-----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, DWpXCeeqQ6ggtSDo+IUZurxFCQuTQ11AtIU8YVsHyDnMDW57nU4UMVR7MU+o10Pr ErubhNuLL3nTttkZ74Ym1A== 0000950134-97-000183.txt : 19970114 0000950134-97-000183.hdr.sgml : 19970114 ACCESSION NUMBER: 0000950134-97-000183 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORWOOD PROMOTIONAL PRODUCTS INC CENTRAL INDEX KEY: 0000902793 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 742553074 STATE OF INCORPORATION: TX FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21800 FILM NUMBER: 97504684 BUSINESS ADDRESS: STREET 1: 70 NE LOOP 410 SUITE 295 STREET 2: THE RENAISSANCE PLAZA CITY: SAN ANTONIO STATE: TX ZIP: 78216 BUSINESS PHONE: 2102277629 10-Q 1 FORM 10-Q FOR PERIOD END NOVEMBER 30, 1996 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 November 30, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 for the Transition Period From to --------- --------- Commission file number 0-21800 NORWOOD PROMOTIONAL PRODUCTS, INC. - -------------------------------------------------------------------------------- Inc. (Exact name of registrant as specified in its charter) TEXAS 74-2553074 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 70 N.E. LOOP 410, SUITE 295 SAN ANTONIO, TEXAS 78216 - -------------------------------------------------------------------------------- (Address of Principal executive offices) (Zip Code) (210) 341-9440 - -------------------------------------------------------------------------------- (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 periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 5,617,039 shares of Common Stock, no par value, as of January 8, 1997. 2 NORWOOD PROMOTIONAL PRODUCTS, INC. INDEX TO FORM 10-Q QUARTER ENDED NOVEMBER 30, 1996
PART I Financial Information PAGE NO. -------- Item 1. Interim Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Statements of Income 3 Condensed Consolidated Balance Sheets 4 Consolidated Statements of Cash Flows 5 Consolidated Statements of Shareholders' Equity 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II Other Information Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 Index to Exhibits 13
2 3 NORWOOD PROMOTIONAL PRODUCTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED ------------------------------- NOVEMBER 30, DECEMBER 2, 1996 1995 ------- ------- Sales $42,176 $33,368 Cost of sales 30,021 22,745 ------- ------- Gross profit 12,155 10,623 Operating expenses 8,941 7,196 ------- ------- Operating income 3,214 3,427 Interest expense 814 1,160 ------- ------- Income before income taxes 2,400 2,267 Provision for income taxes 960 911 ------- ------- Net income $ 1,440 $ 1,356 ======= ======= Net income per common share: Primary Fully Diluted $ 0.25 $ 0.37 0.25 0.37 Weighted average number of common shares outstanding: Primary 5,746 3,691 Fully Diluted 5,746 3,691
See accompanying notes 3 4 NORWOOD PROMOTIONAL PRODUCTS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AMOUNTS)
NOVEMBER 30, AUGUST 31, 1996 1996 ------------ ---------- ASSETS Current Assets: Cash and cash equivalents $ 204 $ 1,861 Accounts receivable 20,335 21,621 Other receivables 707 724 Inventories 31,373 31,823 Prepaid expenses and other current assets 2,207 2,231 --------- --------- Total current assets 54,826 58,260 Property, plant and equipment, net 20,093 19,585 Goodwill 34,577 35,266 Deferred income taxes 751 751 Other assets 7,636 7,514 --------- --------- Total assets $ 117,883 $ 121,376 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Trade accounts payable $ 8,147 $ 10,269 Accrued liabilities 5,513 5,920 Income taxes payable 809 129 Current maturities of long-term debt and capital lease obligations 7,172 6,694 --------- --------- Total current liabilities 21,641 23,012 Long-term debt and capital lease obligations, less current maturities 37,416 40,984 Shareholders' equity: Common stock, no par value; 20,000,000 shares authorized; 5,616,765 and 5,615,791 shares issued and 5,615,335 and 5,614,361 shares outstanding at November 30, 1996 and August 31, 1996, respectively 51,571 51,568 Additional paid-in capital 369 369 Less cost of treasury stock, 1,430 shares at November 30, 1996 and August 31, 1996, respectively (8) (8) Retained earnings 6,905 5,465 --------- --------- 58,837 57,394 Less receivables for purchase of common stock (11) (14) --------- --------- Total shareholders' equity 58,826 57,380 --------- --------- Total liabilities and shareholders' equity $ 117,883 $ 121,376 ========= =========
See accompanying notes 4 5 NORWOOD PROMOTIONAL PRODUCTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS)
