-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, La3ibyszr8w/onHy/CmSCezytKjy9jctDaOp6g7/A6rIg8iUl7uDolpfb7+pm+0U iYDoEoJRE0OGAFb3q5Ccfw== 0001047469-98-043271.txt : 19981209 0001047469-98-043271.hdr.sgml : 19981209 ACCESSION NUMBER: 0001047469-98-043271 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981030 FILED AS OF DATE: 19981208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACORN PRODUCTS INC CENTRAL INDEX KEY: 0001036713 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 223265462 FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22717 FILM NUMBER: 98765425 BUSINESS ADDRESS: STREET 1: 500 DUBLIN AVENUE CITY: COLUMBUS STATE: OH ZIP: 43216-1930 BUSINESS PHONE: 6142224400 MAIL ADDRESS: STREET 1: 500 DUBLIN AVENUE CITY: COLUMBUS STATE: OH ZIP: 43216-1930 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 30, 1998 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number: 0-22717 ACORN PRODUCTS, INC. (Exact name of registrant as specified in its charter) DELAWARE 22-3265462 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 500 DUBLIN AVENUE, COLUMBUS, OHIO 43215 (Address of principal executive offices, including zip code) (614) 222-4400 (Registrant's telephone number, including area code) NOT APPLICABLE (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 the filing requirements for at least the past 90 days. YES X NO ----- ----- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 6,464,105 shares of Common Stock, $.001 par value, were outstanding at December 4, 1998. FORM 10-Q ACORN PRODUCTS, INC. TABLE OF CONTENTS
PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements. Consolidated Balance Sheets 3 July 31, 1998 and October 30, 1998 Consolidated Statements of Operations For the Three Months 4 Ended October 31, 1997 and October 30, 1998 Consolidated Statements of Cash Flows For the Three Months 5 Ended October 31, 1997 and October 30, 1998 Interim Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial 7-9 Condition and Results of Operations. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. 10 Signatures 11
-2- PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ACORN PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
JULY 31, OCTOBER 30, 1998 1998 -------- ----------- (Unaudited) ASSETS Current assets: Cash.......................................................................... $ 1,240 $ 819 Accounts receivable, less allowance for doubtful accounts ($894 and $761, respectively)............................. 24,553 19,072 Inventories................................................................... 30,123 34,084 Prepaids and other current assets............................................. 2,948 2,887 -------- -------- Total current assets........................................................ 58,864 56,862 Property, plant and equipment, net of accumulated depreciation................ 16,205 16,190 Goodwill, net of accumulated amortization..................................... 35,271 35,632 Other intangible assets....................................................... 2,293 2,199 -------- -------- Total assets................................................................ $112,633 $110,883 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Revolving credit facility..................................................... $ 16,308 $ 14,963 Accounts payable.............................................................. 7,010 7,764 Accrued expenses.............................................................. 4,456 4,340 Other current liabilities..................................................... 445 185 -------- -------- Total current liabilities..................................................... 28,219 27,252 Long-term debt.................................................................. 16,009 16,009 Other long-term liabilities..................................................... 4,054 3,945 -------- -------- Total liabilities............................................................. 48,282 47,206 Stockholders' equity: Common stock, par value of $.001 per share, 20,000,000 shares authorized, 6,464,105 shares issued and outstanding at July 31, 1998 and October 30, 1998, respectively......................... 78,391 78,391 Contributed capital-stock options............................................... 460 460 Minimum pension liability....................................................... (285) (285) Retained earnings (deficit)..................................................... (14,215) (14,889) -------- -------- Total stockholders' equity.................................................... 64,351 63,677 -------- -------- Total liabilities and stockholders' equity.................................... $112,633 $110,883 -------- -------- -------- --------
See accompanying notes. -3- ACORN PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE QUARTER ENDED ---------------------------- OCTOBER 31, OCTOBER 30, 1997 1998 ------------- ----------- (Unaudited) (Unaudited) Net sales................................................ $ 20,416 $ 22,172 Cost of goods sold....................................... 15,277 16,814 ---------- ---------- Gross profit............................................. 5,139 5,358 Selling, general and administrative expenses............. 4,819 4,948 Interest expense......................................... 519 672 Amortization of intangibles.............................. 218 261 Other expenses, net...................................... 41 112 ---------- ---------- Income (loss) before income taxes........................ (458) (635) Income taxes (benefit) .................................. (134) (127) ---------- ---------- Income (loss) from continuing operations ................ (324) (508) Loss from discontinued operations, net of tax - (166) ---------- ---------- Net income (loss) ....................................... $ (324) $ (674) ---------- ---------- ---------- ---------- PER SHARE DATA (BASIC AND DILUTED): Income (loss) from continuing operations ................ $ (0.05) $ (0.08) Loss from discontinued operations........................ $ - $ (0.02) ---------- ---------- Net income (loss)........................................ $ (0.05) $ (0.10) ---------- ---------- ---------- ---------- Weighted average shares outstanding...................... 6,464,105 6,464,105 ---------- ---------- ---------- ----------
