SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to_______
Commission file number 1-12139
SEALED AIR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 65-0654331
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Park 80 East
Saddle Brook, New Jersey 07663-5291
- ------------------------ ---------------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (201) 791-7600
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
There were 83,500,810 shares of the registrant's common stock, par value $0.10
per share, and 35,761,616 shares of the registrant's Series A convertible
preferred stock, par value $0.10 per share, outstanding as of April 30, 1999.
<PAGE>
PART I
FINANCIAL INFORMATION
---------------------
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings
For the Three Months Ended March 31, 1999 and 1998
(In thousands of dollars except per share data)
(Unaudited)
1999 1998
------ ------
Net sales $678,937 $431,035
Cost of sales 433,239 290,913
-------- --------
Gross profit 245,698 140,122
Marketing, administrative and
development expenses 128,614 94,453
Goodwill amortization 12,251 90
-------- --------
Operating profit 104,833 45,579
Other income (expense):
Interest expense (14,719) (82)
Other, net (2,164) (411)
-------- --------
Other expense, net (16,883) (493)
-------- --------
Earnings before income taxes 87,950 45,086
Income taxes 41,336 18,034
-------- --------
Net earnings $ 46,614 $ 27,052
======== ========
Less: Series A preferred stock dividends 17,910 18,011
Add: Excess of book value over repurchase
price of Series A preferred stock 10 --
-------- --------
Net earnings ascribed to common shareholders $ 28,714 $ 9,041
======== ========
Earnings per common share (See Note 4):
Basic $ 0.34 $ 0.22
======== ========
Diluted $ 0.34 $ 0.22
======== ========
Weighted average number of common shares outstanding:
Basic 83,364 40,648
======== ========
Diluted 83,496 40,859
======== ========
See accompanying notes to consolidated financial statements.
2
<PAGE>
SEALED AIR CORPORATION
Consolidated Balance Sheets
March 31, 1999 and December 31, 1998
(In thousands of dollars except share data)
March 31, December 31,
1999 1998
(Unaudited)
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 85,280 $ 44,986
Notes and accounts receivable, net of allowances
for doubtful accounts of $19,079 in 1999 and
$17,945 in 1998 449,204 453,124
Inventories 269,504 275,312
Other current assets 71,626 71,192
--------- ---------
Total current assets 875,614 844,614
--------- ---------
Property and equipment:
Land and buildings 413,251 420,589
Machinery and equipment 1,320,206 1,349,716
Other property and equipment 117,940 121,252
Construction in progress 55,415 54,538
--------- ---------
1,906,812 1,946,095
Less accumulated depreciation and amortization 836,003 829,513
--------- ---------
Property and equipment, net 1,070,809 1,116,582
Goodwill, less accumulated amortization of
$48,059 in 1999 and $36,083 in 1998 1,894,863 1,907,736
Other assets 177,334 170,998
--------- ---------
Total assets $4,018,620 $4,039,930
========= =========
See accompanying notes to consolidated financial statements.
3
<PAGE>
SEALED AIR CORPORATION
Consolidated Balance Sheets
March 31, 1999 and December 31, 1998 (Continued)
(In thousands of dollars except share data)
March 31, December 31,
1999 1998
(Unaudited)
----------- ------------
LIABILITIES, CONVERTIBLE PREFERRED STOCK & EQUITY
Current Liabilities:
Short-term borrowings and current portion
of long-term debt $ 278,857 $ 85,131
Accounts payable 167,089 176,594
Other current liabilities 199,908 230,332
Income taxes payable 57,421 42,933
--------- ---------
Total current liabilities 703,275 534,990
Long-term debt, less current portion 805,827 996,526
Deferred income taxes 207,047 200,699
Other liabilities 74,749 79,577
--------- ---------
Total liabilities 1,790,898 1,811,792
--------- ---------
Series A convertible preferred stock, $50 per share
redemption value, authorized and issued 36,019,125
shares in 1999 and 36,021,851 shares in 1998,
including 225,000 shares in 1999 and 200,000
shares in 1998 in treasury, mandatory redemption
in 2018 1,789,707 1,791,093
Shareholders' equity:
Common stock, $.10 par value. Authorized
400,000,000 shares, issued 83,817,951 shares
in 1999 and 83,806,361 shares in 1998 8,380 8,380
Additional paid-in capital 613,717 610,505
Retained earnings (deficit) 20,738 (7,966)
Accumulated translation adjustment (165,522) (124,843)
--------- ---------
477,313 486,076
Less: Deferred compensation 24,377 28,683
Less: Cost of treasury common stock, 331,401
shares in 1999 and 494,550 shares
in 1998 11,807 17,234
Less: Minimum pension liability 3,114 3,114
--------- ---------
Total shareholders' equity 438,015 437,045
--------- ---------
Total liabilities, preferred stock and equity $ 4,018,620 $ 4,039,930
========= =========
See accompanying notes to consolidated financial statements.
4
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1999 and 1998
(In thousands of dollars)
(Unaudited)
1999 1998
---------- ----------
Cash flows from operating activities:
Net earnings $ 46,614 $ 27,052
Adjustments to reconcile net earnings to
net cash provided by operating activities, net
of effect of businesses acquired:
Depreciation and amortization 55,787 29,296
Deferred taxes (1,401) 19,022
Net (gain) loss on disposals of fixed assets (292) 4,305
Changes in operating assets and liabilities, net
of assets and liabilities acquired and
transferred to/from Grace.
Notes and accounts receivable (11,368) (5,210)
Inventories (2,511) (8,080)
Other current assets 33 4,427
Other assets (1,451) (5,142)
Accounts payable (6,608) (12,722)
Other current liabilities (2,461) 5,271
Other liabilities (3,351) 5,656
---------- ----------
Net cash provided by operating activities 72,991 63,875
---------- ----------
Cash flows from investing activities:
Capital expenditures for property and equipment (16,943) (16,963)
Proceeds from sales of property and equipment 861 2,701
Businesses acquired, net of cash acquired -- 51,259
---------- ----------
Net cash(used)provided by investing activities (16,082) 36,997
---------- ----------
Cash flows from financing activities:
Net advances to Grace -- (43,779)
Proceeds from long-term debt 2,753 1,258,807
Payment of long-term debt (191,517) --
Dividends paid on preferred stock (17,911) --
Purchase of treasury preferred stock (1,240) --
Transfer of funds to New Grace -- (1,256,614)
Net proceeds from short-term borrowings 193,181 986
---------- ----------
Net cash used in financing activities (14,734) (40,600)
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents (1,881) (760)
---------- ----------
Cash and cash equivalents:
Increase during the period 40,294 59,512
Balance, beginning of period 44,986 --
---------- ----------
Balance, end of period $ 85,280 $ 59,512
========== ==========
See accompanying notes to consolidated financial statements.
5
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements (abbreviated) of Cash Flows
For the Three Months Ended March 31, 1999 and 1998 (Continued)
(In thousands of dollars)
(Unaudited)
1999 1998
---------- ----------
Supplemental Non-Cash Items:
Interest payments, net of amounts capitalized $ 17,303 $ --
========== =========
Income tax payments $ 2,626 $ --
========== =========
Issuance of 36,021,851 shares of Series A
convertible preferred stock and 40,647,815
shares of common stock in connection with
the Recapitalization $ -- $1,801,093
========== =========
Net assets acquired in exchange for the issuance
of 42,624,246 shares of common stock in
connection with the Merger, net of
cash balance of $51,259 acquired $ -- $2,110,752
========== =========
See accompanying notes to consolidated financial statements.
6
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 1999 and 1998
(In thousands of dollars)
(Unaudited)
Three Months Ended
March 31,
------------------
1999 1998
---- ----
Net Earnings $ 46,614 $ 27,052
Other comprehensive income:
Foreign currency translation adjustments (40,679) (10,117)
-------- --------
Comprehensive income $ 5,935 $ 16,935
======== ========
See accompanying notes to consolidated financial statements.
7
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1999 and 1998
(Amounts in thousands, except per share data)
(Unaudited)
(1) Reorganization, Recapitalization and Merger
On March 31, 1998, the Company (formerly known as W. R. Grace & Co.) and Sealed
Air Corporation ("old Sealed Air"), completed a series of transactions as a
result of which:
(a) The specialty chemicals business of the Company was separated from its
packaging business, the packaging business ("Cryovac") was contributed
to one group of wholly owned subsidiaries, and the specialty chemicals
business was contributed to another group of wholly owned subsidiaries
("New Grace"); the Company and Cryovac borrowed approximately $1.26
billion under two revolving credit agreements (the "Credit
Agreements") (which, as amended, are discussed below) and transferred
substantially all of those funds to New Grace; and the Company
distributed all of the outstanding shares of common stock of New Grace
to its shareholders. As a result, New Grace became a separate publicly
owned corporation that is unrelated to the Company. These transactions
are referred to below as the "Reorganization."
(b) The Company recapitalized its outstanding shares of common stock, par
value $0.01 per share ("Grace Common Stock"), into a new common stock
and Series A convertible preferred stock, each with a par value of
$0.10 per share (the "Recapitalization").
(c) A subsidiary of the Company merged into old Sealed Air (the "Merger"),
with old Sealed Air being the surviving corporation. As a result of
the Merger, old Sealed Air became a subsidiary of the Company, and the
Company was renamed Sealed Air Corporation.
References to "Grace" in these notes refer to the Company before the
Reorganization, the Recapitalization and the Merger.
(2) Basis of Presentation
The Merger was accounted for as a purchase of old Sealed Air by the Company as
of March 31, 1998. Accordingly, the financial statements include the operating
results and cash flows as well as the assets and liabilities of Cryovac for all
periods presented. The operating results, cash flows, assets and liabilities of
old Sealed Air are included from March 31, 1998. See Note 8 for unaudited
selected pro forma statement of earnings information for the quarter ended March
31, 1998. For periods prior to the Merger, the financial statements exclude all
of the assets, liabilities (including contingent liabilities), revenues and
expenses of Grace other than the assets, liabilities, revenues and expenses of
Cryovac.
Subsequent to the Merger, the consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation. In management's
opinion, all adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of the consolidated financial position and
results of operations for the quarter ended March 31, 1999 have been made.
8
<PAGE>
(3) Equity
In connection with the Recapitalization, the Company, among other things,
recapitalized the outstanding shares of Grace Common Stock into 40,647,815
shares of the Company's common stock and 36,021,851 shares of Series A
convertible preferred stock (convertible into approximately 31,900,000 shares of
the Company's common stock), each with a par value of $0.10 per share. In the
Merger, the Company issued 42,624,246 shares of common stock to the shareholders
of old Sealed Air.
The outstanding Series A preferred stock is convertible at any time into
approximately 0.885 share of common stock for each share of preferred stock,
votes with the common stock on an as-converted basis, pays a cash dividend, as
declared by the Board of Directors, at an annual rate of $2.00 per share,
payable quarterly in arrears, becomes redeemable at the option of the Company
beginning March 31, 2001, subject to certain conditions, and is subject to
mandatory redemption on March 31, 2018 at $50 per share, plus any accrued and
unpaid dividends. Because it is subject to mandatory redemption, the Series A
convertible preferred stock is classified outside of the shareholders' equity
section of the balance sheet. At its date of issuance, the fair value of the
Series A convertible preferred stock exceeded its mandatory redemption amount
primarily due to the common stock conversion feature of such preferred stock.
Accordingly, the carrying amount of the Series A convertible preferred stock is
reflected in the consolidated balance sheet at its mandatory redemption value.
The Company has authority to issue a total of 50,000,000 shares of preferred
stock, par value $0.10 per share.
(4) Earnings Per Common Share
In calculating basic and diluted earnings per common share for the first quarter
1998, retroactive recognition was given to the Recapitalization as if it had
occurred on January 1, 1998 in accordance with SAB No. 98. Accordingly, net
earnings were reduced for preferred stock dividends (as if such shares had been
outstanding during each period) to arrive at earnings ascribed to common
shareholders. The weighted average number of outstanding common shares used for
the first quarter of 1998 to calculate basic earnings per common share was
calculated on an equivalent share basis using the weighted average number of
shares of common stock outstanding for the first quarter of 1998, adjusted to
reflect the terms of the Recapitalization. The weighted average number of common
shares used to calculate diluted earnings per common share also considers the
exercise of dilutive stock options in each period. The outstanding preferred
stock is not assumed to be converted in the calculation of diluted earnings per
common share for the first quarter of 1999 and 1998 because the treatment of the
preferred stock as the common stock into which it is convertible would be
antidilutive (i.e., would increase earnings per common share) in those periods.
The following table sets forth the reconciliation of the basic and diluted
earnings per common share computations for the quarters ended March 31, 1999 and
1998 (amounts other than per share amounts in thousands).
