================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant To Section 13 Or 15(d) of the Securities
--- Exchange Act of 1934
For the quarterly period ended March 31, 2000.
Transition Report Pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934 For the transition period from ______ To ______.
Commission File Number 0-22089
BRUNSWICK TECHNOLOGIES, INC.
(Exact Name of Registrant As Specified In Its Charter)
Maine 01-0405052
----- ----------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
43 Bibber Pkwy., Brunswick, ME 04011
------------------------------ -----
(Address of principal executive offices) (Zip Code)
(207) 729-7792
--------------
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
--- ---
The registrant had 5,234,415 shares of Common Stock, $.0001 par value,
outstanding as of May 2, 2000.
================================================================================
<PAGE>
BRUNSWICK TECHNOLOGIES, INC.
INDEX
-----
PAGE NO.
--------
Part I. Financial information.
Item 1. Financial Statements
Report of Independent Accountants 3
Consolidated balance sheets as of March 31, 2000
and December 31, 1999. 4
Consolidated statements of income for the three months
ended March 31, 2000 and 1999. 5
Consolidated statements of cash flows for the three months
ended March 31, 2000 and 1999. 6
Consolidated statements of comprehensive income for the
three months ended March 31, 2000 and 1999. 7
Notes to consolidated financial statements. 8-10
Item 2. Management's Discussion and Analysis of Financial
Condition And Results of Operations. 11-12
Item 3. Quantitative and Qualitative Disclosures about
Market Risk. 12
Part II. Other Information.
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K. 13
2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Brunswick Technologies, Inc.
We have reviewed the accompanying consolidated balance sheet of Brunswick
Technologies, Inc. and Subsidiaries as of March 31, 2000, and the related
consolidated statements of income and comprehensive income for the three month
period ended March 31, 2000 and 1999, and the consolidated statements of cash
flows for the three month periods then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards
the consolidated balance sheet as of December 31, 1999, and the related
consolidated statements of income, shareholders' equity (deficit), comprehensive
income, and cash flows for the year then ended(not presented herein), and in our
report dated February 11, 2000 we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying consolidated balance sheet as of December 31, 1999 is fairly
stated in all material respects in relation to the consolidated balance sheet
from which it has been derived.
PricewaterhouseCoopers
May 1, 2000
3
<PAGE>
BRUNSWICK TECHNOLOGIES, INC,
CONSOLIDATED BALANCE SHEETS
(in thousands except share information)
<TABLE><CAPTION>
March 31, December 31,
2000 1999
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
------
Current assets:
Cash $ 989 $ 173
Accounts receivable, net of allowance for doubtful
accounts of $130 in 2000 and 1999 6,641 5,766
Inventories 7,003 7,730
Refundable income taxes 55 220
Deferred income taxes 348 349
Other current assets 413 269
-------- --------
Total current assets 15,449 14,507
Property, plant and equipment:
Land and building 1,136 1,136
Furniture and fixtures 680 638
Leasehold improvements 138 133
Machinery and equipment 12,693 12,503
Machine under construction 285 383
Vehicles 106 106
Management information system 520 518
-------- --------
15,558 15,417
Less accumulated depreciation and amortization (4,340) (4,000)
-------- --------
Net property, plant and equipment 11,218 11,417
Due from shareholder 115 113
Other assets, including investment in Euro-Technology (net of accumulated
amortization of $329 in 2000 and $289 in 1999) 2,013 2,047
Goodwill (net of accumulated amortization of $935 in 2000 and $864 in 1999) 4,697 4,770
-------- --------
Total assets $ 33,492 $ 32,854
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Bank overdraft $ -- $ 1,351
Current installments of long-term debt 113 118
Accounts payable 3,863 2,064
Accrued expenses 985 969
Income taxes payable -- 21
-------- --------
Total current liabilities 4,961 4,523
Deferred income taxes 1,596 1,603
Shareholders' equity:
Common stock, $0.0001 par value; 20,000,000 shares authorized,
5,230,823 outstanding in 2000 and 5,210,891 outstanding in 1999 1 1
Additional paid-in capital 24,984 24,969
Treasury stock at cost; 3300 shares in 1999 and 1998 (5) (5)
