UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended December 31, 1996
Commission File Number 33-11479
SYNTHETIC INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 58-1049400
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
309 LaFayette Road, Chickamauga, Georgia 30707
(Address of principal executive offices) (Zip Code)
(706) 375-3121
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Outstanding at
Class February 12, 1997
Common Stock, $1.00 par value 8,656,000
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL INFORMATION
SYNTHETIC INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
DECEMBER 31, SEPTEMBER 30,
ASSETS 1996 1996
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents (Note 3) $ 30,806 $ 101
Accounts receivable, net of allowance for
doubtful accounts of $3,062 and $3,036 37,322 48,165
Inventory (Note 4) 49,084 39,142
Other current assets 14,595 14,655
TOTAL CURRENT ASSETS 131,807 102,063
PROPERTY, PLANT AND EQUIPMENT, net (Note 5) 143,142 137,974
OTHER ASSETS 83,202 84,021
$ 358,151 $324,058
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 28,731 $ 20,227
Accrued expenses and other current liabilities 8,704 9,669
Income taxes payable (Note 7) 1,466 1,407
Interest payable 1,475 6,024
Current maturities of long-term debt (Note 6) 673 659
TOTAL CURRENT LIABILITIES 41,049 37,986
LONG-TERM DEBT (Note 6) 190,186 194,353
DEFERRED INCOME TAXES (Note 7) 26,308 25,875
STOCKHOLDERS' EQUITY:
Common stock (Note 8) 8,656 5,781
Additional paid-in capital (Note 8) 94,504 63,519
Cumulative translation adjustments 15 15
Deficit (2,567) (3,471)
TOTAL STOCKHOLDERS' EQUITY 100,608 65,844
$358,151 $324,058
See notes to consolidated financial statements
SYNTHETIC INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
FOR THREE MONTHS ENDED DECEMBER 31,
1996 1995
Net sales $70,857 $64,608
Costs and expenses:
Cost of sales 50,043 49,917
Selling expenses 6,938 5,716
General and administrative expenses 5,881 4,971
Amortization of excess of purchase price over net
assets acquired and other intangibles 648 648
63,510 61,252
Operating income 7,347 3,356
Other expenses:
Interest expense, net 5,410 5,680
Amortization of deferred financing costs 176 173
5,586 5,853
Income(loss) before income tax provision(benefit) 1,761 (2,497)
Income tax provision (benefit) (Note 7) 857 (600)
NET INCOME (LOSS) $ 904 $ (1,897)
Net income (loss) per common share $ 0.11 $ (0.32)
Weighted average shares outstanding 7,870,690 5,930,502
See notes to consolidated financial statements
SYNTHETIC INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
THREE MONTHS ENDED DECEMBER 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 904 $ (1,897)
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation and amortization 4,480 4,008
Provision for bad debts 49 42
Deferred income taxes 27 (720)
Change in assets and liabilities:
Decrease in accounts receivable 10,794 10,701
(Increase) decrease in inventory (9,942) 4,267
Decrease in other current assets 461 268
Increase (decrease) in accounts payable 8,504 (3,181)
Decrease in accrued expenses and other
current liabilities (965) (1,769)
Decrease (increase) in income taxes payable 59 (791)
Decrease in interest payable (4,549) (4,191)
Cash provided by operating activities 9,822 6,737
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (8,824) (7,394)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under the term loan - 19,500
Repayments under term loan - (500)
Net repayments under secured revolving
credit line (3,993) (17,833)
Deferred financing costs - (62)
Proceeds from underwritten public offering 33,860 -
Payments of capital lease obligation and
other long term debt (160) (9)
Cash provided by financing activities 29,707 1,096
Effect of exchange rate changes on cash - (18)
NET INCREASE IN CASH AND CASH EQUVALENTS 30,705 421
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 101 108
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 30,806 $ 529
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 9,959 $ 9,871
Income taxes 771 911
See notes to consolidated financial statements
SYNTHETIC INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE INFORMATION)
(INFORMATION AS OF DECEMBER 31, 1996 AND FOR THE
PERIODS ENDING DECEMBER 31, 1996 AND 1995 IS 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, erosion control,
concrete reinforcement and furniture construction fabrics. The Company
manufactures and sells more than 2,000 products in over 65 end-use markets
predominately in North America, Europe and the Far East. Prior to November 1,
1996, the Company was a wholly owned subsidiary Synthetic Industries L.P. As a
result of the Company's underwritten public offering (Note 8) on November 1,
1996, Synthetic Industries L.P. owns approximately 67% of the Company's
outstanding shares as of December 31, 1996.
