<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
----------------------
OR
[ ] 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 1-10756
---------
CARLISLE PLASTICS, INC.
-------------------------------------------------------
(Exact name of registrant as specified in its Charter)
Delaware 04-2891825
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
_____________________________
Commission file number 33-35966
----------
POLY-TECH, INC.
-------------------------
Minnesota 41-1503086
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
_____________________________
One Union Street, Boston, MA 02108
- - ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(617) 523-0920
----------------------------------------------------
(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 _____
At June 30, 1994, 8,193,733 and 9,510,552 shares of Carlisle Plastics, Inc.
Class A Common Stock and Class B Common Stock, respectively, were outstanding.
<PAGE> 2
CARLISLE PLASTICS, INC.
FORM 10Q
QUARTER ENDED JUNE 30, 1994
<TABLE>
INDEX
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements ................................ 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........ 17
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings.................................... 20
Item 2. Changes in Securities ............................... 20
Item 3. Defaults Upon Senior Securities ..................... 20
Item 4. Submission of Matters to a Vote of
Security Holders .................................... 20
Item 5. Other Information ................................... 20
Item 6. Exhibits and Reports on Form 8-K..................... 20
SIGNATURES ....................................................... 21
INDEX TO EXHIBITS ................................................ 22
</TABLE>
2
<PAGE> 3
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
(In thousands, except share (Unaudited)
and per share amounts) JUNE 30, DECEMBER 31,
1994 1993
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,132 $ 19,745
Receivables--principally trade--net of
allowances of $2,686 as of June 30, 1994
and $3,025 as of December 31, 1993 53,850 46,770
Inventories 42,901 43,032
Other current assets 9,166 5,750
-------- --------
Total current assets 108,049 115,297
-------- --------
Property, plant and equipment--net of
accumulated depreciation of $76,154
as of June 30, 1994 and $68,606
as of December 31, 1993 141,700 135,755
Goodwill--net 66,673 67,729
Other assets--net 6,608 7,067
-------- --------
TOTAL ASSETS $323,030 $325,848
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 8,435 $ 11,209
Accounts payable 36,908 34,109
Other accrued liabilities 8,029 15,722
-------- --------
Total current liabilities 53,372 61,040
-------- --------
Long-term debt--net of current portion 187,621 183,101
Deferred income taxes 10,355 10,816
Other non-current liabilities 3,744 1,625
Commitments and contingencies
Stockholders' equity:
Preferred stock--$.01 par value;
10,000,000 shares authorized,
no shares issued or outstanding
Class A common stock--$.01 par value;
50,000,000 shares authorized;
8,193,733 and 8,000,401 issued and
outstanding as of June 30, 1994 and
December 31, 1993, respectively 82 80
Class B common stock--$.01 par value;
20,000,000 shares authorized;
9,510,552 and 9,618,694 issued and
outstanding as of June 30, 1994 and
December 31, 1993, respectively 95 96
Additional paid-in capital 68,359 67,904
Retained earnings (deficit) (598) 1,186
-------- --------
Total stockholders' equity 67,938 69,266
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $323,030 $325,848
======== ========
</TABLE>
See notes to unaudited condensed consolidated financial statements and
independent accountants' report.
3
<PAGE> 4
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<CAPTION>
PERIODS ENDED JUNE 30,
---------------------------------------------------------------
THREE MONTHS SIX MONTHS
------------------------------ -----------------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 95,002 $ 87,767 $181,094 $178,598
Cost of goods sold 71,227 63,259 135,866 129,754
-------- -------- -------- --------
Gross profit 23,775 24,508 45,228 48,844
Operating expenses 16,650 16,315 31,886 32,865
Goodwill and other amortization 773 743 1,517 1,485
-------- -------- -------- --------
Operating income 6,352 7,450 11,825 14,494
Interest expense 4,395 5,691 9,942 11,621
Interest and other income (33) (94) (134) (222)
-------- -------- -------- --------
Income before provision for
income taxes, extraordinary item
and cumulative effect of change
in accounting principle 1,990 1,853 2,017 3,095
Provision for income taxes 836 801 847 1,360
-------- -------- -------- --------
Income before extraordinary
item and cumulative effect of
change in accounting principle 1,154 1,052 1,170 1,735
Extraordinary item (net of taxes of
$1,574 in 1994 and $138 in 1993) - - (2,462) (234)
Cumulative effect of change in
accounting principle relating
to income taxes - - - 1,586
-------- -------- -------- --------
Net income (loss) $ 1,154 $ 1,052 $ (1,292) $ 3,087
======== ======== ======== ========
Earnings per common share:
Before extraordinary item and
change in accounting principle $ .07 $ .06 $ .07 $ .10
Extraordinary item - - (.14) (.01)
Cumulative effect of change in
accounting principle relating
to income taxes - - - .09
-------- -------- -------- --------
Net income (loss) $ .07 $ .06 $ (.07) $ .18
======== ======== ======== ========
Weighted average of common
and common equivalent shares 17,711 17,659 17,683 17,636
</TABLE>
See notes to unaudited condensed consolidated financial statements and
independent accountants' report.
4
<PAGE> 5
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------
1994 1993
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,292) $ 3,087
Adjustments to reconcile net income (loss) to
net cash flows from operating activities:
Depreciation and amortization 10,449 9,499
Deferred income taxes (556) 204
Bad debt expense 83 252
Write-off of deferred financing costs 1,331 122
Change in accounting principle - (1,586)
Other 8 52
Changes in assets and liabilities:
Receivables (7,163) (2,507)
Inventories 131 (4,349)
Other current assets (3,321) 1,970
Accounts payable 2,799 (727)
Other accrued liabilities (4,972) (2,020)
Other assets (548) (233)
-------- --------
Total adjustments (1,759) 677
-------- --------
Net cash (used for) provided by
operating activities (3,051) 3,764
-------- --------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Acquisition of property,
plant and equipment--net (12,153) (5,898)
Purchase of minority interest of subsidiary (3,221) -
Sale of assets of trucking subsidiary - 1,500
-------- --------
Net cash used for investing activities (15,374) (4,398)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (80,479) (5,598)
Issuance of long-term debt 45,225 467
Borrowings under long-term accounts
receivable securitization 35,000 -
Borrowings under long-term line of credit 33,168 -
Repayments under long-term line of credit (31,168) -
Deferred financing costs (1,390) (5)
Exercise of stock options 456 38
Other - 125
-------- --------
Net cash provided by (used for)
financing activities 812 (4,973)
-------- --------
CASH AND CASH EQUIVALENTS:
Net decrease (17,613) (5,607)
Beginning of period 19,745 17,750
-------- --------
End of period $ 2,132 $ 12,143
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 11,688 $ 11,244
Income taxes paid $ 543 $ 771
</TABLE>
See notes to unaudited condensed consolidated financial statements and
independent accountants' report.
