<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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 1-13894
TRANSPRO, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 34-1807383
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
100 Gando Drive, New Haven, Connecticut 06513
(Address of principal executive offices, including zip code)
(203) 401-6450
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of common stock, $.01 par value, outstanding as of
May 12, 2000 was 6,597,335.
Exhibit Index is on page 15 of this report.
Page 1 of 17
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations for the three months ended
March 31, 2000 and 1999. 3
Condensed Consolidated Balance Sheets at March 31, 2000 and December 31,
1999. 4
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 2000 and 1999. 5
Notes to Condensed Consolidated Financial Statements. 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations. 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders. 15
Item 6. Exhibits and Reports on Form 8-K. 15
Signatures 17
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRANSPRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Unaudited) THREE MONTHS ENDED
(Amounts in thousands, except per share amounts) MARCH 31,
2000 1999
---- ----
<S> <C> <C>
Sales $ 48,430 $ 46,915
Cost of sales 38,741 34,246
-------- --------
Gross margin 9,689 12,669
Selling, general and administrative expenses 11,739 10,948
Plant closure costs 795 --
--------
--------
(Loss) income from continuing operations before interest
and taxes (2,845) 1,721
Interest expense, net 1,335 914
-------- --------
(Loss) income from continuing operations before taxes (4,180) 807
Income tax (benefit) provision (1,519) 343
-------- --------
(Loss) income from continuing operations (2,661) 464
Income from discontinued operations 440 41
======== ========
Net (loss) income $ (2,221) $ 505
======== ========
Basic (loss) earnings per common share:
From continuing operations $ (.41) $ .07
From discontinued operations .07 .01
======== ========
Net (loss) income $ (.34) $ .08
======== ========
Diluted (loss) earnings per common share:
From continuing operations $ (.41) $ .07
From discontinued operations .07 --
-------- --------
Net (loss) income $ (.34) $ .07
======== ========
Cash dividend per common share $ .05 $ .05
======== ========
Weighted average common shares - basic 6,573 6,573
======== ========
Weighted average common shares and assumed conversions -
diluted (1) 7,086 7,071
======== ========
</TABLE>
(1) The weighted average basic common shares outstanding was used in the
calculation of the diluted loss per common share for the three months ended
March 31, 2000 as the use of weighted average diluted common shares outstanding
would have an anti-dilutive effect on earnings per share for the three months
ended March 31, 2000.
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
TRANSPRO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Amounts in thousands, except share data)
MARCH 31, DECEMBER 31,
ASSETS 2000 1999
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ -- $ 222
Accounts receivable (less allowances of $1,459 and $1,943) 34,816 31,845
Inventories, net:
Raw materials 24,709 23,139
Work in process 3,058 2,706
Finished goods 55,332 50,824
--------- ---------
Total inventories 83,099 76,669
--------- ---------
Deferred income tax benefit 5,167 4,913
Other current assets 2,420 1,646
Net assets held for disposition 25,545 24,405
--------- ---------
---------
Total current assets 151,047 139,700
--------- ---------
Property, plant and equipment 77,710 76,602
Less accumulated depreciation (50,965) (49,446)
--------- ---------
Net property, plant and equipment 26,745 27,156
--------- ---------
Goodwill (net of amortization of $843 and $746) 7,157 7,253
Other assets 2,164 2,184
========= =========
Total assets $ 187,113 $ 176,293
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 9,000 $ --
Accounts payable 28,243 20,552
Accrued expenses 5,955 5,203
Accrued insurance 3,462 3,415
Accrued salaries and wages 3,798 3,653
Accrued taxes 709 1,962
--------- ---------
Total current liabilities 51,167 34,785
--------- ---------
Long-term liabilities:
Long-term debt, net of current portion 58,988 61,928
Retirement and post-retirement obligations 3,491 3,474
Deferred income taxes 495 291
Other liabilities 126 393
--------- ---------
Total liabilities 114,267 100,871
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value: Authorized 2,500,000 shares; Issued and
outstanding as follows:
Series A junior participating preferred stock, $.01 par value
Authorized 200,000 shares; issued and outstanding; none at March
31, 2000 and December 31, 1999
Series B convertible preferred stock, $.01 par value Authorized
30,000 shares; issued and outstanding; 30,000 shares at March 31,
2000 and December 31, 1999; (liquidation preference $3,000
at March 31, 2000 and December 31, 1999) -- --
Common stock, $.01 par value: Authorized 17,500,000 shares:
6,669,446 shares issued at March 31, 2000 and December 31, 1999
6,597,335 shares outstanding at March 31, 2000 and December 31, 1999 66 66
Paid-in capital 55,074 55,074
Unearned compensation (54) (66)
Retained earnings 17,722 20,318
Accumulated other comprehensive income 64 56
Treasury stock, at cost:
72,111 shares at March 31, 2000 and December 31, 1999 (26) (26)
--------- ---------
Total stockholders' equity 72,846 75,422
---------
=========
Total liabilities and stockholders' equity $ 187,113 $ 176,293
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
TRANSPRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
(Amounts in thousands) THREE MONTHS ENDED
MARCH 31,
2000 1999
------- --------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $(2,221) $ 505
------- -------
Adjustments to reconcile net (loss) income to net cash used in operating
activities:
Depreciation and amortization 1,615 1,494
Deferred tax benefit (50) (392)
Provision for losses - accounts receivable 79 95
------- -------
Total adjustments to reconcile net (loss) income to net cash used in operating
activities 1,644 1,197
------- -------
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (3,050) (1,360)
Inventories (6,430) (6,052)
Accounts payable 7,691 1,362
Accrued expenses (309) 292
Net assets held for disposition (1,140) (1,462)
Other (996) 477
-------
-------
Total changes in operating assets and liabilities (4,234) (6,743)
------- -------
-------
Net cash used in operating activities (4,811) (5,041)
------- -------
Cash flows from investing activities:
Capital expenditures (1,107) (1,350)
Acquisitions, net of cash acquired -- (2,330)
------- -------
Net cash used in investing activities (1,107) (3,680)
------- -------
Cash flows from financing activities:
Dividends paid (364) (342)
Net borrowings under Revolving Credit Agreement 6,060 9,240
------- -------
Net cash provided by financing activities 5,696 8,898
------- -------
(Decrease) increase in cash and cash equivalents (222) 177
Cash and cash equivalents:
Beginning of period 222 345
------- =======
End of period $ -- $ 522
======= =======
Supplemental Cash Flow Information:
Interest paid $ 1,283 $ 825
======= =======
Taxes paid, net of refunds $ 85 $ 47
======= =======
Supplemental Schedule of non-cash investing and financing activities: The
Company acquired AC Plus, effective February 1, 1999; the details of which are
further described in Note 7. In connection with this transaction, liabilities
were assumed, as follows:
Fair value of assets acquired $ 3,060
Cash paid (2,250)
-------
Liabilities assumed $ 810
=======
</TABLE>
In connection with the acquisition, the Company issued a promissory note of
$250,000, payable on the second anniversary of the closing.
