SYNTHETIC INDUSTRIES INC, 424B4, 1996-11-04

SYNTHETIC INDUSTRIES INC
424B4, 1996-11-04
TEXTILE MILL PRODUCTS

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<PAGE> 1

Filed Pursuant to Rule 424(b)(4)
PROSPECTUS File No. 333-09377

2,500,000 SHARES

[SYNTHETIC INDUSTRIES, INC. LOGO]

COMMON STOCK

All of the 2,500,000 shares (the "Shares") of common stock, par value $1.00
per share (the "Common Stock"), offered hereby are being sold by Synthetic
Industries, Inc. ("SI" or the "Company"). Prior to the offering made hereby (the
"Offering"), there has been no public market for the Common Stock. See
"Underwriting" for information relating to the factors considered in determining
the initial public offering price. The Common Stock has been approved for
quotation on the Nasdaq National Market under the symbol "SIND".

------------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.

------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
============================================================================================
PRICE UNDERWRITING
TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share......................... $13.00 $0.91 $12.09
- --------------------------------------------------------------------------------------------
Total(3).......................... $32,500,000 $2,275,000 $30,225,000
============================================================================================
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".

(2) Before deducting expenses payable by the Company estimated at $750,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
375,000 additional shares of Common Stock on the same terms and conditions
as set forth above to cover over-allotments, if any. If the Underwriters
exercise this option in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be $37,375,000,
$2,616,250 and $34,758,750, respectively. See "Underwriting".

------------------------------

The shares of Common Stock are offered, subject to prior sale, when, as and
if delivered to and accepted by the Underwriters and subject to certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made against payment therefor, on
or about November 6, 1996, at the offices of Bear, Stearns & Co. Inc., 245 Park
Avenue, New York, New York 10167.

------------------------------

BEAR, STEARNS & CO. INC. FURMAN SELZ

THE DATE OF THIS PROSPECTUS IS NOVEMBER 1, 1996

<PAGE> 2

[PRODUCT PICTURES]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE> 3

PROSPECTUS SUMMARY

The following summary information is qualified in its entirety by, and
should be read in conjunction with, the more detailed information and financial
data, including the Consolidated Financial Statements and notes thereto,
appearing elsewhere in this Prospectus. The terms "SI" and "Company" refer to
Synthetic Industries, Inc. and its subsidiaries, unless otherwise stated or
indicated by the context. References to a "fiscal" year refer to the Company's
fiscal year which ends on September 30 (e.g., "fiscal 1995" means the Company's
fiscal year ended September 30, 1995). In addition, prior to the consummation of
the Offering, the Company will amend its Certificate of Incorporation to
increase its authorized shares of Common Stock and to revise certain other
provisions in its Certificate of Incorporation, and will declare a stock split
(the "Stock Split") of approximately 115,740.74 shares for each currently
outstanding share. The information contained in this Prospectus (i) assumes that
the Underwriters' over-allotment option is not exercised and (ii) has been
adjusted to give effect to the Stock Split, unless otherwise noted. See
"Description of Capital Stock".

THE COMPANY

Synthetic Industries, Inc. ("SI" or the "Company") is one of the world's
leading producers of polypropylene fabrics and fibers for the home furnishing,
construction, environmental, recreational and agricultural industries. The
Company manufactures and sells more than 2,000 products in over 65 end-use
markets. The Company believes that it is the second largest producer of carpet
backing in the world and is the largest producer of synthetic fiber additives
for concrete reinforcement through its Fibermesh(R) line of products. SI also
produces polypropylene products for the geotextile and erosion control markets
and is a leader in designing innovative products for specialty applications. The
Company's products are engineered to meet specific customer criteria such as
strength, flexibility, resistance to sunlight, water/air permeability and
resistance to bacteria. The Company aims to compete in markets in which it can
be the primary or secondary provider of such products, with over 93% of its
products meeting this criterion. The Company's consolidated sales have grown
from $188 million in fiscal 1991 to $271 million in fiscal 1995.

The Company's products are sold along three principal product lines: carpet
backing, construction and civil engineering products, and technical textiles.
The Company has a worldwide presence in carpet backing, a woven fabric used in
all modern tufted carpets, and is one of the two leading manufacturers in the
U.S. that produce a broad range of primary and secondary carpet backing. Carpet
backing accounted for approximately 49% of the Company's fiscal 1995 sales. The
Company's construction and civil engineering products are its fastest growing
product line and include fiber additives for concrete reinforcement and
environmental and geotextile products used in roadways, landfills and building
sites to stabilize soils and control erosion. The Company's sales to the
construction and civil engineering market have grown from approximately $24
million in fiscal 1991 to approximately $83 million in fiscal 1995. These
products represented approximately 31% of the Company's total sales in fiscal
1995, up from approximately 13% of total sales in fiscal 1991. The Company's
technical textile products are comprised of specialty fabrics, industrial yarns
and fibers used in diverse applications such as filtration (e.g., wastewater
treatment, air filtration and bauxite mining), agriculture (e.g., shade cloth
and ground cover) and recreation (e.g., swimming pool covers and trampoline
mats). These products are highly engineered to meet niche customer applications
and represented approximately 20% of fiscal 1995 sales. The Company's products
are principally sold through direct sales to customers by the Company's sales
force and through a broad network of distributors located across North and South
America, Europe and the Pacific Rim.

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<PAGE> 4

completed a major $35 million, 130,000 square foot expansion of its largest
manufacturing facility. Based on existing product prices and demand, this
expansion should increase the Company's sales by as much as $30 million over the
next twelve months. The Company is one of the largest independent consumers of
polypropylene in the world. The Company believes its position as a
vertically-integrated manufacturer -- performing each step in the conversion of
polypropylene into value-added end products -- provides a competitive advantage
by allowing the Company to manufacture high quality products to customer's
specifications, while controlling manufacturing costs.

- EXPAND PENETRATION OF EXISTING MARKETS. The Company is committed to
expanding sales in markets where it currently has a leadership position by
increasing market penetration through the offering of a broader product
line to meet its customers' varied needs and by expanding its customer
base. The Company is pursuing this goal through: (i) the expansion of
geographical coverage of its sales efforts; (ii) the development of
applications-oriented marketing efforts that focus on the Company's
product solutions as alternatives to traditional industry practices; (iii)
increased customer acceptance of its products created through stringent
quality standards and industry accreditation for its test labs; and (iv)
the use of in-house technical consultants to educate industry leaders as
to the cost savings offered by the Company's products as compared to
traditional solutions. The Company has experienced success with this
strategy, as evidenced by the growth of its civil engineering product line
for which sales have increased from approximately $17 million in fiscal
1993 to approximately $42 million in fiscal 1995, and approximately $37
million for the nine months ended June 30, 1996. Within this product line,
the Company has focused on the roadway and building sites, erosion control
and waste containment sectors. Among other products, nonwoven geotextile
sales to the roadway and building site markets have grown from
approximately $5 million in fiscal 1993 to approximately $16 million in
fiscal 1995, and approximately $13 million for the nine months ended June
30, 1996. In addition, the Company has expanded its presence in
international markets primarily through additional distribution
arrangements, increased marketing efforts focused primarily on major
international construction projects and the expansion of its international
sales force. As a result, total international sales increased from
approximately $17 million in fiscal 1993 to approximately $34 million in
fiscal 1995, and approximately $21 million for the nine months ended June
30, 1996.

- DEVELOP INNOVATIVE PRODUCTS. The Company seeks to develop innovative
products and modify existing products in response to specific customer
needs and to establish new markets through the development of novel
applications for its existing products. By increasing its expenditures for
research, product development and marketing, the Company believes it will
be able to capitalize on its manufacturing strengths and distribution
network to introduce new value-added products and extend product lines to
complement its existing product base. For example, the Company's specially
designed Fibermesh(R) MD products provide after-crack strength retention
to concrete, thus mitigating immediate failure of the concrete. Since its
introduction in 1991, sales of Fibermesh(R) MD have grown to approximately
$26 million in fiscal 1995, and approximately $18 million for the nine
months ended June 30, 1996.

- STRENGTHEN MARKET POSITION IN CARPET BACKING. The Company intends to
increase its carpet backing market share through: (i) continued capital
investment in state-of-the-art equipment for additional carpet backing
production capacity; (ii) expansion of sales in the growing commercial
carpet sector of the domestic market; and (iii) the continued development
and strengthening of its relationships with key customers. As an example
of this strategy, in August 1996 the Company completed an expansion at its
largest facility that has increased the Company's current capacity in
carpet backing by approximately 16%.

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<PAGE> 5

- CONTINUE TO IMPROVE MANUFACTURING EFFICIENCIES AND EXPAND MANUFACTURING
CAPACITY. The Company has continued to invest in capital improvements and
new facilities to expand capacity, add new capabilities and enhance
production technologies, and in August 1996 completed a major expansion
at its largest manufacturing facility in order to take advantage of
opportunities in both the carpet backing and geotextile markets. The
Company plans to continue to spend additional capital to increase its
manufacturing capability for primary and secondary carpet backing and
woven and nonwoven geotextiles, subject to prevailing market conditions.

- PURSUE STRATEGIC ACQUISITIONS. The Company is continually evaluating the
potential acquisition of companies, technologies or products which will
complement its existing product lines and manufacturing and distribution
strengths. Acquisition opportunities will be evaluated based on the
strategic fit, the expected return on capital invested and the ability of
management to improve the profitability of acquired operations through
cost reductions and other synergies with existing operations.

While the Company's sales have grown in each of the past five years, the
Company's operating income has fluctuated due to a variety of factors,
principally related to changes in the cost of polypropylene, the Company's
primary raw material. The Company believes that the sales prices of its products
will adjust over time to reflect changes in polypropylene costs, although such
cost changes favorably affected operating results for fiscal 1994 and adversely
affected operating results for fiscal 1995. Recently, these movements have
positively affected the Company's operating income, which increased by 50% to
$14.5 million for the third quarter of fiscal 1996 from $9.7 million for the
comparable period of fiscal 1995. These favorable conditions have continued in
the fourth quarter of fiscal 1996.

RECENT DEVELOPMENTS

The following table sets forth certain unaudited operating results of the
Company for the three months ended September 30, 1995 and 1996.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
---------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Net sales.............................................. $77,078 $87,473
Operating income....................................... 5,250 14,863
Net income............................................. (619) 5,317
</TABLE>

The increase in net sales of $10,395 from the 1995 to the 1996 period was
primarily due to unit volume growth in each sales division and higher average
selling prices. Carpet backing sales for the three months ended September 30,
1996 were $40,115 compared to $34,276 for the same period of fiscal 1995, an
increase of $5,839, or 17.0%. Construction and civil engineering product sales
for the three months ended September 30, 1996 were $32,063 compared to $28,800
for the same period of fiscal 1995, an increase of $3,263, or 11.3%, due to a
13% and 18% increase, respectively, in geosynthetic and Fibermesh(@) product
sales. Technical textile sales for the three months ended September 30, 1996
were $15,295 compared to $14,002 for the same period of fiscal 1995, an increase
of $1,293, or 9.2%.

Operating income for the three months ended September 30, 1996 increased
9,613, or 183%, from the comparable period in fiscal 1995. As a percentage of
sales, operating income increased to 16.9% from 6.8%. Net income for the three
months ended September 30, 1996 was $5,317 compared to a net loss of $619 for
the same period of fiscal 1995, an increase of $5,936. These increases were
primarily due to increased sales volume, higher average selling prices and lower
average polypropylene costs, as well as the inclusion in fiscal 1995 of a
pre-tax charge of approximately $2,852 to increase the allowance for doubtful
accounts due to a customer who experienced severe financial difficulty.

5
<PAGE> 6

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.......... 2,500,000 Shares
Common Stock to be outstanding after the
Offering................................... 8,281,250 Shares(1)(2)
Use of Proceeds.............................. To repay outstanding bank indebtedness.
Nasdaq National Market Symbol................ "SIND"
</TABLE>

- ---------------

(1) Does not include up to 375,000 shares of Common Stock which may be offered
by the Company upon exercise of the Underwriters' overallotment option.

(2) Excludes 638,397 shares of Common Stock at September 30, 1996 which are
subject to options granted under the Company's 1994 Stock Option Plan for
Non-Employee Directors, 1994 Stock Option Plan and 1996 Stock Option Plan
(collectively, the "Stock Option Plans"), 204,434 of which are subject to
currently exercisable options.

RISK FACTORS

Prospective purchasers of the Common Stock offered hereby should carefully
consider the factors set forth in "Risk Factors," as well as the other
information set forth in this Prospectus before making an investment in the
Common Stock.

6
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The following summary consolidated financial information should be read in
conjunction with the Consolidated Financial Statements and notes thereto and the
other selected financial data set forth elsewhere in this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
FISCAL YEAR ENDED ENDED
ENDED SEPTEMBER 30, JUNE 30, JUNE 30,
------------------------------------ ----------------------- ----------------------
1993 1994 1995(1) 1995 1996 1995 1996
-------- -------- ---------- -------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales......................... $210,516 $234,977 $ 271,427 $194,349 $ 212,060 $72,767 $ 82,843
Gross profit...................... 68,335 82,672 76,721 57,399 60,839 21,900 27,709
Operating income.................. 29,921 40,770 28,687 23,437 23,612 9,682 14,521
Interest expense.................. 20,854 20,011 22,514 17,027 17,253 5,846 5,863
Income from continuing operations
before provision for income
taxes........................... 8,134 20,020 5,436 5,855 5,836 3,650 8,483
Income from continuing
operations...................... 3,662 11,420 1,936 2,555 2,786 1,879 5,093
PRO FORMA FINANCIAL DATA:
Net income(2)..................... $ 3,566 $ 3,941 $ 5,478
Net income per share(2)........... 0.42 0.47 0.65
Weighted average common and common
equivalent shares outstanding... 8,430,501 8,430,501 8,430,501
OTHER FINANCIAL DATA:
EBITDA(3)......................... $ 41,061 $ 52,421 $ 42,887 $ 33,960 $ 35,330 $13,258 $ 18,556
EBITDA as a percentage of net
sales........................... 19.5% 22.3% 15.8% 17.5% 16.7% 18.2% 22.4%
Depreciation and amortization..... $ 12,073 $ 12,390 $ 14,937 $ 11,078 $ 12,241 $ 3,762 $ 4,210
Capital expenditures.............. 11,759 31,866 13,313 12,169 30,439(4) 3,942 16,789(4)
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
AS OF ------------------------
SEPTEMBER 30, AS
1995 ACTUAL ADJUSTED(5)
------------- -------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......................................................... $ 69,039 $ 66,800 $ 66,800
Total assets............................................................ 312,300 325,532 325,532
Long-term debt.......................................................... 192,048 204,145 174,670
Stockholder's equity.................................................... 57,756 60,508 89,983
</TABLE>

- ---------------

(1) Fiscal 1995 results of operations include a pre-tax charge of $2,852
which occurred during the fourth quarter of fiscal 1995 to increase the
allowance for doubtful accounts due to a customer who experienced
severe financial difficulty. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations".

(2) Pro forma net income and pro forma net income per share reflect the
reduction in interest expense resulting from the use of the estimated
net offering proceeds of $29,475 to repay certain bank indebtedness
calculated as of the beginning of the period indicated. See "Use of
Proceeds".

(3) Represents income before interest, taxes, depreciation, and
amortization. EBITDA is presented because it is generally accepted as
providing useful information regarding a company's ability to service
and/or incur debt. EBITDA should not be considered in isolation from or
as a substitute for net income, cash flows from operating activities
and other consolidated income or cash flow statement data prepared in
accordance with generally accepted accounting principles or as a
measure of profitability or liquidity.

(4) Capital expenditures for the three and nine months ended June 30, 1996
include $5,000 for equipment purchased under a capital lease.

(5) Adjusted to give effect to the sale of the 2,500,000 Shares offered by
the Company hereby (at an initial public offering price of $13.00 per
share and after deducting the estimated underwriting discounts and
expenses of the Offering) and the application of the estimated net
proceeds therefrom. See "Use of Proceeds".

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<PAGE> 8

RISK FACTORS

Prospective investors should carefully review the information set forth
below, in addition to the other information set forth in this Prospectus, prior
to purchasing shares of Common Stock offered hereby.

RAW MATERIAL PRICES AND AVAILABILITY

Polypropylene, a petroleum derivative, is the basic raw material used in
the manufacture of substantially all of the Company's products. For the nine
months ended June 30, 1996 and in fiscal 1995, polypropylene purchases accounted
for approximately 50% of the Company's cost of sales. The price of polypropylene
is primarily a function of manufacturing capacity, demand and the prices of
petrochemical feedstocks, crude oil and natural gas liquids. Historically, the
market price of polypropylene has fluctuated, such as in fiscal 1995 when the
average market cost of polypropylene was approximately 50% higher than in fiscal
1994. A significant increase in the price of polypropylene that cannot be passed
on to customers could have a material adverse effect on the Company's results of
operations and financial condition. There can be no assurance that the price of
polypropylene will not increase in the future or that the Company will be able
to pass on any such increase to its customers. In addition, significant
increases in demand for, or a significant disruption in supply of,
polypropylene, without a corresponding expansion of polypropylene manufacturing
capacity, could result in production shortages. Historically, the creation of
such additional facilities has helped to relieve supply pressures although there
can be no assurance that this will continue to be the case.

The Company's major suppliers of polypropylene are Fina Oil & Chemical
Company, Lyondell Polymers Company, Huntsman Polypropylene and Union Carbide.
The loss of any one of the Company's suppliers could adversely affect the
Company's business until alternative supply arrangements were secured. In
addition, there is no assurance that any new supply agreement entered into by
the Company would have terms comparable to those contained in current supply
arrangements. See "Business -- Raw Materials".

LEVERAGE

The Company is highly leveraged. As of June 30, 1996, the Company had
outstanding consolidated long-term debt (including current maturities) of
approximately $175 million on a pro forma basis taking into account the
application of the estimated net proceeds to the Company from the Offering.
Furthermore, the Company may incur additional indebtedness in the future,
subject to certain limitations contained in the instruments governing its
indebtedness. The degree to which the Company is leveraged could have important
consequences to holders of Common Stock, including: (i) impairment of the
Company's ability to obtain additional financing in the future; (ii) reduction
of funds available to the Company for its operations and general corporate
purposes or for capital expenditures, as a result of the dedication of a
substantial portion of the Company's net cash flow from operations to the
payment of principal of and interest on the Company's indebtedness; (iii) the
possibility of an event of default under financial and operating covenants
contained in the Company's debt instruments which, if not cured or waived, could
possibly have a material adverse effect on the Company; (iv) a relative
competitive disadvantage if the Company is substantially more leveraged than its
competitors; and (v) an inability to adjust to rapidly changing market
conditions and consequent vulnerability in the event of a downturn in general
economic conditions or its business because of the Company's reduced financial
flexibility. The Company's ability to make scheduled payments or to refinance
its obligations with respect to its indebtedness depends on its financial and
operating performance, which, in turn, is subject to prevailing economic
conditions and to financial, business and other factors beyond its control.
Although the Company's cash flow from its operations has historically been
sufficient to meet its debt service obligations, there can be no assurance that
the Company's operating results will continue to be sufficient for payment of
the Company's indebtedness. See "Capitalization" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources".

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<PAGE> 9

COMPETITION

The markets for the Company's products are highly competitive. In the
manufacture and sale of carpet backing, which represented in excess of 50% and
49% of the Company's total net sales for the nine months ended June 30, 1996 and
in fiscal 1995, respectively, the Company competes primarily with Amoco Fabrics
and Fibers Co. ("Amoco"), a subsidiary of Amoco Corporation, and, to a lesser
extent, certain other companies. Amoco has the leading position in the carpet
backing market worldwide. In the manufacture and sale of the Company's other
products, the Company generally competes with a number of other companies,
including, in some cases, Amoco. Several of these competitors, particularly
Amoco, are significantly larger and have substantially greater resources than
the Company. The pricing policies of the Company's competitors have at certain
times in the past limited the Company's ability to increase its sales prices or
caused the Company to lower its sales prices. See "Business -- Products,"
"-- Marketing and Sales" and " -- Raw Materials".

SIGNIFICANT CUSTOMER

For the nine months ended June 30, 1996 and in fiscal 1995, Shaw
Industries, Inc. ("Shaw"), a major carpet manufacturer and long-time customer of
the Company, was the Company's largest single customer, accounting for
approximately 18.4% and 18.2%, respectively, of the Company's total net sales
and approximately 36.7% and 37.1%, respectively, of the Company's carpet backing
sales. If Shaw were to significantly reduce or terminate its purchases of carpet
backing from the Company, the Company's results of operations and financial
condition could be materially adversely affected. The Company has no other
customers that account for greater than 10% of its total net sales. For the nine
months ended June 30, 1996 and in fiscal 1995, the Company's ten largest
customers for carpet backing accounted for approximately 78% and 77%,
respectively, of its total net sales to the carpet industry. See
"Business -- Marketing and Sales -- Carpet Backing".

CONTROL BY CERTAIN STOCKHOLDERS

Upon completion of the Offering, Synthetic Industries, L.P., a Delaware
limited partnership (the "Partnership") will own approximately 70%
(approximately 67% if the Underwriters' over-allotment option is exercised in
full) of the outstanding shares of Common Stock. As a result, the Partnership
will be able to effectively control the outcome of certain matters requiring a
stockholder vote, including the election of directors. Such ownership of Common
Stock may have the effect of delaying, deferring or preventing a change of
control of the Company and may adversely affect the voting and other rights of
other stockholders.

The Partnership has informed the Company that it intends during 1997 to
review alternatives for providing its limited partners liquidity, including, but
not limited to, exercising its right to have the Company register an
underwritten public offering of shares of Common Stock owned by the Partnership.
See "Description of Capital Stock -- Registration Rights". Such an offering
cannot occur without the consent of Bear, Stearns & Co. Inc., however, until the
expiration of 270 days from the date of this Offering. See "Shares Eligible for
Future Sale". In addition, the Partnership has informed its limited partners
that it will not undertake such an offering without first obtaining their
consent to such offering as well as to certain amendments to the Partnership
Agreement that will allow each limited partner to elect whether to participate
in such offering. Such an offering will also be subject to market conditions
existing at the time.

CERTAIN ANTI-TAKEOVER EFFECTS OF CHARTER

The Company's Certificate of Incorporation and By-laws restrict the ability
of stockholders to call special meetings or take stockholder action by written
consent. These provisions could delay or hinder the removal of incumbent
directors and could discourage or make more difficult a proposed merger, tender
offer or proxy contest involving the Company or may otherwise have an adverse
effect on the market price of the Common Stock. See "Description of Capital
Stock -- Certain Provisions of the Certificate of Incorporation". The Company
also is subject to provisions of Delaware corporate law that will restrict the
Company from engaging in certain business combinations with a person who,
together with affiliates and associates, owns 15% or more

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<PAGE> 10

of the Common Stock (an "Interested Stockholder") for three years after the
person becomes an Interested Stockholder, unless certain conditions are met or
the business combination is approved by the Company's Board of Directors (the
"Board") and/or the Company's stockholders in a prescribed manner. These
provisions also could render more difficult or discourage a merger, tender offer
or other similar transaction. See "Description of Capital Stock -- Section 203
of the DGCL".

ABSENCE OF PRIOR MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering there has been no public market for shares of the
Common Stock and there can be no assurances that an active trading market in the
Common Stock will develop or be sustained after the Offering. The initial public
offering price for the Common Stock has been determined solely by negotiations
among Bear, Stearns & Co. Inc., as the Representative of the Underwriters, and
the Company based on several factors and may not be indicative of the market
price for the Common Stock after the Offering. See "Underwriting" for a
description of the factors to be considered in determining the initial public
offering price. In addition, the market price for shares of the Common Stock may
be highly volatile. Factors such as the Company's cost of raw materials, average
selling price, the introduction of new products by the Company or its
competitors, changes in the estimates or recommendations of financial analysts
regarding the Company and general market conditions may have a material adverse
effect on the market price of the Common Stock.