5
<PAGE> 6
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
(Unaudited--See Independent Accountants' Report)
A. Basis of Presentation
The condensed consolidated financial statements have been prepared by
Carlisle Plastics, Inc. (the "Company") pursuant to the rules and regulations
of the Securities and Exchange Commission. In the opinion of management, the
statements reflect all adjustments, which are of a normal recurring nature, to
present fairly the Company's financial position as of June 30,1994 and December
31, 1993 and the results of operations for the three months and six months
ended June 30, 1994 and 1993 and cash flows for the six months ended June 30,
1994 and 1993. While the interim financial statements and accompanying notes
are unaudited, they have been reviewed by Deloitte & Touche, the Company's
independent certified public accountants.
Results of operations are not necessarily indicative of the results expected
for the full year. Certain amounts in prior periods' financial statements have
been reclassified to conform to the current period's presentation.
These condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes included in the Company's
Form 10-K for the year ended December 31, 1993.
B. Inventories
<TABLE>
Inventories consisted of the following at June 30, 1994 and December 31, 1993:
<CAPTION>
(Unaudited)
June 30, December 31,
1994 1993
----------- ------------
<S> <C> <C>
Raw materials $16,754 $13,909
Finished Goods 26,147 29,123
------- -------
Total $42,901 $43,032
======= =======
</TABLE>
C. Related Party Transactions
Management fees incurred with respect to services rendered by affiliates of a
major stockholder were $375 for the three months ended June 30, 1994 and 1993
and $750 for the six months ended June 30, 1994 and 1993. The management fee
agreement has been extended for three years to May 1997.
D. Accounting for Income Taxes
As of June 30, 1994, the Company had net operating loss carryforwards from a
subsidiary which was not consolidated for the purpose of filing income tax
returns for years prior to 1994. These carryforwards, totaling $9,385, expire
in the years 2006 to 2008. The Company also had alternative minimum tax
credits totaling $2,553, which have no expiration date.
6
<PAGE> 7
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
E. Interest Rate Agreements
In September 1993, the Company received $2,000 from the termination of an
interest rate swap agreement, which it had entered into in June 1993.
This gain has been deferred and is being amortized over the original term
of the swap agreement.
On September 15, 1993, the Company entered into a new interest rate swap
agreement with a notional principal amount of $90,000, terminating on June 15,
1997 (matching the principal and due date of the Company's 10.25% Senior Fixed
Rate Notes). Under the agreement, the Company receives interest at a fixed
rate (4.9%) and pays interest at a floating rate (LIBOR), which is established
in arrears at six month intervals. The agreement is collateralized by a letter
of credit. The net interest differential and amortization of the deferred gain
of $50 was recorded as an increase in interest expense in the three month
period ended June 30, 1994 and a $184 reduction in interest expense in the six
month period ended June 30, 1994. The Company is subject to interest rate risk
during the term of the swap agreement. A sufficient increase in market
interest rates during the term of the agreement could result in the Company
having a net payment obligation under the agreement.
On May 5, 1994, the Company bought an interest rate corridor for $1,545 with a
notional principal amount of $90,000, which, beginning June 15, 1995, limits
the Company's interest rate on the interest rate swap agreement at levels
between 5.86% to 7.36%. The term of this corridor is June 15, 1995 through June
15, 1997; the principal and due date matches that of the Company's 10.25% Senior
Fixed Rate Notes. The cost of entering into the interest rate corridor has been
deferred and amortized over the term of the agreement. The Company is subject
to interest rate risk during the period of this corridor to the extent that the
LIBOR rate, established in arrears at six month intervals, exceeds 7.36%.
Based upon market information provided by the counterparty as of June 30,
1994, the estimated net cost of terminating the interest rate agreements
approximated $4,200.
F. Business Acquisition
Under a put and call arrangement signed in conjunction with the acquisition of
Rhino-X Industries, Inc. ("Rhino-X") in July 1991, the Company purchased the
minority interest shares at the minimum option price of $12 per share on January
1, 1994, as established by the put and call arrangement. The Company had
recorded an obligation of $4,000 at December 31, 1993, less $500 for the
minority shareholders' interest in retained earnings. At December 31, 1993 this
obligation was also reduced by $779 for sales tax payments made by the Company
and recoverable from the minority shareholders. The Rhino-X acquisition was
accounted for using purchase accounting.
7
<PAGE> 8
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
G. Debt Financing
During March and April of 1994, the Company entered into a series of
transactions to repay and refinance certain debt.
On March 1, 1994, the Company retired $10,000 of its Senior Variable Rate
Notes due 1994 upon maturity.
On March 9, 1994 (and as amended April 14, 1994), the Company entered into a
three-year $55,000 revolving credit facility secured by the Company's accounts
receivable and inventory. Under the facility, the Company may borrow the lesser
of $55,000 or 80% of eligible accounts receivable and 50% of eligible inventory
(as defined in the agreement) for working capital purposes. The borrowings
under this facility are payable at the expiration of the three-year agreement.
The interest rates on advances under the facility are: LIBOR plus 2.25% for
advances less than $5,000, LIBOR plus 3.25% for advances from $5,000 to $10,000
and LIBOR plus 3.75% for advances in excess of $10,000. The LIBOR rate
applicable to the revolving credit facility was 4.5625% at June 30, 1994. The
fee for unused available funds is 0.25% per annum. On April 14, 1994, the
facility was reduced to $20,000 after the implementation of an accounts
receivable securitization program. At June 30, 1994, the Company had $2,000 in
outstanding revolver advances.
The revolving credit facility includes a $9,000 sub-facility for letters of
credit. The fee for letter of credit obligations is 1.5% per annum for
outstanding obligations less than $2,500, 2.0% for outstanding obligations
from $2,500 to $4,999 and 2.5% for outstanding obligations of $5,000 or
greater. At June 30, 1994, the Company had $6,400 in outstanding letter of
credit obligations.