See accompanying notes. -4- ACORN PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE THREE MONTHS ENDED ------------------------------ OCTOBER 31, OCTOBER 30, 1997 1998 ------------- ------------ (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)........................................... $ (324) $ (674) Adjustments to reconcile net income (loss) to net cash provided by (used in) continuing operations: Loss from discontinued operations......................... - 166 Depreciation and amortization............................. 894 1,025 Changes in operating assets and liabilities: Accounts receivable..................................... 1,056 5,481 Inventories............................................. (1,876) (3,961) Other assets............................................ 772 155 Accounts payable and accrued expenses................... 1,073 722 Income taxes payable.................................... (334) (250) Other liabilities....................................... (73) (369) ------- ------- Net cash provided by (used in) continuing operations........ 1,188 2,295 Net cash provided by (used in) discontinued operations...... (49) 0 ------- ------- Net cash provided by (used in) operating activities......... 1,139 2,295 CASH FLOWS FROM INVESTING ACTIVITIES: Net assets from acquisitions................................ - (622) Purchases of property, plant and equipment, net............. (1,281) (749) ------- ------- Net cash provided by (used in) investing activities......... (1,281) (1,371) CASH FLOWS FROM FINANCING ACTIVITIES: Acquisition line draws...................................... - - Net activity on revolving loan.............................. (8) (1,345) ------- ------- Net cash provided by (used in) financing activities......... (8) (1,345) ------- ------- Net increase (decrease) in cash............................. (150) (421) Cash at beginning of period................................. 1,509 1,240 ------- ------- Cash at end of period....................................... $ 1,359 $ 819 ------- ------- ------- ------- Interest paid............................................... $ 362 $ 768 ------- ------- ------- -------
See accompanying notes. -5- ACORN PRODUCTS, INC. AND SUBSIDIARIES INTERIM NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Footnote disclosure which would substantially duplicate the disclosure contained in the Annual Report to Stockholders for the year ended July 31, 1998 has not been included. The unaudited interim consolidated financial statements reflect all adjustments, that in the opinion of management, are necessary to a fair statement of results for the periods presented and to present fairly the consolidated financial position of Acorn Products, Inc. (the "Company") as of October 30, 1998. All such adjustments are of a normal recurring nature. 2. Inventories of Acorn Products, Inc. are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Inventories consist of the following:
JULY 31, OCTOBER 30, 1998 1998 --------- ------------ (In thousands) Finished goods............................ $16,270 $18,657 Work in process........................... 5,709 7,267 Raw materials and supplies................ 9,212 9,218 ------- ------- 31,191 35,142 Valuation reserves........................ (1,068) (1,058) ------- ------- Total inventories......................... $30,123 $34,084 ------- ------- ------- -------
3. In November 1998, the Company received notification of an assessment of approximately $200,000 in state taxes and interest related to the sale in August 1997 of substantially all of the assets of its McGuire-Nicholas Company, Inc. subsidiary. The Company is contesting the amount of the assessment. The Company has recorded the contingent liability associated with the assessment, net of the affect of taxes, as a loss from discontinued operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Disposition of Non-Lawn and Garden Business Operations." 4. In June 1997, the Financial Standards Board issued Statement No. 130, Reporting Comprehensive Income ("SFAS 130"). SFAS 130 requires adoption for fiscal years beginning after December 15, 1997. Therefore, the Company was required to adopt SFAS 130 effective August 1, 1998. The total comprehensive loss for the three months ended October 30, 1998 was ($674). -6- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the consolidated financial statements of the Company and the other financial information included elsewhere in this Quarterly Report on Form 10-Q, as well as the factors set forth under the caption "Forward-Looking Information" below. FORWARD-LOOKING INFORMATION Statements in the following discussion that indicate the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those suggested in the forward-looking statements is contained under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended July 31, 1998, as