<PAGE> 1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM
TO
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Commission File Number 1-5091
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- --------------------------------------------------------------------------------
FUQUA ENTERPRISES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-1988043
------------------------------ --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
ONE ATLANTIC CENTER, SUITE 5000
1201 W. PEACHTREE STREET, N.W., ATLANTA, GEORGIA 30309
------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 404-815-2000
------------
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. As of April 30, 1996, there
were 4,478,347 shares of Common Stock, Par Value $2.50 per share outstanding.
<PAGE> 2
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
- March 31, 1996 and December 31, 1995
Condensed Consolidated Statements of Income
- for three months ended March 31, 1996 and March 31, 1995
Condensed Consolidated Statements of Cash Flows
- for three months ended March 31, 1996 and March 31, 1995
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Forms 8-K
(i)
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Dollars in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,065 $ 29,000
Investments available for sale . . . . . . . . . . . . . . . . . . . . . . . . 22,374 12,550
Receivables
Trade accounts, less allowance of $280 (1995, $200) . . . . . . . . . . . . . 22,142 19,102
Note receivable from sale of subsidiary . . . . . . . . . . . . . . . . . . . 11,762 11,352
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,555 21,695
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . 779 910
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,789 3,614
-------------------------
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,466 98,223
-------------------------
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . 32,780 32,303
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (11,935) (10,841)
-------------------------
Net Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . 20,845 21,462
-------------------------
Intangible assets, less accumulated amortization of $67 (1995, $25) . . . . . . 4,971 5,013
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,236 1,066
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 95
-------------------------
Total Assets of Continuing Operations . . . . . . . . . . . . . . . . . . . 125,542 125,859
Total Assets of Discontinued Operations . . . . . . . . . . . . . . . . . . 12,047 10,903
-------------------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $137,589 $ 136,762
=========================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
1
<PAGE> 4
CONDENSED CONSOLIDATED BALANCE SHEETS
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Dollars in thousands, except share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250 $ 2,064
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . 18,539 18,800
Long-term liabilities due within one year . . . . . . . . . . . . . . . . . . . 12,516 11,668
-------------------------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 31,305 32,532
Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,773 22,041
-------------------------
Total Liabilities of Continuing Operations . . . . . . . . . . . . . . . . 54,078 54,573
Total Liabilities of Discontinued Operations . . . . . . . . . . . . . . . 149 301
-------------------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,227 54,874
-------------------------
Stockholders' equity
Preference stock, $1 par value:
authorized 8,000,000 shares; none issued . . . . . . . . . . . . . . . . . - -
Common stock, $2.50 par value:
authorized 20,000,000 shares; issued 4,523,169
shares; (1995, 4,443,169 shares) . . . . . . . . . . . . . . . . . . . . . 11,308 11,108
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 24,841 24,074
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,298 46,698
Unrealized gains (losses) on investments . . . . . . . . . . . . . . . . . . . (238) 28
-------------------------
84,209 81,908
Treasury stock, at cost: 44,822 shares; (1995, 995 shares) . . . . . . . . . . (847) (20)
-------------------------
Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . 83,362 81,888
-------------------------
Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . $137,589 $ 136,762
=========================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE> 5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Dollars in thousands, except per share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For Three Months Ended
March 31, March 31,
1996 1995
---------- ----------
<S> <C> <C>
REVENUES:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,500 $ 24,050
Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 670 199
-------------------------
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,170 24,249
-------------------------
COSTS AND EXPENSES:
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,062 20,911
Selling, general and administrative expenses . . . . . . . . . . . . . . . . 3,148 2,045
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333 220
-------------------------
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 28,543 23,176
-------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,627 1,073
INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,027 411
-------------------------
INCOME FROM CONTINUING OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . 1,600 662
-------------------------
DISCONTINUED OPERATIONS:
Income from discontinued operations, net . . . . . . . . . . . . . . . . . . - 783
-------------------------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,600 $ 1,445
=========================
Per share:
Income from continuing operations . . . . . . . . . . . . . . . . . . . . . . $ .36 $ .17
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 .37
Common shares and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 3,865
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
(Dollars in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For Three Months Ended
March 31, March 31,
1996 1995
---------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net cash used in continuing operations . . . . . . . . . . . . . . . . . . . $ (1,244) $ (2,972)
Net cash used in discontinued operations . . . . . . . . . . . . . . . . . . (1,131) (1,638)
-------------------------
Net Cash Used In All Operations . . . . . . . . . . . . . . . . . . . . . (2,375) (4,610)
-------------------------
INVESTING ACTIVITIES
Sales of available for sale investments . . . . . . . . . . . . . . . . . . . 10,517 -
Purchases of available for sale investments . . . . . . . . . . . . . . . . . (20,341) (407)
Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . . (477) (656)
Total from discontinued operations . . . . . . . . . . . . . . . . . . . . . (165) -
-------------------------
Net Cash Used In Investing Activities . . . . . . . . . . . . . . . . . . (10,466) (1,063)
-------------------------
FINANCING ACTIVITIES
Net increase (decrease) in notes payable . . . . . . . . . . . . . . . . . . (1,814) 2,500
Payment of long-term liabilities . . . . . . . . . . . . . . . . . . . . . . (250) (261)
Additional long-term liabilities . . . . . . . . . . . . . . . . . . . . . . 1,830 136
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . 967 -
Acquired shares for treasury . . . . . . . . . . . . . . . . . . . . . . . . (827) -
-------------------------
Net Cash Provided By (Used In) Financing Activities . . . . . . . . . . . (94) 2,375
-------------------------
Decrease in Cash and Cash Equivalents
Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,639) (1,660)
Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,296) (1,638)
Cash and Cash Equivalents, Beginning of Period . . . . . . . . . . . . . . . . 29,000 4,231
-------------------------
Cash and Cash Equivalents, End of Period . . . . . . . . . . . . . . . . . . . $ 16,065 $ 933
=========================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 7
FUQUA ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
1. CORPORATE DEVELOPMENT ACTIVITIES:
Fuqua Enterprises, Inc. ("Fuqua"), formerly Vista Resources, Inc., changed
its name to Fuqua in September 1995. Additionally, in 1995 Fuqua sold its
insurance subsidiary, American Southern Insurance Company ("American Southern")
and, in January 1996, made the decision to discontinue the operations of Kroy
Tanning Company, Incorporated ("Kroy").
The results of operations of American Southern and Kroy which have been
reclassified as discontinued and which are included in the quarterly results
are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
(DOLLARS IN THOUSANDS) MARCH 31, 1995
- ---------------------------------------------------------------------
<S> <C>
Revenues $13,697
Costs and expenses 12,755
-------
Income before income taxes 942
Income taxes 159
-------
Net income $ 783
=======
</TABLE>
In November 1995, Fuqua acquired Basic American Medical Products, Inc.
("Basic"). Basic, through its divisions, Simmons Healthcare, Omni Manufacturing
and SSC Medical, is a manufacturer and distributor of medical equipment and
furnishings for the acute, long-term and home health care markets.