On April 1, 1994, the Company retired an industrial revenue bond for $300
prior to maturity.
On April 4, 1994, the Company entered into a five-year sale and leaseback
financing. Under the financing, the Company sold and leased back equipment for
$45,025, resulting in a gain of approximately $2,400, which was deferred and
amortized over the term of the related equipment. The lease is secured by the
related equipment. The rental payments for the lease are based on a variable
interest rate of LIBOR plus 2.65%. The LIBOR rate applicable to the sale and
leaseback agreement was 4.625% at July 4, 1994.
On April 4, 1994, the Company retired the $68,525 outstanding balance of its
13.75% Senior Fixed Rate Notes, three years prior to maturity, at 103.93% of
the principal amount. The notes were retired using proceeds of the sale and
leaseback financing and cash on hand. The premium and the related write-off of
deferred financing costs were recorded as an extraordinary charge of $2,462
(net of taxes) in the first quarter of 1994.
On April 14, 1994, the Company entered into a five-year $35,000 accounts
receivable securitization program for working capital purposes. Under this
program, the Company sold and will continue to sell substantially all of its
accounts receivable to a newly-formed, wholly-owned subsidiary, Carlisle
Plastics Funding Corporation ("CPFC"). CPFC purchases the accounts receivable
of the Company with proceeds from its borrowings under a commercial paper
facility (limited to 80% of eligible accounts receivable as defined in the
agreement). The interest rate of the facility is the securitization commercial
paper rate (4.34% at June 30, 1994) plus 1.25%. The purchased accounts
receivable are solely the assets of CPFC. In the event of liquidation of CPFC,
creditors of CPFC would be entitled to satisfy their claims from CPFC's assets
prior to any distribution to the Company. CPFC is fully consolidated
within the Company's financial statements.
8
<PAGE> 9
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
G. Debt Financing (continued)
The proceeds of $35,000 were used to pay down the outstanding balance of
revolving credit advances. The borrowings under this agreement are payable at
the expiration of the five-year agreement.
The agreements for the revolving credit facility, sale and leaseback financing,
and accounts receivable securitization program contain covenants that include
requirements to maintain compliance with certain financial tests and ratios,
including maximum capital expenditures, minimum net worth, minimum interest
and taxes coverage ratio, minimum fixed charges coverage ratio and maximum
funded debt to equity ratio.
H. Unaudited Condensed Financial Information of
Carlisle Plastics, Inc. and Subsidiaries
Unaudited condensed consolidating financial information of Carlisle Plastics,
Inc. and subsidiaries follows.
9
<PAGE> 10
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
H. Unaudited Condensed Financial Information of
Carlisle Plastics, Inc. and Subsidiaries (continued)
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS
<CAPTION>
JUNE 30, 1994
------------------------------------------------------------------------
Carlisle Non-Guarantor
Plastics, Poly-Tech, Subsidiaries
Inc. Inc.(1) (2) Eliminations Total
--------- ---------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,574 $ 1 $ 557 $ - $ 2,132
Receivables--net (6) - - 53,850 - 53,850
Inventories (6) 42,778 - 123 - 42,901
Notes receivable from subsidiary (4) 17,317 - - (17,317) -
Receivable from subsidiaries or parent - 25,427 36,149 (61,576)
Other current assets 6,371 6,708 2,013 (5,926) 9,166
-------- -------- -------- --------- --------
Total current assets 68,040 32,136 92,692 (84,819) 108,049
Notes receivable from subsidiaries (3)(4) 118,806 - - (118,806) -
Investment in subsidiaries 33,821 70,540 - (104,361) -
Property, plant and equipment--net (7) 54,675 29,767 57,258 - 141,700
Goodwill--net 4,149 11,956 50,568 - 66,673
Other assets--net 4,935 2 1,671 - 6,608
-------- -------- -------- --------- --------
TOTAL ASSETS $284,426 $144,401 $202,189 $(307,986) $323,030
======== ======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Current portion of long-term debt (7) $ 8,356 $ - $ 79 $ - $ 8,435
Accounts payable 34,426 658 1,824 - 36,908
Note payable to parent (4) - - 17,317 (17,317) -
Payable to subsidiaries or parent 14,354 35,765 11,457 (61,576) -
Other accrued liabilities 2,409 637 10,909 (5,926) 8,029
-------- -------- -------- -------- --------
Total current liabilities 59,545 37,060 41,586 (84,819) 53,372
Long-term debt--net of current portion (7) 152,130 - 35,491 - 187,621
Note payable to parent (3) (4) - 90,000 28,806 (118,806) -
Deferred income taxes 3,054 3,929 3,372 - 10,355
Other non-current liabilities 3,744 - - - 3,744
Stockholders' equity:
Intercompany preferred stock (5) - 15,000 - (15,000) -
Common stock 177 1,300 71,569 (72,869) 177
Additional paid-in capital 68,359 - 16,492 (16,492) 68,359
Retained earnings (deficit) (2,583) (2,888) 4,873 - (598)
-------- -------- -------- -------- --------
Total stockholders' equity 65,953 13,412 92,934 (104,361) 67,938
-------- -------- -------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $284,426 $144,401 $202,189 $(307,986) $323,030
======== ======== ======== ========= ========
</TABLE>
10
<PAGE> 11
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
H. Unaudited Condensed Financial Information of
Carlisle Plastics, Inc. and Subsidiaries (continued)
<CAPTION>
DECEMBER 31, 1993
------------------------------------------------------------------------
Carlisle Non-Guarantor
Plastics, Poly-Tech, Subsidiaries
Inc. Inc.(1) (2) Eliminations Total
--------- ---------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 19,419 $ 1 $ 325 $ - $ 19,745
Receivables--net (6) 17,983 16,080 12,707 - 46,770
Inventories (6) 15,554 7,307 20,171 - 43,032
Notes receivable from subsidiary (4) 21,317 - - (21,317) -
Receivable from subsidiaries or parent 32,706 - 11,520 (44,226) -
Other current assets 1,060 7,186 2,062 (4,558) 5,750
--------- -------- -------- -------- --------
Total current assets 108,039 30,574 46,785 (70,101) 115,297
--------- -------- -------- -------- --------
Notes receivable from subsidiaries (3)(4) 118,806 - - (118,806) -
Investment in subsidiaries 17,329 70,540 - (87,869) -
Property, plant and equipment--net (7) 50,433 29,823 55,499 - 135,755
Goodwill--net 4,330 12,128 51,271 - 67,729
Other assets--net 4,963 525 1,579 - 7,067
-------- -------- -------- -------- --------
TOTAL ASSETS $303,900 $143,590 $155,134 $(276,776) $325,848
