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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                   FORM 10-K
 
      FOR ANNUAL AND TRANSACTION REPORTS PURSUANT TO SECTIONS 13 OR 15(D)
                   OF THE SECURITIES AND EXCHANGE ACT OF 1934
                            ------------------------
 
    /X/  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                     EXCHANGE ACT OF 1934
 
For the fiscal year ended September 30, 1998
 
    / /  TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
 
For the transition period from           to
 
                         Commission File Number 0-21548
                            ------------------------
 
                           SYNTHETIC INDUSTRIES L.P.
 
             (Exact name of Registrant as specified in its charter)
 
<TABLE>
<S>                                              <C>
                   DELAWARE                                        13-3397585
         (State or other jurisdiction                           (I.R.S. Employer
       of incorporation or organization)                       Identification No.)
 
   309 LAFAYETTE ROAD, CHICKAMAUGA, GEORGIA                           30707
   (Address of principal executive offices)                        (Zip Code)
 
                                         (706) 375-3121
                      (Registrant's telephone number, including area code)
</TABLE>
 
          Securities registered pursuant to Section 12(b) of the Act:
 
<TABLE>
<S>                                              <C>
                TITLE OF CLASS                      NAME OF EACH EXCHANGE ON WHICH REGISTERED
                     None
</TABLE>
 
          Securities registered pursuant to Section 12(g) of the Act:
 
                     UNITS OF LIMITED PARTNERSHIP INTEREST
                                (Title of Class)
 
    Indicate by check mark whether Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/  No / /
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
 
    The units are not publicly traded. Hence, the aggregate market value is not
determinable.
 
    The number of units outstanding as of December 28, 1998 was 800.
                            ------------------------
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
    Portions of the annual report on Form 10-K for the fiscal year ended
September 30, 1998 of Synthetic Industries, Inc., a Delaware corporation, are
incorporated by reference herein.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                                     PART I
 
ITEM 1. BUSINESS
 
GENERAL
 
    Synthetic Industries L.P. (the "Partnership") is a limited partnership
organized under the laws of the state of Delaware. In December 1986, the
Partnership acquired all of the issued and outstanding shares (the "Shares") of
the capital stock of Synthetic Industries, Inc., a Delaware corporation (the
"Company"). The Partnership currently owns approximately 66% of the Company's
common stock, par value $1.00 per share (the "Common Stock"). The Company
manufactures and markets a wide range of polypropylene-based fabric and fiber
products designed for industrial applications. The information set forth under
the heading "Business" in the Form 10-K of the Company for the fiscal year ended
September 30, 1998 (the "Form 10-K") is incorporated herein by reference.
 
    Since its organization in 1986, the Partnership has conducted no business
except (i) engaging in the transactions described in a confidential offering
memorandum dated January 16, 1987, as supplemented, relating to the offering and
sale of units of limited partnership interest in the Partnership (the "Units");
and (ii) owning and voting the Shares. The Partnership's principal executive
offices are located at 309 LaFayette Road, Chickamauga, Georgia 30707, and its
telephone number is (706) 375-3121.
 
    The sole general partner of the Partnership is SI Management L.P., a
Delaware limited partnership ("Management L.P." or the "General Partner"). The
sole general partner of Management L.P. is Synthetic Management G.P. ("Synthetic
G.P."). Synthetic G.P. is a Georgia general partnership whose partners are
controlled by certain members of the Company's senior management. See "Directors
and Executive Officers--Partners of Synthetic G.P." Since their respective dates
of the formation, neither Synthetic G.P. nor Management L.P. has engaged in any
business, other than Synthetic G.P. acting as the general partner of Management
L.P. and Management L.P. acting as the general partner of Synthetic L.P.
 
ITEM 2. PROPERTIES
 
    The Partnership does not own or lease any physical properties.
 
    The information set forth under the heading "Properties" in the Form 10-K is
incorporated herein by reference.
 
ITEM 3. CLAIMS AND LEGAL PROCEEDINGS
 
    In connection with the proposed dissolution of the Partnership, pursuant to
an Agreement and Plan of Withdrawal and Dissolution (the "Plan"), the Company,
its directors and certain other of the Company's officers who are affiliated
with the General Partner have been named in two putative class and derivative
action lawsuits filed by certain limited partners of the Partnership. In the
first action, filed on February 11, 1997 in the Delaware Court of Chancery and
thereafter amended, the plaintiffs have alleged, among other things, breach of
contract with respect to the Partnership Agreement which governs the
Partnership, breach of the defendants' fiduciary duty to the limited partners
and the Company, that the Plan was unlawfully coercive, that the General Partner
has allegedly failed to satisfy certain conditions precedent to the right of
limited partners to amend the partnership agreement and that certain amendments
necessary to implement the Plan violate the terms of the partnership agreement.
The plaintiffs sought, among other equitable and legal remedies, removal of the
General Partner, dissolution of the Partnership, appointment of a liquidating
trustee, to enjoin the implementation of the Plan and compensatory damages in an
undetermined amount. On October 23, 1997, the Court preliminarily enjoined the
implementation of the Plan, although the Plan was subsequently approved by
limited partners on November 7, 1997. On November 7, 1997, the Delaware Supreme
Court accepted the defendants' petition for an expedited appeal of this
injunction, and briefing and oral argument on the appeal was completed as of
January 6, 1998. On March 19, 1998, the Delaware Supreme Court issued an opinion
affirming the Court of Chancery's grant of
 
                                       2
<PAGE>
a preliminary injunction and remanded the case for further proceedings. On April
27, 1998, the Court of Chancery granted the motion of certain pro-Plan
intervenors to intervene in the action, but denied their motion to disqualify
plaintiffs' counsel. On May 14, 1998, the General Partner withdrew the Plan.
After the withdrawal of the Plan, plaintiffs, on June 3, 1998, filed a
Consolidated Third Amended and Supplemental Class and Derivative Complaint (the
"Third Amended Complaint"). The Third Amended Complaint, among other things,
eliminated certain requests for relief related to the Plan and added certain
allegations related to the Company's Employee Stock Purchase Plan and certain
options granted to certain directors and officers of the Company. In addition to
the relief sought in prior complaints, the Third Amended Complaint seeks
declaratory relief with respect to certain provisions of the Partnership
Agreement, the invalidation of the Company's Employee Stock Purchase Plan, the
invalidation of certain options granted to the Company's directors and officers,
and the invalidation of certain amendments to the Company's certificate of
incorporation and bylaws relating to voting by consent and the calling of
special meetings. On July 20, 1998, defendants filed a motion to dismiss the
Third Amended Complaint. The defendants have denied any allegation of
wrongdoing.
 
    The second lawsuit was filed in the U.S. District Court of the Northern
District of California on May 1, 1997, and thereafter amended. The plaintiff has
alleged in his amended complaint various federal securities and proxy violations
allegedly arising out of the joint proxy statement and prospectus that was
mailed to limited partners in connection with the solicitation of proxies for
the vote on the Plan and other related documents. The plaintiff also added the
Company as a named defendant, alleging that all defendants acted in concert
with, and as agents of, each other; however the plaintiff made no specific
independent allegations with respect to the Company. The plaintiff sought, among
other equitable and legal remedies, to enjoin the implementation of the Plan and
unspecified damages. On November 6, 1997, the Court granted in part the
plaintiff's motion for a temporary restraining order enjoining the
implementation of the Plan. After the withdrawal of the Plan, defendants, on
June 19, 1998, filed a motion to dismiss the claims as moot. On July 17, 1998,
plaintiff moved to amend his complaint purportedly to include an additional
plaintiff and additional claims for relief, including permanent injunctive
relief for any violations of the securities laws in the future. The amended
complaint also adds the Partnership as a nominal defendant. On September 24,
1998, the Court denied the defendants' motion to dismiss and granted plaintiff's
motion to amend the complaint. The defendants have denied any allegation of
wrongdoing.
 
    On December 29, 1997, a purported derivative action was filed in the
Delaware Chancery Court by a limited partner of the Partnership against certain
of the Company's officers and directors with regard to certain stock options
plans adopted by the Company in 1994. Both the Partnership and the Company were
named as nominal defendants. The plaintiff alleged that the defendants breached
their fiduciary duties by adoption of the stock option plans. The plaintiff
seeks, among other things, a declaration that the stock options granted under
the plans are invalid, the establishment of a constructive trust over the stock
options, unspecified compensatory damages and reasonable attorneys' fees and
expenses. By order dated June 23, 1998, this action was consolidated with the
Delaware action described above. The defendants deny any allegation of
wrongdoing and intend to vigorously contest the lawsuit.
 
    Based on the Company's review of the allegations made in the above actions
to date, the Company does not believe that the ultimate resolution of these
actions will have a material adverse effect on the Company's results of
operations or financial condition.
 
    The Partnership is a principal stockholder of the Company and certain
members of the Company's management control the General Partner. See "Certain
Relationships and Related Transactions."
 
    The Company and its subsidiaries are parties to litigation arising out of
their business operations. Such litigation primarily involves claims for
personal injury, property damage, breach of contract and claims involving
employee relations and certain administrative proceedings. The Company believes
such claims are either adequately covered by insurance or do not involve a risk
of material loss to the Company.
 
                                       3
<PAGE>
    By letter dated October 22, 1998, a demand for indemnification was received
from a customer with respect to utilization of Fibermesh-Registered Trademark-
in concrete slabs in the State of California. The demand for indemnification
pertained to any and all damages relating to their use of the
Fibermesh-Registered Trademark-product. No lawsuits have been filed against the
Company and based upon the information provided to the Company, the scope of
liability and potential damages, if any, cannot be ascertained at this time. The
Company has engaged outside counsel to investigate this claim and intends to
vigorously defend its product.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    On November 1, 1997, a special meeting of the limited partners was held to
vote upon the approval of a proposed dissolution of the Partnership pursuant to
an Agreement and Plan of Dissolution (the "Plan"). Out of 800 limited partner
units outstanding, 565.75 units, or 70.72% voted in favor of the Plan, 108.25
units, or 13.53% voted against the Plan, and 4.875 units, or 0.61%, abstained.
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
    There is no established trading market for the Units. In addition, the
limited partnership agreement of the Partnership (the "Limited Partnership
Agreement") places restrictions on the transferability of Units. No transferee
of all or any part of a Unit may be admitted to the Partnership as a limited
partner ("Limited Partner") without the written consent of Management L.P.,
which consent may be withheld in the absolute discretion of Management L.P. The
Limited Partnership Agreement also provides that the transfer of the whole or
any portion of a Unit shall not be effective to entitle the transferee to
receive distributions of cash or other property from the Partnership applicable
to the Unit acquired by reason of such transfer, unless Management L.P. consents
in writing to such transfer.
 
    The Partnership has made no distributions of any kind since its organization
in 1986. The Company is currently prohibited under a loan agreement with its
senior lenders from paying cash dividends, or making certain type of capital
distributions.
 
                                       4
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
 
    The selected consolidated financial data presented below for, and as of the
end of, each of the fiscal years in the five year period ended September 30,
1998 have been derived from the audited consolidated financial statements of
Synthetic Industries L.P. The consolidated financial statements as of September
30, 1998 and 1997 and for the three-year period ended September 30, 1998 and the
independent auditor's report thereon are included in Item 8 of this Form 10-K.
Dollars are in thousands, except unit and per unit information.
 
<TABLE>
<CAPTION>
                                                                        YEAR ENDED SEPTEMBER 30,
                                                       ----------------------------------------------------------
<S>                                                    <C>         <C>         <C>         <C>         <C>
                                                          1998        1997        1996        1995        1994
                                                       ----------  ----------  ----------  ----------  ----------
SUMMARY OF OPERATIONS DATA:
Net sales............................................  $  368,996  $  345,572  $  299,532  $  271,427  $  234,977
Gross profit.........................................     122,319     112,385      91,211      76,721      82,672
Operating income.....................................      48,695      50,291      37,813      28,687      41,007
Income from continuing operations before provision
  for income taxes, minority interest in subsidiary
  net income and extraordinary item..................      29,451      29,552      14,341       5,436      20,257
Income from continuing operations before minority
  interest in subsidiary net income and extraordinary
  item...............................................      17,596      17,011       7,441       1,936      11,657
Income from continuing operations attributable to
  limited partners...................................      11,314       3,165       7,367       1,917      11,540
Extraordinary item--loss from early extinguishment of
  debt...............................................      --         (11,950)     --          --          --
Net income (loss)....................................      11,429       3,197       7,441       1,936      11,657
Income from continuing operations per limited
  partnership unit...................................  $   14,143  $    3,956  $    9,209  $    2,396  $   14,425
Limited partnership units outstanding................         800         800         800         800         800
</TABLE>
 
<TABLE>
<CAPTION>
                                                                             AS OF SEPTEMBER 30,
                                                            ------------------------------------------------------
<S>                                                         <C>         <C>        <C>        <C>        <C>
                                                               1998       1997       1996       1995       1994
                                                            ----------  ---------  ---------  ---------  ---------
BALANCE SHEET DATA:
Working capital...........................................  $   85,602  $  88,032  $  63,418  $  69,041  $  44,116
Total assets..............................................     439,851    394,795    323,756    312,302    287,935
Long-term debt............................................     236,843    220,464    194,353    192,048    172,490
Partners' Capital.........................................      80,545     68,876     65,185     57,758     55,819
</TABLE>
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
       CONDITION AND RESULTS OF OPERATIONS
 
    As previously discussed, since its organization in 1986 and subsequent
admission of Limited Partners, the Partnership has conducted no business except
owning and voting the Shares. As a result of its public offering of Common Stock
in November 1996, the Company had 8,668,750 shares of Common Stock outstanding
as of September 30, 1998, of which approximately 66% was owned by the
Partnership. As the Partnership has no independent operations or assets other
than its investment in the Company, the Partnership's financial statements are
substantially identical to those of the Company, with the exception of the
minority interest, $663 due the Company and amounts paid by the Company on
behalf of the Partnership relating to the Plan. As a result, the discussion and
analysis of financial condition and results of operations presented below
relates to the operations of the Company, except as disclosed. Accordingly, all
references to fiscal year refer to the Company's fiscal year which ends on
September 30(th).
 
                                       5
<PAGE>
    The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the information
contained in the Consolidated Financial Statements, including the notes thereto.
The following discussion includes forward-looking statements that involve
certain risks and uncertainties. See "Forward-Looking Statements." Dollars are
in thousands, except per share data.
 
OVERVIEW
 
    The Company's net sales in recent years have increased due to a variety of
factors, including generally increasing sales volumes as a result of growing
demand for the Company's products, the Company's ability to expand its markets
through development of new products and acquisitions.
 
    The Company's gross profit has increased due primarily to increasing sales
volumes, continued diversification of its product line in higher margin business
and lower on average polypropylene costs, partially offset by lower average
selling prices due to decreases in the price of polypropylene. Polypropylene is
the basic raw material used in the manufacture of substantially all of the
Company's products today, accounting for approximately 50% of the Company's cost
of sales. The Company believes that the selling prices of many of its products
have adjusted over time to reflect changes in polypropylene prices.
 
    The following table sets forth the Partnership's percentage relationships to
net sales of certain statements of operations items:
 
<TABLE>
<CAPTION>
                                                                                           YEAR ENDED SEPTEMBER 30,
                                                                                        -------------------------------
<S>                                                                                     <C>        <C>        <C>
                                                                                          1998       1997       1996
                                                                                        ---------  ---------  ---------
Net sales.............................................................................      100.0%     100.0%     100.0%
Cost of sales.........................................................................       66.9       67.5       69.5
                                                                                        ---------  ---------  ---------
  Gross profit........................................................................       33.1       32.5       30.5
Selling expenses......................................................................       10.6        9.2        9.2
General and administrative expenses...................................................        8.5        8.0        7.8
Amortization of intangibles...........................................................        0.8        0.7        0.9
                                                                                        ---------  ---------  ---------
Operating income......................................................................       13.2       14.6       12.6
Interest expense......................................................................        5.0        5.8        7.6
Amortization of deferred financing costs..............................................        0.2        0.2        0.2
                                                                                        ---------  ---------  ---------
Income before provision for income taxes, minority interest in subsidiary net income
  and extraordinary item..............................................................        8.0        8.6        4.8
Provision for income taxes............................................................        3.2        3.6        2.3
                                                                                        ---------  ---------  ---------
Income before minority interest in subsidiary net income and extraordinary Item.......        4.8%       5.0%       2.5%
                                                                                        ---------  ---------  ---------
                                                                                        ---------  ---------  ---------
</TABLE>
 
RESULTS OF OPERATIONS
 
FISCAL 1998 COMPARED TO FISCAL 1997
 
    Net sales for fiscal 1998 were $368,996 compared to $345,572 for fiscal
1997, an increase of $23,424, or 6.8%. Carpet backing sales for fiscal 1998 were
$168,998 compared to $166,219 for fiscal 1997, an increase of $2,779, or 1.7%,
reflecting higher unit volume, partially offset by lower average selling prices.
Construction and civil engineering product sales for fiscal 1998 were $128,318
compared to $114,611 for fiscal 1997, an increase of $13,707, or 12.0%,
reflecting increased unit volume in fiber reinforced concrete and geosynthetic
product sales. The Novocon Acquisition contributed approximately $7,000 of this
revenue. Technical textiles sales for fiscal 1998 were $71,680 compared to
$64,742 for fiscal 1997, an increase of $6,938, or 10.7%.
 