Subsequent Event: On April 3, 1996, Fuqua, through its wholly-owned
subsidiaries, Lumex Medical Products, Inc. (formerly MUL Acquisition Corp. I)
and MUL Acquisition Corp. II, consummated the acquisition of the medical
products operations of Lumex, Inc. (the "Lumex Division") for approximately
$40.7 million in cash, subject to final adjustment as provided in the asset
sale agreement. The Lumex Division, whose 1995 net sales were $63 million, is
headquartered in Bay Shore, Long Island, New York and develops and markets a
wide range of health care products including specialty seating, bathroom
safety, mobility products, health care beds and therapeutic support systems.
2. PER SHARE CALCULATIONS:
Per share calculations are based on the average number of shares outstanding
plus common stock equivalents. Common stock equivalents include the effect of
options granted to key employees under Fuqua's Stock Option Plans. Fully
diluted per share calculations are not significantly different from those
reported.
3. INVENTORIES:
Inventories consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
(Dollars in thousands) 1996 1995
- -----------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 4,583 $ 6,598
Work in progress 8,192 6,738
Raw materials and supplies 8,780 8,359
-------- --------
$ 21,555 $ 21,695
======== ========
</TABLE>
5
<PAGE> 8
4. SUPPLEMENTAL CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(Dollars in thousands) 1996 1995
- ----------------------------------------------------------
<S> <C> <C>
Interest payments $ 431 $ 439
------ ------
Income tax payments $ 113 $ 601
------ ------
</TABLE>
5. CAPITAL STOCK:
During the first three months of 1996, options for 80,000 shares of common
stock were exercised at $8.50-9.50 per share, leaving 668,500 shares reserved
(425,500 shares granted, 243,000 shares available for grant) in connection with
Fuqua's stock option plans. Also, during the first three months of 1996, Fuqua
acquired 43,827 shares of common stock for its treasury at a total cost of
$827,000.
During the first three months of 1995, there were no options exercised and
Fuqua did not purchase any shares for its treasury.
--------------------
The unaudited condensed financial statements reflect all adjustments
(consisting of normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods. It is suggested that these unaudited condensed consolidated financial
statements be read in conjunction with the consolidated financial statements
and notes thereto included in Fuqua's 1995 Annual Report on Form 10-K.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Acquisitions: In November 1995, Fuqua acquired 100% of the common stock of
Basic American Medical Products, Inc. ("Basic"). Basic, through its
divisions, Simmons Healthcare, Omni Manufacturing and SSC Medical, is a
manufacturer and distributor of medical equipment and furnishings for the
acute, long-term and home health care markets. Basic's results of operations,
which represent Fuqua's Medical Products Operations, have been included in the
consolidated results of Fuqua for the three months ended March 31, 1996.
On April 3, 1996, Fuqua, through its wholly-owned subsidiaries, Lumex Medical
Products, Inc. (formerly MUL Acquisition Corp. I) and MUL Acquisition Corp. II,
consummated the acquisition of the medical products operations of Lumex, Inc.
(the "Lumex Division") for approximately $40.7 million. The Lumex Division,
whose 1995 net sales were $63 million, develops and markets a wide range of
health care products including specialty seating, bathroom safety, mobility
products, health care beds and therapeutic support systems. The Lumex Division
is headquartered in Bay Shore, Long Island, New York and markets the majority
of its products to the home health care market and the remainder to
institutional markets, including acute care and extended care facilities and
dialysis clinics. The results of operations of the Lumex Division will be
included in Fuqua's consolidated results beginning in the second quarter of
1996. Management believes that Basic and the Lumex Division will provide a
base for Fuqua's further expansion in the medical products markets.
In April 1996, Fuqua's Leather Operations, through a joint venture, acquired
an interest in a tannery in the People's Republic of China. As a result, the
Leather Operations will produce leather in China and will market the products
throughout China and Southeast Asia. Management expects that the investment
will provide an additional channel of distribution for certain grades of the
Leather Operations' production.
Medical Products Operations: Net sales in the first quarter of 1996 were
$7,630,000 which produced an operating profit of $714,000. This resulted in a
profit margin of 9.4%.
6
<PAGE> 9
Inventories at March 31, 1996 were $5,038,000 as compared to $5,267,000 at
December 31, 1995 and accounts receivable at March 31, 1996 were $5,030,000 as
compared to $5,740,000 at December 31, 1995.
Capital expenditures for the Medical Products Operations were $116,000 in
the first quarter of 1996 and are expected to be approximately $600,000 for the
entire year of 1996. Depreciation and amortization expense for the first
quarter of 1996 was $134,000.
Leather Operations: Net sales of the Leather Operations decreased
$1,180,000 or 4.9% in the first quarter of 1996 versus the comparable period of
1995, principally as a result of decreased volume of leather shipped to
producers of shoes who were adversely affected by weak retail demand. Sales to
foreign customers represented 25.0% of net sales in the first quarter of 1996
as compared to 30.1% of net sales in the first quarter of 1995.
The profit margin increased to 10.6% of sales in the first quarter of 1996
from 4.5% in the comparable period of 1995, primarily due to lower hide costs
in 1996.
Selling and administrative expenses decreased $315,000 or 15.4% in the
first quarter of 1996 compared to the first quarter of 1995, representing 7.6%
of net sales as compared to 8.5% a year ago. The decrease of selling and
administrative expenses in the first quarter of 1996 was due to reduced selling
expenses associated with lower levels of foreign sales.
Accounts receivable were higher, $17,111,000 at March 31, 1996, as compared
to $13,043,000 at December 31, 1995, due principally to seasonal factors.
During the first quarter of 1996, inventories increased .5%, from $16,428,000
at December 31, 1995 to $16,517,000 at March 31, 1996.
Capital expenditures for the Leather Operations were $470,000 in the first
quarter of 1996, and are expected to be approximately $1,500,000 for the entire
year of 1996. Depreciation expense for the Leather Operations in the first
quarter of 1996 was $424,000 as compared to $350,000 in the comparable period
of 1995.
Corporate Office Operations: Investment income in the first quarter of 1996
was $670,000 as compared to $199,000 in the comparable period of 1995. The
increase in investment income in 1996 reflects the return on the proceeds from
the sale of American Southern.
Interest expense in the first quarter of 1996 was $333,000 as compared to
$220,000 in the comparable period of 1995 reflecting higher interest costs and
fees associated with a larger amount of outstanding debt.
General and Administrative expenses for corporate office activities were
$852,000 in the first quarter of 1996 as compared to $556,000 in the comparable
period of 1995. The increase resulted mainly from higher costs and expenses
associated with 1996 corporate development activities.