======== ======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (7) $ 10,980 $ - $ 229 $ - $11,209
Accounts payable 31,818 470 1,821 - 34,109
Note payable to parent (4) - - 21,317 (21,317) -
Payable to subsidiaries or parent - 30,659 13,567 (44,226) -
Other accrued liabilities 6,813 2,688 10,779 (4,558) 15,722
-------- -------- -------- -------- --------
Total current liabilities 49,611 33,817 47,713 (70,101) 61,040
Long-term debt--net of current portion (7) 182,457 - 644 - 183,101
Note payable to parent (3) (4) - 90,000 28,806 (118,806) -
Deferred income taxes 2,481 3,835 4,500 - 10,816
Other non-current liabilities 1,625 - - - 1,625
Stockholders' equity:
Intercompany preferred stock (5) - 15,000 - (15,000) -
Common stock 176 1,300 72,069 (73,369) 176
Additional paid-in capital 67,904 - - - 67,904
Retained earnings (deficit) (354) (362) 1,402 500 1,186
-------- -------- -------- -------- --------
Total stockholders' equity 67,726 15,938 73,471 (87,869) 69,266
-------- -------- -------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $303,900 $143,590 $155,134 $(276,776) $325,848
======== ======== ======== ========= ========
</TABLE>
11
<PAGE> 12
CARLISLE PLASTICS, INC. AND
SUBSIDIARIES NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
H. Unaudited Condensed Financial Information of
Carlisle Plastics, Inc. and Subsidiaries (continued)
<CAPTION>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1994
------------------------------------------------------------------------
Carlisle Non-Guarantor
Plastics, Poly-Tech, Subsidiaries
Inc. Inc.(1) (2) Eliminations Total
--------- ---------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Net sales $ 79,116 $ 3,802 $ 16,435 $ (4,351) $ 95,002
Cost of goods sold 61,205 2,447 11,926 (4,351) 71,227
-------- -------- -------- -------- --------
Gross profit 17,911 1,355 4,509 - 23,775
Operating expenses 15,230 405 1,788 - 17,423
Intercompany interest expense (income) (4,163) 3,723 440 - -
Interest expense 3,917 - 478 - 4,395
Interest and other income (66) - 33 - (33)
-------- -------- -------- -------- --------
Income (loss) before
provision for income taxes 2,993 (2,773) 1,770 - 1,990
Provision for income taxes (benefit) 1,354 (1,165) 647 - 836
-------- -------- -------- -------- --------
Net income (loss) $ 1,639 $ (1,608) $ 1,123 $ - $ 1,154
======== ======== ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1993
------------------------------------------------------------------------
Carlisle Non-Guarantor
Plastics, Poly-Tech, Subsidiaries
Inc. Inc.(1) (2) Eliminations Total
--------- ---------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Net sales $ 35,158 $ 21,847 $ 34,307 $ (3,545) $ 87,767
Cost of goods sold 27,032 13,394 26,378 (3,545) 63,259
-------- -------- -------- -------- --------
Gross profit 8,126 8,453 7,929 - 24,508
Operating expenses 4,967 6,273 5,818 - 17,058
Intercompany interest expense (income) (4,710) 3,600 1,110 - -
Interest expense 5,578 1 112 - 5,691
Interest and other income (93) (1) - - (94)
-------- -------- -------- -------- --------
Income (loss) before provision
for income taxes 2,384 (1,420) 889 - 1,853
Provision for income taxes 491 13 297 - 801
-------- -------- -------- -------- --------
Net income (loss) $ 1,893 $ (1,433) $ 592 $ - $ 1,052
======== ======== ======= ======== ========
</TABLE>
12
<PAGE> 13
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
H. Unaudited Condensed Financial Information of
Carlisle Plastics, Inc. and Subsidiaries (continued)
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1994
------------------------------------------------------------------------
Carlisle Non-Guarantor
Plastics, Poly-Tech, Subsidiaries
Inc. Inc.(1) (2) Eliminations Total
--------- ---------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Net sales $167,124 $ 8,434 $ 34,101 $(28,565) $181,094
Cost of goods sold 136,615 4,641 23,175 (28,565) 135,866
------- --------- -------- -------- --------
Gross profit 30,509 3,793 10,926 - 45,228
Operating expenses 29,392 826 3,185 - 33,403
Intercompany interest expense (income) (8,581) 7,323 1,258 - -
Interest expense 9,362 - 580 - 9,942
Interest and other income (242) - 108 - (134)
------- --------- -------- -------- --------
Income (loss) before provision for income
taxes and extraordinary item 578 (4,356) 5,795 - 2,017
Provision for income taxes (benefit) 346 (1,830) 2,331 - 847
------- --------- -------- -------- --------
Income (loss) before extraordinary item 232 (2,526) 3,464 - 1,170
Extraordinary item -- early
retirement of debt, net of taxes (2,460) - (2) - (2,462)
------- --------- -------- -------- --------
Net income (loss) $ (2,228) $ (2,526) $ 3,462 $ - $ (1,292)
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1993
------------------------------------------------------------------------
Carlisle Non-Guarantor
Plastics, Poly-Tech, Subsidiaries
Inc. Inc.(1) (2) Eliminations Total
--------- ---------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Net sales $ 64,927 $ 52,305 $ 74,915 $(13,549) $178,598
Cost of goods sold 49,863 35,238 58,202 (13,549) 129,754
-------- -------- -------- -------- --------
Gross profit 15,064 17,067 16,713 - 48,844
Operating expenses 9,202 12,488 12,660 - 34,350
Intercompany interest expense (income) (9,397) 7,200 2,197 - -
Interest expense 11,390 1 230 - 11,621
Interest and other income (208) (1) (13) - (222)
-------- -------- -------- -------- --------
Income (loss) before provision for income
taxes and extraordinary item and
cumulative effect of change
in accounting principle 4,077 (2,621) 1,639 - 3,095
Provision for income taxes (benefit) 901 (41) 500 - 1,360
-------- -------- -------- -------- --------
Income (loss) before extraordinary item
and cumulative effect of change in
accounting principle 3,176 (2,580) 1,139 - 1,735
Extraordinary item -- early
retirement of debt, net of taxes (234) - - - (234)
Cumulative effect of change in accounting
principle relating to income taxes 2,489 (69) (834) - 1,586
-------- -------- -------- -------- --------
Net income (loss) $ 5,431 $ (2,649) $ 305 $ - $ 3,087
======== ======== ======== ======== ========
</TABLE>
13
<PAGE> 14
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
H. Unaudited Condensed Financial Information of
Carlisle Plastics, Inc. and Subsidiaries (continued)
(1) Poly-Tech, Inc. ("Poly-Tech") has guaranteed the Company's Notes. The
aggregate principal amount of this indebtedness was $177,625 as of
June 30, 1994. American Western Corporation ("American Western"), a
wholly-owned subsidiary of Poly-Tech, is not obligated under any of
such guarantees by Poly-Tech.