THREE MONTHS ENDED ------------------------------------ NOVEMBER 30, DECEMBER 2, 1996 1995 ------------ ----------- OPERATING ACTIVITIES Net income $ 1,440 $ 1,356 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,048 598 Amortization 938 742 (Gain) loss on sale of property & equipment -- (18) Changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable, net 1,286 763 Inventory 450 670 Prepaid expenses and other (378) (567) Other receivables 17 (17) Accounts payable (2,122) (1,574) Accrued liabilities (407) (935) Income taxes payable 680 (85) -------- -------- Net cash provided by operating activities 2,952 933 INVESTING ACTIVITIES Business acquisitions, net of cash -- (3,200) Purchase of property, plant & equipment (1,527) (831) Proceeds from retirement of property, plant & equipment -- 26 -------- -------- Net cash used in investing activities (1,527) (4,005) FINANCING ACTIVITIES Proceeds from long-term debt 11,040 10,050 Payments on long-term debt (14,129) (8,993) Debt refinancing fees -- (11) Payments on common stock and shareholder notes 7 34 -------- -------- Net cash provided by financing activities (3,082) 1,080 -------- -------- Net change in cash (1,657) (1,992) Cash at beginning of period 1,861 2,174 -------- -------- Cash at end of period $ 204 $ 182 ======== ========
See accompanying notes 5 6 NORWOOD PROMOTIONAL PRODUCTS, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED, IN THOUSANDS)
RECEIVABLES FOR COMMON STOCK ADDITIONAL PURCHASES PURCHASES TOTAL ------------ PAID-IN RETAINED OF COMMON OF TREASURY SHAREHOLDERS' SHARES AMOUNT CAPITAL EARNINGS STOCK STOCK EQUITY ------ ------ ---------- --------- --------------- ----------- ------------- Balance at August 31, 1996 5,616 $51,568 $ 369 $ 5,465 $ (14) $ (8) $ 57,380 Purchases of Common Stock 1 3 3 Payment on shareholder notes 3 3 Net Income 1,440 1,440 ----- ------- ------ ------- ------ ----- -------- Balance at November 30, 1996 5,617 $51,571 $ 369 $ 6,905 $ (11) $ (8) $ 58,826 ===== ======= ====== ======= ====== ===== ========
See accompanying notes 6 7 NORWOOD PROMOTIONAL PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED NOVEMBER 30, 1996 AND DECEMBER 2, 1995 1. SIGNIFICANT ACCOUNTS POLICIES The consolidated financial statements include the accounts of Air-Tex Corporation ("Air-Tex"), ArtMold Products Corporation ("ArtMold"), Barlow Promotional Products, Inc. ("Barlow"), Key Industries, Inc. ("Key"), Radio Cap Company, Inc. ("RCC") and Norcorp, Inc. and have been presented in accordance with the reporting requirements for interim financial statements. Such requirements do not include all of the disclosures normally required by generally accepted accounting principles or those normally made in an Annual Report of the registrant on Form 10-K. The information furnished herein reflects all adjustments which, in the opinion of management, are of a normal recurring nature and necessary for a fair statement of the results of interim periods. Such results for interim periods are not necessarily indicative of the results to be expected for a full year, principally due to seasonal fluctuations in product line revenue. 2. INVENTORIES Inventories at November 30, 1996 and August 31, 1996 consist of (in thousands): NOVEMBER 30, AUGUST 31, 1996 1996 ------------ ---------- Raw materials $10,163 $ 9,132 Work in process 1,002 1,099 Finished goods 20,208 21,592 ------- ------- Total $31,373 $31,823 ======= ======= 3. ACQUISITIONS In late November 1996, the Company signed a nonbinding letter of intent to acquire Roubill Group, a German promotional products company. The transaction, which is expected to close in the first quarter of calendar 1997, is subject to the completion of due diligence, the negotiation of a definitive agreement and other customary closing conditions. There can be no assurance that this acquisition will be completed. 7 8 Norwood Promotional Products, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations General The following is Management's discussion and analysis of the results of operations and financial condition of Norwood Promotional Products, Inc. and its subsidiaries ("the Company") during the periods included in the accompanying consolidated financial statements. The discussion below relates to material changes in the results of operations for the three months ended November 30, 1996 as compared to the same period ended December 2, 1995, and to material changes in the financial condition of the Company occurring since the prior fiscal year end of August 31,1996. The Company's results of operations for the periods discussed below were significantly affected by the acquisitions of Ocean Specialty Manufacturing Corporation (acquired in November 1995), TEE-OFF