Cumulative translation adjustment (147) (71)
Retained earnings 2,102 1,834
-------- --------
Total shareholders' equity 26,935 26,728
-------- --------
Total liabilities and shareholders' equity $ 33,492 $ 32,854
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE>
BRUNSWICK TECHNOLOGIES, INC,
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share information)
<TABLE><CAPTION>
For the three months ended
March 31,
----------------------
2000 1999
-------- --------
(Unaudited)
<S> <C> <C>
Net sales $ 12,147 $ 11,474
Cost of goods sold (raw material purchased from a stockholder
amounted to $849 in 2000 and $2,737 in 1999 for the three
months ended March 31) 9,745 8,990
-------- --------
Gross profit 2,402 2,484
Selling, general and administrative expenses 1,798 1,740
Research and development expenses 165 227
-------- --------
Operating income 439 517
-------- --------
Other income (expense):
Interest income 10 11
Interest expense (6) (8)
Miscellaneous, net (8) 40
-------- --------
(4) 43
-------- --------
Income before income taxes 435 560
Income tax expense 167 195
-------- --------
Net income $ 268 $ 365
======== ========
Basic:
Earnings per share $ 0.05 $ 0.07
Weighted average common shares outstanding 5,221 5,188
Diluted:
Earnings per share $ 0.05 $ 0.07
Weighted average common shares outstanding 5,436 5,448
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE>
BRUNSWICK TECHNOLOGIES, INC,
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands except share information)
<TABLE><CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------
2000 1999
---------- ----------
Cash flows from operating activities: (Unaudited)
<S> <C> <C>
Net income $ 268 $ 365
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 466 375
Deferred taxes (7) (3)
Changes in assets and liabilities:
Increase in accounts receivable (929) (440)
(Increase) decrease in inventories 699 (397)
Decrease in refundable income taxes 165 27
(Increase) decrease in other current assets (146) 197
Increase in due from Shareholder (2) (1)
Increase in accounts payable Shareholder -- 151
Increase in accounts payable and accrued expenses 1,868 1,427
(Decrease) increase in income taxes payable (19) 161
---------- ----------
Net cash provided by operating activities 2,363 1,862
---------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment (250) (605)
Increase in other assets (6) (2)
---------- ----------
Net cash used in investing activities (256) (607)
---------- ----------
Cash flows from financing activities:
Decrease in book overdraft (1,351) (474)
Net repayments under line of credit -- (261)
Repayment of short term portion of long term debt (4) --
Repayment of long-term debt -- (3)
Proceeds from exercise of common stock options and warrants -- 3
---------- ----------
Net cash used in financing activities (1,355) (735)
---------- ----------
Effect of currency exchange rate changes on cash 64 (52)
---------- ----------
Net increase in cash 816 468
Cash at beginning of period 173 796
---------- ----------
Cash at end of period $ 989 $ 1,264
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements
6
<PAGE>
BRUNSWICK TECHNOLOGIES, INC,
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands except share information)
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------
2000 1999
---------- ----------
(Unaudited)
Net income $ 268 $ 365
Foreign currency translation adjustments (76) (151)
---------- ----------
Comprehensive income $ 192 $ 214
========== ==========
The accompanying notes are an integral part of the financial statements
7
<PAGE>
BRUNSWICK TECHNOLOGIES, INC,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. CONSOLIDATED FINANCIAL STATEMENTS:
The consolidated financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. In the opinion of management, the
amounts shown reflect all adjustments necessary to present fairly the financial
position and results of operations for the periods presented. All such
adjustments are of a normal recurring nature. The year-end consolidated balance
sheet was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. It is
suggested that the financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's latest annual
report.
FOREIGN CURRENCY TRANSLATION
All assets and liabilities of foreign operations are translated into U.S.
dollars at period end exchange rates. Income and expense items are translated at
average exchange rates during the period. Foreign exchange gains and losses
arising from transactions are reflected in net income.