(2) Non-guarantor subsidiaries include American Western, Rhino-X, A&E
Products (Far East) Ltd., Plasticos Bajacal, S.A. de C.V., A&E --
Korea, Ltd. and CPFC.
(3) Poly-Tech's Intercompany Notes include a $55,000 Intercompany Note issued
March 23, 1990 and a $35,000 Intercompany Note issued April 7, 1989
(together the "Intercompany Notes") payable to the Company ten years from
their respective dates of issuance, without amortization, and bear
interest at 16% per annum. The Intercompany Notes may be prepaid at any
time, in whole or in part, at 100% of their principal amount plus accrued
interest to the date of prepayment. The Intercompany Notes are unsecured
and rank pari passu in right of payment with all other existing and future
senior subordinated indebtedness of Poly-Tech. Additionally, the
Intercompany Notes, pursuant to their terms, are subordinated in right of
payment to all other unsubordinated indebtedness of Poly-Tech, including
the guarantees by Poly-Tech of the Notes.
(4) The Non-Guarantor Subsidiaries' Intercompany Notes include a $4,000 note
issued July 16, 1991, bearing interest at 8% per annum, which was repaid
on January 1, 1994; a 17,317 note issued January 1, 1994 payable upon
demand, without amortization, bearing interest at the commercial paper
rate (4.40% at June 30, 1994) plus 1.25% per annum; and a $28,806 note
issued June 19, 1992 payable March 1, 1996, without amortization, bearing
interest at LIBOR (4.5625% at June 30, 1994) plus 2.375% per annum. These
Intercompany Notes may be prepaid at any time, in whole or in part, at
100% of their principal amount plus accrued interest to the date of
prepayment. The Intercompany Notes are unsecured and rank pari passu in
right of payment with all other existing and future indebtedness of
Rhino-X and American Western.
(5) The intercompany preferred stock has $1,875 cumulative preferred dividends
in arrears.
(6) On March 9, 1994, Poly-Tech, American Western and Rhino-X entered into
asset purchase agreements with Carlisle Plastics, Inc. Under these asset
purchase agreements, all accounts receivable and inventory were sold from
the subsidiaries to Carlisle Plastics, Inc. On March 9, 1994, these
three subsidiaries also entered into contract manufacturing agreements
with Carlisle Plastics, Inc., under which the subsidiaries provide
manufacturing services to Carlisle Plastics, Inc. With the implementation
of these agreements, Carlisle Plastics, Inc. became responsible for all
selling and administrative duties for the Company. The asset purchase and
contract manufacturing agreements were effective January 1, 1994.
(7) On April 4, 1994, Poly-Tech, American Western and Rhino-X sold certain
assets as part of the Company's sale and leaseback financing. The
subsidiaries entered into sublease agreements with Carlisle Plastics, Inc.
The sublease agreements were equal to each subsidiary's pro rata share
(based on assets sold by each subsidiary) of the Company's sale
and leaseback financing and have similar terms.
14
<PAGE> 15
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
H. Unaudited Condensed Financial Information of
Carlisle Plastics, Inc. and Subsidiaries (continued)
(8) On April 14, 1994, the Company entered into a five-year $35,000
accounts receivable securitization program. Under this program, the
Company sold and will continue to sell substantially all of its accounts
receivable to a newly-formed, wholly-owned subsidiary, CPFC. CPFC
purchases the accounts receivable of the Company with proceeds from its
borrowings under a commercial paper facility. The purchased accounts
receivable are solely the assets of CPFC. In the event of liquidation
of CPFC, creditors of CPFC would be entitled to satisfy their claims
from CPFC's assets prior to any distribution to the Company.
15
<PAGE> 16
INDEPENDENT ACCOUNTANTS' REPORT
Carlisle Plastics, Inc.
Boston, Massachusetts
We have reviewed the accompanying condensed consolidated balance sheet of
Carlisle Plastics, Inc. and subsidiaries (the Company) as of June 30, 1994 and
the related condensed consolidated statements of operations for the three and
six month periods ended June 30, 1994 and 1993 and cash flows for the six
month periods ended June 30, 1994 and 1993. 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 of 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 such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Carlisle Plastics, Inc. and
subsidiaries as of December 31, 1993, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 9, 1994, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31,1993 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE
Boston, Massachusetts
July 27, 1994
16
<PAGE> 17
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Net Sales
The Company's net sales for the three months ended June 30, 1994 increased 8.2%
to $95.0 million from $87.8 million for the three months ended June 30, 1993,
primarily due to a 26% increase in sales for the hanger business. Net sales
for the six months ended June 30, 1994 increased 1.4% to $181.1 million from
$178.6 million for the six months ended June 30, 1993. Unit volume increases
of 22% for the three month period and 14% for the six month period were
partially offset by decreases in unit selling prices.
Gross Profit
Gross profit for the three months ended June 30, 1994 decreased to $23.8
million from $24.5 million for the three months ended June 30, 1993. Gross
profit for the six months ended June 30, 1994 decreased to $45.2 million from
$48.8 million for the six months ended June 30, 1993. Gross margin as a
percent of sales decreased to 25.0% from 27.9% for the three month period and
decreased to 25.0% from 27.3% for the six month period. The decrease in
gross profit for both the periods was largely due to the reduction in unit
selling prices.