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
TRANSPRO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
TransPro, Inc. (the "Company") is a manufacturer and supplier of heat
transfer components and systems and replacement automotive air conditioning
parts for a variety of Aftermarket and Original Equipment Manufacturing ("OEM")
automotive, truck and industrial equipment applications.
NOTE 2 - INTERIM FINANCIAL STATEMENTS
The condensed consolidated financial information should be read in
conjunction with the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999 filed with the Securities and Exchange Commission on
March 17, 2000, including the financial statements and notes thereto included
therein.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation of consolidated financial position,
consolidated results of operations and consolidated cash flows have been
included in the accompanying unaudited condensed consolidated financial
statements. All such adjustments are of a normal recurring nature. The December
31, 1999 condensed consolidated balance sheet data was derived from audited
financial statements, but does not include all disclosures required by generally
accepted accounting principles. Certain reclassifications have been made to
prior amounts to conform to current year disclosures.
NOTE 3 - BUSINESS CONSOLIDATION AND CLOSURE COSTS
During the first quarter of 2000, the Company recorded $0.8 million in
closure costs related to actions taken in the Aftermarket Heating and Cooling
Systems segment to close the Houston, Texas regional radiator manufacturing
facility and to consolidate the Santa Fe Springs, California distribution
facility into the existing distribution facility in Memphis, Tennessee. The
manufacturing facility closure plan was initiated to reduce manufacturing costs
and address plant capacity issues at other regional facilities. The distribution
center consolidation plan was initiated to enhance fill rates to customers and
reduce the per unit carrying cost of inventory. These actions resulted in the
termination of 18 manufacturing and eight distribution center employees. A
summary of the associated closure costs is as follows:
<TABLE>
<CAPTION>
Amounts Charged to Operations Amounts Balance Remaining at
through March 31, 2000 Paid March 31, 2000
(Amounts in thousands)
(Unaudited)
<S> <C> <C> <C>
Workforce related $222 $151 $71
Facilities 415 132 283
Product relocation 127 127 -
Asset write-down 31 - 31
------------ ------------ ------------
Total $795 $410 $385
============ ============ ============
</TABLE>
All the costs associated with the closures are expected to be paid in 2000.
6
<PAGE> 7
NOTE 4 - SEGMENT AND BUSINESS INFORMATION
There has been no material change in segment assets since the filing of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999. The Specialty Metal Fabrication segment (the "Crown Divisions") is being
accounted for as discontinued operations in the accompanying condensed
consolidated financial statements. Segment data from continuing operations has
been disclosed on a basis consistent with the Form 10-K for the year ended
December 31, 1999.
Aftermarket Heating and Cooling Systems product lines include complete
radiators and radiator cores, heaters, air conditioning condensers, air
conditioning compressors and other air conditioning parts for aftermarket
customers. The OEM Heat Transfer Systems business provides manufactured
specialized heavy-duty equipment radiators, charge air coolers and oil coolers
to original equipment manufacturers.
The table below sets forth information about reported segments, other
than discontinued operations, for the three months ended March 31, 2000 and
1999.
<TABLE>
<CAPTION>
(Unaudited) (LOSS) INCOME FROM
(Amounts in thousands) CONSOLIDATED REVENUES CONTINUING OPERATIONS
BUSINESS SEGMENT 2000 1999 2000 1999
<S> <C> <C> <C> <C>
Aftermarket Heating and Cooling Systems $36,755 $37,348 $(1,693) $3,015
OEM Heat Transfer Systems 11,675 9,567 (118) (137)
Inter-segment revenues:
Aftermarket Heating and Cooling Systems 2,464 877 - -
OEM Heat Transfer Systems 7 9 - -
Elimination of inter-segment revenues (2,471) (886) - -
---------- ----------- ----------- -----------
Segment totals 48,430 46,915 (1,811) 2,878
Corporate expenses - - (1,034) (1,157)
---------- ----------- ----------- -----------
Consolidated totals $48,430 $46,915 $(2,845) $1,721
========== =========== =========== ===========
</TABLE>
7
<PAGE> 8
NOTE 5 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
(Unaudited) THREE MONTHS
(Amounts in thousands, except per share data) ENDED MARCH 31,
2000 1999
<S> <C> <C>
(LOSS) EARNINGS PER COMMON SHARE COMPUTATION:
Numerator:
(Loss) income from continuing operations $(2,661) $ 464
Less: preferred stock dividend (19) (12)
------- -------
(Loss) income from continuing operations (attributable) available to common
stockholders - basic (2,680) 452
Income from discontinued operations 440 41
------- -------
Net (loss) income (attributable) available to common stockholders - basic
$(2,240) $ 493
======= =======
(Loss) income from continuing operations (attributable) available to common
stockholders - basic $(2,680) $ 452
Add back: preferred stock dividend 19 12
------- -------
(Loss) income from continuing operations (2,661) 464
Income from discontinued operations 440 41
------- -------
Net (loss) income (attributable) available to common stockholders - diluted
$(2,221) $ 505
======= =======
Denominator:
Weighted average common shares 6,597 6,597
Non-vested restricted stock (24) (24)
------- -------
Adjusted weighted average common shares - basic 6,573 6,573
Dilutive effect of Series B preferred stock 496 497
Dilutive effect of stock options and non-vested restricted stock 17 1
======= =======
Adjusted weighted average common shares and assumed conversions(1) - diluted
7,086 7,071
======= =======
Basic (loss) earnings per common share:
From continuing operations $ (.41) $ .07
From discontinued operations .07 .01
------- -------
Basic (loss) earnings per common share $ (.34) $ .08
======= =======
Diluted (loss) earnings per common share:
From continuing operations $ (.41) $ .07
From discontinued operations .07 --
------- -------
Diluted (loss) earnings per common share $ (.34) $ .07
======= =======
</TABLE>
(1) The weighted average basic common shares outstanding was used in the
calculation of the diluted loss per common share for the three months ended
March 31, 2000 as the use of weighted average diluted common shares outstanding
would have an anti-dilutive effect on earnings per share for the three months
ended March 31, 2000.