B. INVENTORIES:
Inventories consist of the following components:
MARCH 31 DECEMBER 31,
2000 1999
---------- ----------
(in thousands)
(Unaudited)
Raw materials $ 1,945 $ 2,843
Work-in-process 1,002 1,038
Finished goods 4,056 3,849
---------- ----------
$ 7,003 $ 7,730
========== ==========
8
<PAGE>
BRUNSWICK TECHNOLOGIES, INC,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
C. NEW ACCOUNTING PRONOUNCEMENTS:
In December 1999, the SEC issued Staff Accounting Bulletin No. 101 "SAB 101",
"Revenue Recognition in Financial Statements". SAB 101 summarizes certain of the
SEC's views in applying generally accounting principles to revenue recognition
in financial statements. The Company is required to adopt SAB 101 in the second
quarter of 2000. Management does not expect the adoption of SAB 101 to have a
material effect on the Company's financial condition or results of operations.
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which establishes accounting and reporting standards
for derivative instruments, including certain derivatives embedded in other
contracts, and for hedging activities. SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those financial instruments at fair value. The
accounting for changes in the fair value of a derivative under SFAS 133 depends
on the intended use of the derivative and its hedging destination. SFAS 133 is
required to be adopted for the Company's year ending December 31, 2001 and the
Company has not yet determined the impact SFAS 133 will have on its results of
operations, liquidity or financial position.
D. EARNINGS PER SHARE:
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share calculations:
<TABLE><CAPTION>
Three months ending March 31,
(in thousands except per share information)
2000 1999
---------------------------------- ---------------------------------
---------------------------------- ---------------------------------
Net Per Net Per
Income Shares Share Income Shares Share
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $ 268 5,221 $ 0.05 $ 365 5,188 $ 0.07
Effect of dilutive securities:
Conversion of Stock Options - 215 - 300
---------- ---------- ---------- ----------
Diluted EPS $ 268 5,436 $ 0.05 $ 365 5,488 $ 0.07
========== ========== ========== ==========
</TABLE>
9
<PAGE>
BRUNSWICK TECHNOLOGIES, INC,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
E. SEGMENT INFORMATION:
The Company has two reportable segments - (1) Domestic and (2) International.
Revenue and asset information is based on the country in which the legal
entities are located. Segment data includes intersegment revenues, as well as a
royalty charge pursuant to an intersegment technology licensing agreement.
Three Months Ended
March 31,
2000 1999
---------- ----------
(in thousands)
DOMESTIC (Unaudited)
Net sales $ 9,909 $ 9,457
Operating income 266 198
Intercompany income 141 101
Pretax income 456 340
Net income $ 291 $ 218
INTERNATIONAL
Net sales $ 2,238 $ 2,017
Operating income 173 319
Intercompany expense (141) 101
Pretax income (21) 220
Net income $ (23) $ 147
EBITDA
Domestic $ 793 $ 651
International 114 292
---------- ----------
Total EBITDA $ 907 $ 943
========== ==========
ASSETS
Domestic $ 31,083 $ 28,894
International 6,197 3,831
(Intercompany elimination) (3,788) (1,902)
---------- ----------
Total assets $ 33,492 $ 30,823
========== ==========
10
<PAGE>
BRUNSWICK TECHNOLOGIES, INC,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Matters discussed in this report with respect to expected financial results and
future events, including any discussion, expressed or implied, of the Company's
anticipated revenue growth, operating results and future earnings per share are
forward-looking statements (identified by the words "expect", "estimate",
"project", "plans", "believe", and similar expressions) that involve known and
unknown risks and uncertainties. For these statements the Company claims the
protection of the safe harbor of the Private Securities Litigation Reform Act of
1995. The Company's future operating results are dependent on its ability to
achieve increased sales and to control expenses. Factors such as lower than
expected inflation, product cost fluctuations, changes in product mix, continued
or increased competitive pressures from existing competitors and new entrants
(both fiberglass and non-fiberglass), including price cutting strategies and
deterioration in general of regional economic conditions are all factors which
could adversely affect sales projections. Additionally, the Company's operating
results may be negatively affected by (i) difficulties, uncertainties and
expenses associated with the unsolicited tender offer which has been made by a
shareholder, (ii) fluctuations in valuation of the pound Sterling versus other
European currencies and the US Dollar, (iii) the failure to obtain necessary
capital for the expansion of facilities and acquisitions, (iv) the inability to
continue to improve production capacity and scheduling (v) failure of
implementation of legislative incentives regarding wind energy industry, (vi)
the ability of the Company to obtain cost effective raw material pricing, (vii)
market conditions that would adversely effect the ability of the Company to put
through and maintain price increases, and (vii) the credit and market
concentrations associated with the Company's large distributors. These and other
risks are detailed from time to time in the Company's SEC reports, including
Form 10K for the year ended December 31, 1999.