2.INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements as of December 31, 1996 and for the
periods ended December 31, 1996 and 1995 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 December 31, 1996 and 1995, and the results of operations for the
three months then ended have been made on a consistent basis. Certain
information and footnote disclosures included in consolidated financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
management believes that the disclosures herein are adequate to make the
information presented not misleading. 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 consolidated
financial statements of the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1996. Operating results for the three months ended
December 31, 1996 may not necessarily be indicative of the results that may be
expected for the full year.
3. CASH AND CASH EQUIVALENTS
The Company classifies as cash equivalents all highly liquid investments with
maturities of three months or less. At December 31, 1996, cash equivalents were
composed primarily of investments in United States government securities and
overnight time deposits.
4.INVENTORY
December 31, September 30,
1996 1996
Finished goods $ 27,692 $ 22,555
Work in process 9,446 7,937
Raw materials 11,946 8,650
$ 49,084 $ 39,142
5.PROPERTY, PLANT AND EQUIPMENT
December 31, September 30,
1996 1996
Land $ 4,458 $ 4,458
Buildings and mprovements 29,298 29,298
Machinery and equipment and
leasehold improvements 188,210 179,386
221,966 213,142
Accumulated depreciation 78,824 75,168
$143,142 $ 137,974
6.LONG-TERM DEBT
December 31, September 30,
1996 1996
Secured revolving credit facility:
Secured revolving credit portion - 3,993
Term loan portion 45,000 45,000
12 3/4% senior subordinated
debentures 140,000 140,000
Capital lease obligation 4,548 4,698
Other 1,311 1,321
190,859 195,012
Less current portion 673 659
Total long term portion $190,186 $194,353
On October 20, 1995, the Company and its lenders entered into the Fourth
Amended and Restated Revolving Credit Agreement (as amended to date, the
"Amended Credit Facility"). The Amended Credit Facility, with a
termination date of October 20, 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 Amended Credit Facility provides for a revolving credit portion of a
maximum amount of $40,000, of which, at December 31, 1996, the Company
had $38,869 available for borrowing.
On February 11, 1997, the Company issued $170,000 in aggregate principal
amount of 9 1/4% senior subordinated notes due 2007. (See Subsequent
Events.)
7.INCOME TAXES
The provision (benefit) for income taxes is as follows:
Three Months Ended December 31,
1996 1995
Current:
Federal $ 620 $ -
State 90 -
Foreign 120 120
830 120
Deferred:
Federal (115) (600)
State 142 (120)
27 (720)
Total provision (benefit) $ 857 $ (600)
The federal income tax provision for the three months ended December 31, 1996
and 1995 reflect 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.
8. UNDERWRITTEN PUBLIC OFFERING
On July 31, 1996, the board of directors of the Company (the "Board"),
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 share 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, became effective immediately prior to the
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.
On November 1, 1996, the Company sold 2,875,000 shares of Common Stock in an
underwritten public offering. The net proceeds to the Company from the sale
(after payment of underwriting discounts and commissions and expenses) were
approximately $34,000.