                                       6
<PAGE>
    Gross profit for fiscal 1998 was $122,319, compared to $112,385 for fiscal
1997, an increase of $9,934, or 8.8%. As a percentage of sales, gross profit
increased to 33.1% in fiscal 1998 from 32.5% in fiscal 1997. This increase was
primarily due to lower on average polypropylene costs and higher sales volume,
partially offset by lower average selling prices.
 
    The Company's improvement in gross profit performance also reflects its
diversification strategy for its products as well as its primary raw material.
The Company expects that sales of construction and civil engineering products
will continue to be of increasing importance to the Company's overall sales.
Reflecting the success of this strategy, sales of carpet backing, although
growing, continue to decrease as a percentage of total sales and now represent
45.8% of fiscal 1998 total net sales. In addition, the Company continues to
expand its polyester-based product offerings and, with the Novocon Acquisition,
now includes steel fibers in its line of concrete reinforcing fibers.
 
    Selling expenses for fiscal 1998 were $39,358 compared to $31,801 for fiscal
1997, an increase of $7,557, or 23.8%. As a percentage of sales, selling
expenses increased from 9.2% in fiscal 1997 to 10.6% in fiscal 1998. General and
administrative expenses for the Company for fiscal 1998 were $30,857 compared to
$26,562 for fiscal 1997, an increase of $4,295, or 16.2%. As a percentage of
sales, general and administrative expenses increased from 7.7% in fiscal 1997 to
8.3% in fiscal 1998. The increase in selling, general and administrative
expenses was primarily due to an increase in research and market development
costs from approximately $4,200 in fiscal 1997 to approximately $8,100 in fiscal
1998, a $2,000 increase in engineering support staff to continue to educate the
marketplace about the benefits of the Company's products, and a $1,500 increase
in advisory and consulting fees to improve operating efficiencies. Included in
general and administrative expenses for the Partnership is $622, which is due
the Company, for expenses incurred on behalf of the Partnership.
 
    Operating income for fiscal 1998 was $49,317 as compared to $51,430 for
fiscal 1997, a decrease of $2,113, or 4.1%. As a percentage of sales, operating
income decreased to 13.4% in fiscal 1998 from 14.9% in fiscal 1997. This
decrease was primarily due to higher selling, general and administrative costs
which offset improved gross margins.
 
    Interest expense for fiscal 1998 was $18,515 compared to $20,085 for fiscal
1997, a decrease of $1,570, or 7.8%, due to lower average interest rates on an
increased level of outstanding debt and the capitalization of interest related
to machinery and equipment installation. The effective income tax rate was 39%
in fiscal year 1998 and 41% in fiscal 1997 before the effect of the
extraordinary item. The provision for income taxes includes the recognition of
additional state income tax credits of approximately $600 during fiscal 1998.
 
    Income from continuing operations for the Company in fiscal 1998 was $18,218
compared to $18,150 for fiscal 1997, an increase of $68. Earnings before
interest, taxes, depreciation and amortization ("EBITDA") for fiscal 1998 was
$69,849 compared to $69,011 for fiscal 1997, an increase of $838, or 1.2%. The
increase in the Company's income before extraordinary item, as well as EBITDA,
was primarily due to the factors discussed above. Income per share on a diluted
basis for fiscal 1998 was $2.03 compared to $2.08 before extraordinary item for
fiscal 1997 on increased weighted average shares outstanding of 275,856 or 3.2%.
 
FISCAL 1997 COMPARED TO FISCAL 1996
 
    Net sales for fiscal 1997 were $345,572 compared to $299,532 for fiscal
1996, an increase of $46,040, or 15.4%. Carpet backing sales for fiscal 1997
were $166,219 compared to $146,491 for fiscal 1996, an increase of $19,728, or
13.5%. This increase was primarily due to higher unit volume in both primary and
secondary carpet backing. Construction and civil engineering product sales for
fiscal 1997 were $114,611 compared to $97,043 for fiscal 1996, an increase of
$17,568, or 18.1%. This increase was primarily due to a 10.5% increase in
Fibermesh-Registered Trademark- sales and a 22.3% increase in geosynthetic
sales. Technical textiles sales for fiscal
 
                                       7
<PAGE>
1997 were $64,742 compared to $55,998 for fiscal 1996, an increase of $8,744, or
15.6%, of which the Spartan Acquisition added approximately $8,600.
 
    Gross profit for fiscal 1997 was $112,385, compared to $91,211 for fiscal
1996, an increase of $21,174, or 23.2%. As a percentage of sales, gross profit
increased to 32.5% from 30.5%. This increase was due to increased sales volume
and growth of higher margin business, coupled with slightly lower average
polypropylene costs as compared to the prior year.
 
    Selling expenses for fiscal 1997 were $31,801 compared to $27,488 for fiscal
1996, an increase of $4,313, or 15.7%. As a percentage of sales, selling
expenses remained at 9.2%. General and administrative expenses for fiscal 1997
for the Company were $26,562 compared to $22,657 for fiscal 1996, an increase of
$3,905, or 17.2%. As a percentage of sales, general and administrative expenses
increased from 7.6% to 7.7%. The increase in selling, general and administrative
expenses was primarily due to infrastructure expenditures, to support
anticipated Company growth, coupled with an increase in research and market
development costs from $2,940 in fiscal 1996 to $4,200 in fiscal 1997. Included
in general and administrative expenses for the Partnership is $1,139, which is
due the Company, for expenses incurred on behalf of the Partnership relating to
the Plan.
 
    Operating income for fiscal 1997 was $51,430 as compared to $38,474 for
fiscal 1996, an increase of $12,956, or 33.7%. As a percentage of sales,
operating income increased to 14.9% in fiscal 1997 from 12.8% in fiscal 1996.
This increase was primarily due to improved gross profits, partially offset by
slightly higher selling, general and administrative costs.
 
    Interest expense for fiscal 1997 was $20,084 compared to $22,773 for fiscal
1996, a decrease of $2,689, or 11.8%, due to lower average interest rates on the
outstanding debt.
 
    The effective income tax rate before the effect of the extraordinary item
was 41% and 46% in fiscal 1997 and 1996, respectively. The higher rate for 1996
was due primarily to the effect of nondeductible expenses, including the
amortization of goodwill, on lower income in fiscal 1996.
 
    Income before extraordinary item for the Company in fiscal 1997 was $18,150
compared to $8,102 for fiscal 1996, an increase of $10,048. Earnings before
interest, taxes, depreciation and amortization ("EBITDA") for fiscal 1997 was
$69,011 compared to $54,074 for fiscal 1996, an increase of $14,937, or 27.6%.
The increase in the Company's income before extraordinary item, as well as
EBITDA, was primarily due to the factors discussed above.
 
    Income per share on a diluted basis before extraordinary item for fiscal
1997 was $2.08 compared to $1.37 for fiscal 1996 on increased weighted average
shares outstanding of 2,788,956 or 47.0%, resulting from the Offering. Pro forma
income per share before extraordinary item, assuming the net proceeds from the
Offering and the issuance of the Notes (as defined hereunder) were used to
reduce outstanding indebtedness and the shares issued in the Offering were
outstanding as of the beginning of each respective period, would have been $2.10
and $1.28 for fiscal 1997 and 1996, respectively.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    To finance its capital expenditures program and fund its operational needs,
the Company has relied upon cash provided by operations, supplemented as
necessary by bank lines of credit and long-term indebtedness. Net cash provided
by operating activities was $42,344, $25,129, and $31,421 for the fiscal years
ended September 30, 1998, 1997 and 1996, respectively.
 
    Net cash provided by operating activities for the Company in fiscal 1998
consisted primarily of net income of $18,218 and noncash charges of $26,225. Net
cash provided by operating activities for the Company in fiscal 1997 and 1996
resulted primarily from net income of $6,200 and $8,102, respectively, after
deducting $19,431 for the extraordinary loss on early extinguishment of debt for
fiscal 1997 and deducting non-cash charges of $21,026, and $20,723 and net
working capital changes of approximately
 
                                       8
<PAGE>
($21,528) and $2,596 for each respective period. In fiscal 1997 the changes
included increased inventory and accounts payable balances resulting primarily
from higher inventory quantities and slightly higher on average polypropylene
costs.
 
    The net proceeds from financing and operating activities in fiscal 1998 were
utilized to fund capital expenditures and an acquisition of approximately
$46,100 and $6,000, respectively. The remaining balance due for the Novocon
Acquisition of $1,302 was paid on December 11, 1998. Capital expenditures
planned for fiscal 1999 are approximately $25,000, primarily to expand the
capacity of the Company's manufacturing facilities, subject to prevailing market
conditions. Capital expenditures in fiscal 1997, including an acquisition, and
1996 were approximately $63,000 and $29,000, respectively.
 
    On April 7, 1998, the Company entered into an eight-year capital lease
agreement to finance additional equipment of approximately $7,500 with an
interest rate of 7.25%. On October 4, 1998, the Company entered into an
eight-year capital lease for the acquisition of equipment of $5,300 at an
interest rate of 7.03%. The proceeds were primarily used to repay the balance of
the May 15, 1996 capital lease of $3,416.
 
    On February 11, 1997, the Company issued $170,000 aggregate principal amount
of 9 1/4% Senior Subordinated Notes due February 15, 2007 (the "Notes"), which
represent unsecured obligations of the Company. The Notes are redeemable at the
option of the Company at any time on or after February 15, 2002, at an initial
redemption price of 104.625% of their principal amount together with accrued
interest, with declining redemption prices thereafter. Interest on the Notes are
payable semi-annually on February 15 and August 15 in the amount of $7,863.
 
    On November 1, 1996, the Company received net proceeds of approximately
$34,000 (after payment of underwriting discounts and commissions and expenses)
from the sale of 2,875,000 shares of Common Stock in an underwritten public
offering. These proceeds, together with the proceeds received from the issuance
of the Notes, were utilized primarily to retire approximately $133,000 of the
Company's 12 3/4% Senior Subordinated Debentures due 2002 (the "Debentures"),
pay the related call premium and prepayment costs and fees associated with the
refinancing of $15,920, pay debt issuance costs of $5,525 and to repay
approximately $21,900 of certain outstanding indebtedness under the Company's
Fourth Amended and Restated Revolving Credit and Security Agreement, dated as of
October 20, 1995, as subsequently amended, among the Company, the lenders party
thereto and BankBoston, as agent. In connection therewith, the Company recorded
an extraordinary loss of $11,950 during the second quarter of fiscal 1997.
 
    On December 1, 1997, the Company redeemed the remaining $7,403 aggregate
principal amount of the Debentures at a redemption price of 106.375% of the
principal amount thereof, together with accrued interest as of the redemption
date.
 
    On December 18, 1997, the Company and its lenders, with BankBoston as agent,
entered into a new five year credit facility (the "Credit Facility"). The Credit
Facility consists of up to a $40 million asset based securitization program,
with amounts borrowed through a newly formed subsidiary, Synthetic Industries
Funding Corporation, (the "Securitization"), and a $60 million senior secured
revolver facility (the "Revolver"). Securitization and Revolver borrowings are
collateralized by the Company's accounts receivables and substantially all of
the assets of the Company, excluding real property, respectively.
 
    Interest on the Securitization is based on the applicable commercial paper
rate in effect plus a spread. The Revolver permits borrowings which bear
interest, at the Company's option, (i) for domestic borrowings based on the
lender's base rate or (ii) for Eurodollar borrowings based on a spread over the
Interbank Eurodollar rate at the time of conversion. Spreads for the
Securitization and the Revolver borrowings are determined by the operational
performance of the Company. At September 30, 1998, the balances under the
Securitization and Revolver were $29,162 and $30,022, respectively, at interest
rates ranging from 6.27% to 8.5%.
 
                                       9
<PAGE>
    The Revolver provides for borrowings under letters of credit of up to
$10,000, which borrowings reduce amounts available under the Revolver. At
September 30, 1998, letters of credit of $402 were outstanding.
 
    The Credit Facility contains covenants related to the maintenance of certain
operating ratios and limitations as to the amount of capital expenditures. The
Company's ability to pay dividends on its Common Stock is restricted by both the
New Credit Facility and the Notes. At September 30, 1998, the availability under
the Credit Facility was approximately $30,800.
 
    At September 30, 1998, the Company's total outstanding indebtedness amounted
to $242,343. Such indebtedness consists of borrowings under the Credit Facility
of $59,184, $170,000 aggregate principal amount of the Notes, outstanding
capital lease obligations, mortgage, and a short-term note of $13,159. Cash
interest paid during fiscal 1998, 1997 and 1996 was $21,232, $23,642, and
$23,176, respectively.
 
    On November 18, 1998, the Company announced its plans to combine its
non-woven manufacturing facilities in the first half of fiscal 1999. The move is
expected to increase operating efficiencies by reducing overhead costs and
centralizing production in a modern facility. The Company estimates that $5,000
to $6,000 of pre-tax costs will be incurred relating to the plant combination.
The combination is expected to be completed in June 1999, and the Company
expects pre-tax savings will be approximately $1,500 to $2,000 annually.
 
    Based on current levels of operations and anticipated growth, the Company's
management expects net cash from operations to provide sufficient cash flow to
satisfy the debt service requirements of the Company's long-term debt
obligations, including the New Credit Facility and lease agreements, permit
anticipated capital expenditures and fund the Company's working capital
requirements for the next twelve months.
 
INFLATION AND SEASONALITY
 
    The Company does not believe that its operations have been materially
affected by inflation during the three most recent fiscal years. While the
Company does not expect that inflation will have a material impact upon
operating results, there is no assurance that its business will not be affected
by inflation in the future.
 
    The Company's sales and income have historically been higher in the third
and fourth quarters of its fiscal year. While sales and income in the carpet
backing and technical textile product lines are not greatly affected by seasonal
trends, sales of construction and civil engineering products are lower in the
first and second quarters of any given fiscal year due to the impact of adverse
weather conditions on the construction and civil engineering markets.
Consequently, as sales from construction and civil engineering products continue
to increase as a percentage of the Company's total sales, the seasonality of
these products' sales will affect total sales and income of the Company to a
greater degree.
 
                                       10
<PAGE>
    Presented below is a summary of the Partnership's unaudited consolidated
quarterly financial information for the years ended September 30, 1998 and 1997:
(Amounts are in thousands of dollars except limited partnership units
outstanding)
 
<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED
                                                               ---------------------------------------------------
<S>                                                            <C>           <C>          <C>         <C>
FISCAL 1998                                                    DECEMBER 31    MARCH 31     JUNE 30    SEPTEMBER 30
-------------------------------------------------------------  ------------  -----------  ----------  ------------
Net sales....................................................   $   76,581    $  79,271   $  104,531   $  108,613
Operating income.............................................        7,034        6,788       17,730       17,143
Net income...................................................          710          647        5,122        4,950
Income per limited partnership unit..........................          881          801        6,339        6,124
Weighted average units outstanding...........................          800          800          800          800
 
FISCAL 1997
-------------------------------------------------------------
Net sales....................................................   $   70,857    $  75,358   $   99,112   $  100,245
Operating income.............................................        7,332        9,391       17,711       15,857
Income before extraordinary item.............................          589        5,650        5,015        3,893
Net income (loss)............................................          589       (6,300)(a)      5,015       3,893
Income(loss) per limited partnership unit....................          729       (7,796)(a)      6,206       4,817
Weighted average units outstanding...........................          800          800          800          800
</TABLE>
 
------------------------
 
    (a) Includes an extraordinary loss of $11,950 from the early extinguishment
       of debt. See Note 9.
 
