<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 1997
------------------
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: 1-12648
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UFP Technologies, Inc.
----------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2314970
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
172 East Main Street, Georgetown, Massachusetts 01833, USA
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(978) 352-2200
--------------
(Registrant's telephone number, including area code)
-----------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
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 filings
requirements for the past 90 days.
Yes X No
----- -----
As of November 6, 1997, 4,666,354 shares of registrant's Common Stock, $.01 par
value, were outstanding.
<PAGE>
UFP TECHNOLOGIES, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets
September 30, 1997 and December 31, 1996.............. 1
Consolidated Statements of Operations
Three Months and Nine Months Ended
September 30, 1997 and 1996........................... 2
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1997 and 1996......... 3
Notes to Consolidated Financial Statements............ 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 6
PART II - OTHER INFORMATION................................................ 8
SIGNATURES................................................................. 9
</TABLE>
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
UFP Technologies, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
30-Sep-97 31-Dec-96
ASSETS Unaudited Audited
------------ ------------
Current assets
<S> <C> <C>
Cash and cash equivalents $ 432,177 143,531
Receivables, net 6,487,445 5,602,202
Inventories 3,657,820 2,585,560
Prepaid expenses and other current assets 418,188 604,093
------------ ------------
Total current assets 10,995,630 8,935,386
Property, plant and equipment 19,101,230 17,201,709
Less accumulated depreciation and amortization (8,698,548) (7,486,126)
------------ ------------
Net property, plant and equipment 10,402,682 9,715,583
Goodwill, net 2,615,346 2,577,491
Other assets 1,645,835 1,671,418
------------ ------------
Total assets $ 25,659,493 22,899,878
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 3,300,000 1,400,000
Current installments of long-term debt 357,701 394,825
Current installments of capital lease obligations 743,933 660,192
Accounts payable 2,026,843 2,215,030
Accrued expenses and payroll withholdings 2,343,792 1,776,926
------------ ------------
Total current liabilities 8,772,269 6,446,973
Long-term debt, excluding current installments 660,482 764,256
Capital lease obligations, excluding current installments 1,993,031 2,459,261
Retirement liability 544,896 499,896
------------ ------------
Total liabilities 11,970,678 10,170,386
------------ ------------
Stockholders' equity
Preferred stock 0 0
Common stock 46,664 46,369
Additional paid-in capital 9,499,019 9,404,902
Retained earnings 4,143,132 3,278,221
------------ ------------
Total stockholders' equity 13,688,815 12,729,492
------------ ------------
Total liabilities and stockholders' equity $ 25,659,493 22,899,878
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
1
<PAGE>
UFP Technologies, Inc. and Subsidiary
Consolidated Income Statement
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- ----------------------------
30-Sep-97 30-Sep-96 30-Sep-97 30-Sep-96
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $11,440,309 10,095,026 33,600,624 28,872,206
Cost of sales 8,266,699 7,458,925 24,662,526 21,712,658
----------- ---------- ---------- ----------
Gross profit 3,173,610 2,636,101 8,938,098 7,159,548
Selling, general and administrative expenses 2,353,399 1,997,396 6,973,435 5,701,464
----------- ---------- ---------- ----------
Operating income 820,211 638,705 1,964,663 1,458,084
----------- ---------- ---------- ----------
Interest expense 171,064 135,984 481,752 356,519
----------- ---------- ---------- ----------
Income before income taxes 649,147 502,721 1,482,911 1,101,565
----------- ---------- ---------- ----------
Income taxes 268,000 201,000 618,000 428,000
----------- ---------- ---------- ----------
Net income $ 381,147 301,721 864,911 673,565
=========== ========== ========== ==========
Weighted average shares outstanding 4,838,372 4,961,728 4,871,519 4,958,043
Per share:
Net income $ 0.08 0.06 0.18 0.14