9. SUBSEQUENT EVENTS
On February 11, 1997, the Company issued $170,000 in aggregate principal
amount of 9 1/4% Senior Subordinated Notes due 2007 (the "Notes"). Most of
the net proceeds from the Notes were utilized to repurchase approximately
$132,000 principal amount of the Company's 12 3/4% Senior Subordinated
Debentures due December 1, 2002 (the "12 3/4% Debentures") which were tendered
in accordance with a tender offer therefor that was commenced by the Company
on January 8, 1997. The balance of the 12 3/4% Debentures will be defeased
and the Company will incur an extraordinary loss of $11,590 or $1.47 per
share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS EXCEPT SHARE INFORMATION)
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
operating activities was $9,822 for the three months ended December 31, 1996.
Cash provided by operating activities resulted primarily from net income of $904
after deducting non-cash charges of $4,556, a decrease in accounts receivable
due to collections, an increase in accounts payable balances due to higher
inventory quantities, partially offset by increased inventory quantities and
interest payments on the 12 3/4% Debentures due December 1, 2002 (the
"Debentures").
Also contributing to the increase in cash and cash equivalents at December 31,
1996 as compared to September 30, 1996 wereproceeds from the sale of 2,875,000
shares of Common Stock in an underwritten public offering completed November 1,
1996. The net proceeds to the Company from the sale (after payment of
underwriting discounts and commissions and expenses) were approximately $34,000.
These proceeds, together with the February 11, 1997 issuance of $170,000 in
aggregate principal amount of the Company's 9 1/4% Senior Subordinated Notes due
February 15, 2007, will be utilized primarily to retire approximately $132,000
of the 12 3/4% Debentures and to repay certain outstanding indebtedness under
the Company's Fourth Amended and Restated Revolving Credit and Security
Agreement, dated as of October 20, 1995, as subsequently amended, among the
Company, the lenders party thereto and The First National Bank of Boston, as
agent (the "Credit Facility").
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. At
December 31, 1996, there was $38,869 available under the Revolver. The Company
is currently in the process of renegotiating the Credit Facility which is due to
expire on October 1, 2001.
Capital expenditures planned in fiscal 1997 of approximately $40,000, of which
$8,824 has been spent to date, are primarily to expand capacity of the Company's
manufacturing facilities, subject to prevailing market conditions.
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 Company's long-term debt
obligations, including the Credit Facility and lease agreements, permit
anticipated capital expenditures and fund the Company's working capital
requirements for the next twelve months.
RESULTS OF OPERATIONS FOR THE FIRST QUARTER
FISCAL 1997 COMPARED TO FISCAL 1996
The following table sets forth the percentage relationships to net sales of
certain income statement items for the quarters ended December 31, 1996 and
1995.
December 31,
1996 1995
Net sales 100.0% 100.0%
Cost of sales 70.6 77.3
Gross profit 29.4 22.7
Selling expenses 9.8 8.8
General and administrative
expenses 8.3 7.7
Amortization of intangibles 0.9 1.0
Operating income 10.4 5.2
Interest expense 7.6 8.8
Amortization of deferred
financing costs 0.3 0.3
Income (loss) before
provision for taxes 2.5 (3.9)
Provision (benefit) for
income taxes 1.2 (0.9)
Net income (loss) 1.3% (3.0)%
Net sales for the quarter ended December 31, 1996 were $70,857 compared to
$64,608 for the same period of fiscal 1996, an increase of $6,249, or 9.7%.
Carpet backing sales for the quarter ended December 31, 1996 were $36,922
compared to $33,553 for the same period of fiscal 1996, an increase of $3,369,
or 10.0%. This increase was the result of higher unit volume and higher average
selling prices. Construction and civil engineering product sales for the quarter
ended December 31, 1996 were $21,072 compared to $19,400 for the same period of
fiscal 1996, an increase of $1,672, or 8.6%. Technical textiles sales for the
quarter ended December 31, 1996 were $12,863 compared to $11,655 for fiscal
1996, an increase of $1,208, or 10.4%.
Gross profit for the quarter ended December 31, 1996 was $20,814 compared to
$14,691 for the same period of fiscal 1996, an increase of $6,123, or 41.7%. As
a percentage of sales, gross profit increased to 29.4% from 22.7%. This
increase was primarily due to increased sales volume and lower average
polypropylene costs.