ENVIRONMENTAL

Certain local governments have adopted ordinances prohibiting or
restricting the use or disposal of certain polypropylene products. Widespread
adoption of such prohibitions or restrictions could adversely affect demand for
the Company's products and thereby have a material adverse effect upon the
Company. In addition, a decline in consumer preference for polypropylene
products due to environmental considerations could have a material adverse
effect upon the Company.

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of substantial amounts of Common Stock in the public market or
the perception that such sales could occur could adversely affect market prices
of the Common Stock. Upon completion of the Offering, the Company will have
outstanding 8,281,250 shares of Common Stock. Of these shares, the 2,500,000
shares of Common Stock sold in the Offering will be freely tradeable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), except for any shares owned by an "affiliate" of the
Company, which will be subject to the limitations of Rule 144 under the
Securities Act ("Rule 144"). The remaining 5,781,250 shares of Common Stock were
acquired by the Partnership prior to the Offering without registration under the
Securities Act in reliance upon exemptions from registration and are "restricted
securities" for purposes of the Securities Act. These shares may not be sold
unless their offer and sale are registered under the Securities Act or unless an
exemption from registration, such as the exemption provided by Rule 144 under
the Securities Act, is available. Each of the Company, its executive officers,
senior management and directors and the Partnership have entered into certain
"lock-up" agreements with the Underwriters with respect to the sale of shares of
Common Stock. Under these "lock-up" agreements, (i) the Company has agreed not
to offer, sell, agree to sell, grant any option for the sale of or otherwise
dispose of, directly or indirectly, any shares of Common Stock (or any security
convertible into, exercisable for or exchangeable for Common Stock) without the
consent of Bear, Stearns & Co. Inc. for a period of 270 days after the date of
this Prospectus, and (ii) the Partnership and the executive officers, senior
management and directors of the Company have agreed not to offer, sell, agree to
sell, grant any option for the sale of or otherwise dispose of, directly or
indirectly, any shares of Common Stock (or any security convertible into,
exercisable for or exchangeable for Common Stock) without the consent of Bear,
Stearns & Co. Inc. for a period of 270 days after the date of this Prospectus,
and thereafter, until December 31, 1997, only pursuant to an underwritten public
offering, except with respect to transfers made by officers, senior managers or
directors as gifts, provided that the donee agrees to be bound by the foregoing
restrictions, and except that the Company may issue shares of Common Stock upon
the exercise of options granted under its stock option plans. After the
expiration of the "lock-up" agreements, such persons will be entitled to sell,
distribute or

10
<PAGE> 11

otherwise dispose of the Common Stock that they hold subject to the provisions
of applicable securities laws. In addition, the Company has entered into a
Registration Rights Agreement with the Partnership which gives the Partnership
certain rights to registration under the Securities Act, subject to certain
conditions. See "Description of Capital Stock -- Registration Rights" and
"Shares Eligible for Future Sale".

DILUTION

Investors in the Common Stock offered hereby will experience immediate and
substantial dilution. See "Dilution".
---------------------

This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included in this Prospectus, including, without
limitation, statements under the captions "Risk Factors", "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business" regarding the Company's financial position, business strategy and
plans and objectives of management of the Company for future operations,
constitute forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been correct.
Cautionary statements describing important factors that could cause actual
results to differ materially from the Company's expectations are disclosed under
the caption "Risk Factors" and elsewhere in this Prospectus, including, without
limitation, in conjunction with the forward-looking statements included in this
Prospectus. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by such cautionary statements.

11
<PAGE> 12

THE COMPANY

The Company is one of the world's leading producers of polypropylene
fabrics and fibers for the home furnishing, construction, environmental,
recreational and agricultural industries. The Company manufactures and sells
more than 2,000 products in over 65 end-use markets. The Company believes that
it is the second largest producer of carpet backing in the world and is the
largest producer of synthetic fiber additives for concrete reinforcement through
its Fibermesh(R) line of products. SI also produces polypropylene products for
the geotextile and erosion control markets and is a leader in designing
innovative products for specialty applications. The Company's products are
engineered to meet specific customer criteria such as strength, flexibility,
resistance to sunlight, water/air permeability and resistance to bacteria. The
Company aims to compete in markets in which it can be the primary or secondary
provider of such products, with over 93% of its products meeting this criterion.
The Company's consolidated sales have grown from $188 million in fiscal 1991 to
$271 million in fiscal 1995.

Immediately prior to the completion of the Offering, all of the issued and
outstanding capital stock of the Company was owned by the Partnership. SI
Management L.P., a Delaware limited partnership, is the sole general partner of
the Partnership and controls the management and affairs of the Partnership and
therefore the Company. SI Management L.P. is controlled indirectly by Leonard
Chill, Ralph Kenner, William Gardner Wright, Jr. and W. Wayne Freed, current
executive officers of the Company, and Jon P. Beckman, a former executive
officer of the Company. See "Management -- Executive Officers and Directors of
the Company" and "Certain Relationships and Related Transactions".

Immediately following the Offering, the Partnership will own 5,781,250
shares of Common Stock, or approximately 70% of the issued and outstanding
shares of Common Stock. Employees, officers and directors have been granted
options to purchase an additional 7.2% of the Common Stock on a fully diluted
basis. See "Principal Stockholders".

The principal executive offices of the Company are located at 309 LaFayette
Road, Chickamauga, Georgia 30707, and the Company's telephone number is (706)
375-3121.

12
<PAGE> 13

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,500,000 Shares to be
sold by the Company hereby (after payment of underwriting discounts and
commissions and estimated expenses of the Offering) are estimated to be $29.5
million ($34.0 million if the Underwriters' overallotment option is exercised in
full). The full amount of the net proceeds to the Company from the Offering will
be used to repay outstanding bank indebtedness. On September 30, 1996, $49.0
million was outstanding, at an interest rate of 8.1875%, under the Company's
Fourth Amended and Restated Revolving Credit and Security Agreement, dated as of
October 20, 1995, as subsequently amended (the "Credit Facility"), among the
Company, the financial institutions party thereto from time to time, as the
lenders (the "Lenders"), and the First National Bank of Boston, as agent for the
Lenders. The Credit Facility expires on October 1, 2001.

DIVIDEND POLICY

The Company has not declared or paid any cash or other dividends on the
Common Stock and intends for the foreseeable future to retain its earnings to
finance the development of its business and for repayment of debt. The
declaration and payment of dividends by the Company are subject to the
discretion of the Board. Any future determination to pay dividends will depend
on the Company's results of operations, financial condition, capital
requirements, contractual restrictions and other factors deemed relevant by the
Board. In addition, the Credit Facility and the Company's $140 million original
principal amount of 12 3/4% Senior Subordinated Debentures due December 1, 2002
(the "Debentures") contain restrictions on the Company's ability to declare and
pay dividends. See "Description of Certain Indebtedness".

13
<PAGE> 14

CAPITALIZATION

The following table sets forth the capitalization of the Company (i) at
September 30, 1996, and (ii) as adjusted to give effect to (a) the
115,740.74-for-1 stock split to be consummated prior to the Offering, (b) the
Offering, and (c) the application of the estimated net proceeds therefrom. The
information presented below should be read in conjunction with "Summary
Consolidated Financial Information", "Selected Consolidated Financial
Information", "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Consolidated Financial Statements and notes
thereto, appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
(UNAUDITED)
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS, EXCEPT
SHARE
AND PER SHARE DATA)
<S> <C> <C>
Long-term debt(1):
Credit Facility(2):
Revolving credit portion......................................... $ 3,993 $ --
Term loan portion................................................ 45,000 19,518
12 3/4% Senior Subordinated Debentures due 2002..................... 140,000 140,000
Capitalized lease obligation........................................ 4,697 4,697
Other............................................................... 1,321 1,321
-------- --------
Total long-term debt........................................ 195,011 165,536
Less current portion............................................. (45) (45)
-------- --------
Long term debt, net................................................. 194,966 165,491
-------- --------
Stockholder's equity:
Common Stock $1.00 par value; 5,000 shares authorized, 49.95 shares
issued and outstanding; 25,000,000 shares authorized and
8,281,250 shares issued and outstanding, as adjusted(3).......... 8,281
Additional paid-in capital.......................................... 69,300 90,494
Cumulative translation adjustments.................................. 15 15
Deficit............................................................. (3,470) (3,470)
-------- --------
Total stockholder's equity.................................. 65,845 95,320
-------- --------
Total capitalization.................................................. $260,811 $ 260,811
======== ========
</TABLE>

- ---------------

(1) For a description of the Company's long-term debt, see Note 8 of Notes to
Consolidated Financial Statements.

(2) At September 30, 1996, the amount available under the Credit Facility and
as adjusted for the Offering was $38,156.

(3) Excludes 638,397 shares of Common Stock at September 30, 1996 which are
subject to options granted under the Stock Option Plans, 204,434 of which
are subject to currently exercisable options.

14
<PAGE> 15

DILUTION

The net tangible book value of the Company as of June 30, 1996 was a
deficit of approximately $24.3 million, or ($4.21) per share. Net tangible book
value per share is equal to stockholder's equity less the net book value of
goodwill and identified intangible assets, divided by the number of shares
outstanding. After giving effect to the sale by the Company of 2,500,000 Shares
in the Offering and the application of the estimated net proceeds therefrom as
described under "Use of Proceeds", the pro forma net tangible book value of the
Company at June 30, 1996 would have been approximately $5.2 million, or $.62 per
share. This represents an immediate increase in net tangible book value of $4.83
per share to the existing stockholder and an immediate net dilution of tangible
book value of $12.38 per share to new investors purchasing Shares in the
Offering. The following table illustrates this dilution:

<TABLE>
<S> <C> <C>
Initial public offering price(1)................................... $13.00
Net tangible book value per share before the Offering............ $(4.21)
Increase per share attributable to new investors................. 4.83
------
Pro forma net tangible book value per share after the Offering..... 0.62
------
Dilution per share to new investors(2)............................. $12.38
======
</TABLE>

- ---------------

(1) Initial public offering price before deduction of underwriting discounts and
commissions and estimated expenses of the Offering to be paid by the
Company.

(2) Assumes no exercise of outstanding stock options.

The following table summarizes, on a pro forma basis as of June 30, 1996,
the differences between the existing stockholder and the new investors with
respect to the number of shares of Common Stock purchased from the Company, the
total consideration paid and the average price per share paid by the existing
stockholder and new investors (based on the assumed initial public offering
price):

<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION AVERAGE
-------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholder............. 5,781,250 69.8% $ 69,300,000 68.1% $ 11.99
New investors.................... 2,500,000 30.2 32,500,000 31.9 13.00
--------- ----- ------------ -----
Total.................. 8,281,250 100.0% $101,800,000 100.0%
========= ===== ============ =====
</TABLE>

The table set forth above assumes no exercise of the Underwriters'
overallotment option or of any outstanding stock options. See footnote 3 under
"Capitalization" for information regarding the number of shares issuable upon
exercise of stock options outstanding at September 30, 1996 and "Underwriting"
for information concerning the Underwriters' over-allotment option.

15
<PAGE> 16

SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The statement of operations data for the fiscal years ended September 30,
1993, 1994 and 1995 and the balance sheet data as of September 30, 1994 and 1995
are derived from the Consolidated Financial Statements that have been audited by
Deloitte & Touche LLP, independent auditors, and are included elsewhere in this
Prospectus. The statement of operations data for the years ended September 30,
1991 and 1992 and the balance sheet data as of September 30, 1991, 1992 and 1993
are derived from audited financial statements of the Company that are not
included herein. The statement of operations and balance sheet data as of and
for the three and nine month periods ended June 30, 1995 and 1996 have been
derived from the unaudited interim financial statements of the Company and
include, in the opinion of management, all adjustments (consisting only of
normal recurring adjustments) necessary to fairly present the data for such
periods. The pro forma financial data is provided for informational purposes
only, is unaudited and is not necessarily indicative of future results or what
the operating results would have been had the transactions actually been
consummated as of the beginning of the periods indicated. The following Selected
Consolidated Financial Information should be read in conjunction with the
Consolidated Financial Statements and the notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED ENDED
FISCAL YEAR ENDED SEPTEMBER 30, JUNE 30, JUNE 30,
----------------------------------------------------- -------------------- --------------------
1991 1992 1993 1994 1995(1) 1995 1996 1995 1996
-------- -------- -------- -------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................... $188,446 $195,739 $210,516 $234,977 $ 271,427 $ 194,349 $ 212,060 $ 72,767 $ 82,843
Cost of sales............... 130,828 133,690 142,181 152,305 194,706 136,950 151,221 50,867 55,134
------- ------- ------- ------- --------- --------- --------- --------- ---------
Gross profit................ 57,618 62,049 68,335 82,672 76,721 57,399 60,839 21,900 27,709
Selling, general and
administrative expenses... 27,192 31,795 35,799 39,403 45,468 32,044 35,283 11,570 12,540
Amortization of
intangibles............... 2,835 2,598 2,615 2,499 2,566 1,918 1,944 648 648
------- ------- ------- ------- --------- --------- --------- --------- ---------
Operating income............ 27,591 27,656 29,921 40,770 28,687 23,437 23,612 9,682 14,521
Interest expense............ 19,155 17,865 20,854 20,011 22,514 17,027 17,253 5,846 5,863
Amortization of deferred
financing costs........... 2,151 1,636 933 739 737 555 523 186 175
------- ------- ------- ------- --------- --------- --------- --------- ---------
Income from continuing
operations before
provision for income
taxes..................... 6,285 8,155 8,134 20,020 5,436 5,855 5,836 3,650 8,483
Provision for income
taxes..................... 4,475 4,560 4,472 8,600 3,500 3,300 3,050 1,771 3,390
------- ------- ------- ------- --------- --------- --------- --------- ---------
Income from continuing
operations................ $ 1,810 $ 3,595 $ 3,662 $ 11,420 $ 1,936 $ 2,555 $ 2,786 $ 1,879 $ 5,093
======= ======= ======= ======= ========= ========= ========= ========= =========
Net income (loss)(2)........ $ 1,501 $ (3,972) $(12,310) $ 11,420 $ 1,936 $ 2,555 $ 2,786 $ 1,879 $ 5,093
======= ======= ======= ======= ========= ========= ========= ========= =========
PRO FORMA FINANCIAL DATA:
Net income(3)............... $ 3,566 $ 3,941 $ 5,478
========= ========= =========
Net income per share(3)..... 0.42 0.47 0.65
========= ========= =========
Weighted average common and
common equivalent shares
outstanding............... 8,430,501 8,430,501 8,430,501
</TABLE>

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, AS OF JUNE 30,
----------------------------------------------------- ---------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................. $ 40,414 $ 33,980 $ 42,055 $ 44,114 $ 69,039 $ 70,452 $ 66,800
Total assets................................ 251,918 254,581 260,372 287,933 312,300 316,450 325,532
Long-term debt.............................. 152,381 158,638 164,723 172,490 192,048 196,760 174,670
Stockholder's equity........................ 62,838 56,700 44,423 55,817 57,756 58,389 89,983
</TABLE>

16
<PAGE> 17

FOOTNOTES TO SELECTED CONSOLIDATED FINANCIAL INFORMATION

(1) Fiscal 1995 results of operations include a pre-tax charge of $2,852 which
occurred during the fourth quarter of fiscal 1995 to increase the allowance
for doubtful accounts due to a customer who experienced severe financial
difficulty. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations".

(2) Net income for fiscal 1993 includes (i) an extraordinary loss of $8,892 from
the early extinguishment of debt, (ii) a charge of $8,500 for the cumulative
effect of an accounting change, and (iii) a gain of $1,420 on the disposal
of discontinued operations. See Notes 9, 11 and 12 of Notes to Consolidated
Financial Statements. Net income for fiscal 1992 includes a loss from
discontinued operations of $553 and a loss on the disposal of discontinued
operations of $7,014. Net income for fiscal 1991 includes a loss from
discontinued operations of $309.

(3) Pro forma net income and pro forma net income per share reflect the
reduction in interest expense resulting from the use of the estimated net
offering proceeds of $29,475 to repay certain bank indebtedness calculated
as of the beginning of the period indicated. See "Use of Proceeds".

17
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the information
contained in the Consolidated Financial Statements, including the notes thereto,
and the other financial information appearing elsewhere in this Prospectus.
Dollar amounts are in thousands. The following discussion includes
forward-looking statements that involve certain risks and uncertainties. See
"Risk Factors".

INTRODUCTION

The Company's net sales in recent years have increased due to a variety of
factors, including generally increasing sales volumes as a result of growing
demand for the Company's products and the Company's ability to expand its
markets through development of new products.

The Company's products are sold along three principal product lines: carpet
backing, construction and civil engineering products, and technical textiles.
The following table summarizes net sales growth for each of these product lines
during the fiscal years ended September 30, 1993, 1994 and 1995 and the nine
month periods ended June 30, 1995 and 1996:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30, NINE MONTHS ENDED JUNE 30,
---------------------------------------------------------- --------------------------------------
1993 1994 1995 1995 1996
---------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Carpet backing............. $106,406 50.5% $117,791 50.1% $133,025 49.0% $ 98,748 50.8% $106,376 50.2%
Construction and civil
engineering.............. 47,899 22.8 68,706 29.3 82,933 30.6 54,134 27.9 64,981 30.6
Technical textiles......... 56,211 26.7 48,480 20.6 55,469 20.4 41,467 21.3 40,703 19.2
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Net sales.................. $210,516 100.0% $234,977 100.0% $271,427 100.0% $194,349 100.0% $212,060 100.0%
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
</TABLE>

The Company's carpet backing business has grown at a faster rate than that
of the industry as a whole, principally due to recent market share gains in the
consumer carpet backing market and increased penetration of the commercial
carpet backing market. The Company's construction and civil engineering business
has grown significantly over the past three years due to increased acceptance of
the Company's proprietary concrete reinforcement products, the expansion of this
product line to offer a full range of geosynthetic products to the markets the
Company serves and other innovative product offerings. Over the past three
years, the Company has streamlined its technical textile business and exited
several product lines which did not meet the Company's strategic sales and
profitability objectives. The Company believes that it has positioned its
technical textile business for increased sales and profitability.

While the Company's sales have grown in each of the past three years, the
Company's operating income has fluctuated due to a variety of factors,
principally related to changes in the cost of polypropylene, the Company's
primary raw material. The Company believes that the selling prices of its
products will adjust over time to reflect changes in polypropylene costs,
although movements in polypropylene costs favorably affected operating results
for fiscal 1994 and adversely affected operating results for fiscal 1995. Based
upon normal Company inventory levels, changes in polypropylene costs generally
affect the Company's results of operations two to three months after the change
occurs. Accordingly, as a result of polypropylene price decreases in the first
quarter of fiscal 1996, the Company's effective cost of polypropylene began to
decline in the second quarter of fiscal 1996. This decrease in polypropylene
costs, without a corresponding decrease in selling prices, in part accounted for
increased operating income in the third quarter of fiscal 1996 to $14,521, as
compared to $9,682 for the comparable period of fiscal 1995. Recent
polypropylene price increases in the third and fourth quarters of fiscal 1996
have been offset by the Company's recently effected price increases for a
majority of its products.

According to a September 1996 report by Chemical Data Inc. ("Chem Data"), a
monthly petrochemical and plastics analysis publication, current annual
polypropylene capacity in North America is 12.6 billion pounds per year, up from
11.4 billion pounds at December 31, 1995. Total average annual capacity will
rise to 14.0 billion pounds per year for 1997 and 14.6 billion pounds per year
for 1998. Historically, the creation of

18
<PAGE> 19

additional capacity has helped to relieve supply pressures although there can be
no assurance that this will continue to be the case. Chem Data also projects
that polypropylene prices will decline in the last three months of calendar
1996.

The Company historically has operated at or near full capacity on a 24-hour
per day, seven days per week, 350 days per year schedule. Reflecting this level
of capacity utilization, the Company invested approximately $80,000 on its six
manufacturing facilities during the five year period ended September 30, 1995.
Additionally, in August 1996 the Company completed a major $35,000 expansion at
its largest manufacturing facility. Based on existing product prices and demand,
this expansion should increase the Company's sales by as much as $30,000 over
the next twelve months.

The following table sets forth the percentage relationships to net sales of
certain income statement items. See "Selected Consolidated Financial
Information", as well as the Consolidated Financial Statements, the notes
thereto and other financial information included elsewhere in the Prospectus for
more detailed financial information.

<TABLE>
<CAPTION>
NINE MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED
SEPTEMBER 30, JUNE 30, JUNE 30,
--------------------- ------------- -------------
1993 1994 1995 1995 1996 1995 1996
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales...................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................................. 67.6 64.8 71.7 70.5 71.3 69.9 66.6
----- ----- ----- ----- ----- ----- -----
Gross profit................................. 32.4 35.2 28.3 29.5 28.7 30.1 33.4
Selling expenses............................... 9.2 9.3 9.0 9.1 9.1 9.1 8.8
General and administrative expenses............ 7.8 7.5 7.8 7.4 7.6 6.8 6.3
Amortization of intangibles.................... 1.2 1.0 0.9 1.0 0.9 0.9 0.8
----- ----- ----- ----- ----- ----- -----
Operating income............................. 14.2 17.4 10.6 12.0 11.1 13.3 17.5
Interest expense............................... 9.9 8.5 8.3 8.8 8.1 8.0 7.1
Amortization of deferred financing costs....... 0.4 0.3 0.3 0.2 0.3 0.3 0.2
----- ----- ----- ----- ----- ----- -----
Income from continuing operations before
provision for taxes....................... 3.9 8.6 2.0 3.0 2.7 5.0 10.2
Provision for income taxes..................... 2.1 3.7 1.3 1.7 1.4 2.4 4.1
----- ----- ----- ----- ----- ----- -----
Income from continuing operations............ 1.8% 4.9% 0.7% 1.3% 1.3% 2.6% 6.1%
===== ===== ===== ===== ===== ===== =====
</TABLE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1996 AS COMPARED TO THREE MONTHS ENDED JUNE 30,
1995

Net sales for the three months ended June 30, 1996 were a record $82,843
for a quarterly period compared to $72,767 for the same period of fiscal 1995,
an increase of $10,076, or 13.8%. This increase was primarily due to increased
sales of carpet backing and construction and civil engineering products. Carpet
backing sales for the three months ended June 30, 1996 were $37,487 compared to
$34,441 for the same period of fiscal 1995, an increase of $3,046 or 8.8%. This
increase was primarily the result of higher unit volume in primary and secondary
carpet backing partially offset by lower average selling prices from the prior
period. Construction and civil engineering product sales for the three months
ended June 30, 1996 were $30,525 compared to $23,780 for the same period of
fiscal 1995, an increase of $6,745, or 28.4%. This increase was primarily due to
a 5.5% increase in sales of Fibermesh(R) and a 51.1% increase in sales of
geotextile and erosion control products during the third quarter of fiscal 1996
compared to the same period in fiscal 1995. Technical textiles sales for the
three months ended June 30, 1996 were $14,831 compared to $14,546 for the same
period of fiscal 1995, an increase of $285, or 2.0%, resulting primarily from
sales gains in the furniture and bedding markets.