well as in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 18, 1997, as amended on October 29,1998 and as the same may be amended from time to time. THREE MONTHS ENDED OCTOBER 30, 1998 COMPARED TO THREE MONTHS ENDED OCTOBER 31, 1997 NET SALES. Net sales increased 8.8%, or $1.8 million, to $22.2 million in the first quarter of fiscal 1999 compared to $20.4 million in the first quarter of fiscal 1998. The increase in net sales reflected sales by the Company's watering products division, as well as increased net sales by the Company's injection molding division. GROSS PROFIT. Gross profit increased 5.9%, or $0.3 million, to $5.4 million in the first quarter of fiscal 1999 compared to $5.1 million in the comparable period of fiscal 1998. Gross margin decreased to 24.2% in the first quarter of fiscal 1999 from 25.2% in the first quarter of fiscal 1998. The decrease in gross margin primarily was due to competitive pricing pressures with respect to sales of long handled tools, as well as inclusion of the Company's watering products division, which realizes lower off-season overhead absorption rates. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses increased 4.2%, or $0.2 million, to $5.0 million in the first quarter of fiscal 1999 from $4.8 million in the first quarter of fiscal 1998. As a percentage of net sales, selling general and administrative expenses decreased to 22.3% in the first quarter of fiscal 1999 from 23.6% in the first quarter of fiscal 1998. The increase in selling, general and administrative expenses resulted primarily from the addition of the Company's watering products division, partially offset by a decrease in selling, general and administrative expenses related to the Company's core business and corporate operations. OTHER EXPENSES, NET. Other expenses, net, increased to $112,000 in the first quarter of fiscal 1999 from $41,000 in the first quarter of fiscal 1998. Other expense, net, in the first quarter of fiscal 1999 related primarily to amortization of financing fees. LOSS BEFORE INCOME TAXES. Loss before income taxes increased to $635,000 in the first quarter of fiscal 1999 from $458,000 in the first quarter of fiscal 1998. In addition to the factors described above, the increase in loss before income taxes resulted primarily from increased interest and amortization expenses related to the acquisition of the Company's watering products division. NET LOSS. The Company recognized a tax benefit of $127,000 in the first quarter of fiscal 1999 compared to a tax benefit of $134,000 in fiscal 1998 bringing the loss from continuing operations to $508,000 in the first quarter of fiscal 1999 compared to a loss of $324,000 in the first quarter of fiscal 1998. SEASONAL AND QUARTERLY FLUCTUATIONS; IMPACT OF WEATHER The lawn and garden industry is seasonal in nature, with a high proportion of sales and operating income generated in January through May. Accordingly, the Company's sales tend to be greater during its third and fourth fiscal quarters. As a result, the Company's operating results depend significantly on the spring selling season. To support this sales peak, the Company must anticipate demand and build inventories of finished goods throughout the fall and winter. Accordingly, the Company's level of raw materials and finished goods inventories tend to be at their highest, relative to sales, during the Company's first and second fiscal quarters. These factors increase variations in the Company's quarterly results of operations and potentially expose the Company to greater adverse effects of changes in economic and industry trends. Moreover, actual demand for the Company's products may vary substantially from the anticipated demand, leaving the Company with excess inventory or insufficient inventory to satisfy customer orders. -7- Weather is the single most important factor in determining market demand for the Company's products and also is the least predictable. For example, while floods in the Midwest adversely affected the sale of most types of lawn and garden equipment in 1992, the severe winter of 1994 resulted in a surge in demand for snow shovels. In addition, bad weather during the spring gardening season, such as that experienced throughout most of the U.S. in the spring of 1995 and 1998, can adversely affect overall annual sales. LIQUIDITY AND CAPITAL RESOURCES There have been no significant changes in the Company's liquidity and capital resources as of October 30, 1998 from those discussed in the Company's Annual Report on Form 10-K for the year ended July 31, 1998. LEGAL PROCEEDINGS On November 23, 1998, Huffy Corporation, True Temper Hardware Company and Huffco Company (collectively the "Huffy Parties") dismissed without prejudice a complaint filed by the Huffy Parties against the Company in the Court of Common Please for Montgomery County, Ohio alleging breach of contract, unfair competition, misappropriation of trade secrets and fraud in connection with discussions between the Company and the Huffy parties regarding a possible merger of the Company and True Temper Hardware Company. DISPOSITION OF NON-LAWN AND GARDEN BUSINESS OPERATIONS In December 1996, the Company sold substantially all of the assets of VSI Fasteners, Inc. ("VSI"), a distributor of packaged fasteners, for approximately $6.9 million, plus the assumption of approximately $2.3 million of related liabilities. In August 1997, the Company sold substantially all of the assets of McGuire-Nicholas Company, Inc. ("McGuire-Nicholas"), a manufacturer and distributor of leather, canvas and synthetic fabric tool holders and work aprons, for approximately $4.7 