Polypropylene is the basic raw material used in the manufacture of
substantially all of the Company's products, accounting for approximately 50% of
the Company's cost of goods sold. The Company believes that the selling prices
of its products have adjusted over time to reflect changes in polypropylene
prices. Higher prices of polypropylene, however, without offsetting selling
price increases could have a significant negative effect on the Company's
results of operations and financial condition. Due to the level of competition,
the Company, historically, has been able to pass through only a portion of the
polypropylene cost increases through higher selling prices of certain product
lines.
The Company has not experienced any shortage of supply of polypropylene;
however, continuous increases in demand or major supply disruptions without
offsetting increases in manufacturing capacities could cause future supply
shortages.
Selling expenses for the quarter ended December 31, 1996 were $6,938 compared
to $5,716 for the same period of fiscal 1996, an increase of $1,222, or 21.4%.
This increase was primarily due to increased expenditures associated with higher
sales volume as well as increased marketing expenses. These expenses are related
to the Company's expectation of higher sales in fiscal 1997 resulting from the
completion of the fiscal 1996 capacity expansion program. As a percentage of
sales, selling expenses increased from 8.8% to 9.8%.
General and administrative expenses for the quarter ended December 31, 1996
were $5,881 compared to $4,971 for the same period of fiscal 1996, an increase
of $910, or 18.3%. As a percentage of sales, general and administrative expenses
increased from 7.7% to 8.3%. The increase in general and administrative
expenses was primarily due to infrastructure expenditures, which included an
increased investment in the Company's Management Information System, to support
anticipated Company growth.
Operating income for the first quarter of fiscal 1997 was $7,347 as compared
to $3,356 for the same period of fiscal 1996, an increase of $3,991, or 118.9%.
As a percentage of sales, operating income increased to 10.4% in fiscal 1997
from 5.2% in fiscal 1996. This was primarily due to higher sales volumes and
lower average raw material costs offset by slightly increased selling and
general and administrative costs.
Total interest expense for the first quarter of fiscal 1997 was $5,410
compared to $5,680 for the same period of fiscal 1996, a decrease of $270, or
4.8%, due to interest income of $172 as well as lower average total debt
outstanding at slightly lower interest rates.
The effective income tax rate for the three months ended December 31, 1996 was
49% due primarily to the effect of nondeductible expenses, including the
amortization of goodwill, on higher taxable income in fiscal 1997.
Net income for the first quarter of fiscal 1997 was $904 compared to net loss
of $1,897 for the first quarter of fiscal 1996, an increase of $2,801, or
147.7%. Earnings before interest, taxes, depreciation and amortization
("EBITDA")1 for the first quarter of fiscal 1997 were $11,651 compared to $7,191
for the first quarter of fiscal 1996, an increase of $4,460, or 62.0%. The
increase in net income, as well as EBITDA, was primarily due to higher sales
volumes and lower average raw material costs offset by slightly increased
selling and general and administrative costs.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
1 2.1 Acquisition Agreement dated November 21, 1986 between
Synthetic Industries, Inc., Synthetic Industries Limited, Polyweave
Corporation, the shareholders of Synthetic Industries, Inc.,
Synthetic Industries Limited and SI Holding Inc. including exhibits
thereto.
1 2.2 Plan and Agreement of Merger dated December 4, 1986.
2 2.3 Asset Purchase Agreement dated October 12, 1990 between
Synthetic Industries, Inc. and Chicopee.
10 3.1 Certificate of Incorporation of Synthetic Industries, Inc.
(including all amendments to date) filed with the Secretary of the
State of Delaware.
10 3.2 Amended and Restated By-Laws of Synthetic Industries, Inc.
(including all amendments to date).
4 4.1 Form of Indenture between Synthetic Industries, Inc. and
United States Trust Company of New York, Trustee, in respect to the
12-3/4% Senior Subordinated Debentures due 2002.
