-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, BSo83dpaLCDIQJV6fvzxfelkg8Nlen2Js4dU3sA5ifcwlSBWvrT2C+prR22ARof+ iAxctOwdGMmGLGMgBzBigQ== 0000230602-95-000011.txt : 19950814 0000230602-95-000011.hdr.sgml : 19950814 ACCESSION NUMBER: 0000230602-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIANGLE PACIFIC CORP CENTRAL INDEX KEY: 0000230602 STANDARD INDUSTRIAL CLASSIFICATION: LUMBER & WOOD PRODUCTS (NO FURNITURE) [2400] IRS NUMBER: 942998971 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22138 FILM NUMBER: 95561343 BUSINESS ADDRESS: STREET 1: 16803 DALLAS PKWY CITY: DALLAS STATE: TX ZIP: 75266-0100 BUSINESS PHONE: 2149313000 MAIL ADDRESS: STREET 1: 16803 DALLAS PKWY CITY: DALLAS STATE: TX ZIP: 75266-0100 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 -------------------------------------------- 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: 0-22138 --------------------------------------------------- Triangle Pacific Corp. - --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware - --------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) 94-2998971 - --------------------------------------------------------------------------- (I.R.S. Employer Identification No.) 16803 Dallas Parkway, Dallas, Texas 75248 - --------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (214) 931-3000 - --------------------------------------------------------------------------- (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 filing requirements for the past 90 days. [X] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 14,663,365 Shares on June 30, 1995 TRIANGLE PACIFIC CORP. AND SUBSIDIARIES INDEX PART I FINANCIAL INFORMATION Page No. Item 1. Financial Statements Consolidated Statements of Operations for the six months ended June 30, 1995 and July 1, 1994 and for the three months ended June 30, 1995 and July 1, 1994 4 Consolidated Balance Sheets June 30, 1995 and December 30, 1994 5 Consolidated Statements of Cash Flows for the six months ended June 30, 1995 and July 1, 1994 7 Consolidated Statement of Changes in Shareholders' Investment for the six months ended June 30, 1995 8 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 PART II OTHER INFORMATION 14 SIGNATURES 15 PART I FINANCIAL INFORMATION Item I. Financial Statements Triangle Pacific Corp. and Subsidiaries Consolidated Financial Statements for the Six Months ended June 30, 1995 The consolidated financial statements included herein have been prepared by the Company without audit. They contain all adjustments which are, in the opinion of the management, necessary to a fair presentaton of financial position and results of operations for the interim periods. The operating results for the interim periods are not necessarily indicative of results to be expected for a full year. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company's Form 10-K as of December 30, 1994. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except earnings per share data) Six Months Ended Three Months Ended -------------------- -------------------- June 30, July 1, June 30, July 1, 1995 1994 1995 1994 -------- -------- ------- -------- Net sales $ 223,801 $ 197,628 $ 116,609 $ 106,918 -------- -------- -------- -------- Costs and expenses: Cost of sales 165,062 146,098 85,802 77,471 Selling, general and administrative 30,861 27,720 15,413 14,607 Amortization of goodwill 760 760 380 380 Interest 9,160 9,522 4,597 4,625 -------- -------- -------- -------- 205,843 184,100 106,192 97,083 -------- -------- -------- -------- Income before income taxes 17,958 13,528 10,417 9,835 Provision for income taxes 6,963 5,526 3,956 3,975 -------- -------- -------- -------- Net income $ 10,995 $ 8,002 $ 6,461 $ 5,860 ======== ======== ======== ======== Net income per share $ 0.75 $ 0.55 $ 0.44 $ 0.40 ======== ======== ======== ======== Weighted average shares outstanding 14,754 14,657 14,758 14,661 The accompanying notes to consolidated financial statements are an integral part of these statements. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) June 30, December 30, 1995 1994 --------- ------------ ASSETS Current assets: Cash and cash equivalents $ 24,051 $ 24,906 Receivables (net of allowances of $2,857 and $2,491 respectively) 51,916 43,303 Inventories 74,676 70,900 Prepaid expenses 4,554 3,934 -------- -------- Total current assets 155,197 143,043 -------- -------- Property, plant and equipment Land 12,003 12,003 Buildings 44,819 43,452 Equipment, furniture and fixtures 82,748 79,568 -------- -------- 139,570 135,023 Less: accumulated depreciation 25,565 21,110 -------- -------- 114,005 113,913 Other assets: Goodwill 55,857 56,617 Trademark 29,533 29,933 Other 11,290 13,237 Deferred financing costs 5,994 6,708 -------- -------- Total assets $ 371,876 $ 363,451 ======== ======== The accompanying notes to consolidated financial statements are an integral part of these balance sheets. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued) (in thousands) June 30, December 30, 1995 1994 --------- ------------ LIABILITIES AND SHAREHOLDERS' INVESTMENT Current liabilities: Current portion of long-term debt $ 1,432 $ 1,527 Accounts payable 18,424 17,723 Accrued liabilities 26,490 28,112 Income taxes payable 1,261 1,327 -------- -------- Total current liabilities 47,607 48,689 -------- -------- Long-term debt, net of current portion 167,683 168,388 -------- -------- Deferred income taxes 38,695 39,480 -------- -------- Total liabilities 253,985 256,557 -------- -------- Shareholders' investment: Common stock - $.01 par value, authorized shares - 30,000,000 issued and outstanding shares - 14,663,365 at June 30, 1995 and 14,662,609 at December 30, 1994 147 147 Additional paid-in capital 93,100 93,098 Retained earnings 24,644 13,649 -------- -------- Total shareholders' investment 117,891 106,894 -------- -------- Total liabilities and shareholders' investment $ 371,876 $ 363,451 ======== ======== The accompanying notes to consolidated financial statements are an integral part of these balance sheets. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Six Months Ended -------------------- June 30, July 1, 1995 1994 --------- -------- Cash flows from operating activities: Net income $ 10,995 $ 8,002 Adjustments: Depreciation 4,456 3,994 Deferred income taxes (785) (2,609) Amortization of goodwill and trademark 1,160 1,160 Amortization of deferred financing costs 714 716 Provision for doubtful accounts 379 402 Changes in assets and liabilities: Receivables (8,993) (8,949) Inventories (3,776) 1,387 Prepaid expenses (621) (525) Other assets 168 1,917 Accounts payable 725 4,479 Accrued liabilities (845) 4,110 Accrued liabilities - interest (801) 785 Income taxes payable (66) 4,992 -------- -------- Net cash provided by operating activities 2,710 19,861 -------- -------- Cash flows from investing activities: Additions to property, plant & equipment (4,547) (6,174) Construction deposits - (1,852) Acquisition of Premier Wood Floors - (5,123) -------- ------- Net cash used in investing activities (4,547) (13,149) -------- -------- Cash flows from financing activities: Long-term debt borrowings - 7,000 Long-term debt payments (800) (733) Exercise of stock options 2 41 Refinancing costs - (14) Reimbursement of construction deposits 1,780 - -------- -------- Net cash provided by financing activities 982 6,294 -------- -------- Net increase (decrease) in cash $ (855) $ 13,006 Cash and cash equivalents, beginning of period 24,906 785 -------- -------- Cash and cash equivalents, end of period $ 24,051 $ 13,791 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 9,507 $ 8,412 Income taxes 7,798 146 The accompanying notes to consolidated financial statements are an integral part of these statements. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' INVESTMENT FOR THE SIX MONTHS ENDED JUNE 30, 1995 (in thousands) Additional Common Paid-In Retained Stock Capital Earnings Total ------- ------- --------- ------- Balance, December 30, 1994 $ 147 $ 93,098 $ 13,649 $106,894 Net income - - 10,995 10,995 Exercise of stock options - 2 - 2 ------- ------- ------- ------- Balance, June 30, 1995 $ 147 $ 93,100 $ 24,644 $117,891 ======= ======= ======= ======= The accompanying notes to consolidated financial statements are an integral part of this statement. TRIANGLE PACIFIC CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -INVENTORIES: Inventories are valued at the lower of cost or market. The last-in, first-out (LIFO) method is used for certain lumber inventories and the first- in, first-out (FIFO) method is used for all other inventories. Inventories valued by the LIFO method were $22,557,000 at June 30, 1995 and $20,870,000 at December 30, 1994. Had all inventories been valued by the FIFO method, which approximates current cost, inventories would have been increased by $1,761,000 at June 30, 1995 and $2,069,000 at December 30, 1994. Raw materials inventories include purchased parts and supplies to be used in manufactured products. Work-in-process and finished goods inventories include material, labor and overhead costs incurred in the manufacturing process. The major components of inventories are as follows: June 30, December 30, 1995 1994 ------------------------- (in thousands) Raw materials $ 37,059 $ 39,092 Work-in-process 4,331 3,640 Finished goods 33,286 28,168 -------- -------- Total $ 74,676 $ 70,900 ======== ======== NOTE 2 - LONG-TERM DEBT: Long-term debt consists of the following: June 30, December 30, 1995 1994 ------------------------- (in thousands) Mortgages payable $ 9,115 $ 9,915 Senior Notes, 10 