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, 2000
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 83,639,976 shares of the registrant's common stock, par value $0.10
per share, and 34,002,692 shares of the registrant's Series A convertible
preferred stock, par value $0.10 per share, outstanding as of April 28, 2000.
<PAGE>
PART I
FINANCIAL INFORMATION
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings
For the Three Months Ended March 31, 2000 and 1999
(In thousands of dollars except per share data)
(Unaudited)
2000 1999
-------- --------
Net sales $ 716,588 $ 678,937
Cost of sales 458,599 433,239
-------- --------
Gross profit 257,989 245,698
Marketing, administrative and
development expenses 129,758 128,614
Goodwill amortization 12,310 12,251
-------- --------
Operating profit 115,921 104,833
Other income (expense):
Interest expense (13,088) (14,719)
Other, net (1,946) (2,164)
-------- --------
Other expense, net (15,034) (16,883)
-------- --------
Earnings before income taxes 100,887 87,950
Income taxes 45,904 41,336
-------- --------
Net earnings $ 54,983 $ 46,614
======== ========
Less: Series A preferred stock dividends 17,097 17,910
Add: Excess of book value over repurchase
price of Series A preferred stock 2,779 10
-------- --------
Net earnings ascribed to common shareholders $ 40,665 $ 28,714
======== ========
Earnings per common share (See Note 3):
Basic $ 0.49 $ 0.34
======== ========
Diluted $ 0.45 $ 0.34
======== ========
Weighted average number of common shares
outstanding: (000)
Basic 83,629 83,364
======== ========
Diluted 84,382 83,496
======== ========
See accompanying notes to consolidated financial statements.
2
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999
(In thousands of dollars except share data)
March 31,
2000 December 31,
(Unaudited) 1999
------------ -------------
ASSETS
------
Current assets:
Cash and cash equivalents $ 17,721 $ 13,672
Notes and accounts receivable, net of allowances
for doubtful accounts of $21,271 in 2000 and
$21,396 in 1999 473,055 470,046
Inventories 265,675 245,934
Other current assets 74,534 73,572
---------- ---------
Total current assets 830,985 803,224
---------- ---------
Property and equipment:
Land and buildings 425,765 426,460
Machinery and equipment 1,356,672 1,364,454
Other property and equipment 111,484 115,111
Construction in progress 50,442 40,106
--------- ---------
1,944,363 1,946,131
Less accumulated depreciation and amortization 937,915 922,722
--------- ---------
Property and equipment, net 1,006,448 1,023,409
--------- ---------
Goodwill, less accumulated amortization of
$96,256 in 2000 and $84,699 in 1999 1,857,843 1,859,958
Other assets 176,718 168,642
--------- ---------
Total assets $ 3,871,994 $ 3,855,233
========= =========
See accompanying notes to consolidated financial statements.
3
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999 (Continued)
(In thousands of dollars except share data)
March 31,
2000 December 31,
(Unaudited) 1999
------------ --------------
LIABILITIES, CONVERTIBLE PREFERRED STOCK &
SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $ 129,348 $ 152,653
Current portion of long-term debt 6,495 6,908
Accounts payable 173,024 175,166
Other current liabilities 195,680 216,487
Income taxes payable 66,838 30,880
--------- ---------
Total current liabilities 571,385 582,094
Long-term debt, less current portion 706,902 665,116
Deferred income taxes 212,659 214,906
Other liabilities 77,881 80,425
--------- ---------
Total liabilities 1,568,827 1,542,541
--------- ---------
Authorized 50,000,000 preferred shares.