9 4.2 Supplemental Form of Indenture between Synthetic Industries,
Inc. and United States Trust Company of New York, Trustee, in
respect to the 12-3/4% Senior Subordinated Debentures due 2002.
9 10.1 Fourth Amended and Restated Revolving Credit and Security
Agreement dated as of October 20, 1995 among Synthetic Industries,
Inc., The First National Bank of Boston and other Lenders listed
on Schedule I thereto, and The First National Bank of Boston, as
agent on behalf of the Lenders.
9 10.2 Amendment No. 1 to the Fourth Amended and Restated Revolving
Credit and Security Agreement dated as of December 1, 1995
11 10.3 Amendment No. 2 to the Fourth Amended and Restated Revolving
Credit and Security Agreement dated as of December 1, 1995
9 10.4 Amendment No. 3 to the Fourth Amended and Restated Revolving
Credit and Security Agreement dated as of December 1, 1995
2 10.5 US Patent No. 4,867,614, Reinforced Soil and Method (Exp.
December 13, 2003).
2 10.6 US Patent No. 4,790,691, Fiber Reinforced Soil and Method
(Exp. December 13, 2003).
2 10.7 US Patent No. 5,007,766, Shaped Barrier for Erosion Control
and Sediment
Collection (Exp. April 16, 2008).
1 10.8 Lease agreement dated November 22, 1971 between Murray Sobel
and Synthetic Industries, Inc. (including all amendments to date).
1 10.9 Lease agreement dated February 13, 1969, between Murray Sobel
and wife, Marcela S. Sobel, and Joseph F. Decosimo, Frank M.
Thompson and Murray Sobel, Trustees and Synthetic Industries, Inc.
(including all amendments to date).
2 10.10 Lease agreement dated December 17, 1990 between Chicopee and
Synthetic Industries, Inc.
2 10.11 Lease agreement dated January 17, 1991 between Herchel L.
Webster and Allie Ree Webster and Synthetic Industries, Inc. (the
"Lumite Lease").
6 10.12 Amendment to the Lumite Lease dated October 1, 1992.
2 10.13 Consulting Agreement dated July 23, 1991 between Texpro
Limitada y Cia S.C.A. and Synthetic Industries, Limited.
7 10.14 Supply Contract between Eastman Chemical Products, Inc. and
Synthetic Industries, Inc. dated December 13, 1991.
13 10.15 Agreement dated September 6, 1996 between Leonard Chill and
Synthetic Industries, Inc.
13 10.16 Agreement dated September 6, 1996 between W. Wayne Freed and
Synthetic Industries, Inc.
13 10.17 Agreement dated September 6, 1996 between Ralph A. Kenner
and Synthetic Industries, Inc.
13 10.18 Agreement dated September 6, 1996 between Gardner Wright, Jr.
and Synthetic Industries, Inc.
13 10.19 Agreement dated September 6, 1996 between John M. Long and
Synthetic Industries, Inc.
13 10.20 Agreement dated September 6, 1996 between Charles T. Koerner
and Synthetic Industries, Inc.
2 10.21 Agreement dated September 6, 1996 between Robert J. Breyley,
Sr. and Fibermesh Company.
13 10.22 Agreement dated September 6, 1996 between Joseph Sinicropi
and Synthetic Industries, Inc.
13 10.23 Agreement dated September 6, 1996 between W.O. Falkenberry
and Synthetic Industries, Inc.
13 10.24 Agreement dated September 6, 1996 between Bobby Callahan and
Synthetic Industries, Inc.
8 10.25 1994 Stock Option Plan for Non-Employee Directors
8 10.26 1994 Stock Option Plan
11 10.27 1996 Stock Option Plan
11 10.28 Incentive Compensation Plan Fiscal Year 1994/1995
11 10.29 Incentive Compensation Plan Fiscal Year 1995/1996
12 10.30 Form of Registration Rights Agreement between Synthetic
Industries, L.P. and Synthetic Industries, Inc. dated as of
October 31, 1996.