1/2% due 8-1-2003 160,000 160,000 -------- -------- 169,115 169,915 Less: Current portion of long-term debt (1,432) (1,527) -------- -------- $ 167,683 $ 168,388 ======== ======== Letters of credit outstanding at June 30, 1995 were $8.3 million and $9.8 million at December 30, 1994 under a facility pursuant to which they can be renewed or replaced. Senior Notes The Senior Notes are senior unsecured obligations of the Company with an aggregate principal amount of $160 million. The Senior Notes mature on August 1, 2003 and bear interest at an annual rate of 10 1/2%, payable in two equal semi-annual installments of $8,400,000 each, with each semi-annual period deemed to have 180 days. The Senior Notes were issued under an Indenture (the "Indenture") between the Company and a predecessor to Texas Commerce Bank National Association, as Trustee (the "Trustee"). The Senior Notes rank pari passu with all present and future senior indebtedness of the Company and senior to all present and future subordinated indebtedness of the Company. However, because borrowings under the Credit Facility are secured by inventory and accounts receivable of the Company and the proceeds thereof, the Senior Notes are effectively subordinated to such borrowings to the extent of such security interest. The Senior Notes are not redeemable prior to August 1, 1998. Thereafter, the Senior Notes are redeemable at the option of the Company at redemption prices specified in the Indenture. The Senior Notes are not subject to any mandatory sinking fund requirements. Upon a "change of control" (as defined in the Indenture), the Company is required to offer to purchase all outstanding Senior Notes at 101% of the principal amount thereof, plus accrued interest to the date of repurchase. In addition, the Company may be required to offer to purchase the Senior Notes at 100% of the principal amount plus accrued interest with the net cash proceeds of certain sales or other dispositions of assets. The Indenture contains covenants which limit, among other things, the incurrence of additional indebtedness by the Company and its subsidiaries, the payment of dividends on or the purchase of the capital stock of the Company ("Restricted Payments"), the creation of liens on the assets of the Company and its subsidiaries, the creation of certain restrictions on the payment of dividends and other distributions by the Company's subsidiaries, the issuance of preferred stock by the Company's subsidiaries, and certain mergers, sales of assets and transactions with affiliates. Based on the Company's operations through June 30, 1995, the amount of Restricted Payments that the Company could make under the Indenture was $20,938,000. The Indenture specifies a number of events of default including, among others, the failure to make timely principal and interest payments or to perform the covenants contained therein. The Indenture contains a cross- default to other indebtedness of the Company aggregating more than $5,000,000 and certain customary bankruptcy and insolvency defaults. Upon the occurrence of an event of default under the Indenture, the Trustee or the holders of not less than 25% in principal amount of the outstanding Senior Notes may declare all amounts thereunder immediately due and payable, except that such amounts automatically become immediately due and payable in the event of a bankruptcy or insolvency default. Credit Facility: The Company has entered into the Credit Facility, which provides for up to $70 million of revolving loans for working capital and general corporate purposes and for letters of credit. Availability of borrowings under the Credit Facility is based upon a formula related to inventory and accounts receivable. At June 30, 1995, the Company had no borrowings under the Credit Facility and had $61.7 million of borrowing capacity under this facility. Borrowings under the Credit Facility bear interest at the agent's prime rate plus 1% (10.0% at June 30, 1995) or, at the Company's option, at certain alternate floating rates and is secured by a pledge of the Company's inventory and accounts receivable. The Credit Facility expires on August 4, 1996. The Credit Facility contains covenants which restrict, among other things, the incurrence of additional indebtedness and rental obligations by the Company and its subsidiaries, the payment of dividends and other distributions in respect of the capital stock of the Company, the creation of liens on the assets of the Company and its subsidiaries, the creation of certain restrictions on the payment of dividends and other distributions by the Company's subsidiaries, the making of investments and capital expenditures by the Company and its subsidiaries, the creation of new subsidiaries by the Company, and certain mergers, sales of