amended by replacing such schedule in
its entirety with SCHEDULE II attached hereto.
(d)
2. Section REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
that (a) the execution, delivery and performance of this Agreement are within
the corporate power and authority of the Company and have been duly authorized
by appropriate proceedings, (b) this Agreement constitutes legal, valid, and
binding obligations of the Company enforceable in accordance with their terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally and
general principles of equity, and (c) upon the effectiveness of this Agreement
and the amendment of the Credit Documents as provided for herein, no Event of
Default shall exist under the Credit Documents and there shall have occurred no
event which with notice or lapse of time would become an Event of Default under
the Credit Documents, as amended.
3.
4. Section EFFECT ON CREDIT DOCUMENTS. Except as amended herein, the Credit
Agreement and all other Credit Documents remain in full force and effect as
originally executed. Nothing herein shall act as a waiver of any of the Agent's
or the Banks' rights under the Credit Documents as amended, including the waiver
of any default or event of default, however denominated. The Company must
continue to comply with the terms of the Credit Documents, as amended. This
Agreement is a Credit Document for the purposes of the provisions of the other
Credit Documents. Without limiting the foregoing, any breach of representations,
warranties, and covenants under this Agreement may be a default or event of
default under other Credit Documents.
5.
6. Section EFFECTIVENESS. This Agreement shall become effective and the Credit
Agreement shall be amended as provided in this Agreement effective on the date
first set forth above when the Company, the Banks, and the Agent shall have duly
and validly executed originals of this Agreement and delivered them to the
Agent.
7.
8. Section MISCELLANEOUS. The miscellaneous provisions of the Credit
Agreement apply to this Agreement. This Agreement may be signed in any number of
counterparts, each of which shall be an original.
-15-
<PAGE>
9.
-16-
<PAGE>
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS
AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
EXECUTED as of the date first above written.
COMPANY:
GUNDLE/SLT ENVIRONMENTAL, INC.
By: _____________________________________
Roger J. Klatt
Chief Financial Officer
AGENT:
BANK OF AMERICA, N.A., as Agent
By: _____________________________________
William B. Borus
Vice President
COMMITMENT BANKS:
$15,000,000 BANK OF AMERICA, N.A.
By: _____________________________________
William B. Borus
Vice President
-17-
<PAGE>
$10,000,000 COMERICA BANK - TEXAS
By: _____________________________________
Name: ___________________________________
Title: __________________________________
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 11,834
<SECURITIES> 0
<RECEIVABLES> 72,671
<ALLOWANCES> 3,246
<INVENTORY> 17,947
<CURRENT-ASSETS> 110,494
<PP&E> 92,588
<DEPRECIATION> 59,309
<TOTAL-ASSETS> 174,780
<CURRENT-LIABILITIES> 50,325
<BONDS> 26,724
181
0
<COMMON> 0
<OTHER-SE> 94,168
<TOTAL-LIABILITY-AND-EQUITY> 174,780
<SALES> 61,389
<TOTAL-REVENUES> 61,389
<CGS> 47,093
<TOTAL-COSTS> 53,236
<OTHER-EXPENSES> (235)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 583
<INCOME-PRETAX> 7,944
<INCOME-TAX> 3,337
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,607
<EPS-BASIC> .36
<EPS-DILUTED> .36
</TABLE>