13 10.31 Amendment No. 4 to the Fourth Amended and Restated Revolving
Credit and Security Agreement dated as of September 27, 1996.
14 10.32 Amendment No. 5 to the Fourth Amended and Restated Revolving
Credit and Security Agreement dated as of October 28, 1996.
15 10.33 Amendment No. 6 to the Fourth Amended and Restated Revolving
Credit and Security Agreement dated as of January 29, 1997.
27. Financial Data Schedule
- --------------
1 Filed as an exhibit to the Company's Registration Statement on Form S-1
(33-11479) as filed with the Securities and Exchange Commission on
January 23, 1987 and incorporated herein by reference.
2 Filed as an exhibit to the Company's Registration Statement on Form S-1
(33-51206) as filed with the Securities and Exchange Commission on
August 24, 1992 and incorporated herein by reference.
3 Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1993 and incorporated herein by
reference.
4 Filed as an exhibit to the Company's Amendment No. 3 to the Registration
on Form S-1 (33-51206) as filed with the Securities and Exchange
Commission on December 4, 1992 and incorporated herein by reference.
5 Filed as an exhibit to the Partnership's Registration Statement on Form
10 (0-21548) as filed with the Securities and Exchange Commission on
April 16, 1993 and incorporated herein by reference.
6 Filed as an exhibit to the Partnership's Amendment No. 1 to the
Registration Statement on Form 10 (0-21548) as filed with the Securities
and Exchange Commission on August 10, 1993 and incorporated herein by
reference.
7 Pursuant to an order dated October 19, 1992, the Securities and Exchange
Commission granted confidential treatment with respect to certain
portions of this exhibit under Rule 406 of the Securities Act of 1933, as
amended.
8 Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994 and incorporated herein by
reference.
9 Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 and incorporated herein by
reference.
10 Filed as an exhibit to the Company's Registration Statement on Form 8-A
(0-12357) as filed with the Securities and Exchange Commission on
October 24, 1996 and incorporated herein by reference.
11 Filed as an exhibit to the Company's Registration Statement on Form S-1
(333-09377) as filed with the Securities and Exchange Commission on
August 1, 1996 and incorporated herein by reference.
12 Filed as an exhibit to Amendment No. 1 to the Company's Registration
Statement on Form S-1 (333-09377) as filed with the Securities and
Exchange Commission on September 13, 1996 and incorporated herein by
reference.
13 Filed as an exhibit to Amendment No. 2 to the Company's Registration
Statement on Form S-1 (333-09377) as filed with the Securities and
Exchange Commission on October 2, 1996 and incorporated herein by
reference.
14 Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1996 and incorporated herein by
reference.
15 Filed herewith
(b) Reports of Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNTHETIC INDUSTRIES, INC.
By: /s/ Leonard Chill
Leonard Chill
President
Dated: February 12,1997
By: /s/ Joseph Sinicropi
Joseph Sinicropi
Chief Financial Officer
Dated: February 12, 1997
_______________________________
1 The Company believes that EBITDA is helpful in understanding cash flow from
operations that is available for debt service, taxes and capital expenditures.
EBITDA is not a concept in accordance with generally accepted accounting
principles and is not a substitute for operating income, net income or cash
flows from operating activities.
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AMENDMENT NO. 6 AND CONSENT
to
FOURTH AMENDED AND RESTATED REVOLVING
CREDIT AND SECURITY AGREEMENT
dated as of October 20, 1995
THIS AMENDMENT NO. 6 dated as of January 29, 1997 is made by and among
Synthetic Industries, Inc., a Delaware Corporation (the "Borrower"), the First
National Bank of Boston ("Bank of Boston"), Sanwa Business Credit Corporation
("Sanwa") and SouthTrust Bank of Georgia, N.A. ("SouthTrust" and together with
Bank of Boston and Sanwa, the "Lenders"), and Bank of Boston as agent (the
"Agent") for the Lenders.