YEAR 2000 READINESS DISCLOSURES
 
    The Company is preparing its computer systems and hardware to deal with the
issues related to the year 2000. This is necessary because certain computer
programs have been written using two digits rather than four to define the
applicable year. As a result, software may recognize a date using the two digits
"00" as the year 1900 rather than the year 2000. Computer programs that do not
recognize the proper date could generate erroneous data or cause systems to
fail. In addition, many of the Company's vendors and service providers are also
faced with similar issues related to the year 2000.
 
    In January 1998, the Company formally implemented a plan to become year 2000
compliant. The Company is evaluating and testing business and technical
information system hardware and software as to year 2000 compliance and
functionality. Planned application testing is 66% complete. The Company's basic
integrated software applications, Infinium and CAMS, are represented to be year
2000 compliant by their respective vendors and testing to date has verified
vendor representations. Minimal code renovations were necessary in CAMS and have
been completed. The last phase of testing is scheduled to be completed on or
before March 1999, although test validation processes will be ongoing, thereby
providing sufficient time to handle unforeseen contingencies and respond to
external year 2000 issues that affect the Company and the Company's business
partners. The inventory process and assigning priorities are complete for
manufacturing process control, instrumentation and embedded systems.
Documentation from respective equipment manufacturers and resources is
approximately 85% complete. The Company believes that the repair of this
equipment is approximately 95% complete, with all testing of this equipment to
be scheduled and completed by mid 1999. Contingency planning for this equipment
is in process and scheduled for completion by fiscal year-end 1999. The Company
has also been proactive in contact with external business partners to
communicate and exchange status information.
 
    In fiscal 1998 the costs for addressing year 2000 issues were approximately
$225 and have been expensed as incurred. The Company does not believe that
future costs will have a material adverse effect on the Company's results of
operations or financial condition.
 
    In the event that the efforts of this program do not address all potential
system problems, the Company is developing contingency plans to ensure that it
will be able to operate the critical areas of its
 
                                       11
<PAGE>
business. This process includes developing alternative plans to engage in
business activities with customers and suppliers who may not be year 2000
compliant. These plans will be monitored for completion as we approach the year
2000. There can be no assurance that the efforts or the contingency plans
related to the Company's systems or those of third parties relied upon will be
successful or that any failure to convert, upgrade, or appropriately plan for
contingencies would not have a material adverse effect on the Company's results
of operations or financial condition.
 
RECENT ACCOUNTING PRONOUNCEMENTS
 
    In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), which must be adopted for fiscal years beginning after
December 15, 1997. SFAS 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. SFAS 130 will not have a material effect on the Company's
results of operations or financial condition.
 
    Also in June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"), which must be adopted for fiscal years beginning
after December 15, 1997. Under the new standard, companies will be required to
report certain information about operating segments in consolidated financial
statements. Operating segments will be determined based on the method that
management organizes its businesses for making operating decisions and assessing
performance. SFAS 131 also requires companies to report certain information
about their products and services, the geographic areas in which they operate,
and their major customers. The Company is currently evaluating the effect SFAS
131 will have on its financial statement presentation.
 
    In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which must be adopted for fiscal quarters of fiscal years beginning after
June 15,1999. SFAS 133 requires the recognition of all derivatives as either
assets or liabilities in the statement of financial position and measurement of
those instruments at fair value. SFAS 133 will not have a material effect on the
Company's results of operations or financial condition
 
FORWARD LOOKING STATEMENTS
 
    The discussion of the Company's business and operations in this report
includes in several instances forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are based upon management's
good faith assumptions relating to the financial, market, operating, and other
relevant environments that will exist and affect the Company's business and
operations in the future. No assurance can be made that the assumptions upon
which management based its forward-looking statements will prove to be correct,
or that the Company's business and operations will not be affected in any
substantial manner by other factors not currently foreseeable by management or
beyond the Company's control. All forward-looking statements involve risks and
uncertainties, including those described in this report, and such statements
shall be deemed in the future to be modified in their entirety by the Company's
public pronouncements, including those contained in all future reports and other
documents filed by the Company with the Securities and Exchange Commission.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
    Market risks relating to the Company's operations result primarily from
changes in interest rates and commodity prices.
 
                                       12
<PAGE>
INTEREST RATE RISK
 
    The Company faces minimal interest rate risk exposure in relation to its
outstanding debt of $242,343 at September 30, 1998. Of this amount $59,184,
under the Credit Facility, is subject to interest rate fluctuations. A
hypothetical 10% change in interest rates applied to the fair value of debt
would not have a material impact on earnings or cash flows of the Company.
 
COMMODITY PRICE RISK
 
    The Company is a purchaser of certain commodities, primarily polypropylene.
The Company does not use commodity futures for hedging purposes. Polypropylene
is the basic raw material used in the manufacture of substantially all of the
Company's products today, accounting for approximately 50% of the Company's cost
of goods sold.
 
    The price of polypropylene is determined by the supply and demand for the
product. Historically, the creation of additional capacity has helped to relieve
supply and pricing pressures although there can be no assurance that this will
continue to be the case. According to a September 1998 report by Chemical Data
Inc., a monthly petrochemical and plastics analysis publication, annual
polypropylene capacity in North America is expected to rise from 12.6 billion
pounds per year for 1996 to 15.0 billion pounds per year for 1998, and to 19.3
billion pounds per year by the year 2000, a 10.8% compounded growth rate.
Although in fiscal 1998 supply increased faster than demand, the Company expects
polypropylene prices to remain basically unchanged in fiscal year 1999 as supply
and demand stabilize.
 
    An increase in the price of polypropylene for a prolonged period without an
increase in the selling prices of the Company's products could have a material
effect on the Company's earnings and cash flows. The Company believes that the
selling prices of many of its products have adjusted over time to reflect
changes in polypropylene prices.
 
CURRENCY RISK
 
    The Company faces currency risk exposure that arises from translating the
results of its United Kingdom operations to the U.S. dollar. The currency risk
exposure is not material as the United Kingdom division's operations do not have
a material impact on the Company's earnings.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    Information with respect to this Item is contained in the Company's
consolidated financial statements indicated in the Index in Part IV, Item 14 of
this Annual Report on Form 10-K and is incorporated herein by reference.
 
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
    None.
 
                                       13
<PAGE>
                                    PART III
 
ITEM 10. EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
 
    Synthetic G.P. is the sole general partner of Management L.P., which is the
sole general partner of the Partnership. By virtue of these relationships,
Synthetic G.P. controls the management and affairs of the Partnership.
 
    The general partners of Synthetic G.P. are the following Delaware
corporations: Chill Investments, Inc., Beckman Investments, Inc., Freed
Investments, Inc., Kenner Investments, Inc., and Wright Investments, Inc. Each
of Leonard Chill, Jon P. Beckman, W. Wayne Freed, Ralph A. Kenner and W. Gardner
Wright, Jr. is the sole director and the controlling stockholder of one of
Synthetic G.P.'s general partners., Messrs. Chill, Kenner, Freed and Wright are
executive officers of the Company. Mr. Chill also serves as director of the
Company.
 
    The following table sets forth certain information concerning each of the
executive officers and directors of the Company:
 
<TABLE>
<CAPTION>
NAME                                            AGE                         POSITION AND OFFICES HELD
------------------------------------------      ---      ---------------------------------------------------------------
<S>                                         <C>          <C>
Leonard Chill.............................          66   President, Chief Executive Officer and Director
Joseph F. Dana............................          51   Chief Operating Officer, General Counsel and Director
Joseph Sinicropi..........................          44   Chief Financial Officer and Secretary
W. Wayne Freed............................          63   Vice President--Market Development
Ralph Kenner..............................          54   Vice President--Manufacturing
C. Ted Koerner............................          49   Vice President--General Manager Construction/Civil Engineering
                                                         Products Group
John Michael Long.........................          55   Vice President--General Manager Technical Textiles Group
William Gardner Wright, Jr................          69   Vice President--General Manager Carpet Backing
Bobby Callahan............................          56   Controller
Richard E. Hingson........................          43   Vice President--Technical Services
Lee J. Seidler(1).........................          63   Director
William J. Shortt(1)......................          73   Director
Robert L. Voigt(1)........................          80   Director
</TABLE>
 
------------------------
 
(1) Member of Compensation Committee and Audit Committee.
 
    Directors of the Company are elected each year at the annual meeting of
stockholders. The Company's officers serve at the discretion of the Board.
 
    LEONARD CHILL, age 66, joined the Company in December 1973 as President and
was appointed Chief Executive Officer in 1986. He has been a director since
1986. From 1967 until joining the Company, he held a number of positions with
Thiokol Corporation in its Fibers Division, including that of General Manager.
Mr. Chill is also the sole director and sole stockholder of one of the general
partners of Synthetic Management G.P., the entity which is the sole general
partner of the general partner of the Partnership. In addition, Mr. Chill is a
director of Synthetic Textiles Ltd.
 
    JOSEPH F. DANA, age 51, was appointed Chief Operating Officer and General
Counsel in May 1997. Prior to joining the Company, Mr. Dana had been engaged in
the private practice of law for over twenty years and had been a member of the
law firm Watson & Dana, LaFayette, Georgia, since its formation in 1978, serving
as general counsel to the Company since 1987. He has been a Director since 1993.
 
                                       14
<PAGE>
    JOSEPH SINICROPI, age 44, joined the Company in 1995 as Chief Accounting
Officer. He was named Chief Financial Officer and Secretary in February 1996.
Prior to joining the Company, he was an audit senior manager in the
international accounting firm of Deloitte & Touche LLP from 1985 to 1995.
 
    W. WAYNE FREED, age 63, joined the Company in 1981 and became Vice
President--Market Development in 1987. Prior thereto, he had 28 years experience
in the textile industry. Mr. Freed is also the sole director and sole
stockholder of one of the general partners of Synthetic Management G.P.
 
    RALPH KENNER, age 54, has been Vice President--Manufacturing since 1984. He
joined the Company in 1974 as Director, Industrial Relations and served in that
capacity until 1976. In 1976, he was appointed Plant Manager and served in that
capacity until 1984. Mr. Kenner is also the sole director and sole stockholder
of one of the general partners of Synthetic Management G.P.
 
    C. TED KOERNER, age 49, joined the Company in 1990 and became Vice
President--Construction Products Division in 1993. He was named Vice
President--General Manager of the Construction/Civil Engineering Products Group
in 1995. Prior thereto, Mr. Koerner was an engineer with the Ohio Department of
Transportation; a sales engineer, product supervisor and regional engineer with
Armco Steel Corporation; and a sales manager with National Seal Corporation.
 
    JOHN MICHAEL LONG, age 55, was Vice President--Nonwoven Fabrics from 1991 to
1996 at which time he was named Vice President--General Manager of the Technical
Textiles Group. Prior thereto, he held a variety of managerial positions with
Spartan Mills, a manufacturer of nonwoven geotextile fabrics. During his last
five years at Spartan, he was Vice President and General Manager.
 
    WILLIAM GARDNER WRIGHT, JR., age 69, was Vice President--Marketing and Sales
from 1983 to 1996 at which time he was named Vice President-General Manager of
the Carpet Backing Division. From 1977 until 1983, he was President of Synca
Marketing Corp., a textile sales agency which served as a sales agent for the
Company's primary carpet backing, as well as the products of other
manufacturers. Mr. Wright is a director of the Sun Trust Bank of Northwest
Georgia. Mr. Wright is also the sole director and sole stockholder of one of the
general partners of Synthetic Management G.P.
 
    BOBBY CALLAHAN, age 56, joined the Company in 1977 and has been Controller
since 1980. Prior thereto, he held a variety of financial management positions
in the carpet industry.
 
    RICHARD E. HINGSON, age 43, joined the Company in 1984 as Quality Control
Manager and became Technical Director in 1989. He was promoted to Vice
President--Technical Services in 1997. Prior thereto, he held a variety of
managerial positions with Amoco Fabrics Company, a producer of polypropylene and
polyethylene yarns and fabrics.
 
    LEE J. SEIDLER, age 63, was professor of accounting and Price Waterhouse
professor of auditing at New York University. Dr. Seidler was Senior Managing
Director at Bear, Stearns & Co. Inc. from 1981 to 1989. He is presently
associated with Bear, Stearns & Co. Inc. as Managing Director Emeritus. Dr.
Seidler is a director of the Shubert Foundation, The Shubert Organization, and
Players International, Inc. and has been a director of SafeCard Services, Inc.
and Eastbank, N.A. He has been a Director since 1993.
 
    WILLIAM J. SHORTT, age 73, retired from Johnson & Johnson in 1989. From 1977
to 1989, he was Director of Government and Trade Relations, Southeast at Johnson
& Johnson. Mr. Shortt has also been a director of Standard Telephone Company,
Standard Group Inc., and First National Bank of Habersham. He has been a
Director since 1993.
 
    ROBERT L. VOIGT, age 80, served as a consultant to Dixie Yarns Inc. from
1985 until his retirement at the end of 1991. Mr. Voigt also served as a
director of Dixie Yarns, Inc. from 1981 to 1987. He has been a Director since
1993.
 
                                       15
<PAGE>
ITEM 11. REMUNERATION OF DIRECTORS AND OFFICERS
 
DIRECTOR COMPENSATION
 
    Outside directors receive $15,000 per annum for services as a director and
$800 per meeting attended. Directors who are members of management do not
receive any meeting attendance fees or additional compensation for service as a
director or service on committees of the Board. All directors are reimbursed for
reasonable out-of-pocket expenses incurred in connection with their attendance
at meetings of the Board and its committees on which they serve.
 
    Under the Company's 1994 Stock Option Plan for Non-Employee Directors (the
"DIRECTORS' PLAN"), Messrs. Dana, Seidler, Shortt and Voigt were granted
non-qualified stock options (the "DIRECTORS' OPTIONS") to purchase 28,906,
57,813, 19,271 and 19,271 shares of Common Stock, respectively. The Directors'
Plan does not provide for any further grants of options thereunder.
 
    The purchase price of the shares of Common Stock subject to the Directors'
Options was determined by reference to the fair market value of the Common
Stock, as determined by the Compensation Committee, at the time Messrs. Dana,
Seidler, Shortt and Voigt became members of the Board. As of October 1, 1996,
100% of the number of shares of Common Stock subject to each Director Option are
vested and are exercisable. As a Company employee, Mr. Chill is not eligible to
participate in the Directors' Plan. In the event that the outstanding shares of
Common Stock are changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, combination or exchange of
shares and the like, or dividends payable in Common Stock, an appropriate
adjustment shall be made by the Committee in the aggregate number of shares of
Common Stock available under the Directors' Plan and in the number of shares and
price per share subject to outstanding Directors' Options. The term of each
Directors' Option is ten years from the date of grant.
 
COMMITTEES AND MEETINGS OF THE BOARD
 
    The Board has established a Compensation Committee, composed of Messrs.
Seidler, Shortt and Voigt, which establishes salary, incentives and other forms
of compensation and administers the Company's 1994 Stock Option Plan and 1996
Stock Option Plan and other incentive compensation and benefit plans applicable
to the Company's officers. The Board has also established an Audit Committee,
composed of Messrs. Seidler, Shortt and Voigt, which recommends to the Board the
selection of independent auditors, and reviews the scope and results of the
audit and other services provided by the independent auditors.
 
                                       16
<PAGE>
EXECUTIVE COMPENSATION
 
    The following table sets forth information regarding aggregate cash
compensation, stock option awards and other compensation earned by the Company's
Chief Executive Officer and the four other most highly compensated executive
officers for services rendered in all capacities to the Company and its
subsidiaries in the fiscal years 1996 to 1998.
 