1999 1998
- --------------------------------------------------------------------------------
Basic EPS:
Numerator
Net earnings $ 46,614 $ 27,052
Add: Excess of book value over repurchase price of
preferred stock 10 --
Less: Preferred stock dividends 17,910 --
Less: Retroactive recognition of preferred stock -- 18,011
- --------------------------------------------------------------------------------
Earnings ascribed to common shareholders $ 28,714 $ 9,041
- --------------------------------------------------------------------------------
Denominator
Weighted average common shares outstanding - basic 83,364 40,648
9
<PAGE>
- --------------------------------------------------------------------------------
Basic earnings per common share $ 0.34 $ 0.22
- --------------------------------------------------------------------------------
Diluted EPS:
Numerator
Earnings ascribed to common shareholders $ 28,714 $ 9,041
- --------------------------------------------------------------------------------
Denominator
Weighted average common shares outstanding - basic 83,364 40,648
Effect of assumed exercise of options 132 211
Weighted average common shares outstanding - diluted 83,496 40,859
- --------------------------------------------------------------------------------
Diluted earnings per common share $ 0.34 $ 0.22
- --------------------------------------------------------------------------------
(5) Inventories
At March 31, 1999 and December 31, 1998, the components of inventories by major
classification (raw materials, work in process and finished goods) were as
follows:
March 31, December 31,
1999 1998
--------- ------------
Raw materials $ 62,649 $ 63,805
Work in process 51,142 50,714
Finished goods 171,033 176,965
------- -------
Subtotal 284,824 291,484
Reduction of certain
inventories to LIFO basis (15,320) (16,172)
------- -------
Total inventories $ 269,504 $ 275,312
======= =======
(6) Income Taxes
The Company's effective income tax rates were 47.0% and 40.0% for the first
quarters of 1999 and 1998, respectively. The effective tax rate for the 1999
period is higher than that for the first quarter of 1998 primarily due to the
non-deductibility of the goodwill amortization resulting from the Merger. In the
first quarter of 1998, such rates were higher than the statutory U.S. federal
income tax rate primarily due to state income taxes.
(7) Long-Term Debt
At March 31, 1999 and December 31, 1998, debt consisted primarily of borrowings
that were made under the Credit Agreements described below. Debt also included
certain other loans incurred by the Company's subsidiaries.
The Company's two principal Credit Agreements are a 5-year revolving credit
facility that expires on March 30, 2003 and a $600 million 364-day revolving
credit facility that was renewed effective March 29, 1999 for an additional
364-day period. At that time, the Company voluntarily reduced the aggregate
amount available under the 5-year revolving credit facility from $1 billion to
$800 million. As of March 31, 1999, outstanding borrowings under the 5-year and
364-day revolving credit facilities were $800 million (included in long-term
debt) and $175 million (included in short-term borrowings), respectively. The
Credit Agreements provide that the Company and certain of its
10
<PAGE>
subsidiaries may borrow for various purposes, including the refinancing of
existing debt, the provision of working capital and other general corporate
needs.
The Company's obligations under the Credit Agreements bear interest at floating
rates. The weighted average interest rate under the Credit Agreements was
approximately 5.4% at March 31, 1999. The Company has entered into certain
interest rate swap agreements that have the effect of fixing the interest rates
on a portion of such debt. The weighted average interest rate at March 31, 1999
did not change significantly as a result of these derivative financial
instruments.
The Credit Agreements provide for changes in borrowing margins based on
financial criteria and the Company's senior unsecured debt ratings, and impose
certain limitations on the operations of the Company and certain of its
subsidiaries. The limitations include financial covenants relating to interest
coverage and debt leverage as well as certain restrictions on the incurrence of
additional indebtedness, the creation of liens, mergers and acquisitions, and
certain dispositions of property and assets. The Company was in compliance with
these requirements as of March 31, 1999.
(8) Pro Forma Information
The following table presents selected unaudited pro forma statement of earnings
information for the quarter ended March 31, 1998 as a result of the
Reorganization, the Recapitalization and the Merger. Such information reflects
pro forma adjustments made in combining the historical results of old Sealed Air
and Cryovac as a result of such transactions for the quarter presented. Such
amounts include for the first quarter of 1998, among others, incremental
goodwill amortization of approximately $10 million and incremental interest
expense of approximately $20 million. This pro forma information is not intended
to represent what the Company's actual results of operations would have been for
such period.
Quarter Ended
March 31,
-------------------------
Reported Pro Forma
1999 1998
-------- ---------
Net sales by business segment:
Food and specialty packaging $425,979 $400,870
Protective packaging 252,958 242,917
- --------------------------------------------------------------------------------
Total net sales 678,937 643,787
Cost of sales 433,239 423,850
- --------------------------------------------------------------------------------
Gross profit 245,698 219,937
Marketing, administrative and
development expenses 128,614 124,562
Goodwill amortization 12,251 11,921
- --------------------------------------------------------------------------------
Operating profit 104,833 83,454
Other income(expense), net (16,883) (22,249)
- --------------------------------------------------------------------------------
Earnings before income taxes 87,950 61,205
Income taxes 41,336 28,400
- --------------------------------------------------------------------------------
Net earnings 46,614 32,805
- --------------------------------------------------------------------------------
11
<PAGE>
Less: Preferred stock dividends (17,910) (18,011)
Add: Excess of book value over
repurchase price of preferred stock 10 --
- --------------------------------------------------------------------------------
Net earnings ascribed to common shareholders 28,714 14,794
Earnings per common share (1)
Basic 0.34 0.18
Diluted 0.34 0.18
- --------------------------------------------------------------------------------
Weighted average number of common shares outstanding:
Basic 83,364 83,272
Diluted 83,496 83,483
- --------------------------------------------------------------------------------
(1) For purposes of calculating basic and diluted earnings per common share in
the 1998 period, net earnings have been reduced by the dividends that would
have been payable on the Company's Series A convertible preferred stock if
such shares had been outstanding during such period to arrive at earnings
ascribed to common shareholders. The weighted average number of outstanding
common shares used to calculate basic earnings per common share is
calculated on an equivalent share basis using the weighted average number
of shares outstanding of the Company's common stock, adjusted to reflect
the terms of the Recapitalization. The assumed conversion of the
convertible preferred stock is not considered in the calculation of diluted
earnings per common share for either of the periods presented as the effect
is antidilutive (i.e. would increase the earnings per common share for each
period presented).
(9) Restructuring and Other Charges
The Company's restructuring reserve, which arose primarily out of a
restructuring undertaken by the Company during the third quarter of 1998,
amounted to $19,056 at March 31, 1999 and $26,924 at December 31, 1998. The
components of the restructuring charges, spending and other activity through
March 31, 1999 and the remaining reserve balance at March 31, 1999 were as
follows:
<TABLE>
Employee Contract
Termination Plant/Office Termination
Costs Closures Costs Total
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Restructuring provision recorded in 1998 $ 39,848 $ 2,291 $ 1,150 $ 43,289
Cash payments during 1998 (14,486) (729) (1,150) (16,365)
- -----------------------------------------------------------------------------------------
Restructuring reserve at December 31, 1998 25,362 1,562 - 26,924
Cash payments during 1999 (7,633) (235) - (7,868)
- -----------------------------------------------------------------------------------------
Restructuring reserve at March 31, 1999 17,729 1,327 - 19,056
- -----------------------------------------------------------------------------------------
</TABLE>
The Company's third quarter 1998 restructuring charge of $111,074, included
$39,848 of employee termination costs, $3,441 of exit costs and $67,785 of asset
impairments related to long-lived assets either held for use or held for
disposition. The asset impairment amount of $67,785 includes write-downs or
write-offs of $47,083 for property, plant and equipment, $13,008 for goodwill,
and $7,694 for certain other long-lived intangible assets. The Company expects
to incur approximately $43,289 of cash outlays to carry out this restructuring
program, of which approximately $24,233 was paid through March 31, 1999. These
cash outlays include primarily severance and other personnel related costs,
costs of terminating leases and facilities and equipment disposition costs. In
connection with the restructuring, the Company is eliminating 750 positions, or
approximately 5% of its workforce, across all functional areas. Through March
31, 1999, approximately 569 positions had been eliminated, and all restructuring
actions, including remaining asset dispositions, are expected to be completed by
the end of 1999 although certain cash outlays will continue into future years.
12
<PAGE>
(10) Business Segment Information
The Company operates in two reportable business segments: (i) Food and Specialty
Packaging and (ii) Protective Packaging. The Food and Specialty Packaging
segment comprises the Company's Cryovac(R) food and specialty products. The
Protective Packaging segment includes the aggregation of the Company's packaging
products, engineered products and specialty products, all of which products are
for non-food applications.
The Food and Specialty Packaging segment includes flexible materials and related
systems (shrink film products, laminated films and specialty packaging systems
marketed primarily under the Cryovac(R) trademark for a broad range of
perishable foods). This segment also includes rigid packaging and absorbent pads
(absorbent pads used for the packaging of meat, fish and poultry, foam trays for
supermarkets and food processors, and rigid plastic containers for dairy and
other food products).
The Protective Packaging segment includes cushioning and surface protection
products (including air cellular cushioning materials, films for non-food
applications, polyurethane foam packaging systems sold under the Instapak(R)
trademark, polyethylene foam sheets and planks, a comprehensive line of
protective and durable mailers and bags, certain paper-based protective
packaging materials, suspension and retention packaging, and packaging systems)
and other products (principally specialty adhesive products).
Quarter Ended
March 31,
--------------------------
1999 1998
- --------------------------------------------------------------------------------
Net Sales
Food and Specialty Packaging $ 425,979 $ 378,752
Protective Packaging 252,958 52,283
- --------------------------------------------------------------------------------
Total segments $ 678,937 $ 431,035
- --------------------------------------------------------------------------------
Operating profit
Food and Specialty Packaging $ 67,564 $ 39,844
Protective Packaging 53,553 5,825
- --------------------------------------------------------------------------------
Total segments 121,117 45,669
Corporate operating expenses (including goodwill
amortization of $12,251 and $90 in 1999
and 1998, respectively) (16,284) (90)
- --------------------------------------------------------------------------------
Total $ 104,833 $ 45,579
- --------------------------------------------------------------------------------
Depreciation and amortization
Food and Specialty Packaging $ 28,349 $ 22,613
Protective Packaging 14,914 6,593
- --------------------------------------------------------------------------------
Total segments 43,263 29,206
Corporate (including goodwill amortization) 12,524 90
- --------------------------------------------------------------------------------
Total $ 55,787 $ 29,296
- --------------------------------------------------------------------------------
13
<PAGE>
Management's Discussion and Analysis of Results of Operations and Financial
Condition
On March 31, 1998, the Company (formerly known as W. R. Grace & Co.)
and Sealed Air Corporation ("old Sealed Air") completed a series of transactions
as a result of which:
(a) The specialty chemicals business of the Company was separated from
its packaging business, the packaging business ("Cryovac") was
contributed to one group of wholly owned subsidiaries, and the
specialty chemicals business was contributed to another group of wholly
owned subsidiaries ("New Grace"); the Company and Cryovac borrowed
approximately $1.26 billion under two revolving credit agreements (the
"Credit Agreements") (which, as amended, are discussed below) and
transferred substantially all of those funds to New Grace; and the
Company distributed all of the outstanding shares of common stock of
New Grace to its stockholders. As a result, New Grace became a separate
publicly owned corporation that is unrelated to the Company. These
transactions are referred to below as the "Reorganization."
(b) The Company recapitalized its outstanding shares of common stock,
par value $0.01 per share ("Grace Common Stock"), into a new common
stock and Series A convertible preferred stock (the "Series A Preferred
Stock"), each with a par value of $0.10 per share (the
"Recapitalization").
(c) A subsidiary of the Company merged into old Sealed Air (the
"Merger"), with old Sealed Air being the surviving corporation. As a
result of the Merger, old Sealed Air became a subsidiary of the
Company, and the Company was renamed Sealed Air Corporation.
References to "Grace" in this Management's Discussion and Analysis
refer to the Company before the Reorganization, the Recapitalization and the
Merger.
The Merger was accounted for as a purchase of old Sealed Air by the
Company as of March 31, 1998. Accordingly, the financial statements include the
operating results and cash flows as well as the assets and liabilities of
Cryovac for all periods presented. The operating results, cash flows, assets and
liabilities of old Sealed Air are included from March 31, 1998. For periods
prior to the Merger, the financial statements exclude all of the assets,
liabilities (including contingent liabilities), revenues and expenses of Grace
other than the assets, liabilities, revenues and expenses of Cryovac.
In order to facilitate a review of the factors that affected the
Company's operating results for the first quarter of 1999, the Company has
included selected unaudited pro forma financial information for the first
quarter of 1998 in Note 8 to the consolidated financial statements included in
this Form 10-Q.
14
<PAGE>
Results of Operations
Discussion and Analysis of Reported Operating Results
The Company's net sales increased 58% to $678,937,000 in the first
quarter of 1999 from $431,035,000 in the first quarter of 1998. The increase in
net sales as well as most of the increases in cost of sales, marketing,
administrative and development expenses and other costs and expenses, including
the substantial increases in interest expense and goodwill amortization, that
the Company experienced in the first quarter of 1999 were due to the inclusion
of the protective packaging business of old Sealed Air's operations in this
period and adjustments arising from the Merger, the Reorganization and the
Recapitalization.