Discontinued Operations: During December 1995, Fuqua sold its insurance
subsidiary, American Southern Insurance Company ("American Southern") for
$34,000,000 to Atlantic American Corporation, an Atlanta, Georgia based
publicly-held insurance company. The proceeds from the sale included cash of
$22,648,000 and a note receivable from the purchaser of $11,352,000. The note
bears interest at prime, half of which is payable quarterly and half of which
is payable, together with principal, in October 1996. The term and amount of
the note receivable is the same as the note payable which arose in connection
with Fuqua's acquisition of American Southern in 1991. Management expects that
the note payable will be repaid from the proceeds of the note receivable or, to
the extent necessary, repaid with a drawing under a Letter of Credit Agreement
which will then be replaced with borrowings under Fuqua's Revolving Credit
Facility. The note payable and related acquisition agreements provide for
indemnification and certain offset rights which, to the extent claims remain
outstanding in October 1996, could result in a delay of payment of the full
amount of the notes payable. The note receivable from Atlantic American has
similar offset and indemnification rights. Management does not believe that
the indemnification rights under the note receivables or note payable will have
a naterial adverse affect on Fuqua's liquidity or results of operations.
Management does not believe that the indemnification rights under the note
receivables or note payable agreement will have a material adverse affect on
Fuqua's liquidity or results of operations. The sale transaction resulted in
the 1995 earnings of American Southern being reclassified as discontinued
operations.
In January 1996, Fuqua made the decision to discontinue the operations of
Kroy Tanning Company, Incorporated, ("Kroy"), which historically had been
unprofitable. Accordingly, Kroy has been treated as a discontinued operation
7
<PAGE> 10
in the 1995 and 1996 results of operations. In connection with Fuqua's
decision to discontinue the operations of Kroy, $4,800,000, before the benefit
of income taxes, was accrued at December 31, 1995 to write down assets to their
net realizable values and to pay for obligations, including environmental clean
up costs, in connection with the wind down of operations and the closing of
Kroy's facility in East Wilton, Maine.
Recent Pronouncements: In March 1995, the Financial Accounting Standards
Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"), which
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS 121 also addresses the accounting for long-lived assets
that are expected to be disposed. Fuqua adopted SFAS 121 in the first quarter
of 1996 and its adoption did not have a material impact.
LIQUIDITY:
Fuqua, as a result of its sale of American Southern and having entered into
the $60,000,000 Revolving Credit Facility, had at March 31, 1996 $38,439,000 in
cash and investments and $41,500,000 in borrowing capacity under the Revolving
Credit Facility. Subsequent to March 31, 1996, Fuqua used approximately
$8,000,000 of its cash and $33,000,000 of its borrowing capacity to acquire the
Lumex Division. Subsequent to the acquisition of the Lumex Division, Fuqua had
$38,500,000 in cash, investments and borrowing capacity and Management believes
that it has adequate resources and additional borrowing capacity to meet its
obligations when due and to pursue an active plan of expansion through
acquisitions.
8
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Listing of Exhibits
<TABLE>
<CAPTION>
EXHIBITS INCORPORATED HEREIN BY REFERENCE
------------------------------------------------------------
DESIGNATION DOCUMENT WITH WHICH EXHIBIT DESIGNATION OF SUCH
OF EXHIBIT IN DESCRIPTION OF WAS PREVIOUSLY FILED WITH EXHIBIT IN THAT
This Form 10-Q Exhibits COMMISSION) DOCUMENT
- -------------- ---------------------------------- ------------------------------- -----------------------
<S> <C>
10(r) Letter Agreement and Irrevocable Standby Letter of Credit
between First Union National Bank of Georgia and Fuqua dated
December 8, 1995 related to the sale of American Southern
Insurance Company (Fuqua agrees to furnish a copy of any
omitted schedules to the Commission upon request).
11 Statement of Computation of Earnings
Per Share
27 Financial Data Schedules (for SEC use only)
Article 5
</TABLE>
- ---------------------
(b) Reports on Form 8-K
A report of Form 8-K dated April 3, 1996 was filed announcing the
consummation of Fuqua's acquisition of the medical products division
of Lumex, Inc. ("Lumex"), by and between Lumex, Lumex Medical
Products, Inc. (formerly MUL Acquisition Corp. I), MUL Acquisition
Corp. II and Fuqua.
9
<PAGE> 12
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.
FUQUA ENTERPRISES, INC.
EREGISTRANT
/s/ Brady W. Mullinax, Jr.
--------------------------------
Brady W. Mullinax, Jr., Vice President-Finance,
Treasurer and Chief Financial Officer (Principal
Financial and Accounting Officer
and Executive Officer
Date: May 15, 1996
10
<PAGE> 1
EXHIBIT 10(r)
FIRST UNION NATIONAL BANK OF GEORGIA
4570 Ashford Dunwoody Road
Atlanta, Georgia 30356
404-865-2560
FAX: 404-865-2388
LETTER AGREEMENT
December 8, 1995
Fuqua Enterprises, Inc.
One Atlantic Center
1201 West Peachtree Street, N.W.
Suite 5000
Atlanta, GA 30309
Attention: Mr. Brady W. Mullinax, Jr.
Vice President-Finance
Treasurer and Chief Financial Officer
Dear Brad:
First Union National Bank of Georgia (the "Issuer") has agreed to issue the
letter of credit described below for the account of Fuqua Enterprises, Inc., a
Delaware corporation (the "Applicant"), pursuant to the terms and
conditions of that certain Application and Agreement for Standby Letter of
Credit dated as of even date herewith (the" Application"), as supplemented by
the terms and conditions of this letter agreement (this "Letter Agreement").
By your execution below, you acknowledge that the Issuer is issuing the letter
of credit described below in express reliance on the terms hereof which are
in addition to, and not in lieu of the terms of the Application.
The terms of the letter of credit are as follows:
Facility: Irrevocable Standby Letter of Credit, issued in the
form attached as Exhibit "A" (the "Letter of
Credit");
Amount: $11,803,914.56 (Eleven million, eight hundred and
three thousand, nine hundred and fourteen dollars and
56/100);
Issuer: First Union National Bank of Georgia;
Applicant: Fuqua Enterprises, Inc.
Term: The letter of credit will expire at the counters of
First Union National Bank of Georgia, Two First Union
Center, T-7, 301 South Tryon Street, Charlotte, NC
28288 on January 31, 1997;
Participation: A risk participation in the letter of credit may be
made to SunTrust Bank, Atlanta, Wachovia Bank of
Georgia, N.A., and Fleet Bank of Maine at the
Applicant's request (prior to or simultaneous with
issuance), in an aggregate amount not to exceed $6
million;
<PAGE> 2
L/C Fee: Tne letter of credit fee shall be 0.5% per annum,
payable in advance upon issuance, for the entire term
of the letter of credit, calculated upon an
actual/actual day count. In the event risk
participations are made as contemplated above, the
participating banks (and the Issuer, on its
participating portion) shall receive 0.45% on the
face amount of the participation, calculated as
above, and the Issuer shall receive 0.05% on the
amount of the letter of credit.
Reimbursement Obligation:
The reimbursement obligation of the Applicant shall
be governed by the Application.