<TABLE>
<CAPTION>
                                                                                                       LONG-TERM
                                                                      ANNUAL COMPENSATION            COMPENSATION
                                                              -----------------------------------       AWARDS
                                                   FISCAL                                OTHER     -----------------
                                                    YEAR                                ANNUAL        SECURITIES       ALL OTHER
                   NAME AND                         ENDED                               COMPEN-       UNDERLYING        COMPEN-
              PRINCIPAL POSITION                  SEPT. 30    SALARY($)    BONUS($)    SATION($)      OPTIONS(#)       SATION($)
              ------------------                 -----------  ----------  ----------  -----------  -----------------  -----------
<S>                                              <C>          <C>         <C>         <C>          <C>                <C>
Leonard Chill..................................        1998   $  280,000  $  137,058   $   7,360              --       $  10,424(1)
  Chief Executive                                      1997      270,163     144,720       2,168              --          10,174(1)
  Officer and President                                1996      254,871     118,119       2,170              --           9,924(1)
Joseph F. Dana.................................        1998   $  225,000  $   77,580   $  12,932              --       $   5,000(2)
  Chief Operating Officer                              1997(3)    118,100     75,000       6,586              --             -0-
  and General Counsel                                  1998   $  170,000  $   72,408   $  12,932              --       $   5,000(2)
Joseph Sinicropi...............................        1997      132,500      51,840       5,312              --           4,750(2)
  Chief Financial Officer                              1996      125,000      55,960         720              --           4,500(2)
Ralph Kenner...................................        1998   $  171,000  $   71,546   $   5,577              --       $   4,800(2)
  Vice President--Manufacturing                        1997      154,731      69,768       5,771              --           4,750(2)
                                                       1996      145,973      55,063       5,395              --           4,170(2)
William Gardner Wright, Jr.....................        1998   $  249,803  $   86,411   $   3,183              --       $   5,000(2)
  Vice President--General Manager--                    1997      249,803      91,800         427              --           4,750(2)
  Carpet Backing Division                              1996      235,664      81,920         700              --           4,170(2)
</TABLE>
 
------------------------
 
(1) These amounts consist of $5,424 of insurance premiums paid by the Company
    under a term life insurance policy in each of 1998, 1997 and 1996, and
    $5,000, $4,750 and $4,500 contributed by the Company under its 401(k) plan
    in 1998, 1997 and 1996, respectively.
 
(2) These amounts represent the annual contribution made by the Company under
    its 401(k) Plan in the respective year.
 
(3) Mr. Dana assumed his duties as Chief Operating Officer and General Counsel
    on June 1, 1997.
 
OPTION GRANTS
 
    The following table sets forth information with respect to the executive
officers named in the Summary Compensation Table concerning the grants of
options made under the Company's 1994 and 1996 Stock Option Plan[S] during
fiscal 1998.
 
                                       17
<PAGE>
                       OPTION GRANTS IN LAST FISCAL YEAR
 
<TABLE>
<CAPTION>
                                                                                                   POTENTIAL REALIZABLE
                                             INDIVIDUAL GRANTS                                           VALUE AT
                                       ------------------------------                              ASSUMED ANNUAL RATES
                                         NUMBER OF      PERCENT OF                                    OF STOCK PRICE
                                        SECURITIES     TOTAL OPTIONS                                 APPRECIATION FOR
                                        UNDERLYING      GRANTED TO     EXERCISE OF                      OPTION TERM
                                          OPTION       EMPLOYEES IN    BASE PRICE    EXPIRATION    ---------------------
NAME                                    GRANTED(#)      FISCAL YEAR      ($/SH)         DATE         5%($)      10%($)
-------------------------------------  -------------  ---------------  -----------  -------------  ---------  ----------
<S>                                    <C>            <C>              <C>          <C>            <C>        <C>
Leonard Chill........................       --              --             --            --           --          --
Joseph F. Dana.......................       10,100           12.48%     $   15.00          7/08    $  98,022  $  258,617
Joseph Sinicropi.....................        6,200            7.66%         15.00          7/08       60,172     158,755
Ralph Kenner.........................       --              --             --            --           --          --
William Gardner Wright, Jr...........       --              --             --            --           --          --
</TABLE>
 
                         OPTION EXERCISES AND HOLDINGS
 
    The following table sets forth information with respect to the executive
officers named in the Summary Compensation Table concerning the exercise of
options during fiscal 1998 and unexercised options held as of the end of fiscal
1998, which include grants made under the Company's 1994 and 1996 Stock Option
Plans.
 
                AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
                                                                                                            VALUE OF
                                                                                                          UNEXERCISED
                                                                                 NUMBER OF SECURITIES     IN-THE-MONEY
                                             SHARES                             UNDERLYING UNEXERCISED     OPTIONS AT
                                            ACQUIRED                            OPTIONS AT FY-END (1)        FY-END
                                               ON                VALUE        --------------------------  ------------
NAME                                      EXERCISE (#)       REALIZED ($)     EXERCISABLE  UNEXERCISABLE  EXERCISABLE
--------------------------------------  -----------------  -----------------  -----------  -------------  ------------
<S>                                     <C>                <C>                <C>          <C>            <C>
Leonard Chill.........................             --                 --         100,243        45,039    $  554,342(2)
Joseph F. Dana........................             --                 --         169,506            --       284,920(3)
Joseph Sinicropi......................             --                 --          38,194        14,494        87,902(4)
Ralph Kenner..........................             --                 --          35,289        18,582       195,147(2)
William Gardner Wright, Jr............             --                 --          35,289        18,582       195,147(2)
 
<CAPTION>
 
NAME                                    UNEXERCISABLE
--------------------------------------  -------------
<S>                                     <C>
Leonard Chill.........................   $ 249,067(2)
Joseph F. Dana........................            --
Joseph Sinicropi......................      80,149(2)
Ralph Kenner..........................     102,760(2)
William Gardner Wright, Jr............     102,760(2)
</TABLE>
 
------------------------
 
(1) Any shares of Common Stock received upon the exercise of options are subject
    to "lock-up" agreements with the underwriters of the Common Stock Offering.
 
(2) Based on the September 30, 1998 price ($16.25 per share) less the exercise
    price ($10.72 per share) payable for such shares.
 
(3) Based on the September 30, 1998 price ($16.25 per share) less the exercise
    prices of $6.83 for 28,906 shares and $15.00 for 10,100 shares.
 
(4) Based on the September 30, 1998 price ($16.25 per share) less the exercise
    prices of $10.72 for 14,494 shares and $15.00 for 6,200 shares.
 
                                       18
<PAGE>
                AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
                                                                                                            VALUE OF
                                                                                                          UNEXERCISED
                                                                                 NUMBER OF SECURITIES     IN-THE-MONEY
                                             SHARES                             UNDERLYING UNEXERCISED     OPTIONS AT
                                            ACQUIRED                            OPTIONS AT FY-END (1)        FY-END
                                               ON                VALUE        --------------------------  ------------
NAME                                      EXERCISE (#)       REALIZED ($)     EXERCISABLE  UNEXERCISABLE  EXERCISABLE
--------------------------------------  -----------------  -----------------  -----------  -------------  ------------
<S>                                     <C>                <C>                <C>          <C>            <C>
Leonard Chill.........................             --                 --         100,243        45,039    $  554,342(2)
Joseph F. Dana........................             --                 --         169,506            --       284,920(3)
Joseph Sinicropi......................             --                 --          38,194        14,494        87,902(4)
Ralph Kenner..........................             --                 --          35,289        18,582       195,147(2)
William Gardner Wright, Jr............             --                 --          35,289        18,582       195,147(2)
 
<CAPTION>
 
NAME                                    UNEXERCISABLE
--------------------------------------  -------------
<S>                                     <C>
Leonard Chill.........................   $ 249,067(2)
Joseph F. Dana........................            --
Joseph Sinicropi......................      80,149(2)
Ralph Kenner..........................     102,760(2)
William Gardner Wright, Jr............     102,760(2)
</TABLE>
 
------------------------
 
(1) Any shares of Common Stock received upon the exercise of options are subject
    to "lock-up" agreements with the underwriters of the Common Stock Offering.
 
(2) Based on the September 30, 1998 price ($16.25 per share) less the exercise
    price ($10.72 per share) payable for such shares.
 
(3) Based on the September 30, 1998 price ($16.25 per share) less the exercise
    prices of $6.83 for 28,906 shares and $15.00 for 10,100 shares.
 
(4) Based on the September 30, 1998 price ($16.25 per share) less the exercise
    prices of $10.72 for 14,494 shares and $15.00 for 6,200 shares.
 
DESCRIPTION OF CERTAIN EMPLOYMENT AGREEMENTS
 
    Each of Messrs. Chill, Dana, Sinicropi and Kenner (the "Executives") are
employed by the Company pursuant to individual employment agreements effective
as of September 24, 1998 (the "Effective Date"). The term of employment under
these agreements is twenty-five months from the Effective Date in the case of
Messrs. Chill and Kenner, three years from the Effective Date in the case of Mr.
Sinicropi and four years from the Effective Date in the case of Mr. Dana;
provided that on each anniversary of the month following the [first] Effective
Date (or, in the case of Mr. Dana, the second Effective Date), and each
successive month, the term is automatically extended for one successive month,
providing a minimum remaining term of two years, unless either party terminates
the agreement by written notice. The current annual salaries for Messrs. Chill,
Dana, Sinicropi and Kenner pursuant to these agreements are $280,000, $225,000,
$170,000 and $171,000, respectively, and are subject to annual review by the
Board.
 
    The Company has the right to terminate the Executive's employment for
"cause" or "without cause," in each case as defined in the applicable employment
agreement. In the event that an Executive is terminated by the Company "without
cause," other than following a "Change in Control" (as defined below), the
Executive is entitled to receive (a) his base salary at the rate in effect on
the date of termination of employment for a period of one and one-half years
from the date of termination, (b) any unpaid, accrued amounts under the annual
incentive plan, (c) a pro rata payment under the annual incentive plan for the
termination year, (d) a payment equal to the three year average of incentive
payments received under the Company's annual incentive plan and (e) certain
other supplemental insurance coverages. Under these employment agreements, a
"Change in Control" occurs when (i) any person or group becomes the beneficial
owner of capital stock of the Company representing 35% of all the voting stock,
(ii) the members of the Board on the Effective Date cease to constitute a
majority of the Board, (iii) the Company combines with another entity and a
person holds more than 35% of the voting stock of the Company or the Company's
directors, as of the date immediately before such combination, constitute less
than a majority of the board of directors of the combined entity, (iv) the
Company's stockholders approve a merger, consolidation or share exchange that
results in the conversion or exchange
 
                                       19
<PAGE>
of the Company's voting stock or the Company's stockholders holding less than
50% of the combined voting power of the surviving entity, (v) any event that
would constitute a change of control (as defined under Regulation 14A of the
Securities Act of 1933, as amended) of the Partnership, or (vi) the removal of
the general partner of the Partnership or the appointment of a liquidating
trustee not approved by the general partner or the Board.
 
    If either Mr. Chill or Mr. Kenner is terminated by the Company "without
cause" prior to the occurrence of a Change in Control and it can be shown such
termination occurred in connection with, prior to or in anticipation of the
Change in Control or, if following a Change in Control, either Mr. Chill or Mr.
Kenner is terminated by the Company other than for "cause," (and, in the case of
Mr. Chill, he terminates his employment within 120 days following the Change in
Control or thereafter terminates his employment for "good reason" (as defined in
the employment agreement)), he is entitled to (i) all accrued and unpaid
compensation and benefits, (ii) a lump sum payment equal to one and one-half
times his annual base salary, plus two times the incentive payments under the
annual incentive plan for the year in which the Change in Control occurs or the
prior year, whichever is greater, (iii) unpaid, accrued amounts under the annual
incentive plan and a payment that equals the average of the incentive payment
received by him under the annual incentive plan for the immediately preceding
three years and (iv) certain other supplemental insurance coverages. In the
event of a Change in Control, whether or not Mr. Chill's or Mr. Kenner's
employment continues with the Company, all options granted to them under any of
the Company's stock option plans shall vest immediately on the date of the
Change in Control.
 
    If either Mr. Dana or Mr. Sinicropi is terminated by the Company "without
cause" prior to the occurrence of a Change in Control and it can be shown such
termination occurred in connection with, prior to or in anticipation of the
Change in Control or, if following a Change in Control, either Mr. Dana or Mr.
Sinicropi is terminated by the Company other than for "cause," terminates his
employment within 120 days following the Change in Control or thereafter
terminates his employment for "good reason" (as defined in the applicable
employment agreement), he is entitled to (i) all accrued and unpaid compensation
and benefits, (ii) a lump sum payment equal to two and one-half times his annual
base salary, plus two times the incentive payments under the annual incentive
plan for the year in which the Change in Control occurs or the prior year,
whichever is greater, (iii) unpaid, accrued amounts under the annual incentive
plan and a payment that equals the average of the incentive payment received by
him under the annual incentive plan for the immediately preceding three years,
(iv) certain other supplemental insurance coverages and (vi) reimbursement for
excise taxes, if any, due in connection with the termination compensation
described above. In the event of a Change in Control, whether or not Mr. Dana's
or Mr. Sinicropi's employment continues with the Company, all options granted to
them under any of the Company's stock option plans shall vest immediately on the
date of the Change in Control.
 
    In the event that the Executive's employment is terminated for disability or
death, he (or his estate) is to be paid (a) his base salary accrued through the
date of termination and (b) any unpaid, accrued amounts under the annual
incentive plan. In the case of termination by reason of death, the Executive is
also entitled to a payment under the annual incentive plan equal to the pro rata
amount due for the termination year.
 
    Each of these employment agreements also provides that the Executive is
restricted from soliciting customers or employees or engaging in certain
restricted activities on behalf of any entity which engages in businesses
similar to that of the Company until two years after the date his employment
ends for any reason, for which he will be paid an amount equal to one-half his
base salary as in effect on the date of termination of employment.
 
    Mr. Wright is employed by the Company pursuant to an employment agreement
effective as of September 6, 1996 (the "Effective Date"). The term of employment
under this agreement is three years from the Effective Date; provided that on
each anniversary of the month following the first Effective Date, and each
successive month, the term is automatically extended for one successive month,
providing a
 
                                       20
<PAGE>
minimum remaining term of two years, unless either party terminates the
agreement by written notice. The current annual salary for Mr. Wright pursuant
to this agreement is $249,803, and is subject to annual review by the Board.
 
    The Company has the right to terminate Mr. Wright's employment for "cause"
or "without cause," in each case as defined in the employment agreement. In the
event that Mr. Wright is terminated by the Company "without cause," other than
following a "Change in Control" (as defined below), he is entitled to receive
his base salary at the rate in effect on the date of termination of employment
for a period of two years from the date of termination, any unpaid, accrued
amounts under the annual incentive plan, a pro rata payment under the annual
incentive plan for the termination year, a payment equal to the three year
average of incentive payments received under the Company's annual incentive plan
and any stock option rights due through the end of the term. Under this
employment agreement, a "Change in Control" occurs when (i) any person or group
becomes the beneficial owner of capital stock of the Company representing 35% of
all the voting stock, (ii) the members of the Board on the Effective Date cease
to constitute a majority of the Board, or (iii) the Company combines with
another entity and a person holds more than 35% of the voting stock of the
Company or the Company's directors, as of the date immediately before such
combination, constitute less than a majority of the board of directors of the
combined entity.
 
    If Mr. Wright is terminated by the Company "without cause" prior to the
occurrence of a Change in Control and it can be shown such termination occurred
in connection with, prior to or in anticipation of the Change in Control, or if
the termination resulted from a Change in Control, he is entitled to (i) a lump
sum payment equal to two times his annual base salary and annual incentive plan
for the year in which the Change in Control occurs or the prior year, whichever
is greater, and (ii) unpaid, accrued amounts under the annual incentive plan and
a payment that equals the average of the incentive payment received by him under
the annual incentive plan for the immediately preceding three years. In the
event of a Change in Control, whether or not Mr. Wright's employment continues
with the Company, all options granted to him under any of the Management Plans
shall vest immediately on the date of the Change in Control.
 
    In the event that Mr. Wright's employment is terminated for disability or
death, he (or his estate) is to be paid (a) his base salary at the rate in
effect on the date of termination until the earlier of six months from the date
of termination or the date of commencement of long term disability payments, if
applicable, and (b) any unpaid, accrued amounts under the annual incentive plan,
and will receive any stock option rights to which he would otherwise be
entitled. In the case of termination by reason of death, Mr. Wright is also
entitled to a payment under the annual incentive plan equal to the pro rata
amount due for the termination year.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    As at December 23, 1998, no person or group is known to the Partnership to
be the beneficial owner of more than five percent (5%) of the Units. The general
partners of Synthetic G.P. and their respective stockholders do not own any
Units.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    SI Management L.P. is the sole general partner of the Partnership. Synthetic
Management G.P. is the sole general partner of SI Management L.P. By virtue of
these relationships, Synthetic Management G.P. controls the management and
affairs of the Partnership and therefore, the Company. The Partnership owns
5,699,194 shares of Common Stock, or approximately 66% of the issued and
outstanding shares of Common Stock, and therefore, holds the voting power to
determine the outcome of all matters upon which stockholders vote.
 
    The partners of Synthetic Management G.P. are the following five Delaware
corporations: Chill Investments, Inc., Beckman Investments, Inc., Freed
Investments, Inc., Kenner Investments, Inc. and W.G. Wright Investments, Inc.
Each of Messrs. Chill, Beckman, Freed, Kenner and Wright is the sole director
 
                                       21
<PAGE>
and the sole stockholder of one of Synthetic Management G.P.'s partners. For
further information concerning Messrs. Chill, Freed, Kenner and Wright, see
"Executive Officers and Directors of the Company."
 