Results of Operations
- ---------------------
Net sales in the first quarter of 2000 increased 5.9% over the same period last
year and 16.1% over the forth quarter of 1999. The gross profit margin was
19.8%, down from 21.6% during the same period last year and 21.1% in the fourth
quarter of 1999. Net income was $268,000, or $0.05 per fully diluted share.
Domestically, demand rebounded from the fourth quarter showing strong growth
entering 2000. Orders were received and filled for wind-blades for the first
time since the first quarter of 1999. Volume is expected to continue growing in
this category throughout 2000. Marine demand continues to be strong throughout
North America. Oil and Gas and Industrial shipments continue to show steady
demand with an increase in the demand for BTI's Black Steel(R) Carbon and Carbon
Hybrid products.
Internationally, demand continues to be strong with an increase in pounds
shipped of 17.6% over the fourth quarter of 1999 and a 13.3% increase over the
same period last year. Shipments into the wind energy industry have stabilized
following the uncertainty in the industry in general during the fourth quarter
of 1999. The major manufactures and industry participants are gaining
sophistication and are now positioned to deal with continued growth.
Gross margin slipped during the first quarter of 2000 due primarily to two
significant factors:
o Raw material price negotiations with the major glass suppliers extended
through the last few days of 1999. This was too late for the increases
to be effectively passed on to the marketplace until late in the first
quarter.
o Significant production capacity was committed to the development and
delivery of BTI's Black Steel(R) carbon products. The production time
dedicated to these efforts during the first quarter came at the expense
of conventional glass product that could have shipped instead.
Selling, general and administrative expenses were 14.8% of net sales for the
first quarter of 2000, down from 15.2% during the same period one-year ago.
Research and development costs as well as selling expenses were down in
comparison to the same period last year in terms of both dollars and percent of
net sales. Selling expense has been managed lower through strategic reallocation
of resources.
11
<PAGE>
BRUNSWICK TECHNOLOGIES, INC,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other income was $47,000 less in the first quarter of 2000 compared to the same
period in 1999 due to lower cash discounts and higher foreign exchange losses.
Cash discounts fluctuate based on the level and timing of raw material
purchases. The losses in foreign currency came primarily as a result of the
British Pound Sterling strengthening against the Euro, causing a devaluation in
foreign denominated receivables of Brunswick Technologies Europe LTD, a UK based
wholly owned subsidiary.
Financial Condition
- -------------------
The consolidated balance sheet at March 31, 2000 reflected improved liquidity
over year-end with an increase in cash and decrease in inventories. Cash had
been used at year-end to purchase approximately one month of domestic raw
material ahead of the price increases. Net cash from operating activities
totaled $2.4 million and the Company was paid out of its line of credit with the
bank as of March 31st. Capital expenditures during the quarter totaled $256,000
largely due to production equipment enhancements at the Maine and UK
manufacturing plants. The Company's $4.0 million unsecured line of credit was
recently renewed through May 27, 2001 and the Company believes cash flow from
ongoing operations and funds available under the Company's credit facility will
be adequate to meet the Company's needs during 2000, including the expenses
associated with the Company's unsolicited tender offer.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management feels that the Market Risk profile of the Company is low. The Company
has a wholly owned subsidiary, BTI-Europe, located in Andover, UK. The value of
the Company's interest in, and inter-Company obligations to and from, BTI-Europe
may fluctuate from time to time in response to changes in the relative exchange
rates between the US Dollar ($) and British Pound Sterling ((pound)). The
financial statements of BTI-Europe are consolidated into the financial
statements of the Company for financial reporting purposes in accordance with
Generally Accepted Accounting Principals ("GAAP") and, as such, are translated
into US currency at the exchange rates prescribed by GAAP. The Company also
sells product throughout the world and, from time to time, may agree to sell
based on the local currencies. The Company may, from time to time, enter into
foreign exchange forward contracts in order to hedge against currency
fluctuations associated with these foreign sales or anticipated sales.