Gross profit increased as a percentage of net sales to 36.2% for the
first quarter of 1999 from 32.5% for the first quarter of 1998. This increase in
gross profit as a percentage of net sales resulted from the higher level of net
sales, certain lower raw material costs and cost reductions arising out of
certain improvements in the Company's operations.
Marketing, administrative and development expenses in the first quarter
of 1998 included $18,044,000 of corporate expenses that were allocated to
Cryovac by Grace prior to the Merger. Such allocations ceased upon the Merger.
However, following the Merger, the Company has incurred and expects that it will
continue to incur marketing, administrative and development expenses that
partially offset the savings derived from the elimination of these allocated
expenses. Primarily as a result of the Merger, the Company recorded goodwill
amortization of $12,251,000 in the first quarter of 1999 compared to $90,000 in
the first quarter of 1998.
The increase in other expense, net for the first quarter of 1999 from
the 1998 period was due primarily to interest expense on the Company's
outstanding debt under the Credit Agreements.
The Company's effective income tax rate for the quarter ended March 31,
1999 was 47.0% compared to 40.0% for the quarter ended March 31, 1998. The
effective tax rate in 1999 is higher than the first quarter of 1998 primarily
due to the non-deductibility of goodwill resulting from the Merger.
As a result of the factors discussed above, the Company reported net
earnings of $46,614,000 for the first quarter of 1999 compared with net earnings
of $27,052,000 for the first quarter of 1998.
For the first quarter of 1999, the Company reported basic and diluted
earnings per common share of $0.34. For the first quarter of 1998, the Company
reported basic and diluted earnings per common share of $0.22.
15
<PAGE>
Discussion and Analysis of Pro Forma Operating Results
The following discussion relates to the unaudited selected pro forma
financial information that appears in Note 8 to the consolidated financial
statements included in this Form 10-Q.
Net sales for the first quarter of 1999 increased 5% to $678,937,000,
compared with pro forma net sales of $643,787,000 for the first quarter of 1998,
primarily due to higher unit volume, partially offset by the negative effect of
foreign currency translation.
The Company's net sales were affected in the first quarter of 1999 by
the continued weakness of foreign currencies compared with the U.S. dollar,
particularly in Latin America and the Asia-Pacific region. Excluding the
negative effect of foreign currency translation, net sales would have increased
7% compared with the first quarter of 1998 on a pro forma basis.
Net sales from domestic operations increased approximately 5% compared
with the first quarter of 1998 on a pro forma basis, primarily due to increased
unit volume. Net sales from foreign operations, which represented approximately
47% of the Company's total net sales in both periods, increased approximately 6%
compared with the first quarter of 1998 on a pro forma basis, primarily due to
increased unit volume which more than offset the negative effect of foreign
currency translation.
Net sales of the Company's food and specialty packaging products
segment, which consist primarily of the Company's Cryovac(R) food packaging
products and Dri-Loc(R) absorbent pads, increased approximately 6% compared with
the first quarter of 1998 on a pro forma basis. This increase was due primarily
to increased unit volume partially offset by the negative effect of foreign
currency translation. Excluding the effect of foreign currency translation, net
sales of this segment would have increased 8% compared with the first quarter of
1998 on a pro forma basis.
Net sales of the Company's protective packaging segment, which consist
primarily of Cryovac(R) industrial and consumer packaging, Instapak(R) chemicals
and equipment, air cellular and polyethylene foam surface protection and
cushioning materials and protective and durable mailers and bags, increased 4%
compared with the first quarter of 1998 on a pro forma basis primarily due to
higher unit volume. Foreign currency translation had a minimal effect on the net
sales of this segment.
Gross profit as a percentage of net sales increased to 36.2% compared
to 34.2% for the first quarter of 1998 on a pro forma basis. This increase
resulted from the higher level of net sales, certain lower raw material prices
and cost reductions arising out of certain improvements in the Company's
operations.
Marketing, administrative and development expenses and goodwill
amortization as a percentage of net sales were 20.7% for the first quarter of
1999 compared to 21.2% for the first quarter of 1998 on a pro forma basis. This
decrease resulted primarily from the higher level of net sales and cost
reductions arising out of certain improvements in the Company's operations,
partially offset by integration and information systems costs.
16
<PAGE>
On a pro forma basis, the decrease in other expense, net, consisting
primarily of interest expense, was primarily due to the lower level of debt
outstanding for the first quarter of 1999.
The Company's effective income tax rate was 47.0% for the first quarter
of 1999 compared with a pro forma rate of 46.4% for the first quarter of 1998.
These rates are higher than the Company's applicable statutory rates primarily
due to the non-deductibility for tax purposes of the goodwill amortization
resulting from the Merger. The Company expects that its effective tax rate will
remain higher than statutory rates for 1999.
As a result of the above, the Company recorded net earnings of
$46,614,000 for the first quarter of 1999 compared to pro forma net earnings of
$32,805,000 for the 1998 period.
Basic and diluted earnings per common share for the first quarter of
1999 were $0.34 compared with pro forma earnings per common share of $0.18 for
the first quarter of 1998. The effect of the conversion of the Company's
outstanding convertible preferred stock is not considered in the calculation of
diluted earnings per common share because it would be antidilutive (i.e., would
increase earnings per common share to $0.40 for the first quarter of 1999
compared with pro forma earnings per common share of $0.28 for the first quarter
of 1998).
Liquidity and Capital Resources
The Company's principal sources of liquidity are cash flows from
operations and amounts available under the Company's existing lines of credit,
including principally the Credit Agreements mentioned above. Prior to the
consummation of the Merger, Cryovac participated in Grace's centralized cash
management system, whereby cash received from operations was transferred to, and
disbursements were funded from, centralized corporate accounts. As a result, any
cash flows from operations that were in excess of Cryovac's cash needs were
transferred to these corporate accounts and used for other corporate purposes.
In connection with the Reorganization, most of the Company's net cash at March
31, 1998 (other than $51,259,000 of cash recorded on the balance sheet of old
Sealed Air immediately before the Merger) was transferred to New Grace.
Net cash provided by operating activities increased to $72,991,000 in
the first quarter of 1999. The increase in operating cash flows in the first
quarter of 1999 was primarily due to the inclusion of the operations of old
Sealed Air, higher levels of depreciation and amortization partially offset by
the change in operating assets and liabilities in the ordinary course of
business.
Net cash used in investing activities amounted to $16,082,000 in the
first quarter of 1999 compared to net cash provided by investing activities of
$36,997,000 in the 1998 period. The decrease in 1999 compared to the first
quarter of 1998 was primarily due to the $51,259,000 of cash acquired from old
Sealed Air at the time of the Merger. Capital
17
<PAGE>
expenditures were $16,943,000 for the first quarter of 1999 and $16,963,000 for
the 1998 period.
Net cash used in financing activities amounted to $14,734,000 in the
first quarter of 1999 and $40,600,000 in the first quarter of 1998. Repayments
of debt in the first quarter of 1999 were offset by additional borrowings. Also
included in the first quarter of 1999 was $17,911,000 of dividends paid on the
Company's Series A Preferred Stock and $1,240,000 for the repurchase on the open
market of shares of Series A Preferred Stock. In 1998, cash flows from financing
activities reflected the proceeds from borrowings under the Credit Agreements,
offset by the contribution of funds to New Grace in connection with the
Reorganization.
At March 31, 1999, the Company had working capital of $172,339,000, or
4% of total assets, compared to working capital of $309,624,000, or 8% of total
assets, at December 31, 1998. Working capital declined primarily due to an
increase in short-term borrowings and current installments of long-term debt of
$193,726,000 arising out of the reclassification of certain borrowings made
under the Credit Agreements from the Company's 5-year facility to its 364-day
facility, partially offset by a $40,294,000 increase in cash.
The Company's ratio of current assets to current liabilities (current
ratio) was 1.2 at March 31, 1999 and 1.6 at December 31, 1998. The Company's
ratio of current assets less inventory to current liabilities (quick ratio) was
0.9 at March 31, 1999 and 1.1 at December 31, 1998. The decreases in these
ratios in 1999 resulted primarily from the decreases in working capital
discussed above.
The Company's two principal Credit Agreements are a 5-year revolving
credit facility that expires on March 30, 2003 and a $600 million 364-day
revolving credit facility that was renewed effective March 29, 1999 for an
additional 364-day period. At that time, the Company voluntarily reduced the
aggregate amount available under the 5-year revolving credit facility from $1
billion to $800 million. Borrowings outstanding under the 5-year facility are
recorded as long-term debt and borrowings outstanding under the 364-day facility
are recorded as short-term borrowings. The Credit Agreements provide that the
Company and certain of its subsidiaries may borrow for various purposes,
including the refinancing of existing debt, the provision of working capital and
other general corporate needs. Long term debt, less current installments
outstanding at March 31, 1999 includes primarily borrowings under the 5-year
Credit Agreement, less prepayments made through March 31, 1999.
On May 13, 1999, the Company priced an offering of $300 million
aggregate principal amount of 10-year 6.95% senior notes that is being made
under Rule 144A and Regulation S under the Securities Act of 1933, as amended.
The net proceeds of such offering will be used to repay indebtedness outstanding
under the Credit Agreements. The Company expects this offering to be completed
in May 1999. Although amounts repaid under the Credit Agreements may be
reborrowed under the Credit Agreements, the Company is considering a further
voluntary reduction of the aggregate amounts available under the Credit
Agreements.
The Company's obligations under the Credit Agreements bear interest at
floating rates. The weighted average interest rate under the Credit Agreements
was approximately 5.4% at March 31, 1999. The Company has entered into certain
interest rate swap
18
<PAGE>
agreements that have the effect of fixing the interest rates on a portion of
such debt. The weighted average interest rate at March 31, 1999 did not change
as a result of these derivative financial instruments.
The Credit Agreements provide for changes in borrowing margins based on
financial criteria and the Company's senior unsecured debt ratings, and impose
certain limitations on the operations of the Company and certain of its
subsidiaries. These limitations include financial covenants relating to interest
coverage and debt leverage as well as certain restrictions on the incurrence of
additional indebtedness, the creation of liens, mergers and acquisitions, and
certain dispositions of property or assets. The Company was in compliance with
these requirements as of March 31, 1999.
At March 31, 1999, the Company had available lines of credit, including
those available under the Credit Agreements, of approximately $1.6 billion of
which approximately $566 million were unused.
The Company's shareholders' equity was $438,015,000 at March 31, 1999
compared to $437,045,000 at December 31, 1998. Shareholders' equity increased
marginally in the first quarter of 1999 as the Company's net earnings of
$46,614,000 were substantially offset by the payment of the preferred stock
dividends of $17,911,000 and by $40,679,000 reflecting the negative effect of
foreign currency translation in the accumulated translation adjustment.
Other Matters
Environmental Matters
The Company is subject to loss contingencies resulting from
environmental laws and regulations, and it accrues for anticipated costs
associated with investigatory and remediation efforts when an assessment has
indicated that a loss is probable and can be reasonably estimated. These
accruals do not take into account any discounting for the time value of money
and are not reduced by potential insurance recoveries, if any. Environmental
liabilities are reassessed whenever circumstances become better defined and/or
remediation efforts and their costs can be better estimated. These liabilities
are evaluated periodically based on available information, including the
progress of remedial investigations at each site, the current status of
discussions with regulatory authorities regarding the methods and extent of
remediation and the apportionment of costs among potentially responsible
parties. As some of these issues are decided (the outcomes of which are subject
to uncertainties) and/or new sites are assessed and costs can be reasonably
estimated, the Company adjusts the recorded accruals, as necessary. However, the
Company believes that it has adequately reserved for all probable and estimable
environmental exposures.
19
<PAGE>
Year 2000 Computer System Compliance
The Company is addressing various Year 2000 issues. Year 2000 issues
arise from computer programs that utilize only the last two digits of a year to
define a particular year rather than the complete four-digit year. As a result,
certain computer programs may not properly process certain dates, particularly
those that fall into the year 2000 or subsequent years. Year 2000 issues affect
both computer-based information systems and systems with embedded
microcontrollers or microcomputers.
In addressing these issues, the Company has considered the following
four areas: (a) computer-based information technology systems, (b) other systems
not directly involving information technology, including embedded systems, (c)
packaging and dispensing equipment used by the Company's customers, and (d) Year
2000 readiness of the Company's key suppliers and customers. The Company's
action plan for dealing with these issues consists of the following four phases:
(1) identifying the potentially affected items, (2) assessing the effect of Year
2000 issues on these items, (3) remediating the deficiencies of these items with
updates, repairs or replacements, and (4) testing these items.
State of Readiness
The Company has examined the hardware and software of its
computer-based information technology systems, including mainline systems,
personal computers and telephone systems. The Company has also examined other
devices incorporating electronic microchips that might fail as a result of the
Year 2000 issue. These include security and control systems in Company
facilities and programmable logic controllers and microcomputers embedded into
production and other equipment in the Company's plants and warehouses. The
Company has substantially finished the identification and assessment phases of
its Year 2000 action plan in these two areas. The Company has also completed
approximately 90% of the remediation and testing phases of the plan for these
areas. The Company expects to complete its work on Year 2000 issues for
computer-based information technology systems by June 30, 1999 and for
non-information technology systems by September 30, 1999.