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
UFP Technologies, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
30-Sep-97 30-Sep-96
---------- ----------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 864,911 673,565
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,281,235 1,091,968
Equity in net income of unconsolidated affiliate and partnership 8,590 14,000
Stock issued in lieu of compensation 33,750 16,875
Changes in operating assets and liabilities:
Receivables, net (209,531) (823,919)
Inventories (777,259) (78,319)
Prepaid expenses and other current assets 242,760 168,359
Accounts payable (299,305) 372,493
Accrued expenses and payroll withholdings 473,360 479,202
Retirement liability 45,000 45,000
---------- ----------
Net cash provided by operating activities 1,663,511 1,959,224
---------- ----------
Cash flows from investing activities:
Additions to property, plant and equipment (1,186,311) (1,934,598)
Acquisition of Foam Cutting Engineers, net of cash acquired (1,512,879) --
Decrease (increase) in other assets 33,646 (18,797)
---------- ----------
Net cash used in investing activities (2,665,544) (1,953,395)
---------- ----------
Cash flows from financing activities:
Net borrowings under notes payable 1,900,000 (575,000)
Principal repayments of long-term debt (140,898) (137,480)
Principal repayments of capital lease obligations (529,085) (266,840)
Proceeds from capital lease obligation 0 1,041,000
Net proceeds from sale of common stock 60,662 11,900
---------- ----------
Net cash provided by financing activities 1,290,679 73,580
---------- ----------
Net change in cash and cash equivalents 288,646 79,409
Cash and cash equivalents, at beginning of period 143,531 524,490
---------- ----------
Cash and cash equivalents, at end of period $ 432,177 603,899
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
UFP TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The interim consolidated financial statements of UFP Technologies,
Inc. (the Company) presented herein, without audit, have been prepared
pursuant to the rules of the Securities and Exchange Commission for
quarterly reports on Form 10-Q and do not include all the information and
note disclosures required by generally accepted accounting principles.
These statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended December 31,
1996, included in the Company's 1996 Annual Report on Form 10-K as
provided to the Securities and Exchange Commission.
The condensed consolidated balance sheet as of September 30, 1997,
the consolidated income statement for the three and nine months ended
September 30, 1997 and 1996, and the consolidated statements of cash
flows for the nine months ended September 30, 1997 and 1996, are
unaudited but, in the opinion of management, include all adjustments
(consisting of normal, recurring adjustments) necessary for fair
presentation of results for these interim periods.
The results of operations for the nine months ended September 30,
1997, are not necessarily indicative of the results to be expected for
the entire fiscal year ending December 31, 1997.
(2) Inventory
Inventories are stated at the lower of cost (first-in, first-out) or
market and consist of the following:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
(unaudited) (audited)
-------------------- ---------------------
<S> <C> <C>
Raw materials $ 2,344,019 $ 1,850,238
Work-in-process 424,837 190,553
Finished goods 888,964 544,769
-------------------- ---------------------
Total Inventory $ 3,657,820 $ 2,585,560
==================== =====================
</TABLE>
(3) Common Stock
At December 31, 1996, 695,250 options were outstanding under the
Company's 1993 Stock Option Plan ("1993 Plan"). The purpose of these
options is to provide long-term rewards and incentives to the Company's
key employees, officers, employees, directors, consultants and advisors.
There were 44,000 options issued and 17,500 options exercised in the
first nine months of 1997 under the 1993 Plan, and 32,750 options
expired. At September 30, 1997, 689,000 options were outstanding under
the plan.
At December 31, 1996, 37,500 options were outstanding under the
Company's Non-Employee Director Plan. There were 12,500 options issued,
and 5,000 options exercised in the first nine months of 1997 under the
plan, and 2,500 options expired. At September 30, 1997, 42,500 options
were outstanding.