Gross profit for the three months ended June 30, 1996 was $27,709 compared
to $21,900 for the same period of fiscal 1995, an increase of $5,809, or 26.5%.
As a percentage of sales, gross profit increased to 33.4% from 30.1%. This
increase was primarily due to increased sales volumes as well as lower average
polypropylene costs. See "-- Introduction".

19
<PAGE> 20

Selling expenses for the three months ended June 30, 1996 increased $680,
or 10.3%, to $7,307 as compared to $6,627 for the same period of fiscal 1995,
reflecting increased expenditures associated with higher sales volume as well as
increased marketing expenses. These expenses related to the Company's strategy
to leverage its market position in its core businesses as well as the Company's
expectation of higher sales resulting from the completion of its capacity
expansion program later this year. As a percentage of sales, selling expenses
decreased from 9.1% to 8.8%, principally due to the significant increase in
sales without a corresponding increase in selling costs.

General and administrative expenses for the three months ended June 30,
1996 were $5,233 compared to $4,943 for the same period of fiscal 1995, an
increase of $290, or 5.9%, principally due to expenditures related to continued
improvements in the Company's Management Information Systems. As a percentage of
sales, general and administrative expenses decreased from 6.8% to 6.3%,
principally due to the increase in sales without a corresponding increase in
general and administrative expenses.

Operating income for the three months ended June 30, 1996 was $14,521
compared to $9,682 for the same period of fiscal 1995, an increase of $4,839, or
50%. As a percentage of sales, operating income increased to 17.5% from 13.3%.
This increase was primarily due to the factors discussed above.

Total interest expense for the three months ended June 30, 1996 was $5,863
compared to $5,846 for the same period of fiscal 1995, principally due to higher
average borrowings under the Credit Facility partially offset by lower effective
interest rates.

The effective income tax rate for the three months ended June 30, 1996 was
40.0% compared to 48.5% for the same period of 1995, principally due to the
effect of higher nondeductible expenses, including the amortization of goodwill,
on lower taxable income in fiscal 1995.

Net income for the three months ended June 30, 1996 was a record $5,093 for
a quarterly period compared to $1,879 for the same period of fiscal 1995, an
increase of $3,214, or 171%. This increase was primarily due to higher sales
volumes and lower average polypropylene costs.

NINE MONTHS ENDED JUNE 30, 1996 AS COMPARED TO NINE MONTHS ENDED JUNE 30,
1995

Net sales for the nine months ended June 30, 1996 were $212,060 compared to
$194,349 for the same period of fiscal 1995, an increase of $17,711, or 9.1%.
This increase was primarily due to increased sales of carpet backing and
construction and civil engineering products. Carpet backing sales for the nine
months ended June 30, 1996 were $106,376 compared to $98,748 for the same period
of fiscal 1995, an increase of $7,628, or 7.7%. This increase was the result of
higher unit volume in primary and secondary carpet backing, partially offset by
lower average selling prices. Construction and civil engineering product sales
for the nine months ended June 30, 1996 were $64,981 compared to $54,134 for the
same period of fiscal 1995, an increase of $10,847 or 20%. This increase was due
to an increase in sales of geotextile and erosion control fabrics of $10,771, or
41.9%, resulting primarily from nonwoven sales in the landfill and roadway and
building site markets. Technical textiles sales for the nine months ended June
30, 1996 were $40,703 compared to $41,467 for the same period of fiscal 1995, a
decrease of $764, or 1.8%. This decrease was primarily due to an adverse
condition in the agricultural market that the Company serves as well as the
discontinuance of several product lines which did not meet the Company's
strategic and profitability objectives, partially offset by sales increases in
the furniture and bedding markets.

Gross profit for the nine months ended June 30, 1996 was $60,839 compared
to $57,399 for the same period of fiscal 1995, an increase of $3,440, or 6.0%.
As a percentage of sales, gross profit decreased from 29.5% to 28.7%. These
results were primarily due to lower average carpet backing selling prices and
increased manufacturing costs associated with plant shutdowns due to the winter
ice storms in 1996. See "-- Introduction".

Selling expenses for the nine months ended June 30, 1996 were $19,259
compared to $17,591 for the same period of fiscal 1995, an increase of $1,668,
or 9.5%. This increase was primarily due to increased expenditures associated
with higher sales volume as well as increased marketing expenses. These expenses
related to the Company's strategy to leverage its market position in its core
businesses as well as the

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<PAGE> 21

Company's expectation of higher sales resulting from the completion of its
capacity expansion program later this year. As a percentage of sales, selling
expenses remained constant at 9.1% of sales.

General and administrative expenses for the nine months ended June 30, 1996
were $16,024 compared to $14,453 for the same period of fiscal 1995, an increase
of $1,571, or 10.9%. As a percentage of sales, general and administrative
expenses increased from 7.4% to 7.6%. This increase was primarily due to the
increased marketing expenses related to the Company's expectation of higher
sales resulting from the completion of its capacity expansion program later this
year as well as an increased investment in the Company's Management Information
Systems.

Operating income for the nine months ended June 30, 1996 was $23,612
compared to $23,437 for the same period of fiscal 1995, an increase of $175, or
0.7%. As a percentage of sales, operating income decreased to 11.1% from 12.1%.
These changes were primarily due to the factors discussed above.

Total interest expense for the nine months ended June 30, 1996 was $17,253
compared to $17,027 for the same period of fiscal 1995, an increase of $226, or
1.3%. This increase was primarily due to higher average total borrowings
outstanding under the Credit Facility, partially offset by lower interest rates.

The effective income tax rate for the nine months ended June 30, 1996 was
52.3% as compared to 56.4% for the same period of 1995, principally due to the
timing of certain nondeductible expense charges in 1995. Nondeductible expense
charges include the amortization of goodwill.

Net income for the nine months ended June 30, 1996 was $2,786 compared to
$2,555 for the same period of fiscal 1995, an increase of $231, or 9.0%. This
increase was primarily due to higher sales volumes, partially offset by lower
average selling prices, higher manufacturing costs associated with plant
shutdowns as a result of the winter ice storms in 1996 and increased selling,
general and administrative expenses in expectation of future sales growth.

FISCAL 1995 COMPARED TO FISCAL 1994

Net sales for fiscal 1995 were $271,427 compared to $234,977 for fiscal
1994, an increase of $36,450, or 15.5%. This increase was primarily due to unit
volume growth in certain product lines and higher average selling prices. Carpet
backing sales for fiscal 1995 were $133,025 compared to $117,791 for fiscal
1994, an increase of $15,234, or 12.9%. This increase was primarily due to
higher unit volume due in part to increased market share in both primary and
secondary carpet backing as well as higher selling prices as compared to fiscal
1994. Construction and civil engineering product sales for fiscal 1995 were
$82,933 compared to $68,706 for fiscal 1994, an increase of $14,227, or 20.7%.
This increase was primarily due to a significant growth in sales of geosynthetic
products as well as an increase in sales of Fibermesh(R) fibers. Technical
textiles sales for fiscal 1995 were $55,469 compared to $48,480 for fiscal 1994,
an increase of $6,989, or 14.4%. This increase was primarily due to unit volume
growth in the furniture and bedding markets.

Gross profit for fiscal 1995 was $76,721 compared to $82,672 for fiscal
1994, a decrease of $5,951, or 7.2%. As a percentage of sales, gross profit
decreased to 28.3% from 35.2%. This decrease was primarily due to the higher
polypropylene costs, offset partially by higher average selling prices. See
"-- Introduction".

Selling expenses for fiscal 1995 were $24,273 compared to $21,815 for
fiscal 1994, an increase of $2,458, or 11.3%. This increase was primarily due to
increased marketing efforts in the construction and civil engineering products
lines as a direct result of increased sales. However, as a percentage of sales,
selling expenses decreased from 9.3% to 8.9%.

General and administrative expenses for fiscal 1995 were $21,195 compared
to $17,588 for fiscal 1994, an increase of $3,607, or 20.5%. As a percentage of
sales, general and administrative expenses increased from 7.5% to 7.8%. This
increase was primarily due to a charge of $2,852 related to an increase in the
allowance for doubtful accounts during the fourth quarter of fiscal 1995. The
charge was taken to establish a reserve for accounts receivable for a carpet
backing customer who experienced severe financial difficulties. The Company
believes the reserve provided is adequate for this account to cover any future
potential losses and in the opinion of management, no significant future loss of
revenue is anticipated.

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<PAGE> 22

Operating income for fiscal 1995 was $28,687 compared to $40,770 for fiscal
1994, a decrease of $12,083, or 29.6%. As a percentage of sales, operating
income decreased to 10.6% from 17.4%. This decrease was primarily due to the
change in gross profit associated with higher raw material costs.

Total interest expense for fiscal 1995 was $22,514 compared to $20,011 for
fiscal 1994. This increase was due to a higher average total debt outstanding
and a higher base rate for the Credit Facility.

The effective income tax rate for fiscal 1995 was 64.3% compared to 43% for
fiscal 1994. The increase was primarily due to the effect of nondeductible
expenses, including the amortization of goodwill, on lower taxable income in
fiscal 1995.

Net income for fiscal 1995 was $1,936 compared to $11,420 for fiscal 1994,
a decrease of $9,484, or 83%. This decrease was primarily due to increased raw
material and interest costs.

FISCAL 1994 COMPARED TO FISCAL 1993

Net sales for fiscal 1994 were $234,977, as compared to $210,516 for fiscal
1993, an increase of $24,461, or 11.6%. This increase was the result of
increased sales of carpet backing and construction and civil engineering
products offset by a decrease in sales of technical textiles. Carpet backing
sales for fiscal 1994 were $117,791, as compared to $106,406 for fiscal 1993, an
increase of $11,385, or 10.7%. This was principally due to increased volume due
in part to increased market share of both primary and secondary carpet backing.
Construction and civil engineering product sales were $68,706 for fiscal 1994,
as compared to $47,899 for fiscal 1993, an increase of $20,807, or 43.4%. This
was due to a 20.4% increase in Fibermesh(R) sales and an 85% increase in sales
of geotextiles and erosion control fabrics. Technical textiles sales were
$48,480 for fiscal 1994, as compared to $56,211 for fiscal 1993, a decrease of
$7,731, or 13.8%. This decrease was principally due to the phase out of several
product lines which did not meet the Company's strategic and profitability
objectives. The equipment associated with the discontinued product lines was
redirected to the additional production of woven geotextiles.

Gross profit for fiscal 1994 was $82,672, as compared to $68,335 for fiscal
1993, an increase of $14,337, or 21.0%. As a percentage of net sales, gross
profit increased from 32.5% for fiscal 1993 to 35.2% in fiscal 1994. The
increase in gross profit was due primarily to the increased sales volume, as
well as increased gross margin on such sales. Gross margin improved principally
as a result of lower average polypropylene costs during fiscal 1994. See
"-- Introduction".

Selling expenses for fiscal 1994 were $21,815, as compared to $19,395 for
fiscal 1993, an increase of $2,420, or 12.5%. The increase in selling expenses
was primarily due to the growth in net sales. As a percentage of net sales,
selling expenses increased from 9.2% to 9.3%. General and administrative
expenses for fiscal 1994 were $17,588, as compared to $16,404 for fiscal 1993,
an increase of $1,184, or 7.2%. However, as a percentage of net sales, general
and administrative expenses decreased from 7.8% to 7.5%.

Operating income was $40,770 for fiscal 1994 compared to $29,921 for fiscal
1993. As a percentage of net sales, operating income increased to 17.4% in
fiscal 1994 from 14.2% in fiscal 1993. The increase in operating income was
primarily due to increased gross profit partially offset by higher selling
expenses.

Interest expense for fiscal 1994 was $20,011 as compared to $20,854 for
fiscal 1993. This decrease was a result of decreased average borrowings under
the Credit Facility and the redemption of the Company's $40,000 zero coupon
junior debenture due December 1, 1999, at its accreted value ($17,093) during
1993, partially offset by the interest payments made in fiscal 1994 relating to
the Debentures.

The effective income tax rate for fiscal 1994 was 43.0% as compared to
55.0% for fiscal 1993, principally due to the effect of nondeductible expenses
on lower income in fiscal 1993.

Income from continuing operations for fiscal 1994 was $11,420 as compared
to $3,662 for fiscal 1993, an increase of $7,758, or 211.9%. The Company had net
income of $11,420 for fiscal 1994 compared to a net loss of $12,310 for fiscal
1993. The net loss for fiscal 1993 included an extraordinary loss of $8,892 (net
of tax) from the early extinguishment of debt, a charge of $8,500 for the
cumulative effect on prior fiscal years of a

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<PAGE> 23

change in accounting principle for income taxes, and a gain of $1,420 from the
reversal of a provision for disposal of discontinued operations in fiscal 1992.

LIQUIDITY AND CAPITAL RESOURCES

To finance its capital expenditures program and fund its operational needs,
the Company has relied upon cash provided by operations, supplemented as
necessary by bank lines of credit and long-term indebtedness. Cash provided by
(used in) operating activities was $18,353 and ($11,934) for the nine months
ended June 30, 1996 and 1995, respectively, and ($35) and $23,962 for fiscal
1995 and 1994, respectively.

Cash provided by operating activities in the nine months ended June 30,
1996 and 1995 consists of net income of $2,786 and $2,555, respectively, after
deducting non-cash charges of $13,544 and $12,788 and changes in net working
capital of $2,023 and ($27,277) for each respective period. The increase in cash
provided by operating activities during the nine months ended June 30, 1996 as
compared to 1995 was principally due to fluctuations in the Company's working
capital requirements. The changes included reduced inventory and accounts
payable balances in 1996 resulting primarily from lower inventory quantities and
lower polypropylene costs, as well as increased collections on accounts
receivable.

Cash provided by (used in) operating activities in fiscal 1995 and 1994
resulted primarily from net income of $1,936 and $11,420, respectively, after
deducting non-cash charges of $17,945 and $16,703 and net working capital
charges of approximately ($19,916) and ($4,161), for each respective period. The
decrease in cash provided by operating activities in fiscal 1995 as compared to
fiscal 1994 was principally due to lower net income and fluctuations in working
capital requirements. Working capital requirements increased primarily due to
increases in accounts receivable, inventory and accounts payable. The increase
in accounts receivable results from increased sales over the prior year
particularly in certain seasonal product lines. The increases in inventory and
accounts payable result from the effects of higher polypropylene costs, as well
as increased units in finished goods and raw materials. Working capital amounted
to $66,800 and $70,452 at June 30, 1996 and 1995, respectively, and $69,039 and
$44,114 at September 30, 1995 and 1994, respectively.

Capital expenditures in fiscal 1995 and 1994 were approximately $13,300 and
$31,900, respectively. The Company had planned $37,000 of capital expenditures
during fiscal 1996, primarily to increase woven manufacturing capacity at its
largest facility. Of this amount, $30,439 has been spent through June 30, 1996,
including a capital lease to finance $5,000 of equipment. The Company expects to
incur approximately $40,000 of additional capital expenditures in each of fiscal
1997 and 1998, primarily to expand capacity and to continue to reduce
manufacturing costs, subject in each case to prevailing market conditions.

The Credit Facility provides for potential borrowing capacity of up to
$85,000 and is comprised of term loan borrowings of $45,000 (of which $10,000 is
payable in 1999 and $17,500 is payable in each of 2000 and 2001) and a revolving
credit loan portion (the "Revolver") of up to $40,000. The Revolver provides for
availability based on a borrowing formula consisting of 85% of eligible accounts
receivable and 50% of eligible inventory, subject to certain limitations. The
Credit Facility expires on October 1, 2001. See "Description of Certain
Indebtedness".

On December 14, 1992, the Company issued $140,000 of the Debentures, which
represent unsecured obligations of the Company. The Debentures are redeemable at
the option of the Company at any time on or after December 1, 1997, at an
initial redemption price of 106.375% of their principal amount together with
accrued interest, with declining redemption prices thereafter. Interest on the
Debentures is payable semi-annually on June 1 and December 1.

At June 30, 1996, the Company's total outstanding indebtedness amounted to
$204,205. Such indebtedness consists primarily of borrowings under the Credit
Facility of $58,014, $140,000 aggregate principal amount of the Debentures and
an outstanding capital lease obligation of $4,843 dated as of May 28, 1996. Cash
interest paid during the nine months ended June 30, 1996 and 1995 was $21,125
and $21,079, respectively, and during fiscal 1995, 1994 and 1993 was $22,334,
$19,787 and $14,913, respectively. The Company intends to use the estimated net
proceeds of approximately $29,475 from the Offering to repay certain bank
indebtedness. See "Use of Proceeds" and "Capitalization".

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<PAGE> 24

Based on current levels of operations and anticipated growth, the Company's
management expects cash from operations to provide sufficient cash flow to
satisfy the debt service requirements of the long-term obligations, including
interest thereon, permit anticipated capital expenditures and fund the Company's
working capital requirements for the next twelve months.

INFLATION AND SEASONALITY

The Company does not believe that its operations have been materially
affected by inflation during the three most recent fiscal years. While the
Company does not expect that inflation will have a material impact upon
operating results, there is no assurance that its business will not be affected
by inflation in the future.

The Company's sales and income from continuing operations have historically
been higher in the third and fourth quarters of its fiscal year. While sales and
operating income in the carpet backing and technical textile product lines are
not greatly affected by seasonal trends, sales of construction and civil
engineering products are lower in the first and second quarters of any given
fiscal year due to the impact of adverse weather conditions on the construction
and civil engineering markets. Consequently, as sales from construction and
civil engineering products continue to increase as a percentage of the Company's
total sales, the seasonality of these products' sales will affect total sales of
the Company to a greater degree.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," which requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. SFAS No. 121 is effective for
financial statements for fiscal years beginning after December 15, 1995;
therefore, the Company will adopt SFAS No. 121 in the first quarter of fiscal
1997 and, based on current circumstances, does not believe the effect of
adoption will be material.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation" which will be effective for the Company beginning October 1, 1996.
SFAS No. 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. The Company will account for stock-
based compensation awards under the provisions of Accounting Principles Board
Opinion No. 25, as permitted by SFAS No. 123. In accordance with SFAS No. 123,
beginning in the fiscal year ended September 30, 1997, the Company will make pro
forma disclosures relative to stock-based compensation as part of the
accompanying footnotes to the consolidated financial statements.

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<PAGE> 25

BUSINESS

THE COMPANY

Management believes that the Company has a reputation in its markets as a
high quality, cost-efficient manufacturer. The Company is committed to
maintaining its market leadership and reputation for innovation through capital
investment in facilities and state-of-the-art equipment, by hiring and training
skilled employees and through process control standards and productivity
improvements. The Company has been awarded ISO-9002 certification at all of its
major manufacturing facilities, and believes it is the only U.S. manufacturer in
a majority of its markets to have been awarded such certification. SI invested
approximately $80 million in capital improvements in its facilities and
equipment during the five year period ended September 30, 1995. Additionally, in
August 1996 the Company completed a major $35 million, 130,000 square foot
expansion of its largest manufacturing facility. Based on existing product
prices and demand, this expansion should increase the Company's sales by as much
as $30 million over the next twelve months. The Company is one of the largest
independent consumers of polypropylene in the world. The Company also believes
its position as a vertically-integrated manufacturer -- performing each step in
the conversion of polypropylene into value-added end products -- provides a
competitive advantage by allowing the Company to manufacture high quality
products to customer's specifications, while controlling manufacturing costs.

The Company's principal business strategy is to leverage its market
presence in its core businesses into additional growth while maintaining its
market position as a high quality, cost-efficient manufacturer. The primary
components of this strategy are to expand penetration of existing markets,
develop innovative products, strengthen market position in carpet backing,
continue to improve manufacturing efficiencies and expand manufacturing capacity
and pursue strategic acquisitions.

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<PAGE> 26

HISTORY

The Company was founded in 1969 to produce polypropylene-based primary
carpet backing. Following the acquisition of the Company in 1976 by a group of
private investors, the Company diversified into the manufacture and sale of
polypropylene-based industrial fabrics and specialty yarns. Between 1981 and
1983, the Company entered the construction and civil engineering products
market, initially by manufacturing woven geotextiles and later through its
introduction of Fibermesh(R) fibers for concrete reinforcement. In 1985, the
Company added secondary carpet backing to its product offerings. In 1990, the
Company purchased a technical synthetic fabrics operation located in
Gainesville, Georgia, from Chicopee, a subsidiary of Johnson & Johnson (the
"Chicopee Acquisition"). In addition to broadening the Company's line of
geosynthetic products, the acquisition gave the Company access to new markets
for high performance geotextiles. As a result of improved fiber technology and
increased fiber manufacturing capabilities, the Company opened its sixth
facility, the nonwoven geotextile plant in Ringgold, Georgia in 1992, enabling
the Company to offer a full line of geotextile products.

The Company was acquired by the Partnership in December 1986. All of the
issued and outstanding Common Stock is currently owned by the Partnership. See
"The Company", "Principal Stockholders" and "Certain Relationships and Related
Transactions".

INDUSTRY OVERVIEW

The Company manufactures polypropylene fiber, most of which it consumes
internally to manufacture its products. Polypropylene fiber is the second
largest polymeric material used in synthetic fabrics, representing approximately
30% of the total U.S. synthetic fiber market, behind polyester and ahead of
nylon. According to the Society for the Plastics Industry ("SPI"), total
domestic production of polypropylene fiber was approximately 3 billion pounds in
1995 and grew at an annual rate of approximately 9.3% per year in the period
from 1993 to 1995.

In 1995, the Company was one of the largest manufacturers of polypropylene
fiber in the U.S. with approximately 8% of total domestic output. The top ten
manufacturers of polypropylene fiber in the United States generate approximately
70% of the annual domestic output of polypropylene fiber. Most of the large
producers of polypropylene fiber, including the Company, are vertically
integrated, converting polypropylene into fiber which can be used to manufacture
fabrics or can be sold directly to other manufacturers. These large producers
often have significant shares of the markets in which they compete, such as the
Company's share of the primary and secondary carpet backing markets and concrete
fiber reinforcement market.

Most of the products manufactured by the Company are woven and nonwoven
polypropylene fabrics. Woven polypropylene fabrics are produced by weaving
narrow tapes of slit film, which are made by extruding polypropylene into long
sheets. Such fabrics are characterized by high strength to weight ratios. All of
the Company's carpet backing products and approximately 53% of its civil
engineering products are woven polypropylene fabrics. Nonwoven polypropylene
fabrics are produced by mechanically interlocking fibers with barbed needles.
Several of the Company's technical textile products and 47% of its civil
engineering products, principally for waste containment, roadway and building
site applications, are nonwoven polypropylene fabrics.

Approximately 45% of the polypropylene fiber manufactured by the Company is
used by the Company to make carpet backing. The Carpet and Rug Institute ("CRI")
estimates that 1995 U.S. shipments of primary polypropylene carpet backing were
approximately 1.64 billion square yards. The Company believes that 1995 U.S.
shipments of secondary polypropylene carpet backing were 1.56 billion square
yards, or approximately 95% of primary carpet backing shipments. The Company
shipped worldwide an aggregate of 790 million square yards of primary and
secondary polypropylene carpet backing in 1995. According to CRI, growth of
total domestic primary carpet backing shipments averaged 1.6% in the period from
1993 to 1995 and 4.1% for the six months ended June 30, 1996. The growth rate of
the Company's primary and secondary carpet backing shipments has generally
exceeded that of the market, with an average annual increase in shipments of
7.7% for the period from fiscal 1993 to fiscal 1995 and 8.9% for the nine months
ended June 30, 1996.