Enterprises, Inc. (acquired in January 1996) and Alpha Products, Inc. (acquired in April 1996) (collectively referred to as the "fiscal 1996 acquisitions"). Reference is made to Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the year ended August 31, 1996 for further details regarding the significant factors affecting the results of operations and financial condition of the Company. THREE MONTHS ENDED NOVEMBER 30, 1996 COMPARED WITH THREE MONTHS ENDED DECEMBER 2, 1995 Sales for the first quarter of fiscal 1997 increased $8.8 million, or 26.4%, to $42.2 million from $33.4 million in the first quarter of fiscal 1996. Of this increase, $1.7 million was attributable to increased sales of the Company's core product lines, and $7.1 million was due to the fiscal 1996 acquisitions. Gross profit for the first quarter of fiscal 1997 increased $1.6 million, or 14.4%, to $12.2 million from $10.6 million in the first quarter of fiscal 1996. This increase was primarily attributable to the fiscal 1996 acquisitions. Excluding the fiscal 1996 acquisitions, gross profit as a percentage of sales increased from 31.8% to 32.4%. Including the fiscal 1996 acquisitions, gross profit as a percentage of sales decreased from 31.8% to 28.8%. This decrease was attributable to the fiscal 1996 acquisitions which operated with lower gross profit percentages than the Company's pre-existing businesses. Operating expenses for the first quarter of fiscal 1997 increased $1.7 million, or 24.2%, to $8.9 million from $7.2 million in the first quarter of fiscal 1996. This increase was primarily attributable to the fiscal 1996 acquisitions. Operating expenses as a percentage of sales decreased from 21.6% to 21.2%. This decrease is primarily a result of the restructuring effort undertaken in the fourth quarter of fiscal 1996 and to other cost saving initiatives undertaken by the subsidiaries. Operating income for the first quarter of fiscal 1997 decreased $213,000, or 6.2%, to $3.2 million from $3.4 million in the first quarter of fiscal 1996. Operating income as a percentage of sales decreased from 10.3% to 7.6%. This decrease was mainly attributable to the fiscal 1996 acquisitions lower gross profit percentages and to lower than expected contribution from the Artmold, California Line(TM), and domestic bag product lines. Interest expense was $814,000 during the first quarter of fiscal 1997 compared to $1.2 million in the first quarter of fiscal 1996. The decrease was attributable to lower effective interest rates and the use of the proceeds received from the December 1995 stock offering to pay down debt, offset by borrowings used to finance the fiscal 1996 acquisitions. 8 9 The Company's effective tax rate was 40.0% during the first quarter of fiscal 1997 compared with 40.2% in the first quarter of fiscal 1996. As a result of the above, first quarter of fiscal 1997 net income increased $84,000, or 6.2%, to $1.44 million from $1.36 million in the first quarter of fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES The Company has financed its business activities primarily with borrowings under the bank credit facility (the "Bank Credit Facility"), notes payable to former owners of acquired businesses, the sale of Common Stock and cash provided from operations. The Bank Credit Facility provides for aggregate borrowings of up to $60.0 million, comprised of a $20.0 million revolving credit facility ($9.6 million outstanding at November 30,1996), a $21.5 million term loan facility ($6.7 million outstanding at November 30, 1996) and an $18.5 million acquisition loan facility ($14.8 million outstanding at November 30, 1996). The revolving loan facility is available to finance acquisitions and for working capital and general corporate purposes. The acquisition loan facility is available to finance acquisitions. Pursuant to the terms of the Bank Credit Facility, the Company is required to maintain certain financial ratios and minimum tangible net worth and is subject to a prohibition on dividends, and limitations on additional indebtedness, liens, investments, issuance of stock of subsidiaries, changes in management and ownership, mergers and acquisitions, sale/leaseback transactions and sales of assets. An event of default occurs under the Bank Credit Facility if any person becomes the owner of more than 35.0% of the outstanding capital stock of the Company, or if within a 12-month period, a majority of the Company's Board of Directors shall be comprised of new directors. The Company is required to make quarterly amortization payments on certain amounts outstanding under the Bank Credit Facility. The final maturity of the Bank Credit Facility is July 