4
<PAGE>
(4) Earnings per share disclosure in 10-Qs
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 128, Earnings per Share
(FASB No. 128). FASB No. 128 supersedes APB No. 15 and specifies the
computation, presentation and disclosure requirements for earnings per
share. FASB No. 128 is effective for financial statements for both
interim and annual periods ending after December 15, 1997 and early
application is not permitted. Accordingly, the Company will apply FASB
No. 128 for the quarter and year ended December 31, 1997 and restate
prior period information as required under the statement. The Company
believes that if the FASB No. 128 had been applied for the three-month
period ending September 30, 1997, and the nine-month period ending
September 30, 1997, the impact on earnings per share as currently stated
would have been immaterial.
(5) Pro forma results of acquisition of Foam Cutting Engineers, Inc. (FCE)
The following table outlines the pro forma financial results of UFP
Technologies, Inc. for the nine month period ended September 30, 1996 as
if FCE was purchased on January 1, 1996. Such pro forma financial
information reflects adjustments for amortization of goodwill and
interest.
<TABLE>
<CAPTION>
Nine Month Period Ended
September 30, 1996
------------------------------
Historical Pro-forma
(unaudited) (unaudited)
----------- -----------
<S> <C> <C>
Net Sales $28,872,206 $31,718,433
Net income $ 673,565 $ 716,242
Weighted average shares outstanding 4,958,043 4,958,043
Net income per share $ 0.14 $ 0.14
</TABLE>
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Three Months Ended September 30, 1997 and 1996
- ----------------------------------------------
The Company's net sales increased 13% to $11,440,309 in the 1997 period
from $10,095,026 in the 1996 period. The increase was primarily attributable to
an increase in sales volume of the Company's moulded fibre products and the
addition of the Foam Cutting Engineers ("FCE") division which was acquired
effective January 1, 1997.
Cost of sales as a percentage of sales declined to 72.3% in the 1997
period from 73.9% in the 1996 period. The improvement in the cost of sales
margin was primarily attributable to continued volume and manufacturing
efficiency improvements associated with the Company's moulded fibre products.
Selling, general and administrative expenses increased to $2,353,399
(20.6% of sales) in the 1997 period from $1,997,396 (19.8% of sales) in the 1996
period. The increase was primarily associated with additional selling expenses
related to increased sales and general and administrative expenses associated
with the addition of the FCE division.
Interest expense increased 26% in the 1997 period to $171,064 from
$135,984 in the 1996 period. The increase was primarily attributable to the
additional borrowings associated with the acquisition of FCE and increases in
capital lease obligations associated with the Company's purchase of additional
moulded fibre equipment.
Nine Months Ended September 30, 1997 and 1996
- ---------------------------------------------
The Company's net sales increased 16.4% to $33,600,624 in the 1997 period
from $28,872,206 in the 1996 period. The increase was primarily attributable to
an increase in sales volume of the Company's moulded fibre products and the
addition of the FCE division which was acquired effective January 1, 1997.
Cost of sales as a percentage of sales improved to 73.4% in the 1997
period from 75.2% in the 1996 period. The improvements in the cost of sales
margin was primarily attributable to continued volume and manufacturing
efficiency improvements with the Company's moulded fibre products.
Selling, general and administrative expenses increased to $6,973,435
(20.8% of sales) in the 1997 period, from $5,701,464 (19.7% of sales) in the
1996 period. The increase was primarily associated with additional selling
expenses related to increased sales and general and administrative expenses
associated with the addition of the FCE division.
Interest expenses increased 35% in the 1997 period to $481,752 from
$356,519 in the 1996 period. The increase was primarily attributable to the
additional borrowings associated with the acquisition of FCE and the increase in
capital lease obligations associated with the Company's purchase of additional
moulded fibre equipment.
6
<PAGE>
Liquidity and Capital Resources
At September 30, 1997, the Company's working capital was approximately
$2,223,000 including $432,000 of cash and cash equivalents. In addition, the
Company had a $5,000,000 bank revolving loan facility, of which $3,300,000 was
outstanding at September 30, 1997.