The Company has examined certain packaging and dispensing equipment
that it has sold or leased to customers in order to identify Year 2000 issues.
This equipment often incorporates microprocessors as controllers. The Company
believes that no further remediation is necessary for these devices.
The Company has conducted an initial Year 2000 issue survey of key
suppliers, particularly single-source suppliers of important raw materials, and
initial responses have been received. Remedial action will be requested as
required. The Company expects that all survey activity regarding suppliers will
be completed by June 30, 1999. In addition, the Company intends to contact
certain customers by May 31, 1999 regarding their overall Year 2000 readiness.
20
<PAGE>
Costs
The Company estimates that the total costs to address the Company's
Year 2000 issues will be in the neighborhood of $6 million. No significant
information technology projects have been deferred by the Company due to Year
2000 issues.
Risks
While the Company believes that it is taking all steps reasonably
necessary to assure its ability to conduct business and to safeguard its assets
during the period affected by Year 2000 issues, risks cannot in every case be
eliminated. Utilities and other sole-source suppliers may disrupt one or more of
the Company's operations if they are unable to conduct business during this
period.
If the Company is unable to complete its remediation efforts
satisfactorily and on a timely basis, substantial business interruptions may
occur in its operations. These could include disruptions to manufacturing
operations, logistics, invoicing, collections and vendor payments. The Company's
efforts described herein are expected to reduce the Company's uncertainty about
Year 2000 issues. The Company believes that its efforts to date in this regard
have contributed to reducing the risk of significant interruptions of its
operations, and it intends to pursue these efforts as described herein.
Contingency Plans
The Company has certain contingency measures in place, including in
some cases dual utility services, backup power equipment, backup data centers,
manual backup procedures and alternate suppliers. The Company is developing a
formal Year 2000 contingency plan to implement additional protection measures.
The Company expects to complete this plan during the first half of 1999 and to
implement it on a timely basis.
Euro Conversion
On January 1, 1999, eleven of the fifteen members of the European Union
(the "participating countries") established fixed conversion rates between their
existing currencies (the "legacy currencies") and introduced the euro, a single
common non-cash currency. The euro is now traded on currency exchanges and is
being used in business transactions.
At the beginning of 2002, new euro-denominated bills and coins will be
issued to replace the legacy currencies, and the legacy currencies will be
withdrawn from circulation. By 2002, all companies operating in the
participating countries are required to restate their statutory accounting data
into euros as their base currency.
In 1998, the Company established plans to address the systems and
business issues raised by the euro currency conversion. These issues include,
among others, (1) the need to adapt computer, accounting and other business
systems and equipment to accommodate euro-denominated transactions, (2) the need
to modify banking and cash management systems in order to be able to handle
payments between customers and suppliers in legacy
21
<PAGE>
currencies and euros between 1999 and 2002, (3) the requirement to change the
base statutory and reporting currency of each subsidiary in the participating
countries into euros during the transition period, (4) the foreign currency
exposure changes resulting from the alignment of the legacy currencies into the
euro, and (5) the identification of material contracts and sales agreements
whose contractual stated currency will need to be converted into euros.
The Company believes that it will be euro compliant by January 1, 2002.
The Company has implemented plans to accommodate euro-denominated transactions
and to handle euro payments with third party customers and suppliers in the
participating countries. The Company plans to meet the requirement to convert
statutory and reporting currencies to the euro by acquiring and installing new
financial software systems. If there are delays in such installation, the
Company plans to pursue alternate means to convert statutory and reporting
currencies to the euro by 2002. The Company expects that its foreign currency
exposures will be reduced as a result of the alignment of legacy currencies, and
the Company believes that all material contracts and sales agreements requiring
conversion will be converted to euros prior to January 1, 2002.
Although additional costs are expected to result from the
implementation of the Company's plans, the Company also expects to achieve
benefits in its treasury and procurement areas as a result of the elimination of
the legacy currencies. Since the Company has operations in each of its business
segments in the participating countries, each of its business segments will be
affected by the conversion process. However, the Company expects that the total
impact of all strategic and operational issues related to the euro conversion
and the cost of implementing its plans for the euro conversion will not have a
material adverse impact on its consolidated financial condition or results of
operations.
Recently Issued Statements of Financial Accounting Standards
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This Statement, which the
Company expects to adopt beginning January 1, 2000, establishes accounting and
operating standards for hedging activities and derivative instruments, including
certain derivative instruments embedded in other contracts. The Company is
reviewing the potential impact, if any, of SFAS No. 133 on its Consolidated
Financial Statements.
Forward-Looking Statements
Certain statements made by the Company in this Form 10-Q and in future
oral and written statements by management of the Company may be forward-looking.
These statements include comments as to the Company's beliefs and expectations
as to future events and trends affecting the Company's business, its results of
operations and its financial condition. These forward-looking statements are
based upon management's current
22
<PAGE>
expectations concerning future events and discuss, among other things,
anticipated future performance and future business plans. Forward-looking
statements are identified by such words and phrases as "expects," "intends,"
"believes," "will continue," "plans to," "could be" and similar expressions.
Forward-looking statements are necessarily subject to uncertainties, many of
which are outside the control of the Company, that could cause actual results to
differ materially from such statements.
While the Company is not aware that any of the factors listed below
will adversely affect the future performance of the Company, the Company
recognizes that it is subject to a number of uncertainties, such as business and
market conditions in Asia, Latin America and other geographic areas around the
world, changes in the value of foreign currencies against the U.S. dollar, the
ability of the Company to complete integration and restructuring activities
relating to the merger of old Sealed Air and Cryovac and the success of those
efforts, general economic, business and market conditions, conditions in the
industries and markets that use the Company's packaging materials and systems,
the development and success of new products, the Company's success in entering
new markets, competitive factors, raw material availability and pricing, changes
in the Company's relationship with customers and suppliers, future litigation
and claims (including environmental matters) involving the Company, changes in
domestic or foreign laws or regulations, or difficulties related to the Year
2000 issue or the euro conversion.
23
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PART II
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OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
In March 1999, the Company issued 175,049 shares of its common stock,
par value $0.10 per share, to the Profit-Sharing Plan of the Company as part of
its 1998 contribution to the Profit-Sharing Plan. The issuance of such shares to
the Profit-Sharing Plan was not registered under the Securities Act of 1933, as
amended (the "Securities Act"), because such transaction did not involve an
"offer" or "sale" of securities under Section 2(3) of the Securities Act.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Number Description
10.1 First Amendment, dated as of March
16, 1999, to Global Revolving Credit
Agreement (5-year), among the
Company, certain of the Company's
subsidiaries as borrowers and
guarantors thereunder, ABN AMRO Bank
N.V., as Administrative Agent, and
certain other banks party thereto.
10.2 First Amendment, dated as of March
16, 1999, to Global Revolving Credit
Agreement (364-Day), among the
Company, certain of the Company's
subsidiaries as borrowers and
guarantors thereunder, ABN AMRO Bank
N.V., as Administrative Agent, and
certain other banks party thereto.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
On March 16, 1999, the Company filed a Current Report on Form
8-K, Date of Report - March 15, 1999, which reported under Item 5 that the
Company's 1999 Annual Meeting will be held on May 21, 1999 in accordance with
the Company's By-Laws, and proxy materials were expected to be mailed to the
Company's stockholders on or about March 31, 1999 and that the Company's 1998
Annual Meeting was held on June 26, 1998, delayed from the date provided in the
Company's By-Laws due to the closing of the Reorganization, the Recapitalization
and the Merger.
24
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Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SEALED AIR CORPORATION
Date: May 14, 1999 By /s/ Jeffrey S. Warren
------------------------
Jeffrey S. Warren
Controller
(Authorized Executive Officer
and Chief Accounting Officer)
25
FIRST AMENDMENT TO GLOBAL REVOLVING CREDIT AGREEMENT (5-YEAR)
The First Amendment to Global Revolving Credit Agreement (5-Year) (the
"Amendment") dated as of March 16, 1999 among Sealed Air Corporation (the
"Company"), the Subsidiary Borrowers party hereto, the Subsidiary Guarantors
party hereto, the Banks party hereto, and ABN AMRO Bank N.V., as Administrative
Agent;
W I T N E S S E T H:
WHEREAS, the Company (which was formerly known as W. R. Grace & Co.)
and the Subsidiary Borrowers, the Guarantors, the Banks and ABN AMRO Bank N.V.,
as Administrative Agent, have heretofore executed and delivered a Global
Revolving Credit Agreement (5-Year) dated as of March 30, 1998 (the "Credit
Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement as
provided herein;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that the
Credit Agreement shall be and hereby is amended as follows:
1. The first paragraph of Section 1.04(a) of the Credit Agreement,
clauses (i), (ii) and (iii) thereof and Section 1.04(d) of the Credit Agreement
are hereby amended in their entirety and as so amended shall read as follows:
Section 1.04. Bid Loans. (a) Each Bank severally agrees that
the Company may request Bid Borrowings denominated in Dollars
comprised of either Absolute Rate Bid Loans or Eurodollar Rate Bid
Loans under this Section 1.04 to be made from time to time on any
Business Day during the period from the Effective Date until the
date occurring one day prior to the Final Maturity Date, in the
manner set forth below; provided that, following the making of each
Bid Borrowing, the aggregate Original Dollar Amount of all Loans
outstanding hereunder plus the aggregate amount of all Letter of
Credit Outstandings at such time shall not exceed the Total
Commitment in effect at such time. Each Bid Borrowing shall be in
an aggregate amount not less than $5,000,000 or an integral
multiple of $1,000,000 in excess thereof.
(i) The Company may request a Bid Borrowing by delivering
to the Administrative Agent by telecopier or telex, a notice of
a Bid Borrowing (a "Notice of Bid Borrowing"), in substantially
the form of Exhibit A-2 hereto, specifying the date and
aggregate amount of the
<PAGE>
proposed Bid Borrowing, whether such Bid Borrowing is to
consist of Absolute Rate Bid Loans or Eurodollar Rate Bid
Loans, the maturity date for repayment of each Bid Loan to be
made as part of such Bid Borrowing (which maturity date may be
the date occurring between one and 180 days after the date of
such Bid Borrowing, in the case of Absolute Rate Bid Loans, and
one, two, three or six months after the date of such Bid
Borrowing, in the case of Eurodollar Rate Bid Loans, and in any
case no later than the Final Maturity Date), the interest
payment date or dates relating thereto (which shall occur at
least every 3 months, in the case of Eurodollar Rate Bid Loans,
and at least every 90 days, in the case of Absolute Rate Bid
Loans), and any other terms to be applicable to such Bid
Borrowing, not later than 9:00 A.M. (New York time) (A) at
least one Business Day prior to the date of the proposed Bid
Borrowing, in the case of an Absolute Rate Bid Loan and (B) at
least five Business Days prior to the date of the proposed Bid
Borrowing, in the case of a Eurodollar Rate Bid Loan. The
Company may request Bid Borrowings for more than one maturity
date in a single Notice of Bid Borrowing. The Administrative
Agent shall in turn promptly notify each Bank of each request
for a Bid Borrowing received by it from the Company by sending
such Bank a copy of the related Notice of Bid Borrowing.
(ii) Each Bank may, if, in its sole discretion, it elects
to do so, irrevocably offer to make one or more Bid Loans to
the Company as part of such proposed Bid Borrowing at, in the
case of Absolute Rate Bid Loans, a rate or rates of interest
(an "Absolute Rate") or, in the case of Eurodollar Rate Bid
Loans, a margin (expressed as a percentage) above or below the
applicable Eurocurrency Rate (a "Bid Rate Margin"), in any case
as specified by such Bank in its sole discretion, by notifying
the Administrative Agent (which shall give prompt notice
thereof to the Company), before 9:00 A.M. (New York time) (A)
on the date of such proposed Bid Borrowing, in the case of an
Absolute Rate Bid Loan and (B) four Business Days before the
date of such proposed Bid Borrowing, in the case of a
Eurodollar Rate Bid Loan, of the minimum amount (which must be
at least $5,000,000) and maximum amount of each Bid Loan that
such Bank would be willing to make as part of such proposed Bid
Borrowing (which amounts may, subject to the proviso to the
first sentence of this Section 1.04, exceed such Bank's
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<PAGE>
Commitment), the Absolute Rates or Bid Rate Margins, as the
case may be, therefor and the maturity date relating thereto,
provided that if the Administrative Agent in its capacity as a
Bank shall, in its sole discretion, elect to make any such
offer, it shall notify the Company of such offer before 8:45
A.M. (New York time) on the date on which notice of such
election is to be given to the Administrative Agent by the
other Banks. Subject to Sections 5 and 9, any offer so made
shall not be revocable except with the written consent of the
Administrative Agent given on the instructions of the Company.