assets and transactions with affiliates. The Credit Facility also contains certain financial covenants relating to the consolidated financial condition of the Company and its subsidiaries, including covenants relating to their net worth, the ratio of their earnings to their fixed charges, the ratio of their earnings to their interest expense, the ratio of their current assets to their current liabilities, and the ratio of their indebtedness to their total capitalization. At June 30, 1995, the Company was in compliance with all financial covenants. The Credit Facility specifies a number of events of default including, among others, the failure to make timely payments of principal, fees, and interest, the failure to perform the covenants contained therein, the failure of representations and warranties to be true, the occurrence of a "change of control" (as defined in the Credit Facility, to include, among other things, the ownership by any person or group of more than 25% (or, in case of The TCW Group, Inc. and its affiliates, 50%) of the total voting securities of the Company), and certain impairments of the security for the Credit Facility. The Credit Facility also contains a cross-default to other indebtedness of the Company aggregating more than $2,000,000 and certain customary bankruptcy, insolvency and similar defaults. Upon the occurrence of an event of default under the Credit Facility, at least three of the lenders holding at least 60% in amount of the principal indebtedness outstanding under the Credit Facility may declare all amounts thereunder immediately due and payable, except that such amounts automatically become immediately due and payable in the event of certain bankruptcy, insolvency or similar defaults. The Credit Facility generally prohibits the Company from prepaying the Senior Notes whether the prepayment would result from the redemption of the Senior Notes, an offer by the Company to purchase the Senior Notes following a change of control or a sale or other disposition of assets, or the acceleration of the due date for payment of the Senior Notes. Mortgages payable represent primarily various Industrial Revenue Bond (IRB) notes. The IRB notes vary in interest rate, with several notes dependent upon the prime rate. At June 30, 1995 and December 30, 1994 the interest rates ranged up to 9.0%. These notes are payable through 2001 and are collateralized by the related underlying assets. NOTE 3 - INCOME TAXES: The components of the deferred tax liability and asset are as follows: June 30, December 30, 1995 1994 ------------------------ (in thousands) Deferred Tax Liability: Property, plant and equipment $ 22,680 $ 22,511 Trademark 11,607 11,764 Other 8,644 8,527 -------- -------- Total $ 42,931 $ 42,802 ======== ======== Deferred Tax Asset: Other 4,236 3,322 -------- -------- Total $ 4,236 $ 3,322 ======== ======== The provision for income taxes consists of the following: Six Months Ended -------------------- June 30, July 1, 1995 1994 -------------------- (in thousands) Current: Federal $ 6,831 $ 4,497 State and local 856 552 -------- ------- $ 7,687 $ 5,049 ======== ======= Deferred: Federal $ (645) $ 425 State and local (79) 52 -------- ------- $ (724) $ 477 ======== ======= Total $ 6,963 $ 5,526 ======== ======= The tax provision for the periods ending June 30, 1995 and July 1, 1994 is 38.8% and 40.9% of pre-tax income, respectively. The factors causing the rate to vary from the U.S. Federal statutory rate are as follows: Six Months Ended -------------------- June 30, July 1, 1995 1994 -------------------- (in thousands) Computed (expected) tax provision $ 6,285 $ 4,733 State and local taxes 772 582 Amortization of goodwill 299 299 Other book to tax differences (net) (393) (88) ------- ------ $ 6,963 $ 5,526 ======= ====== MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET SALES Net sales for the six months ended June 30, 1995 were $223.8 million compared to $197.6 million for the six months ended July 1, 1994, representing a 13.2% increase. Cabinet Division sales were up 28.2% over those of the same period in 1994. Hardwood Floors sales for the six months ended June 30, 1995 increased 6.8% over the comparable period in 1994. Net sales for the three months ended June 30, 1995 were $116.6 million compared to $106.9 million for the three months ended July 1, 1994, representing a 9.1% increase. GROSS PROFIT Gross profit for the six months ended June 30, 1995 amounted to $58.7 million, or 26.3% of net sales, compared to $51.5 million or 26.1% of net sales in the same period in 1994. Gross profit for the three months ended June 30, 1995 were $30.8 million or 26.4% of net sales, compared to $29.4 million or 27.5% of net sales in the same period in 1994. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses amounted to $30.9 million for the six months ended June 30, 1995 compared to $27.7 million for the six months ended July 1, 1994. As a percent of net sales, selling, general and administrative expenses were 13.8% for the six months ended June 30, 1995, compared to 14.0% for the same period in 1994. Selling, general and administrative expenses amounted to $15.4 million or 13.2% of net sales for the three months ended June 30, 1995 compared to $14.6 million or 13.7% of net sales for the three months ended July 1,1994. OPERATING INCOME Operating income for the six months ended June 30, 1995 was $27.1 million compared to $23.1 million for the six months ended July 1, 1994. The increased operating income in the first six months of 1995 compared to the same period in 1994 was attributable to higher net sales and improved operating margins. Operating income for the three months ended June 30, 1995 was $15.0 million compared to $14.5 million in the same period in 1994. INTEREST EXPENSE Interest expense for the six months ended June 30, 1995 was $9.2 million compared to $9.5 million for the six months ended July 1, 1995. Interest expense for the three months ended June 30, 1995 was $4.6 million, the same as the three month period ended July 1, 1994. NET INCOME Net income for the six months ended June 30, 1995 was $11.0 million or $0.75 per share compared to $8.0 million or $0.55 per share for the six months ended July 1, 1994. The 1995 period benefited from higher net sales and operating income. Net income for the three months ended June 30, 1995 was $6.5 million or $0.44 per share compared to $5.9 million or $0.40 per share for the three months ended July 1, 1994. LIQUIDITY AND CAPITAL RESOURCES For the six months ended June 30, 1995, cash decreased by $.9 million. Cash provided from operating activities was $2.7 million and cash received from the reimbursement of construction deposits was $1.8 million. Cash of $4.5 million was used for additions to property, plant and equipment and $.8 million for long-term debt payments. On June 30, 1995, the Company had working capital of $107.6 million or 28.9% of total assets, and $61.7 million of unused bank borrowing capacity. The Company believes that borrowing availability under the Credit Facility and cash generated from operations will be adequate to fund working capital requirements, debt service payments and planned capital expenditures for the foreseeable future. During the first six months of 1995 there were declines in several economic indicators which impact the Company's industry, including single- family housing starts, sales of existing homes, and the level of consumer confidence. These trends are cause for concern about the strength of the economy in the second half of 1995. Management has taken precautionary measures in the Company's operations to minimize the impact of these trends on the Company's business. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. a) Exhibits Exhibit No. 4.5 - Admendment No. 5 to the Credit Agreement dated as of June 1, 1995. 27 - Financial Data Schedule for the six month interim period ended June 30, 1995. (Submitted only in EDGAR filing to Securities and Exchange Commission) b) No reports on Form 8-K have been filed during the quarter ended June 30, 1995. 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. TRIANGLE PACIFIC CORP. Date: August 11, 1995 By: /s/ M. Joseph McHugh ----------------- ----------------------------------- M. Joseph McHugh President and Chief Operating Officer (duly authorized officer) Date: August 11, 1995 By: /s/ Robert J. Symon ----------------- ----------------------------------- Robert J. Symon Executive Vice President, Treasurer and Chief Financial Officer (principal financial and accounting officer) 15 EX-4.5 2 EXHIBIT 4.5 ----------- FIFTH AMENDMENT TO CREDIT AGREEMENT THIS FIFTH AMENDMENT TO CREDIT AGREEMENT, dated as of June 1, 1995 (herein called this "Amendment"), is entered into by and among TRIANGLE PACIFIC CORP., a Delaware corporation (herein called the "Borrower"), the various financial institutions as are or may become parties to the Credit Agreement referenced below (collectively, the "Lenders"), and THE BANK OF NOVA SCOTIA, as agent (in such capacity, the "Agent") for the Lenders. Unless otherwise defined, terms defined in the Credit Agreement are used herein with the same meaning. W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower, the Lenders, the Co-Agent and the Agent have heretofore entered into a certain Credit Agreement, dated as of August 4, 1993, as amended by Amendment No. 1 to Credit Agreement dated as of August 9, 1993, Amendment No. 2 to Credit Agreement dated as of August 11, 1993, Amendment No. 3 to Credit Agreement dated as of August 13, 1993 and Fourth Amendment to Credit Agreement