On September 30, 1997, the company renewed its borrowing arrangement with
BankBoston. Under the terms of the renewal, the revolving working capital
facility limit was increased from $4.5 million to $5.0 million, and provides for
a new $1.0 million four-year term loan. In addition, the bank agreed to extend
the company an additional $2.0 million equipment line of credit.
During the nine months ended September 30, 1997, operating activities of
the Company provided approximately $1,664,000 in cash, primarily due to net
income and depreciation and amortization which was offset by increases in
accounts receivable and inventory and a decrease in accounts payable. The
increases in accounts receivable and inventory were primarily due to the
increase in sales volume and product demand.
Cash used in investing of approximately $2,666,000 was attributable to the
acquisition of FCE and to additions of property, plant and equipment.
Net cash generated from financing activities totaled approximately
$1,291,000 due to a $1,900,000 increase in short-term borrowings primarily
associated with the purchase of FCE, which was partially offset by principal
payments of capital lease obligations and long-term debt.
At September 30, 1997, the Company had approximately $897,000 outstanding
under two mortgage notes and approximately $122,000 outstanding under two
equipment notes. At September 30, 1997, the current portions of these
obligations, together with the Company's line of credit totaled $3,658,000.
The Company believes it will continue to have capital expenditure needs
related to the growth of its Moulded Fiber division, including increased
inventory requirements, additional and enhanced manufacturing equipment and,
possibly, establishing a new production site. Although the Company believes that
it will be able to obtain the necessary financing for this expansion, there can
be no assurance that such financing will be available on favorable terms, if at
all.
* * *
7
<PAGE>
PART II - OTHER INFORMATION
UFP TECHNOLOGIES, INC. AND SUBSIDIARY
Item 1 Legal Proceedings.
No material litigation.
Item 2 Changes in Securities.
None.
Item 3 Defaults Upon Senior Securities.
None.
Item 4 Submission of Matters to a Vote of Security Holders.
None.
Item 5 Other Information.
None.
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits furnished:
(10) BankBoston credit facility.
(11) Statement Re: Computation of Earnings Per Share.
(27) Financial Data Schedule.
(b) Reports on Form 8-K:
The Company did not file a report on Form 8-K for the
reporting period.
8
<PAGE>
UFP TECHNOLOGIES, INC. AND SUBSIDIARY
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.
UFP TECHNOLOGIES, INC.
(Registrant)
November 14, 1997 /s/ R. Jeffrey Bailly
- ----------------- ---------------------
Date R. Jeffrey Bailly
President, Chief Executive
Officer and Director
November 14, 1997 /s/ Ron Lataille
- ----------------- ---------------------
Date Ron Lataille
Chief Financial Officer
9
<PAGE>
EXHIBIT 10
SECOND AMENDMENT
TO
CREDIT AGREEMENT
----------------
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
September __, 1997 is by and among UFP TECHNOLOGIES, INC. ("UFP"), a Delaware
corporation having is principal place of business at 172 East Main Street,
Georgetown, Massachusetts 01833, MOULDED FIBRE TECHNOLOGY, INC. ("MFT"), a Maine
corporation having its principal place of business at 301 U.S. Route One,
Scarborough, Maine 04074 (UFP and MFT are collectively referred to herein as the
"Borrowers" and individually as a "Borrower") and BANKBOSTON, N.A. (successor
by merger to BAYBANK), a national bank with its head office at 100 Federal
Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Borrowers and the Bank are parties to that certain Credit
Agreement dated as of June 30, 1995, as amended pursuant to a First Amendment
dated May 31, 1996, (as herein amended, the "Credit Agreement"); and
WHEREAS, the Borrowers and the Bank have agreed, subject to the terms and
conditions set forth herein, to amend certain provisions of the Credit Agreement
as set forth herein;
NOW THEREFORE, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Borrowers and the Bank hereby agree to amend the
Credit Agreement as follows;
1. Definitions. All capitalized terms used herein without definition shall
-----------
have the meanings ascribed to them in the Credit Agreement.