Operating Expenses
Operating expenses, exclusive of goodwill and other amortization, for the three
months ended June 30, 1994 increased to $16.7 million from $16.3 million for the
three months ended June 30, 1993 and decreased to $31.9 million for the six
months ended June 30, 1994 from $32.9 million for the six months ended June 30,
1993. The decrease was due to reduced selling and advertising expenses.
Income from Operations
Income from operations decreased to $6.4 million for the three months ended
June 30, 1994 from $7.5 million for the same period in 1993. Income from
operations decreased to $11.8 million for the six months ended June 30, 1994
from $14.5 million for the same period in 1993.
Interest Expense
Interest expense, including amortization of deferred financing costs, decreased
22.8% to $4.4 million for the three months ended June 30, 1994 from $5.7
million for the three months ended June 30, 1993 and decreased 14.5% to $9.9
million for the six months ended June 30, 1994 from $11.6 million for the six
months ended June 30, 1993. The decrease was due to the refinancing of fixed
rate debt with lower rate variable rate debt.
Income Taxes
The provision for income taxes is based upon the estimated effective tax rate
for each respective year.
17
<PAGE> 18
Net Income (Loss)
Net income for the three months ended June 30, 1994 increased 9.7% to $1.2
million from $1.1 million for the three months ended June 30, 1993. Net loss
for the six months ended June 30, 1994 was $1.3 million. The loss included a
$2.5 million extraordinary charge due to the early extinguishment of debt.
Net income of $3.1 million for the six months ended June 30, 1993 included a
benefit of $1.6 million from the cumulative effect of an accounting principle
change relating to the adoption of SFAS No. 109 and $.2 million extraordinary
charge due to the early extinguishment of debt.
Liquidity and Capital Resources
The Company's working capital as of June 30, 1994 was $54.7 million, an
increase of $0.4 million from the working capital balance at December 31, 1993.
For the six months ended June 30, 1994, net cash flow used by operations was
$3.1 million. For the six months ended June 30, 1993, net cash flow provided by
operations was $3.8 million. Principal uses of cash in 1994 included net
capital expenditures of $12.2 million. Capital expenditures for 1994 are
expected to approximate depreciation expense.
On January 1, 1994, the Company purchased the minority interest shares of
Rhino-X for $4.0 million, net of $.8 million for sales tax payments made by the
Company and recoverable from the minority shareholders.
On March 1, 1994, the Company retired $10.0 million of its Senior Variable Rate
Notes due 1994 upon maturity.
On March 9, 1994, the Company entered into a three-year $55.0 million revolving
credit facility. At June 30, 1994, $2.0 million was outstanding under
this revolving credit facility. On April 1, 1994 the Company retired the $0.3
million balance of one of its industrial revenue bonds. On April 4, 1994, the
Company entered into a five-year sale and leaseback financing. The Company
utilized existing cash balances and proceeds from the sale and leaseback
financing to retire the $68.5 million outstanding balance of its 13.75% Senior
Fixed Rate Notes, three years prior to maturity at 103.93% of their principal
amount. The premium and the related write-off of deferred financing costs were
recorded as an extraordinary charge of $2.5 million (net of taxes) in the first
quarter of 1994.
On April 14, 1994, the Company completed a five-year accounts receivable
securitization agreement for $35.0 million and used the proceeds to pay down
outstanding revolving credit advances. The Company reduced the revolving
credit agreement to $20.0 million.
In the third quarter of 1993, the Company entered into an interest rate swap
agreement with a notional principal amount of $90.0 million, terminating on
June 15, 1997 (matching the principal and due date of the Company's 10.25%
Senior Fixed Rate Notes) to manage interest expense. Under the agreement,
the Company receives interest at a fixed rate (4.9%) and pays interest at a
floating rate (LIBOR), which is established in arrears at six month intervals.
The agreement is collateralized by a letter of credit. The net interest
differential of $0.2 million and $0.1 million was recorded as an increase in
interest expense in the three month and six month periods ended June 30, 1994,
respectively. The Company is subject to interest rate risk during the term of
the swap agreement. A sufficient increase in market interest rates during the
term of the agreement could result in the Company having a net payment
obligation under the agreement.
18
<PAGE> 19
On May 5, 1994, the Company bought an interest rate corridor for $1.5 million
with a notional principal amount of $90.0 million, which limits the Company's
interest rate on the interest rate swap agreement at levels between 5.86% to
7.36% beginning in June 1995. The term of this corridor is June 15, 1995
through June 15, 1997; the principal and due date matches that of the Company's
10.25% Senior Fixed Rate Notes. The cost of entering into the interest rate
corridor will be deferred and amortized over the term of the agreement. The
Company is subject to interest rate risk during the period of this corridor to
the extent that the LIBOR rate, established in arrears at six month
intervals, exceeds 7.36%.
Based upon market information provided by the counterparty as of June 30, 1994,
the estimated net cost of terminating the interest rate agreements
approximated $4.2 million.
The Company expects its cash on hand, funds from operations and borrowings
available under existing credit facilities to be sufficient to cover future
operating and investing cash requirements. Based upon the Company's expected
ability to generate funds from operations, management believes that the Company
will have the funds necessary to meet all of its financing requirements and
obligations.
Accounting Pronouncements
During 1994, the Company adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities,"
which had no material effects on its consolidated financial statements.
19
<PAGE> 20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
None.
Item 2. Changes in Securities:
None.
Item 3. Defaults Upon Senior Securities:
None.
Item 4. Submission of Matters to a Vote of Security Holders:
The Company held its annual meeting of shareholders on April 26,
1994. The shareholders took the following actions: (i) The
shareholders elected eight directors to serve for a term ending in
1995 and until their successors are elected and qualified. The
shareholders present in person or by proxy cast the following
numbers of votes in connection with the election of directors,
resulting in the election of all nominees:
<TABLE>
<CAPTION>
Votes Votes
For Withheld
----------- --------
<S> <C> <C>
William H. Binnie 157,228,097 36,630
Rajiv P. Bhatt 157,232,101 32,626
Clifford A. Deupree 157,236,301 28,426
Grant M. Wilson 157,236,001 28,726
Clarence M. Schwerin III 157,235,501 29,226
Samuel H. Smith, Jr. 157,235,301 29,426
Yehochai Schneider 157,235,396 29,331
David E. Wilbur, Jr. 157,179,701 85,026
</TABLE>
(iii) The shareholders approved the selection of Deloitte & Touche as
the Company's independent public accountants for 1994.
157,225,539 votes were cast for the resolution; 22,690 votes were
cast against the resolution; shares representing 16,498 votes
abstained; and there were no broker non-votes.