31, 2000. Amounts outstanding under the Bank Credit Facility bear interest at a rate equal to either the agent bank's prime rate or the London Interbank Offered Rate, plus an interest rate spread which varies based on the ratio of the Company's Consolidated Senior Funded Debt to Earnings Before Interest Taxes and Depreciation (as such terms are defined in the Bank Credit Facility). Indebtedness under the Bank Credit Facility is secured by a first lien priority security interest in substantially all the assets of the Company, including a pledge of the stock of each of the Company's subsidiaries. Additionally, any entities and assets acquired with financing under the Bank Credit Facility will serve as security. Borrowings under the Bank Credit Facility are jointly and severally guaranteed by all subsidiaries acquired or created by the Company. On December 20, 1995, the Company completed the sale of 2,015,481 shares of Common Stock in a public offering. The net proceeds of this offering of approximately $31.2 million were used to prepay indebtedness under the Bank Credit Facility. The Company may, subject to certain conditions, reborrow such amounts from time to time for general corporate purposes, including financing future acquisitions. WORKING CAPITAL AND CAPITAL EXPENDITURES Net cash provided by operating activities was $2.9 million and $933,000 for the first quarter of 1997 and 1996, respectively. Capital expenditures were approximately $1.5 million and $831,000 for the first quarter of 1997 and 1996, respectively. 9 10 The Company's principal capital needs will be to finance any future acquisitions and ongoing capital expenditures. Although the Company currently believes that cash flow from operations and available borrowings under the Bank Credit Facility will be sufficient to meet the Company's working capital and capital expenditure requirements and future debt service obligations for at least the next 18 months, there can be no assurance that this will be the case. The Company believes its fiscal 1997 capital expenditure requirements will be approximately $4.5 million, but there can be no assurance that the Company will actually spend such amounts. The Company anticipates that such capital expenditures will be required primarily to acquire additional processing equipment, management information systems, furniture and fixtures and leasehold improvements. FORWARD LOOKING STATEMENTS This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, that are not historical facts. Such statements may include, but not be limited to, projections of revenues, income, capital expenditures, plans for future operations, financing needs or plans, and plans relating to products or services of the Company, as well as assumptions relating to the foregoing. These statements involve management assumptions and are subject to risks and uncertainties, including those set forth below, along with factors set forth in the Company's Annual Report on Form 10-K in "Business--Risk Factors". The following factors could affect the Company's results, causing such results to differ materially from those in any forward looking statement contained in this report: (i) the failure of the Company to maintain or control its internal growth or that the Company will be able to manage its expanding operations effectively; (ii) a change in risks inherent in the Company's foreign sourcing of supplies; (iii) the loss of services of one or more key management personnel; (iv) a change in the risks inherent in the Company's leverage position; (v) the loss of the Company's single supplier of Koozie(R) insulation material; and (vi) an increase in competition. 10 11 NORWOOD PROMOTIONAL PRODUCTS, INC. FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 30, 1996 PART II Item 6. Exhibits and Reports on Form 8-K 6 (a) Exhibits: See Index to Exhibits. 6 (b) Reports on Form 8-K: The following is the date and description of the events reported on Forms 8-K filed during the first quarter of 1997:
Date of Earliest Event Reported on Form 8-K Description ---------------------- ----------- None
11 12 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Norwood Promotional Products, Inc. ---------------------------------- Registrant Date: January 8, 1997 /s/ J. Max Waits ---------------------------------- J. Max Waits Secretary, Treasurer and Chief Financial Officer 12 13 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.24(c) -- First Amendment to Amended and Restated Credit Agreement (schedules have been omitted) 10.24(d) -- Second Amendment to Amended and Restated Credit Agreement 11.1 -- Computation of per share earnings. 27.0 -- Financial data schedule.