Series A convertible preferred
stock, $50.00 per share redemption
value, authorized 36,021,851 shares
in 2000 and 1999, issued 36,015,291
shares in 2000 and 36,015,645
shares in 1999, including 1,987,149
shares in 2000 and 782,400 shares
in 1999 in treasury, mandatory
redemption in 2018 1,701,407 1,761,662
Shareholders' equity:
Common stock, $.10 par value. Authorized
400,000,000 shares, issued
84,153,371 shares in 2000 and
84,135,255 shares in 1999 8,415 8,413
Additional paid-in capital 636,578 632,230
Retained earnings 169,959 132,073
Accumulated translation adjustment (168,916) (171,521)
--------- ---------
646,036 601,195
--------- ---------
Less: Deferred compensation 19,870 24,511
Less: Cost of treasury common stock,
495,296 shares in 2000 and
535,356 shares in 1999 22,404 23,652
Less: Minimum pension liability 2,002 2,002
--------- ---------
Total shareholders' equity 601,760 551,030
--------- ---------
Total liabilities, preferred stock
and shareholders' equity $ 3,871,994 $ 3,855,233
========= =========
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, 2000 and 1999
(In thousands of dollars)
(Unaudited)
2000 1999
---------- ---------
Cash flows from operating activities:
Net earnings $ 54,983 $ 46,614
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 55,091 55,787
Amortization of bond discount 82 --
Deferred tax provision (benefit) 2,953 (1,401)
Net loss (gain) on disposals of fixed assets 63 (292)
Changes in operating assets and liabilities,
net of businesses acquired:
Notes and accounts receivable (12,211) (11,368)
Inventories (20,548) (2,511)
Other current assets (1,584) 33
Other assets (922) (1,451)
Accounts payable 1,440 (6,608)
Other current liabilities 29,812 (2,461)
Other liabilities (773) (3,351)
---------- -----------
Net cash provided by operating activities 108,386 72,991
---------- ----------
Cash flows from investing activities:
Capital expenditures for property and equipment (23,867) (16,943)
Proceeds from sales of property and equipment 296 861
Businesses acquired in purchase transactions,
net of cash acquired (27,542) --
---------- --------
Net cash used in investing activities (51,113) (16,082)
---------- ----------
Cash flows from financing activities:
Proceeds from long-term debt 101,221 2,753
Payment of long-term debt (46,385) (191,517)
Dividends paid on preferred stock (17,791) (17,911)
Purchase of treasury common stock (14,145) --
Purchase of treasury preferred stock (57,458) (1,240)
Proceeds from stock option exercises 233 --
(Payments of) net proceeds from short-term
borrowings (19,988) 193,181
---------- ---------
Net cash used in financing activities (54,313) (14,734)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents 1,089 (1,881)
--------- ---------
Cash and cash equivalents:
Increase during the period 4,049 40,294
Balance, beginning of period 13,672 44,986
--------- ---------
Balance, end of period $ 17,721 $ 85,280
========= =========
See accompanying notes to consolidated financial statements.
5
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2000 and 1999 (Continued)
(In thousands of dollars)
(Unaudited)
2000 1999
--------- ---------
Supplemental Cash Flow Items:
Interest payments, net of amounts capitalized $ 6,104 $ 17,303
======== ========
Income tax payments $ 17,304 $ 2,626
======== ========
Non-Cash Items:
Issuance of shares of common stock to the
profit-sharing plan $ 13,877 $ 8,796
======== ========
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, 2000 and 1999
(In thousands of dollars)
(Unaudited)
Three Months Ended
March 31,
---------------------
2000 1999
----------- --------
Net earnings $ 54,983 $ 46,614
Other comprehensive income:
Foreign currency translation adjustments 2,605 (40,679)
------- --------
Comprehensive income $ 57,588 $ 5,935
======= =======
See accompanying notes to consolidated financial statements.
7
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2000 and 1999
(Amounts in thousands, except per share data)
(Unaudited)
(1) Basis of Consolidation
The consolidated financial statements include the accounts of Sealed Air
Corporation and its subsidiaries (the "Company"). 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, 2000 have been made. The
consolidated statement of earnings for the quarter ended March 31, 2000 is not
necessarily indicative of the results to be expected for the full year.
Certain prior period amounts, including segment information, have been
reclassified to conform to the current year's presentation.
(2) Equity
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 consolidated balance sheet.
(3) Earnings Per Common Share
The following table sets forth the reconciliation of the basic and diluted
earnings per common share computations for the quarters ended March 31, 2000 and
1999.