Accordingly, the Company's accounts receivable may be subject to realized and
unrealized foreign exchange gains or losses and are reported in accordance with
GAAP. At March 31, 2000, the Company had approximately $1,111,000 in foreign
exchange forward contracts outstanding. These contracts were hedging a portion
of foreign denominated accounts receivable and inter-company obligations.
Accordingly, any loss or gain from these contracts have been or will be offset
by corresponding losses or gains on the hedged accounts receivable and/or
inter-company obligations.
12
<PAGE>
PART II. OTHER INFORMATION.
ITEM 5. OTHER INFORMATION
A limited review was made of the results of the three months ended
March 31, 2000 by PricewaterhouseCoopers LLP, whose report is included
in Part 1. Such report is not within the meaning of "report" in Section
7 and 11 of the Securities Act and the independent accountants
liability under Section 11 does not extend to it.
VA Acquisition Corporation, its parent, CertainTeed Corporation, and
Compagnie de Saint-Gobain which indirectly owns VA Acquisition
Corporation and CertainTeed Corporation, have filed with the Securities
and Exchange Commission a Tender Offer Statement, on Schedule TO, under
Section 14(d)(1) dated April 20, 2000, which has been amended by ten
amendments to date, relative to its tender for the Company's shares of
common stock. The Company has filed its Solicitation/Recommendation
Statement on Schedule 14D-9 pursuant to Section 14(d)(4) dated May 3,
2000, which has been amended by four amendments to date, in which it
recommends against the tender as inadequate and not in the best
interests of the Company and its stockholders. All filings may be
obtained for free on the SEC's Internet web site at http://www.sec.gov.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following exhibits are filed with this report:
(a) Exhibit 3 - Amendment to by-laws
(b) Exhibit 10* - Agreement with Vetrotex America dated January 3, 2000
(c) Exhibit 27 - Financial Data Schedule
The Company did not file any reports on Form 8-K during the period
covered by this report.
----------------
* Exhibit for which the Company is seeking confidential treatment
for certain portions. The confidential material in Exhibit 10 has
been redacted and separately filed with the Securities and
Exchange Commission.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Brunswick Technologies, Inc.
May 12, 2000 By: /s/ Alan M. Chesney
-------------------------------------------
Alan M. Chesney
Chief Financial Officer and Treasurer
(Principal financial and accounting officer)
14
RESOLVED: That the first sentence of Article III, Section 6 of the
Bylaws of the Corporation hereby is amended to read as follows:
Section 6 Notice. Notice of any special meeting shall be given
by any usual means of communication, including facsimile
transmission, telephone or email, not less than twenty four
(24) hours before the meeting.
VETROTEX AMERICA
Fiber Glass Reinforcements
750 F. Swedesford Road
P.O. Box 860
Valley Forge, PA 19182
(610) 341-7000 Fax (610) 341-7470
January 3, 2000
Mr. Tom Wallace
Brunswick Technologies, Inc.
43 Bibber Parkway
Brunswick, ME 04011
Dear Tom:
Vetrotex America is pleased to offer the following contract proposal to
Brunswick Technologies, Inc. for your consideration.
CONTRACT PERIOD
January 1, 2000 through close of business December 31, 2000.
ELIGIBLE VETROTEX AMERICA PRODUCTS AND CONTRACT PRICE
=========== ======================== =====================
Yield Volume in Lbs Price $/lb
=========== ======================== =====================
1200 1,000,000 (max) [ * ]
----------- ------------------------ ---------------------
675 1,500,000 (max) [ * ]
----------- ------------------------ ---------------------
450 [ * ]
----------- ------------------------ ---------------------
225 [ * ]
----------- ------------------------ ---------------------
113 [ * ]
----------- ------------------------ ---------------------
Total 6,000,000 lbs
----------- ------------------------ ---------------------
PURCHASE AND SUPPLY COMMITMENTS
Customer agrees to purchase 6 million pounds of product directly from Vetrotex
America. The above volumes can be mixed as you wish with the exception of 1200 &
675 yields where maximum volumes are indicated. Therefore, the total volume can
only equal 6 million pounds.
A Saint-Gobain Company ISO 9002 Registered Awarded OSHA Star
* Confidential material omitted and separately filed with the Commission under
an application for confidential treatment.
<PAGE>
Brunswick Technologies, Inc.