million, plus the assumption of approximately $4 million of related liabilities. VSI's and McGuire-Nicholas' results of operations are shown as "Loss from Discontinued Operations" in the consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. IMPACT OF THE YEAR 2000 ON COMPUTER SYSTEMS STATE OF READINESS. The Company has reviewed its Year 2000 issues in regard to both its information-technology and its non-information-technology. The Company's operating system software as well as some of the Company's older software applications were written using two digits rather than four to define the applicable year. As a result, those software applications have time- sensitive software that recognize a date using "00" as the year 1900 rather than the Year 2000. This could cause a system failure or miscalculations causing disruptions of operations, including a temporary inability to process transactions, send invoices or engage in similar normal business activities. The Company has determined that it will have to modify or replace portions of its software applications and hardware so that its computer systems will function properly with respect to dates in the Year 2000 and thereafter. The Company expects that its information-technology will be Year 2000-ready by June 1, 1999, which is prior to any anticipated impact on its operating systems. The Company does not believe that there any material Year 2000 issues with regard to its non-information-technology. In addition, the Company has initiated communications with its significant customers and suppliers to determine the extent to which the Company's interface systems are vulnerable to the failure of such customers and suppliers to remediate their own Year 2000 issues. Based on such communications, the Company is not currently aware of any third-party issue applicable to the Year 2000 that is likely to have a material impact on the conduct of the business, the results of operations or the financial condition of the Company. COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES. Although the Company is currently updating its computer systems, such updating was not accelerated due to Year 2000 issues. The following chart reflects the Company's estimated Year 2000-specific costs plus the estimated cost to update its current computer systems. ESTIMATED CONVERSION COST
Expense Capital -------- -------- Hardware -- $200,000 Project Management $125,000 75,000 Software and Custom Coding 165,000 -- -------- -------- $290,000 $275,000 -------- -------- -------- --------
-8- RISKS OF THE COMPANY'S YEAR 2000 ISSUES. The Company does not believe that any Year 2000 issues will impact its manufacturing. However, it is possible that Year 2000 issues may have an impact on the administration of the Company. The Company believes that its greatest Year 2000 risk is the risk that its customers and suppliers are not Year 2000-ready. Failure by the Company, or its customers or suppliers to adequately address the Year 2000 issues in a timely manner could have a material impact on the conduct of the business, the results of operations and the financial condition of the Company. Accordingly, the Company plans to address all Year 2000 issues before problems materialize. The Company believes that the associated costs are adequately budgeted for in its fiscal 1999 business plans. However, should efforts on the part of the Company, its customers and suppliers fail to adequately address their relevant Year 2000 issues, the most likely worst case scenario would be a total loss of revenue to the Company. THE COMPANY'S CONTINGENCY PLANS. The Company will produce contingency plans on a case by case basis. RISKS. There can be no assurance that the Company will not experience cost overruns or delays in the completion of its year 2000 project. Factors that could cause such cost overruns or delays include, among other things, an unavailability of properly trained personnel, unforeseen difficulty locating and correcting relevant computer codes and similar uncertainties. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. None. -9- PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. None. ITEM 2. CHANGES IN SECURITIES. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER MATTERS. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS.
EXHIBIT EXHIBIT NUMBER DESCRIPTION 10.1 Third Amendment to Amended and Restated Credit Agreement, October 29, 1998, between UnionTools, Inc. and Heller Financial, Inc., in its capacity as Agent for the Lenders party to the Amended and Restated Credit Agreement. 27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K. (1) Form 8-K/A No. 1 (Item 5) filed October 29, 1998 to update the disclosure provided in the Form 8-K filed on September 18, 1997 reporting the cautionary statement for purposes of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. -10- 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. ACORN PRODUCTS, INC. Date: December 8, 1998 By: /s/ Gabe Mihaly ------------------------------------------- Gabe Mihaly, President and Chief Executive Officer (Principal Executive Officer) Date: December 8, 1998 By: /s/ Stephen M. Kasprisin ------------------------------------------- Stephen M. Kasprisin, Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) -11- ACORN PRODUCTS, INC. AND SUBSIDIARIES FORM 10-Q EXHIBIT INDEX
EXHIBIT EXHIBIT NUMBER DESCRIPTION 10.1 Third Amendment to Amended and Restated Credit Agreement, October 29, 1998, between UnionTools, Inc. and Heller Financial, Inc., in its capacity as Agent for the Lenders party to the Amended and Restated Credit Agreement. 27 Financial Data Schedule.