(iii) The Company may, in turn, before 10:00 A.M. (New
York time) (A) on the date of such proposed Bid Borrowing, in
the case of an Absolute Rate Bid Loan and (B) three Business
Days before the date of such proposed Bid Borrowing, in the
case of a Eurodollar Rate Bid Loan either
(A) cancel such Bid Borrowing by giving the Administrative
Agent notice to that effect,
(B) irrevocably accept one or more of the offers made by
any Bank or Banks pursuant to paragraph (ii) above, in its sole
discretion, subject only to the provisions of this paragraph
(iii), by giving notice to the Administrative Agent of the
amount of each Bid Loan (which amount shall be equal to or
greater than the minimum amount and equal to or less than the
maximum amount, notified to the Company by the Administrative
Agent on behalf of such Bank for such Bid Loan pursuant to
paragraph (ii) above) to be made by each Bank as part of such
Bid Borrowing, and reject any remaining offers with the same
maturity date made by Banks pursuant to paragraph (ii) above by
giving the Administrative Agent notice to that effect;
provided, however, that (x) the Company shall not accept an
offer made pursuant to paragraph (ii) above, at any Absolute
Rate or
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<PAGE>
Bid Rate Margin, as the case may be, if the Company shall have,
or shall be deemed to have, rejected any other offer with the
same maturity date made pursuant to paragraph (ii) above, at a
lower Absolute Rate or Bid Rate Margin, as the case may be, (y)
if the Company declines to accept, or is otherwise restricted
by the provisions of this Agreement from accepting, the maximum
aggregate principal amount of Bid Borrowings offered at the
same Absolute Rate or Bid Rate Margin, as the case may be, with
the same maturity date pursuant to paragraph (ii) above, then
the Company shall accept a pro rata portion of each offer made
at such Absolute Rate or Bid Rate Margin, as the case may be,
with the same maturity date, based as nearly as possible on the
ratio of the aggregate principal amount of such offers to be
accepted by the Company to the maximum aggregate principal
amount of such offers made pursuant to paragraph (ii) above
(rounding up or down to the next higher or lower multiple of
$1,000,000), and (z) no offer made pursuant to paragraph (ii)
above shall be accepted unless the Bid Borrowing in respect of
such offer is in an integral multiple of $1,000,000 and the
aggregate amount of such offers accepted by the Company is
equal to at least $5,000,000, or
(C) reject any or all of such offers either directly by
written or telephonic notice to the Administrative Agent or
indirectly by taking no action prior to the deadline specified
above.
Any offer or offers made pursuant to paragraph (ii) above not
expressly accepted or rejected by the Company in accordance with
this paragraph (iii) shall be deemed to have been rejected by the
Company. Determinations by the Company of the amount of Bid Loans
shall be conclusive in the absence of demonstrable error.
(d) The Company shall pay interest on the unpaid principal
amount of each Bid Loan from the date of such Bid Loan to (but not
including) the date the principal amount of such Bid Loan is repaid
in full, at a rate per annum equal to, in the case of an Absolute
Rate Bid Loan, the Absolute Rate quoted by the Bank making such Bid
Loan and, in the case of a Eurodollar Rate Bid Loan, the sum of the
applicable Eurocurrency Rate determined for such Bid Loan plus (or
minus) the Bid Rate Margin quoted by the Bank making such Bid Loan,
payable in arrears on the interest payment date or dates specified
by the Company for such Bid Loan in the related Notice of Bid
Borrowing delivered pursuant to subsection (a)(i) above.
2. Section 1.12 of the Credit Agreement is hereby amended by:
(a) inserting immediately after the words "Eurocurrency Loans"
appearing in the sixth, ninth, thirteenth, and seventeenth lines
thereof the following ", Eurodollar Rate Bid Loans"; and
-4-
<PAGE>
(b) inserting immediately after the word "Borrowing" appearing
in the tenth line thereof the following: ", Notice of Bid
Borrowing."
3. Section 6 of the Credit Agreement is hereby amended by inserting
immediately following Section 6.18 a new Section 6.19 as follows:
Section 6.19. Year 2000 Compliance. The Company has reviewed
the areas within its consolidated business and operations (and has
initiated a review of suppliers, vendors and customers) that could
be adversely affected by, and has developed and is carrying out a
plan to address on a timely basis, the "Year 2000 Problem" (that
is, the risk that computer applications used by the Company and its
Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates on or prior to,
and any date after December 31, 1999). Based on such review and
plan, the Company reasonably believes that the "Year 2000 Problem"
will not have a Material Adverse Effect.
4. The defined terms "Applicable Margin" and "Eurocurrency Rate"
contained in Section 10.01 of the Credit Agreement are each hereby amended in
their entirety and as so amended shall read as follows:
"Applicable Margin" shall mean, for any day, the rate per
annum set forth below opposite the Applicable Rating Period then in
effect:
APPLICABLE RATING
PERIOD RATE
Category A Period .220%
Category B Period .255%
Category C Period .300%
Category D Period .350%
Category E Period .475%
Category F Period .550%
"Eurocurrency Rate" shall mean the offered quotation to
first-class banks in the London interbank eurocurrency market by
ABN AMRO for deposits of amounts in Dollars or the relevant
Eurocurrency, as appropriate, in immediately available funds
comparable to, in the case of a Borrowing of Revolving Loans, the
principal amount of the Eurocurrency Loan of ABN AMRO for which the
Eurocurrency Rate is being determined or, in the case of a
Eurodollar Rate Bid Loan, the principal amount of the Bid Rate
-5-
<PAGE>
Loan for which the Eurocurrency Rate is being determined, with
maturities comparable to, in the case of a Borrowing of Revolving
Loans, the Interest Period applicable to such Eurocurrency Loan or,
in the case of a Eurodollar Rate Bid Loan, the maturity date
thereof, as of 11:00 A.M. (London time) on the date which is two
Business Days prior to the commencement of such Interest Period or
the date of making such Eurodollar Bid Rate Loan, as the case may
be.
5. Section 10.01 of the Credit Agreement is hereby further amended by
inserting in proper alphabetical order the following new defined terms:
"Absolute Rates" shall have the meaning provided in Section
1.04(a).
"Absolute Rate Bid Loan" means a Bid Loan in connection with
which the rates of interest offered by the Banks pursuant to
Section 1.04 shall be Absolute Rates per annum and with a term of 1
to 180 days.
"Bid Rate Margins" shall have the meaning provided in Section
1.04(a).
"Eurodollar Rate Bid Loan" means a Bid Loan in connection with
which Bid Rate Margins and the Eurocurrency Rate shall be the basis
used by the Banks in determining the rates of interest to be
offered by them pursuant to Section 1.04 and with a term of 1, 2, 3
or 6 months.
6. Exhibit A-2 to the Credit Agreement is hereby amended in its
entirety and as so amended shall be as set forth as Exhibit A-2 to this
Amendment.
7. This Amendment shall become effective as of the opening of business
on March 29, 1999 subject to the conditions precedent that on or before such
date:
(a) the Administrative Agent shall have received counterparts
hereof executed by the parties hereto (or, in the case of any party
as to which an executed counterpart hereof shall not have been
received, receipt by the Administrative Agent in form satisfactory
to it of facsimile or other written confirmation from such party of
execution of a counterpart hereof by such party);
(b) the Administrative Agent shall have received (i) a
certificate of the Secretary of the Company, each Domestic
Subsidiary that is a Borrower and each Guarantor dated no more than
10 Business Days prior to March 29, 1999 certifying that
-6-
<PAGE>
attached thereto is a true and complete copy of resolutions adopted
by the Board of Directors of such Borrower or Guarantor, as
applicable, authorizing the execution, delivery and performance of
this Amendment and certifying the names and true signatures of the
officers of such Borrower or Guarantor, as applicable, authorized
to sign this Amendment and (ii) such supporting documents as the
Administrative Agent may reasonably request; and
(c) the opinion of H. Katherine White, General Counsel to the
Company and certain of the Borrowers and Guarantors in form and
substance satisfactory to the Administrative Agent.
If this Amendment becomes effective, the changes in the Applicable
Margin shall take effect with respect to any Loans and Letters of Credit
outstanding on March 29, 1999 and on each day thereafter, but any payment of
interest or Letter of Credit Fees due on or after March 29, 1999 with respect to
Loans or Letters of Credit outstanding prior thereto shall be computed on the
basis of the Applicable Margin in effect prior to such effectiveness.
8.1. To induce the Administrative Agent and the Banks to enter into this
Amendment, each Borrower and Guarantor represents and warrants to the
Administrative Agent and the Banks that: (a) the representations and warranties
contained in the Credit Documents, as amended by this Amendment (other than
Section 6.05 of the Credit Agreement), are true and correct in all material
respects as of the date hereof with the same effect as though made on the date
hereof (it being understood and agreed that any representation or warranty which
by its terms is made as of a specified date shall be required to be true and
correct in all material respects only as of such specified date); (b) after
giving effect to this Amendment, no Default exists; (c) this Amendment has been
duly authorized by all necessary corporate proceedings and duly executed and
delivered by each Borrower and each Guarantor, and the Credit Agreement, as
amended by this Amendment, and each of the other Credit Documents are the legal,
valid and binding obligations of the applicable Borrower or Guarantor,
enforceable against such Borrower or Guarantor in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors' rights or by general principles of equity; and (d) no
consent, approval, authorization, order, registration or qualification with any
governmental authority is required for, and in the absence of which would
adversely effect, the legal and valid execution and delivery or performance by
any Borrower or any Guarantor of this Amendment or the performance by any
Borrower or any Guarantor of the Credit Agreement, as amended by this Amendment,
or any other Credit Document to which they are party.
8.2. This Amendment may be executed in any number of counterparts and by
the different parties on separate counterparts and each such counterpart shall
be deemed to be an original, but all such counterparts shall together constitute
but one and the same Amendment.
8.3. Except as specifically provided above, the Credit Agreement and the
other Credit Documents shall remain in full force and effect and are hereby
ratified and confirmed in all
-7-
<PAGE>
respects. The execution, delivery, and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power, or remedy of the Agent or any Bank under the Credit Agreement or any of
the other Credit Documents, nor constitute a waiver or modification of any
provision of any of the other Credit Documents.
8.4. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the law of
the State of New York.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
SEALED AIR CORPORATION, as
Borrower and Guarantor
By /s/ William V. Hickey
--------------------------------------
Title President
-------------------------------
SEALED AIR CORPORATION (US),
as Borrower and Guarantor
By /s/ William V. Hickey
--------------------------------------
Title President
-------------------------------
CRYOVAC, INC., as Borrower and Guarantor
By /s/ William V. Hickey
--------------------------------------
Title Vice President
-------------------------------
By H. Katherine White
--------------------------------------
Title Vice President
-------------------------------
-9-
<PAGE>
ABN AMRO BANK N.V., individually and as
Administrative Agent
By /s/ John W. Deegan
--------------------------------------
Title Group Vice President
-------------------------------
By /s/ Pauline McHugh
--------------------------------------
Title Vice President
-------------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By /s/ Deborah J. Graziano
--------------------------------------
Title Vice President
-------------------------------
BANKERS TRUST COMPANY
By /s/ Gregory P. Shefrin
--------------------------------------
Title Principal
-------------------------------
-10-
<PAGE>
CITIBANK, N.A.
By /s/ William G. Martens
--------------------------------------
Title Vice President
-------------------------------
COMMERZBANK AG, NEW YORK BRANCH
By /s/ Robert Donohue
--------------------------------------
Title Sr. Vice President
-------------------------------
By /s/ David T. Whitworth
--------------------------------------
Title Sr. Vice President
-------------------------------
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Vladimir Labun
--------------------------------------
Title First Vice President - Manager
-------------------------------
-11-
<PAGE>
FLEET NATIONAL BANK
By /s/ Christopher W. Criswell
--------------------------------------
Title Senior Vice President
-------------------------------
SUMMIT BANK
By /s/ Wayne Trotman
--------------------------------------
Title Senior Vice President
-------------------------------
TORONTO DOMINION (TEXAS) INC.
By /s/ Mark A. Baird
--------------------------------------
Title Vice President
-------------------------------
-12-
<PAGE>
BANCA DI ROMA
By /s/ Steven Paley
--------------------------------------
Title Vice President
-------------------------------
By /s/ Nicola Dell'Edera
--------------------------------------
Title AT
-------------------------------
THE BANK OF NEW YORK
By /s/ Ernest Fung
--------------------------------------
Title Vice President
-------------------------------
THE BANK OF NOVA SCOTIA
By /s/ Stephen Lockhart
--------------------------------------
Title Vice President
-------------------------------
-13-
<PAGE>
BACA NAZIONALE DEL LAVORO S.P.A. ---
NEW YORK BRANCH
By /s/ Giulio Giovine
--------------------------------------
Title Vice President
-------------------------------
By /s/ Leonardo Valentini
--------------------------------------
Title First Vice President
-------------------------------
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By /s/ Eric Longuet
--------------------------------------
Title Vice President
-------------------------------
By /s/ Albert Calo
--------------------------------------
Title Vice President
-------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Juan J. Duarte
--------------------------------------
Title Vice President
-------------------------------
-14-
<PAGE>
FIRST UNION NATIONAL BANK
By /s/ Christopher M. Mclaughlin
--------------------------------------
Title Vice President
-------------------------------
MARINE MIDLAND BANK
By /s/ Diane Zieske
--------------------------------------
Title Assistant Vice President
-------------------------------
WACHOVIA BANK N.A.