Certain options to purchase common stock were outstanding during the
three months ended March 31, 2000 and 1999, but were not included in the
computation of diluted earnings per share because their exercise prices were
greater than the average market price for the common shares for the period. The
anti-dilutive options outstanding and their exercise prices are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
---- ----
<S> <C> <C>
Options outstanding 437,178 481,829
Range of exercise prices $5.88 - $11.75 $5.88 - $11.75
</TABLE>
8
<PAGE> 9
NOTE 6 - SERIES B CONVERTIBLE PREFERRED STOCK
In connection with the acquisition of Evap, Inc., the Company issued
30,000 shares of TransPro, Inc. Series B Convertible Preferred Stock (the
"Series B Preferred Stock"). The Series B Preferred Stock has an initial
liquidation preference of $3.0 million, which is reflected in paid-in capital on
the Company's consolidated balance sheet. There is a potential additional payout
for the Evap acquisition based on the future earnings performance of the Evap
business for the period January 1, 1999 through December 31, 2000 that will take
the form of an increase in the liquidation preference of the Series B Preferred
Stock. Increases to the liquidation preference of the Series B Preferred Stock,
if any, are effective on April 1, 2000 and April 1, 2001 based upon the earnings
of the Evap business for the prior calendar year. The Series B Preferred Stock
is non-transferable and is entitled to cumulative dividends of 2% per annum
during the first year after acquisition, 3.5% per annum during the second year
and 5.0% per annum thereafter. The Series B Preferred Stock is convertible into
TransPro common stock at the rate of 50% on the third anniversary of the
acquisition, an additional 25% on the fourth anniversary and the remaining 25%
on the fifth anniversary; it is redeemable after the fifth anniversary at the
liquidation preference at the time of redemption. The Series B Preferred Stock
is convertible into TransPro common stock based upon the liquidation preference
and the market value of TransPro common stock at the time of conversion, as
further described in the purchase agreement. The aggregate number of shares of
TransPro common stock to be issued upon conversion of all the Series B Preferred
Stock may not exceed 7% of the total number of shares of TransPro common stock
outstanding, after giving effect to the conversion, as further described in the
purchase agreement. The average market value of the TransPro common stock in
excess of the 7% limitation, if any, will be paid in cash. The Company is
currently in the process of finalizing the determination of the initial payout
amount, in accordance with the purchase agreement. The final payout amount will
be determined during 2001.
NOTE 7 - ACQUISITIONS
Effective February 1, 1999, the Company purchased 100% of the
outstanding stock of A/C Plus, an air conditioning compressor re-manufacturer
located in Arlington, Texas. A/C Plus had sales of approximately $2.9 million in
fiscal 1998. The transaction was structured with a purchase price of $2.25
million in cash, plus transaction costs, and a promissory note of $0.25 million
payable on the second anniversary of the closing. Concurrent with the purchase,
the Company repaid $0.5 million in working capital debt on behalf of A/C Plus.
The purchase price and working capital repayment were financed through the
Company's Revolving Credit Agreement. The acquisition was accounted for as a
purchase. Goodwill of $2.2 million was recorded in connection with the
transaction and is being amortized over 20 years. A/C Plus' results are included
in the Company's consolidated financial statements from the date of acquisition.
NOTE 8 - IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS No. 133), "Accounting
for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments and hedging
contracts. Statement of Financial Accounting Standards No. 137 ("SFAS No. 137")
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133" was issued in June 1999 and defers the
effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000.
The effect of adopting SFAS No. 133 is still being assessed.
9
<PAGE> 10
NOTE 9 - SUBSEQUENT EVENT - DISPOSITION OF BUSINESS SEGMENT
Effective May 5, 2000, the Company sold its Crown Divisions to Leggett
& Platt, Incorporated in a transaction valued at $37.5 million, comprised of
$28.6 million in cash and the assumption of $8.9 million in debt. Net proceeds
from the sale will be used to reduce outstanding borrowings under the Company's
Revolving Credit Agreement. As a result of the transaction, the Crown Divisions
segment has been accounted for as a discontinued operation. Accordingly, the
results of operations of the Crown Divisions segment are reported as income from
discontinued operations in the accompanying condensed consolidated statements of
operations and the net assets of the Crown Divisions segment are shown as net
assets held for disposition in current assets of the accompanying condensed
consolidated balance sheets.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OPERATING RESULTS
QUARTER ENDED MARCH 31, 2000 VERSUS QUARTER ENDED MARCH 31, 1999
Net sales from continuing operations for the first quarter of 2000
increased $1.5 million, or 3.2%, to $48.4 million compared with $46.9 million in
the first quarter of 1999. Sales in the Aftermarket Heating and Cooling Systems
business declined $0.6 million, or 1.6%, from the comparable 1999 quarter.
Higher volume in complete radiators and condensers was offset by lower sales of
air conditioning parts, as mild weather conditions and high customer inventory
levels led to lower than usual demand in the pre-season. Sales in the OEM Heat
Transfer Systems business increased by $2.1 million compared with the 1999 first
quarter due to increased sales of radiators and charge air coolers to satisfy
continued strong demand in the Class 8 truck, specialty vehicle and industrial
application markets.
Consolidated first quarter 2000 gross margins from continuing
operations were $9.7 million compared with $12.7 million in the first quarter of
1999. First quarter 2000 gross margins reflect lower margins in the Aftermarket
Heating and Cooling Systems segment primarily as a result of planned actions to
improve profits and reduce debt levels in the future. These actions included
temporary reductions in production rates during the quarter that will
significantly reduce inventory levels in the future, and which resulted in
decreased manufacturing cost absorption. First quarter 2000 gross margin was
also affected by the start up of production in Mexico of two new products,
plastic tank aluminum core radiators and six-millimeter condensers, resulting in
temporary inefficiencies. Lower unit volume in air conditioning parts and
pricing activity in response to competitive pressures in the Aftermarket also
affected gross margins in the quarter. In the OEM Heat Transfer Systems segment,
gross margins were similar to the comparable prior period.
Selling, general and administrative expenses ("SG&A") increased $0.8
million or 7.2%, primarily as a result of higher freight costs related to
increased radiator unit volume and inflation-related employee cost increases in
the Aftermarket Heating and Cooling Systems segment. Plant closure and
consolidation costs of $0.8 were incurred in the Aftermarket Heating and Cooling
Systems business related to actions taken to close the Houston, Texas regional
radiator manufacturing plant and to consolidate the Santa Fe Springs, California
distribution center into the existing distribution facility in Memphis,
Tennessee.