Preliminary Statements
The Borrower, the Lenders and the Agent are parties to a Fourth
Amended and Restated Revolving Credit and Security Agreement dated as of October
20, 1995, as amended by Amendment No. 1 dated as of December 1, 1995, Amendment
No. 2 dated as of February 14, 1996, Amendment No. 3 dated as of March 15,
1996, Amendment No. 4 dated as of September 26, 1996 and Amendment No. 5 dated
as of November 4, 1996 (the "Credit Agreement"; terms defined therein and not
otherwise defined herein being used herein as therein defined).
The Borrower has requested, and the Lenders and the Agent have agreed,
upon and subject to the terms, conditions and provisions of this amendment, the
right to refinance the Senior Subordinated Debentures, in part by the issuance
of new Indebtedness.
Accordingly, in consideration of the Credit Agreement, the Loans made
by the Lenders and outstanding thereunder, the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Amendments to Credit Agreement. The Credit Agreement
is hereby amended, subject to the provisions of Section 3 of this Amendment, by
(a) amending Section 1.1 Definitions by
(i) amending the definition "Indenture" in its entirety to read as
follows:
"Indenture" means the 1992 Indenture or the 1997 Indenture.
(ii) amending the definition "Senior Subordinated Debentures" in its
entirety to read as follows:
"Senior Subordinated Debentures" means the Senior Subordinated
Debentures Due 2002 in an original aggregate principal amount of
$140,000,000, issued by the Borrower pursuant to the 1992 Indenture, and
the notes issued by the Borrower pursuant to the 1997 Indenture, provided,
that such notes bear interest at a rate that does not exceed 11-1/4% per
annum, are payable as to principal in a single installment not sooner than
the tenth anniversary of the date of issuance, and the proceeds thereof are
applied, first, to the repayment of principal of, and accrued interest and
premium, if any, on the Senior Subordinated Debentures issued by the
Borrower pursuant to the 1992 Indenture, and only after such Debentures
have been paid in full or defeased (or such payment or defeasance provided
for in a manner satisfactory to the Agent), and the 1992 Indenture has been
terminated (or has otherwise ceased to be effective except with respect to
any defeasance or other matters satisfactory to the Agent), to any other
purpose.
(iii) adding thereto in appropriate alphabetical order, the
following new definitions:
"1997 Indenture" means the Indenture dated as of February 1, 1997, to
which the Borrower and United States Trust Company of New York are parties,
as the same may be supplemented, amended and modified from time to time,
consistent with the provisions of this Agreement.
"1992 Indenture" means the Indenture dated as of December 14, 1992, to
which the Borrower and United States Trust Company of New York are parties,
as the same may have been and may hereafter be supplemented, amended and
modified from time to time, consistent with the provisions of this
Agreement.
(b) amending Section 9.4 Copies of Other Reports by inserting
subsection (b) thereof immediately after the word "stockholders" appearing
therein, the phrase "or holders of its Senior Subordinated Debentures or any
trustee for such holders"; and
(c) amending Section 11.1. Events of Default by deleting the notation
"Reserved" appearing in subsection (o) thereof and substituting therefor the
following:
(o) Change of Control. Events shall occur or circumstances shall
exist by reason of which the Borrower becomes obligated pursuant to the terms of
the applicable Indenture, to offer to purchase or repurchase any Senior
Subordinated Debentures, including, without being limited to, pursuant to
Section 4.15 of the 1997 Indenture.
Section 2. Consent . The Agent and the Lenders hereby consent,
subject to the provisions of Section 3 of this Amendment, to the issuance by the
Borrower of not less than $125,000,000 in original aggregate principal amount of
__% Senior Subordinated Notes due 2007 pursuant to the Indenture dated as of
February 1, 1997 (the "1997 Indenture") between the Borrower and United States
Trust Company of New York, Trustee (the "New Subordinated Debt") and the
repayment of the Senior Subordinated Debentures outstanding pursuant to the 1992
Indenture (as defined in the Credit Agreement as amended by this Amendment).