Documentation:
As a condition precedent to Issuer's obligation to issue the Letter of Credit,
the Applicant shall deliver the following documents prior to such issuance,
duly executed by the parties thereto:
The Application (Section 7, Security Agreement to be
deleted).
Participation Agreement(s) in a form satisfactory to
the Applicant, the Issuer and the participating banks
(Form attached as Exhibit "B").
Opinion of Applicant's counsel that Applicant has the
right, power, and authority to enter into this
transaction and perform all obligations hereunder,
that Applicant is duly authorized, and the documents
executed by Applicant as a part of this transaction
are valid, binding, and legally enforceable in
accordance with their respective terms.
This Letter Agreement executed by Applicant.
Financial Covenants:
As long as the Letter of Credit shall remain outstanding or the Applicant shall
have any obligation to the Issuer under the Application or this Letter
Agreement, the Applicant shall:
Maintain a ratio of Consolidated Funded Debt to Total
Capitalization equal to or less than 0.6:1.0,
measured as of the last day of each fiscal quarter of
Applicant.
Maintain an Interest Coverage Ratio equal to or
greater than 2.0: 1.0, measured as of the last day of
each fiscal quarter of Applicant for the immediately
preceding four fiscal quarters ending on such date.
- 2 -
<PAGE> 3
Maintain a ratio of (i) Consolidated Funded Debt to
(ii) Consolidated EBITDA equal to or less than 3.5:
1.0, measured as of the last day of each fiscal
quarter of the Applicant, and in the case of
Consolidated EBITDA, calculated for the immediately
preceding four fiscal quarters ending on such date.
All capitalized terms used in these Financial Covenants shall have the meaning
ascribed to such terms in that certain Credit Agreement, dated as of November
6, 1995 (the "SunTrust Agreement"), by and among Applicant, SunTrust Bank,
Atlanta, as Agent, and the lenders party thereto (the "Lenders").
Financial Reporting:
As long as the Letter of Credit shall remain outstanding or the Applicant shall
have any obligation to the Issuer under the Application or this Letter
Agreement, the Applicant shall:
Furnish to the Issuer all documents, reports,
filings, and certificates required under Section 6.07
(Financial Reporting) of the SunTrust Agreement, as
and when furnished to the Lenders thereunder.
Events of Default:
In addition to the Events of Default set forth in the
Application, the Applicant and the Issuer expressly
agree that the following events shall also constitute
"Events of Default" pursuant to the Application:
(a) the occurrence of an "Event of Default" pursuant
to the terms of the SunTrust Agreement; and
(b) the failure of the Applicant to comply with the
terms and conditions of this Letter Agreement.
Remedies:
Upon the occurrence and during the continuance of an
Event of Default under the Application, as
supplemented by this Letter Agreement, in addition to
the rights and remedies afforded pursuant to the
Application, at law or in any other document related
hereto, the parties expressly agree that the Letter
of Credit shall be deemed to have been drawn in full
and the Applicant shall immediately reimburse to the
Issuer the full amount of such deemed drawing,
together with any other amounts owing
- 3 -
<PAGE> 4
hereunder or pursuant to the Applications in U.S.
Dollars, which amount shall be held by the Issuer as
cash collateral for Applicant's obligations pursuant
to the Application and this Letter Agreement. Such
collateral shall be held by Issuer for the pro-rata
benefit of the Issuer and participating banks. In
the event that the Letter of Credit expires or
terminates without draw, such amount shall be
immediately returned to the Applicant, together with
the interest thereon.
Miscellaneous:
(a) This Letter Agreement shall be governed by the
laws of the State of Georgia.
(b) This Letter Agreement is incorporated into the
Application and expressly made a part thereof.
(c) All references to the SunTrust Agreement refer
to such agreement as of the date hereof. The
portions of the SunTrust Agreement referenced herein
are expressly incorporated into this Agreement by
such reference and shall survive the termination and
repayment of the SunTrust Agreement.
(d) This Letter Agreement may only be amended or
modified by a writing signed by both parties, and in
accordance with the terms of any Participation
Agreement then in effect.
(e) This Letter Agreement shall be binding upon the
successors and assigns of the Applicant and inure to
the benefit of the successors and assigns of the
Issuer.
- 4 -
<PAGE> 5
If these terms and conditions are acceptable to you, please indicate your
acceptance by executing a copy of this Letter Agreement in the space below, and
return a copy to me.
Sincerely,
FIRST UNION NATIONAL BANK OF GEORGIA
By: /s/ James R. Pryor
------------------------------------
James R. Pryor
Senior Vice President
First Union National Bank of Georgia
ACCEPTED AND AGREED TO
BY:
FUQUA ENTERPRISES, INC.
By: /s/ John Huntz
-------------------------------
Its: Executive Vice President &
Chief Operating Officer
-----------------------------
Date: 12/3/95
-----------------------------
Attest:/s/ Brady W. Mullinax, Jr.
---------------------------
Its: V.P. Finance, Treasurer, CFO
------------------------------
Date: 12/8/95
-----------------------------
-5-
<PAGE> 6
December 8, 1995
InterRedec Southern Company, Inc.
Post Office Box 2049
Sterling Bluff
Richmond Hill, Georgia 31324
IRREVOCABLE STANDBY LETTER OF CREDIT
Gentlemen:
We hereby open our Irrevocable Standby Letter of Credit No. S062173, in your
favor, for the account of Fuqua Enterprises, Inc., 1201 West Peachtree Street,
Suite 5000, Atlanta, Georgia 30309 up to the aggregate amount of
US$11,803,914.56 (Eleven Million Eight Hundred Three Thousand Nine Hundred
Fourteen and 56/1OO US Dollars) available by your sight drafts, at sight, drawn
on First Union National Bank of Georgia, and accompanied by (1) a certificate in
the form of Annex A hereto appropriately completed and purportedly signed by
the holder of the promissory note referred to in Annex A and (2) the documents
required by the express terms of such certificate to be delivered with such
certificate.
This Irrevocable Standby Letter of Credit sets forth in full the terms of our
undertaking. This undertaking shall not in any way be modified, amended or
amplified by reference to any document or contract referred to herein.
This Letter of Credit expires at this office on January 31, 1997. This Letter
of Credit is transferable. Partial drawings are not permitted.
A drawing presented to us by 12:00 noon, provided that such drawing strictly
complies with the terms hereof, will be honored by us no sooner than two
business days later. Tested telex demands for payment are not acceptable.
Draft(s) under this Letter of Credit must state on their face: "Drawn under
First Union National Bank of Georgia Letter of Credit No. S062173 dated
December 8, 1995."
We hereby engage with you that sight draft(s) drawn under and in strict
compliance with the terms of this Letter of Credit shall be duly honored by us
if presented to us, at this office, on or before the above stated expiration
date as provided for herein.
All notices, if any, with respect to this Letter of Credit will be sent by
facsimile and overnight mail to the addressee named above and to the Federal
Reserve Bank of New York, Legal Department, 33 Liberty Street, New York, New
York 10045-0001, Attention: Thomas C. Baxter, Jr., General Counsel and
Executive Vice President.