Net interest expense increased $0.4 million in the first quarter of
2000 compared with the first quarter of 1999 due to higher debt levels
associated with higher working capital levels in the Aftermarket Heating and
Cooling Systems business required to support new product introductions.
The Company's effective tax rate of 36.3% for the first quarter of 2000
is comprised of the U. S. Federal income tax rate, plus the estimated aggregate
effective rate for state and local income taxes. The rate decreased from the
first quarter 1999 rate of 42.5%, reflecting a lower level of non-tax deductible
expenses expected in 2000.
The loss from continuing operations in the first quarter of 2000 was
$2.7 million, or $0.41 per basic and diluted common share, compared with income
from continuing operations of $0.5 million, or $0.07 per basic and diluted
common share in the first quarter of 1999.
The Company sold its Crown Divisions to Leggett & Platt, Incorporated
on May 5, 2000. As a result of the sale, the Crown Divisions was accounted for
as a discontinued operation in the first quarter.
11
<PAGE> 12
Accordingly, the Company reported income from discontinued operations of $0.4
million, or $0.07 per basic and diluted common share for the first quarter of
2000 compared to $0.04 million, or $0.01 per basic common share and $0.00 per
diluted common share for the first quarter of 1999.
The net loss for the first quarter of 2000 was $2.2 million, or $0.34
per basic and diluted common share, compared with net income of $0.5 million, or
$0.08 per basic common share and $0.07 per diluted common share in the first
quarter of 1999.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
In July 1998, the Company entered into a Revolving Credit Agreement
(the "Revolving Credit Agreement") with five banking institutions, which
provided for secured borrowings or the issuance of letters of credit in an
initial aggregate amount not to exceed $75.0 million. The Revolving Credit
Agreement is secured by a blanket first perfected security interest in
substantially all of the Company's assets plus a pledge of the stock of the
Company's subsidiaries. The Revolving Credit Agreement expires on July 1, 2003.
The security interest in the Company's assets and the pledge of the Company's
subsidiaries' stock are eligible for release if the Company achieves certain
senior debt ratings or if certain financial ratios are met and maintained.
Available borrowings under the Revolving Credit Agreement are
determined by a borrowing base consisting of the Company's eligible (i) accounts
receivable, (ii) inventory and (iii) fixed assets, as adjusted by an advance
rate. The aggregate amount of borrowings under the Revolving Credit Agreement
was automatically reduced by $0.5 million at the end of each quarter through
June 30, 1999; and then by $1.25 million at the end of each quarter through
December 31, 1999. On December 31, 1999, the Company entered into the Third
Amendment to the Revolving Credit Agreement (the "Third Amendment") to return
the amount of secured borrowings or the issuance of letters of credit to the
initial aggregate amount of $75.0 million, and reschedule the automatic
reductions and amend the leverage coverage ratio covenant. Pursuant to the Third
Amendment, the aggregate amount of borrowings was to be automatically reduced by
$5.0 million on November 30, 2000 and December 31, 2000 and by $1.5 million at
the end of each quarter beginning March 31, 2001 through June 30, 2003. On May
1, 2000, the Company entered into the Limited Waiver and Fourth Amendment to
Revolving Credit Agreement (the "Limited Waiver and Fourth Amendment"). The
Limited Waiver and Fourth Amendment reduces the aggregate amount of secured
borrowings or the issuance of letters of credit to $55.0 million, reschedules
the automatic reductions and contains certain amendments, which are effective
with the sale of the Crown Divisions. Pursuant to the Limited Waiver and Fourth
Amendment, the aggregate amount of borrowings is automatically reduced by $5.0
million on December 31, 2000, by $5.0 million on December 31, 2001 and by $7.5
million on December 31, 2002. The Limited Waiver and Fourth Amendment also
consents to the sale of the Crown Divisions, releases any security interest in
the Crown assets, releases Crown Canada as a guarantor and provides for the
elimination of the borrowing base if, on April 10, 2001, no Default or Event of
Default exists.
The Revolving Credit Agreement bears interest at variable rates based,
at the Company's option, on either (a) a Eurodollar loan rate, plus an
applicable margin based upon the ratio of the Company's total funded debt to
earnings before interest, taxes, depreciation and amortization ("EBITDA"), or
(b) the higher of the (i) BankBoston, N.A. base lending rate and (ii) one-half
of one percent above the Federal Funds Effective Rate, as defined, plus an
applicable margin based upon the ratio of the Company's total funded debt to
EBITDA. A commitment fee of .25% or .375% based upon the ratio of the Company's
total funded debt to EBITDA on the average daily unused portion of the Revolving
Credit Agreement is payable quarterly, in arrears.
12
<PAGE> 13
The Revolving Credit Agreement contains financial covenants which,
among other things, require maintenance of a minimum tangible net worth and debt
service coverage and a maximum level of debt to EBITDA and debt to net worth, as
well as covenants which place limits on dividend payments in excess of $2.0
million per year and capital expenditures in excess of 140% of such year's
depreciation expense. On June 25, 1999, the Company entered into the Waiver and
Second Amendment to the Revolving Credit Agreement (the "Waiver and Second
Amendment"), amending the interest coverage ratio covenant and the liabilities
to net worth ratio covenant and waiving compliance with the interest coverage
ratio and the liabilities to net worth ratio covenants for the quarter ended
March 31, 1999. Pursuant to the Limited Waiver and Fourth Amendment, the lenders
agreed to waive compliance with the leverage ratio, the interest coverage ratio
and the liabilities to net worth ratio covenants for the quarter ended March 31,
2000.
At March 31, 2000, borrowings under the Company's Revolving Credit
Agreement were approximately $55.0 million. The Company also had $13.0 million
of borrowings outstanding under floating rate industrial revenue bonds, of which
$8.0 million matures in the year 2010 and $5.0 million matures in the year 2013.
The bonds bear interest based upon a short-term tax-exempt bond index.
Outstanding letters of credit totaled approximately $17.5 million at March 31,
2000. Of the total letters of credit outstanding, $13.4 million supported
borrowings and related interest under the floating rate industrial revenue
bonds.
During the first three months of 2000, the Company required $4.8
million of cash to support its operations. Inventory increased $6.4 million,
primarily to support the second and third quarter peak selling season for
Aftermarket Heating and Cooling Systems products. Accounts receivable increased
$3.1 million reflecting the higher sales volume from continuing operations
during the first quarter of 2000 compared with the fourth quarter of 1999. A net
increase in accounts payable and accrued expenses provided $7.4 million of cash.