    The Company and the Partnership have entered into a Registration Rights
Agreement pursuant to which the Company has agreed that upon request of the
Partnership the Company will register under the Securities Act and applicable
state securities laws the sale of the Common Stock owned by the Partnership and
as to which registration has been requested. The Company's obligation is subject
to certain limitations relating to a minimum amount required for registration,
the timing of a registration and other similar matters. The Company is obligated
to pay any registration expenses incidental to such registration, excluding
underwriters' commissions and discounts. In connection with the Company's
initial public offering of Common Stock in November 1996, the Company incurred
approximately $650,000 of such incidental registration expenses on the behalf of
the Partnership. The above description is qualified in its entirety by reference
to the Registration Rights Agreement, a copy of which has been filed as an
exhibit to Amendment No. 1 to the Company's Registration Statement on Form S-1
(File No. 333-9377), filed with the Securities and Exchange Commission on
September 13, 1996.
 
    On September 19, 1997, the Company and the Partnership entered into the
Agreement and Plan of Withdrawal and Dissolution of the Partnership (the
"Plan"). Pursuant to the Plan, the Partnership was to be dissolved in two
separate phases. The first phase was to be an underwritten public offering of
the number of shares of Common Stock that limited partners have elected to sell,
and the second phase is to be one to three liquidating distributions of the
unsold portions of the Partnership's shares of Common Stock, beginning 180 days
after the completion of the public offering. On November 7, 1997, the limited
partners approved the adoption of the Plan. However, the implementation of the
Plan has been enjoined by courts in Delaware and California in connection with
two lawsuits filed by certain limited partners of the Partnership against the
Partnership and its general partner (the "General Partner"), among others. See
"Claims and Legal Proceedings." Among other equitable and legal remedies, the
plaintiff is seeking the removal of the General Partner and the liquidation of
the Partnership. The Company is only a nominal defendant in these proceedings
and does not presently possess any contractual rights with respect to their
ultimate resolution. If, in connection with these lawsuits, the General Partner
is removed or resigns, or the Partnership is liquidated under a court-appointed
receiver, there can be no assurance that the resulting sale and/or distribution
of the Partnership's shares of Common Stock will be made in the same or similar
manner as that contemplated by the Plan. The General Partner has denied the
allegations of the plaintiff and is vigorously contesting the lawsuits; however,
in the event of an adverse ruling, the Company cannot predict the volume and
price at which the Common Stock trades might be affected.
 
    Lee J. Seidler, a director of the Company, is presently associated with
Bear, Stearns & Co. Inc. as Managing Director Emeritus and from time to time
receives fees in connection with consulting and referral services to Bear,
Stearns & Co. Inc., including the initial public offering and the offering of
$170,000,000 aggregate principal amount of the Notes. Dr. Seidler has received
from Bear, Stearns & Co. Inc., in connection with such services, approximately
$200,000 in fiscal 1997.
 
    Jon P. Beckman, a former executive officer of the Company and an affiliate
of the General Partner, is being retained as a consultant to the Company.
Pursuant to his consulting agreement with the Company, Mr. Beckman will receive,
until January 31, 2000, or upon earlier termination of his consulting agreement,
$125,000 per year and various insurance coverages, and will be authorized to
exercise all stock options awarded to him, subject to applicable vesting
provisions. Under this agreement, Mr. Beckman is required to provide the Company
with 20 hours of consultation per month, has released the Company from any
liability resulting from his employment and has also agreed not to compete
against the Company.
 
    The Company leases office space under a five-year lease with William Gardner
Wright, Jr., one of the Company's executive officers. The term of the lease
expires on September 30, 2003 and the rent is approximately $4,300 per month,
which the Company believes is within prevailing market rates.
 
                                       22
<PAGE>
    Pursuant to a licensing agreement with the Company, W. Wayne Freed, an
executive officer of the Company, receives royalties related to the manufacture
and sale of a certain product for which Mr. Freed owns all of the U.S. and
foreign patents. Under this agreement, Mr. Freed received royalties of $9,900
and $12,646 in fiscal 1998 and 1997, respectively, and will continue to receive
such royalties until 2012 or the earlier termination of the licensing agreement.
 
    In May 1998, the Company acquired 82,056 shares of Common Stock from the
Partnership in exchange for $1,759,085 of amounts receivable from the
Partnership in partial settlement of expenses incurred by the Company on behalf
of the Partnership during the last several years. The shares were acquired at
their fair market value and are held in treasury for issuance under the Employee
Stock Purchase Plan (see Note 15 to the financial statements). At September 30,
1998, the remaining balance due the Company from the Partnership was $663,443.
 
                                       23
<PAGE>
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
    (a) Index to Consolidated Financial Statements:
 
<TABLE>
<CAPTION>
                                                                                                      PAGE NO. OF
                                                                                                  FINANCIAL STATEMENT
                                                                                                -----------------------
<S>                                                                                             <C>
(1) Financial Statements:
 
  Independent Auditors' Report................................................................               F-1
  Consolidated Balance Sheets.................................................................               F-2
  Consolidated Statements of Operations.......................................................               F-3
  Consolidated Statements of Changes in
  Partners' Capital...........................................................................               F-4
  Consolidated Statements of Cash Flows.......................................................               F-5
  Notes to Consolidated Financial Statements..................................................               F-6
</TABLE>
 
    (b) The Company did not file a Current Report on Form 8-K during the last
quarter of the fiscal year covered by this Annual Report.
 
    (c) Exhibits: See Exhibit Index immediately following Item 14.
 
    (d) No additional financial statements are required to be filed.
 
                                       24
<PAGE>
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
     LOCATION IN
     SEQUENTIAL
   PAGE NUMBERING
       SYSTEM
---------------------
<C>                    <S>
                       The following are the Exhibits as required by Item 14 (c).
 
               1       2.1 Acquisition Agreement dated November 21, 1986 between Synthetic Industries, Inc., Synthetic
                       Industries Limited, Polyweave Corporation, the shareholders of Synthetic Industries, Inc.,
                       Synthetic Industries Limited and SI Holding Inc. including exhibits thereto.
 
               1       2.2 Plan and Agreement of Merger dated December 4, 1986.
 
               2       2.3 Asset Purchase Agreement dated October 12, 1990 between Synthetic Industries, Inc. and
                       Chicopee.
 
               6       3.1 Certificate of Incorporation of Synthetic Industries, Inc. (including all amendments to date)
                       filed with the Secretary of the State of Delaware.
 
               6       3.2 Amended and Restated By-Laws of Synthetic Industries, Inc. (including all amendments to
                       date).
 
               10      4.4 Indenture dated as of February 11, 1997 between Synthetic Industries, Inc. and United Stated
                       Trust Company of New York, Trustee, with respect to the 9 1/4% Senior Subordinated Notes due
                       2007.
 
               10      4.5 Registration Rights Agreement, dated as of February 11, 1997, between Synthetic Industries,
                       Inc. and Bear Stearns & Co. Inc.
 
               8       4.6 Registration Rights Agreement, dated as of October 31, 1996, between Synthetic Industries,
                       Inc. and Synthetic Industries, L.P.
 
               2       10.1 US Patent No. 4,867,614, Reinforced Soil and Method (Exp. December 13, 2003).
 
               2       10.2 US Patent No. 4,790,691, Fiber Reinforced Soil and Method (Exp. December 13, 2003).
 
               2       10.3 US Patent No. 5,007,766, Shaped Barrier for Erosion Control and Sediment Collection (Exp.
                       April 16, 2008).
 
               1       10.4 Lease agreement dated November 22, 1971 between Murray Sobel and Synthetic Industries, Inc.
                       (including all amendments to date).
 
               1       10.5 Lease agreement dated February 13, 1969, between Murray Sobel and wife, Marcela S. Sobel,
                       and Joseph F. Decosimo, Frank M. Thompson and Murray Sobel, Trustees and Synthetic Industries,
                       Inc. (including all amendments to date).
 
               2       10.6 Lease agreement dated December 17, 1990 between Chicopee and Synthetic Industries, Inc.
 
               2       10.7 Lease agreement dated January 17, 1991 between Herchel L. Webster and Allie Ree Webster and
                       Synthetic Industries, Inc. (the "Lumite Lease").
 
               3       10.8 Amendment to the Lumite Lease dated October 1, 1992.
 
               2       10.9 Consulting Agreement dated July 23, 1991 between Texpro Limitada y Cia S.C.A. and Synthetic
                       Industries, Limited.
 
               4       10.10 Supply Contract between Eastman Chemical Products, Inc. and Synthetic Industries, Inc.
                       dated December 13, 1991.
</TABLE>
 
                                       25
<PAGE>
<TABLE>
<CAPTION>
     LOCATION IN
     SEQUENTIAL
   PAGE NUMBERING
       SYSTEM
---------------------
<C>                    <S>
               15      10.11 Agreement dated September 24, 1998 between Leonard Chill and Synthetic Industries, Inc.
 
               15      10.12 Agreement dated September 24, 1998 between W. Wayne Freed and Synthetic Industries, Inc.
 
               15      10.13 Agreement dated September 24, 1998 between Ralph A. Kenner and Synthetic Industries, Inc.
 
               9       10.14 Agreement dated September 6, 1996 between W. Gardner Wright, Jr. and Synthetic Industries,
                       Inc.
 
               9       10.15 Agreement dated September 6, 1996 between John M. Long and Synthetic Industries, Inc.
 
               15      10.16 Agreement dated September 24, 1998 between Charles T. Koerner and Synthetic Industries,
                       Inc.
 
               15      10.17 Agreement dated September 24, 1998 between Joseph Sinicropi and Synthetic Industries, Inc.
 
               15      10.18 Agreement dated September 24, 1998 between Bobby Callahan and Synthetic Industries, Inc.
 
               15      10.19 Agreement dated September 24, 1998 between Joseph F. Dana and Synthetic Industries, Inc
 
               *       10.20 Agreement dated August 10, 1998 between Richard Hingson and Synthetic Industries, Inc.
 
               5       10.21 1994 Stock Option Plan for Non-Employee Directors
 
               5       10.22 1994 Stock Option Plan
 
               7       10.23 1996 Stock Option Plan
 
               7       10.24 Incentive Compensation Plan Fiscal Year 1994/1995
 
               7       10.25 Incentive Compensation Plan Fiscal Year 1995/1996
 
               15      10.26 Incentive Compensation Plan Fiscal Year 1996/1997
 
               15      10.27 Incentive Compensation Plan Fiscal Year 1997/1998
 
               11      10.28 Asset Sale Agreement by and between Spartan Mills and Synthetic Industries, Inc. dated as
                       of February 27, 1997.
 
               11      10.29 Lease Agreement by and between Spartan Mills and Synthetic Industries, Inc. dated as of
                       February 27, 1997.
 
               12      10.30 Receivable Purchase and Sale Agreement dated as of December 18, 1997 among Synthetic
                       Industries, Inc., BankBoston and other Lenders, and BankBoston, as agent on behalf of the
                       Lenders.
 
               *       10.31 Loan and Security Agreement dated dated as of December 18, 1997.
 
               *       10.32 Amendment No.1 to the Loan and Security Agreement dated as of December 18, 1997.
 
               13      10.33 Amendment No. 2 to the Loan and Security Agreement dated as of December 18, 1997.
</TABLE>
 
                                       26
<PAGE>
<TABLE>
<CAPTION>
     LOCATION IN
     SEQUENTIAL
   PAGE NUMBERING
       SYSTEM
---------------------
<C>                    <S>
               14      10.34 Amendment No. 3 to the Loan and Security Agreement dated as of December 18, 1997
 
               15      10.35 Amendment No. 4 to the Loan and Security Agreement dated as of December 18, 1997.
 
               15      10.36 Supplemental Savings Plan
 
               *       21. List of Subsidiaries of Synthetic Industries, Inc.
 
                       27. Financial Data Schedule
</TABLE>
 
------------------------
 
(1)   Filed as an exhibit to the Company's Registration Statement on Form S-1
    (33-11479) as filed with the Securities and Exchange Commission on January
    23, 1987 and incorporated herein by reference.
 
(2)   Filed as an exhibit to the Company's Registration Statement on Form S-1
    (33-51206) as filed with the Securities and Exchange Commission on August
    24, 1992 and incorporated herein by reference.
 
(3)   Filed as an exhibit to the Partnership's Amendment No. 1 to the
    Registration Statement on Form 10 (0-21548) as filed with the Securities and
    Exchange Commission on August 10, 1993 and incorporated herein by reference.
 
(4)   Pursuant to an order dated October 19, 1992, the Securities and Exchange
    Commission granted confidential treatment with respect to certain portions
    of this exhibit under Rule 406 of the Securities Act of 1933, as amended.
 
(5)   Filed as an exhibit to the Company's Annual Report on Form 10-K for the
    fiscal year ended September 30, 1994 and incorporated herein by reference.
 
(6)   Filed as an exhibit to the Company's Registration Statement on Form 8-A
    (0-12357) as filed with the Securities and Exchange Commission on October
    24, 1996 and incorporated herein by reference.
 
(7)   Filed as an exhibit to the Company's Registration Statement on Form S-1
    (333-09377) as filed with the Securities and Exchange Commission on August
    1, 1996 and incorporated herein by reference.
 
(8)   Filed as an exhibit to Amendment No. 1 to the Company's Registration
    Statement on Form S-1 (333-09377) as filed with the Securities and Exchange
    Commission on September 13, 1996 and incorporated herein by reference.
 
(9)   Filed as an exhibit to Amendment No. 2 to the Company's Registration
    Statement on Form S-1 (333-09377) as filed with the Securities and Exchange
    Commission on October 2,1996 and incorporated herein by reference.
 
(10)  Filed as an exhibit to the Company's Registration Statement on Form S-4
    (File No. 333-23167) as filed with the Securities and Exchange Commission on
    March 12, 1997 and incorporated herein by reference.
 
(11)  Filed as an exhibit to Amendment No. 3 to the Company's Registration
    Statement on Form S-4 (File No. 333-28817) as filed with the Securities and
    Exchange Commission on September 17, 1997.
 
(12)  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
    quarter ended December 31, 1998 and incorporated herein by reference.
 
(13)  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
    quarter ended March 31, 1998 and incorporated herein by reference.
 
                                       27
<PAGE>
(14)  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
    quarter ended June 30, 1998 and incorporated herein by reference.
 
(15)  Filed herewith.
 
*   To be filed by amendment.
 
                                       28
<PAGE>
INDEPENDENT AUDITORS' REPORT
 
To the Partners of
Synthetic Industries L.P.
Chickamauga, Georgia
 
    We have audited the accompanying consolidated balance sheets of Synthetic
Industries, L.P. and subsidiary as of September 30, 1998 and 1997, and the
related consolidated statements of operations, changes in Partners' equity and
cash flows for each of the three years in the period ended September 30, 1998.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Synthetic Industries, LP and
subsidiary at September 30, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended September
30, 1998 in conformity with generally accepted accounting principles.
 