Except so far as otherwise expressly stated herein, this Letter of Credit is
subject to the "Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500."
Very truly yours,
FIRST UNION NATIONAL BANK OF GEORGIA
By: /s/ T. Walker Brown
---------------------------
T. Walker Brown
Title: Vice President
<PAGE> 7
ANNEX A
DRAWING CERTIFICATE
First Union National Bank of Georgia
Two First Union Center, T-7
301 South Tryon Street
Charlotte, North Carolina 28288-0742
Re: Irrevocable Letter of Credit No. S062173 (the "Letter of
Credit") For the Account of Fuqua Enteprises, Inc.,
formerly known as Vista Resources, Inc. (the "Applicant")
Ladies and Gentlemen:
Reference is made to that certain Nonnegotiable Note dated October 11, 1991
executed by the Applicant, payable to InterRedec Southern Company, Inc.
("InterRedec") in the original principal amount of $8,000,000 (the "Note").
The undersigned, the Federal Reserve Bank of New York (the "Holder") hereby
certifies to First Union National Bank of Georgia and to the Applicant that:
1. The Holder is the legal and rightful holder of the Note and is entitled to
make this demand for payment under the Letter of Credit.
2. Attached to this Certificate are (a) the original of the Note and (b) a
copy of the written disbursement instructions executed by the Secretary of the
Board of Governors of the Federal Reserve System (the "Board") required to be
delivered to the Federal Reserve Bank of New York (the "New York Fed") under
Section 10(b) of the Escrow and Security Agreement dated October 8, 1991 by and
among the Board, InterRedec, Inc., the Applicant, Concord Finance & Investment,
Inc., Randy A. Mastro and the Federal Reserve Bank of New York.
3. An Event of Default under and as defined in that certain Stock Pledge
and Security Agreement dated as of October 11, 1991 (the "Pledge Agreement") by
and between the Applicant and InterRedec ("Event of Default") has occurred and
is continuing under Section 3(a) thereof.
4. With respect to paragraphs 5(a), (b) or (c) below, InterRedec has given
written notice to the Applicant at least 30 day's prior to the date of this
certificate that InterRedec intends to exercise its default rights and remedies
under the Pledge Agreement by drawing on the Letter of Credit. A true copy of
such notice is attached to this Certificate.
5. The statement noted below is true [check one of the following as
applicable]:
[ ] (a) The Applicant and InterRedec have
agreed in writing (including an agreement as to the
amount owed by the Applicant to the Holder) that
InterRedec is entitled to exercise its default
rights and remedies under the Pledge Agreement and a
true copy of such written agreement
is attached to this Certificate;
-1-
<PAGE> 8
[ ] (b) The Applicant and InterRedec have agreed to arbitration
procedures with respect to whether InterRedec is
entitled to exercise its default rights and remedies under
the Pledge Agreement, and the arbitrator thereunder has
entered an award in InterRedec's favor and a true copy of
such award is attached to this Certificate; or
[ ] (c) A court of competent jurisdiction has entered a judgment in
InterRedec's favor that InterRedec is entitled to exercise
its default rights and remedies under the Pledge Agreement
and a true copy of such judgment is attached to this
Certificate.
[ ] (d) After exercising reasonable efforts but in any event no
sooner than 30 days after an Event of Default has occurred,
the Holder has not been able to agree with the Applicant as
to the terms and of an escrow as described in paragraph 16
of the Note and at least 10 days have elapsed since the
Holder has notified the Applicant in writing that it
intends to draw under the Letter of Credit pursuant to this
paragraph 5(d).
6. The Holder is entitled to payment under the Letter of Credit
in the amount of $__________ . The holder acknowledges that in the event it
draws under the Letter of Credit based upon the certification set forth in
paragraph 5(d) above, the amount the Holder is entitled to draw under the
Letter of Credit shall not exceed $8,903,914.56.
7. Please direct payment under the Letter of Credit by wire transfer to:
Federal Reserve Bank of New York
59 Maiden Lane, 10th Floor
New York, New York 10045
Attention: Thomas C. Baxter
General Counsel and Executive Vice President
ABA No. 021001208
For further credit to account number 021039898
8. Upon payment by you of the amount demanded hereby in accordance
with the payment instructions set forth above, you are hereby instructed (a) to
mark the Note "Paid In Full" and (b) to deliver the Note to the Applicant.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Certtficate.
[HOLDER OF NOTE]
By: Name:
Title:
A-4
<PAGE> 9
FUQUA ENTERPRISES, INC.
ONE ATLANTIC CENTER
SUITE 5000
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309
(404) 815-2000
December 8, 1995
The Board of Governors of
the Federal Reserve System
c/o Federal Reserve Bank of New York
59 Maiden Lane, 8th Floor
New York, New York 10045
Ladies and Gentlemen:
This letter is intended to reflect the understanding between you and us
that in the event that (A) you, as holder of that certain Nonnegotiable
Promissory Note dated October 11, 1991 payable to InterRedec Southern Company,
Inc. ("InterRedec") in the amount of $8,000,000 (the "Note"), make a drawing
under that certain Irrevocable Standby Letter of Credit No. S062173 opened by
First Union National Bank of Georgia for the account of Fuqua Enterprises, Inc.
(the "Letter of Credit") based upon the certification set forth in paragraph
5(d) of the form of Drawing Certificate attached to the Letter of Credit and
(B) it is finally determined pursuant to the terms of that certain Stock
Purchase Agreement dated as of September 17, 1991 by and among Vista Resources,
Inc. (now known as Fuqua Enterprises, Inc. ("Fuqua"), Concorde Finance &
Investment, Inc., InterRedec, Inc., InterRedec and American Southern Insurance
Company (the "Stock Purchase Agreement")) that the Damages (as such term is
defined in the Stock Purchase Agreement) claimed by Fuqua at the time of the
drawing under the Letter of Credit are actually less than $3,000,000 (such
lesser amount being the "Actual Damages"), Fuqua shall promptly pay to you an
amount equal to the difference between $3,000,000 and the Actual Damages.
Promptly upon being advised that there is a default under the Note, and in
any event within five business days of being notified of such default, Fuqua
will promptly notify you of such event at the following address: Federal
Reserve Bank of New York, Legal Department, 33 Liberty Street, New York, New
York 10045-0001, Attention: Thomas C. Baxter, Jr., General Counsel and
Executive Vice President.
If the foregoing correctly sets forth the understanding and agreement
between Fuqua and the Board of Governors of the Federal Reserve System, please
so indicate in the space provided below, whereupon this letter agreement shall
constitute a binding agreement as of the date first above written.
FUQUA ENTERPRISES, INC.
By: /s/ John Huntz
----------------------------------
Name: John Huntz
Title: Executive Vice President
and Chief Operating Officer
AGREED TO AND ACCEPTED:
THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 10
ATLANTIC AMERICAN CORPORATION
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319-3000
Telephone: 266-5500
Telecopier: 231-2123
December 31, 1995
Fuqua Enterprises, Inc.