2. Amendment to (S)1 of the Credit Agreement.
-----------------------------------------
(a) The following definitions in (S)1 of the Credit Agreement are hereby
deleted and the following substituted in place thereof:
"LIBOR Rate Margin: With respect to any LIBOR Rate Loan, one and three
------------------
quarters of one percent (1 3/4%) per annum."
"Loan: Any loan made or to be made to the Borrowers pursuant to (S)(S)2,
-----
3, 4 and 4A hereof."
<PAGE>
"Maturity Date: June 30, 1998 or such earlier date on which any of the
--------------
Loans may become due and payable."
"Security Documents: The Amended and Restated Security Agreement, dated
-------------------
as of September __, 1997 between UFP and the Bank, the Amended and Restated
Security Agreement, dated as of September __, 1997 between MFT and the Bank,
the Patent Collateral Assignment and Security Agreement, dated as of the
date hereof between UFP and the Bank, the Patent Collateral Assignment and
Security Agreement dated as of the date hereof between MFT and the Bank,
the Trademark Collateral Security and Pledge Agreement, dated as of the date
hereof between UFP and the Bank, and the Assignment of Trademarks and
Service Marks dated as of the date hereof between UFP and the Bank."
"Working Capital Commitment: The obligation of the Bank to make Loans
---------------------------
pursuant to (S)2.1 to the Borrowers up to an aggregate outstanding principal
amount not to exceed $5,000,000, as such amount may be reduced from time to
time or terminated hereunder."
(b) The following definitions in (S)1 of the Credit Agreement are
hereby amended as follows:
(i) The definition of "Base Accounts" is hereby amended by
-------------
deleting the clause contained in subsection (v) thereof its entirety
and substituting therefor "intentionally omitted"; and
(ii) The definition of "Base Inventory" is hereby amended by
--------------
deleting the clause contained in subsection (iii) thereof in its
entirety and substituting therefor "intentionally omitted";
3. The following new definitions are added to (S)1 of the Credit Agreement
in appropriate alphabetical sequence:
"Secured Loans: Any loan made or to be made to the Borrowers pursuant
-------------
to (S)4 and 4A hereof."
"Secured Obligations: All indebtedness, obligations and liabilities of
-------------------
the Borrowers to the Bank, existing on the date of this Agreement or arising
thereafter, direct or indirect joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, arising by contract,
operation of law or otherwise, arising or incurred under this Agreement or
any other Loan Document in respect of any of the Secured Loans and the Notes
relating thereto or other instruments, at any time including any thereof."
4. Amendment to (S)2.2(b) of the Credit Agreement. Section 2.2(b) is
----------------------------------------------
hereby amended by replacing the principal amount of "$4,500,000" with the
principal amount of "$5,000,000".
-2-
<PAGE>
5. Amendment to (S)9.30(b) of the Credit Agreement. Section 9.30(b) is
-----------------------------------------------
hereby deleted in its entirety and the following substituted in place thereof:
"(b) permit Tangible Net Worth to be less than $11,000,000 at
any time;"
6. Addition to Credit Agreement. The Credit Agreement is hereby amended
----------------------------
by adding a new Section 4A immediately following Section 4 thereof as follows:
"4A. 1997 TERM LOAN FACILITY.
-----------------------
4A.1. The 1997 Term Loan. (a) Upon the terms and subject to the conditions
------------------
of this Agreement, the Bank agrees to make a term loan (the "1997 Term Loan") to
the Borrowers on the date hereof. The 1997 Term Loan shall be in the maximum
principal amount of $1,000,000. The 1997 Term Loan shall be evidenced by a
promissory note of the Borrower, in the form and substance satisfactory to the
Bank (the "1997 Term Note"), dated as of September ___, 1997 and payable to the
order of the Bank.
4A.2 Interest.