dated as of December 2, 1994 (such agreement, as so amended, herein called the "Credit Agreement"); and WHEREAS, the Borrower and the Lenders now desire to amend the Credit Agreement in certain respects, as hereinafter provided, NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Borrower, the Lenders, and the Agent hereby agree as follows: 1. Amendment of Section 1.1. Effective as of the date this Amendment is effective pursuant to Section 6 hereof, Section 1.1 of the Credit Agreement is hereby amended as follows: (i) The definition of "LIBO Rate Margin" is hereby amended to read in its entirety as follows: "LIBO Rate Margin" means, with respect to any LIBO Rate Loan, a per annum rate based on reference to the Leverage Ratio and Interest Coverage Ratio, in each case as indicated in the Compliance Certificate most recently delivered pursuant to clause (d) of Section 7.1.1, equal to: (a) 0.875% per annum, if the Leverage Ratio is less than 0.50:1 and the Interest Coverage Ratio is greater than 4.00:1; (b) 1.375% per annum, if the Leverage Ratio is less than 0.60:1 and the Interest Coverage Ratio is greater than 3.00:1 and the foregoing clause (a) does not apply; (c) 1.75% per annum, if the Leverage Ratio is less than 0.65:1 and the Interest Coverage Ratio is greater than 2.75:1 and the foregoing clauses (a) and (b) do not apply; (d) 1.875% per annum, if the Leverage Ratio is less than 0.71:1 and the Interest Coverage Ratio is greater than 2.50:1 and the foregoing clauses (a), (b) and (c) do not apply; and (e) 2.375% per annum, if the Leverage Ratio is 0.71 or greater and the Interest Coverage Ratio is 2.50:1 or less. The LIBO Rate Margin shall only be increased or decreased from the then existing LIBO Rate Margin if each of the Interest Coverage Ratio and Leverage Ratio (as reflected in the most recently delivered Compliance Certificate) is contained within the ranges set forth in the same clause (a), (b), (c), (d) or (e) above. (ii) The following definition is hereby added to Section 1.1 of the Credit Agreement immediately preceding the definition of "Commitment Termination Date": "Commitment Fee Rate" means, with respect to the commitment fee set forth in Section 3.3.1, a per annum rate determined by reference to the Leverage Ratio and Interest Coverage Ratio, in each case as indicated in the Compliance Certificate most recently delivered pursuant to clause (d) of Section 7.1.1, equal to: (a) 0.25% per annum, if the Leverage Ratio is less than 0.50:1 and the Interest Coverage Ratio is greater than 4.00:1; (b) 0.375% per annum, if the Leverage Ratio is less than 0.65:1 and the Interest Coverage Ratio is greater than 2.75:1 and the foregoing clause (a) does not apply; and (c) 0.50% per annum, if the Leverage Ratio is 0.65:1 or greater and the Interest Coverage Ratio is 2.75:1 or less. The Commitment Fee Rate shall only be increased or decreased from the then existing Commitment Fee Rate if each of the Interest Coverage Ratio and Leverage Ratio (as reflected in the most recently delivered Compliance Certificate) is contained within the ranges set forth in the same clause (a), (b) or (c) above. (iii) The following definition is hereby added to Section 1.1 of the Credit Agreement immediately preceding the definition of "Leverage Ratio": "Letter of Credit Rate" means, with respect to any Letter of Credit, a per annum rate based on reference to the Leverage Ratio and Interest Coverage Ratio, in each case as indicated in the Compliance Certificate most recently delivered pursuant to clause (d) of Section 7.1.1, equal to: (a) 0.875% per annum, if the Leverage Ratio is less than 0.50:1 and the Interest Coverage Ratio is greater than 4.00:1; (b) 1.375% per annum, if the Leverage Ratio is less than 0.60:1 and the Interest Coverage Ratio is greater than 3.00:1 and the foregoing clause (a) does not apply; (c) 1.75% per annum, if the Leverage Ratio is less than 0.65:1 and the Interest Coverage Ratio is greater than 2.75:1 and the foregoing clauses (a) and (b) do not apply; (d) 1.875% per annum, if the Leverage Ratio is less than 0.71:1 and the Interest Coverage Ratio is greater than 2.50:1 and the foregoing clauses (a), (b) and (c) do not apply; and (e) 2.375% per annum, if the Leverage Ratio is 0.71 or greater and the Interest Coverage Ratio is 2.50:1 or less. The Letter of Credit Rate shall only be increased or decreased from the then existing Letter of Credit Rate if each of the Interest Coverage Ratio and Leverage Ratio (as reflected in the most recently delivered Compliance Certificate) is contained within the ranges set forth in the same clause (a), (b), (c), (d) or (e) above. 