One Atlantic Center
Suite 5000
1201 West Peachtree Street
Atlanta, Georgia 30309
Gentlemen:
This letter is intended to reflect the understanding between you and
us that in the event that Fuqua Enterprises, Inc. ("Fuqua") is required to make
a payment to the Board of Governors of the Federal Reserve System (the "Fed"),
or its assignee, pursuant to that certain letter agreement dated December 8,
1995, Fuqua and the Fed, a copy of which is attached hereto as Exhibit A,
Atlantic American Corporation ("Atlantic American") shall simultaneously make a
payment to Fuqua in an amount equal to Fuqua's payment to the Fed.
If the foregoing correctly sets forth the understanding and agreement
between Atlantic American and Fuqua, please so indicate in the space provided
below, whereupon this letter agreement shall constitute a binding agreement as
of the date first above written.
ATLANTIC AMERICAN CORPORATION
By: /s/ Hilton H. Howell, Jr.
-----------------------------------------
Name: Hilton H. Howell, Jr.
Title: President and Chief Executive Officer
AGREED TO AND ACCEPTED:
FUQUA ENTERPRISES, INC.
By: /s/ John J. Huntz, Jr.
-----------------------------------
Name: John J. Huntz, Jr.
Title: Executive Vice President and
Chief Operating Officer
<PAGE> 11
EXHIBIT A
FUQUA ENTERPRISES, INC.
ONE ATLANTIC CENTER
SUITE 5000
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309
(404) 815-2000
December 8, 1995
The Board of Governors of
the Federal Reserve System
c/o Federal Reserve Bank of New York
59 Maiden Lane, 8th Floor
New York, New York 10045
Ladies and Gentlemen:
This letter is intended to reflect the understanding between you and us that
in the event that (A) you, as holder of that certain Nonnegotiable Promissory
Note dated October 11, 1991 payable to InterRedec Southern Company, Inc.
("InterRedec") in the amount of $8,000,000 (the "Note"), make a drawing under
that certain Irrevocable Standby Letter of Credit No. S062173 opened by First
Union National Bank of Georgia for the account of Fuqua Enterprises, Inc. (the
"Letter of Credit") based upon the certification set forth in paragraph 5(d)
of the form of Drawing Certificate attached to the Letter of Credit and (B) it
is finally determined pursuant to the terms of that certain Stock Purchase
Agreement dated as of September 17, 1991 by and among Vista Resources, Inc. now
known as Fuqua Enterprises, Inc. ("Fuqua"), Concorde Finance & Investment,
Inc., InterRedec Inc., InterRedec and American Southern Insurance Company (the
"Stock Purchase Agreement")) that the Damages (as such term is defined in the
Stock Purchase Agreement) claimed by Fuqua at the time of the drawing under the
Letter of Credit are actually less than $3,000,000 (such lesser amount being
the "Actual Damages"), Fuqua shall promptly pay to you an amount equal to the
difference between $3,000,000 and the Actual Damages.
Promptly upon being advised that there is a default under the Note, and in
any event within five business days of being notified of such default, Fuqua
will promptly notify you of such event at the following address: Federal
Reserve Bank of New York, Legal Department, 33 Liberty Street, New York, New
York 10045-0001, Attention: Thomas C. Baxter, Jr., General Counsel and
Executive Vice President.
If the foregoing correctly sets forth the understanding and agreement
between Fuqua and the Board of Governors of the Federal Reserve System, please
so indicate in the space provided below, whereupon this letter agreement shall
constitute a binding agreement as of the date first above written.
FUQUA ENTERPRISES, INC.
By: /s/ John Huntz
-----------------------------------
Name: John Huntz
Title: Executive Vice President
and Chief Operating Officer
AGREED TO AND ACCEPTED:
THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM
By:
-----------------------------
Name:
-----------------------
Title:
-----------------------
<PAGE> 12
FIRST UNION
December 8, 1995
InterRedec Southern Company, Inc.
Post Office Box 2049
Sterling Bluff
Richmond Hill, Georgia 31324
IRREVOCABLE STANDBY LETTER OF CREDIT
Gentlemen:
We hereby open our Irrevocable Standby Letter of Credit No. S062173, in your
favor, for the account of Fuqua Enterprises, Inc., 1201 West Peachtree Street,
Suite 5000, Atlanta, Georgia 30309 up to the aggregate amount of
US$11,803,914.56 (Eleven Million Eight Hundred Three Thousand Nine Hundred
Fourteen and 56/100 US Dollars) available by your sight drafts, at sight, drawn
on First Union National Bank of Georgia, and accompanied by (1) a certificate
in the form of Annex A hereto appropriately completed and purportedly signed by
the holder of the promissory note referred to in Annex A and (2) the documents
required by the express terms of such certificate to be delivered with such
certificate.
This Irrevocable Standby Letter of Credit sets forth in full the terms of our
undertaking. This undertaking shall not in any way be modified, amended or
amplified by reference to any document or contract referred to herein.
This Letter of Credit expires at this office on January 31, 1997. This Letter
of Credit is transferable. Partial drawings are not permitted.
A drawing presented to us by 12:00 noon, provided that such drawing strictly
complies with the terms hereof, will be honored by us no sooner than two
business days later. Tested telex demands for payment are not acceptable.
Draft(s) under this Letter of Credit must state on their face: "Drawn under
First Union National Bank of Georgia Letter of Credit No. S062173 dated
December 8, 1995."
We hereby engage with you that sight draft(s) drawn under and in strict
compliance with the terms of this Letter of Credit shall be duly honored by us
if presented to us, at this office, on or before the above stated expiration
date as provided for herein.
All notices, if any, with respect to this Letter of Credit will be sent by
facsimile and overnight mail to the addressee named above and to the Federal
Reserve Bank of New York, Legal Department, 33 Liberty Street, New York, New
York 10045-0001, Attention: Thomas C. Baxter, Jr., General Counsel and
Executive Vice President.
Except so far as otherwise expressly stated herein, this Letter of Credit is
subject to the "Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500."
Very truly yours,
FIRST UNION NATIONAL BANK OF GEORGIA
By: /s/ T. Walker Brown
----------------------------
T. Walker Brown
Title: Vice President
<PAGE> 13
FIRST UNION
ANNEX A
DRAWING CERTIFICATE
First Union National Bank of Georgia
Two First Union Center, T-7
301 South Tryon Street
Charlotte, North Carolina 28288-0742
Re: Irrevocable Letter of Credit No. S062173 (the
"Letter of Credit") For the Account of Fuqua
Enterprises, Inc., formerly known as Vista
Resources, Inc. (the "Applicant")
Ladies and Gentlemen:
Reference is made to that certain Nonnegotiable Note dated October 11, 1991
executed by the Applicant, payable to InterRedec Southern Company, Inc.
("InterRedec") in the original principal amount of $8,000,000 (the "Note").