By /s/ M. Eugene Wood, III
--------------------------------------
Title Senior Vice President
-------------------------------
-15-
<PAGE>
THE NORTHERN TRUST COMPANY
By /s/ Mark E. Taylor
--------------------------------------
Title Second Vice President
-------------------------------
BANK AUSTRIA AKTIENGESELLSCHAFT
By
--------------------------------------
Title
-------------------------------
By
--------------------------------------
Title
-------------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.
By /s/ William DiNicola
--------------------------------------
Title Attorney-in-Fact
-------------------------------
-16-
<PAGE>
BANQUE NATIONALE DE PARIS
By /s/ Richard L. Sted
--------------------------------------
Title Senior Vice President
-------------------------------
By /s/ Richard Pace
--------------------------------------
Title Vice President
Corporate Banking Division
-------------------------------
CARIPLO-CASSA DI RISPARMIO DELLE PROVINCIE
LOMBARDE SPA
By /s/ Anthony Giobbi
--------------------------------------
Title F.V.P.
-------------------------------
By /s/ Maria Elena Greene
--------------------------------------
Title A.V.P.
-------------------------------
UNI CREDITO ITALIANO S.P.A.
By /s/ Giansranco Bisagni
--------------------------------------
Title First Vice President
-------------------------------
By /s/ Sayed Abbas
--------------------------------------
Title Asst. Vice President
-------------------------------
-17-
<PAGE>
KBC BANK N.V.
By /s/ Robert Snauffer
--------------------------------------
Title First Vice President
-------------------------------
By /s/ Robert M. Surdam Jr.
--------------------------------------
Title Vice President
-------------------------------
MELLON BANK, N.A.
By /s/ Maria Sisto
--------------------------------------
Title Assistant Vice President
-------------------------------
BANCA MONTE DEI PASCHI DI SIENA, S.P.A.
By /s/ G. Natalicchi
--------------------------------------
Title Supervisor & General Manager
-------------------------------
By /s/ Brian R. Landy
--------------------------------------
Title Vice President
-------------------------------
-18-
<PAGE>
NORDDEUTSCHE LANDESBANK GIROZENTRALE
By /s/ Stephen K. Hunter
--------------------------------------
Title SVP
-------------------------------
By /s/ Josef Haas
--------------------------------------
Title VP
-------------------------------
SUNTRUST BANK, ATLANTA
By /s/ Armen Karozichian
--------------------------------------
Title Vice President
-------------------------------
By
--------------------------------------
Title
-------------------------------
ISTITUTO BANCARIO SAN PAOLO DI
TORINO ISTITUTO MOBILIARE
ITALIANO S.P.A.
By /s/ Luca Sacchi
--------------------------------------
Title Vice President
-------------------------------
By /s/ Alex Guzzo
--------------------------------------
Title Vice President
-------------------------------
-19-
<PAGE>
CREDIT AGRICOLE INDOSUEZ
By /s/ Rene LeBlanc
--------------------------------------
Title Vice President, Sr. Rel. Mgr.
-------------------------------
By /s/ Richard Manix
--------------------------------------
Title First Vice President
-------------------------------
BANCA POPOLARE DI MILANO
By /s/ Anthony Franco
--------------------------------------
Title Executive Vice President
& General Manager
-------------------------------
By /s/ Esperanza Quintero
--------------------------------------
Title Vice President
-------------------------------
BANCA COMMERCIALE ITALIANA
NEW YORK BRANCH
By /s/ Charles Dougherty
--------------------------------------
Title VP
-------------------------------
By /s/ Karen Purelis
--------------------------------------
Title Vice President
-------------------------------
-20-
<PAGE>
REPUBLIC NATIONAL BANK
By
--------------------------------------
Title
-------------------------------
-21-
<PAGE>
EXHIBIT A-2
NOTICE OF BID BORROWING
[Date]
ABN AMRO Bank N.V., as Administrative Agent
for the Banks party to
the Credit Agreement
referred to below
1325 Avenue of the Americas
New York, New York 10019
Attention: Agency Services
Gentlemen:
The undersigned refers to the Global Revolving Credit Agreement
(5-Year), dated as of March 30, 1998 (as amended, modified or supplemented from
time to time, the "Credit Agreement"; the terms defined therein being used
herein as therein defined), among Sealed Air Corporation, Cryovac, Inc., as the
initial Subsidiary Borrower, and each additional Subsidiary Borrower, the
Company and certain Domestic Subsidiaries, as Guarantors, the lenders from time
to time party thereto (the "Banks"), you, as Administrative Agent for such
Banks, Bankers Trust Company, as Documentation Agent, and Bank of America
National Trust and Savings Association, as Syndication Agent, and hereby gives
you notice, irrevocably, pursuant to Section 1.04(a) of the Credit Agreement,
that the undersigned hereby requests a Borrowing under the Credit Agreement, and
in that connection sets forth below the information relating to such Borrowing
(the "Proposed Borrowing") as required by Section 1.04(a) of the Credit
Agreement:
(i) The date of the Proposed Bid Borrowing1 ______________
(ii) The Proposed Bid Borrowing is to be of ______________
[Absolute Rate Bid Loans, and Banks should
quote an Absolute Rate]
[Eurodollar Rate Bid Loans, and Banks should
quote a Bid Rate Margin (indicating whether
"Plus" or "Minus" the applicable Eurocurrency
Rate)]
- -----------
1 At least one Business Day's prior notice is required for a Proposed
Bid Borrowing of Absolute Rate Bid Loans and at least five Business
Days' prior notice is required for a Proposed Bid Borrowing of
Eurodollar Rate Bid Loans.
<PAGE>
(iii) Aggregate Principal Amount of each Proposed
Bid Borrowing2 ______________
(iv) Maturity Date for each Proposed Bid
Borrowing3 ______________
(v) Interest Payment Dates for each Proposed Bid
Borrowing ______________
The undersigned hereby certifies that the following statements will be
true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in the
Credit Agreement (other than Section 6.05) and in the other Credit
Documents will be true and correct in all material respects, both
before and after giving effect to the Proposed Borrowing and to the
application of the proceeds thereof, with the same effect as though
such representations and warranties had been made on and as of the date
of such Proposed Borrowing (it being understood that any representation
or warranty which by its terms is made as of a specified date shall be
required to be true and correct in all material respects only as of
such specified date); and
(B) no Default has occurred and is continuing, or would
result from such Proposed Borrowing or from the application of the
proceeds thereof.
Very truly yours,
SEALED AIR CORPORATION
By
--------------------------------------
Name:
Title:
- ------------
2 Not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
3 Must be 1 to 180 days, in the case of Absolute Rate Bid Loans, and one,
two, three or six months, in the case of Eurodollar Rate Bid Loans, after the
date of such Proposed Bid Borrowing and in any case of no later than the
Final Maturity Date.
-2-
FIRST AMENDMENT TO GLOBAL REVOLVING CREDIT AGREEMENT (364-DAY)
The First Amendment to Global Revolving Credit Agreement (364-Day) (the
"Amendment") dated as of March 16, 1999 among Sealed Air Corporation (the
"Company"), the Subsidiary Borrowers party hereto, the Subsidiary Guarantors
party hereto, the Banks party hereto, and ABN AMRO Bank N.V., as Administrative
Agent;
W I T N E S S E T H:
WHEREAS, the Company (which was formerly known as W. R. Grace & Co.)
and the Subsidiary Borrowers, the Guarantors, the Banks and ABN AMRO Bank N.V.,
as Administrative Agent, have heretofore executed and delivered a Global
Revolving Credit Agreement (364-Day) dated as of March 30, 1998 (the "Credit
Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement as
provided herein;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that the
Credit Agreement shall be and hereby is amended as follows:
1. The first paragraph of Section 1.04(a) of the Credit Agreement,
clauses (i), (ii) and (iii) thereof and Section 1.04(d) of the Credit Agreement
are hereby amended in their entirety and as so amended shall read as follows:
Section 1.04. Bid Loans. (a) Each Bank severally agrees that
the Company may request Bid Borrowings denominated in Dollars
comprised of either Absolute Rate Bid Loans or Eurodollar Rate Bid
Loans under this Section 1.04 to be made from time to time on any
Business Day during the period from the Effective Date until the
date occurring one day prior to the Final Maturity Date, in the
manner set forth below; provided that, following the making of each
Bid Borrowing, the aggregate Original Dollar Amount of all Loans
outstanding hereunder plus the aggregate amount of all Letter of
Credit Outstandings at such time shall not exceed the Total
Commitment in effect at such time. Each Bid Borrowing shall be in
an aggregate amount not less than $5,000,000 or an integral
multiple of $1,000,000 in excess thereof.
(i) The Company may request a Bid Borrowing by delivering
to the Administrative Agent by telecopier or telex, a notice of
a Bid Borrowing (a "Notice of Bid Borrowing"), in substantially
the form of Exhibit A-2 hereto, specifying the date and
aggregate amount of the
<PAGE>
proposed Bid Borrowing, whether such Bid Borrowing is to
consist of Absolute Rate Bid Loans or Eurodollar Rate Bid
Loans, the maturity date for repayment of each Bid Loan to be
made as part of such Bid Borrowing (which maturity date may be
the date occurring between one and 180 days after the date of
such Bid Borrowing, in the case of Absolute Rate Bid Loans, and
one, two, three or six months after the date of such Bid
Borrowing, in the case of Eurodollar Rate Bid Loans, and in any
case no later than the Final Maturity Date), the interest
payment date or dates relating thereto (which shall occur at
least every 3 months, in the case of Eurodollar Rate Bid Loans,
and at least every 90 days, in the case of Absolute Rate Bid
Loans), and any other terms to be applicable to such Bid
Borrowing, not later than 9:00 A.M. (New York time) (A) at
least one Business Day prior to the date of the proposed Bid
Borrowing, in the case of an Absolute Rate Bid Loan and (B) at
least five Business Days prior to the date of the proposed Bid
Borrowing, in the case of a Eurodollar Rate Bid Loan. The
Company may request Bid Borrowings for more than one maturity
date in a single Notice of Bid Borrowing. The Administrative
Agent shall in turn promptly notify each Bank of each request
for a Bid Borrowing received by it from the Company by sending
such Bank a copy of the related Notice of Bid Borrowing.
(ii) Each Bank may, if, in its sole discretion, it elects
to do so, irrevocably offer to make one or more Bid Loans to
the Company as part of such proposed Bid Borrowing at, in the
case of Absolute Rate Bid Loans, a rate or rates of interest
(an "Absolute Rate") or, in the case of Eurodollar Rate Bid
Loans, a margin (expressed as a percentage) above or below the
applicable Eurocurrency Rate (a "Bid Rate Margin"), in any case
as specified by such Bank in its sole discretion, by notifying
the Administrative Agent (which shall give prompt notice
thereof to the Company), before 9:00 A.M. (New York time) (A)
on the date of such proposed Bid Borrowing, in the case of an
Absolute Rate Bid Loan and (B) four Business Days before the
date of such proposed Bid Borrowing, in the case of a
Eurodollar Rate Bid Loan, of the minimum amount (which must be
at least $5,000,000) and maximum amount of each Bid Loan that
such Bank would be willing to make as part of such proposed Bid
Borrowing (which amounts may, subject to the proviso to the
first sentence of this Section 1.04, exceed such Bank's
-2-
<PAGE>
Commitment), the Absolute Rates or Bid Rate Margins, as the
case may be, therefor and the maturity date relating thereto,
provided that if the Administrative Agent in its capacity as a
Bank shall, in its sole discretion, elect to make any such
offer, it shall notify the Company of such offer before 8:45
A.M. (New York time) on the date on which notice of such
election is to be given to the Administrative Agent by the
other Banks. Subject to Sections 5 and 9, any offer so made
shall not be revocable except with the written consent of the
Administrative Agent given on the instructions of the Company.
(iii) The Company may, in turn, before 10:00 A.M. (New
York time) (A) on the date of such proposed Bid Borrowing, in
the case of an Absolute Rate Bid Loan and (B) three Business
Days before the date of such proposed Bid Borrowing, in the
case of a Eurodollar Rate Bid Loan either
(A) cancel such Bid Borrowing by giving the Administrative
Agent notice to that effect,
(B) irrevocably accept one or more of the offers made by
any Bank or Banks pursuant to paragraph (ii) above, in its sole
discretion, subject only to the provisions of this paragraph
(iii), by giving notice to the Administrative Agent of the
amount of each Bid Loan (which amount shall be equal to or
greater than the minimum amount and equal to or less than the
maximum amount, notified to the Company by the Administrative
Agent on behalf of such Bank for such Bid Loan pursuant to
paragraph (ii) above) to be made by each Bank as part of such
Bid Borrowing, and reject any remaining offers with the same
maturity date made by Banks pursuant to paragraph (ii) above by
giving the Administrative Agent notice to that effect;
provided, however, that (x) the Company shall not accept an
offer made pursuant to paragraph (ii) above, at any Absolute
Rate or Bid Rate Margin, as the case may be, if the Company
shall have, or shall be deemed to have, rejected any other
offer with the same maturity date made pursuant to paragraph
(ii) above, at a lower Absolute Rate or
-3-
<PAGE>
Bid Rate Margin, as the case may be, (y) if the Company
declines to accept, or is otherwise restricted by the
provisions of this Agreement from accepting, the maximum
aggregate principal amount of Bid Borrowings offered at the
same Absolute Rate or Bid Rate Margin, as the case may be, with
the same maturity date pursuant to paragraph (ii) above, then
the Company shall accept a pro rata portion of each offer made
at such Absolute Rate or Bid Rate Margin, as the case may be,
with the same maturity date, based as nearly as possible on the
ratio of the aggregate principal amount of such offers to be
accepted by the Company to the maximum aggregate principal
amount of such offers made pursuant to paragraph (ii) above
(rounding up or down to the next higher or lower multiple of
$1,000,000), and (z) no offer made pursuant to paragraph (ii)
above shall be accepted unless the Bid Borrowing in respect of
such offer is in an integral multiple of $1,000,000 and the
aggregate amount of such offers accepted by the Company is
equal to at least $5,000,000, or
(C) reject any or all of such offers either directly by
written or telephonic notice to the Administrative Agent or
indirectly by taking no action prior to the deadline specified
above.