Cash of $0.6 million was required to fund the net loss plus total adjustments to
reconcile net loss to net cash used in operating activities.
Capital spending during the first three months of 2000 totaled $1.1
million. The Company paid a cash dividend to its common stockholders of $0.05
per common share totaling $0.3 million during the first three months of 2000. In
addition, the Company paid a cash dividend to its preferred stockholder of $0.03
million during the first quarter. Net borrowings under the Revolving Credit
Agreement increased by $6.1 million from December 31, 1999, to finance the
operating and other working capital requirements of the Company.
The future liquidity and ordinary capital needs of the Company in the
short term are expected to be met from operations. The Company's working capital
requirements peak during the second and third quarters, reflecting the normal
seasonality of the Aftermarket Heating and Cooling Systems business. The Company
believes that together with borrowings under its current Revolving Credit
Agreement, its cash flow from operations will be adequate to meet its
anticipated ordinary capital expenditure and working capital requirements.
FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in nature
are forward-looking statements. Such forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The Company's Annual Report on Form 10-K contains certain
detailed factors that could cause the Company's actual results to materially
differ from the forward-looking statements made by the Company. In particular,
statements relating to the future financial performance of the Company are
subject to business conditions and growth in the general economy and automotive
and truck business, the impact of competitive
13
<PAGE> 14
products and pricing, changes in customer product mix, failure to obtain new
customers or retain old customers or changes in the financial stability of
customers, changes in the cost of raw materials, components or finished products
and changes in interest rates. Improvements in manufacturing efficiencies and
reduction of costs are subject to a number of factors, including but not limited
to, the ability of management to implement improvements in workforce
efficiencies and the timing of such improvements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has certain exposures to market risk related to changes in
interest rates, foreign currency exchange rates and commodities. There have been
no material changes in market risk since the filing of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999.
14
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders of the Company held on May 3,
2000, two proposals were voted upon by the Company's stockholders. A brief
discussion of each proposal voted upon at the Annual Meeting and the number of
votes cast for, against and withheld, as well as the number of abstentions to
each proposal are set forth below. There were no broker non-votes with regard to
these proposals.
A vote was taken at the Annual Meeting for the election of seven
Directors of the Company to hold office until the next Annual Meeting of
Stockholders of the Company and until their respective successors shall have
been duly elected. The aggregate numbers of shares of Common Stock voted in
person or by proxy for each nominee were as follows:
<TABLE>
<CAPTION>
NOMINEE FOR WITHHELD
------- --- --------
<S> <C> <C>
Barry R. Banducci 5,485,658 129,744
Henry P. McHale 5,481,338 134,064
William J. Abraham, Jr. 5,487,061 128,341
Philip Wm. Colburn 5,479,445 135,957
Paul R. Lederer 5,486,050 129,352
Sharon M. Oster 5,486,050 129,352
F. Alan Smith 5,486,075 129,327
</TABLE>
A vote was taken at the Annual Meeting on the proposal to ratify the
appointment of PricewaterhouseCoopers LLP as auditors for the Company for the
fiscal year ending December 31, 2000. The aggregate numbers of shares of Common
Stock in person or by proxy which: (a) voted for, (b) voted against or (c)
abstained from the vote upon such proposal were as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C>
5,547,269 49,103 19,030
</TABLE>
The foregoing proposals are described more fully in the Company's
definitive proxy statement dated March 30, 2000, filed with the Securities and
Exchange Commission pursuant to Section 14 (a) of the Securities Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
(2.1) Asset Purchase Agreement dated as of April 17, 2000, by and among
TransPro, Inc. and Leggett & Platt, Incorporated.(1)
(10.1) Limited Waiver and Fourth Amendment to Revolving Credit Agreement dated
May 1, 2000
(27) Financial Data Schedule
- -------------------------
(1) Incorporated by reference to the Company's Form 8-K filed May 2, 2000 (File
No. 1-13894).
15
<PAGE> 16
b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended March
31, 2000.
On May 2, 2000, the Company filed a Current Report on Form 8-K
announcing that the Company had signed an agreement to sell the Company's Crown
Divisions to Leggett & Platt, Incorporated.
16
<PAGE> 17
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.
TRANSPRO, INC.
(Registrant)
Date: May 15, 2000 By: /s/ Henry P. McHale
------------------------------------------------
Henry P. McHale
President, Chief Executive Officer and Director
Date: May 15, 2000 By: /s/ Timothy E. Coyne
------------------------------------------------
Timothy E. Coyne
Vice President, Treasurer, Secretary,
Controller and Chief Financial Officer
(Principal Financial and Accounting Officer)
17
<PAGE> 1
EXHIBIT 10.1
LIMITED WAIVER AND FOURTH AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
This LIMITED WAIVER AND FOURTH AMENDMENT is made and entered into as of
May 1, 2000 (this "Amendment"), among (a) TRANSPRO, INC., a Delaware corporation
(the "Parent"), ALLEN HEAT TRANSFER PRODUCTS, INC., a Delaware corporation
("AHTP"), AHTP II, INC., a Delaware corporation ("AHTP II"), EVAP, INC. (f/k/a
EI Acquisition Corp.), a Texas corporation ("EVAP" and collectively with Parent,
AHTP and AHTP II, the "Original Borrowers"), GO/DAN INDUSTRIES, INC., a Delaware
corporation ("GDI") and A/C PLUS, INC., a Texas corporation ("AC" and
collectively with GDI and the Original Borrowers, the "Borrowers"), (b) FLEET
NATIONAL BANK (f/k/a BankBoston, N.A.), a national banking association and the
other lending institutions listed on Schedule 1 of the Credit Agreement
(collectively, the "Banks") and (c) FLEET NATIONAL BANK, as agent (the "Agent")
for the Banks. Capitalized terms used herein without definition shall have the
meanings assigned to such terms in the Credit Agreement defined below.
WHEREAS, the Original Borrowers, the Banks and the Agent have entered
into the Revolving Credit Agreement, dated as of July 30, 1998 (as amended and
in effect from time to time, the "Credit Agreement"), pursuant to which the
Banks have extended credit to the Borrowers and the terms set forth therein;
WHEREAS, the Parent or one or more of its Subsidiaries wishes to sell
the assets of the Parent's so-called Crown division and the capital stock of
Crown Canada described on Annex A attached hereto (collectively, the "Crown
Assets");
WHEREAS, Leggett & Platt, Incorporated (the "Buyer") wishes to purchase
the Crown Assets for a purchase price of not less than $37,500,000 (the "Crown
Sale");
WHEREAS, the Borrowers have requested that the Banks and the Agent
waive compliance with certain financial covenants for a period ending March 31,
2000 and other covenants to permit the Crown Sale and amend other provisions
contained in the Credit Agreement and other Loan Documents; and
WHEREAS, the Banks and the Agent have agreed to honor such requests
upon the terms and subject to the conditions contained herein;
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
<PAGE> 2
-2-
SECTION 1. LIMITED WAIVER.