--------
So long as no Event of Default is continuing, the Borrower shall pay
interest on the 1997 Term Loan at a rate per annum which is equal to 8.47%, such
interest to be payable in arrears on the first day of each calendar month for
the immediately preceding calendar month, commencing with the first such day
following the date hereof. While an Event of Default is continuing, amounts
payable under any of the Loan Documents shall bear interest (compounded monthly
and payable on demand in respect of overdue amounts) at a rate per annum which
is equal to the sum of (a) the Prime Lending Rate, and (b) two percent (2%)
above the rate of interest otherwise applicable to the 1997 Term Loan until such
amount is paid in full or (as the case may be) such Event of Default has been
cured or waived in writing by the Bank (after as well before judgment).
4A.3. Repayments and Prepayments.
--------------------------
The Borrowers hereby promise to pay to the Bank the principal amount of the
1997 Term Loan in forth-eight (48) consecutive equal monthly installments due on
the last day of each calendar month, commencing September 30, 1997 with a final
payment of the full amount of the remaining balance of the Term Loan on August
31, 2001. The Borrowers may elect to prepay the outstanding principal of all or
any part of the 1997 Term Loan, without premium or penalty, in a minimum amount
of $100,000 or an integral multiple thereof, upon written notice to the Bank
given by 10:00 a.m. Boston time on the date of such prepayment, of the amount to
be prepaid. Each repayment or prepayment of principal of the 1997 Term Loan
shall be accompanied by payment of the unpaid interest
- 3 -
<PAGE>
accrued to such date of the principal being repaid or prepaid and shall be
applied against the scheduled installments of principal due on the 1997 Term
Loan in the inverse order of maturity. No amount repaid with respect to the
1997 Term Loan may be reborrowed."
7. This Amendment shall become effective upon the satisfaction of each
of the following conditions:
(a) This Amendment shall have been executed and delivered by the
respective parties hereto;
(b) The Borrowers shall have executed and delivered to the Bank a
Second Amended and Restated Note in the form of Exhibit A
hereto;
(c) The Borrowers shall have executed and delivered to the Bank two
Amended and restated Security Agreements in the form of Exhibit
B-1 and Exhibit B-2 hereto;
(d) The Borrowers shall have executed and delivered to the Bank the
1997 Term Note in the form of Exhibit C hereto;
(e) The Bank shall have executed UCC-3 financing statements
releasing accounts receivable and inventory from the
collateral;
(f) Each of the Borrowers shall have delivered to the Bank
certified copies of corporate resolutions satisfactory to the
Bank authorizing this Amendment, the Second Amended and
Restated Note, the Amended and Restated Security Agreements and
the 1997 Term Note and all related documents;
(g) Each of the Borrowers shall have delivered to the Bank copies,
certified by a duly authorized officer of each Borrower to be
true and complete on the date hereof, of each of (i) its
charter or other incorporation documents as in effect on such
date of certification, and (ii) its by-laws as in effect on
such date;
(h) Each of the Borrowers shall have delivered to the bank an
incumbency certificate, dated as of the date hereof, signed by
a duly authorized officer of the Borrower, and giving the name
and bearing a specimen signature of each individual who shall
be authorized: (i) to sign, in the name and on behalf of such
Borrower each of the documents to which such Borrower is or is
to become a party; and (ii) to give notices and to take other
action on its
- 4 -
<PAGE>
behalf under the documents to which it is a party; and
(i) The Borrowers shall have delivered to the Bank a
legal opinion from counsel to the Borrowers in form
and detail satisfactory to the Bank.
8. Except as expressly amended hereby, the Credit Agreement, the
other Loan Documents and all documents, instruments and agreements related
thereto are hereby ratified and confirmed in all respects and shall continue in
full force and effect. This Amendment and the Credit Agreement, shall hereafter
be read and construed together as a single document, and all references in the
Credit Agreement or any related agreement or instrument to the Credit Agreement
shall hereafter refer to the Credit Agreement as amended by this Amendment.
9. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL TAKE EFFECT AS A
SEALED INSTRUMENT IN ACCORDANCE WITH SUCH LAWS.