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<PAGE> 27

Approximately 33% of the polypropylene fiber manufactured by the Company is
used to make construction and civil engineering products, of which approximately
22% and 11% are geotextiles and concrete reinforcing fibers, respectively.
According to Industrial Fabrics Association International, approximately 414
million square yards of woven and nonwoven geotextiles were shipped domestically
in 1995 for the civil engineering fabric market. According to industry sources,
domestic shipments of woven and nonwoven geotextiles are expected to grow at an
average annual rate of approximately 6% over the next five years. The growth
rate of the Company's civil engineering product lines has outpaced that of the
market with average annual growth in shipments of 48.9% for the period from
fiscal 1993 to fiscal 1995. In addition, the Company believes that its
Fibermesh(R) products currently have a 70% share of the fiber reinforced
concrete industry. Fibermesh(R) concrete reinforcing fiber shipments grew at an
average annual rate of 16.0% for the period from fiscal 1993 to fiscal 1995.

Approximately 22% of the polypropylene fiber manufactured by the Company is
used to make technical textiles. The technical textiles market consists of a
large number of relatively stable product lines with annual sales in each
product line of approximately $10 million to $12 million. The Company expects to
generate growth in its technical textiles sales through new products such as
building product components and nonwoven furniture construction fabrics.

BUSINESS STRATEGY

The Company's goals are to maintain steady growth in its core business,
develop innovative and value-added products to expand its product lines,
penetrate new international markets, and continue to create new high margin
niche products out of engineered fabrics and fibers. The Company seeks to be the
leading or second supplier in its chosen markets by delivering high-quality
products at competitive prices. Key elements of the Company's strategy to
achieve these goals are:

EXPAND PENETRATION OF EXISTING MARKETS

The Company is committed to expanding sales in markets where it currently
has a leadership position by increasing market penetration through the offering
of a broader product line to meet its customers' varied needs and by expanding
its customer base. The Company is pursuing this goal through: (i) the expansion
of geographical coverage of its sales effort; (ii) the development of
applications-oriented marketing efforts that focus on the Company's product
solutions as alternatives to traditional industry practices; (iii) increased
customer acceptance of its products created through stringent quality standards
and industry accreditation for its test labs; and (iv) the use of in-house
technical consultants to educate industry leaders as to the cost savings offered
by the Company's products as compared to traditional solutions.

The Company believes that it has significant expansion opportunities for
its existing products. The Company is developing comprehensive marketing efforts
to increase sales of its products in existing markets and to penetrate new
domestic and international markets, particularly Europe and the Pacific Rim, by
increasing awareness of its products among existing and potential customers. The
Company focuses on education of its customers' engineering support personnel,
advertising and application-oriented marketing efforts as it seeks to expand
acceptance of its products. The Company has experienced success with this
strategy, as evidenced by the growth of its civil engineering product line for
which sales have increased from $17.0 million in fiscal 1993 to $42.4 million in
fiscal 1995, and $36.5 million for the nine months ended June 30, 1996. Within
this product line, the Company has focused on the roadway and building site,
erosion control and waste containment sectors. Among the Company's other
products, nonwoven geotextile sales to the roadway and building site markets
have grown from $4.8 million in fiscal 1993 to $16.2 million in fiscal 1995 and
were $13.0 million for the nine months ended June 30, 1996.

The Company has also expanded its presence in international markets
primarily through additional distribution arrangements, increased marketing
efforts focused primarily on major international construction projects and the
expansion of its international sales force. As a result, total international
sales increased from $16.6 million in fiscal 1993 to $33.8 million in fiscal
1995 and were $21 million for the nine months ended June 30, 1996.

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DEVELOP INNOVATIVE PRODUCTS

The Company seeks to develop innovative products and modify existing
products in response to specific customer needs and to establish new markets
through the development of novel applications for its existing products. By
increasing its expenditures for research, product development and marketing, the
Company believes it will be able to capitalize on its manufacturing strengths
and distribution network to introduce new value-added products and extend
product lines to complement its existing product base. For example, the
Company's specially designed Fibermesh(R) MD products provide after-crack
strength retention to concrete, thus mitigating immediate failure of the
concrete. Since its introduction in 1991, sales of Fibermesh(R) MD have grown to
$26.0 million in fiscal 1995, and $17.9 million for the nine months ended June
30, 1996.

The redesign and enhancement of its core products have also resulted in the
development of high strength geotextiles and the Company's building material
products. These developments utilize existing weaving technology to permit
construction over extremely weak soils and to replace fiberglass in certain
construction applications such as wallboard. The Company's soil reinforcement
fibers are used in roadway construction and maintenance and its biotechnical
composite three dimensional mats enable vegetation to be grown on steep slopes
and in high-flow water channels. The Company believes that these products are
environmentally friendly, aesthetically pleasing and low-cost alternatives to
crushed rock. The Company has also developed a new line of products that are
manufactured using the same production techniques as nonwoven geotextiles but
are used as vinyl substrates and spill control products.

STRENGTHEN MARKET POSITION IN CARPET BACKING

The Company intends to increase its carpet backing market share through:
(i) continued capital investment in state-of-the-art equipment for additional
carpet backing production capacity; (ii) expansion of sales in the growing
commercial carpet sector of the domestic market; and (iii) the continued
development and strengthening of its relationships with key customers. The
Company's sales of primary and secondary carpet backing have grown from $106.4
million in fiscal 1993 to $133.0 million in fiscal 1995, and $106.4 million for
the nine months ended June 30, 1996 as compared to $98.7 million for the same
period in 1995. To support this growth, beginning in fiscal 1994, the Company
introduced a new production initiative supported by capital expenditures in each
of fiscal 1994, 1995 and 1996. Recent expenditures include investments to expand
capacity and improve production output through installation of state-of-the-art
equipment, including the Company's 88 loom, $35.0 million expansion at its
largest manufacturing facility completed in August 1996 that has increased the
Company's current capacity in carpet backing by approximately 16.0%.

Despite the Company's recent strong growth, customer demand for the
Company's products has exceeded capacity. The Company believes it is well
positioned, based upon its relationships with its customers, the quality of its
products and its planned expansion in manufacturing capacity, to gain market
share. While the Company estimates that its share of the domestic residential
carpet backing market is 22%, in the growing commercial carpet segment of the
U.S. market, which currently represents approximately 25% of the total U.S.
carpet market, its share is less than 10%.

The Company has successfully cultivated long-term relationships with key
customers, which include nine of the top ten largest carpet manufacturers in the
world. The Company's success in developing and strengthening its relationships
with these and other key customers is attributable to its commitment to product
quality, dedication to customer technical service and sensitivity and
responsiveness to changing customer needs.

CONTINUE TO IMPROVE MANUFACTURING EFFICIENCIES AND EXPAND MANUFACTURING
CAPACITY

The Company is committed to implementing improvements throughout its
manufacturing system that will increase product volume and lower costs. The
Company's product design teams continuously seek to incorporate new operating
capabilities that enhance or maintain performance specifications while lowering
the cost of manufacturing its products. State-of-the-art equipment, much of
which has been developed with direct input from internal engineers, has been
modified and installed to exceed manufacturing processing specifica-

28
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tions, to continuously measure process parameters and to maintain very narrow
tolerances, resulting in less product variation. As a result, the Company has
been able to improve its manufacturing processes to utilize less labor and
material and produce higher quality fabrics. In addition, the Company maintains
a human resource program aimed at capturing productivity gains through team
building, formal training and employee empowerment.

The Company also believes that its sales are enhanced as a result of its
reputation for quality control and process improvement (especially in markets
where product reliability is critical, such as waste containment). The Company
has led this market by being the first (and in many cases, the only)
manufacturer to achieve ISO-9002 quality certification for its manufacturing
facilities. In addition, the Company was the first geosynthetic manufacturer to
have its own test laboratories accredited by the Geosynthetic Research Institute
which assures that a quality system and laboratory infrastructure is in place to
perform specific tests required in the industry.

The Company believes that increasing manufacturing capacity at its existing
plants will provide the capability to gain market share in its current markets
and to continue to expand into new markets. The Company has invested
approximately $80 million in capital improvements and new facilities during the
five year period ended September 30, 1995 and continuously evaluates
opportunities to expand its existing production capacity, add new capabilities
and enhance production technologies. Specifically, in response to opportunities
in the nonwoven market, the Company constructed a state-of-the-art nonwoven
facility in 1992 which management believes to be one of the largest such
facilities in the United States. This facility today generates sales exceeding
$35 million per year as its products support the geotextile, furniture and
building materials markets. The Company's recently completed $35 million capital
expenditure has increased capacity for carpet backing and woven geotextile
production, thus expanding the Company's market base and should increase
consolidated sales over the next twelve months by a projected $30 million.
Included in this expansion is a 130,000 square foot building addition to the
Company's largest manufacturing facility, 88 new looms and related equipment to
support these looms. The Company plans to continue to spend additional capital
to increase its manufacturing capability for primary and secondary carpet
backing, and woven and nonwoven geotextiles, subject to prevailing market
conditions.

PURSUE STRATEGIC ACQUISITIONS

The Company is continually evaluating the potential acquisition of
companies, technologies or products which will complement its existing product
lines and manufacturing and distribution strengths. Acquisition opportunities
will be evaluated based on the strategic fit, the expected return on capital
invested and the ability of management to improve the profitability of acquired
operations through cost reductions and other synergies with existing operations.

PRODUCTS

The Company develops, manufactures and sells a wide array of
polypropylene-based industrial fibers and fabrics along its three principal
product lines: carpet backing, construction and civil engineering, which
comprises environmental/geotextile products and concrete reinforcement products,
and technical textiles. The Company manufactures five basic yarn and fiber
types, from which approximately 2,000 products are manufactured to serve in
excess of 65 end-use markets. The Company aims to compete in markets in which it
can be the primary or secondary provider of such products, with over 93% of its
products meeting this criterion. Although end-use applications are diverse, the
Company has been able to leverage its manufacturing expertise to introduce new
products that often define industry standards. Through research, internal
developments, marketing and acquisitions, the Company has developed or acquired
new technologies to capitalize on a broad range of new niche product
opportunities, enabling it to expand beyond its traditional primary carpet
backing business. Since 1981, the following product lines have been added to the
Company's portfolio: filtration, specialty yarns, geotextiles, Fibermesh(R)
concrete reinforcing fibers, secondary carpet backing, staple fibers, erosion
control fibers, soil reinforcing fibers and high performance wovens and
nonwovens. This diversification has contributed to average annual sales
increases of 21.5% for the period from fiscal 1986 to fiscal 1990 and 10.9% for
the period from fiscal 1991 to fiscal 1995.

29
<PAGE> 30

CARPET BACKING

Carpet backing is the Company's oldest and largest product line. Carpet
backing represented approximately 50.5%, 50.1% and 49.0%, or $106.4 million,
$117.8 million and $133.0 million, of the Company's fiscal 1993, 1994 and 1995
net sales, respectively. The technology utilized in the Company's carpet backing
business has provided the basic woven fabric technology for the Company's other
product lines. For example, certain geotextiles, agriculture fabrics and
furniture construction fabrics are woven on the same looms used to weave carpet
backing.

The Company's carpet backing product line consists of woven primary and
secondary fabrics in a variety of styles and widths that are manufactured from
polypropylene raw materials. Primary carpet backing is a tightly woven material
into which carpet yarn is tufted in the manufacture of broadloom floorcoverings.
Secondary carpet backing, which forms the base of the carpet, is the coarser
woven fabric that is laminated to the back of tufted broadloom to insure both
carpet integrity and dimensional stability. The Company produces a broad range
of primary and secondary backing.

The Company believes it is the second largest producer of carpet backing in
the United States, where carpeting is the most popular floor covering material.
The total market for carpeting in the United States has grown approximately 4%
per year over the past decade. In recent years, the growth rate of the Company's
carpet backing sales has generally outpaced that of the market due to the
Company's ability to gain market share. Management believes that the Company's
growth rate has been limited by its production capacity.

CONSTRUCTION AND CIVIL ENGINEERING

The Company's construction and civil engineering product line has two
distinct segments: environmental and geotextile products and concrete
reinforcement fibers. Construction and civil engineering has achieved rapid
growth since 1993 when the Company enhanced its channels of distributions for
Fibermesh(R) and expanded into production of nonwoven geotextiles. Construction
and civil engineering products represented approximately 22.8%, 29.3% and 30.6%,
or $47.9 million, $68.7 million and $82.9 million, of the Company's fiscal 1993,
1994 and 1995 net sales, respectively. Within this product line, geotextile
products principally serve the environmental market, with end uses such as
landfill containment and stabilization, erosion control and soil stabilization,
separation and reinforcement. The construction market includes subbase
reinforcement and stabilization for highway and commercial construction and
reinforcement of conventional and pre-cast concrete. Growth in sales in the
environmental/geotextiles sector for the period fiscal 1992 to fiscal 1995
averaged 57.9% annually, with a 34.8% increase in fiscal 1995 over fiscal 1994.
Fibermesh(R) concrete reinforcing fiber sales grew at an average annual rate of
14.6% for the period from fiscal 1993 to fiscal 1995, with an 8.8% increase for
the period from fiscal 1994 to fiscal 1995.

Environmental/Geotextile Products. The Company's environmental/geotextile
product line consists of erosion control fabrics, geotextiles, and soil fibers.
These products control erosion and capture sediment; provide filtration,
separation and reinforcement of soils; improve engineering properties of native
soils; protect landfill liners; and extend pavement life. The specifications of
the Company's geosynthetic fabrics and fibers vary depending on specific site
conditions, including such factors as slope angles, water flow velocities,
climate, runoff, soil profile and ultimate land use. The Company's geosynthetic
products generally comply with state agency guidelines pertaining to
geosynthetic products issued to date.

The Company produces a variety of nonwoven geotextiles for use in landfill
construction, asphalt roadway construction and drainage systems. The Company's
woven geotextiles are typically used in road and building construction to form a
separation barrier between unstable soils and aggregate foundations. The
Company's LANDLOK(R) erosion control products are used in water runoff channels
and in areas of exposed soil and shoreline erosion. These products hold the soil
in place, while allowing and supporting vegetative growth. LANDLOK(R) products
are an environmentally friendly and aesthetically pleasing alternative to rock
or concrete erosion control methods.

30
<PAGE> 31

The Company has developed a strong market position in
environmental/geotextile products on the basis of sales growth and engineering
strengths. The Company believes it is now the fastest growing supplier of
geotextiles to this market, and has the broadest environmental/geotextile
product line in North America.

Environmental and economic concerns have contributed to an increase in
government mandates as well as industry practices to control surface runoff and
soil erosion and improve water quality. Geotextiles tend to be more durable,
easier to use, and more cost effective as compared to similar products made of
conventional materials. In highly populated urban areas with high concentrations
of roads and buildings the need for good conservation practices is becoming
increasingly acute. The Company believes that this market will continue to
expand as environmental concerns continue to grow, thereby increasing demand for
the Company's products. The Company believes its strength as a cost-effective
manufacturer of geotextiles will allow it to continue to increase sales of
current products, and introduce new products to this market.

Concrete Reinforcement. The Company pioneered the concept of using
polypropylene fibers as a secondary reinforcement for concrete and developed and
introduced Fibermesh(R) to the concrete industry in 1983. The Company believes
that its Fibermesh(R) products have a 70% share of the fiber treated segment of
the concrete industry. All concrete reinforcement fibers, including
Fibermesh(R), have only approximately 9% penetration of the total concrete
industry. Growth in this market will be based on increased acceptance of the use
of synthetic fibers for concrete reinforcement as a replacement for conventional
wire mesh. The Company estimates that 250 million cubic yards of concrete poured
annually in the United States could potentially benefit from the use of
Fibermesh(R) fibers.

The addition of Fibermesh polypropylene fibers to the concrete mixture
gives the concrete greater crack resistance and improved impact strength.
Primary applications for fiber reinforced concrete are commercial and
residential slabs, precast pipe and other products, shotcrete installations, and
whitetopped highways. In 1994, the Company started marketing Fibermesh(R) fibers
containing an antibacterial additive. This niche product is available for use in
concrete where bacteria growth is a concern. Primary targets are hospitals,
clinics, food processing facilities, and veterinary facilities. Fibermesh(R)
provides a cost-effective replacement for the nonstructural wire mesh
traditionally used in concrete construction and improves the concrete's
durability. Fibermesh(R) complies with construction guidelines and
specifications issued by all of the national building code associations. Of the
three synthetic fiber types used in fiber reinforced concrete, polypropylene is
recognized for its superior properties over nylon and polyester. Fibermesh(R) is
sold in fibrillated, monofilament and multi-denier designs, the latter of which
is protected by a U.S. patent.

TECHNICAL TEXTILES

Technical textiles produced by the Company are products and systems that
offer high performance solutions for niche markets. Technical textiles
represented approximately 26.7%, 20.6% and 20.4%, or $56.2 million, $48.5
million and $55.5 million, of the Company's fiscal 1993, 1994 and 1995 net
sales, respectively. Technical textiles are sold to several niche markets,
including the furniture, filtration, agricultural and recreational industries,
and each product in those markets generally accounts for $10 to $12 million or
less in sales. The Company's technical textile products are generally
differentiated on the basis of product uniqueness, quality and service rather
than price.

The Company's technical textiles consist of specialty fabrics, industrial
yarns and fibers. The specialty fabrics are manufactured in a variety of widths,
weights, permeability ranges and dimensional configurations primarily from
polypropylene and, to a minor extent, other synthetic fibers. Customers use
these fabrics to manufacture products used in diverse applications such as
filtration (e.g., bauxite mining, wastewater treatment, electrostatic-air
filters and chemical separation), agriculture (e.g., shade for foliage
protection and environmental screening), and recreation (e.g., swimming pool
covers and trampoline mats).

The Company also sells its industrial yarns and fibers directly to weavers,
knitters, and non-woven manufacturers who produce niche market products, such as
automobile upholstery, coat linings, geotextiles, air filters and water
filtration media.

31
<PAGE> 32

Recent product line repackaging has created new business programs for the
Company, which programs are currently in the new product launch phase. These
programs include professional landscaping products, livestock maintenance
fabrics, antibacterial products and building product components.

MARKETING AND SALES

Carpet Backing. The Company sells its carpet backing products to 91
customers in the carpet industry, most of whom are carpet manufacturers located
in the United States. In fiscal 1995, the Company's ten largest carpet backing
customers accounted for approximately 77% of its total net sales to the carpet
industry. In fiscal 1995, sales to Shaw, the Company's largest customer,
accounted for approximately 37% of net carpet backing sales and approximately
18% of the Company's total net sales. Shaw is estimated to have 27% of the
United States carpet market.

The Company's carpet backing products are sold primarily through the
Company's sales force that is directed from a central sales office in Calhoun,
Georgia. All of the sales managers have significant industry experience and
monitor ongoing product requirements, styling changes and competitive trends
affecting their customers.

Construction and Civil Engineering. The Company's geosynthetic products are
sold primarily in North America to regional and national distributors,
installers of landfill liners and various governmental transportation
departments, port authorities and waterway commissions. In fiscal 1995, the ten
largest geosynthetic product customers accounted for approximately 28% of the
Company's total net sales in this product line.

The Company's geosynthetic products are marketed by full-time salespeople
with expertise in civil engineering and agronomy who are directed from a central
office in Chattanooga, Tennessee. These salespeople, along with a technical
support staff at Company headquarters, provide design and field engineering
services to customers. They also are integral to the process of obtaining
required governmental permits for use of the products by end-users. In addition,
the Company has an ongoing marketing communications program to build awareness
of product capabilities and expand interest in and use of geotextiles.

Fibermesh(R) is sold through a direct sales force to ready-mix concrete
companies and precast concrete product manufacturers located primarily in the
United States and the United Kingdom. The Fibermesh(R) sales force operates out
of divisional offices in Austin, Texas, Denver, Colorado, Chattanooga, Tennessee
and Chesterfield, England. In addition, Fibermesh(R) is sold through a contract
with Master Builders, Inc., a construction industry product distributor. Other
construction industry product distributors market Fibermesh(R) in over 50
foreign countries. In fiscal 1995, the ten largest Fibermesh(R) customers
accounted for approximately 12% of the Company's total net sales of
Fibermesh(R).

Technical Textiles. The Company sells its specialty fabrics to a diverse
group of approximately 400 manufacturers located primarily in North and Central
America and the Pacific Rim countries. The Company sells its industrial yarns
and fibers to a diverse group of approximately 100 manufacturers located in
North America and Europe. In fiscal 1995, the Company's ten largest technical
textile customers accounted for approximately 29% of the Company's total net
sales of technical textiles. The Company's technical textiles are marketed by
salespersons through sales offices in Gainesville, Ringgold and Calhoun, Georgia
and Chesterfield, England.

COMPETITION

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<PAGE> 33

backing market primarily on the basis of quality, availability, service, price
and product line variety, providing carpet manufacturers with a reliable
alternative source of supply to Amoco.

In the manufacture and sale of the Company's other products, the Company
generally competes with a number of other companies, some of which are
significantly larger and have substantially greater resources than the Company.
The Company's primary competitors in the construction and civil engineering
market are Amoco and Nicolon Corporation with respect to geotextiles, North
American Green, Inc. with respect to environmental and erosion control products,
and W.R. Grace & Co., which markets but does not manufacture concrete
reinforcement fibers, with respect to concrete reinforcement. The Company
competes in the concrete reinforcement fiber market primarily on the basis of
product design and technical service. In some applications, Fibermesh(R) also
competes with welded wire fabric on the basis of product performance and cost.
The Company competes in the construction and civil engineering market on the
basis of product line breadth and quality, price, and the custom design,
engineering and other services it provides to customers. With respect to
technical textiles, competitors vary depending upon the specific market niche.
The Company competes in each segment of the technical textiles market primarily
on the basis of service, quality, innovation and product line variety.

The pricing policies of the Company's competitors have at certain times in
the past limited the Company's ability to increase the prices or caused the
Company to lower the prices of certain of its products. See "-- Products,"
"-- Marketing and Sales" and "-- Raw Materials".

MANUFACTURING PROCESS

Polypropylene, a chemically inert plastic derived from petroleum, is the
basic raw material used in the manufacture of substantially all of the Company's
products. SI believes it is a technological leader in the conversion of
polypropylene into woven and nonwoven polypropylene products. The expertise of
the Company's research and development and marketing staff has enabled the
Company to develop innovative products, frequently in response to specific
customer needs.

Woven fabrics are produced by interlacing thousands of strands of extruded
yarn at right angles to one another. The manner in which the yarn is interlaced
determines the type of weave. Woven fabrics are characterized by strength and
dimensional stability. The Company's woven fabric products include primary and
secondary carpet backing, geotextiles, erosion control fabrics, and specialty
fabrics for the filtration, recreational, construction and agricultural markets.

Nonwoven fabrics are produced by first stacking several layers of webbed
short length fibers and then entangling the layers by punching barbed needles
through the layers. Nonwoven fabrics provide extensibility without rupture and
dimensionality. The Company's nonwoven fabric products include geotextiles,
erosion control fabrics, furniture and bedding construction fabrics, and spill
control fabrics.

The Company believes that it has state-of-the-art manufacturing capability
in both its woven and nonwoven product lines and is one of the most
cost-efficient producers in the markets in which it participates. The Company's
three primary manufacturing processes are extrusion, weaving and needlepunching.

Extrusion. Much of the Company's expertise has been developed in its
extrusion processes. Many of the product's specification properties are created
by engineering the polymeric raw materials during the extrusion process. In
addition to yarns and fibers for conventional end-uses, the Company has also
developed value-added products through the use of additives including those
which resist sunlight degradation or provide resistance to bacteria. The Company
owns and operates one of the world's largest polypropylene staple fiber lines.
Most of the Company's extruded products are consumed internally and become
value-added woven and nonwoven fabrics, but some are sold to weavers, knitters,
nonwovens producers and convertors.