The undersigned, the Federal Reserve Bank of New York (the "Holder") hereby
certifies to First Union National Bank of Georgia and to the Applicant that:
1. The Holder is the legal and rightful holder of the Note and is entitled
to make this demand for payment under the Letter of Credit.
2. Attached to this Certificate are (a) the original of the Note and (b) a
copy of the written disbursement instructions executed by the Secretary of the
Board of Governors of the Federal Reserve System (the "Board") required to be
delivered to the Federal Reserve Bank of New York (the "New York Fed") under
Section 10(b) of the Escrow and Security Agreement dated October 8, 1991 by and
among the Board, InterRedec, Inc., the Applicant, Concord Finance & Investment,
Inc., Randy A. Mastro and the Federal Reserve Bank of New York.
3. An Event of Default under and as defined in that certain Stock Pledge and
Security Agreement dated as of October 11, 1991 (the "Pledge Agreement") by and
between the Applicant and InterRedec ("Event of Default") has and is continuing
under Section 3(a) thereof.
4. With respect to paragraphs 5(a), (b) or (c) below, InterRedec has given
written notice to the Applicant at least 30 day's prior to the date of this
certificate that InterRedec intends to exercise its default rights and remedies
under the Pledge Agreement by drawing on the Letter of Credit. A true copy of
such notice is attached to this Certificate.
5. The statement noted below is true [check one of the following as
applicable]:
[ ] (a) The Applicant and InterRedec have agreed in
writing (including an agreement as to the amount
owed by the Applicant to the Holder) that InterRedec
is entitled to exercise its default rights and
remedies under the Pledge Agreement and a true copy
of such written agreement is attached to this
Certificate;
-1-
<PAGE> 14
FIRST UNION
[ ] (b) The Applicant and InterRedec have agreed to
arbitration procedures with respect to whether
InterRedec is entitled to exercise its default
rights and remedies under the Pledge Agreement, and
the arbitrator thereunder has entered an award in
InterRedec's favor and a true copy of such award is
attached to this Certificate; or
[ ] (c) A court of competent jurisdiction has entered a
judgment in InterRedec's favor that InterRedec is
entitled to exercise its default rights and remedies
under the Pledge Agreement and a true copy of such
judgment is attached to this Certificate.
[ ] (d) After exercising reasonable efforts but in any
event no sooner than 30 days after an Event of
Default has occurred, the Holder has not been able
to agree with the Applicant as to the terms and
arrangements of an escrow as described in paragraph
16 of the Note and at least 10 days have elapsed
since the Holder has notified the Applicant in
writing that it intends to draw under the Letter of
Credit pursuant to this paragraph 5(d).
6. The Holder is entitled to payment under the Letter of Credit in the
amount of $______________. The holder acknowledges that in the event it draws
under the Letter of Credit based upon the certification set forth in 5(d)
above, the amount the Holder is entitled to draw under the Letter of Credit
shall not exceed $8,803,914.56.
7. Please direct payment under the Letter of Credit by wire transfer to:
Federal Reserve Bank of New York
59 Maiden Lane, 10th Floor
New York, New York 10045
Attention: Thomas C. Baxter
General Counsel and Executive Vice President
ABA No. 021001208
For further credit to account number 021039898
8. Upon payment by you of the amount demanded hereby in accordance with
the payment instructions set forth above, you are hereby instructed (a) to mark
the Note "Paid In Full" and (b) to deliver the Note to the Applicant.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Certificate.
[HOLDER OF NOTE]
By: Name:
Title:
A-4
<PAGE> 15
FUQUA ENTERPRISES, INC.
ONE ATLANTIC CENTER
SUITE 5000
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309
(404) 815-2000
December 8, 1995
The Board of Governors of
the Federal Reserve System
c/o Federal Reserve Bank of New York
59 Maiden Lane, 8th Floor
New York, New York 10045
Ladies and Gentlemen:
This letter is intended to reflect the understanding between you and us that
in the event that (A) you, as holder of that certain Nonnegotiable Promissory
Note dated October 11, 1991 payable to InterRedec Southern Company, Inc.
("InterRedec") in the amount of $8,000,000 (the "Note"), make a drawing under
that certain Irrevocable Standby Letter of Credit No. S062173 opened by First
Union National Bank of Georgia for the account of Fuqua Enterprises, Inc. (the
"Letter of Credit") based upon the certification set forth in paragraph 5(d) of
the form of Drawing Certificate attached to the Letter of Credit and (B) it is
finally determined pursuant to the terms of that certain Stock Purchase
Agreement dated as of September 17, 1991 by and among Vista Resources, Inc.
(now known as Fuqua Enterprises, Inc. ("Fuqua"), Concorde Finance & Investment,
Inc., InterRedec, Inc., InterRedec and American Southern Insurance Company (the
"Stock Purchase Agreement")) that the Damages (as such term is defined in the
Stock Purchase Agreement) claimed by Fuqua at the time of the drawing under the
Letter of Credit are actually less than $3,000,000 (such lesser amount being
the "Actual Damages"), Fuqua shall promptly pay to you an amount equal to the
difference between $3,000,000 and the Actual Damages.
Promptly upon being advised that there is a default under the Note, and in
any event within five business days of being notified of such default, Fuqua
will promptly notify you of such event at the following address: Federal Reserve
Bank of New York, Legal Department, 33 Liberty Street, New York, New York
10045-0001, Attention: Thomas C. Baxter, Jr., General Counsel and Executive
Vice President.
If the foregoing correctly sets forth the understanding and agreement
between Fuqua and the Board of Governors of the Federal Reserve System, please
so indicate in the space provided below, whereupon this letter agreement shall
constitute a binding agreement as of the date first above written.
FUQUA ENTERPRISES, INC.
By: /s/ John Huntz
----------------------------------
Name: John Huntz
Title: Executive Vice President
and Chief Operating Officer
AGREED TO AND ACCEPTED:
THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 16
ATLANTIC AMERICAN CORPORATION
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319-3000
Telephone: 266-5500
Telecopier: 231-2123
December 31, 1995
Fuqua Enterprises, Inc.
One Atlantic Center
Suite 5000
1201 West Peachtree Street
Atlanta, Georgia 30309
Gentlemen:
This letter is intended to reflect the understanding between you and
us that in the event that Fuqua Enterprises, Inc. ("Fuqua") is required to make
a payment to the Board of Governors of the Federal Reserve System (the "Fed"),
or its assignee, pursuant to that certain letter agreement dated December 8,
1995, between Fuqua and the Fed, a copy of which is attached hereto as Exhibit
A, Atlantic American Corporation ("Atlantic American") shall simultaneously
make a payment to Fuqua in an amount equal to Fuqua's payment to the Fed.
If the foregoing correctly sets forth the understanding and agreement
between Atlantic American and Fuqua, please so indicate in the space provided
below, whereupon this letter agreement shall constitute a binding agreement as
of the date first above written.
ATLANTIC AMERICAN CORPORATION
By: /s/ Hilton H. Howell, Jr.