EX-10.1 2 EXHIBIT 10.1 THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT This THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT ("AMENDMENT") is made and entered into this 29th day of October, 1998, by and between UNION TOOLS, INC. ("BORROWER"), Heller Financial, Inc., in its capacity as Agent for the Lenders party to the Amended and Restated Credit Agreement described below ("AGENT"), and the Lenders which are signatories hereto. WHEREAS, Agent, Lenders and Borrower are parties to a certain Amended and Restated Credit Agreement dated May 20, 1997 and all amendments thereto (as such agreement has from time to time been amended, supplemented or otherwise modified, the "AGREEMENT"); and WHEREAS, the parties desire to amend the Agreement as hereinafter set forth; NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in the Agreement and this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. DEFINITIONS. Capitalized terms used in this Amendment, unless otherwise defined herein, shall have the meaning ascribed to such terms in the Agreement. 2. AMENDMENTS. Subject to the conditions set forth below, subsection 4.6(b) is amended by deleting such subsection in its entirety and inserting the following in lieu thereof: "(b) Borrower shall not permit the ratio of Total Indebtedness calculated as of the last day of fiscal quarter ending on the dates or during the periods set forth below to Operating Cash Flow for the twelve (12) month period ending on such day to be greater than the amount set forth for such date or period.
Date/ Period Amount ------------ ------ January 31, 1998 4.0:1 April 30, 1998 3.8:1 July 31, 1998 2.7:1 October 31, 1998 4.6:1 January 31, 1999 3.0:1 April 30, 1999 3.0:1 On or after July 31, 1999 2.0:1
"Total Indebtedness" and "Operating Cash Flow" will be calculated as illustrated on Exhibit 4.10(C) 4. CONDITIONS. The effectiveness of this Amendment is subject to the following conditions precedent (unless specifically waived in writing by Agent): (a) Borrower shall have executed and delivered this Amendment, and such other documents and instruments as Agent may require shall have been executed and/or delivered to Agent; (b) All proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto shall be satisfactory to Agent and its legal counsel; and (c) No Default or Event of Default shall have occurred and be continuing. 5. REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders to enter into this Amendment, Borrower represents and warrants to Agent and Lenders that (a) the execution, delivery and performance of this Amendment has been duly authorized by all requisite corporate action on the part of Borrower and that this Amendment has been duly executed and delivered by Borrower and (b) each of the representations and warranties set forth in Section 5 of the Agreement (other than those which, by their terms, specifically are made as of certain date prior to the date hereof) are true and correct in all material respects as of the date hereof. 6. SEVERABILITY. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. 7. REFERENCES. Any reference to the Agreement contained in any document, instrument or agreement executed in connection with the Agreement shall be deemed to be a reference to the Agreement as modified by this Amendment. 8. COUNTERPARTS. This Amendment may be executed in one or more counterparts, each of which shall constitute an original, but all of which taken together shall be one and the same instrument. 9. RATIFICATION. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions of the Agreement and shall not be deemed to be a consent to the modification or waiver of any other term or condition of the Agreement. Except as expressly modified and superseded by this Amendment, the terms and provisions of the Agreement are ratified and confirmed and shall continue in full force and effect. 2 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under seal and delivered by their respective duly authorized officers on the date first written above. HELLER FINANCIAL, INC., UNION TOOLS, INC., as Agent and Lender Borrower By: /s/ William Vukovich By: /s/ Steve Kasprisin ------------------------------- ------------------------------------ Title: Assistant Vice-President Title: Vice-President -Chief Accounting ---------------------------- ---------------------------------- Officer --------------------------------- OTHER LENDERS: FLEET CAPITAL CORPORATION By: /s/ Lawrence Ausburn ------------------------------ Title: Senior Vice-President --------------------------- PNC BANK, NATIONAL ASSOCIATION By: /s/ Warren F. Weber ------------------------------ Title: Vice-President --------------------------- STAR BANK, N.A. By: ------------------------------ Title: --------------------------- BANKBOSTON, N.A. By: /s/ Gregory R.D. Clark ------------------------------ Title: Division Executive --------------------------- SANWA BUSINESS CREDIT CORPORATION By: /s/ Lawrence J. Placek ------------------------------ Title: Vice-President --------------------------- 3 EX-27 3 EXHIBIT 27
5 1,000 U.S. 3-MOS JUL-30-1999 AUG-01-1998 OCT-30-1998 1 819 0 19,833 (761) 34,084 58,862 27,617 (11,427) 110,883 27,252 0 0 0 78,391 (14,714) 110,883 22,172 22,172 16,814 16,814 5,321 0 672 (635) (127) (674) 0 0 0 (674) (0.10) 0
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