2. Amendment of Section 3.3.1. Effective as of the date this Amendment is effective pursuant to Section 6 hereof, Section 3.3.1 of the Credit Agreement is hereby amended by deleting the phrase "1/2 of 1% per annum" appearing in the first sentence of such Section and inserting in its place the phrase "the applicable Commitment Fee Rate". 3. Amendment of Section 3.3.3. Effective as of the date this Amendment is effective pursuant to Section 6 hereof, Section 3.3.3 of the Credit Agreement is hereby amended by deleting the phrase "2.50% per annum" appearing in the first sentence of such Section and inserting in its place the phrase "the applicable Letter of Credit Rate". 4. Removal of Citicorp USA, Inc. as a Lender and as Co-Agent; Reduction of Revolving Loan Commitment Amount and Reallocation of Percentages. (a) On the date of the payment by the Borrower to Citicorp USA, Inc. ("Citicorp") pursuant to Section 6.B. hereof (such date, the "Payoff Date"), the Commitments of Citicorp shall terminate, Citicorp shall cease to be the "Co-Agent" and shall cease to be a "Lender", Citicorp shall relinquish its rights and be released from its obligations under the Credit Agreement (except for rights and obligations under those provisions of the Credit Agreement specified in Section 10.5 to survive termination thereof with respect to obligations (contingent or otherwise) existing, or related to or arising out of events or conditions occurring, while it was a Co-Agent or Lender), and Citicorp shall deliver to the Agent (for delivery to the Borrower), the Note then held by Citicorp marked "cancelled." Notwithstanding Section 4.8 of the Credit Agreement, Citicorp shall not be required to purchase participations from the other Lenders on account of the payment received by Citicorp from the Borrower in accordance with the Section 6.B. of this Agreement, and Citicorp shall be entitled to retain such payment. (b) In addition, on the Payoff Date pursuant to Section 2.2.1 of the Credit Agreement the Revolving Loan Commitment Amount shall be irrevocably reduced to $70,000,000, and the respective Percentages of the Lenders shall be adjusted as set forth opposite each Lender's signature hereto. 5. Representations and Warranties. To induce the Lenders and the Agent to enter into this Amendment, the Borrower hereby reaffirms, as of the date hereof, the representations and warranties contained in Article VI of the Credit Agreement (except to the extent such representations and warranties relate solely to an earlier date) and additionally represents and warrants as follows: (i) The Borrower and each of its Subsidiaries is a corporation validly organized and existing and in good standing under the laws of the State or jurisdiction of its incorporation, is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction where the failure so to qualify could have a Material Adverse Effect and has full power and authority and holds all requisite governmental licenses, permits and other approvals to enter into and perform its Obligations under this Amendment and each Loan Document to which it is a party and to own and hold under lease its property and to conduct its business substantially as currently conducted by it. (ii) The execution, delivery and performance by the Borrower of this Amendment are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not (A) contravene the Borrower's Organic Documents; (B) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting the Borrower; or (C) result in, or require the creation or imposition of, any Lien on any of the Borrower's properties. (iii) Except for those which have been received or made, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by the Borrower of this Amendment. (iv) This Amendment is the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, subject to the effect of (i) bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws affecting the rights and remedies of creditors generally and (ii) general principles of equity, whether applied by a court of law or equity. (v) Except as disclosed by the Borrower to the Agent and the Lenders pursuant to Section 6.7 of the Credit Agreement, no labor controversy, litigation, arbitration or governmental investigation or proceeding is pending or, to the knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries which could have a Material Adverse Effect, and no development has occurred in any labor controversy, litigation, arbitration or governmental investigation or proceeding disclosed pursuant to Section 6.7 of the Credit Agreement which could have a Material Adverse Effect. Other than any liability incident to such labor controversy, litigation, arbitration or proceedings, none of the Borrower or its Subsidiaries has any material contingent liabilities not disclosed in writing to the Agent. (vi) The Revolving Loan Commitment Amount, after giving effect to the reduction thereof on the Payoff Date pursuant to Section 4 of this Amendment, will not be less than (x) the then aggregate outstanding principal amount of all Revolving Loans, Swing Line Loans and Letter of Credit Outstandings or (y) the then existing Letter of Credit Commitment Amount. 