Weaving. The yarns produced in the Company's extrusion and yarn spinning
operations are woven on looms to produce the wide variety of fabrics that the
Company sells through all of its marketing divisions. Fabric properties are
engineered to industry specifications by altering constituent yarns and weave
patterns. Looms are generally interchangeable to weave carpet backing,
geotextiles and certain agricultural fabrics. The breadth of the Company's woven
product offerings was enhanced by the Chicopee Acquisition.

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<PAGE> 34

Needlepunching. In 1993, the Company constructed a state-of-the-art
needlepunched nonwovens fabric facility. This modern plant produces a new
generation of engineered cost-effective fabrics for the geotextile, furniture
construction and chemical spill cleanup markets.

The Company maintains a complete rigorous quality control program centered
around statistical process control and customer key measures. Each stage of the
process from the raw material to the final product is monitored using standard
procedures and test methods which satisfy the quality control standards
established by ISO. All of the Company's manufacturing facilities have been
granted ISO-9002 certification for their systematic approach to quality in all
areas of operation.

The Company's production equipment is capable of manufacturing a variety of
woven and nonwoven polypropylene products. This versatility enables the Company
to alter the product mix within its woven and nonwoven product lines in response
to market demand or to take advantage of specific profit opportunities.

The Company's plants are run on a continuous 24-hour per day basis, seven
days a week, 350 days per year. Orders are typically filled from inventory.

RESEARCH AND DEVELOPMENT

The Company's research and development is focused primarily on development
and as such the Company engages in product design, development and performance
validation to improve existing products and to create new products. The Company
expended approximately $1.9 million (approximately 0.7% of sales) on
Company-sponsored research and development activities in fiscal 1995 and
anticipates spending approximately the same amount in fiscal 1996. As part of a
recently completed strategic review, the Company expects to increase research
and development expenses beginning in fiscal 1997 to approximately 1.0% of
sales.

INTERNATIONAL OPERATIONS

The Company conducts its foreign sales operations through subsidiaries in
Europe and a network of distributors worldwide. In fiscal 1995, the aggregate
sales (principally of construction and civil engineering products) by such
foreign subsidiaries and marketing divisions were approximately $5.3 million.
International sales from United States operations in fiscal 1995 were $28.5
million, or 11% of net sales.

RAW MATERIALS

Polypropylene, which is a petroleum derivative, is the basic raw material
used in the manufacture of substantially all of the Company's products. The
Company currently purchases polypropylene in pellet form principally from four
suppliers, with Fina Oil & Chemical Company being the Company's largest supplier
of polypropylene. These purchases are generally made pursuant to long-standing
arrangements.

Polypropylene purchases account for approximately 50% of the Company's cost
of sales. Increases in the price of polypropylene without offsetting increases
in selling prices could have a significant negative effect on the Company's
results of operations and financial condition. The Company believes that the
sales prices of its products will adjust over time to reflect changes in
polypropylene costs. The Company did not experience production curtailment due
to shortages of polypropylene supply during the very tight market in fiscal
1995.

REGULATION

The Company is subject to federal, state and local laws and regulations
affecting its business, including those promulgated under the Occupational
Safety and Health Act and by the Environmental Protection Agency or similar
state agencies. Many of the Company's construction and civil engineering
products have applications that are subject to building code association
guidelines and specifications and highway department guidelines. Obtaining the
necessary approvals can delay new product introductions in some areas. Moreover,
the enactment of new legislation or the issuance of new guidelines may require
the Company to modify its existing geotextile and erosion control fabric
products and may also delay the Company's introduction of new geotextiles and
erosion control fabric products.

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<PAGE> 35

The Company's expenditures to date in connection with such federal, state
and local laws and regulations have not been material to its operations. The
Company believes it is currently in substantial compliance with applicable
governmental regulations.

ENVIRONMENTAL COMPLIANCE

The Company is subject to a broad range of federal, foreign, state and
local laws and regulations relating to the pollution and protection of the
environment. Among the many environmental requirements applicable to the Company
are laws relating to air emissions, wastewater discharges and the handling,
disposal or release of solid and hazardous substances and wastes. Based on
continuing internal review and advice from independent consultants, the Company
believes that it is currently in substantial compliance with applicable
environmental requirements. A cease-and-desist order was issued by the U.S. Army
Corps of Engineers on June 13, 1996, concerning the Chickamauga, Georgia
facility and the deposit of filling material into wetlands without a permit. The
Company is working with the Army Corps of Engineers to create an equivalent
wetland area. The Company does not anticipate that such order will have a
material adverse effect on its operations.

The Company is also subject to laws, such as the federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
("CERCLA"), that may impose liability retroactively and without fault for
releases or threatened releases of hazardous substances at on-site or off-site
locations. The Company is not aware of any releases for which it may be liable
under CERCLA or any analogous provision.

Actions by federal, state and local governments in the United States and
abroad concerning environmental matters could result in laws or regulations that
could increase the cost of producing the products manufactured by the Company or
otherwise adversely affect demand for its products. For example, certain local
governments have adopted ordinances prohibiting or restricting the use or
disposal of certain polypropylene products. Widespread adoption of such
prohibitions or restrictions could adversely affect demand for the Company's
products and thereby have a material adverse effect upon the Company. In
addition, a decline in consumer preference for polypropylene products due to
environmental considerations could have a material adverse effect upon the
Company.

Most of the Company's manufacturing processes are mechanical and are
therefore considered to be environmentally benign. Polypropylene resins are
readily recyclable, and the Company maintains a network of recyclers to receive
post-industrial waste for certain of the Company's products. In addition, each
of the Company's manufacturing sites has equipment and procedures for reclaiming
a majority of internally generated scrap, thus reducing the amount of waste sent
to local landfills. As a result, the Company does not currently anticipate any
material adverse effect on its operations, financial condition or competitive
position as a result of its efforts to comply with environmental requirements.
Some risk of environmental liability is inherent, however, in the nature of the
Company's business, and there can be no assurance that material environmental
liabilities will not arise. It is also possible that future developments in
environmental regulation could lead to material environmental compliance or
cleanup costs.

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<PAGE> 36

PROPERTIES

The Company operates the following principal domestic manufacturing and
distribution facilities. All of the Company's owned properties are subject to
liens in favor of the lenders under the Credit Facility.

<TABLE>
<CAPTION>
APPROXIMATE
SQUARE
FOOTAGE OWNED OR
LOCATION PRINCIPAL FUNCTION OF FACILITY LEASED
- -------------------------------------- --------------------------------- ----------- --------
<S> <C> <C> <C>
Chickamauga, Georgia.................. Manufacturing of carpet backing, 738,800 Owned
geotextiles and fibers

Dalton, Georgia....................... Distribution center and multi- 216,000 Owned
product warehouse

Ringgold, Georgia..................... Manufacturing of geotextiles 183,750 Owned

Chattanooga, Tennessee................ Manufacturing of specialty yarns 126,432 Owned

Alto, Georgia......................... Manufacturing of certain yarns 92,400 Owned

Dalton, Georgia....................... Needlepunching of carpet backing 44,945 Owned

Gainesville, Georgia.................. Manufacturing of certain fabrics 200,000 Leased

Dalton, Georgia....................... Woven, nonwoven and geotextile 185,000 Leased
124 Keene Street warehouse

Dalton, Georgia....................... Geosynthetic products and fiber 168,000 Leased
120 Keene Street warehouse

Chickamauga, Georgia.................. Manufacturing of carpet backing, 143,736 Leased
geotextiles and fibers
Dalton, Georgia....................... Specialty yarn warehouse 104,827 Leased
Cleveland Highway

Cornelia, Georgia..................... Assembly of certain fabrics 100,000 Leased

Westside, Georgia..................... Carpet backing warehouse 86,440 Leased

Dalton, Georgia....................... Carpet backing warehouse 85,000 Leased
North Dug Gap

Dalton, Georgia....................... Geosynthetic products warehouse 36,000 Leased
Florence

Dalton, Georgia....................... Geosynthetic products warehouse 31,500 Leased
1408 Coronet

Claremont, North Carolina............. Nonwoven fabrics warehouse 14,000 Leased

Tupelo, Mississippi................... Nonwoven fabrics warehouse 13,500 Leased

Chattanooga, Tennessee................ Corporate support offices 4,800 Leased
-----------
Total............................... 2,575,130
=========
</TABLE>

ORDER BACKLOG

The Company generally sells its products pursuant to customer orders which
are satisfied either out of inventory or by the manufacture and shipment of the
product promptly following receipt of an order. Accordingly, the dollar amount
of backlog orders believed to be firm is not significant or indicative of the
Company's future sales and earnings.

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<PAGE> 37

EMPLOYEES

As of June 30, 1996, the Company employed 2,071 persons in the United
States, of whom 446 were salaried employees and the remainder were hourly
employees. None of the Company's employees are unionized. The Company has never
experienced any strikes and believes its relations with employees to be
satisfactory. The Company employs 13 persons in the United Kingdom.

PATENTS AND TRADEMARKS

The Company owns or is licensed under several United States and foreign
patents. While these patents are helpful to the Company's business, it is
believed that a loss of patent exclusivity would not be materially adverse to
the Company's business.

The Company has registered several of its trademarks, including
FIBERGRIDS(R), FIBERMESH(R) and LANDLOK(R), with the United States Patent and
Trademark office and with several foreign trademark offices.

CLAIMS AND LEGAL PROCEEDINGS

In January 1995, an arbitration proceeding was initiated by Fibermesh
(Suisse), S.A. against the Company in the United States, alleging a breach by
the Company of an exclusive distribution agreement for the distribution of
Fibermesh(R) in Switzerland and claiming actual damages of 6,104,000 Swiss
Francs ($4.9 million at June 30, 1996) and punitive damages of $20 million. On
September 20, 1996, the arbitrator issued a decision finding for the Company
against Fibermesh (Suisse), S.A. on all issues and claims presented.
Accordingly, the Company was found not to be liable for any actual or punitive
damages in connection with this action. Fibermesh (Suisse), S.A. has limited
rights of appeal.

In August 1996, two related products liability lawsuits were filed in Texas
against 182 defendants, including the Company, engaged in the production,
transportation and use of cement and cement additives, claiming personal injury
caused by the allegedly toxic substances contained in the cement. The amount of
damages sought to be recovered has not yet been specified. The Company believes
that all claims against the Company in these actions are without merit and that
the ultimate resolution will not have a materially adverse effect on the
Company's financial position or results of operations.

The Company and its subsidiaries are parties to litigation arising out of
their business operations. Most of such litigation involves claims for personal
injury, property damage, breach of contract and claims involving employee
relations and certain administrative proceedings. The Company believes such
claims are adequately covered by insurance or do not involve a risk of material
loss to the Company.

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<PAGE> 38

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY

The following table sets forth certain information concerning each of the
executive officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICES HELD
--------------------------------------- --- ---------------------------------------
<S> <C> <C>
Leonard Chill.......................... 64 President, Chief Executive Officer and
Director
W. Wayne Freed......................... 60 Vice President -- Market Development
Ralph Kenner........................... 52 Vice President -- Manufacturing
William Gardner Wright, Jr. ........... 67 Vice President -- General Manager
Carpet Backing Division
Robert J. Breyley...................... 67 Vice President -- Fibermesh(R) Division
W.O. Falkenberry....................... 54 Vice President -- Human Resources
C. Ted Koerner......................... 47 Vice President -- General Manager
Construction/Civil Engineering
Products Group
John Michael Long...................... 53 Vice President -- General Manager
Technical Textiles Group
Joseph Sinicropi....................... 42 Chief Financial Officer and Secretary
Bobby Callahan......................... 54 Controller
Joseph F. Dana(1)...................... 49 Director
Lee J. Seidler(1)...................... 61 Director
William J. Shortt(1)................... 71 Director
Robert L. Voigt(1)..................... 78 Director
</TABLE>

- ---------------

(1) Member of Compensation Committee and Audit Committee.

Directors of the Company are elected each year at the annual meeting of
stockholders. The Company's officers serve at the discretion of the Board.

Leonard Chill joined the Company in December 1973 as President and was
appointed Chief Executive Officer in 1986. He has been a director since 1986.
From 1967 until joining the Company, he held a number of positions with Thiokol
Corporation in its Fibers Division, including that of General Manager. Mr. Chill
is also the sole director and sole stockholder of one of the general partners of
Synthetic Management G.P., the entity which is the sole general partner of the
general partner of the Partnership. See "The Company".

W. Wayne Freed joined the Company in 1981 and became Vice
President -- Market Development in 1987. Prior thereto, he had 28 years
experience in the textile industry. Mr. Freed is also the sole director and sole
stockholder of one of the general partners of Synthetic Management G.P.

Ralph Kenner has been Vice President -- Manufacturing since 1984. He joined
the Company in 1974 as Director, Industrial Relations and served in that
capacity until 1976. In 1976, he was appointed Plant Manager and served in that
capacity until 1984. Mr. Kenner is also the sole director and sole stockholder
of one of the general partners of Synthetic Management G.P.

William Gardner Wright, Jr. was Vice President -- Marketing and Sales from
1983 to 1996 at which time he was named Vice President-General Manager of the
Carpet Backing Division. From 1977 until 1983, he was President of Synca
Marketing Corp., a textile sales agency which served as a sales agent for the
Company's primary carpet backing, as well as the products of other
manufacturers. Mr. Wright is a Director of the Sun Trust Bank of Northwest
Georgia. Mr. Wright is also the sole director and sole stockholder of one of the
general partners of Synthetic Management G.P.

38
<PAGE> 39

Robert J. Breyley joined the Company in 1984 and became Vice
President -- Fibermesh Division in December 1984. Prior thereto, he held a
variety of managerial positions with Master Builders, Inc., a leading concrete
admixtures supplier. During his last six years with Master Builders, he was
Senior Vice President of Sales and Marketing.

W.O. Falkenberry joined the Company in 1993 as Vice President of Human
Resources. Prior thereto, he was Director of Human Resources with the Champion
Products Division of the Sara Lee Corporation from 1989 to 1993.

C. Ted Koerner joined the Company in 1990 and became Vice
President -- Construction Products Division in 1993. He was named Vice President
and General Manager -- Construction/Civil Engineering Products Division in 1995.
Prior thereto, Mr. Koerner was an Engineer with the Ohio Department of
Transportation; a Sales Engineer, Product Supervisor and Regional Engineer with
Armco Steel Corporation; and a Sales Manager with National Seal Corporation.

John Michael Long was Vice President -- Nonwoven Fabrics from 1991 to 1996
at which time he was named Vice President -- General Manager of the Technical
Textiles Division. Prior thereto, he held a variety of managerial positions with
Spartan Mills, a manufacturer of nonwoven geotextile fabrics. During his last
five years at Spartan, he was Vice President and General Manager.

Joseph Sinicropi joined the Company in 1995 as Chief Accounting Officer. He
was named Chief Financial Officer and Secretary in February 1996. Prior to
joining the Company, he was an audit senior manager in the international
accounting firm of Deloitte & Touche LLP from 1985 to 1995.

Bobby Callahan joined the Company in 1977 and has been Controller since
1980. Prior thereto, he held a variety of financial management positions in the
carpet industry.

Joseph F. Dana has been engaged in the private practice of law for over
twenty years and has been a member of the law firm Watson & Dana, LaFayette,
Georgia, since its formation in 1978. Mr. Dana has served as general counsel to
the Company since 1987 and has been a Director since 1993.

Lee J. Seidler was Senior Managing Director at Bear, Stearns & Co. Inc.
from 1981 to 1989. He is presently associated with Bear, Stearns & Co. Inc. as
Managing Director Emeritus. Mr. Seidler is a director of the Shubert Foundation,
The Shubert Organization, and Players International, Inc. and has been a
director of SafeCard Services, Inc. and Eastbank, N.A. He has been a Director
since 1993.

William J. Shortt retired from Johnson & Johnson in 1989. From 1977 to
1989, he was Director of Government and Trade Relations, Southeast at Johnson &
Johnson. Mr. Shortt is also a director of Standard Telephone Company and
Standard Group Inc., and has been a director of First National Bank of
Habersham. He has been a Director since 1993.

Robert L. Voigt served as a consultant to Dixie Yarns Inc. from 1985 until
his retirement at the end of 1991. Mr. Voigt also served as a director of Dixie
Yarns, Inc., from 1981 to 1987. He has been a Director since 1993.

Each of the executive officers, except Mr. Breyley, has an Employment
Agreement with the Company. There are no family relationships between any of the
above officers or directors of the Company.

DIRECTORS' COMPENSATION

Outside directors receive $15,000 per annum for services as a director and
$800 per meeting attended. Directors who are members of management do not
receive any meeting attendance fees or additional compensation for service as a
director or service on committees of the Board. All directors are reimbursed for
reasonable out-of-pocket expenses incurred in connection with their attendance
at meetings of the Board and its committees on which they serve.

Under the Company's 1994 Stock Option Plan for Non-Employee Directors (the
"Directors' Plan"), Messrs. Dana, Seidler, Shortt and Voigt were granted
non-qualified stock options (the "Directors' Options")

39
<PAGE> 40

to purchase 28,906, 57,813, 19,271 and 19,271 shares of Common Stock,
respectively. The Directors' Plan does not provide for any further grants of
options thereunder.

The purchase price of the shares of Common Stock subject to the Directors'
Options was determined by reference to the fair market value of the Common
Stock, as determined by the Compensation Committee, at the time Messrs. Dana,
Seidler, Shortt and Voigt became members of the Board. As of October 1, 1996,
100% of the number of shares of Common Stock subject to each Director Option are
vested and are exercisable. As a Company employee, Mr. Chill is not eligible to
participate in the Directors' Plan. In the event that the outstanding shares of
Common Stock are changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, combination or exchange of
shares and the like, or dividends payable in Common Stock, an appropriate
adjustment shall be made by the Committee in the aggregate number of shares of
Common Stock available under the Directors' Plan and in the number of shares and
price per share subject to outstanding Directors' Options. The term of each
Directors' Option is ten years from the date of grant.

BOARD COMMITTEES

The Board has established a Compensation Committee, composed of Messrs.
Dana, Seidler, Shortt and Voigt, which establishes salary, incentives and other
forms of compensation and administers the Company's 1994 Stock Option Plan and
1996 Stock Option Plan and other incentive compensation and benefit plans
applicable to the Company's officers. The Board has also established an Audit
Committee, composed of Messrs. Dana, Seidler, Shortt and Voigt, which recommends
to the Board the selection of independent auditors, and reviews the scope and
results of the audit and other services provided by the independent auditors.

40
<PAGE> 41

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth information regarding the compensation paid
during each of the Company's last three completed fiscal years to the Chief
Executive Officer of the Company and each of the other four most highly
compensated executive officers of the Company as of September 30, 1996
(collectively, the "Named Executive Officers").

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
FISCAL ----------------------------------- ------------
YEAR OTHER ANNUAL SECURITIES
NAME AND ENDED COMPENSATION UNDERLYING ALL OTHER
PRINCIPAL POSITION SEPT. 30, SALARY($) BONUS($) ($) OPTIONS(#) COMPENSATION($)
- ------------------------------ --------- --------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Leonard Chill 1996 254,871 (1) -- -- 9,924(2)
Chief Executive Officer and 1995 254,871 89,939 4,668 -- 10,044(2)
President 1994 247,447 127,260 3,989 -- 9,921(2)

Ralph Kenner 1996 145,973 (1) -- -- 4,170(3)
Vice President -- 1995 145,973 41,926 2,344 -- 4,482(3)
Manufacturing 1994 125,973 66,660 2,300 -- 4,497(3)

William Gardner Wright, Jr. 1996 235,664 (1) -- -- 4,170(3)
Vice President -- General 1995 235,664 70,238 304 -- 4,005(3)
Manager -- Carpet Backing 1994 235,664 99,384 339 -- 4,497(3)
Division

Robert J. Breyley 1996 141,720 (1) -- -- 4,170(3)
Vice President -- 1995 141,720 49,500 -- -- 3,329(3)
Fibermesh(R) Division 1994 141,720 72,000 -- -- 4,198(3)

W. Wayne Freed 1996 152,400 (1) -- -- 4,170(3)
Vice President -- Market 1995 142,000 28,267 1,808 -- 4,090(3)
Development 1994 128,544 29,969 2,109 -- 3,808(3)
</TABLE>

- ---------------

(1) Bonus payments with respect to the annual incentive plan for fiscal 1996
have yet to be determined and such payments will be made in fiscal 1997.

(2) These amounts consist of $5,424 of insurance premiums paid by the Company
under a term life insurance policy in each of 1996, 1995 and 1994, and
$4,500, $4,620 and $4,497 contributed by the Company under its 401(k) plan
in 1996, 1995 and 1994, respectively.

(3) These amounts represent the annual contribution made by the Company under
its 401(k) plan in the respective year.

41
<PAGE> 42

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth options granted to the Named Executive
Officers during fiscal 1996:

POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
---------------------------------------------------- -------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ------------ ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Leonard Chill................... 34,875 17.8% $ 10.72 12/09/05 $235,058 $595,665
Ralph Kenner.................... 20,458 10.4 10.72 12/09/05 137,887 349,423
William Gardner Wright, Jr. .... 20,458 10.4 10.72 12/09/05 137,887 349,423
Robert J. Breyley............... -- -- -- -- -- --
W. Wayne Freed.................. 20,458 10.4 10.72 12/09/05 137,887 349,423
</TABLE>

- ---------------

(1) These gains are based on arbitrary compounded rates of growth of stock
prices mandated by the Securities and Exchange Commission of 5% and 10% per
year from the date the option was granted over the full option term. These
rates do not represent the Company's estimate or projection of future prices
of the Common Stock. There is no assurance that the values that may be
realized by any Named Executive Officer upon exercise of his options will be
at or near the value estimated in the foregoing table.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

The following table sets forth option exercises by and the value of the
in-the-money unexercised options held at September 30, 1996:

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FY-END(1) AT FY-END(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leonard Chill................ -- -- 27,602 117,680 $ 62,933 $ 268,310
Ralph Kenner................. -- -- 8,353 45,518 19,045 103,781
William Gardner Wright,
Jr. ....................... -- -- 8,353 45,518 19,045 103,781
Robert J. Breyley............ -- -- 2,421 7,264 5,520 16,562
W. Wayne Freed............... -- -- 8,353 45,518 19,045 103,781
</TABLE>

- ---------------

(1) Any shares of Common Stock received upon the exercise of options will be
subject to "lock-up" agreements with the Underwriters. See "Shares Eligible
for Future Sale".

(2) Based on the initial public offering price ($13.00 per share) less the
exercise price ($10.72 per share) payable for such shares.

EMPLOYMENT AGREEMENTS

Each of Messrs. Chill, Freed, Kenner and Wright (the "Executives") are
employed by the Company pursuant to individual employment agreements effective
as of September 6, 1996 (the "Effective Date"). The term of employment under
these agreements is three years from the Effective Date; provided that on each
anniversary of the month following the first Effective Date, and each successive
month, the term is automatically extended for one successive month, providing a
minimum remaining term of two years, unless either party terminates the
agreement by written notice. The current annual salaries for Messrs. Chill,
Freed, Kenner and Wright pursuant to these agreements are $270,163, $161,544,
$154,731 and $249,803, respectively, and are subject to annual review by the
Board.