Section 3. Effectiveness of Amendment. Sections 1 and 2 of this
Amendment shall become effective as of the first date (the "Amendment Effective
Date") on which all of the following conditions have been satisfied:
(a) The Agent shall have received the following, in sufficient copies for
all the Lenders, in form and substance satisfactory to the Agent:
(i) at least seven copies of this amendment, each duly executed and
delivered by the Borrower and the Lenders, and
(ii) a certificate of the president or chief financial officer of the
Borrower to the effect that after giving effect to this Amendment,
(A) all representations and warranties of the Borrower set forth
in the Credit Agreement and the other Loan Documents are true and
correct on and as of the Amendment Effective Date, and
(B) no Default or Event of Default has occurred and is
continuing, and such statements shall be true and there shall be
attached to such certificate any amended Schedules to the Credit
Agreement necessary to make such statements true.
(b) The New Subordinated Debt shall have been issued by the Borrower
in an aggregate original principal amount of not less than $125,000,000 at a
fixed interest rate per annum not greater than 11-1/4% and repayable as to
principal in a single installment not earlier than the tenth anniversary of the
date of issuance, pursuant to the 1997 Indenture. The 1997 Indenture, as
executed and delivered by the Borrower, shall provide for subordination of the
New Subordinated Debt to the Loans and Notes on terms and conditions
satisfactory to the Agent and the majority Lenders and shall otherwise be in
form and substance satisfactory to the Agent. The Agent shall have received
evidence satisfactory to it that the amount required to repay the Senior
subordinated Debentures Due 2002 of the Borrower in full, including premium and
accrued interest, if any, thereon, to pay any costs related to such repayment
and to pay any costs related to the issuance of the New Subordinated Debt, which
costs are payable on issuance thereof, does not exceed an amount equal to the
sum of (i) the gross proceeds of the New Subordinated Debt, (ii) and amount
equal to the net proceeds to the Borrower of the IPO and (iii) an amount equal
to $6,000,000, and that the borrower has given irrevocable instructions so to
apply the net proceeds of the New Subordinated Debt, the Borrower's cash and
cash equivalents on hand and any Revolving Credit loans made on the Amendment
Effective Date. No notice to or approval by any private Person or public entity
not already obtained and in full force and effect shall be required to be
obtained before such repayment and termination of the 1992 Indenture are
effected. The Agent shall have received copies, in sufficient number for each
Lender, of all agreements, instruments, certificates, legal opinions and other
documents delivered in connection with the issuance of the New Subordinated
Debt, all of which shall be satisfactory in form and substance to the Agent, and
the Agent and the Lenders shall be entitled to rely on each such legal opinion
(whether as a direct addressee or by a reliance letter from the author thereof).
(c) The Agent shall have received such other documents, instruments
and certificates as the Agent may reasonably request in connection with the
transactions contemplated by this Amendment.
Section 4. Effect of Amendment. From and after the effectiveness
of this amendment, all references in the Credit Agreement and in any other loan
document to "this Agreement," "the Credit Agreement," "hereunder," "hereof" and
words of like import referring to the Credit Agreement shall mean and be
references to the Credit Agreement, as amended by this Amendment. Except as
expressly amended hereby, the
Credit Agreement and all terms, conditions and provisions thereof remain in full
force and effect and are hereby ratified and confirmed. The execution, delivery
and effectiveness of this amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of any lender or the
Agent under any of the Loan Documents, nor constitute a waiver of any provision
of any of the Loan Documents.
Section 5.Counterpart Execution; Governing Law.
(a) Execution in counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.
(b) Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SYNTHETIC INDUSTRIES, INC.
By: ____________________________
(Corporate Seal) Name:
Title:
ATTEST:
_________________________
(Assistant) Secretary
THE FIRST NATIONAL BANK OF
BOSTON, as the Agent and as a
Lender
By: ______________________________
Stephen Y. McGehee
Director
SANWA BUSINESS CREDIT
CORPORATION
By: ______________________________
Name:
Title:
SOUTHTRUST BANK OF GEORGIA,
N.A.
By: _______________________________
Melinda M. Bergbom
Vice President