13 EX-10.24(C) 2 AMENDMENT NO.1 & RE-STATED CREDIT AGREEMENT 1 EXHIBIT 10.24(c) FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT is made and entered into as of the 10th day of October, 1996, among NORWOOD PROMOTIONAL PRODUCTS, INC., a Texas corporation ("Norwood"), and THE FROST NATIONAL BANK ("Frost Bank"), individually, as the Issuing Bank and as the Agent, and each financial institution that is a signatory hereto or becomes a party hereto as provided in Section 10.7 (individually, a "Bank" and collectively, the "Banks"). RECITALS A. Norwood, as borrower, Frost Bank, individually, as the Issuing Bank and as the Agent, and the financial institutions who are signatories thereto, entered into the Credit Agreement dated as of June 27, 1994, as amended by the First Amendment to Credit Agreement dated as of June 7, 1995 (as amended, the "Original Credit Agreement"). B. Norwood, as borrower, Frost Bank, individually, as the Issuing Bank and as the Agent, and the financial institutions who are signatories thereto, entered into the Amended and Restated Credit Agreement dated as of July 26, 1995 (as amended, modified, supplemented and restated from time to time, the "Credit Agreement"). C. On June 9, 1995, Air-Tex Corporation, a Delaware corporation ("Air-Tex"), acquired the assets of Designer Plastics, Inc., an Oregon corporation. D. On July 28, 1995, Barlow Promotional Products, Inc., a Delaware corporation ("Barlow"), acquired the assets of PAJ, Inc., a Nevada corporation (formerly known as "BTS Group"). E. On November 17, 1995, Key Industries, Inc., a Delaware corporation ("Key"), acquired the assets of Ocean Specialty Manufacturing Corporation, a California corporation. F. On January 22, 1996, ArtMold Products Corporation, a Delaware corporation ("ArtMold"), acquired the assets of Tee Off Enterprises, Inc., a Wisconsin corporation. G. On April 1, 1996, Radio Cap Company, Inc., a Delaware corporation ("Radio Cap"), acquired the assets of Alpha Products, Inc., a Georgia corporation. H. Norwood, the ultimate parent company of each of Air-Tex, Barlow, Key, ArtMold and Radio Cap, and the Banks desire to further amend the Credit Agreement to reflect the security interest of the Banks in the assets acquired in these acquisitions. AGREEMENTS NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and for other good, fair and valuable considerations, the receipt and sufficiency of which 2 are hereby acknowledged, the parties hereto agree that the terms and provisions of the Credit Agreement are amended and restated as follows: SECTION 1. Defined Terms and Related Matters. (a) Unless otherwise defined herein, the capitalized terms used herein which are defined in the Credit Agreement shall have the meanings specified therein. (b) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. SECTION 2. Amendment to Schedules. (a) Schedule 4.1 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 4.1 attached hereto and made a part hereof. (b) Schedule 4.3 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 4.3 attached hereto and made a part hereof. (c) Schedule 4.9 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 4.9 attached hereto and made a part hereof. (d) Schedule 4.10 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 4.10 attached hereto and made a part hereof. (e) Schedule 4.14 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 4.14 attached hereto and made a part hereof. (f) Schedule 4.15 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 4.15 attached hereto and made a part hereof. (g) Schedule 4.17 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 4.17 attached hereto and made a part hereof. (h) Schedule 4.18 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 4.18 attached hereto and made a part hereof. (i) Schedule 4.20 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 4.20 attached hereto and made a part hereof. (j) Schedule 4.21 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 4.21 attached hereto and made a part hereof. (k) Schedule 5.15 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 5.15 attached hereto and made a part hereof. (l) Schedule 6.4 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 6.4 attached hereto and made a part hereof. -2- 3 (m) Schedule 6.5 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 6.5 attached hereto and made a part hereof. (n) Schedule 6.6 of the Credit Agreement is hereby deleted in its entirety and replaced by Schedule 6.6 attached hereto and made a part hereof. (o) Other than as specifically set out herein, the terms, conditions and provisions of the