Any offer or offers made pursuant to paragraph (ii) above not
expressly accepted or rejected by the Company in accordance with
this paragraph (iii) shall be deemed to have been rejected by the
Company. Determinations by the Company of the amount of Bid Loans
shall be conclusive in the absence of demonstrable error.
(d) The Company shall pay interest on the unpaid principal
amount of each Bid Loan from the date of such Bid Loan to (but not
including) the date the principal amount of such Bid Loan is repaid
in full, at a rate per annum equal to, in the case of an Absolute
Rate Bid Loan, the Absolute Rate quoted by the Bank making such Bid
Loan and, in the case of a Eurodollar Rate Bid Loan, the sum of the
applicable Eurocurrency Rate determined for such Bid Loan plus (or
minus) the Bid Rate Margin quoted by the Bank making such Bid Loan,
payable in arrears on the interest payment date or dates specified
by the Company for such Bid Loan in the related Notice of Bid
Borrowing delivered pursuant to subsection (a)(i) above.
2. Section 1.12 of the Credit Agreement is hereby amended by:
(a) inserting immediately after the words "Eurocurrency Loans"
appearing in the sixth, ninth, thirteenth, and seventeenth lines
thereof the following ", Eurodollar Rate Bid Loans"; and
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<PAGE>
(b) inserting immediately after the word "Borrowing" appearing
in the tenth line thereof the following: " Notice of Bid
Borrowing."
3. Section 3.01(a) of the Credit Agreement is hereby amended in its
entirety and as so amended shall read as follows:
Section 3.01. Fees. (a) The Company agrees to pay to the
Administrative Agent for distribution to each Bank a Facility Fee
(the "Facility Fee") for the period from the Effective Date to but
not including the Final Maturity Date (or such earlier date as the
Total Commitment shall have been terminated) on the daily average
Commitment of such Bank, at a rate of:
(i) 0.075% per annum for each day Category A Period exists,
(ii) 0.100% per annum for each day Category B Period exists,
(iii) 0.125% per annum for each day Category C Period exists,
(iv) 0.200% per annum for each day Category D Period exists,
(v) 0.250% per annum for each day Category E Period exists,
and
(vi) 0.500% per annum for each day Category F Period exists.
Accrued Facility Fee shall be due and payable quarterly in arrears
on the last business Day of each March, June, September and
December of each year, and on the Final Maturity Date (or upon such
earlier date as the Total Commitment is terminated).
4. Section 6 of the Credit Agreement is hereby amended by inserting
immediately following Section 6.18 a new Section 6.19 as follows:
Section 6.19. Year 2000 Compliance. The Company has reviewed
the areas within its consolidated business and operations (and has
initiated a review of suppliers, vendors and customers) that could
be adversely affected by, and has developed and is carrying out a
plan to address on a timely basis, the "Year 2000 Problem" (that
is, the risk that computer applications used by the Company and its
Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates on or prior to,
and any date after December 31, 1999). Based on such review and
plan, the Company reasonably believes that the "Year 2000 Problem"
will not have a Material Adverse Effect.
-5-
<PAGE>
5. The defined terms "Applicable Margin," "Eurocurrency Rate" and
"Final Maturity Date" contained in Section 10.01 of the Credit Agreement are
each hereby amended in their entirety and as so amended shall read as follows:
"Applicable Margin" shall mean, for any day, the rate per annum set
forth below opposite the Applicable Rating Period then in effect:
APPLICABLE RATING
PERIOD RATE
Category A Period .400%
Category B Period .450%
Category C Period .525%
Category D Period .700%
Category E Period 1.000%
Category F Period 1.500%
"Eurocurrency Rate" shall mean the offered quotation to
first-class banks in the London interbank eurocurrency market by ABN
AMRO for deposits of amounts in Dollars or the relevant
Eurocurrency, as appropriate, in immediately available funds
comparable to, in the case of a Borrowing of Revolving Loans, the
principal amount of the Eurocurrency Loan of ABN AMRO for which the
Eurocurrency Rate is being determined or, in the case of a
Eurodollar Rate Bid Loan, the principal amount of the Bid Rate Loan
for which the Eurocurrency Rate is being determined, with maturities
comparable to, in the case of a Borrowing of Revolving Loans, the
Interest Period applicable to such Eurocurrency Loan or, in the case
of a Eurodollar Rate Bid Loan, the maturity date thereof, as of
11:00 A.M. (London time) on the date which is two Business Days
prior to the commencement of such Interest Period or the date of
making such Eurodollar Bid Rate Loan, as the case may be.
"Final Maturity Date" shall mean March 27, 2000.
6. Section 10.01 of the Credit Agreement is hereby further amended by
inserting in proper alphabetical order the following new defined terms:
"Absolute Rates" shall have the meaning provided in Section
1.04(a).
"Absolute Rate Bid Loan" means a Bid Loan in connection with
which the rates of interest offered by the Banks pursuant to
-6-
<PAGE>
Section 1.04 shall be Absolute Rates per annum and with a term of 1
to 180 days.
"Bid Rate Margins" shall have the meaning provided in Section
1.04(a).
"Eurodollar Rate Bid Loan" means a Bid Loan in connection with
which Bid Rate Margins and the Eurocurrency Rate shall be the basis
used by the Banks in determining the rates of interest to be
offered by them pursuant to Section 1.04 and with a term of 1, 2, 3
or 6 months.
7. Exhibit A-2 to the Credit Agreement is hereby amended in its
entirety and as so amended shall be as set forth as Exhibit A-2 to this
Amendment.
8. Subject to satisfaction of the conditions precedent contained in
paragraph 9 hereof, Banks that are party to the Credit Agreement immediately
prior to the Effective Time (as defined in paragraph 9) which have not executed
this Amendment (each, a "non-Consenting Bank") shall cease to be a party to the
Credit Agreement from and after the Effective Time. From and after the Effective
Time, each non-Consenting Bank shall relinquish its rights and be released from
its obligations under the Credit Agreement. Notwithstanding the foregoing, the
obligations of each Borrower and Guarantor to each non-Consenting Bank contained
in the Credit Agreement which by the terms of the Credit Agreement survive the
termination of the Credit Agreement, including without limitation, Sections
1.11, 1.12, 2.06, 4.04, 13.01 and 13.06, shall survive the occurrence of the
Effective Time, but only as they relate to the period when such non-Consenting
Bank was, or to such non-Consenting Bank's former status as, a Bank under the
Credit Agreement.
Pursuant to Section 13.12(b) of the Credit Agreement the Company has
requested that from and after the Effective Time the Commitments of the Banks
(including the Commitments of the non-Consenting Banks) be reallocated among the
Banks executing this Amendment provided that the aggregate amount of the
Commitments do not exceed $600,000,000. Accordingly, Schedule 1.01 to the Credit
Agreement is hereby amended in its entirety and as so amended shall be as set
forth as Schedule 1.01 to this Amendment.
9. This Amendment shall become effective as of the opening of business
on March 29, 1999 (the "Effective Time") subject to the conditions precedent
that on or before such date:
(a) the Administrative Agent shall have received counterparts
hereof executed by the parties hereto (or, in the case of any party
as to which an executed counterpart hereof shall not have been
received, receipt by the Administrative Agent in form satisfactory
to it of facsimile or other written confirmation from such party of
execution of a counterpart hereof by such party);
(b) the Administrative Agent shall have received (i) a
certificate of the Secretary of the Company, each Domestic
-7-
<PAGE>
Subsidiary that is a Borrower and each Guarantor dated no more than
10 Business Days prior to March 29, 1999 certifying that attached
thereto is a true and complete copy of resolutions adopted by the
Board of Directors of such Borrower or Guarantor, as applicable,
authorizing the execution, delivery and performance of this
Amendment and certifying the names and true signatures of the
officers of such Borrower or Guarantor, as applicable, authorized
to sign this Amendment and (ii) such supporting documents as the
Administrative Agent may reasonably request;
(c) the opinion of H. Katherine White, General Counsel to the
Company and certain of the Borrowers and Guarantors in form and
substance satisfactory to the Administrative Agent; and
(d) all Loans owing to any non-Consenting Bank shall have been
repaid in full, together with all interest, Facility Fee, and all
other fees and expenses that are accrued but unpaid to March 29,
1999 and payable to each non-Consenting Bank under the terms of the
Credit Agreement (or the Administrative Agent shall have received
assurance satisfactory to it that arrangements for the necessary
transfers of funds by the Borrowers have been made and are in
process).
If this Amendment becomes effective, the changes in Applicable Margins
and the Facility Fee shall take effect with respect to any Loans, Letters of
Credit and the amount of the Commitments outstanding on March 29, 1999 and on
each day thereafter, but any payment of interest, Letter of Credit Fees or
Facility Fees due on or after March 29, 1999 with respect to Loans or Letters of
Credit outstanding or the amount of the Commitments on account of any day prior
thereto shall be computed on the basis of the Applicable Margin and Facility Fee
in effect prior to such effectiveness.
10.1. To induce the Administrative Agent and the Banks to enter into this
Amendment, each Borrower and Guarantor represents and warrants to the
Administrative Agent and the Banks that: (a) the representations and warranties
contained in the Credit Documents, as amended by this Amendment (other than
Section 6.05 of the Credit Agreement), are true and correct in all material
respects as of the date hereof with the same effect as though made on the date
hereof (it being understood and agreed that any representation or warranty which
by its terms is made as of a specified date shall be required to be true and
correct in all material respects only as of such specified date); (b) after
giving effect to this Amendment, no Default exists; (c) this Amendment has been
duly authorized by all necessary corporate proceedings and duly executed and
delivered by each Borrower and each Guarantor, and the Credit Agreement, as
amended by this Amendment, and each of the other Credit Documents are the legal,
valid and binding obligations of the applicable Borrower or Guarantor,
enforceable against such Borrower or Guarantor in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors' rights or by general principles of equity; and (d) no
consent, approval, authorization, order,
-8-
<PAGE>
registration or qualification with any governmental authority is required for,
and in the absence of which would adversely effect, the legal and valid
execution and delivery or performance by any Borrower or any Guarantor of this
Amendment or the performance by any Borrower or any Guarantor of the Credit
Agreement, as amended by this Amendment, or any other Credit Document to which
they are party.
10.2. This Amendment may be executed in any number of counterparts and by
the different parties on separate counterparts and each such counterpart shall
be deemed to be an original, but all such counterparts shall together constitute
but one and the same Amendment.
10.3. Except as specifically provided above, the Credit Agreement and the
other Credit Documents shall remain in full force and effect and are hereby
ratified and confirmed in all respects. The execution, delivery, and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power, or remedy of the Agent or any Bank
under the Credit Agreement or any of the other Credit Documents, nor constitute
a waiver or modification of any provision of any of the other Credit Documents.
10.4. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the law of
the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
SEALED AIR CORPORATION, as
Borrower and Guarantor
By /s/ William V. Hickey
--------------------------------------
Title President
-------------------------------
SEALED AIR CORPORATION (US),
as Borrower and Guarantor
By /s/ William V. Hickey
--------------------------------------
Title President
-------------------------------
CRYOVAC, INC., as Borrower and Guarantor
By /s/ William V. Hickey
--------------------------------------
Title President
-------------------------------
By /s/ H. Katherine White
--------------------------------------
Title Vice President
-------------------------------
-10-
<PAGE>
CRYOVAC UK LIMITED, as Borrower
By /s/ Mark T. Becker
--------------------------------------
Title Controller Europe
-------------------------------
CRYOVAC AG, as Borrower
By /s/ Mark T. Becker
--------------------------------------
Title Controller Europe
-------------------------------
CRYOVAC S.P.A., as Borrower
By /s/ Domenico Bertani
--------------------------------------
Title CFO/Managing Director
-------------------------------
-11-
<PAGE>
CRYOVAC AUSTRALIA PTY.