Quarter ended
March 31,
---------------------
2000 1999
--------- ---------
Basic EPS:
Numerator
- ---------
Net earnings $ 54,983 $ 46,614
Add: Excess of book value over repurchase
price of preferred stock 2,779 10
Less: Preferred stock dividends 17,097 17,910
--------- ---------
Earnings ascribed to common shareholders $ 40,665 $ 28,714
========= =========
Denominator
- -----------
Weighted average common shares
outstanding - basic 83,629 83,364
--------- ---------
Basic earnings per common share(1) $ 0.49 $ 0.34
========= =========
8
<PAGE>
Diluted EPS:
Numerator
- ---------
Earnings ascribed to common shareholders $ 40,665 $ 28,714
Less: Excess of book value over repurchase
price of preferred stock 2,779 --
Add: Dividends associated with repurchased
preferred stock 71 --
--------- ---------
Earnings ascribed to common shareholders $ 37,957 $ 28,714
========= =========
Denominator
- -----------
Weighted average common shares outstanding - basic 83,629 83,364
Effect of assumed exercise of options 120 132
Effect of conversion of repurchased preferred stock 633 --
--------- ---------
Weighted average common shares outstanding - diluted 84,382 83,496
--------- ---------
Diluted earnings per common share(2) $ 0.45 $ 0.34
========= =========
- ----------
(1) The basic earnings per common share calculation for the quarter ended March
31, 2000 includes a $0.03 per share gain attributable to the repurchase of
preferred stock. Such gain is not included in the calculation of diluted
earnings per common share for the quarter ended March 31, 2000. The gain
attributable to the repurchase of preferred stock was not significant in
the 1999 period.
(2) For the purpose of calculating diluted earnings per common share, net
earnings ascribed to common shareholders have been adjusted to exclude the
gain attributable to the repurchase of preferred stock and to add back
dividends attributable to such repurchased preferred stock in each period,
and the weighted average common shares outstanding have been adjusted to
assume conversion of the shares of preferred stock repurchased during each
period in accordance with the Financial Accounting Standards Board's
Emerging Issues Task Force D-53 guidance.
(4) Inventories
At March 31, 2000 and December 31, 1999, the components of inventories by major
classification (raw materials, work in process and finished goods) were as
follows:
March 31, December 31,
2000 1999
----------- ------------
Raw materials $ 62,674 $ 60,596
Work in process 46,126 43,021
Finished goods 174,516 157,341
----------- ----------
Subtotal 283,316 260,958
Reduction of certain
inventories to LIFO basis (17,641) (15,024)
----------- ----------
Total inventories $ 265,675 $ 245,934
========== =========
(5) Income Taxes
The Company's effective income tax rates were 45.5% and 47.0% for the first
quarters of 2000 and 1999, respectively. These rates are higher than the
statutory U.S. federal income tax rate primarily due to the non-deductibility of
goodwill amortization.
9
<PAGE>
(6) Debt
At March 31, 2000 and December 31, 1999, debt consisted primarily of borrowings
that were made under the Credit Agreements described below, the 10-year 6.95%
senior notes due May 2009 (the "Senior Notes"), the 7-year 5.625% euro notes due
July 2006 (the "Euro Notes") and certain other loans.
The Company's two principal credit agreements (the "Credit Agreements") are a
5-year revolving credit facility that expires on March 30, 2003 (included in
long-term debt) and a 364-day revolving credit facility that was renewed during
the first quarter of 2000 for an additional period that expires on March 26,
2001 (included in short-term borrowings). During the first quarter of 2000, the
Company voluntarily reduced the amounts available under the Credit Agreements to
$900,000 in the aggregate. As of March 31, 2000 and December 31, 1999,
outstanding borrowings were $214,030 and $160,978, respectively, under the
5-year revolving credit facility and $6,680 and $38,342, respectively, under the
364-day revolving credit facility. 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, including acquisitions and capital expenditures.
Amounts repaid under the Credit Agreements may be reborrowed from time to time.
As of March 31, 2000, facility fees were payable on the total amounts available
under the Credit Agreements and amounted to 0.095% and 0.100% per annum under
the 5-year revolving credit facility and the 364-day revolving credit facility,
respectively.