Credit Agreement are and remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories as of the day and year first above written. NORWOOD: NORWOOD PROMOTIONAL PRODUCTS, INC. By: /s/ J. Max Waits ----------------------------------- J. Max Waits, Secretary, Treasurer and Chief Financial Officer BANKS: THE FROST NATIONAL BANK, Individually, as the Agent and the Issuing Bank By: /s/ Victor J. Harris ----------------------------------- Victor J. Harris, Vice President THE BOATMEN'S NATIONAL BANK OF ST. LOUIS By: /s/ Juan A. Cazorla ----------------------------------- Juan A. Cazorla, Assistant Vice President -3- 4 BANQUE PARIBAS By: /s/ Deanna C. Walker ----------------------------------- Deanna C. Walker, Assistant Vice President By: /s/ Kenneth E. Moore, Jr. ----------------------------------- Kenneth E. Moore, Jr., Vice President SUBSIDIARIES: NORCORP, INC. By: /s/ J. Max Waits ----------------------------------- J. Max Waits, Secretary, Treasurer and Chief Financial Officer RADIO CAP COMPANY, INC. By: /s/ J. Max Waits ----------------------------------- J. Max Waits, Secretary BARLOW PROMOTIONAL PRODUCTS, INC. By: /s/ J. Max Waits ----------------------------------- J. Max Waits, Secretary KEY INDUSTRIES, INC. By: /s/ J. Max Waits ----------------------------------- J. Max Waits, Secretary -4- 5 ARTMOLD PRODUCTS CORPORATION By: /s/ J. Max Waits ----------------------------------- J. Max Waits, Secretary AIR-TEX CORPORATION By: /s/ J. Max Waits ----------------------------------- J. Max Waits, Secretary -5- EX-10.24(D) 3 AMENDMENT NO.2 & RESTATED CREDIT AGREEMENT 1 EXHIBIT 10.24(d) SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT ("Amendment") is made and entered into as of the 11th day of October, 1996, among NORWOOD PROMOTIONAL PRODUCTS, INC., a Texas corporation ("Norwood"), and THE FROST NATIONAL BANK ("Frost Bank"), individually, as the Issuing Bank and as the Agent, and each financial institution that is a signatory hereto or becomes a party hereto as provided in Section 10.7 (individually, a "Bank" and collectively, the "Banks"). RECITALS A. Norwood, the Agent, the Issuing Bank and the other Banks have heretofore entered into the Amended and Restated Credit Agreement dated as of July 26, 1995 (as amended, modified, restated and supplemented from time to time, the "Credit Agreement"). B. Norwood and the Banks desire to amend the Credit Agreement to extend the Acquisition Availability Period and the Term Loan Availability Period as provided herein. AGREEMENTS NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and for other good, fair and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the terms and provisions of the Original Credit Agreement are amended and restated as follows: 1. Defined Terms and Related Matters. (a) Unless otherwise defined herein, the capitalized terms used herein which are defined in the Credit Agreement shall have the meanings specified therein. (b) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. 2. Amendments. The Credit Agreement shall be amended as follows: (a) The definition of Term Commitment Termination Date in Annex B attached to the Credit Agreement is hereby amended to read in its entirety as follows: "Term Commitment Termination Date" means the earlier of (i) December 31, 1997 and (ii) the date upon which the Term Commitments of all Banks have been terminated pursuant to the terms of this Agreement. (b) The definition of Acquisition Commitment Termination Date in Annex B attached to the Credit Agreement is hereby amended to read in its entirety as follows: 2 "Acquisition Commitment Termination Date" means the earlier of (i) December 31, 1997 and (ii) the date upon which the Acquisition Commitments of all Banks have been terminated pursuant to the terms of this Agreement. 3. In order to induce the Agent and the Banks to enter into this Amendment, Norwood and each Subsidiary of Norwood hereby represent and warrant to the Agent and the Banks that, as of the date of this Amendment, (a) the representations and warranties set forth in the Credit Agreement and each other Loan Document to which it is a party are true and correct as if made on and as of the date hereof (other than those representations and warranties expressly limited by their terms to a specific date), (b) no Default or Event of Default has occurred and is continuing, except to the extent that such Default or Event of Default has been waived in Waiver Letter signed by the Banks, and (c) no event has occurred since the date of the most recent financial statements delivered pursuant to Section 5.1 of the Credit Agreement that has caused a Material Adverse Effect. 