(a) The Majority Banks hereby waive compliance with SectionSection10.1,
10.2 and 10.4 of the Credit Agreement For the period ending March 31, 2000. This
waiver is limited to its express terms and shall not extend to any matters not
specifically addressed hereby.
(b) The Banks and the Agent hereby consent to the Crown Sale, to the
release by the Agent of the Agent's security interest in the Crown Assets, and
to the release from its guaranty of Crown Canada which is a Guarantor and all of
whose capital stock is being sold as part of the Crown Assets, subject to the
satisfaction of the following conditions,
(i) the net cash proceeds (the gross purchase price, net of
industrial revenue bond obligations, pension adjustments, Canadian
holdback and reasonable direct transactions cost) from the Crown Sale
shall not be less than $26,320,000 (the "Net Cash Proceeds"),
(ii) the Net Cash Proceeds, if not paid directly to the Agent
by the Buyer, shall, upon receipt by any Borrower or any Subsidiary of
such cash proceeds, be forthwith paid to the Agent for application to
the outstanding Revolving Credit Loans,
(iii) the Agent's security interest under the Security
Documents shall attach, on a first perfected basis, to any non-cash
proceeds of the Crown Sale, the Borrowers hereby agreeing to, and to
cause any applicable Subsidiary to, deliver any such non-cash proceeds
consisting of instruments or investment property, together with
indorsements and stock powers executed in blank, to the Agent to hold
as Collateral under the Security Documents and to take any other action
as made by necessary or, in the opinion of the Agent, advisable for the
Agent to perfect and to maintain its perfection and priority of such
security interest,
(iv) the Agent shall be permitted to notify any Person of the
Agent's security interest in any deferred or holdback portion of the
purchase price of the Crown Assets, and cause such Person to agree to
deliver to the Agent without further consent of the Borrowers and their
Subsidiaries, for application to the outstanding Revolving Credit
Loans, to such extent and at such time as delivery would otherwise be
available to the Borrowers and their Subsidiaries,
(v) the Agent and its counsel shall have reviewed and shall be
reasonably satisfied with the terms and conditions of the purchase and
sale agreement for the Crown Sale,
(vi) no Default or Event of Default shall have occurred and
shall be continuing at the time of the Crown Sale or would occur as a
result thereof, and
<PAGE> 3
-3-
(vii) the Crown Sale shall have been completed by May 9, 2000.
(c) Upon satisfaction of the conditions set forth in Section 1(b) for
the Crown Sale, the Agent is instructed by the Banks (a) to provide such Uniform
Commercial Code or other releases and confirmations of releases of the Agent's
security interest in the Crown Assets sold under the Crown Sale, (b) to provide
any releases or confirmations of release of Crown Canada from its guaranty if
all of its capital stock is comprised in the Crown Assets sold under the Crown
Sale, and (c) if applicable, to deliver to the applicable Borrower or its
nominee any certificated securities of Crown Canada's capital stock in the
possession or under the control of the Agent. The Agent shall be entitled to
assume that any factual condition set forth in Section 1(b), not evident from
the Agent's own books and records, has been met unless the officers of the Agent
active upon the Borrowers account have actual knowledge that such condition has
not been met.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. The Amendments to the
Credit Agreement set forth herein shall become effective as of the Crown Sale
Date (as defined herein).
SECTION 2.1 DEFINITIONS.
(a) The following new definitions are hereby inserted in Section 1.1 of
the Credit Agreement in their appropriate alphabetical order:
"Crown Sale. Crown Assets acquired by Leggett & Platt, Incorporated
under the Crown Asset Purchase Agreement."
"Crown Sale Date. The date the Crown Sale is completed."
"Crown Assets. All rights and interests of the assets and liabilities
in the Crown and all issued and outstanding capital stock of Crown Canada."
"Crown Asset Purchase Agreement. Asset Purchase Agreement, dated as of
April 17, 2000, between Leggett & Platt, Incorporated, as buyer and the Parent,
as seller."
"Fleet. Fleet National Bank, a national banking association, in its
individual capacity."
(b) The definition of Agent's Head Office is hereby amended by deleting
the word "Head" and replacing it with the word "Boston."
(c) The definition of Applicable Margin is hereby amended by deleting
the table set forth therein and replacing it with the following:
<PAGE> 4
-4-
<TABLE>
<CAPTION>
APPLICABLE
TOTAL FUNDED EURODOLLAR APPLICABLE BASE LETTER OF
LEVEL DEBT/EBITDA MARGIN RATE LOAN COMMITMENT FEE CREDIT FEE
<S> <C> <C> <C> <C> <C>
I >=3.00:1 2.250% 0.75% 0.375% 2.250%
II >=2.50:1 2.000% 0.50% 0.375% 2.000%
III >=2.00:1 1.750% 0.25% 0.375% 1.750%
IV >=1.50:1 1.500% 0.00% 0.375% 1.500%
V <1.50:1 1.250% 0.00% 0.250% 1.250%"
</TABLE>
(d) The definition of Borrowing Base is hereby amended by deleting the
amount $20,000,000 and the date September 30, 1999 in Item (i) of the definition
and replacing such amount with $12,500,000 and date with September 30, 2000,
respectively, therein.
SECTION 2.2. AMENDMENT TO TOTAL COMMITMENT AND BORROWING BASE.
(a) The Total Commitment is permanently reduced to $55,000,000.
(b) Each of the Borrowers, the Banks and the Agent agrees to amend and
restate Schedule 1 of the Credit Agreement in its entirety to read as set forth
in the new Schedule 1 attached hereto.
(c) If, on April 10, 2001, no Default or Event of Default exists, all
references to the Borrowing Base and its related reporting requirements shall be
eliminated and the Borrower's ability to borrow the Revolving Credit Loans shall
not be limited by the Borrowing Base.
SECTION 2.3. AMENDMENT TO SECTION 2.3.2(a) OF THE CREDIT AGREEMENT.