The Company's obligations under the Credit Agreements bear interest at floating
rates. The weighted average interest rate under the Credit Agreements was
approximately 6.0% at March 31, 2000 and December 31, 1999. The Company had
certain interest rate and currency swaps outstanding at March 31, 2000 and
December 31, 1999, related to its obligations under the Credit Agreements. These
agreements had the effect of adjusting the interest rates on a portion of such
debt. The weighted average interest rate at March 31, 2000 and December 31, 1999
did not change significantly as a result of these derivative financial
instruments.
At March 31, 2000, the Company was party to interest rate swaps with an
aggregate notional amount of approximately $148,000 with various expiration
dates through November 2004 compared to forward-starting interest rate swaps
with an aggregate notional amount of approximately $151,000 with various
expiration dates through November 2004 at December 31, 1999. The interest rate
swaps outstanding as of March 31, 2000 and December 31, 1999 had the effect of
converting a portion of the Company's fixed rate debt to variable rate debt at
U.S. denominated rates which ranged from 6.2% to 6.5% at March 31, 2000 and
December 31, 1999, and euro denominated rates which ranged from 3.7% to 4.4% at
March 31, 2000 and 3.8% to 4.4% at December 31, 1999.
The Credit Agreements provide for changes in borrowing margins based on
financial criteria and the Company's senior unsecured debt ratings. The Credit
Agreements, Senior Notes and Euro Notes impose certain limitations on the
operations of the Company and certain of its subsidiaries. The Company was in
compliance with these requirements as of March 31, 2000.
(7) 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 $3,400 at March 31, 2000 and $4,996 at December 31, 1999. The
components of the restructuring charges, spending and other activity through
March 31, 2000 and the remaining reserve balance at March 31, 2000 were as
follows:
10
<PAGE>
<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
Payments during 1998 (14,486) (729) (1,150) (16,365)
-------- -------- -------- --------
Restructuring reserve at December 31, 1998 25,362 1,562 - 26,924
Payments during 1999 (21,392) (536) - (21,928)
-------- -------- -------- --------
Restructuring reserve at December 31, 1999 3,970 1,026 - 4,996
Payments during 2000 (1,484) (112) - (1,596)
-------- -------- -------- --------
Restructuring reserve at March 31, 2000 $ 2,486 $ 914 $ - $ 3,400
======== ======== ======== ========
</TABLE>
The cash outlays include primarily severance and other personnel-related costs,
costs of terminating leases, and facilities and equipment disposition costs. As
of September 30, 1998, in connection with the restructuring, the Company was
eliminating approximately 750 positions or approximately 5% of its workforce, of
which 746 positions have been eliminated as of March 31, 2000. All restructuring
actions were substantially completed as of March 31, 2000, and the remaining
reserves of $3,400 are related principally to outstanding employee severances
and lease termination costs that are expected to be completed during 2000 and to
a limited extent in later years.
(8) Business Segment Information
The Company operates in two reportable business segments: (i) Food Packaging and
(ii) Protective and Specialty Packaging. The Food Packaging segment comprises
primarily the Company's Cryovac(R) food packaging products. The Protective and
Specialty Packaging segment includes the aggregation of the Company's packaging
products, engineered products and specialty products, all of which products are
principally for non-food applications.
The Food Packaging segment includes flexible materials and related systems
(shrink film products, laminated films and 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 and Specialty 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,
-----------------------------------
2000 1999
------------------- ---------------
Net Sales
Food Packaging $ 429,401 $ 419,693
Protective and Specialty Packaging 287,187 259,244
----------- ------------
Total segments $ 716,588 $ 678,937
=========== ============
Operating profit
Food Packaging $ 69,407 $ 66,904
Protective and Specialty Packaging 63,285 54,213
----------- ------------
Total segments 132,692 121,117
Corporate operating expenses
(including goodwill
amortization of $12,310 and
$12,251 in 2000 and
1999, respectively) (16,771) (16,284)
----------- ------------
Total $ 115,921 $ 104,833
=========== ============
11
<PAGE>
Quarter Ended
March 31,
-----------------------------------
2000 1999
------------------- ---------------
Depreciation and amortization
Food Packaging $ 27,595 $ 27,878
Protective and Specialty Packaging 14,738 15,385
----------- ------------
Total segments 42,333 43,263
Corporate (including goodwill
amortization) 12,758 12,524
----------- ------------
Total $ 55,091 $ 55,787
=========== ============
(9) Acquisitions
During the first quarter of 2000, the Company made two small acquisitions. These
transactions, which were effected in exchange for cash in the aggregate amount
of approximately $27,542, were accounted for as purchases and were not material
to the Company's consolidated financial statements.