4. Norwood hereby acknowledges and agrees that no facts, events, status or conditions presently exist which, either now or with the passage of time or the giving of notice or both, presently constitute or will constitute a basis for any claim or cause of action against any of the Banks, or any defense to the payment of any of the indebtedness evidenced or to be evidenced by any of the Loan Documents. 5. Each Subsidiary of Norwood covenants and agrees that, as to the Subsidiary Guaranty Agreement executed and delivered by such Subsidiary in favor of the Banks as part of the Security Documents, (a) such Subsidiary Guaranty Agreement is an unconditional guarantee of payment and performance and not of collection, (b) such Subsidiary Guaranty Agreement represents the primary, absolute and unconditional obligation of such Subsidiary, and (c) such Subsidiary Guaranty Agreement is a continuing guarantee and shall remain in full force and effect until the termination of the obligations of the Banks to make Loans or issue Letters of Credit and the indefeasible payment in full of the Obligations (as defined in each such Subsidiary Guaranty Agreement). 6. As to each Security Document executed in favor of the Banks, Norwood and each Subsidiary of Norwood hereby ratify and confirm the liens and security interests of the Banks in and to all collateral covered by each such Security Document to which it is a party as security for the prompt and full payment and performance of the obligations secured by each such Security Document. In furtherance of the foregoing, all liens and security interests of each such Security Document (which are hereby acknowledged to be valid and subsisting) are hereby carried forward, continued, extended, modified and renewed to secure the prompt and full payment and performance of the obligations secured by each such Security Document. 7. As to each Security Document executed in favor of Norwood or Norcorp and collaterally assigned, ultimately, in favor of the Banks, Norwood and each Subsidiary of Norwood hereby ratify and confirm the liens and security interests of the Banks, as collateral assignees, in and to all collateral covered by each such Security Document to which it is a party as security for the prompt and full payment and performance of the obligations secured by each such Security Document. In furtherance of the foregoing, all liens and security interests of each such Security Document (which are hereby acknowledged to be valid and subsisting) are hereby carried forward, continued, extended, modified and renewed to secure the prompt and full payment and performance of the obligations secured by each such Security Document. -2- 3 8. Each Loan Document is hereby amended and modified to the extent necessary to give full force and effect to the terms of this Amendment, and each such Loan Document shall hereafter be construed and interpreted after giving full force and effect to the terms of this Amendment. As amended, modified and supplemented pursuant to this Amendment, Norwood and each Subsidiary of Norwood hereby ratify, confirm and restate each Loan Document to which it is a party and agrees that each such Loan Document shall continue in full force and effect. Each of the Loan Documents now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement, as amended hereby, or as further evidence of or security for or in connection with the Credit Agreement, as amended hereby, is hereby amended to the extent necessary so that any reference in any such documents, instruments or agreements to the Credit Agreement shall be a reference to the Credit Agreement, as amended hereby. 9. In the event that any one or more of the provisions contained in this Amendment shall be determined invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision or provisions in every other respect and the remaining provisions of this Amendment shall not be impaired in any way. 10. When required or implied by the context used, defined terms used herein shall include the plural as well as the singular, and vice versa. 11. This Amendment shall be governed by and construed in accordance with the internal laws of the State of Texas and applicable federal laws of the United States of America. This Amendment has been entered into in Bexar County, Texas and shall be performable for all purposes in Bexar County, Texas. The courts within the State of Texas shall have jurisdiction over any and all disputes arising under or pertaining to this Amendment; and any such dispute shall be heard in the county or judicial district of the principal place of business of The Frost National Bank. 12. This Amendment shall be binding upon and inure to the benefit of all parties hereto and their respective successors and assigns; provided, however, that neither Norwood nor any of its Subsidiaries nor any of their respective successors or assigns may, without the prior written consent of all of the Banks, assign any rights, powers, duties or obligations hereunder. 