/S/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
November 20, 1998
 
                                      F-1
<PAGE>
                           SYNTHETIC INDUSTRIES L.P.
                                 AND SUBSIDIARY
 
                          CONSOLIDATED BALANCE SHEETS
 
    (IN THOUSANDS OF DOLLARS, EXCEPT LIMITED PARTNERSHIP UNITS OUTSTANDING)
 
<TABLE>
<CAPTION>
                                                                                                SEPTEMBER 30,
                                                                                            ----------------------
<S>                                                                                         <C>         <C>
                                                                                               1998        1997
                                                                                            ----------  ----------
                                          ASSETS
 
CURRENT ASSETS:
  Cash....................................................................................  $      287  $      340
  Accounts receivable, net (Note 4).......................................................      64,251      60,031
  Inventory (Note 5)......................................................................      52,450      54,139
  Other current assets (Note 6)...........................................................      16,644      15,402
                                                                                            ----------  ----------
      TOTAL CURRENT ASSETS................................................................     133,632     129,912
 
PROPERTY, PLANT AND EQUIPMENT, net (Note 7)...............................................     218,449     182,102
 
OTHER ASSETS (Note 8).....................................................................      87,770      82,781
                                                                                            ----------  ----------
                                                                                            $  439,851  $  394,795
                                                                                            ----------  ----------
                                                                                            ----------  ----------
                            LIABILITIES AND PARTNERS' CAPITAL
 
CURRENT LIABILITIES:
  Accounts payable........................................................................  $   26,438  $   27,030
  Accrued expenses and other current liabilities..........................................      13,653      11,613
  Income taxes payable (Note 10)..........................................................         285          52
  Interest payable........................................................................       2,154       2,467
  Current maturities of long-term debt (Note 9)...........................................       5,500         718
                                                                                            ----------  ----------
      TOTAL CURRENT LIABILITIES...........................................................      48,030      41,880
 
LONG-TERM DEBT (Note 9)...................................................................     236,843     220,464
 
DEFERRED INCOME TAXES (Note 10)...........................................................      32,996      28,430
 
MINORITY INTEREST IN SUBSIDIARY...........................................................      41,437      35,145
 
COMMITMENTS AND CONTINGENCIES (Note 15)
 
PARTNERS' CAPITAL
  General Partner Capital.................................................................         805         688
  Limited Partners' Capital, 800 Units issued and outstanding.............................      79,746      68,188
                                                                                            ----------  ----------
      TOTAL PARTNERS' CAPITAL.............................................................      80,545      68,876
                                                                                            ----------  ----------
                                                                                            $  439,851  $  394,795
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>
 
                 See notes to consolidated financial statements
 
                                      F-2
<PAGE>
                           SYNTHETIC INDUSTRIES L.P.
                                 AND SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
    (IN THOUSANDS OF DOLLARS, EXCEPT LIMITED PARTNERSHIP UNITS OUTSTANDING)
 
<TABLE>
<CAPTION>
                                                                                    YEAR ENDED SEPTEMBER 30,
                                                                               ----------------------------------
<S>                                                                            <C>         <C>         <C>
                                                                                  1998        1997        1996
                                                                               ----------  ----------  ----------
Net sales....................................................................  $  368,996  $  345,572  $  299,532
                                                                               ----------  ----------  ----------
Costs and expenses:
  Cost of sales..............................................................     246,677     233,187     208,321
  Selling expenses...........................................................      39,358      31,801      27,488
  General and administrative expenses........................................      31,479      27,701      23,318
  Amortization of excess of purchase price over net assets acquired and other
    intangibles..............................................................       2,787       2,592       2,592
                                                                               ----------  ----------  ----------
                                                                                  320,301     295,281     261,719
                                                                               ----------  ----------  ----------
  Operating income...........................................................      48,695      50,291      37,813
                                                                               ----------  ----------  ----------
Other expenses:
  Interest expense, net......................................................      18,515      20,085      22,773
  Amortization of deferred financing costs...................................         729         654         699
                                                                               ----------  ----------  ----------
                                                                                   19,244      20,739      23,472
                                                                               ----------  ----------  ----------
Income before provision for income taxes, minority interest in subsidiary net
  income and extraordinary item..............................................      29,451      29,552      14,341
 
Provision for income taxes (Note 10).........................................      11,855      12,541       6,900
                                                                               ----------  ----------  ----------
Income before minority interest in subsidiary net income and extraordinary
  item.......................................................................      17,596      17,011       7,441
 
Minority interest in subsidiary net income...................................       6,167       1,864          --
                                                                               ----------  ----------  ----------
Income before extraordinary item.............................................      11,429      15,147       7,441
Extraordinary item--Loss from early extinguishment of debt (net of tax
  benefit of $7,481) (Note 9)................................................      --          11,950          --
                                                                               ----------  ----------  ----------
NET INCOME...................................................................  $   11,429  $    3,197  $    7,441
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
Net income attributable to:
  General partner............................................................  $      115  $       32  $       74
  Limited partners...........................................................      11,314       3,165       7,367
                                                                               ----------  ----------  ----------
                                                                               $   11,429  $    3,197  $    7,441
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
Net income per limited partnership unit......................................  $   14,143  $    3,956  $    9,209
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
Limited partnership units outstanding........................................         800         800         800
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
</TABLE>
 
                 See notes to consolidated financial statements
 
                                      F-3
<PAGE>
                           SYNTHETIC INDUSTRIES L.P.
                                 AND SUBSIDIARY
 
            CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
 
                           (IN THOUSANDS OF DOLLARS)
 
<TABLE>
<CAPTION>
                                                                                                              TOTAL
                                                                                      GENERAL     LIMITED   PARTNERS'
                                                                                      PARTNER     PARTNER    CAPITAL
                                                                                    -----------  ---------  ---------
<S>                                                                                 <C>          <C>        <C>
Balance, September 30, 1995.......................................................         575      57,183     57,758
Net income........................................................................          74       7,367      7,441
Foreign currency translation......................................................          --         (14)       (14)
                                                                                         -----   ---------  ---------
Balance, September 30, 1996.......................................................         649      64,536     65,185
Net income........................................................................          32       3,165      3,197
Equity from the Offering..........................................................           5         424        429
Foreign currency translation......................................................           2          63         65
                                                                                         -----   ---------  ---------
Balance, September 30, 1997.......................................................         688      68,188     68,876
Net income........................................................................         115      11,314     11,429
Foreign currency translation......................................................      --              39         39
Exercise stock options............................................................           1          52         53
Stock transfer....................................................................           1         147        148
                                                                                         -----   ---------  ---------
Balance, September 30, 1998.......................................................   $     805   $  79,740  $  80,545
                                                                                         -----   ---------  ---------
                                                                                         -----   ---------  ---------
</TABLE>
 
                 See notes to consolidated financial statements
 
                                      F-4
<PAGE>
                           SYNTHETIC INDUSTRIES L.P.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                           (IN THOUSANDS OF DOLLARS)
 
<TABLE>
<CAPTION>
                                                                                          YEAR ENDED SEPTEMBER 30,
                                                                                       -------------------------------
<S>                                                                                    <C>        <C>        <C>
                                                                                         1998       1997       1996
                                                                                       ---------  ---------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income in minority interest....................................................  $  11,429  $   3,197  $   7,441
  Adjustments to reconcile net income to cash provided by operations:
    Minority Interest in subsidiary net income.......................................      6,167      1,864     --
    Extraordinary loss on early extinguishment of debt...............................     --         19,431     --
    Depreciation and amortization....................................................     21,261     18,236     16,299
    Deferred income taxes............................................................      4,977      2,270      3,400
    (Recoveries of) provision for bad debts..........................................        (13)       520      1,024
  Change in operating assets and liabilities, net of acquisition:
    Accounts receivable..............................................................     (2,478)    (9,993)      (943)
    Inventory........................................................................      3,343    (13,634)     6,451
    Other assets.....................................................................     (1,232)       236       (647)
    Accounts payable.................................................................     (3,166)     6,803     (3,801)
    Accrued expenses and other current liabilities...................................      2,046      1,111      2,648
    Income taxes payable.............................................................        323     (1,355)       (48)
    Interest payable.................................................................       (313)    (3,557)      (403)
                                                                                       ---------  ---------  ---------
      Net cash provided by operating activities......................................     42,344     25,129     31,421
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant and equipment.........................................    (46,112)   (53,980)   (29,253)
  Acquisition of business, net of cash acquired......................................     (6,000)    (9,354)        --
                                                                                       ---------  ---------  ---------
      Net cash used in investing activities..........................................    (52,112)   (63,334)   (29,253)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (repayments) borrowings under term loan........................................    (25,000)   (20,000)    19,000
  Net borrowings (repayments) under the credit facility..............................     43,607      9,427    (20,734)
  Issuance of 9 1/4% Senior subordinated notes.......................................     --        170,000     --
  Redemption of 12 3/4% Senior subordinated debentures...............................     (7,403)  (132,597)    --
  Prepayment costs on early extinguishment of debt...................................     --        (15,920)    --
  Proceeds from underwritten public offering.........................................     --         33,681     --
  Proceeds from exercise of stock options............................................         85     --         --
  Proceeds from sale of treasury stock under the Employee Stock Purchase Plan........        130     --         --
  Repayments of capital lease obligation and other long-term debt....................     (1,002)      (660)      (342)
  Debt issuance costs................................................................       (792)    (5,525)      (101)
                                                                                       ---------  ---------  ---------
      Net cash provided by (used in) financing activities............................      9,625     38,406     (2,177)
        Effect of exchange rate changes on cash......................................         90         36          2
                                                                                       ---------  ---------  ---------
NET (DECREASE) INCREASE IN CASH......................................................        (53)       237         (7)
CASH AT BEGINNING OF PERIOD..........................................................        340        103        110
                                                                                       ---------  ---------  ---------
CASH AT END OF PERIOD................................................................  $     287  $     340  $     103
                                                                                       ---------  ---------  ---------
                                                                                       ---------  ---------  ---------
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid during the year for:
  Interest...........................................................................  $  21,232  $  23,642  $  23,176
  Income taxes.......................................................................      5,927      4,145      3,548
  SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITY
  Capital lease obligation incurred for purchase of equipment........................  $   7,500  $  --      $   5,000
  Treasury stock transferred to Synthetic Industries, Inc. in exchange for note
    receivable.......................................................................      1,759     --         --
  Payable incurred for acquisition of business.......................................      1,302     --         --
</TABLE>
 
                 See notes to consolidated financial statements
 
                                      F-5
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                 AND SUBSIDIARY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
1. ORGANIZATION
 
    Synthetic Industries, L.P. (the "Partnership") is a limited partnership
organized under the laws of Delaware. In December 1986, the Partnership acquired
all of the issued and outstanding shares of Synthetic Industries, Inc. (the
"Company"). The Company manufactures and markets a wide range of
polypropylene-based fabric and fiber products designed for industrial
applications. The Company's diverse mix of products are marketed to the floor
covering, construction and technical textile markets for such end-use
applications as carpet backing, geotextiles, erosion control, concrete
reinforcement and furniture construction fabrics.
 
    Since its organization in 1986 and subsequent admission of limited partners,
the Partnership has conducted no business except owning and voting the shares of
the Company. As a result of its public offering of Common Stock in November
1996, the Company had 8,668,750 shares of Common Stock outstanding at September
30, 1998, of which approximately 66% are owned by the Partnership. As the
Partnership has no independent operations or assets other than its investment in
the Company, the Partnership's financial statements are substantially identical
to those of the Company, with the exception of the minority interest and certain
expenses recognized by the Partnership associated with a withdrawn common stock
offering. As a result, the footnote information presented below relates to that
of the Company, except as disclosed. Accordingly, all references to fiscal year
refer to the Company's fiscal year which ends on September 30(th).
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    PRINCIPLES OF CONSOLIDATION
 
    The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. All significant
intercompany transactions and balances have been eliminated.
 
    REVENUE RECOGNITION
 
    Revenue from product sales is recognized at the time of shipment.
 
    FOREIGN CURRENCY TRANSLATION
 
    The assets and liabilities of foreign subsidiaries are translated at the
fiscal year-end rates of exchange, and the results of operations are translated
at the average rates of exchange for the years presented. Gains or losses
resulting from translating foreign currency financial statements are accumulated
in the cumulative translation adjustments account in the stockholders' equity
section of the accompanying consolidated balance sheets. Foreign currency
transaction gains and losses are included in results of operations. Foreign
currency realized and unrealized gains and losses for the years presented were
not material.
 
    INVENTORY
 
    Inventory is stated at the lower of cost, determined using the first-in,
first-out method, or market.
 
                                      F-6
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                 AND SUBSIDIARY
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    PROPERTY, PLANT AND EQUIPMENT
 
    Property, plant and equipment is stated at cost less accumulated
depreciation and amortization. Depreciation is provided on the straight-line
method based on estimated useful lives, as follows:
 
<TABLE>
<S>                                                                 <C>
Building and improvements.........................................  25 years
Machinery and equipment...........................................  14 years
</TABLE>
 
    Leasehold improvements are amortized over the shorter of the useful life of
the asset or the term of the lease. Expenses for repairs, maintenance and
renewals are charged to operations as incurred. Expenditures which improve an
asset or extend its useful life are capitalized. When properties are retired or
otherwise disposed of, the related cost and accumulated depreciation and
amortization are removed from the accounts and any gain or loss is included in
the results of operations.
 
    Capitalized interest is charged to machinery and equipment and amortized
over the lives of the related assets. Interest capitalized during fiscal 1998,
1997 and 1996 was $2,404, $838 and $392, respectively.
 
    INCOME TAXES
 
    The Company accounts for income taxes using an asset and liability approach
in accordance with Statement of Financial Accounting Standards No. 109 ("SFAS
109"). Under SFAS 109, deferred income taxes are recognized for the tax
consequences of temporary differences by applying enacted statutory tax rates
applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. The
effect on deferred taxes of a change in tax rates is recognized in the statement
of operations for the period that includes the enactment date.
 
    EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED
 
    The excess of purchase price over net assets acquired is amortized on a
straight-line basis over a period of 20 to 40 years. Excess of purchase price
over net assets acquired is assessed for recoverability on a regular basis. In
evaluating the value and future benefits of goodwill, its carrying value would
be reduced by the excess, if any, of the balance over management's best estimate
of undiscounted future cash flows before amortization of the related intangible
assets over the remaining amortization period.
 
    DEFERRED FINANCING AND INTANGIBLE ASSETS
 
    Deferred financing costs are amortized over periods from 5 to 12 years.
Intangible assets consist primarily of a Fibermesh-Registered Trademark-
trademark and patents on civil engineering products, which are amortized on a
straight-line basis over 40 and 15 years, respectively.
 
    INCOME PER LIMITED PARTNERSHIP UNIT
 
    Income per limited partnership unit is based upon the weighted average
number of units outstanding during each respective year. Net income is allocated
to the General Partner, the Limited Partners, and the minority interest based on
their respective ownership percentages.
 
                                      F-7
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                 AND SUBSIDIARY
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    USE OF ESTIMATES
 
    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
    RECENT ACCOUNTING PRONOUNCEMENTS
 
    In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), which must be adopted for fiscal years beginning after
December 15, 1997. SFAS 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. SFAS 130 will not have a material effect on the Company's
results of operations or financial condition.
 
    Also in June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"), which must be adopted for fiscal years beginning
after December 15, 1997. Under the new standard, companies will be required to
report certain information about operating segments in consolidated financial
statements. Operating segments will be determined based on the method that
management organizes its businesses for making operating decisions and assessing
performance. SFAS 131 also requires companies to report certain information
about their products and services, the geographic areas in which they operate,
and their major customers. The Company is currently evaluating the effect SFAS
131 will have on its financial statement presentation.
 
    In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which must be adopted for fiscal quarters of fiscal years beginning after
June 15,1999. SFAS 133 requires the recognition of all derivatives as either
assets or liabilities in the statement of financial position and measurement of
those instruments at fair value. SFAS 133 will not have a material effect on the
Company's results of operations or financial condition.
 
    RESEARCH AND DEVELOPMENT
 
    The Company's research and market development is focused primarily on
development and as such the Company engages in product design, development and
performance validation to improve existing products and to create new products.
The Company expended $8,100, $4,208, and $2,942 in fiscal 1998, 1997, and 1996,
respectively. Research and market development costs are expensed as incurred and
included in general and administrative expenses.
 
    RECLASSIFICATION OF PRIOR FINANCIAL STATEMENTS
 
    Certain reclassifications have been made to previous years' financial
statements to conform with 1998 classifications.
 
                                      F-8
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
3. BUSINESS ACQUISITIONS
 
    On March 18, 1998, pursuant to a Stock Purchase Agreement, as subsequently
amended, the Company acquired all of the outstanding shares of Novocon
International, Inc. (the "Novocon Acquisition"), a manufacturer and marketer of
steel concrete reinforcing fibers, for $7,302. The acquisition has been
accounted for using the purchase method of accounting and, accordingly, the
purchase price has been allocated to the assets acquired of $5,293 (primarily
accounts receivable and inventory of $1,731 and $1,654, respectively) and the
liabilities assumed of $4,880 (primarily accounts payable and other debt of
$2,545 and $2,335, respectively) based upon the fair market value at the date of
acquisition. The excess purchase price over the fair values of the net assets
acquired has been recorded as goodwill, which is being amortized on a
straight-line basis over 20 years. The operating results of the acquired
business have been included in the consolidated statement of operations from the
date of acquisition.
 
    On February 27, 1997, the Company acquired certain assets of the Spartan
Technologies division of Spartan Mills (the "Spartan Acquisition") for
approximately $9,400. The Spartan Acquisition has been accounted for using the
purchase method of accounting, and, accordingly, the purchase price has been
allocated to the net assets acquired (accounts receivable, inventory, and
property, plant and equipment) based on the fair market value (which
approximated cost) at the date of acquisition. The operating results of the
acquired business have been included in the consolidated statement of operations
from the date of acquisition.
 