Item 5. Other Information:
None.
Item 6. Exhibits and Reports on Form 8-K:
The Index to Exhibits as set forth on page 22.
20
<PAGE> 21
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.
CARLISLE PLASTICS, INC.
Date August 12, 1994 /s/ Rajiv P. Bhatt
--------------- ------------------------
Rajiv P. Bhatt
Chief Financial Officer
(Principal Financial and
Accounting Officer) and
Director
POLY-TECH, INC.
Date August 12, 1994 /s/ Rajiv P. Bhatt
--------------- ------------------------
Rajiv P. Bhatt
Chief Financial Officer
(Principal Financial and
Accounting Officer)
21
<PAGE> 22
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
QUARTERLY PERIOD ENDED JUNE 30, 1994
INDEX TO EXHIBITS
10.8 Management Agreement dated as of May 2, 1994 between the Company
and Carlisle Plastics Management Corporation.
10.14 Second Amendment to Credit Agreement dated as of April 15, 1994 by
and among the borrowers under the Credit Agreement referenced in
Exhibit 10.14 of the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994 and General Electric Capital
Corporation ("GECC"), as Agent and Lender.
22
<PAGE> 1
EXHIBIT 10.8
CARLISLE PLASTICS MANAGEMENT CORPORATION
May 2, 1994
Carlisle Plastics, Inc.
One Union Street
Boston, MA 02108
ATTN: Rajiv Bhatt, Chief Financial Officer
RE: Management Services Agreement
Dear Mr. Bhatt:
On behalf of Carlisle Plastics, Inc. (the "Company") you have requested that
Carlisle Plastics Management Corporation ("CPMC") provide the Company with
management and oversight assistance in the areas of:
Operational and information management;
Strategic marketing planning;
Systems development and implementation;
Executive resource management;
Finance and banking relationships;
Taxation;
Financial and managerial accounting;
Coordination of legal, auditing, pension, actuarial,
and other required professional services; and
Other business decision making strategies
collectively, "management services." You have further requested that CPMC be
available for the furnishing of such management services on an as-needed basis
and that CPMC provide the necessary personnel and professionals in order to
assist the Company in meeting its overall business mission. The management
services listed above are not intended to be exclusive.
<PAGE> 2
Carlisle Plastics, Inc.
May 2, 1994
Page 2
Accordingly, CPMC agrees to furnish additional services to the Company, from
time to time, as such additional services are requested by the Company.
The Company will, at all times, protect, defend, indemnify and otherwise hold
CPMC and its officers, directors, employees, and agents (collectively,
the "Indemnified Parties" and each individually, an "Indemnified Party")
harmless against and from any and all claims, suits, actions, debts, costs
(including reasonable attorneys' fees), losses, obligations, judgments, charges
and expenses of any nature whatsoever suffered or incurred by such Indemnified
Parties with respect to any management service or services rendered to the
Company pursuant to this Agreement. This indemnity shall survive the termination
of this Agreement. If any claim is made against any Indemnified Party that, if
sustained, would give rise to a liability pursuant to this paragraph, the
Indemnified Party shall promptly cause written notice of the claim to be
delivered to the Company and shall afford the Company and its counsel, at the
Company's sole expense, the opportunity to defend or settle the claim; provided,
however, that the failure to give such notice shall not relieve the Company from
liability hereunder except to the extent that the Company has actually been
damaged by such failure. The Company shall notify the Indemnified Party within
30 days after receipt of such notice of its decision whether to assume defense
of such claim. If the Company assumes the defense of a claim that exclusively
seeks monetary damages, it shall have the right to conduct the defense of such
claim and to make such settlement with regard thereto as it shall in its sole
discretion determine. If the Company assumes the defense of a claim that seeks
non-monetary relief, it shall have the right to conduct the defense of such
claim in consultation with the Indemnified Party and to make such settlement
(i) with respect to non-monetary relief, as shall be consented to by the
Indemnified Party, such consent not to be unreasonably withheld, and
(ii) with respect to monetary damages, if any, as the Company shall in
its sole discretion determine.
If the Company does not assume the defense of a claim, the Indemnified
Party shall have the right to conduct the defense of such claim in consultation
with the Company and to make such settlement as shall be consented by the
Company, such consent not to be unreasonably withheld.
This letter memorandum will serve to memorialize the past practice in which the
Company and CPMC have engaged with respect to management services and will
also serve to evidence the management services agreement which CPMC and the
Company have reached with respect to the furnishing of management services for
the three-year period commencing May 22, 1994.
CPMC will charge the Company an annual fee (the "Management Fee") in an
amount of $1,500,000 for each of the three 1-year periods commencing on May 22,
1994, and
<PAGE> 3
Carlisle Plastics, Inc.
May 2, 1994
Page 3 -
ending on the first, second, and third anniversaries of such date. The
Management Fee will be due and payable in equal monthly installments on the
tenth (10th) day of the month during which the services are provided. If
other services are arranged by CPMC or are provided by other independent
professionals arranged with or by CPMC's assistance, the Company agrees to be
responsible for such professional fees. Such responsibility may be satisfied,
depending upon the circumstances, by
(1) an increase in the monthly amount,
(2) direct payment to the independent professional who provided
the service, or
(3) reimbursement to CPMC for any amounts advanced on the
Company's behalf.
The Company agrees to promptly reimburse CPMC for all travel and other
reasonable expenses incurred or paid by CPMC in the performance of management
services pursuant to this Agreement, in each case consistent with the past
practices of the Company and subject to receipt by the Company of such expense
reports and receipts as it shall reasonably request.
This Agreement may be amended at any time with the joint consent of CPMC and
the Company.
If this represents your understanding of our Agreement, please date and sign
the enclosed copy of this letter and return it to me at your earliest
convenience.
Sincerely,
CARLISLE PLASTICS MANAGEMENT CORPORATION
By /s/ William H. Binnie
--------------------------------------
William H. Binnie, President
Acknowledged and accepted on May 2, 1994:
CARLISLE PLASTICS, INC.