42
<PAGE> 43

The Company has the right to terminate the Executive's employment for
"cause" or "without cause", in each case as defined in the applicable employment
agreement. In the event that an Executive is terminated by the Company "without
cause," other than following a "Change in Control" (as defined below), the
Executive is entitled to receive his base salary at the rate in effect on the
date of termination of employment for a period of two years from the date of
termination, any unpaid, accrued amounts under the annual incentive plan, a pro
rata payment under the annual incentive plan for the termination year, a payment
equal to the three year average of incentive payments received under the
Company's annual incentive plan and any stock option rights due through the end
of the term. Under each employment agreement, a Change in Control occurs when
(i) any person or group becomes the beneficial owner of capital stock of the
Company representing 35% of all the voting stock, (ii) the members of the Board
on the Effective Date cease to constitute a majority of the Board, or (iii) the
Company combines with another entity and a person holds more than 35% of the
voting stock of the Company or the Company's directors, as of the date
immediately before such combination, constitute less than a majority of the
board of directors of the combined entity.

If the Executive is terminated by the Company "without cause" prior to the
occurrence of a Change in Control and it can be shown such termination occurred
in connection with, prior to or in anticipation of the Change in Control, or if
the termination resulted from a Change in Control, the Executive is entitled to
(i) a lump sum payment equal to two times the Executive's annual base salary and
annual incentive plan for the year in which the Change in Control occurs or the
prior year, whichever is greater, (ii) unpaid, accrued amounts under the annual
incentive plan and a payment that equals the average of the incentive payment
received by the Executive under the annual incentive plan for the immediately
preceding three years and (iii) certain other supplemental insurance coverages,
for a maximum of 18 months (the "Change in Control Provision"). In the event of
a Change in Control, whether or not the Executive's employment continues with
the Company, all options granted to such Executive under any of the Management
Plans (as defined below) shall vest immediately on the date of the Change in
Control.

In the event that an Executive's employment is terminated for disability or
death, the Executive (or his estate) is to be paid (a) his base salary at the
rate in effect on the date of termination until the earlier of six months from
the date of termination or the date of commencement of long term disability
payments, if applicable, and (b) any unpaid, accrued amounts under the annual
incentive plan, and will receive any stock option rights to which such Executive
would otherwise be entitled. In the case of termination by reason of death, the
executive is also entitled to a payment under the annual incentive plan equal to
the pro rata amount due for the termination year.

OPTION PLANS

The Company's 1994 Stock Option Plan (the "1994 Plan") was adopted by the
Board upon the recommendations of a special committee consisting of Messrs.
Seidler, Shortt and Voigt, and approved by the Company's sole stockholder during
the fourth quarter of fiscal 1994. The Company's 1996 Stock Option Plan (the
"1996 Plan") was similarly adopted on May 15, 1996, as amended as of July 31,
1996.

Under the 1994 Plan and 1996 Plan (collectively, the "Management Plans")
incentive stock options ("ISOs"), as provided in Section 422A of the Internal
Revenue Code, and non-qualified stock options may be granted to any full-time
employee of the Company or its subsidiaries. The maximum aggregate number of
shares of Common Stock that may be issued under the 1994 Plan and 1996 Plan is
491,413 and 289,062, respectively. As of June 30, 1996, options to purchase an
aggregate of 491,413 shares of Common Stock had been granted under the 1994
Plan. Of such amount, Messrs. Chill, Wright, Freed, Kenner and other key
managers hold options to purchase 145,282, 53,871, 53,871, 53,871 and 130,648
shares of Common Stock, respectively. Mr. Beckman holds options for 53,870
common shares. As of June 30, 1996, the only options granted under the 1996 Plan
were options to purchase 21,723 shares of Common Stock granted to Mr. Sinicropi.
Options may not be granted under the Management Plans after August 28, 2004. See
"Principal Stockholders".

The purchase price of the shares of Common Stock subject to options under
the Management Plans must be no less than the fair market value of the Common
Stock at the date of grant, as determined by the

43
<PAGE> 44

Committee; provided, however, that the purchase price of shares of Common Stock
subject to ISOs granted to any optionee who owns shares possessing more than 10%
of the combined voting power of the Company or any parent or subsidiary of the
Company ("Ten Percent Stockholder") must not be less than 110% of the fair
market value of the Common Stock at the date of the grant. The maximum term of
an option may not exceed ten years from the date of grant, except with respect
to ISOs granted to Ten Percent Stockholders which must expire within five years
of the date of grant.

The Management Plans are administered by the Company's Compensation
Committee. Subject to the express provisions of the Management Plans, the
Compensation Committee has the discretion and authority to determine to whom
from among the eligible employees an option may be granted, the time or times at
which each option may be exercised, the number of shares of Common Stock subject
to each option and the terms and conditions of each stock option agreement
issued pursuant to the Management Plans; provided, however, that shares of
Common Stock subject to any such agreement shall vest and become exercisable at
a minimum rate of 25% per year over a four-year period.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 1995 and the nine months ended June 30, 1996, the Company
paid legal fees totaling approximately $135,000 and $93,000 to the law firm of
Watson & Dana. Mr. Dana, a director of the Company and a member of the
Compensation Committee, is a member of Watson & Dana.

44
<PAGE> 45

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of October 1, 1996 and as adjusted
to reflect the sale of the Shares offered hereby by : (i) each stockholder known
by the Company to own beneficially 5% or more of the outstanding shares of
Common Stock; (ii) each director of the Company; (iii) each of the Named
Executive Officers; and (iv) all executive officers and directors of the Company
as a group. Unless otherwise indicated, the address for each officer, director
and 5% stockholder is c/o Synthetic Industries, Inc., 309 LaFayette Road,
Chickamauga, Georgia 30707.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING AFTER OFFERING
-------------------------- NUMBER OF SHARES ---------------------
NAME NUMBER PERCENT BEING OFFERED NUMBER PERCENT
---- --------- ------- ---------------- --------- -------
<S> <C> <C> <C> <C> <C>
5% STOCKHOLDER:
Synthetic Industries, L.P. ............ 5,781,250 100% -- 5,781,250(1) 68.2%
NAMED EXECUTIVE OFFICERS:
Leonard Chill.......................... 37,234(2)(3)(4) * -- 37,234 *
W. Wayne Freed......................... 17,985(2)(3)(4) * -- 17,985 *
William Gardner Wright, Jr............. 17,985(2)(3)(4) * -- 17,985 *
Ralph Kenner........................... 17,985(2)(3)(4) * -- 17,985 *
Robert J. Breyley...................... 3,051(3)(5) * -- 3,051 *
DIRECTORS:
Joseph F. Dana......................... 28,906(3) * -- 28,906 *
Lee J. Seidler......................... 57,813(3) * -- 57,813 *
William J. Shortt...................... 19,271(3) * -- 19,271 *
Robert L. Voigt........................ 19,271(3) * -- 19,271 *
All executive officers and
directors as a group
(14 persons)(4)(5)(6)................ 226,159 3.78% -- 226,159 2.67%
</TABLE>

- ---------------

* Less than 1.0%.

(1) Under certain conditions the Partnership has the right to cause the
Company to register the sale of its shares of Common Stock. See "Risk
Factors -- Control by Certain Stockholders".

(2) Includes 9,632 shares as to which such person may be deemed to have
beneficial ownership as a result of his indirect beneficial ownership
of 0.1666% of a partnership interest in the Partnership.

(3) Includes shares of Common Stock subject to options exercisable within
60 days, as follows: Leonard Chill -- 27,602 shares; W. Wayne
Freed -- 8,353 shares; William Gardner Wright, Jr. -- 8,353 shares;
Ralph Kenner -- 8,353 shares; Robert J. Breyley -- 2,421 shares; Joseph
F. Dana -- 28,906 shares; Lee J. Seidler -- 57,813 shares; William J.
Shortt -- 19,271 shares; Robert L. Voigt -- 19,271 shares.

(4) Does not include 5,781,250 shares (other than the 9,632 Shares
described in footnote 2 above) as to which Messrs. Chill, Wright,
Kenner and Freed may be deemed to have beneficial ownership by virtue
of their indirect control of the Partnership. See "Certain
Relationships and Related Transactions".

(5) Includes 630 shares as to which Mr. Breyley may be deemed to have
beneficial ownership as a result of his indirect beneficial ownership
of 0.0109% of a partnership interest in the Partnership.

(6) Does not include (i) an aggregate of 17,433 shares of Common Stock
subject to options exercisable within 60 days that are owned by
employees of the Company other than the executive officers and (ii) an
aggregate of 433,963 shares of Common Stock subject to options that are
not exercisable within 60 days that are owned by directors, officers
and employees of the Company. Includes an aggregate of 38,528 shares as
to which Messrs. Chill, Wright, Kenner and Freed may be deemed to have
beneficial ownership as a result of their indirect beneficial ownership
of 0.1666% each of a partnership interest in the Partnership.

45
<PAGE> 46

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As of June 30, 1996, all of the issued and outstanding Common Stock was
owned by the Partnership. See "Principal Stockholders". SI Management L.P. (the
"General Partner") is the sole general partner of the Partnership. Synthetic
Management G.P. is the sole general partner of SI Management L.P. By virtue of
these relationships, Synthetic Management G.P. controls the management and
affairs of the Partnership and, therefore, the Company. After the Offering, the
Partnership will own 5,781,250 shares of Common Stock, or approximately 70% of
the issued and outstanding shares of Common Stock, and will therefore hold the
voting power to determine the outcome of all matters upon which stockholders
vote.

The general partners of Synthetic Management G.P. are the following five
Delaware corporations: Chill Investments, Inc., Beckman Investments, Inc., Freed
Investments, Inc., Kenner Investments, Inc. and W.G. Wright Investments, Inc.
Each of Messrs. Chill, Beckman, Freed, Kenner and Wright is the sole director
and the sole stockholder of one of Synthetic Management G.P.'s general partners.
For further information concerning Messrs. Chill, Beckman, Freed, Kenner and
Wright, see "Management -- Executive Officers and Directors of the Company" and
"-- Executive Compensation".

The Company and the Partnership have entered into a Registration Rights
Agreement pursuant to which the Company has agreed that upon request of the
Partnership the Company will register under the Securities Act and applicable
state securities laws the sale of the Common Stock owned by the Partnership and
as to which registration has been requested. The Company's obligation is subject
to certain limitations relating to a minimum amount required for registration,
the timing of a registration and other similar matters. The Company is obligated
to pay any registration expenses incidental to such registration, excluding
underwriters' commissions and discounts. The above description is qualified in
its entirety by reference to the Registration Rights Agreement, a copy of which
has been filed as an exhibit to the Registration Statement in the form executed
or substantially in the form to be executed. The Partnership, however, is
subject to a lock-up agreement with the Underwriters pursuant to which the
Partnership has agreed not to offer, sell, agree to sell, grant any option for
the sale of or otherwise dispose of, directly or indirectly, any shares of
Common Stock (or any security convertible into, exercisable for or exchangeable
for Common Stock) without the consent of Bear, Stearns & Co. Inc. for a period
of 270 days after the date of this Prospectus, and thereafter, until December
31, 1997, only pursuant to an underwritten public offering. See "Shares Eligible
for Future Sale".

The General Partner has received a series of letters from a law firm
purporting to represent a number of the limited partners of the Partnership who
hold a minority interest therein. This law firm alleges, among other things,
that the Offering is unfair to the limited partners, and by failing to stop the
Company from issuing shares of its Common Stock in the Offering the General
Partner is breaching its fiduciary duty to the limited partners. The law firm
further has threatened to commence litigation against the General Partner
relating to the Offering and undertake a proxy contest to replace the General
Partner. Several members of the Company's senior management are control persons
of the General Partner. The General Partner has informed the Company that it
believes the allegations made by this law firm are without merit and that a
proxy contest to replace the General Partner would not be successful.

Lee J. Seidler, a director of the Company, is presently associated with
Bear, Stearns & Co. Inc. as Managing Director Emeritus and from time to time
receives fees in connection with consulting and referral services to Bear,
Stearns & Co. Inc.

Jon P. Beckman, a former executive officer of the Company and an affiliate
of the General Partner, is being retained as a consultant to the Company.
Pursuant to his consulting agreement with the Company, Mr. Beckman will receive,
until January 31, 2000, or upon earlier termination of his consulting agreement,
$125,000 per year and various insurance coverages, and will be authorized to
exercise all stock options awarded to him, subject to applicable vesting
provisions. Under this agreement, Mr. Beckman is required to provide the Company
with 20 hours of consultation per month, has released the Company from any
liability resulting from his employment and has also agreed not to compete
against the Company.

46
<PAGE> 47

The Company leases office space under a five-year lease with William
Gardner Wright, Jr., one of the Company's executive officers. The term of the
lease expires on September 30, 1998 and the rent is approximately $4,000 per
month, which the Company believes is within prevailing market rates.

Pursuant to a licensing agreement with the Company, W. Wayne Freed, an
executive officer of the Company, receives royalties related to the manufacture
and sale of a certain product for which Mr. Freed owns all of the U.S. and
foreign patents. Under this agreement, Mr. Freed received royalties of $3,079
and $12,269 in fiscal 1995 and 1996, respectively, and will continue to receive
such royalties until 2012 or the earlier termination of the licensing agreement.

See also the information and the transactions described under
"Management -- Compensation Committee Interlocks and Insider Participation".

47
<PAGE> 48

DESCRIPTION OF CERTAIN INDEBTEDNESS

THE CREDIT FACILITY

On October 20, 1995, as subsequently amended, the Company entered into the
Credit Facility with the Lenders and The First National Bank of Boston, as
agent. The Credit Facility provides for a revolving credit line, a term loan
facility and a letter of credit facility pursuant to which the Company may
borrow up to an aggregate of $85 million.

At June 30, 1996, $45 million was borrowed under the term loan facility and
approximately $13.0 million was outstanding under the revolving credit loan
portion of the Credit Facility (the "Revolver") and approximately $25.7 million
was available for additional borrowing thereunder. The Revolver provides for
availability based on a borrowing formula consisting of 85% of eligible
receivables and 50% of eligible inventory, subject to certain limitations. The
entire amount outstanding under the Revolver matures on October 1, 2001. Of the
$45 million due under the term loan, $10 million is payable in 1999 and $17.5
million is payable in each of 2000 and 2001.

The Credit Facility permits borrowings which bear interest, at the
Company's option, (i) for domestic borrowings, based on the lender's base rate
plus 0.75% or 1.00% for revolver or term loan advances, respectively (9.0% to
9.25% at June 30, 1996) or (ii) for Eurodollar borrowings, based on the
Interbank Eurodollar rate at the time of conversion plus 2.75% or 2.50% for
revolver or term loan advances, respectively (8.19% to 7.94% at June 30, 1996).

The Credit Facility provides for borrowings under a letter of credit
facility up to $3 million, which borrowings reduce amounts available under the
Revolver. As of June 30, 1996, approximately $1.3 million was outstanding under
the letter of credit facility.

The Credit Facility contains a number of covenants, including, among
others, covenants restricting the Company and its subsidiaries with respect to
the incurrence of indebtedness, limitations on sales of substantial assets,
mergers or consolidations and capital expenditures. The Company is also required
to comply with certain financial tests and maintain certain financial ratios.
Additionally, the Credit Facility and the Debentures contain restrictions on the
Company's ability to declare and pay dividends. Based on such restrictions and
financial covenants, the Company was prohibited from paying dividends at June
30, 1996.

THE DEBENTURES

On December 14, 1992, the Company issued the Debentures, which represent
unsecured obligations of the Company. The Debentures are redeemable at the
option of the Company at any time on or after December 1, 1997, initially at
106.375% of their principal amount, together with accrued interest, with
declining redemption prices thereafter. Interest on the Debentures is payable
semi-annually on June 1 and December 1.

48
<PAGE> 49

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company currently consists of 5,000
shares of Common Stock, par value $1.00 per share, of which 49.95 Shares are
issued and outstanding. All of the issued and outstanding shares of Common Stock
are owned by the Partnership. Immediately prior to the Offering, the Company's
Certificate of Incorporation (the "Certificate of Incorporation"), as amended in
December 1994, will be amended and restated to increase the authorized capital
stock of the Company to 25,000,000 shares of Common Stock and the Stock Split
will occur which will increase the number of shares of Common Stock issued and
outstanding to 5,781,250 shares. The information below assumes that the
amendment of the Certificate of Incorporation and the Stock Split have occurred.

COMMON STOCK

Each share of Common Stock is entitled to share equally in dividends if,
as, and when declared by the Board and, upon liquidation or dissolution of the
Company, whether voluntary or involuntary, to share equally in the assets of the
Company available for distribution to the holders of the Common Stock. Each
holder of Common Stock is entitled to one vote per share for all purposes. The
holders of Common Stock have no preemptive rights and there is no cumulative
voting, redemption right or right of conversion with respect to the Common
Stock. All outstanding shares of Common Stock and all shares to be sold and
issued by the Company pursuant to the Offering will be fully paid and
nonassessable. The Board is authorized to issue additional shares of Common
Stock within the limits authorized by the Certificate of Incorporation and
without stockholder action.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Certificate of Incorporation contains provisions to indemnify the
Company's directors and officers to the fullest extent permitted by the Delaware
General Corporation Law (the "DGCL"), including payment in advance of a final
disposition of a director's or officers' expenses and attorneys' fees incurred
in defending any action, suit or proceeding. The Company believes that these
provisions will assist the Company in attracting and retaining qualified
individuals to serve as directors.

CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION

The Certificate of Incorporation requires that any action required or
permitted to be taken by the Company's stockholders must be effected at a duly
called annual or special meeting of stockholders and may not be effected by
consent in writing. The provisions requiring stockholders to take action only at
a duly called annual or special meeting may be amended, altered or repealed only
upon the affirmative vote of the holders of at least 66 2/3% of the outstanding
shares of voting stock of the Company.

SECTION 203 OF THE DGCL

Generally, Section 203 of the DGCL prohibits certain Delaware corporations
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the time of the transaction in which the person
became an interested stockholder, unless (i) prior to the time the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder, (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owns
at least 85% of the outstanding voting stock, or (iii) at or after such time the
business combination is approved by the board of directors and by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder. A "business combination" includes
mergers, asset sales and other transactions resulting in a financial benefit to
the interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within three years, did own) 15% or more of the corporation's voting stock. A
Delaware corporation may "opt out" from the application of Section 203 of the
DGCL through a provision in its certificate of incorporation or by-laws. The
Company has

49
<PAGE> 50

not opted out of Section 203 of the DGCL and thus is subject to this provision
which could render more difficult or discourage a merger, tender offer or other
similar transaction.

REGISTRATION RIGHTS

The Company and the Partnership have entered into a Registration Rights
Agreement pursuant to which the Company has agreed that upon request of the
Partnership the Company will register under the Securities Act and applicable
state securities laws the sale of the Common Stock owned by the Partnership and
as to which registration has been requested. The Company's obligation is subject
to certain limitations relating to a minimum amount required for registration,
the timing of a registration and other similar matters. The Company is obligated
to pay any registration expenses incidental to such registration, excluding
underwriters' commissions and discounts. The above description is qualified in
its entirety by reference to the Registration Rights Agreement, a copy of which
has been filed as an exhibit to the Registration Statement in the form executed
or substantially in the form to be executed. The Partnership, however, is
subject to a lock-up agreement with the Underwriters pursuant to which the
Partnership has agreed not to offer, sell, agree to sell, grant any option for
the sale of or otherwise dispose of, directly or indirectly, any shares of
Common Stock (or any security convertible into, exercisable for or exchangeable
for Common Stock) without the consent of Bear, Stearns & Co. Inc. for a period
of 270 days after the date of this Prospectus, and thereafter, until December 1,
1997, only pursuant to an underwritten public offering. See "Shares Eligible for
Future Sale".

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is The First National
Bank of Boston.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
8,281,250 shares of Common Stock. Of these shares, the 2,500,000 shares of
Common Stock sold in the Offering will be freely tradeable without restriction
or further registration under the Securities Act, except for any shares owned by
an "affiliate" of the Company, which will be subject to the limitations of Rule
144 under the Securities Act ("Rule 144").

The shares of Common Stock issued and outstanding prior to the Offering
were acquired by the Partnership without registration under the Securities Act
in reliance upon exemptions from registration and are "restricted securities"
for purposes of the Securities Act. These shares may not be sold unless their
offer and sale are registered under the Securities Act or unless an exemption
from registration, such as the exemption provided by Rule 144 under the
Securities Act, is available. Each of the Company, its executive officers,
senior management and directors and the Partnership have entered into certain
"lock-up" agreements with the Underwriters with respect to the sale of shares of
Common Stock. Under these "lock-up" agreements, (i) the Company has agreed not
to offer, sell, agree to sell, grant any option for the sale of or otherwise
dispose of, directly or indirectly, any shares of Common Stock (or any security
convertible into, exercisable for or exchangeable for Common Stock) without the
consent of Bear, Stearns & Co. Inc. for a period of 270 days after the date of
this Prospectus, and (ii) the Partnership and the executive officers, senior
management and directors of the Company have agreed not to offer, sell, agree to
sell, grant any option for the sale of or otherwise dispose of, directly or
indirectly, any shares of Common Stock (or any security convertible into,
exercisable for or exchangeable for Common Stock) without the consent of Bear,
Stearns & Co. Inc. for a period of 270 days after the date of this Prospectus,
and thereafter, until December 31, 1997, only pursuant to an underwritten public
offering, except with respect to transfers made by officers, senior managers or
directors as gifts, provided that the donee agrees to be bound by the foregoing
restrictions, and except that the Company may issue shares of Common Stock upon
the exercise of options granted under its stock option plans. After the
expiration of the "lock-up" agreements, such persons will be entitled to sell,
distribute or otherwise dispose of the Common Stock that they hold subject to
the provisions of applicable securities laws.

Executive officers and directors of the Company are generally permitted to
sell Common Stock in accordance with Rule 144. In general, under Rule 144 as
currently in effect, a person (or persons whose shares

50
<PAGE> 51

are aggregated) who has beneficially owned his or her restricted securities (as
that term is defined in Rule 144) for at least two years from the date such
securities were acquired from the Company or an affiliate of the Company is
entitled to sell within any three-month period a number of shares that does not
exceed the greater of (i) one percent of the then outstanding shares of Common
Stock and (ii) the average weekly trading volume of the Common Stock during the
four calendar weeks preceding a sale by such person. Sales under Rule 144 are
also subject to certain manner-of-sale provisions, notice requirements and the
availability of current public information about the Company. Under Rule 144,
however, a person who has held shares for a minimum of three years from the
later of the date such securities were acquired from the Company or an affiliate
of the Company and who is not, and for the three months prior to the sale of
such shares has not been, an affiliate of the Company, is free to sell such
shares without regard to the volume, manner-of-sale and certain other
limitations contained in Rule 144.

Following expiration of the applicable "lock-up" agreements with the
Underwriters described above, all outstanding shares of Common Stock held by the
Partnership or the Company's officers and directors will be immediately eligible
for sale, subject to applicable volume limitations and other provisions of Rule
144.

The Partnership also has the benefit of a Registration Rights Agreement
which provides the Partnership with certain rights to registration under the
Securities Act, subject to certain conditions. See "Description of Capital
Stock -- Registration Rights".

There can be no certainty as to the effect, if any, that market sales of
shares of Common Stock or the availability of such shares for sale will have on
the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of Common Stock in the public market may have an adverse
impact on the market for the Shares.