12
<PAGE>
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations
Net sales increased 6% to $716,588,000, compared with net sales of
$678,937,000 for the first quarter of 1999, primarily due to higher unit volume,
partially offset by the negative effect of foreign currency translation.
The Company's net sales were affected by the continued weakness of foreign
currencies compared with the U.S. dollar, particularly in Europe and Latin
America. Excluding the negative effect of foreign currency translation, net
sales would have increased 9% compared with the first quarter of 1999.
Net sales from domestic operations increased approximately 8% compared with
the first quarter of 1999, primarily due to increased unit volume. Net sales
from foreign operations, which represented approximately 46% and 47% of the
Company's total net sales in the first quarters of 2000 and 1999, respectively,
increased approximately 3% compared with the first quarter of 1999, primarily
due to increased unit volume and, to a lesser extent, the added net sales of
several small acquired businesses, which more than offset the negative effect of
foreign currency translation.
Net sales of the Company's food packaging products segment, which consist
primarily of the Company's Cryovac(R) food packaging products and Dri-Loc(R)
absorbent pads, increased approximately 2% compared with the first quarter of
1999. This increase was due primarily to increased unit volume partially offset
by the negative effect of foreign currency translation. Excluding the negative
effect of foreign currency translation, net sales of this segment would have
increased 6% compared with the first quarter of 1999.
Net sales of the Company's protective and specialty 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 11% compared with the first quarter of 1999 primarily due to higher
unit volume and, to a lesser extent, the added net sales of several small
acquired businesses. Excluding the negative effect of foreign currency
translation, net sales of this segment would have increased 14%.
Gross profit increased to $257,989,000 or 36.0% of net sales from
$245,698,000 or 36.2% of net sales for the first quarter of 1999. The increase
in gross profit compared to the first quarter of 1999 was due primarily to the
higher level of net sales. Certain higher raw material costs resulted in the
decline in gross profit as a percentage of net sales compared to the first
quarter of 1999.
Marketing, administrative and development expenses and goodwill
amortization remained relatively flat compared to the first quarter of 1999.
Such expenses declined to 19.8% of net sales compared to 20.7% for the first
quarter of 1999. As in the first quarter of
13
<PAGE>
1999, the Company continued to incur information system costs related to the
implementation of its enterprise resource planning system.
The decrease in other expense, net, consisting primarily of interest
expense, was primarily due to the lower level of debt outstanding compared to
the first quarter of 1999.
The Company's effective income tax rate was 45.5% compared with 47.0% for
the first quarter of 1999. These rates are higher than the Company's applicable
statutory rates primarily due to the non-deductibility for tax purposes of
goodwill amortization. The Company expects that its effective tax rate will
remain higher than statutory rates for 2000.
As a result of the above, net earnings increased to $54,983,000 for the
first quarter of 2000 compared to $46,614,000 for the 1999 period.
Basic and diluted earnings per common share were $0.49 and $0.45,
respectively, compared with basic and diluted earnings per common share of $0.34
for the first quarter of 1999. The basic earnings per common share calculation
for the quarter ended March 31, 2000 includes a $0.03 per share gain
attributable to the repurchase of preferred stock. Such gain is not included in
the calculation of diluted earnings per common share. The diluted earnings per
common share for the quarter ended March 31, 2000 is calculated assuming the
conversion of the shares of preferred stock repurchased during the period in
accordance with the Financial Accounting Standards Board's Emerging Issues Task
Force D-53 guidance. 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 in the first quarters of 2000 and 1999 because it
would be antidilutive.
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 below.
Net cash provided by operating activities increased to $108,386,000 from
$72,991,000 in the first quarter of 1999. The increase in operating cash flows
in the first quarter of 2000 was primarily due to increased net earnings and
changes in operating assets and liabilities in the ordinary course of business.