Section (a) of the Credit Agreement is amended and restated in its entirety as
follows:
"(a) Unless terminated earlier pursuant to the provisions of
this Section 2.3, on each of the dates set forth in the table below
(each such date being referred to as a "Reduction Date"), the Total
Commitment shall be automatically and permanently reduced to the amount
set forth opposite such date in the column headed "Commitment Amount"
set forth below, as such Commitment Amount may be adjusted and in
effect from time to time pursuant to this Section 2.3 whereupon the
Commitments of the Banks shall be reduced pro rata in accordance with
their respective Commitment Percentages:
<TABLE>
<CAPTION>
REDUCTION DATE COMMITMENT AMOUNT
<S> <C>
December 31, 2000 $52,500,000
December 31, 2001 $47,500,000
December 31, 2002 $40,000,000.
</TABLE>
On each Reduction Date there shall become absolutely and
unconditionally due and payable, and the Borrowers hereby absolutely
and unconditionally, jointly and severally, promise to pay to the Agent
for
<PAGE> 5
-5-
the account of the Banks, the amount by which the sum of the aggregate
principal amount of all Loans outstanding plus the Maximum Drawing
Amount of all Letters of Credit and all Unpaid Reimbursement
Obligations exceeds the Total Commitment after giving effect to the
reduction of the Total Commitment as set forth herein. No reduction of
the Total Commitment may be reinstated."
SECTION 2.4. AMENDMENT TO SECTION 4.1.1 OF THE CREDIT AGREEMENT.
Section 4.1.1 of the Credit Agreement is hereby amended by deleting the amount
"$25,000,000" and replacing such amount with "$17,000,000."
SECTION 2.5. AMENDMENT TO SECTION 6.2 OF THE CREDIT AGREEMENT.
Section 6.2 of the Credit Agreement is hereby deleted in its entirety.
SECTION 2.6. AMENDMENT TO SECTION 9.5.1 OF THE CREDIT AGREEMENT.
Section 9.5.1 of the Credit Agreement is hereby amended deleting the word "and"
and subpart (iv) in its entirety and replacing them with the following:
"(iv) the total consideration constituting the total purchase price of
all assets acquired in a single transaction shall not exceed $10,000,000 per
annum and (v) the total consideration constituting the total purchase price of
all assets acquired in all transactions after the Effective Date shall not
exceed $15,000,000 per annum; provided, however, that the Parent shall
demonstrate that the Parent is in pro forma compliance prior to completion of
any transaction with the total consideration exceeding $5,000,0000."
SECTION 2.7. AMENDMENT TO SECTION 10.1 OF THE CREDIT AGREEMENT.
Section 10.1 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"10.1 LEVERAGE RATIO. The Borrowers will not permit the Leverage Ratio
for the four consecutive fiscal quarters of the Parent ending during the periods
described in the table set forth below to be greater than the ratio set forth
opposite such period in such table:
<TABLE>
<CAPTION>
PERIOD RATIO
<S> <C>
through June 30, 2000 3.25:1
July 1, 2000 - December 31, 2001 3.00:1
January 1, 2002 - thereafter 2.75:1
</TABLE>
Notwithstanding the provisions contained in the definition of Leverage
Ratio, (a) Consolidated EBITDA shall be calculated excluding the Crown Asset and
any contribution to Consolidated EBITDA attributed to the Crown Assets and (b)
Consolidated Funded Debt for periods prior to the Crown Asset Sale Date shall be
reduced by $30,352,000."
SECTION 2.8. AMENDMENT TO SECTION 10.2 OF THE CREDIT AGREEMENT.
Section 10.2 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
<PAGE> 6
-6-
"10.2. INTEREST COVERAGE RATIO. The Borrowers will not permit the
Interest Coverage Ratio for the four consecutive fiscal quarters of the Parent
ending during the periods described in the table set forth below to be lesser
than the ratio set forth opposite such period in such table:
<TABLE>
<CAPTION>
PERIOD RATIO
<S> <C>
through June 30, 2000 1.40:1
July 1, 2000 - September 30, 2000 1.75:1
October 1, 2000 - December 31, 2001 2.25:1
January 1, 2002 - thereafter 2.50:1."
</TABLE>
Notwithstanding the provisions contained in the definition of Interest
Coverage Ratio, (a) Consolidated EBIT shall be calculated excluding the Crown
Asset and any contribution to Consolidated EBIT attributed to the Crown Assets
and (b) Consolidated Total Interest Expense for periods prior to the Crown Asset
Sale Date shall be reduced by $513,000 per quarter with a proportionate
reduction for periods of less than a quarter."
SECTION 2.9. AMENDMENT TO SECTION 10.4 OF THE CREDIT AGREEMENT.
Section 10.4 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"10.4. LIABILITIES TO WORTH RATIO. The Borrowers will not at any time
permit the ratio of Consolidated Total Liabilities to Consolidated Tangible Net
Worth to exceed 1.50 to 1."
SECTION 2.10. AMENDMENT TO SECTION 10.5 OF THE CREDIT AGREEMENT.
Section 10.5 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"10.5. CONSOLIDATED TANGIBLE NET WORTH. The Borrowers will not at any
time permit Consolidated Tangible Net Worth to be less than (i) 90% of
Consolidated Tangible Net Worth as of the month ending following the Crown Sale
Date plus (ii) on a cumulative basis, 50% of positive Consolidated Net Income of
each Fiscal Year subsequent to the Crown Sale Date plus (iii) 50% of Net Equity
Proceeds."
SECTION 3. AMENDMENT FEE. The Borrowers hereby agree to pay to
the Agent, for the account of the Banks, a closing fee equal to $82,500 in the
aggregate (the "Amendment Fee"). The Amendment Fee shall be shared pro rata by
the Banks in accordance with their Commitments. The Amendment Fee shall be
nonrefundable and fully earned as of the date hereof.
SECTION 4. CONDITIONS TO EFFECTIVENESS. This Amendment shall not
become effective unless on or prior to 5:00 p.m., Boston time, May 1, 2000 (the
"Effective Date"):
(a) This Amendment shall have been executed and delivered by each of
the Borrowers, the requisite Banks and the Agent. For the purposes of
Sections 1(a), 2.1(a), (b) and (d), 2.2(c), 2.5, 2.6, 2.7, 2.8, 2.9 and
2.10, the requisite
<PAGE> 7
-7-
Banks are the Majority Banks. For purposes of Sections 1(b), 2.1(c), 2.2(a)
and (b), 2.3 and 2.4, the requisite Banks are all of the Banks.
(b) The Borrowers shall have paid the Amendment Fee to the Agent for
the account of the Banks.