51
<PAGE> 52

UNDERWRITING

The Underwriters named below (the "Underwriters"), for whom Bear, Stearns &
Co. Inc. and Furman Selz LLC are acting as Representatives (the
"Representatives"), have severally agreed, subject to the terms and conditions
of the Underwriting Agreement, to purchase from the Company the aggregate number
of shares of Common Stock set forth opposite their names below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES TO BE
UNDERWRITERS PURCHASED
------------ ------------
<S> <C>
Bear, Stearns & Co. Inc. ........................................ 737,500
Furman Selz LLC.................................................. 737,500
Alex. Brown & Sons Incorporated.................................. 50,000
Cowen & Company.................................................. 50,000
Dean Witter Reynolds Inc. ....................................... 50,000
Donaldson, Lufkin & Jenrette Securities Corporation.............. 50,000
EVEREN Securities, Inc. ......................................... 50,000
Goldman, Sachs & Co. ............................................ 50,000
Lazard Freres & Co. LLC.......................................... 50,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated............... 50,000
Morgan Stanley & Co. Incorporated................................ 50,000
PaineWebber Incorporated......................................... 50,000
Prudential Securities Incorporated............................... 50,000
Salomon Brothers Inc ............................................ 50,000
Schroder Wertheim & Co. Incorporated............................. 50,000
Wasserstein Perella Securities, Inc. ............................ 50,000
Robert W. Baird & Co. Incorporated............................... 25,000
William Blair & Company, L.L.C. ................................. 25,000
J.C. Bradford & Co. ............................................. 25,000
Brean Murray & Co., Inc. ........................................ 25,000
Interstate/Johnson Lane Corporation.............................. 25,000
Johnson Rice & Company L.L.C. ................................... 25,000
Josephthal Lyon & Ross Incorporated.............................. 25,000
McDonald & Company Securities, Inc. ............................. 25,000
Needham & Company, Inc. ......................................... 25,000
Parker/Hunter Incorporated....................................... 25,000
Raymond James & Associates, Inc. ................................ 25,000
The Robinson-Humphrey Company, Inc. ............................. 25,000
Scott & Stringfellow, Inc. ...................................... 25,000
---------
Total.................................................. 2,500,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters thereunder are subject to approval of certain legal matters by
their counsel and to various other conditions. The nature of the obligations of
the Underwriters is such that they are committed to purchase all of the shares
of Common Stock offered hereby if any are purchased.

The Representatives have advised the Company that the Underwriters propose
initially to offer the shares of Common Stock offered hereby directly to the
public at the public offering price set forth on the cover page of this
Prospectus. The Underwriters may allow a selected dealer concession of not more
than $0.55 per share, and the Underwriters may allow, and such dealers may
reallow, concessions not in excess of $0.10 per share to certain other dealers.
After the initial public offering, the public offering price and concessions and
reallowances to dealers may be changed by the Representatives.

52
<PAGE> 53

The Company has granted an option to the Underwriters, exercisable at any
time during the 30-day period after the date of this Prospectus, to purchase
from the Company up to an additional 375,000 shares of Common Stock at the
public offering price set forth on the cover page of this Prospectus, less the
underwriting discount. The Underwriters may exercise such option solely for the
purpose of covering over-allotments, if any, made in connection with the sale of
the shares of Common Stock offered hereby. To the extent that the Underwriters
exercise this option, each Underwriter will be committed, subject to certain
conditions, to purchase a number of the additional shares of Common Stock
proportionate to such Underwriter's purchase obligations set forth in the
foregoing table.

The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, or will contribute to payments the Underwriters may
be required to make in respect thereof.

Each of the Company, its executive officers, senior management and
directors and the Partnership have entered into certain "lock-up" agreements
with the Underwriters with respect to the sale of shares of Common Stock. Under
these "lock-up" agreements, (i) the Company has agreed not to offer, sell, agree
to sell, grant any option for the sale of or otherwise dispose of, directly or
indirectly, any shares of Common Stock (or any security convertible into,
exercisable for or exchangeable for Common Stock) without the consent of Bear,
Stearns & Co. Inc. for a period of 270 days after the date of this Prospectus,
and (ii) the Partnership and the executive officers, senior management and
directors of the Company have agreed not to offer, sell, agree to sell, grant
any option for the sale of or otherwise dispose of, directly or indirectly, any
shares of Common Stock (or any security convertible into, exercisable for or
exchangeable for Common Stock) without the consent of Bear, Stearns & Co. Inc.
for a period of 270 days after the date of this Prospectus, and thereafter,
until December 31, 1997, only pursuant to an underwritten public offering,
except with respect to transfers made by officers, senior managers or directors
as gifts, provided that the donee agrees to be bound by the foregoing
restrictions, and except that the Company may issue shares of Common Stock upon
the exercise of options granted under its stock option plans. After the
expiration of the "lock-up" agreements, such persons will be entitled to sell,
distribute or otherwise dispose of the Common Stock that they hold subject to
the provisions of applicable securities laws.

The Representatives have advised the Company that the Underwriters do not
expect to confirm sales to discretionary accounts.

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price has been determined by negotiation
between the Company and the Representatives. Among the factors which were
considered in such negotiations are the Company's history, capital structure and
financial condition, its past and present earnings and the trend of such
earnings, prospects for the Company and its industry, the present state of the
Company's development, the recent market prices of publicly-held companies that
the Company and the Representatives believe to be comparable to the Company and
general conditions prevailing in the securities markets at the time of this
Offering.

LEGAL MATTERS

Certain legal matters with respect to the validity of the Shares are being
passed upon for the Company by Andrews & Kurth L.L.P., New York, New York. Paul,
Hastings, Janofsky & Walker LLP (a limited liability partnership including
professional corporations), New York, New York, has acted as counsel to the
Underwriters in connection with the Offering.

EXPERTS

The Consolidated Financial Statements as of September 30, 1995 and 1994 and
for each of the three fiscal years in the period ended September 30, 1995,
appearing in this Prospectus and Registration Statement have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports thereon
appearing herein and elsewhere in the Registration Statement, and have been so
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.

53
<PAGE> 54

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission. Such reports, proxy statements and other information as filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and the following Regional Offices of the Commission: Northeast
Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048, and
Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, such reports, proxy statements and other
information may be electronically accessed at the Commission's site on the World
Wide Web located at http://www.sec.gov. Such reports, proxy statements and other
information concerning the Company may also be inspected at the offices of the
Nasdaq National Market, 1735 K Street, N.W., Washington, D.C. 20006.

The Company has filed with the Commission a Registration Statement on Form
S-1, of which this Prospectus forms a part (together with any amendments
thereto, the "Registration Statement"), under the Securities Act in respect of
the Shares offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus omits certain information, exhibits and undertakings
contained in the Registration Statement. Such additional information, exhibits
and undertakings may be inspected at and obtained from the Commission's
principal office in Washington, D.C. Statements contained herein concerning the
provisions of documents are necessarily summaries of such documents, and each
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.

54
<PAGE> 55

SYNTHETIC INDUSTRIES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS:

(1) Consolidated Financial Statements as of September 30, 1994 and 1995 and for
each of the three years in the period ended September 30, 1995.

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report..................................................... F-2
Consolidated Balance Sheets...................................................... F-3
Consolidated Statements of Operations............................................ F-4
Consolidated Statements of Changes in Stockholder's Equity....................... F-5
Consolidated Statements of Cash Flows............................................ F-6
Notes to Consolidated Financial Statements....................................... F-7
</TABLE>

(2) Unaudited Consolidated Financial Statements as of June 30, 1995 and 1996
and for the three and nine month periods then ended.

<TABLE>
<S> <C>
Consolidated Balance Sheets...................................................... F-16
Consolidated Statements of Operations............................................ F-17
Consolidated Statements of Cash Flows............................................ F-18
Notes to Consolidated Financial Statements....................................... F-19
</TABLE>

F-1
<PAGE> 56

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholder
Synthetic Industries, Inc.
Chickamauga, Georgia

We have audited the accompanying consolidated balance sheets of Synthetic
Industries, Inc. (a wholly owned subsidiary of Synthetic Industries, L.P.) and
its subsidiaries as of September 30, 1994 and 1995, and the related consolidated
statements of operations, changes in stockholder's equity and cash flows for
each of the three years in the period ended September 30, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Synthetic Industries, Inc. and
subsidiaries at September 30, 1994 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended September
30, 1995 in conformity with generally accepted accounting principles.

As discussed in Note 11 to the consolidated financial statements, the
Company changed its method of accounting for income taxes during the year ended
September 30, 1993.

DELOITTE & TOUCHE LLP

New York, New York
November 17, 1995 (September 20, 1996 as to Notes 10.c. and 15)

F-2
<PAGE> 57

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------
ASSETS 1994 1995
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash................................................................. $ 117 $ 108
Accounts receivable, net (Note 3).................................... 39,094 47,947
Inventory (Note 4)................................................... 32,520 45,597
Other current assets (Note 5)........................................ 10,859 14,708
-------- --------
TOTAL CURRENT ASSETS......................................... 82,590 108,360
PROPERTY, PLANT AND EQUIPMENT, net (Note 6)............................ 115,050 116,729
OTHER ASSETS (Note 7).................................................. 90,293 87,211
-------- --------
$287,933 $312,300
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable..................................................... $ 18,767 $ 24,021
Accrued expenses and other current liabilities....................... 6,944 7,378
Income taxes payable (Note 11)....................................... 482 1,455
Interest payable..................................................... 6,247 6,427
Current maturities of long-term debt (Note 8)........................ 6,036 40
-------- --------
TOTAL CURRENT LIABILITIES.................................... 38,476 39,321
LONG-TERM DEBT (Note 8)................................................ 172,490 192,048
DEFERRED INCOME TAXES (Note 11)........................................ 21,150 23,175
COMMITMENTS AND CONTINGENCIES (Notes 10 and 11)
STOCKHOLDER'S EQUITY (Notes 14 and 15):
Common stock......................................................... -- --
Additional paid-in capital........................................... 69,300 69,300
Cumulative translation adjustments................................... 26 29
Deficit.............................................................. (13,509) (11,573)
-------- --------
TOTAL STOCKHOLDER'S EQUITY................................... 55,817 57,756
-------- --------
$287,933 $312,300
======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

F-3
<PAGE> 58

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
---------------------------------
1993 1994 1995
-------- -------- ---------
<S> <C> <C> <C>
Net sales.................................................... $210,516 $234,977 $ 271,427
-------- -------- ---------
Costs and expenses:
Costs of sales............................................. 142,181 152,305 194,706
Selling expenses........................................... 19,395 21,815 24,273
General and administrative expenses........................ 16,404 17,588 21,195
Amortization of excess of purchase price over net assets
acquired and other intangibles.......................... 2,615 2,499 2,566
-------- -------- ---------
180,595 194,207 242,740
-------- -------- ---------
Operating income........................................ 29,921 40,770 28,687
-------- -------- ---------
Other expenses:
Interest expense........................................... 20,854 20,011 22,514
Amortization of deferred financing costs................... 933 739 737
-------- -------- ---------
21,787 20,750 23,251
-------- -------- ---------
Income from continuing operations before provision for income
taxes...................................................... 8,134 20,020 5,436
Provision for income taxes (Note 11)......................... 4,472 8,600 3,500
-------- -------- ---------
Income from continuing operations............................ 3,662 11,420 1,936
Reversal of provision for discontinued operations (Note
12)........................................................ 1,420 -- --
-------- -------- ---------
Income before extraordinary item and cumulative effect of
change in accounting principle............................. 5,082 11,420 1,936
Extraordinary item -- loss from early extinguishment of debt
(Note 9)................................................... (8,892) -- --
Cumulative effect on prior years of change in accounting for
income taxes (Note 11)..................................... (8,500) -- --
-------- -------- ---------
NET INCOME (LOSS)............................................ $(12,310) $ 11,420 $ 1,936
======== ======== =========
Pro Forma Financial Data (Unaudited):
Pro forma net income....................................... $ 3,566
=========
Weighted average shares outstanding used in computing pro
forma net income per share.............................. 8,430,501
=========
Pro forma net income per share............................. $ 0.42
=========
</TABLE>

See Notes to Consolidated Financial Statements.

F-4
<PAGE> 59

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE
COMMON PAID-IN TRANSLATION
STOCK CAPITAL ADJUSTMENTS DEFICIT TOTAL
------ ---------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance, October 1, 1992................. $ -- $ 69,300 $ 19 $(12,619) $ 56,700
Net loss................................. -- -- -- (12,310) (12,310)
Foreign currency translation............. -- -- 33 -- 33
---- ------- ---- -------- --------
Balance, September 30, 1993.............. -- 69,300 52 (24,929) 44,423
Net income............................... -- -- -- 11,420 11,420
Foreign currency translation............. -- -- (26) -- (26)
---- ------- ---- -------- --------
Balance, September 30, 1994 -- 69,300 26 (13,509) 55,817
Net income............................... -- -- -- 1,936 1,936
Foreign currency translation............. -- -- 3 -- 3
---- ------- ---- -------- --------
Balance, September 30, 1995.............. $ -- $ 69,300 $ 29 $(11,573) $ 57,756
==== ======= ==== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

F-5
<PAGE> 60

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
---------------------------------
1993 1994 1995
--------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before extraordinary item and cumulative effect of
change in accounting principle......................... $ 5,082 $ 11,420 $ 1,936
Adjustments to reconcile net income to net cash provided
by operations:
Depreciation......................................... 8,515 9,152 11,634
Amortization of intangibles and deferred financing
costs............................................. 3,558 3,238 3,303
Deferred income taxes................................ 5,489 3,830 (355)
Provision for bad debts.............................. 383 217 3,363
Loss on disposal of equipment........................ 751 266 --
Reversal of provision for loss on disposal of
discontinued operations (net of tax).............. (1,420) -- --
Changes in assets and liabilities:
Increase in accounts receivable...................... (5,335) (2,861) (12,212)
Decrease (increase) in inventory..................... 1,758 (7,255) (13,076)
Increase in other current assets..................... (647) (632) (1,469)
(Decrease) increase in accounts payable.............. (1,700) 5,348 5,254
Increase in accrued expenses and other current
liabilities....................................... 2,499 533 434
(Decrease) increase in income taxes payable.......... (356) 482 973
Increase in interest payable......................... 5,757 224 180
--------- -------- --------
Cash provided by (used in) operating activities... 24,334 23,962 (35)
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment................ (11,759) (31,866) (13,313)
--------- -------- --------
Cash used in investing activities...................... (11,759) (31,866) (13,313)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under term loan................................ 30,000 -- 11,000
Repayments under term loan................................ (19,303) (6,000) (6,000)
Issuance of 12 3/4% senior subordinated debentures........ 140,000 -- --
Redemption of 11 1/2% senior subordinated debentures...... (116,344) -- --
Repayment costs on early extinguishment of debt........... (720) -- --
Repayment of junior subordinated debentures............... (17,093) -- --
Net repayment (borrowings) under revolving credit line.... (23,298) 13,802 8,598
Repayments of other long term debt........................ (28) (31) (36)
Deferred financing costs.................................. (5,784) -- (221)
--------- -------- --------
Cash (used in) provided by financing activities........ (12,570) 7,771 13,341
Effect of exchange rate changes on cash................ (1) (3) (2)
--------- -------- --------
NET INCREASE (DECREASE) IN CASH........................... 4 (136) (9)
CASH AT BEGINNING OF YEAR................................. 249 253 117
--------- -------- --------
CASH AT END OF YEAR....................................... $ 253 $ 117 $ 108
========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest............................................... $ 14,913 $ 19,787 $ 22,334
Income taxes........................................... -- 3,901 2,882
</TABLE>

See Notes to Consolidated Financial Statements.

F-6
<PAGE> 61

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. ORGANIZATION

Synthetic Industries, Inc., a Delaware corporation (the "Company"),
manufactures and markets a wide range of polypropylene-based fabric and fiber
products designed for industrial applications. The Company's diverse mix of
products are marketed to the floor covering, construction and technical textile
markets for such end-use applications as carpet backing, geotextiles, erosion
control, concrete reinforcement and furniture construction fabrics. The Company
is a wholly-owned subsidiary of Synthetic Industries, L.P., a Delaware limited
partnership.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly-owned. All significant
intercompany transactions and balances have been eliminated.

REVENUE RECOGNITION

Revenue from product sales is recognized at the time of shipment.

FOREIGN CURRENCY TRANSLATION

The assets and liabilities of foreign subsidiaries are translated at the
fiscal year-end rates of exchange, and the results of operations are translated
at the average rates of exchange for the years presented. Gains or losses
resulting from translating foreign currency financial statements are accumulated
in the cumulative translation adjustments account in the stockholder's equity
section of the accompanying consolidated balance sheets.

INVENTORY

Inventory is stated at the lower of cost, determined using the first-in,
first-out method, or market.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost less accumulated
depreciation and amortization. Depreciation is provided on the straight-line
method based on estimated useful lives, as follows:

<TABLE>
<S> <C>
Building and improvements.................................. 25 years
Machinery and equipment.................................... 14 years
</TABLE>

Leasehold improvements are amortized over the shorter of the useful life of the
asset or the term of the lease. Expenses for repairs, maintenance and renewals
are charged to operations as incurred. Expenditures which improve an asset or
extend its useful life are capitalized. When properties are retired or otherwise
disposed of, the related cost and accumulated depreciation and amortization are
removed from the accounts and any gain or loss is included in the results of
operations.

The Company had capitalized interest costs of $283, $729 and $255 in fiscal
1993, 1994 and 1995, respectively.

INCOME TAXES

The Company accounts for income taxes using an asset and liability approach
in accordance with Financial Accounting Standards Board ("FASB") Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes".
Under SFAS No. 109, deferred income taxes are recognized for the

F-7
<PAGE> 62

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

tax consequences of temporary differences by applying enacted statutory tax
rates applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. The
effect on deferred taxes of a change in tax rates is recognized in the statement
of operations in the period that includes the enactment date.

EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED

The excess of purchase price over net assets acquired is amortized on a
straight-line basis over a period of 40 years. Excess of purchase price over net
assets acquired is assessed for recoverability on a regular basis. In evaluating
the value and future benefits of goodwill, its carrying value would be reduced
by the excess, if any, of the balance over management's best estimate of
undiscounted future operating income before amortization of the related
intangible assets over the remaining amortization period.

DEFERRED FINANCING COSTS AND INTANGIBLE ASSETS

Deferred financing costs are amortized over periods from 5 to 12 years.
Intangible assets consist primarily of trademarks and patent on Fibermesh(R)
which are amortized on a straight-line basis over 40 and 5 years, respectively.

COMPUTATION OF PRO FORMA NET INCOME PER SHARE

The Company has presented pro forma net income per share for the year ended
September 30, 1995 in lieu of historical net income per share. Historical per
share information is not meaningful as the Company is owned by one shareholder.
The pro forma net income per share has been computed assuming (a) proceeds of
the initial public offering (Note 15) were used to repay indebtedness resulting
in interest savings and (b) the weighted average number of common shares and
common share equivalents outstanding have been adjusted to give effect to the
stock split authorized in July 1996 (Note 15). Pursuant to Securities and
Exchange Commission Staff Accounting Bulletin No. 55, common share equivalents
attributable to stock options granted within one year of an initial public
offering have been included in the calculation of weighted average shares
outstanding.

RECLASSIFICATION OF PRIOR FINANCIAL STATEMENTS

Certain reclassifications have been made to previous years' financial
statements to conform with 1995 classifications.

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
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 those estimates.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. SFAS No. 121 is effective for
financial statements for fiscal years beginning after December 15, 1995;
therefore, the Company will adopt SFAS

F-8
<PAGE> 63

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

No. 121 in the first quarter of fiscal 1997 and, based on current circumstances,
does not believe the effect of adoption will be material.

3. ACCOUNTS RECEIVABLE

Accounts receivable are presented net of the allowances for doubtful
accounts of $1,201 and $4,053 as of September 30, 1994 and 1995, respectively.
During fiscal 1995, the Company recorded a pre-tax charge of $2,852 to increase
the allowance for doubtful accounts due to a customer who experienced severe
financial difficulty. Amounts written off against established allowances were
$383, $217 and $511 for the years ended September 30, 1993, 1994 and 1995,
respectively.

Most of the Company's carpet backing sales are with customers located in
Georgia. Net sales to one customer represented 17%, 18% and 18%, respectively,
of consolidated net sales for the fiscal years presented.

4. INVENTORY

Inventory consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1994 1995
------- -------
<S> <C> <C>
Finished goods................................................. $20,580 $27,867
Work in progress............................................... 5,263 5,541
Raw materials.................................................. 6,677 12,189
------- -------
$32,520 $45,597
======= =======
</TABLE>

5. OTHER CURRENT ASSETS

Other current assets consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1994 1995
------- -------
<S> <C> <C>
Prepaid supplies................................................. $ 6,416 $ 7,192
Deferred tax assets (Note 11).................................... 3,085 5,465
Other............................................................ 1,358 2,051
------- -------
$10,859 $14,708
======= =======
</TABLE>

F-9
<PAGE> 64

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------
1994 1995
-------- --------
<S> <C> <C>
Land........................................................... $ 3,061 $ 3,511
Buildings and improvements..................................... 21,183 23,457
Machinery and equipment and leasehold improvements............. 141,332 151,921
-------- --------
165,576 178,889
Accumulated depreciation....................................... (50,526) (62,160)
-------- --------
$115,050 $116,729
======== ========
</TABLE>

7. OTHER ASSETS

Other assets consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------
1994 1995
-------- --------
<S> <C> <C>
Excess of purchase price over net assets acquired.............. $ 99,818 $ 99,818
Intangible assets.............................................. 4,485 3,546
Deferred financing and organizational costs.................... 12,034 12,230
-------- --------
116,337 115,594
Accumulated amortization....................................... (26,044) (28,383)
-------- --------
$ 90,293 $ 87,211
======== ========
</TABLE>

The excess of purchase price over net assets acquired arose from the
purchase of the Company's common stock in 1986.

8. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------
1994 1995
-------- --------
<S> <C> <C>
Secured Revolving Credit Facility(a):
Secured revolving credit portion............................. $ 16,129 $ 24,727
Term loan portion............................................ 21,000 26,000
12 3/4% senior subordinated debentures(b)...................... 140,000 140,000
Other.......................................................... 1,397 1,361
-------- --------
178,526 192,088
Less current portion........................................... (6,036) (40)
-------- --------
Total long-term portion........................................ $172,490 $192,048
======== ========
</TABLE>

A. THE SECURED REVOLVING CREDIT FACILITY

On January 13, 1995, the Company and its lenders entered into a Third
Amended and Restated Revolving Credit Agreement (as amended to date, the "Credit
Facility"). The Company's term loan portion of the Credit Facility (the "Term
Loan") increased to $30,000 from $19,000. Prior to the execution of the Fourth
Amended and Restated Revolving Credit Agreement (the "Amended Credit Facility")
on October 20, 1995, the Term Loan was payable in equal monthly installments of
$500, plus interest beginning on

F-10
<PAGE> 65

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

February 1, 1995. The Company entered into the Amended Credit Facility, with a
termination date of October 1, 2001, which provides for Term Loan borrowings of
$45,000 of which $10,000 is payable in 1999 and $17,500 is payable in each of
2000 and 2001. Accordingly, at September 30, 1995, all term loan borrowings are
classified as long term.

The revolving credit loan portion of the Amended Credit Facility (the
"Revolver") provides for availability based on a borrowing formula consisting of
85% of eligible accounts receivable and 50% of eligible inventory, subject to
certain limitations. At September 30, 1995, the Company had $9,173 available
under the Revolver. Under the Amended Credit Facility, the maximum amount
available for borrowing under the Revolver is increased to $40,000.

The Amended Credit Facility permits borrowings which bear interest, at the
Company's option, (i) for domestic borrowings based on the lender's base rate
plus .75% (9.5% at September 30, 1995) or (ii) for Eurodollar borrowings based
on the Interbank Eurodollar rate at the time of conversion plus 2.5% or 2.75%
for Term Loan or Revolver advances, respectively (8.5% to 8.625% at September
30, 1995). The Credit Facility contained similar provisions for payment of
interests thereunder.

The Amended Credit Facility provides for borrowings under letters of credit
of up to $3,000, which borrowings reduce amounts available under the Revolver.
The Company is required to pay a .375% fee on the unused portion of the
commitment.