6. Conditions to Effectiveness. The effectiveness of this Amendment (including without limitation the effectiveness of Sections 1 through 3 hereof) is conditioned upon (A) receipt by the Agent of all the following documents, each in form and substance satisfactory to the Agent: (i) A certificate of the Secretary or an Assistant Secretary of the Borrower as to resolutions of its Board of Directors (or an authorized committee thereof) then in full force and effect authorizing the execution, delivery and performance of this Amendment and the incumbency and signatures of those of its officers authorized to act with respect to this Amendment; (ii) The opinion of Darryl Marchand, Esq., counsel to the Borrower, in form and substance satisfactory to the Agent; (iii) A Consent and Acknowledgment, substantially in the form of Exhibit A hereto, duly executed by Worldwide Kitchens; (iv) Such other documents as the Agent shall have reasonably requested; and (B) Payment in full by the Borrower to Citicorp of all monetary Obligations then owing to Citicorp. Promptly upon the satisfaction of those conditions set forth in clauses (A) and (B) above, the Agent shall notify each Lender and the Borrower that such conditions have been satisfied and that this Amendment is effective as of the date of such notice. 7. Effect of Amendment. This Amendment shall be deemed to be an amendment to the Credit Agreement, and the Credit Agreement, as amended hereby, is hereby ratified, approved and confirmed in each and every respect. All references to the Credit Agreement in any other document, instrument, agreement or writing shall hereafter be deemed to refer to the Credit Agreement as amended hereby. 8. Governing Law; Etc. THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. All obligations of the Borrower and rights of the Agent and the Lenders expressed herein shall be in addition to and not in limitation of those provided by applicable law. Whenever possible each provision of this Amendment shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment. 9. Counterpart Execution. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Amendment by signing one or more counterparts. 10. Successors and Assigns. This Amendment shall be binding upon the Borrower, the Agent and each Lender and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Agent and each Lender and the successors and assigns of each. 11. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AMENDMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 12. WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AMENDMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AMENDMENT. [SIGNATURES FOLLOW] IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereto duly authorized as of the day and year first written above. TRIANGLE PACIFIC CORP. By Title PERCENTAGE THE BANK OF NOVA SCOTIA, as Agent and Lender 42.8571429% By Title BANK OF AMERICA NT&SA 28.5714286% By Title By Title BANQUE PARIBAS 14.2857143% By Title By Title COMERICA BANK - TEXAS 14.2857143% By Title For purposes of Section 4 of this Amendment: CITICORP USA, INC. By Title CONSENT AND ACKNOWLEDGMENT The undersigned, by its signature hereto, acknowledges and agrees to the terms and conditions of that certain Fifth Amendment to Credit Agreement, dated as of June 1, 1995 (the "Amendment"). The undersigned acknowledges and reaffirms its obligations owing under its Subsidiary Guaranty and agrees that such Guaranty shall remain in full force and effect. Although the undersigned has been informed by the Borrower of the matters set forth in the Amendment, and the undersigned has acknowledged and agreed to same, the undersigned understands that the Lenders have no duty to notify Subsidiary Guarantor or to seek Subsidiary Guarantor's acknowledgment or agreement, and nothing contained herein shall create such a duty as to any transactions hereafter. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement dated as of August 4, 1993 among Triangle Pacific Corp., as the Borrower, certain commercial lending institutions, as the Lenders, Citicorp USA, Inc., as the Co-Agent for the Lenders and The Bank of Nova Scotia, as the Agent for the Lenders. WORLDWIDE KITCHENS, INC. By: Name: Title: EX-27 3
5 6-MOS DEC-29-1995 JUN-30-1995 24,051,000 0 54,773,000 2,857,000 74,676,000 155,197,000 139,570,000 25,565,000 371,876,000 47,607,000 0 147,000 0 0 117,744,000 371,876,000 223,801,000 223,801,000 165,062,000 165,062,000 31,242,000 379,000 9,160,000 17,958,000 6,963,000 10,995,000 0 0 0 10,995,000 .75 .75
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