By /s/ Rajiv Bhatt
--------------------------------------
Rajiv Bhatt, Chief Financial Officer
<PAGE> 1
EXHIBIT 10.14
SECOND AMENDMENT TO CREDIT AGREEMENT
------------------------------------
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of April 15, 1994, is by and among CARLISLE PLASTICS, INC., a Delaware
corporation, as Borrower, POLY-TECH, INC., a Minnesota corporation, A&E PRODUCTS
(FAR EAST) LTD., a Hong Kong corporation, PLASTICOS BAJACAL S.A. DE C.V., a
Mexican corporation, RHINO-X INDUSTRIES, INC., a Delaware corporation, A&E
KOREA, LTD., a Delaware corporation, AMERICAN WESTERN CORPORATION, a Delaware
corporation, and AWC TRANSPORTATION CORPORATION, a South Dakota corporation,
collectively as the Co-Obligors, and GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation, as Agent and as Lender.
RECITALS
--------
A. The parties hereto are parties to that certain Credit
Agreement, dated as of March 9, 1994, as amended by that certain First
Amendment to Credit Agreement and Security Agreement, dated as of April 14,
1994 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), pursuant to which Lender has made and may
hereafter make loans and advances and other extensions of credit to Borrower;
B. Borrower and Co-Obligors desire, and Agent is willing, to
further amend certain provisions of the Credit Agreement, all on the terms and
conditions set forth in this Amendment; and
C. Each capitalized term used in this Amendment and not otherwise
defined in this Amendment shall have the meaning ascribed thereto in Schedule A
to the Credit Agreement; this Amendment shall constitute a Loan Document; these
Recitals shall be construed as part of this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
1. Amendment of the Credit Agreement. The Credit Agreement is
hereby amended by deleting in its entirety Schedule B, Letters of Credit, and
by substituting therefor Schedule B, Letters of Credit, in the form attached
hereto as Schedule B.
2. Effectiveness. This Amendment shall be effective as of
April 15, 1994.
3. Conditions to Effectiveness. This Amendment shall not become
effective, and Agent and Lenders shall have no obligation hereunder, until the
following conditions shall have been satisfied in full, in Agent's sole
discretion:
(a) Agent shall have received original counterparts of this
Amendment, duly executed by each party hereto;
1
<PAGE> 2
(b) Agent shall have received such agreements, schedules, exhibits,
certificates, documents or other instruments as Agent may request; and
(c) on and as of the date hereof, the representations and
warranties of Borrower made pursuant to Section 4 hereof shall be true,
accurate and complete in all respects.
4. Representations and Warranties of Borrower. In order to induce
Agent and Lender to enter into this Amendment, Borrower hereby makes the
following representations and warranties, each of which shall survive the
execution and delivery of this Amendment:
(a) as of the date hereof, no Default or Event of Default has
occurred and is continuing and, after giving effect to this Amendment and
the transactions contemplated hereby, no Default or Event of Default shall
have occurred and be continuing;
(b) as of the date hereof and after giving effect to this Amendment
and the transactions contemplated hereby, the representations and warranties
of Borrower and each of the Co-Obligors contained in the Loan Documents are
true, accurate and complete in all respects on and as of the date hereof
to the same extent as though made on and as of the date hereof, except to
the extent that any such representation or warranty expressly relates to
an earlier date; and
(c) the execution, delivery and performance by Borrower and each of
the Co-Obligors of this Amendment and each of the agreements, schedules,
exhibits, certificates, documents and other instruments attached hereto,
described herein or contemplated hereby to which such Person is a party
are within its corporate power and have been duly authorized by all
necessary corporate action on the part of such Person (including, without
limitation, resolutions of the board of directors and, as applicable, the
stockholders, of such Person), and this Amendment and such agreements,
schedules, exhibits, certificates, documents and instruments are the legal,
valid and binding obligation of each such Person enforceable against each
such Person in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar
laws affecting the rights of creditors generally or by application of
general principles of equity.
5. Reference to and Effect on the Credit Agreement.
5.1 Except as specifically amended above, the Credit Agreement and
each of the Schedules thereto shall remain in full force and effect and the
Credit Agreement (including Schedule B, Letters of Credit), as amended by this
Amendment, is hereby ratified and confirmed in all respects.
5.2 The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of Agent under the
Credit Agreement or any of the other Loan Documents, or constitute a waiver of
any provision of the Credit Agreement or any of the other Loan Documents.
2
<PAGE> 3
5.3 Upon the effectiveness of this Amendment each reference in (a) the
Credit Agreement to "this Agreement," "hereunder," "hereof," or words of similar
import and (b) any other Loan Document to "the Credit Agreement," shall, in each
case, mean and be a reference to the Credit Agreement (including Schedule B,
Letters of Credit), as amended hereby.
6. Miscellaneous.
6.1 Fees and Expenses. Borrower agrees to pay on demand all fees, costs
and expenses incurred by or otherwise due to Agent in connection with the
preparation, execution and delivery of this Amendment, together with all fees,
costs and expenses incurred by or otherwise due to Agent prior to the date
hereof which are payable by Borrower pursuant to the Credit Agreement.
6.2 Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
6.3 Counterparts. This Amendment may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
6.4 GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AMENDMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS AND DECISIONS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES) APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
* * * *
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IN WITNESS WHEREOF, each party hereto has caused this Second Amendment
to be duly executed and delivered by its proper and duly authorized officer as
of the date first written above.
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: /s/ Daniel R. Pengue
---------------------------
Title: Authorized Signatory
---------------------------
CARLISLE PLASTICS, INC.
By: /s/ Rajiv P. Bhatt
---------------------------
Title: Chief Financial Officer
---------------------------
POLY-TECH, INC.
By: /s/ Rajiv P. Bhatt
---------------------------
Title: Vice President
---------------------------
A&E PRODUCTS (FAR EAST) LTD.
By: /s/ Rajiv P. Bhatt
---------------------------
Title: Director
---------------------------
PLASTICOS BAJACAL S.A. DE C.V.
By: /s/ Clifford A. Deupree
---------------------------
Title: Sole Administrator
---------------------------
RHINO-X INDUSTRIES, INC.
By: /s/ Rajiv P. Bhatt
---------------------------
Title: Chief Financial Officer
---------------------------
A&E - KOREA, LTD.
By: /s/ Rajiv P. Bhatt
---------------------------
Title: Vice President
---------------------------
4
<PAGE> 5
AMERICAN WESTERN CORPORATION
By: /s/ Rajiv P. Bhatt
---------------------------
Title: Vice President
---------------------------
AWC TRANSPORTATION CORPORATION
By: /s/ Rajiv P. Bhatt
---------------------------
Title: Vice President
---------------------------
5