January 3, 2000
Page 2
Customer acknowledges that its compliance with this purchase commitment is a
condition to Vetrotex America's commitments under this Agreement.
Customer agrees that all product purchased hereunder will be used solely for
Customer's own use and shall not be purchased for resale.
MONTHLY SHIPMENTS
The purchase and sale of all volumes hereunder shall be relatively uniform from
month to month. Vetrotex America's supply commitment, with regard to our 6
million pound annual cap, shall be a minimum of 400,000 lbs per month and shall
not exceed 550,000 lbs per month.
PAYMENT TERMS
1% 15, net 30 days from the invoice date.
FREIGHT TERMS
Shipments must be 40,000 pounds or full visible truckload quantities. Freight
terms are F.O.B. Wichita Falls, Texas. Freight will be prepaid and absorbed via
Vetrotex America's routing to a single destination. 4 days normal freight time
(truck) is understood.
AGREEMENT NOT ASSIGNABLE
This Agreement may not be assigned or transferred (by operation of law or
otherwise) by Customer without the prior written consent of an authorized
Vetrotex America representative. For this purpose, an assignment includes the
sale or other transfer of a controlling interest in the stock or other equity of
Customer and any merger of Customer with or into another entity.
PACKAGING
Standard Vetrotex America packaging on the "special BTI pallet," already in use,
will be used for 225, 675, 450, and 1200 yields. Should any other products be
sold to BTI, then Vetrotex America will utilize standard packaging and pallets.
CONSIGNMENT
Vetrotex America will provide for a consignment inventory at Brunswick, ME.
Consignment inventory will be subject to UCC 1 filings by Vetrotex America.
Consignment quantities will be limited to a maximum of 2 weeks' supply.
FORECAST
Customer will provide a rolling 2 month forecast to Vetrotex America each month
by the 20th of each month to the Sales Office in Montreal, Quebec, CN (Robert
Martineau's office).
MISCELLANEOUS
Except as expressly stated otherwise in this Agreement, all sales shall be
subject to Vetrotex America's General Terms and Conditions of Sale, as in effect
from time to time. A copy of the current General Terms and Conditions of Sale is
attached.
<PAGE>
Brunswick Technologies, Inc.
January 3, 2000
Page 3
This Agreement sets forth the entire agreement of the parties regarding the
purchase supply of the referenced reinforcement products and supercedes any
prior proposals or agreements, written or oral. This Agreement may not be
amended or modified in any respect except by the prior written agreement of both
parties. No waiver by either party of any term or condition of this Agreement
shall be effective unless in writing and signed by the waiving party.
The terms of this Agreement shall supersede, and shall not be supplemented by,
the terms of any purchase order, acknowledgment, invoice or other document
issued or used by either party in connection with the purchase or sale of
products hereunder.
TERMINATION
This Agreement terminates as of the close of business on December 31, 2000.
If this offer meets with your approval, please have an authorized representative
of BTI sign and date this letter in the space provided below and return it to me
at the above address prior to January 10, 2000. This offer will be automatically
deemed withdrawn if we have not received your written acceptance by the close of
business on January 10, 2000.
Sincerely, Accepted and agreed:
/s/ Robert S. Jones /s/ Thomas L. Wallace
- ------------------------ ---------------------
(Authorized Signature) (Authorized Signature)
Robert S. Jones
Vetrotex America Name: Tom Wallace
-------------------------------
Title: Vice President, Manufacturing
-------------------------------
BRUNSWICK TECHNOLOGIES, INC.
Date: 1/4/00
-------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 989
<SECURITIES> 0
<RECEIVABLES> 6641
<ALLOWANCES> 130
<INVENTORY> 7003
<CURRENT-ASSETS> 15449
<PP&E> 15558
<DEPRECIATION> 4340
<TOTAL-ASSETS> 33492
<CURRENT-LIABILITIES> 4961
<BONDS> 0
0
0
<COMMON> 24980
<OTHER-SE> 1955
<TOTAL-LIABILITY-AND-EQUITY> 33492
<SALES> 12147
<TOTAL-REVENUES> 12147
<CGS> 9745
<TOTAL-COSTS> 11708
<OTHER-EXPENSES> (2)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 435
<INCOME-TAX> 167
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 268
<EPS-BASIC> 0.05
<EPS-DILUTED> 0.05
</TABLE>