4. ACCOUNTS RECEIVABLE
 
    Accounts receivable are presented net of the doubtful allowances of $2,714,
$2,707 and $3,036 for fiscal 1998, 1997 and 1996, respectively. The Company had
net recoveries for the year ended September 30, 1998 of $20 and amounts written
off against established allowances of $849 and $2,041 for the years ended
September 30, 1997 and 1996, respectively.
 
    The Company grants uncollateralized trade terms to most U.S. customers. A
majority of the Company's carpet backing sales are with customers located in the
state of Georgia. As of September 30, 1998 and 1997, $27,766 and $26,126,
respectively of the Company's accounts receivable balances were due from
customers located in this state. Net sales to one customer represented
approximately 25%, 20% and 18% of consolidated net sales for 1998, 1997 and
1996, respectively.
 
5. INVENTORY
 
<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30,
                                                                          --------------------
<S>                                                                       <C>        <C>
                                                                            1998       1997
                                                                          ---------  ---------
Finished goods..........................................................  $  37,689  $  33,572
Work in process.........................................................      7,107      7,427
Raw materials...........................................................      7,654     13,140
                                                                          ---------  ---------
                                                                          $  52,450  $  54,139
                                                                          ---------  ---------
                                                                          ---------  ---------
</TABLE>
 
                                      F-9
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
6. OTHER CURRENT ASSETS
 
<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30,
                                                                          --------------------
<S>                                                                       <C>        <C>
                                                                            1998       1997
                                                                          ---------  ---------
Prepaid supplies........................................................  $   9,603  $   9,003
Deferred tax assets (Note 10)...........................................      4,639      5,050
Insurance receivable....................................................      1,110        191
Other...................................................................      1,292      1,158
                                                                          ---------  ---------
                                                                          $  16,644  $  15,402
                                                                          ---------  ---------
                                                                          ---------  ---------
</TABLE>
 
7. PROPERTY, PLANT AND EQUIPMENT
 
<TABLE>
<CAPTION>
                                                                            SEPTEMBER 30,
                                                                        ----------------------
<S>                                                                     <C>         <C>
                                                                           1998        1997
                                                                        ----------  ----------
Land..................................................................  $    4,585  $    4,585
Buildings and improvements............................................      42,588      35,398
Equipment under capital leases........................................      12,500       4,973
Machinery and equipment and leasehold improvements....................     266,972     227,304
                                                                        ----------  ----------
                                                                           326,645     272,260
Accumulated depreciation..............................................     108,196      90,158
                                                                        ----------  ----------
                                                                        $  218,449  $  182,102
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>
 
    Depreciation expense on property, plant and equipment was $17,745, $14,990
and $13,008 in fiscal 1998, 1997 and 1996, respectively.
 
8. OTHER ASSETS
 
<TABLE>
<CAPTION>
                                                                            SEPTEMBER 30,
                                                                        ----------------------
<S>                                                                     <C>         <C>
                                                                           1998        1997
                                                                        ----------  ----------
Excess of purchase price over net assets acquired.....................  $  107,379  $   99,818
Intangible assets.....................................................       3,698       3,546
Deferred financing costs..............................................      12,443      11,651
                                                                        ----------  ----------
                                                                           123,520     115,015
Accumulated amortization..............................................      35,750      32,234
                                                                        ----------  ----------
                                                                        $   87,770  $   82,781
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>
 
    Amortization expense was $3,516, $3,246 and $3,291 in fiscal 1998, 1997 and
1996, respectively.
 
                                      F-10
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
9. LONG-TERM DEBT
 
<TABLE>
<CAPTION>
                                                                                                SEPTEMBER 30,
                                                                                            ----------------------
<S>                                                                                         <C>         <C>
                                                                                               1998        1997
                                                                                            ----------  ----------
Credit facility:
  Securitization..........................................................................  $   29,162  $   --
  Revolver................................................................................      30,022      13,420
  Term loan portion.......................................................................      --          25,000
9 1/4% senior subordinated notes, due 2007................................................     170,000     170,000
12 3/4% senior subordinated debentures, due 2002..........................................      --           7,403
Capital lease obligation (Note 16)........................................................      10,647       4,083
Other.....................................................................................       2,512       1,276
                                                                                            ----------  ----------
                                                                                               242,343     221,182
Less current portion......................................................................       5,500         718
                                                                                            ----------  ----------
Total long-term portion...................................................................  $  236,843  $  220,464
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>
 
    CREDIT FACILITY
 
    On December 18, 1997, the Company and its lenders, with BankBoston as agent,
entered into a new five-year credit facility (the "Credit Facility"). Proceeds
from the Credit Facility were used to repay the Fourth Amended and Restated
Revolving Credit Agreement dated October 20, 1995. The Credit Facility consists
of up to a $40 million asset based securitization program (the
"Securitization"), with amounts borrowed through a wholly owned subsidiary,
Synthetic Funding Corporation, and a $60 million senior secured revolver
facility (the "Revolver"). In conjunction with the Securitization, the Company
entered into a five-year agreement with its subsidiary providing for the sale of
substantially all of its receivables on a revolving basis. Securitization and
Revolver borrowings are collateralized by the Company's accounts receivable and
substantially all of the assets of the Company, excluding real property,
respectively.
 
    Interest on the Securitization is based on the applicable commercial paper
rate in effect plus a spread. The Revolver permits borrowings which bear
interest, at the Company's option, (i) for domestic borrowings based on the
lender's base rate or (ii) for Eurodollar borrowings based on a spread over the
Interbank Eurodollar rate at the time of conversion. Spreads for the
Securitization and the Eurodollar borrowings are determined by the operational
performance of the Company. At September 30, 1998, the balances under the
Securitization and Revolver were $29,162 and $30,022, respectively, at interest
rates ranging from 6.27% to 8.5%.
 
    The Revolver provides for borrowings under letters of credit of up to
$10,000, which borrowings reduce amounts available under the Revolver. At
September 30, 1998, letters of credit of $402 were outstanding.
 
    The Credit Facility contains covenants related to the maintenance of certain
operating ratios and limitations as to the amount of capital expenditures. The
Company's ability to pay dividends on Common Stock is prohibited under the
Credit Facility.
 
                                      F-11
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
9. LONG-TERM DEBT (CONTINUED)
    SENIOR SUBORDINATED DEBENTURES AND NOTES
 
    On February 11, 1997, the Company issued $170,000 in aggregate principal
amount of 9 1/4% Senior Subordinated Notes due 2007 (the "Notes"), which
represent unsecured obligations of the Company. The Notes are redeemable at the
option of the Company at any time on or after February 15, 2002, initially at
104.625% of their amount, together with accrued interest, with declining
redemption prices thereafter. Interest on the Notes is payable semi-annually on
February 15 and August 15.
 
    In connection with the issuance of the Notes, the Company redeemed
approximately $132,600 principal amount of its 12 3/4% Senior Subordinated
Debentures due 2002 (the "Debentures") at a redemption price of 111.07% of the
principal amount thereof. In addition, the Company repaid $20,000 of its
outstanding term loan borrowings as of March 5, 1997. In connection with the
early extinguishment of debt, the Company recorded an extraordinary loss of
$11,950 (representing call premium and prepayment fees of $15,920 and write off
of deferred financing costs of $3,511, net of an income tax benefit of $7,481)
during the second quarter of fiscal 1997.
 
    On December 1, 1997 the Company redeemed the remaining $7,403 aggregate
principal amount of Debentures outstanding at a redemption price of 106.375% of
the principal amount thereof, together with accrued interest as of the
redemption date.
 
    AGGREGATE MINIMUM PAYMENTS AND FAIR VALUE
 
    Approximate aggregate minimum annual payments due on long term debt and
capital leases (see Note 16), for the subsequent five years, are as follows:
1999, $2,549; 2000, $1,408; 2001, $1,516; 2002, $1,631; 2003, $60,940; and
thereafter, $176,212.
 
    The fair value of the Company's Notes is estimated to be $169,150 and
$176,375 at September 30, 1998 and 1997, respectively. The fair value of the
Debentures were estimated to be $7,875 at September 30, 1997. The fair values
are based on quoted market prices for the Notes and Debentures in the
over-the-counter market.
 
10. INCOME TAXES
 
    The sources of the Company's income before provision for income taxes are as
follows:
 
<TABLE>
<CAPTION>
                                                                                      YEAR ENDED SEPTEMBER 30,
                                                                                   -------------------------------
<S>                                                                                <C>        <C>        <C>
                                                                                     1998       1997       1996
                                                                                   ---------  ---------  ---------
United States....................................................................  $  28,575  $  29,609  $  14,083
Foreign..........................................................................      1,498      1,082        919
                                                                                   ---------  ---------  ---------
Earnings before income taxes.....................................................  $  30,073  $  30,691  $  15,002
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
</TABLE>
 
                                      F-12
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
10. INCOME TAXES (CONTINUED)
    The provision for income taxes contributable to the amounts shown above
consists of the following:
 
<TABLE>
<CAPTION>
                                                                                       YEAR ENDED SEPTEMBER 30,
                                                                                    -------------------------------
<S>                                                                                 <C>        <C>        <C>
                                                                                      1998       1997       1996
                                                                                    ---------  ---------  ---------
Current:
  Federal.........................................................................  $   4,875  $   8,796  $   2,600
  State...........................................................................        591      1,120        600
  Foreign.........................................................................        500        355        300
                                                                                    ---------  ---------  ---------
                                                                                        5,966     10,271      3,500
                                                                                    ---------  ---------  ---------
Deferred:
  Federal.........................................................................      6,594      1,900      3,200
  State...........................................................................       (705)       370        200
                                                                                    ---------  ---------  ---------
                                                                                        5,889      2,270      3,400
                                                                                    ---------  ---------  ---------
Total.............................................................................  $  11,855  $  12,541  $   6,900
                                                                                    ---------  ---------  ---------
                                                                                    ---------  ---------  ---------
</TABLE>
 
    As described in Note 9, the Company recorded a current tax benefit of $7,481
in fiscal 1997 as a result of the early extinguishment of debt.
 
    A reconciliation of US income tax computed at the statutory rate and actual
tax expense is as follows:
 
<TABLE>
<CAPTION>
                                                                                       YEAR ENDED SEPTEMBER 30,
                                                                                    -------------------------------
<S>                                                                                 <C>        <C>        <C>
                                                                                      1998       1997       1996
                                                                                    ---------  ---------  ---------
Amount computed at statutory rate.................................................  $  10,526  $  10,742  $   5,250
State and local taxes less applicable
federal income tax benefit........................................................        978        998        550
Amortization of goodwill..........................................................        942        873        873
Tax credits.......................................................................       (991)      (405)    --
Other nondeductible expenses......................................................        202        181        115
Other, net........................................................................        198        152        112
                                                                                    ---------  ---------  ---------
                                                                                    $  11,855  $  12,541  $   6,900
                                                                                    ---------  ---------  ---------
                                                                                    ---------  ---------  ---------
</TABLE>
 
                                      F-13
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
10. INCOME TAXES (CONTINUED)
 
    The tax effects of significant items comprising the Company's net deferred
tax liability are as follows:
 
<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30,
                                                                          --------------------
<S>                                                                       <C>        <C>
                                                                            1998       1997
                                                                          ---------  ---------
Property, plant and equipment...........................................  $  31,754  $  27,345
Trademarks and patents..................................................      1,242      1,085
                                                                          ---------  ---------
Total deferred tax liabilities..........................................     32,996     28,430
                                                                          ---------  ---------
Accounts receivable.....................................................        968      1,018
Inventory...............................................................        749        815
Accrued expenses........................................................      1,869      2,013
AMT credit carryforward.................................................         --      1,204
State tax credit carryforward...........................................      1,053         --
                                                                          ---------  ---------
Total deferred tax assets...............................................      4,639      5,050
                                                                          ---------  ---------
Net deferred tax liability..............................................  $  28,357  $  23,380
                                                                          ---------  ---------
                                                                          ---------  ---------
</TABLE>
 
    At September 30, 1998 the Company has available state income tax credits of
approximately $1,053 which are available to reduce future state income taxes,
subject to statutory limitations, which will expire in 2007.
 
11. RETIREMENT PROGRAMS
 
    For US employees, the Company maintains a trusteed profit-sharing plan
("Plan") which is qualified under Section 401(k) of the Internal Revenue Code.
All full-time employees over the age of 21 who have been employed continuously
for at least one year are eligible for participation in the Plan. The Company
may, but has not elected to, contribute a portion of its profits to the Plan, as
determined by the Board of Directors. Employer contributions vest over 1 to 5
years. The Company has elected to match employee contributions to the Plan on a
50% basis but not to exceed 3% of the employee's annual compensation. During
fiscal years 1998, 1997 and 1996, the Company contributed $1,117, $1,098 and
$999, respectively. The Plan provides for the Company to bear the expense of the
administration of the Plan. Pension expense on the foreign plans is not
significant.
 
12. EMPLOYEE STOCK PURCHASE PLAN
 
    On February 25, 1998, the stockholders approved the Synthetic Industries,
Inc. Employee Stock Purchase Plan (the "Stock Purchase Plan"), reserving 325,000
shares of Common Stock for issuance under this Plan. The Company adopted the
Stock Purchase Plan with an initial option period commencing effective April 1,
1998, and continuing in three-month option periods thereafter. The Stock
Purchase Plan permits eligible employees to purchase Common Stock through
payroll deductions or lump sum contributions, which may not exceed $25 in a
calendar year, at a price equal to 85% of the Common Stock price as reported by
NASDAQ at the beginning or end of each option period, whichever is lower. As of
September 30, 1998, 10,510 shares were purchased out of treasury stock under the
Stock Purchase Plan.
 
                                      F-14
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
13. STOCK OPTIONS
 
    DIRECTOR'S PLAN
 
    In August 1994, the Company adopted a stock option plan (the "Director's
Plan") pursuant to which non-qualified stock options to purchase an aggregate of
125,261 shares of Common Stock were granted to the four non-employee Directors
of the Company at an exercise price of $6.83 per share which was determined by
reference to the fair market value of the Company's equity at the time such
Directors joined the Board. The stock options were fully vested as of October 1,
1996 and have a term which expires on August 4, 2004. The Director's Plan does
not provide for any further grants or options thereunder.
 
    MANAGEMENT PLAN
 
    The Company's 1994 and 1996 Stock Option Plans (collectively, the
"Management Plans") for its key employees, provides for the granting of
incentive stock options ("ISOs"), as provided in Section 422A of the Internal
Revenue Code, and non-qualified stock options. The maximum aggregate number of
shares of Common Stock that may be issued under the 1994 Plan and the 1996 Plan
is 491,413 and 289,062, respectively.
 
    Stock option transactions during 1998, 1997 and 1996 are summarized as
follows:
 
<TABLE>
<CAPTION>
                                               SHARES
                                            RESERVED FOR                 SHARES
                                           ISSUANCE UNDER               AVAILABLE                        WEIGHTED
                                           THE MANAGEMENT    SHARES        FOR                            AVERAGE
                                                PLANS        GRANTED      GRANT           PRICE            PRICE
                                           ---------------  ---------  -----------  ------------------  -----------
<S>                                        <C>              <C>        <C>          <C>                 <C>
Balance at September 30, 1995............       491,413       316,697     174,716         $10.72         $   10.72
  Options granted........................       289,062       194,439          --         $10.72         $   10.72
                                                -------     ---------  -----------  ------------------  -----------
Balance at September 30, 1996............       780,475       513,136     267,339         $10.72         $   10.72
  Options granted........................            --       175,500          --    $17.875-$21.375     $   18.77
                                                -------     ---------  -----------  ------------------  -----------
Balance at September 30, 1997............       780,475       688,636      91,839     $10.72-$21.375     $   12.77
  Options granted........................            --        80,900          --         $15.00         $   15.00
                                                -------     ---------  -----------  ------------------  -----------
Balance at September 30, 1998............       780,475       769,536      10,939     $10.72-$21.375     $   13.01
</TABLE>
 
    At September 30, 1998, 506,917 options were exercisable at exercise prices
ranging from $10.72 to 21.375 per share.
 
    The purchase price of the shares of Common Stock subject to options under
the Management Plans must be no less than the fair market value of the Common
stock at the date of grant; provided, however, that the purchase price of shares
of Common Stock subject to ISOs granted to any optionee who owns shares
possessing more than 10% of the combined voting power of the Company ("Ten
Percent Shareholder') must not be less that 110% of the fair market value of the
Common Stock at the date of the grant. The maximum term of an option may not
exceed ten years from the date of the grant, except with respect to ISOs granted
to Ten Percent Shareholders which must expire within five years of the date of
grant.
 