13. This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. 14. This Amendment constitutes a Loan Document. 15. Upon execution of this Agreement by the Banks, Norwood and each of its Subsidiaries shall deliver to the Agent, in form and substance satisfactory to the Agent, the certificates and documents described on Annex A. 16. Upon execution of this Agreement by the Banks, Norwood shall pay the Agent, for the ratable account of the Banks, a non-refundable amendment fee equal to $11,516.69. [signatures on next page] -3- 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories as of the day and year first above written. NORWOOD: NORWOOD PROMOTIONAL PRODUCTS, INC. By: /s/ J. Max Waits --------------------------------- J. Max Waits, Secretary, Treasurer and Chief Financial Officer BANKS: THE FROST NATIONAL BANK, Individually, as the Agent and the Issuing Bank By: /s/ Victor J. Harris --------------------------------- Victor J. Harris, Vice President THE BOATMEN'S NATIONAL BANK OF ST. LOUIS By: /s/ Juan A. Cazorla --------------------------------- Juan A. Cazorla, Vice President BANQUE PARIBAS By: /s/ Deanna C. Walker --------------------------------- Deanna C. Walker, Assistant Vice President By: /s/ Kenneth E. Moore, Jr. --------------------------------- Kenneth E. Moore, Jr., Vice President [signatures continued on next page] -4- 5 SUBSIDIARIES: NORCORP, INC. By: /s/ J. Max Waits --------------------------------- J. Max Waits, Secretary, Treasurer and Chief Financial Officer RADIO CAP COMPANY, INC. By: /s/ J. Max Waits --------------------------------- J. Max Waits, Secretary BARLOW PROMOTIONAL PRODUCTS, INC. By: /s/ J. Max Waits --------------------------------- J. Max Waits, Secretary KEY INDUSTRIES, INC. By: /s/ J. Max Waits --------------------------------- J. Max Waits, Secretary ARTMOLD PRODUCTS CORPORATION By: /s/ J. Max Waits --------------------------------- J. Max Waits, Secretary AIR-TEX CORPORATION By: /s/ J. Max Waits --------------------------------- J. Max Waits, Secretary -5- 6 ANNEX A 1. Norwood and each of its Subsidiaries shall have provided to the Agent a certificate signed by the secretary of such corporation, which secretary's office and signature shall be confirmed by another officer of such corporation, dated as of the effective date of this Amendment attaching thereto or containing therein, and certifying as to the following: (i) corporate resolutions, as in effect and neither revoked nor rescinded, duly adopted by the board of directors of such corporation authorizing the execution, delivery and performance of this Amendment and all other documents, instruments and agreements in connection therewith (the "Amendment Documents") to which it is or will be a party, and the transactions contemplated thereby; and (ii) names, incumbency and specimen signatures of the officers of such corporation authorized to execute and deliver the Amendment Documents to which such corporation is a party. 2. All other documents requested by the Agent in connection with this Amendment. -6- EX-11.1 4 COMPUTATION OF PER SHARE 1 EXHIBIT 11.1 COMPUTATION OF EARNINGS PER SHARE (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED ----------------------------- NOVEMBER 30, DECEMBER 2, 1996 1995 ------------ ----------- PRIMARY: Weighted average common shares outstanding 5,615 3,540 Weighted average common equivalent shares outstanding 131 151 ------ ------ Total 5,746 3,691 ====== ====== Net Income $1,440 $1,356 Per share amount $ 0.25 $ 0.37 FULLY DILUTED: Weighted average common shares outstanding 5,615 3,540 Weighted average common equivalent shares outstanding 131 151 ------ ------ Total 5,746 3,691 ====== ====== Net Income $1,440 $1,356 Per share amount $ 0.25 $ 0.37
14 EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF NORWOOD PROMOTIONAL PRODUCTS, INC. FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q. 1,000 3-MOS AUG-30-1997 SEP-01-1996 NOV-30-1996 204 0 21,070 735 31,373 54,826 31,116 11,023 117,883 21,641 0 0 0 51,571 7,255 117,883 42,176 42,176 30,021 30,021 8,941 0 814 2,400 960 1,440 0 0 0 1,440 0.25 0.25
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