10. This Amendment may be executed in any number of counterparts and
by different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which counterparts taken
together shall be deemed to constitute one and the same instrument. Complete
sets of counterparts shall be held by the Bank.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment under seal
this ______ day of September, 1997.
UFP TECHNOLOGIES, INC.
By: /s/ Paul J. Greenler
---------------------
Name: Paul J. Greenler
Title: Vice President and Chief
Financial Officer
MOULDED FIBRE TECHNOLOGY, INC.
By: /s/ Paul J. Greenler
---------------------
Name: Paul J. Greenler
Title: Vice President and Chief
Financial Officer
BANKBOSTON, N.A.
By: /s/ Randall Kutch
---------------------
Name: Randall Kutch
Title: Vice President
-6-
<PAGE>
SECOND AMENDED AND RESTATED NOTE
$5,000,000 September ____, 1997
FOR VALUE RECEIVED, each of the undersigned UFP TECHNOLOGIES, INC.
("UFP"), a Delaware corporation, and MOULDED FIBRE TECHNOLOGY, INC. ("MFT"), a
Maine corporation (UFP and MFT are collectively referred to herein as the
"Borrowers"), hereby promises to pay to the order of BANKBOSTON, N.A. (successor
by merger to BAYBANK), a national bank (the "Bank") at the Bank's head office at
100 Federal Street, Boston, MA 02110:
(a) prior to or on June 30, 1998 the principal amount of Five
Million Dollars ($5,000,000) or, if less, the aggregate unpaid principal
amount of Loans advanced by the Bank to the Borrowers pursuant to (S)2.1
of the Credit Agreement dated as of June 30, 1995, as amended as of May
31, 1996 and as amended as of September ___, 1997 (as amended and in
effect from time to time, the "Credit Agreement"), among the Borrowers
and the Bank;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided
in the Credit Agreement.
This Note constitutes the second amendment and restatement in
its entirety of the note dated June 30, 1995 of the Borrowers to the Bank.
This Note evidences borrowings under and has been issued by the
Borrowers in accordance with the terms of the Credit Agreement. The Bank and any
holder hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrowers contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in
this Note and not otherwise defined herein shall have the same meanings herein
as in the Credit Agreement.
The Borrowers irrevocably authorize the Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Loan or at the time of
receipt of any payment of principal of this Note, an appropriate notation on the
grid attached to this Note, or the continuation of such grid, or any other
similar record,
<PAGE>
including computer records, reflecting the making of such Loan or (as the case
may be) the receipt of such payment. The outstanding amount of the Loans set
forth on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by the Bank
with respect to any Loans shall be prima facie evidence of the principal amount
----- -----
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligation of the Borrowers hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
The Borrowers have the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
on this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWERS HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWERS AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWERS BY MAIL AT THE ADDRESS SPECIFIED IN THE CREDIT AGREEMENT. THE
BORROWERS HEREBY WAIVE ANY
-2-
<PAGE>
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, each of the undersigned have caused this Note to be
signed in its respective corporate name and its respective corporate seal to be
impressed thereon by its duly authorized officer as of the day and the year
first above written.
[Corporate Seal]
UFP TECHNOLOGIES, INC.
By: /s/ Paul J. Greenler
-------------------------------
Name: Paul J. Greenler
Title: Vice President and Chief
Financial Officer
[Corporate Seal]
MOULDED FIBRE TECHNOLOGY, INC.