    The Company has elected to continue measuring stock-based compensation using
the intrinsic value approach under APB Opinion No. 25 and has adopted the
disclosure-only provision of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS 123").
 
                                      F-15
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
13. STOCK OPTIONS (CONTINUED)
Accordingly, no compensation expense has been recognized for the options
described above. Had compensation costs for the options been determined based on
the fair value on the grant date consistent with the provisions of SFAS 123, the
Company's net income and diluted income per share would have been changed to the
following pro forma amounts:
 
<TABLE>
<CAPTION>
                                                                    1998       1997       1996
                                                                  ---------  ---------  ---------
<S>                                                               <C>        <C>        <C>
Pro forma net income............................................  $  17,640  $   6,009  $   8,012
Pro forma income per share......................................       1.96       0.69       1.35
</TABLE>
 
    The fair values for the years presented were determined using a
Black-Scholes option-pricing model with the following weighted average
assumptions:
 
<TABLE>
<CAPTION>
                                                1998             1997             1996
                                           ---------------  ---------------  ---------------
<S>                                        <C>              <C>              <C>
Dividend yield...........................       None             None             None
Volatility...............................        64%              33%              33%
Risk-free interest rate..................   5.5% to 6.8%     6.4% to 6.8%     5.8% to 6.7%
Expected life............................      4 years          4 years          4 years
</TABLE>
 
    The weighted average fair value of options granted in 1998, 1997 and 1996
was $8.04, $10.30 and $5.78, respectively.
 
    For options outstanding and exercisable at September 30, 1998, the
exercisable price ranges and average remaining lives were:
 
<TABLE>
<CAPTION>
                            OPTIONS OUTSTANDING
                -------------------------------------------   OPTIONS EXERCISABLE
                                  WEIGHTED                   ----------------------
                  SHARES           AVERAGE         AVERAGE     SHARES      AVERAGE
EXERCISE        OUTSTANDING       REMAINING       EXERCISE   OUTSTANDING  EXERCISE
  PRICES        AT 9/30/98    CONTRACTUAL LIFE      PRICE    AT 9/30/98     PRICE
--------------  -----------  -------------------  ---------  -----------  ---------
<S>             <C>          <C>                  <C>        <C>          <C>
  $   10.72        513,136             7.4        $  10.72      335,743   $  10.72
  $   15.00         80,900             9.8           15.00       16,300      15.00
  $   17.875       130,500             8.6           17.875     130,500      17.875
  $   21.375        45,000             8.75          21.375      24,375      21.375
</TABLE>
 
14. RELATED PARTY TRANSACTIONS
 
    SI Management L.P. is the sole general partner of the Partnership. Synthetic
Management G.P. is the sole general partner of SI Management L.P. By virtue of
these relationships, Synthetic Management G.P. controls the management and
affairs of the Partnership and therefore, the Company. The Partnership owns
5,699,194 shares of Common Stock, or approximately 66% of the issued and
outstanding shares of Common Stock, and therefore, holds the voting power to
determine the outcome of all matters upon which stockholders vote.
 
    The partners of Synthetic Management G.P. are the following five Delaware
corporations: Chill Investments, Inc., Beckman Investments, Inc., Freed
Investments, Inc., Kenner Investments, Inc. and W.G. Wright Investments, Inc.
Each of Messrs. Chill, Beckman, Freed, Kenner and Wright is the sole director
 
                                      F-16
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
14. RELATED PARTY TRANSACTIONS (CONTINUED)
and the sole stockholder of one of Synthetic Management G.P.'s partners. For
further information concerning Messrs. Chill, Freed, Kenner and Wright, see
"Executive Officers and Directors of the Company."
 
    The Company and the Partnership have entered into a Registration Rights
Agreement pursuant to which the Company has agreed that upon request of the
Partnership the Company will register under the Securities Act and applicable
state securities laws the sale of the Common Stock owned by the Partnership and
as to which registration has been requested. The Company's obligation is subject
to certain limitations relating to a minimum amount required for registration,
the timing of a registration and other similar matters. The Company is obligated
to pay any registration expenses incidental to such registration, excluding
underwriters' commissions and discounts. In connection with the Company's
initial public offering of Common Stock in November 1996, the Company incurred
approximately $650 of such incidental registration expenses on the behalf of the
Partnership. The above description is qualified in its entirety by reference to
the Registration Rights Agreement, a copy of which has been filed as an exhibit
to Amendment No. 1 to the Company's Registration Statement on Form S-1 (File No.
333-9377), filed with the Securities and Exchange Commission on September 13,
1996.
 
    On September 19, 1997, the Company and the Partnership entered into the
Agreement and Plan of Withdrawal and Dissolution of the Partnership (the
"Plan"). Pursuant to the Plan, the Partnership was to be dissolved in two
separate phases. The first phase was to be an underwritten public offering of
the number of shares of Common Stock that limited partners have elected to sell,
and the second phase is to be one to three liquidating distributions of the
unsold portions of the Partnership's shares of Common Stock, beginning 180 days
after the completion of the public offering. On November 7, 1997, the limited
partners approved the adoption of the Plan. However, the implementation of the
Plan has been enjoined by courts in Delaware and California in connection with
two lawsuits filed by certain limited partners of the Partnership against the
Partnership and its general partner (the "General Partner"), among others. See
"Claims and Legal Proceedings." Among other equitable and legal remedies, the
plaintiff is seeking the removal of the General Partner and the liquidation of
the Partnership. The Company is only a nominal defendant in these proceedings
and does not presently possess any contractual rights with respect to their
ultimate resolution. If, in connection with these lawsuits, the General Partner
is removed or resigns, or the Partnership is liquidated under a court-appointed
receiver, there can be no assurance that the resulting sale and/or distribution
of the Partnership's shares of Common Stock will be made in the same or similar
manner as that contemplated by the Plan. The General Partner has denied the
allegations of the plaintiff and is vigorously contesting the lawsuits; however,
in the event of an adverse ruling, the Company cannot predict the volume and
price at which the Common Stock trades might be affected.
 
    A former executive officer of the Company and an affiliate of the
Partnership, is being retained as a consultant to the Company. Pursuant to his
consulting agreement with the Company, the former executive officer will
receive, until January 31, 2000, or upon earlier termination of his consulting
agreement, $125 per year and various insurance coverages, and will be authorized
to exercise all stock options awarded to him, subject to applicable vesting
provisions. Under this agreement, the former executive officer is required to
provide the Company with 20 hours of consultation per month, has released the
Company from any liability resulting from his employment and has also agreed not
to compete against the Company.
 
                                      F-17
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
14. RELATED PARTY TRANSACTIONS (CONTINUED)
    The Company leases office space under a five-year lease with one of the
Company's executive officers. The term of the lease expires on September 30,
2003 and the rent is approximately $52 per year, which the Company believes is
within prevailing market rates.
 
    Pursuant to a licensing agreement with the Company, an executive officer of
the Company, receives royalties related to the manufacture and sale of a certain
product for which the executive officer owns all of the U.S. and foreign
patents. Under this agreement, the Company paid royalties of approximately $9
and $13 in fiscal 1998 and 1997, respectively, and will continue to pay such
royalties until 2012 or the earlier termination of the licensing agreement.
 
    During fiscal 1998 and 1997 the Company paid fees of approximately $125 and
$241, respectively, to a law firm in which Mr. Joseph Dana, a director of the
Company was a member until May 21, 1997. Effective May 21, 1997, Mr. Dana became
employed as Chief Operating Officer and General Counsel of the Company.
 
    In May 1998, the Company acquired 82,056 shares of Common Stock from the
Partnership in exchange for $1,759 of amounts receivable from the Partnership,
in partial settlement of expenses incurred by the Company on behalf of the
Partnership during the last several years. The shares were acquired at their
fair market value and are held in treasury for issuance under the Employee Stock
Purchase Plan. At September 30, 1998, the remaining balance due the Company was
$663.
 
15. COMMITMENTS AND CONTINGENCIES
 
    A. LEASE COMMITMENTS
 
    On April 7, 1998, the Company entered into an eight-year capital lease
agreement to finance $7,500 of equipment at 7.25%. On October 4, 1998, the
Company entered into an eight-year capital lease for the acquisition of
equipment of $5,300 at an interest rate of 7.03%. The proceeds were primarily
used to repay the balance of the May 15, 1996 capital lease of $3,416. The
Company also leases certain factory and warehouse buildings and equipment under
long-term operating leases expiring periodically through 2009.
 
                                      F-18
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
15. COMMITMENTS AND CONTINGENCIES (CONTINUED)
    Future minimum lease payments under noncancelable lease obligations at
September 30, 1998, including the October 4, 1998 capital lease are as follows:
 
<TABLE>
<CAPTION>
                                                                         CAPITAL     OPERATING
YEAR                                                                     LEASES       LEASES
---------------------------------------------------------------------  -----------  -----------
<S>                                                                    <C>          <C>
1999.................................................................  $     2,111   $   4,836
2000.................................................................        2,111       3,319
2001.................................................................        2,111       1,901
2002.................................................................        2,111       1,198
2003.................................................................        2,111         557
Thereafter...........................................................        5,816         603
                                                                       -----------  -----------
Total minimum lease payments.........................................  $    16,371   $  12,414
                                                                                    -----------
                                                                                    -----------
Less amount representing interest....................................        3,841
                                                                       -----------
Present value of net minimum lease payments..........................       12,530
 
Less current maturities of capital lease obligation..................        1,207
                                                                       -----------
Long-term capital lease obligation...................................  $    11,323
                                                                       -----------
                                                                       -----------
</TABLE>
 
    Total rental expense for the above operating leases and other short-term
leases for the fiscal years 1998, 1997 and 1996 was $5,813, $4,112 and $4,499,
respectively.
 
    B. CAPITAL EXPENDITURES
 
    In fiscal 1999, the Company plans to incur approximately $25,000 in
connection with an expansion of its existing manufacturing facilities, primarily
to increase capacity, subject to prevailing market conditions.
 
16. LITIGATION
 
    In connection with the proposed dissolution of the Partnership, pursuant to
an Agreement and Plan of Withdrawal and Dissolution (the "Plan"), the Company,
its directors and certain other of the Company's officers who are affiliated
with the General Partner have been named in two putative class and derivative
action lawsuits filed by certain limited partners of the Partnership. In the
first action, filed on February 11, 1997 in the Delaware Court of Chancery and
thereafter amended, the plaintiffs have alleged, among other things, breach of
contract with respect to the Partnership Agreement which governs the
Partnership, breach of the defendants' fiduciary duty to the limited partners
and the Company, that the Plan was unlawfully coercive, that the General Partner
has allegedly failed to satisfy certain conditions precedent to the right of
limited partners to amend the partnership agreement and that certain amendments
necessary to implement the Plan violate the terms of the partnership agreement.
The plaintiffs sought, among other equitable and legal remedies, removal of the
General Partner, dissolution of the Partnership, appointment of a liquidating
trustee, to enjoin the implementation of the Plan and compensatory damages in an
undetermined amount. On October 23, 1997, the Court preliminarily enjoined the
implementation of the Plan, although the Plan was subsequently approved by
limited partners on November 7, 1997. On November 7, 1997, the Delaware Supreme
Court accepted the defendants' petition for an expedited appeal
 
                                      F-19
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
16. LITIGATION (CONTINUED)
of this injunction, and briefing and oral argument on the appeal was completed
as of January 6, 1998. On March 19, 1998, the Delaware Supreme Court issued an
opinion affirming the Court of Chancery's grant of a preliminary injunction and
remanded the case for further proceedings. On April 27, 1998, the Court of
Chancery granted the motion of certain pro-Plan intervenors to intervene in the
action, but denied their motion to disqualify plaintiffs' counsel. On May 14,
1998, the General Partner withdrew the Plan. After the withdrawal of the Plan,
plaintiffs, on June 3, 1998, filed a Consolidated Third Amended and Supplemental
Class and Derivative Complaint (the "Third Amended Complaint"). The Third
Amended Complaint, among other things, eliminated certain requests for relief
related to the Plan and added certain allegations related to the Company's
Employee Stock Purchase Plan and certain options granted to certain directors
and officers of the Company. In addition to the relief sought in prior
complaints, the Third Amended Complaint seeks declaratory relief with respect to
certain provisions of the Partnership Agreement, the invalidation of the
Company's Employee Stock Purchase Plan, the invalidation of certain options
granted to the Company's directors and officers, and the invalidation of certain
amendments to the Company's certificate of incorporation and bylaws relating to
voting by consent and the calling of special meetings. On July 20, 1998,
defendants filed a motion to dismiss the Third Amended Complaint. The defendants
have denied any allegation of wrongdoing.
 
    The second lawsuit was filed in the U.S. District Court of the Northern
District of California on May 1, 1997, and thereafter amended. The plaintiff has
alleged in his amended complaint various federal securities and proxy violations
allegedly arising out of the joint proxy statement and prospectus that was
mailed to limited partners in connection with the solicitation of proxies for
the vote on the Plan and other related documents. The plaintiff also added the
Company as a named defendant, alleging that all defendants acted in concert
with, and as agents of, each other; however the plaintiff made no specific
independent allegations with respect to the Company. The plaintiff sought, among
other equitable and legal remedies, to enjoin the implementation of the Plan and
unspecified damages. On November 6, 1997, the Court granted in part the
plaintiff's motion for a temporary restraining order enjoining the
implementation of the Plan. After the withdrawal of the Plan, defendants, on
June 19, 1998, filed a motion to dismiss the claims as moot. On July 17, 1998,
plaintiff moved to amend his complaint purportedly to include an additional
plaintiff and additional claims for relief, including permanent injunctive
relief for any violations of the securities laws in the future. The amended
complaint also adds the Partnership as a nominal defendant. On September 24,
1998, the Court denied the defendants' motion to dismiss and granted plaintiff's
motion to amend the complaint. The defendants have denied any allegation of
wrongdoing.
 
    On December 29, 1997, a purported derivative action was filed in the
Delaware Chancery Court by a limited partner of the Partnership against certain
of the Company's officers and directors with regard to certain stock options
plans adopted by the Company in 1994. Both the Partnership and the Company were
named as nominal defendants. The plaintiff alleged that the defendants breached
their fiduciary duties by adoption of the stock option plans. The plaintiff
seeks, among other things, a declaration that the stock options granted under
the plans are invalid, the establishment of a constructive trust over the stock
options, unspecified compensatory damages and reasonable attorneys' fees and
expenses. By order dated June 23, 1998, this action was consolidated with the
Delaware action described above. The defendants deny any allegation of
wrongdoing and intend to vigorously contest the lawsuit.
 
                                      F-20
<PAGE>
                           SYNTHETIC INDUSTRIES, L.P.
                                AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
        (IN THOUSANDS OF DOLLARS, EXCEPT UNIT AND PER UNIT INFORMATION)
 
16. LITIGATION (CONTINUED)
    Based on the Company's review of the allegations made in the above actions
to date, the Company does not believe that the ultimate resolution of these
actions will have a material adverse effect on the Company's results of
operations or financial condition.
 
    The Partnership is a principal stockholder of the Company and certain
members of the Company's management control the General Partner. See "Certain
Relationships and Related Transactions."
 
    The Company and its subsidiaries are parties to litigation arising out of
their business operations. Such litigation primarily involves claims for
personal injury, property damage, breach of contract and claims involving
employee relations and certain administrative proceedings. The Company believes
such claims are either adequately covered by insurance or do not involve a risk
of material loss to the Company.
 
    By letter dated October 22, 1998, a demand for indemnification was received
from a customer with respect to utilization of Fibermesh-Registered Trademark-
in concrete slabs in the State of California. The demand for indemnification
pertained to any and all damages relating to their use of the
Fibermesh-Registered Trademark-product. No lawsuits have been filed against the
Company and based upon the information provided to the Company, the scope of
liability and potential damages, if any, cannot be ascertained at this time. The
Company has engaged outside counsel to investigate this claim and intends to
vigorously defend its product.
 
                                      F-21
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
 
                                          SYNTHETIC INDUSTRIES L.P.
 
                                          By: SI MANAGEMENT L.P.
                                               General Partner
 
                                          By: SYNTHETIC MANAGEMENT G.P.
                                               General Partner
 
                                          By: CHILL INVESTMENTS, INC.
                                               Managing General Partner
 
                                          By: /s/ LEONARD CHILL
                                             -----------------------------------
                                               Leonard Chill
                                               PRESIDENT
 
Date: December 28, 1998
 
                                      F-22