(c) The Agent shall have received evidence satisfactory to it of
appropriate corporate or other entity actions approving the terms and conditions
set forth herein.
(d) The Borrowers shall have paid or reimbursed the Agent for all of
the fees and disbursements of the Agent's special counsel, which shall have been
incurred by the Agent in connection with the preparation, negotiation, execution
and delivery of this Amendment and the implementation of the transactions
contemplated thereby.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrowers hereby
represent and warrant to the Banks and the Agent as follows:
SECTION 5.1. REPRESENTATIONS AND WARRANTIES IN CREDIT AGREEMENT.
Each of the representations and warranties of the Borrowers contained in the
Credit Agreement as modified hereby or in any document or instrument delivered
pursuant to or in connection with the Credit Agreement as modified hereby are
true as of the date hereof (except to the extent of changes resulting from
transactions contemplated or permitted by the Credit Agreement and changes
occurring in the ordinary course of business which singly or in the aggregate
are not materially adverse, or to the extent that such representations and
warranties relate solely and expressly to an earlier date) and, taking into
account this Amendment, no Default or Event of Default has occurred and is
continuing.
SECTION 5.2. AUTHORITY, NO CONFLICTS, ETC. The execution,
delivery and performance of this Amendment and the transactions contemplated
hereby (i) are within the corporate authority of each of the Borrowers, (ii)
have been duly authorized by all necessary corporate proceedings, (iii) do not
conflict with or result in any material breach or contravention of any provision
of law, statute, rule or regulation to which each of the Borrower is subject or
any judgment, order, writ, injunction, license or permit applicable to each
Borrower so as to materially adversely affect the assets, business or any
activity of such Borrower, and (iv) do not conflict with any provision of the
corporate charter or bylaws of each of the Borrowers or any agreement or other
instrument binding upon them. The execution, delivery and performance of this
Amendment will result in valid and legally binding obligations of each of the
Borrowers enforceable against each in accordance with the respective terms and
provisions hereof.
SECTION 6. RATIFICATION, ETC. This Amendment is limited to the
waiver and amendments to the Credit Agreement set forth herein and upon the
terms and subject to the conditions contained herein. Except as expressly stated
herein,
<PAGE> 8
-8-
the Amendment, 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 is a
Loan Document.
SECTION 7. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, which together shall constitute one instrument.
SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE A CONTRACT UNDER
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, SHALL FOR ALL PURPOSES BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF SAID
JURISDICTION, WITHOUT REFERENCE TO CONFLICTS OF LAW, AND IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT.
<PAGE> 9
-9-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
a document under seal as of the date first above written.
TRANSPRO, INC.
By: /s/ Timothy E. Coyne
----------------------------------------
Name: Timothy E. Coyne
Title: V.P.
ALLEN HEAT TRANSFER PRODUCTS, INC.
By: /s/ Timothy E. Coyne
----------------------------------------
Name: Timothy E. Coyne
Title: V.P.
AHTP II, INC.
By: /s/ Timothy E. Coyne
----------------------------------------
Name: Timothy E. Coyne
Title: V.P.
EVAP, INC. (f/k/a EI Acquisition Corp.)
By: /s/ Timothy E. Coyne
----------------------------------------
Name: Timothy E. Coyne
Title: V.P.
GO/DAN INDUSTRIES
By: /s/ Timothy E. Coyne
----------------------------------------
Name: Timothy E. Coyne
Title: V.P.
<PAGE> 10
-10-
A/C PLUS, INC.
By: /s/ Timothy E. Coyne
----------------------------------------
Name: Timothy E. Coyne
Title: V.P.
FLEET NATIONAL BANK
(f/k/a BankBoston, N.A.), individually and as Agent
By: /s/ Richard D. Briggs, Jr.
----------------------------------------
Name: Richard D. Briggs, Jr.
Title: Director
PEOPLE'S BANK
By: /s/ Kevin R. Callahan
----------------------------------------
Name: Kevin R. Callahan
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Geraldine Turkington
----------------------------------------
Name: Geraldine Turkington
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By: /s/ Michael Johnson
----------------------------------------
Name: Michael Johnson
Title: Vice President
BANK ONE , NA
By: /s/ Jeff Lubatkin
---------------------------------------------------
Name: Jeff Lubatkin
Title: Vice President
<PAGE> 11
-11-
ANNEX A
The "Purchased Assets" as defined Section 1.1. of that certain Asset
Purchase Agreement dated as of April 17, 2000 between TransPro, Inc., a Delaware
corporation, as seller and Leggett & Platt, Incorporated, a Missouri
corporation, as buyer.
<PAGE> 12
-12-
SCHEDULE 1
Banks; Commitments; Commitment Percentages
<TABLE>
<CAPTION>
Revolving Credit
Domestic and Eurodollar Lending Commitment Facility
Banks Office Percentage
<S> <C> <C> <C>
Fleet National Bank 100 Federal Street 26.66666667% $14,666,666.67
Boston, MA 02110
Fax No. (617) 434-0816
The Bank of New York 10 Mason Street 23.33333333% $12,833,333.33
Greenwich, CT 06830
Fax No.: (203) 863-2610
Harris Trust and Savings 111 West Monroe Street 16.66666667% $9,166,666.67
Bank Chicago, IL 60603
Fax No.: (312) 461-5225
Bank One, N.A. 153 West 51st Street 20.00000000% $11,000,000.00
New York, NY 10019
Fax No.: (212) 373-1180
People's Bank Bridgeport Center 13.33333333% $7,333,333.33
850 Main Street
Bridgeport, CT 06604-4913
Fax No.: (203) 338-4781
Total 100.00% $55,000,000.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TRANSPRO,
INC. AND SUBSIDIARIES FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 36,275
<ALLOWANCES> 1,459
<INVENTORY> 83,099
<CURRENT-ASSETS> 151,047
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<DEPRECIATION> 50,965
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0
0
<COMMON> 66
<OTHER-SE> 72,846
<TOTAL-LIABILITY-AND-EQUITY> 187,113
<SALES> 48,430
<TOTAL-REVENUES> 48,430
<CGS> 38,741
<TOTAL-COSTS> 38,741
<OTHER-EXPENSES> 12,455
<LOSS-PROVISION> 79
<INTEREST-EXPENSE> 1,335
<INCOME-PRETAX> (4,180)
<INCOME-TAX> (1,519)
<INCOME-CONTINUING> (2,661)
<DISCONTINUED> 440
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,221)
<EPS-BASIC> (0.34)
<EPS-DILUTED> (0.34)
</TABLE>