By: /s/ Paul J. Greenler
-------------------------------
Name: Paul J. Greenler
Title: Vice President and Chief
Financial Officer
-3-
<PAGE>
*[Loan Spreadsheet Appears Here]
-4-
<PAGE>
1997 TERM NOTE
--------------
$1,000,000 September ___, 1997
FOR VALUE RECEIVED, each of the undersigned UFP TECHNOLOGIES, INC. ("UFP"), a
Delaware corporation, and MOULDED FIBRE TECHNOLOGY, INC. ("MFT"), a Maine
corporation (UFP and MFT are collectively referred to herein as the
"Borrowers"), hereby promises to pay to the order of BANKBOSTON, N.A. (successor
by merger to BAYBANK), a national bank (the "Bank") at the Bank's head office at
100 Federal Street, Boston, Massachusetts 02110
(a) prior to or on August 31, 2001 the principal amount of One
Million Dollars ($1,000,000), evidencing the 1997 Term Loan made by the
Bank to the Borrowers pursuant to (S)4A of the Credit Agreement dated as
of June 30, 1995 as amended pursuant to a First Amendment dated May 31,
1996 and a Second Amendment dated as of September ___, 1997 (as amended
and in effect from time to time, the "Credit Agreement"), by and among
the Borrowers and the Bank;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest from the date hereof on the principal amount from time
to time outstanding to and including the maturity hereof at the rates
and terms and in all cases in accordance with the terms of the Credit
Agreement.
This Note evidences borrowings under and has been issued by the
Borrowers in accordance with the terms of the Credit Agreement. The Bank and
any holder hereof is entitled to the benefits of the Credit Agreement, the
Security Documents and the other Loan Documents, and may enforce the agreements
of the Borrowers contained therein, and any holder hereof may exercise the
respective remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the respective terms thereof. All capitalized
terms used in this Note and not otherwise defined herein shall have the same
meanings herein as in the Credit Agreement.
The Borrowers irrevocably authorize the Bank to make or cause to be made, at the
time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the receipt of
such payment. The outstanding amount of the Term Loan set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records,
<PAGE>
-3-
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, each of the undersigned have caused this Note to be
signed in its respective corporate name and its respective corporate seal to be
impresses thereon by its duly authorized officer as of the day and year first
above written.
[Corporate Seal}
UFP TECHNOLOGIES, INC.
By: /s/ Paul J. Greenler
-------------------------------
Name: Paul J. Greenler
Title: Vice President and
Chief Financial Officer
[Corporate Seal]
MOULDED FIBRE TECHNOLOGY, INC.
By: /s/ Paul J. Greenler
-------------------------------
Name: Paul J. Greenler
Title: Vice President and
Chief Financial Officer
<PAGE>
Exhibit 11.0
UFP Technologies, Inc.
Statement of Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ -----------------
30-Sep 30-Sep 30-Sep 30-Sep
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 381,147 301,721 864,911 673,565
Primary earnings per share:
Weighted average common shares outstanding 4,662,054 4,636,854 4,651,114 4,633,169
Dilutive stock options and warrants 176,318 275,837 220,405 237,055
---------- ---------- ---------- ----------
4,838,372 4,912,691 4,871,519 4,870,224
========== ========== ========== ==========
Income per share $ 0.08 0.06 0.18 0.14
========== ========== ========== ==========
Fully diluted earnings per share:
Weighted average common shares outstanding 4,662,054 4,636,854 4,651,114 4,633,169
Dilutive stock options and warrants 176,318 324,874 220,405 324,874
---------- ---------- ---------- ----------
4,838,372 4,961,728 4,871,519 4,958,043
========== ========== ========== ==========
Income per share $ 0.08 0.06 0.18 0.14
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 432
<SECURITIES> 0
<RECEIVABLES> 6,487
<ALLOWANCES> 0
<INVENTORY> 3,658
<CURRENT-ASSETS> 10,996
<PP&E> 19,101
<DEPRECIATION> 8,699
<TOTAL-ASSETS> 25,659
<CURRENT-LIABILITIES> 8,772
<BONDS> 0
0
0
<COMMON> 47
<OTHER-SE> 13,642
<TOTAL-LIABILITY-AND-EQUITY> 25,659
<SALES> 33,601
<TOTAL-REVENUES> 33,601
<CGS> 24,663
<TOTAL-COSTS> 24,663
<OTHER-EXPENSES> 6,973
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 482
<INCOME-PRETAX> 1,483
<INCOME-TAX> 618
<INCOME-CONTINUING> 865
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 865
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