The Company considers the carrying values of amounts outstanding under the
Credit Facility to approximate fair value because they reprice frequently at
market rates.

The Amended Credit Facility is collateralized by substantially all of the
Company's assets and contains covenants related to the maintenance of certain
operating and working capital levels and limitations as to the amount of capital
expenditures. The Credit Facility was similarly collateralized and contained
like limitations and restrictions. The Company's ability to pay dividends on its
Common Stock is restricted by both the Amended Credit Facility and the indenture
relating to the Debentures discussed below. Based on such restrictions and
financial covenants, the Company was prohibited from paying dividends at
September 30, 1995.

B. SENIOR SUBORDINATED DEBENTURES

On December 14, 1992, the Company issued $140,000 of 12 3/4% Senior
Subordinated Debentures due 2002 (the "Debentures"), which represent unsecured
obligations of the Company. The Debentures are redeemable at the option of the
Company at any time on or after December 1, 1997, initially at 106.375% of their
principal amount, together with accrued interest, with declining redemption
prices thereafter. Interest on the Debentures is payable semi-annually on June 1
and December 1.

The fair value of the Company's Debentures is estimated based on quoted
market prices for the Debentures in the over-the-counter market. The estimated
fair value of the Debentures at September 30, 1995 is 97.5% of their face
amount, or $136,500.

Approximate aggregate minimum annual payments due on long term debt,
inclusive of additional borrowings pursuant to the Amended Credit Facility, for
the subsequent five years are as follows: 1996, $40; 1997, $45; 1998, $50; 1999,
$10,057; 2000, $42,291; and thereafter, $158,605.

9. EXTINGUISHMENT OF DEBT

On January 13, 1993, the Company's 11 1/2% Senior Subordinated Debentures
due 1999 (the "Old Debentures"), with a principal amount of $110,000, were
redeemed at 105.11% of the principal amount thereof. On April 22, 1993, the
Company redeemed a $40,000 maturity value zero coupon junior subordinated
debenture scheduled to mature on December 1, 1999, for $17,488. Also in fiscal
1993, deferred financing fees

F-11
<PAGE> 66

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and prepayment costs associated with a prior credit facility were written off.
The principal amounts, related prepayment costs and unamortized issuance costs
resulted in an extraordinary loss of $8,892 (net of tax benefit of $5,392).

10. COMMITMENTS AND CONTINGENCIES

A. LEASE COMMITMENTS

The Company leases certain factory and warehouse buildings and equipment
under long-term operating leases expiring through 2009. Future minimum lease
payments under noncancellable operating leases at September 30, 1995 are as
follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
------------------------------------------------- -------
<S> <C>
1996............................................. $ 3,755
1997............................................. 2,637
1998............................................. 1,707
1999............................................. 1,248
2000............................................. 1,080
Thereafter....................................... 1,461
-------
Total.................................. $11,888
=======
</TABLE>

Total rental expense for the above operating leases and other short-term
leases for the fiscal years 1993, 1994 and 1995 was $4,340, $4,684 and $3,731,
respectively.

B. CAPITAL EXPENDITURES

In fiscal 1996, the Company plans a $35,000 expansion of its manufacturing
facilities, of which $3,028 is committed at September 30, 1995.

C. CONTINGENCIES

In January 1995, an arbitration proceeding was initiated by Fibermesh
(Suisse), S.A. against the Company, in the United States, alleging a breach by
the Company of an exclusive distribution agreement for the distribution of
Fibermesh(R) in Switzerland and claiming actual damages of 6,104,000 Swiss
Francs ($4.9 million at June 30, 1996) and punitive damages of $20 million. On
September 20, 1996, the arbitrator issued a decision finding for the Company
against Fibermesh (Suisse), S.A. on all issues and claims presented.
Accordingly, the Company was found not to be liable for any actual or punitive
damages in connection with this action. Fibermesh (Suisse), S.A. has limited
rights of appeal.

F-12
<PAGE> 67

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. INCOME TAXES

Income tax expense for each of the years presented is determined in
accordance with SFAS No. 109. The Company adopted SFAS No. 109 as of October 1,
1992, and reflected a charge of $8,500 representing the cumulative effect of
this accounting change on net income.

The provision (benefit) for income taxes is as follows:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------
1993 1994 1995
----- ------ ------
<S> <C> <C> <C>
Current:
Federal................................................... $(764) $3,770 $3,180
State..................................................... (200) 1,000 400
Foreign................................................... -- -- 275
----- ------ ------
(964) 4,770 3,855
----- ------ ------
Deferred:
Federal................................................... 795 3,405 (218)
State..................................................... 49 425 (137)
----- ------ ------
844 3,830 (355)
----- ------ ------
Total taxes on income....................................... $(120) $8,600 $3,500
===== ====== ======
</TABLE>

The Omnibus Budget Reconciliation Act of 1993 (the "Tax Act"), enacted in
August 1993, increased the statutory corporate income tax 1% (to 35%) and made
other changes concerning the deductibility of certain costs in determining
taxable income. Provisions of the Tax Act were effective retroactive to January
1, 1993. As a result and in accordance with SFAS No. 109, deferred federal
income tax expense was increased by $423 in the quarter ended September 30,
1993.

A reconciliation of income taxes from continuing operations computed at the
statutory rate and actual tax expense is as follows:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1993 1994 1995
------ ------ ------
<S> <C> <C> <C>
Amount computed at statutory rate.......................... $2,522 $7,007 $1,900
State and local taxes less applicable federal income tax... 289 747 270
Amortization of goodwill................................... 915 871 873
Other nondeductible expenses............................... 142 348 210
Effect of federal tax rate increase........................ 423 -- --
Other, net................................................. 181 (373) 247
------ ------ ------
$4,472 $8,600 $3,500
====== ====== ======
</TABLE>

F-13
<PAGE> 68

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The tax effects of significant items comprising the Company's net deferred
tax liability are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------
1994 1995
------- -------
<S> <C> <C>
Property, plant and equipment.................................... $20,058 $22,121
Trademarks and patents........................................... 1,092 1,054
------- -------
Total deferred income tax liabilities............................ 21,150 23,175
------- -------
Receivables...................................................... 480 1,609
Inventory........................................................ 397 628
Accrued expenses................................................. 691 1,581
AMT credit carryforward.......................................... 1,517 1,647
------- -------
Total deferred income tax assets................................. 3,085 5,465
------- -------
Net deferred income tax liability................................ $18,065 $17,710
======= =======
</TABLE>

United States income tax returns for fiscal years 1992 and 1993 are
currently under examination by the Internal Revenue Service. In the opinion of
management, adjustments resulting from the examination will not have a material
adverse effect on the Company's consolidated financial position or results of
operations.

12. DISCONTINUED OPERATIONS

On March 15, 1993, the Company completed the disposal of its Irish
manufacturing operations, which had been accounted for as a discontinued
operation. In fiscal 1993, the Company reduced amounts previously provided for
the loss on disposal by $1,420 (net of income taxes of $800).

13. RETIREMENT PROGRAMS

For United States employees, the Company maintains a trustee profit-sharing
plan (the "Plan") which is qualified under Section 401(k) of the Internal
Revenue Code. All full-time employees over the age of 21 who have been employed
continuously for at least one year are eligible for participation in the Plan.
The Company may, but has not elected to, contribute a portion of its profits to
the Plan, as determined by the Board. Employer contributions vest over 3 to 7
years. The Company has elected to match employee contributions to the Plan on a
50% basis but not to exceed 6% of the employee's annual compensation. During
fiscal years 1993, 1994 and 1995, the Company contributed $813, $891 and $921,
respectively. The Plan provides for the Company to bear the expense of the
administration of the Plan. Pension expense on the foreign plans is not
significant.

14. STOCKHOLDER'S EQUITY

A. COMMON STOCK

The authorized capital stock of the Company consisted of 5,000 shares of
common stock, par value $1.00 per share (the "Common Stock"), of which 49.95
shares were outstanding at September 30, 1995 and 1994. All of the issued and
outstanding shares of Common Stock are owned by Synthetic Industries, L.P. In
connection with the Recapitalization in July 1996 (Note 15.b), the Company
increased the authorized number of shares to 25,000,000 and approved a
115,740.74-for-1 stock split of the issued and outstanding shares. All share and
per share information have been adjusted to give retroactive recognition to the
stock split.

F-14
<PAGE> 69

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

B. STOCK OPTIONS

In August 1994, the Company adopted a stock option plan (the "Directors'
Plan"), pursuant to which non-qualified stock options to purchase an aggregate
of 125,261 shares of Common Stock were granted to the four non-employee
Directors of the Company at an exercise price of $6.83 per share which was
determined by reference to the fair market value of the Company's equity at the
time such Directors joined the Board. The stock options will be fully vested by
October 1, 1996 and have a term which expires on August 4, 2004. The Directors'
Plan does not provide for any further grants of options thereunder.

In August 1994, the Company adopted a stock option plan (the "1994 Plan")
for its key employees which provides for the grant of incentive stock options,
within the meaning of Section 422A of the Internal Revenue Code, and
non-qualified stock options. The maximum aggregate number of shares of Common
Stock that may be issued under the 1994 Plan is 491,413 shares. In December
1995, stock options to purchase an aggregate of 316,697 shares of Common Stock
were granted at an exercise price of $10.72 per share. The stock options vest
and become exercisable at a rate of 25% per year over a four-year period and
expire ten years from the date of grant. As of September 30, 1995, no options
were exercisable under the 1994 Plan.

The purchase price of the shares of Common Stock subject to options under
the 1994 Plan must be no less than the fair market value of the Common Stock at
the date of grant, provided, however, that the purchase price of shares of
Common Stock subject to ISOs granted to any optionee who owns shares possessing
more than 10% of the combined voting power of the Company ("Ten Percent
Stockholder") must not be less than 110% of the fair market value of the Common
Stock at the date of the grant. The maximum term of an option may not exceed ten
years from the date of grant, except with respect to ISOs granted to Ten Percent
Stockholders which must expire within five years of the date of grant.

15. SUBSEQUENT EVENTS

A. STOCK OPTIONS

In December 1995, stock options for 174,716 shares of Common Stock were
granted to various employees under the 1994 Plan at an exercise price of $10.72
per share. The stock options vest and become exercisable at a rate of 25% per
year over a four-year period and expire ten years from the date of grant. As of
September 6, 1996, options to purchase an aggregate of 491,413 shares of Common
Stock had been granted under the 1994 Plan. As of September 6, 1996, 79,173
stock options were exercisable under the 1994 Plan.

In May 1996, the Company adopted a stock option plan (the "1996 Plan"),
which provides for the grant of incentive stock options and nonqualified stock
options to any full time employee of the Company under terms substantially the
same as the 1994 Plan. The maximum number of shares of Common Stock that may be
issued under the 1996 Plan is 57,812 shares. Options to purchase an aggregate of
21,723 shares have been granted at an exercise price of $10.72 per share.

B. RECAPITALIZATION

On July 31, 1996, the Board of Directors approved an amendment to the
Company's Certificate of Incorporation to effect a recapitalization of the
Company's Common Stock, pursuant to which the number of authorized shares of the
Company's Common Stock was increased to 25,000,000 shares (the
"Recapitalization"). As part of the Recapitalization, the Board approved a
115,740.74-for-1 stock split of the issued and outstanding shares of Common
Stock. The Recapitalization, including the stock split, will be effective
immediately prior to a contemplated initial public offering. All share and per
share information included in the accompanying consolidated financial statements
and notes have been adjusted to give retroactive recognition to the stock split.

In addition, on July 31, 1996, the Board of Directors authorized an
increase to the number of available shares of Common Stock that may be issued
under the 1996 Plan by 231,250 to 289,062.

F-15
<PAGE> 70

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash.............................................................. $ 108 $ 165
Accounts receivable, net of allowance for doubtful accounts of
$4,053 and $4,050, respectively................................ 47,947 50,809
Inventory (Note 3)................................................ 45,597 37,668
Other current assets.............................................. 14,708 14,812
-------- --------
TOTAL CURRENT ASSETS.............................................. 108,360 103,454
PROPERTY, PLANT AND EQUIPMENT, net (Note 4)......................... 116,729 137,237
OTHER ASSETS........................................................ 87,211 84,841
-------- --------
$312,300 $325,532
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable.................................................. $ 24,021 $ 23,600
Accrued expenses and other current liabilities.................... 7,378 8,235
Income taxes payable (Note 6)..................................... 1,455 2,204
Interest payable.................................................. 6,427 2,555
Current maturities of long-term debt (Note 5)..................... 40 60
-------- --------
TOTAL CURRENT LIABILITIES......................................... 39,321 36,654
LONG-TERM DEBT (Note 5)............................................. 192,048 204,145
DEFERRED INCOME TAXES (Note 6)...................................... 23,175 24,225
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDER'S EQUITY (Note 8):
Common stock...................................................... -- --
Additional paid-in capital........................................ 69,300 69,300
Cumulative translation adjustments................................ 29 (5)
Deficit........................................................... (11,573) (8,787)
-------- --------
TOTAL STOCKHOLDER'S EQUITY........................................ 57,756 60,508
-------- --------
$312,300 $325,532
======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

F-16
<PAGE> 71

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- ---------------------
1995 1996 1995 1996
------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net sales.......................................... $72,767 $ 82,843 $194,349 $ 212,060
------ --------- -------- ---------
Costs and expenses:
Costs of sales................................... 50,867 55,134 136,950 151,221
Selling expenses................................. 6,627 7,307 17,591 19,259
General and administrative expenses.............. 4,943 5,233 14,453 16,024
Amortization of excess of purchase price over net
assets acquired and other intangibles......... 648 648 1,918 1,944
------ --------- -------- ---------
63,085 68,322 170,912 188,448
------ --------- -------- ---------
Operating income.............................. 9,682 14,521 23,437 23,612
------ --------- -------- ---------
Other expenses:
Interest expense................................. 5,846 5,863 17,027 17,253
Amortization of deferred financing costs......... 186 175 555 523
------ --------- -------- ---------
6,032 6,038 17,582 17,776
------ --------- -------- ---------
Income before provision for income taxes........... 3,650 8,483 5,855 5,836
Provision for income taxes (Note 6)................ 1,771 3,390 3,300 3,050
------ --------- -------- ---------
NET INCOME......................................... $ 1,879 $ 5,093 $ 2,555 $ 2,786
====== ========= ======== =========
Pro Forma Financial Data (Note 8):
Pro forma net income............................. $ 5,478 $ 3,941
========= =========
Weighted average shares outstanding used in
computing pro forma net income per share...... 8,430,501 8,430,501
========= =========
Pro forma net income per share................... $ 0.65 $ 0.47
========= =========
</TABLE>

See Notes to Consolidated Financial Statements.

F-17
<PAGE> 72

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
-----------------------
1995 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................................... $ 2,555 $ 2,786
Adjustments to reconcile net income to net cash provided by (used
in) operations:
Depreciation.................................................... 8,605 9,774
Amortization of deferred financing costs and intangibles........ 2,473 2,467
Provision for bad debts......................................... 580 23
Deferred income taxes........................................... 1,130 1,280
Change in assets and liabilities:
Increase in accounts receivable................................. (9,814) (2,885)
(Increase) decrease in inventory................................ (18,205) 7,929
Increase in other current assets................................ (117) (334)
Increase (decrease) in accounts payable......................... 4,917 (421)
(Decrease) increase in accrued expenses and other current
liabilities.................................................... (194) 857
Increase in income taxes payable................................ 188 749
Decrease in interest payable.................................... (4,052) (3,872)
-------- --------
Cash provided by (used in) operating activities............... (11,934) 18,353
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment......................... (12,169) (25,439)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under term loan......................................... 11,000 19,500
Repayments under term loan......................................... (4,500) (500)
Net borrowings (repayments) under revolving credit line............ 17,800 (11,713)
Deferred financing costs........................................... (201) (97)
Repayments of other long term obligations.......................... (27) (13)
-------- --------
Cash provided by financing activities........................... 24,072 7,177
Effect of exchange rate changes on cash......................... 17 (34)
-------- --------
NET (DECREASE) INCREASE IN CASH...................................... (14) 57
CASH AT BEGINNING OF PERIOD.......................................... 117 108
-------- --------
CASH AT END OF PERIOD................................................ $ 103 $ 165
======== ========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest........................................................ $ 21,079 $ 21,125
Income taxes.................................................... 1,832 1,387
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITY:
Capital lease obligations incurred for purchase of equipment....... $ -- $ 5,000
</TABLE>

See Notes to Consolidated Financial Statements.

F-18
<PAGE> 73

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)

1. ORGANIZATION

Synthetic Industries, Inc., a Delaware corporation (the "Company"),
manufactures and markets a wide range of polypropylene-based fabric and fiber
products designed for industrial applications. The Company's diverse mix of
products are marketed to the floor covering, construction and technical textile
markets for such end-use applications as carpet backing, geotextiles and erosion
control, concrete reinforcement and furniture construction fabrics. The Company
is a wholly-owned subsidiary of Synthetic Industries, L.P., a Delaware limited
partnership.

2. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements as of June 30, 1996 and for the three
and nine month periods ended June 30, 1995 and 1996 included herein have been
prepared, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
the financial position at June 30, 1995 and 1996, and the results of operations
for the three and nine months ended June 30, 1995 and 1996 have been made on a
consistent basis. It is suggested that these consolidated financial statements
be read in conjunction with management's discussion and analysis of financial
condition and results of operations and the audited consolidated financial
statements and footnotes thereto included elsewhere in this Prospectus.
Operating results for the three and nine months ended June 30, 1996 may not
necessarily be indicative of the results that may be expected for the full year.

3. INVENTORY

Inventory consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- --------
<S> <C> <C>
Finished goods............................................. $27,867 $ 23,358
Work in process............................................ 5,541 7,227
Raw materials.............................................. 12,189 7,083
------- --------
$45,597 $ 37,668
======= ========
</TABLE>

F-19
<PAGE> 74

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- --------
<S> <C> <C>
Land........................................................ $ 3,511 $ 3,511
Buildings and improvements.................................. 23,457 28,650
Machinery and equipment and leasehold improvements.......... 151,921 177,010
-------- --------
178,889 209,171
Accumulated depreciation.................................... (62,160) (71,934)
-------- --------
$116,729 $137,237
======== ========
</TABLE>

5. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1995 1996
------------- --------
<S> <C> <C>
Secured revolving credit facility ("Amended Credit
Facility"):
Secured revolving credit portion ("Revolver")............. $ 24,727 $ 13,014
Term loan portion......................................... 26,000 45,000
12 3/4% Senior subordinated debentures...................... 140,000 140,000
Capitalized lease obligation................................ -- 4,843
Other....................................................... 1,361 1,348
-------- --------
192,088 204,205
Less current portion.............................. (40) (60)
-------- --------
Total long-term portion........................... $192,048 $204,145
======== ========
</TABLE>

The Amended Credit Facility, with termination date of October 1, 2001,
provides for term loan borrowings of $45,000, of which $10,000 is payable in
1999 and $17,500 is payable in each of 2000 and 2001.

The Revolver provides for availability based on a borrowing formula
consisting of 85% of eligible accounts receivable and 50% of eligible inventory,
subject to certain limitations. Under the Amended Credit Facility, the maximum
amount available for borrowing under the Revolver is increased to $40,000. At
June 30, 1996, the Company had $25,691 available for borrowings under the
Revolver.

The Company considers the carrying values for the amounts outstanding under
the Credit Facility to approximate fair value because they reprice frequently at
market rates.

F-20
<PAGE> 75

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES

The provision (benefit) for income taxes is as follows:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
----------------- -----------------
1995 1996 1995 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Current:
Federal...................................... $ 768 $1,320 $1,820 $1,320
State........................................ 170 190 350 190
Foreign...................................... -- 110 -- 260
------ ------ ------ ------
938 1,620 2,170 1,770
------ ------ ------ ------
Deferred:
Federal...................................... 805 1,640 1,308 1,180
State........................................ 28 130 (178) 100
------ ------ ------ ------
833 1,770 1,130 1,280
------ ------ ------ ------
Total taxes on income.......................... $1,771 $3,390 $3,300 $3,050
====== ====== ====== ======
</TABLE>

The federal income tax provision for the three and nine months ended June
30, 1995 and 1996 reflects the non-deductibility of certain expenses for income
tax purposes such as amortization of goodwill. Deferred income taxes result from
temporary differences between tax bases of assets and liabilities and their
reported amounts in the financial statements. The Company's United States income
tax returns for the fiscal years 1992 and 1993 have been examined and settled
without material adjustment.

7. CONTINGENCY

8. PRO FORMA NET INCOME PER SHARE

The Company has presented pro forma net income per share for the three and
nine month periods ended June 30, 1996 in lieu of historical net income per
share. Historical information is not meaningful as the Company is owned by one
shareholder. The pro forma net income per share has been computed assuming (a)
proceeds of the initial public offering (Note 10) were used to repay
indebtedness resulting in interest savings and (b) the weighted average number
of common shares and common shares equivalents outstanding have been adjusted to
give effect to the stock split authorized in July 1996 (Note 10). Pursuant to
Securities and Exchange Commission Staff Accounting Bulletin No. 55, common
share equivalents attributable to stock options granted within one year of an
initial public offering have been included in the calculation of weighted
average shares outstanding.

9. STOCK OPTIONS

F-21
<PAGE> 76

SYNTHETIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

September 6, 1996, options to purchase an aggregate of 491,413 shares of Common
Stock had been granted under the 1994 Plan. As of September 6, 1996, 79,173
stock options were exercisable under the 1994 Plan.

10. SUBSEQUENT EVENTS

On July 31, 1996, the Board of Directors approved an amendment to the
Company's Certificate of Incorporation to effect a recapitalization of the
Company's Common Stock, pursuant to which the number of authorized shares of the
Company's Common Stock will be increased to 25,000,000 shares (the
"Recapitalization"). As part of the Recapitalization, the Board approved a
115,740.74-for-1 stock split of the issued and outstanding shares of Common
Stock. The Recapitalization, including the stock split, will be effective
immediately prior to a contemplated initial public offering. All share and per
share information included in the accompanying consolidated financial statements
and notes have been adjusted to give retroactive recognition to the stock split.

In addition, on July 31, 1996, the Board of Directors authorized an
increase to the number of available shares of Common Stock that may be issued
under the Amended 1996 Plan by 231,250 to 289,062.

F-22
<PAGE> 77

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------------------------------------------------------

NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE
OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK TO ANY PERSON IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 8
The Company.......................... 12
Use of Proceeds...................... 13
Dividend Policy...................... 13
Capitalization....................... 14
Dilution............................. 15
Selected Consolidated Financial
Information........................ 16
Management's Discussion and Analysis
of Financial Condition
and Results of Operations.......... 18
Business............................. 25
Management........................... 38
Principal Stockholders............... 45
Certain Relationships and Related
Transactions....................... 46
Description of Certain Indebtedness.. 48
Description of Capital Stock......... 49
Shares Eligible for Future Sale...... 50
Underwriting......................... 52
Legal Matters........................ 53
Experts.............................. 53
Available Information................ 54
Index to Consolidated Financial
Statements......................... F-1
</TABLE>

UNTIL NOVEMBER 26, 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN SHARES OF THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

------------------------------------------------------
------------------------------------------------------

2,500,000 SHARES

[SYNTHETIC INDUSTRIES, INC. LOGO]

COMMON STOCK
------------------------

PROSPECTUS
------------------------
BEAR, STEARNS & CO. INC.

FURMAN SELZ

NOVEMBER 1, 1996

------------------------------------------------------
------------------------------------------------------