LIMITED, as Borrower
By /s/ H. Katherine White
--------------------------------------
Title Director
-------------------------------
SEALED AIR S.A., as Borrower
By /s/ S. Froelich
--------------------------------------
Title Managing Director
-------------------------------
SEALED AIR LIMITED, as Borrower
By /s/ William V. Hickey
--------------------------------------
Title Director
-------------------------------
-12-
<PAGE>
CRYOVAC VERPACKUNGEN GMBH, as Borrower
By /s/ Hans-Otto Bosse
--------------------------------------
Title Managing Director
-------------------------------
SEALED AIR (CANADA) INC., as Borrower
By /s/ Andre Schmidt
--------------------------------------
Title Controller
-------------------------------
SEALED AIR (NZ) LIMITED, as Borrower
By /s/ H. Katherine White
--------------------------------------
Title Director
-------------------------------
-13-
<PAGE>
CRYOVAC (NEW ZEALAND) LIMITED, as
Borrower
By /s/ H. Katherine White
--------------------------------------
Title Director
-------------------------------
SEALED AIR AUSTRALIA PTY LIMITED, as
Borrower
By /s/ H. Katherine White
--------------------------------------
Title Director
-------------------------------
SEALED AIR B.V., as Borrower
By /s/ H. Katherine White
--------------------------------------
Title Director
-------------------------------
-14-
<PAGE>
ABN AMRO BANK N.V., individually and as
Administrative Agent
By /s/ John W. Deegan
--------------------------------------
Title Group Vice President
-------------------------------
By /s/ Pauline McHugh
--------------------------------------
Title Vice President
-------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Deborah J. Graziano
--------------------------------------
Title Vice President
-------------------------------
BANKERS TRUST COMPANY
By /s/ Gregory P. Shefrin
--------------------------------------
Title Principal
-------------------------------
-15-
<PAGE>
CITIBANK, N.A.
By /s/ William G. Martens
--------------------------------------
Title V.P.
-------------------------------
COMMERZBANK AG, NEW YORK BRANCH
By /s/ Robert Donohue
--------------------------------------
Title Sr. Vice President
-------------------------------
By /s/ David T. Whitworth
--------------------------------------
Title Sr. Vice President
-------------------------------
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Vladimir Labun
--------------------------------------
Title First Vice President - Manager
-------------------------------
-16-
<PAGE>
FLEET NATIONAL BANK
By /s/ Christopher W. Criswell
--------------------------------------
Title Senior Vice President
-------------------------------
SUMMIT BANK
By /s/ Wayne Trotman
--------------------------------------
Title Senior Vice President
-------------------------------
TORONTO DOMINION (TEXAS) INC.
By /s/ Mark A. Baird
--------------------------------------
Title Vice President
-------------------------------
-17-
<PAGE>
BANCA DI ROMA
By /s/ Steven Paley
--------------------------------------
Title VP
-------------------------------
By /s/ Nicola Dell'Edera
--------------------------------------
Title AT
-------------------------------
THE BANK OF NEW YORK
By /s/ Ernest Fung
--------------------------------------
Title Vice President
-------------------------------
THE BANK OF NOVA SCOTIA
By /s/ Stephen Lockhart
--------------------------------------
Title Vice President
-------------------------------
-18-
<PAGE>
BANCA NAZIONALE DEL LAVORO S.P.A.
NEW YORK BRANCH
By /s/ Giulio Giovine
--------------------------------------
Title Vice President
-------------------------------
By /s/ Leonardo Valentini
--------------------------------------
Title First Vice President
-------------------------------
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By /s/ Eric Longuet
--------------------------------------
Title Vice President
-------------------------------
By /s/ Albert Calo
--------------------------------------
Title Vice President
-------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Juan J. Duarte
--------------------------------------
Title Vice President
-------------------------------
-19-
<PAGE>
FIRST UNION NATIONAL BANK
By Christopher M. Mclaughlin
--------------------------------------
Title Vice President
-------------------------------
MARINE MIDLAND BANK
By /s/ Diane Zieske
--------------------------------------
Title Assistant Vice President
-------------------------------
WACHOVIA BANK N.A.
By /s/ M. Eugene Wood, III
--------------------------------------
Title Senior Vice President
-------------------------------
-20-
<PAGE>
THE NORTHERN TRUST COMPANY
By /s/ Marke E. Taylor
--------------------------------------
Title Second Vice President
-------------------------------
THE BANK OF TOKYO-MITSUBISHI, LTD.
By /s/ William DiNicola
--------------------------------------
Title Attorney-in-Fact
-------------------------------
BANQUE NATIONALE DE PARIS
By /s/ Richard L. Sted
--------------------------------------
Title Senior Vice President
-------------------------------
By /s/ Richard Pace
--------------------------------------
Title Vice President
Corporate Banking Division
-------------------------------
-21-
<PAGE>
CARIPLO-CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE SPA
By /s/ Anthony Giobbi
--------------------------------------
Title F.V.P.
-------------------------------
By /s/ Maria Elena Greene
--------------------------------------
Title A.V.P.
-------------------------------
UNI CREDITO ITALIANO S.P.A.
By /s/ Giansranco Bisagni
--------------------------------------
Title First Vice President
-------------------------------
By /s/ Sayed Abbas
--------------------------------------
Title Asst. Vice President
-------------------------------
KBC BANK N.V.
By /s/ Robert Snauffer
--------------------------------------
Title First Vice President
-------------------------------
By /s/ Robert M. Surdam Jr.
--------------------------------------
Title Vice President
-------------------------------
-22-
<PAGE>
MELLON BANK, N.A.
By /s/ Maria Sisto
--------------------------------------
Title Assistant Vice President
-------------------------------
BANCA MONTE DEI PASCHI DI SIENA, S.P.A.
By /s/ G. Natalicchi
--------------------------------------
Title Supervisor & General Manager
-------------------------------
By /s/ Brian R. Landy
--------------------------------------
Title Vice President
-------------------------------
NORDDEUTSCHE LANDESBANK GIROZENTRALE
By Stephen K. Hunter
--------------------------------------
Title SVP
-------------------------------
By /s/ Josef Haas
--------------------------------------
Title VP
-------------------------------
-23-
<PAGE>
SUNTRUST BANK, ATLANTA
By /s/ Armen Karozichian
--------------------------------------
Title Vice President
-------------------------------
By
--------------------------------------
Title
-------------------------------
ISTITUTO BANCARIO SAN PAOLO DI
TORINO ISTITUTO MOBILIARE
ITALIANO S.P.A.
By /s/ Luca Sacchi
--------------------------------------
Title Vice President
-------------------------------
By /s/ Alex Guzzo
--------------------------------------
Title Vice President
-------------------------------
CREDIT AGRICOLE INDOSUEZ
By Rene LeBlanc
--------------------------------------
Title Vice President, Sr. Rel. Mgr.
-------------------------------
By /s/ Richard Manix
--------------------------------------
Title First Vice President
-------------------------------
-24-
<PAGE>
BANCA COMMERCIALE ITALIANA
NEW YORK BRANCH
By /s/ Charles Dougherty
--------------------------------------
Title
-------------------------------
By /s/ Karen Purelis
--------------------------------------
Title Vice President
-------------------------------
-25-
<PAGE>
SCHEDULE 1.01
COMMITMENTS
BANK NAME COMMITMENT
ABN AMRO Bank N.V. 30,000,000.00
Bank of America National Trust and Savings Association 30,000,000.00
Bankers Trust Company 30,000,000.00
Banca Nazionale del Lavoro S.p.A. -- New York Branch 23,000,000.00
Citibank, N.A. 23,000,000.00
Commerzbank AG, New York Branch 23,000,000.00
Credit Agricole Indosuez 23,000,000.00
Credit Lyonnais, New York Branch 23,000,000.00
First Union National Bank 23,000,000.00
Fleet National Bank 23,000,000.00
Marine Midland Bank 23,000,000.00
Summit Bank 23,000,000.00
SunTrust Bank, Atlanta 23,000,000.00
The Bank of New York 23,000,000.00
The Bank of Nova Scotia 23,000,000.00
Toronto Dominion (Texas), Inc. 23,000,000.00
Wachovia Bank N.A. 23,000,000.00
<PAGE>
Banca Commerciale Italiana 18,000,000.00
Banca di Roma 18,000,000.00
Banque Nationale de Paris 18,000,000.00
Compagne Financiere de CIC et de L'Union Europeene 18,000,000.00
KBC Bank N.V. 18,000,000.00
The First National Bank of Chicago 18,000,000.00
Banca Monte dei Paschi di Siena, S.p.A. 10,000,000.00
Cariplo-Cassa di Risparmio delle Provincie Lombarde SpA 10,000,000.00
Istituto Bancario San Paolo di Torino Istituto Mobiliare
Italiano SpA 10,000,000.00
Mellon Bank, N.A. 10,000,000.00
Norddeutsche Landesbank Girozentrale 10,000,000.00
The Northern Trust Company 10,000,000.00
The Bank of Tokyo-Mitsubishi, Ltd. 10,000,000.00
UNI Credito Italiano S.p.A. 10,000,000.00
<PAGE>
EXHIBIT A-2
NOTICE OF BID BORROWING
[Date]
ABN AMRO Bank N.V., as Administrative Agent
for the Banks party to
the Credit Agreement
referred to below
1325 Avenue of the Americas
New York, New York 10019
Attention: Agency Services
Gentlemen:
The undersigned refers to the Global Revolving Credit Agreement
(364-Day), dated as of March 30, 1998 (as amended, modified or supplemented from
time to time, the "Credit Agreement"; the terms defined therein being used
herein as therein defined), among Sealed Air Corporation, Cryovac, Inc., as the
initial Subsidiary Borrower, and each additional Subsidiary Borrower, the
Company and certain Domestic Subsidiaries, as Guarantors, the lenders from time
to time party thereto (the "Banks"), you, as Administrative Agent for such
Banks, Bankers Trust Company, as Documentation Agent, and Bank of America
National Trust and Savings Association, as Syndication Agent, and hereby gives
you notice, irrevocably, pursuant to Section 1.04(a) of the Credit Agreement,
that the undersigned hereby requests a Borrowing under the Credit Agreement, and
in that connection sets forth below the information relating to such Borrowing
(the "Proposed Borrowing") as required by Section 1.04(a) of the Credit
Agreement:
(i) The date of the Proposed Bid Borrowing1 ______________
(ii) The Proposed Bid Borrowing is to be of ______________
[Absolute Rate Bid Loans, and Banks should
quote an Absolute Rate]
[Eurodollar Rate Bid Loans, and Banks should
quote a Bid Rate Margin (indicating whether
"Plus" or "Minus" the applicable Eurocurrency
Rate)]
(iii) Aggregate Principal Amount of each Proposed
- -----------
1 At least one Business Day's prior notice is required for a Proposed
Bid Borrowing of Absolute Rate Bid Loans and at least five Business
Days' prior notice is required for a Proposed Bid Borrowing of
Eurodollar Rate Bid Loans.
<PAGE>
Bid Borrowing2 ______________
(iv) Maturity Date for each Proposed Bid
Borrowing3 ______________
(v) Interest Payment Dates for each Proposed Bid
Borrowing ______________
The undersigned hereby certifies that the following statements will be
true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in the
Credit Agreement (other than Section 6.05) and in the other Credit
Documents will be true and correct in all material respects, both
before and after giving effect to the Proposed Borrowing and to the
application of the proceeds thereof, with the same effect as though
such representations and warranties had been made on and as of the date
of such Proposed Borrowing (it being understood that any representation
or warranty which by its terms is made as of a specified date shall be
required to be true and correct in all material respects only as of
such specified date); and
(B) no Default has occurred and is continuing, or would
result from such Proposed Borrowing or from the application of the
proceeds thereof.
Very truly yours,
SEALED AIR CORPORATION
By
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
- ------------
2 Not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
3 Must be 1 to 180 days, in the case of Absolute Rate Bid Loans, and one,
two, three or six months, in the case of Eurodollar Rate Bid Loans, after the
date of such Proposed Bid Borrowing and in any case of no later than the
Final Maturity Date
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information extracted from the consolidated
statement of earnings for the three months ended March 31, 1999 and the
consolidated balance sheet at March 31, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0001012100
<NAME> SEALED AIR CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 85,280,000
<SECURITIES> 0
<RECEIVABLES> 449,204,000
<ALLOWANCES> 19,079,000
<INVENTORY> 269,504,000
<CURRENT-ASSETS> 875,614,000
<PP&E> 1,906,812,000
<DEPRECIATION> 836,003,000
<TOTAL-ASSETS> 4,018,620,000
<CURRENT-LIABILITIES> 703,275,000
<BONDS> 0
1,789,707,000
0
<COMMON> 8,380,000
<OTHER-SE> 429,635,000
<TOTAL-LIABILITY-AND-EQUITY> 4,018,620,000
<SALES> 678,937,000
<TOTAL-REVENUES> 678,937,000
<CGS> 433,239,000
<TOTAL-COSTS> 433,239,000
<OTHER-EXPENSES> 140,865,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,719,000
<INCOME-PRETAX> 87,950,000
<INCOME-TAX> 41,336,000
<INCOME-CONTINUING> 46,614,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,614,000
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