----------------------------------
Name: Hilton H. Howell, Jr.
Title: President and Chief Executive Officer
AGREED TO AND ACCEPTED:
FUQUA ENTERPRISES, INC.
By: /s/ John J. Huntz, Jr.
-------------------------------
Name: John J. Huntz, Jr.
Title: Executive Vice President and
Chief Operating Officer
<PAGE> 17
EXIHIBIT A
FUQUA ENTERPRISES, INC.
ONE ATLANTIC CENTER
SUITE 5000
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309
(404) 815-2000
December 8, 1995
The Board of Governors of
the Federal Reserve System
c/o Federal Reserve Bank of New York
59 Maiden Lane, 8th Floor
New York, New York 10045
Ladies and Gentlemen:
This letter is intended to reflect the understanding between you and us that
in the event that (A) you, as holder of that certain Nonnegotiable Promissory
Note dated October 11, 1991 payable to InterRedec Southern Company, Inc.
("InterRedec") in the amount of $8,000,000 (the "Note"), make a drawing under
that certain Irrevocable Standby Letter of Credit No. S062173 opened by First
Union National of Georgia for the account of Fuqua Enterprises, Inc. (the
"Letter of Credit") based upon the certification set forth in paragraph 5(d) of
the form of Drawing Certificate attached to the Letter of Credit and (B) it is
finally determined pursuant to the terms of that certain Stock Purchase
Agreement dated as of September 17, 1991 by and among Vista Resources, Inc.
(now known as Fuqua Enterprises, Inc. ("Fuqua"), Concorde Finance & Investment,
Inc., InterRedec, Inc., InterRedec and American Southern Insurance Company (the
"Stock Purchase Agreement")) that the Damages (as such term is defined in the
Stock Purchase Agreement) claimed by Fuqua at the time of the drawing under the
Letter of Credit are actually less than $3,000,000 (such lesser amount being the
"Actual Damages"), Fuqua shall promptly pay to you an amount equal to the
difference between $3,000,000 and the Actual Damages.
Promptly upon being advised that there is a default under the Note, and in
any event within five business days of being notified of such default, Fuqua
will promptly notify you of such event at the following address: Federal
Reserve Bank of New York, Legal Department, 33 Liberty Street, New York, New
York 10045-0001, Attention: Thomas C. Baxter, Jr., General Counsel and
Executive Vice President.
If the foregoing correctly sets forth the understanding and agreement
between Fuqua and the Board of Governors of the Federal Reserve System, please
so indicate in the space provided below, whereupon this letter agreement shall
constitute a binding agreement as of the date first above written.
FUQUA ENTERPRISES, INC.
By: /s/ John Huntz
----------------------------------
Name: John Huntz
Title: Executive Vice President
and Chief Operating Officer
AGREED TO AND ACCEPTED:
THE BOARD OF GOVERNORS OF
THE FEDERAL RESERVE SYSTEM
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
<PAGE> 1
EXHIBIT 11
FUQUA ENTERPRISES, INC.
NUMBER OF SHARES USED IN COMPUTING EARNINGS PER SHARE
MARCH 31, 1996
PRIMARY EARNINGS PER SHARE:
TREASURY STOCK METHOD:
<TABLE>
<CAPTION>
NUMBER OF
TRADING TOTAL TOTAL
MONTH DAYS HIGH LOW
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
January 22 $ 430.000 $ 418.375
February 20 397.000 384.750
March 21 505.375 491.500
-- --------- ---------
63 $ 1,332.375 $ 1,294.625 $2,627.000
== ========= ========= =========
</TABLE>
AVERAGE: $2,627.000 divided by 63 divided by 2 = $20.849
===============================================================================
<TABLE>
<CAPTION>
OPTIONS OPTION
OUTSTANDING SHARES PRICE EXTENSION
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
500 $ 8.500 $ 4,250
5,000 9.500 47,500
121,000 20.250 2,450,250
25,000 20.375 509,375
5,000 21.000 105,000
15,000 20.625 309,375
4,000 18.625 74,500
150,000 20.500 3,075,000
100,000 18.375 1,837,500
------- ---------
Total 425,500 $ 8,412,750
======= =========
Average Price (above) $ 20.849
---------
Total Option Extension Divided by Average Price 403,505
Options Outstanding 425,500
---------
Common Stock Equivalents 21,995
Average Shares Outstanding (see page 2) 4,477,716
---------
Use for Primary Earnings Per Share 1st Quarter 4,499,711
---------
</TABLE>
-continued-
1
<PAGE> 2
FULLY DILUTED EARNINGS PER SHARE:
AVERAGE NUMBER OF SHARES OUTSTANDING:
<TABLE>
<CAPTION>
BEGINNING ENDING NUMBER SHARES
DATE DATE OF DAYS OUTSTANDING EXTENSION
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1-1-96 1-2-96 1 4,441,865 4,441,865
1-3-96 1-5-96 4 4,472,265 17,889,060
1-6-96 1-9-96 4 4,472,515 17,890,060
1-10-96 1-19-96 11 4,478,500 49,263,500
1-20-96 2-13-96 25 4,479,347 111,983,675
2-14-96 3-31-96 46 4,478,347 206,003,962
-- -----------
91 407,472,122
== ===========
Average Number of Shares Outstanding:
First Quarter (Extension Divided by Number of Days) 4,477,716
- --------------------------------------------------------------------------------------------------------------
FIRST
QUARTER
-------
Closing Price - 3-31-96 $ 25.625
----------
Total Option Extension (from page 1) Divided by Closing Price 328,302
Options Outstanding 425,500
----------
Common Stock Equivalents 97,198
Average Shares Outstanding (from above) 4,477,716
----------
Fully Diluted Shares 4,574,914
Less Primary Shares (from page 1) 4,499,711
----------
Additional Shares 75,203
----------
Percentage 1.68%
</TABLE>
(Note: Anti-dilutive or less than 3.0%; no fully diluted presentation required.)
- -------------------------------------------------------------------------------
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1996 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FORM 10-Q AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 16,065
<SECURITIES> 22,374
<RECEIVABLES> 34,184
<ALLOWANCES> (280)
<INVENTORY> 21,555
<CURRENT-ASSETS> 98,466
<PP&E> 32,780
<DEPRECIATION> (11,935)
<TOTAL-ASSETS> 137,589
<CURRENT-LIABILITIES> 31,305
<BONDS> 22,773
0
0
<COMMON> 11,308
<OTHER-SE> 72,054
<TOTAL-LIABILITY-AND-EQUITY> 137,589
<SALES> 30,500
<TOTAL-REVENUES> 31,170
<CGS> 25,062
<TOTAL-COSTS> 28,210
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 82
<INTEREST-EXPENSE> 333
<INCOME-PRETAX> 2,627
<INCOME-TAX> 1,027
<INCOME-CONTINUING> 1,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,600
<EPS-PRIMARY> .36
<EPS-DILUTED> 0
</TABLE>