Net cash used in investing activities amounted to $51,113,000 compared to
$16,082,000 in the first quarter of 1999. The increase in the first quarter of
2000 was primarily due to $27,542,000 of cash used for businesses acquired in
the 2000 period and to a higher level of capital expenditures in the first
quarter of 2000. Capital expenditures were $23,867,000 for the first quarter of
2000 and $16,943,000 for the 1999 period. The Company currently anticipates that
capital expenditures for the full year of 2000 will be in the range of
$125,000,000 to $150,000,000.
Net cash used in financing activities amounted to $54,313,000 compared to
$14,734,000 in the first quarter of 1999. The increase in net cash used in
financing activities in the first quarter of 2000
14
<PAGE>
reflected primarily a higher level of purchases of treasury stock, offset in
part by a higher level of net proceeds from borrowings.
At March 31, 2000, the Company had working capital of $259,600,000, or 7%
of total assets, compared to working capital of $221,130,000, or 6% of total
assets, at December 31, 1999. Total current assets increased primarily due to
increased inventory levels. Total current liabilities decreased due primarily to
a decrease in short-term borrowings arising out of the replacement of certain
borrowings made under the 364-day revolving credit facility with borrowings
under the 5-year revolving credit facility and a decrease in other current
liabilities (which related primarily to accrued payroll) due to the timing of
cash payments, partially offset by an increase in income taxes payable.
The Company's ratio of current assets to current liabilities (current
ratio) was 1.5 at March 31, 2000 and 1.4 at December 31, 1999. The Company's
ratio of current assets less inventory to current liabilities (quick ratio) was
1.0 at March 31, 2000 and December 31, 1999. The change in the current ratio in
2000 resulted primarily from the changes in working capital discussed above.
At March 31, 2000 and December 31, 1999, debt consisted primarily of
borrowings that were made under the Credit Agreements described below, the
10-year 6.95% senior notes due May 2009 (the "Senior Notes"), the 7-year 5.625%
euro notes due July 2006 (the "Euro Notes") and certain other loans.
The Company's two principal Credit Agreements (the "Credit Agreements") are
a 5-year revolving credit facility that expires on March 30, 2003 (included in
long-term debt) and a 364-day revolving credit facility that was renewed during
the first quarter of 2000 for an additional period that expires on March 26,
2001 (included in short-term borrowings). During the first quarter of 2000, the
Company voluntarily reduced the amounts available under the Credit Agreements to
$900,000,000 in the aggregate. As of March 31, 2000 and December 31, 1999,
outstanding borrowings were $214,030,000 and $160,978,000, respectively, under
the 5-year revolving credit facility and $6,680,000 and $38,342,000,
respectively, under the 364-day revolving credit facility. 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, including acquisitions and capital
expenditures. Amounts repaid under the Credit Agreements may be reborrowed from
time to time. As of March 31, 2000, facility fees were payable on the total
amounts available under the Credit Agreements and amounted to 0.095% and 0.100%
per annum under the 5-year revolving credit facility and the 364-day revolving
credit facility, respectively.
The Company's obligations under the Credit Agreements bear interest at
floating rates. The weighted average interest rate under the Credit Agreements
was approximately 6.0% at March 31, 2000 and December 31, 1999. The Company had
certain interest rate and currency swaps outstanding at March 31, 2000 and
December 31, 1999, related to its obligations under the Credit Agreements. These
agreements had the effect of adjusting the interest rates on a portion of such
debt. The weighted average interest rate at March 31, 2000 and December
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31, 1999 did not change significantly as a result of these derivative financial
instruments.
At March 31, 2000, the Company was party to interest rate swaps with an
aggregate notional amount of approximately $148,000,000 with various expiration
dates through November 2004 compared to forward-starting interest rate swaps
with an aggregate notional amount of approximately $151,000,000 with various
expiration dates through November 2004 at December 31, 1999. The interest rate
swaps outstanding as of March 31, 2000 and December 31, 1999 had the effect of
converting a portion of the Company's fixed rate debt to variable rate debt at
U.S. denominated rates which ranged from 6.2% to 6.5% at March 31, 2000 and
December 31, 1999, and euro denominated rates which ranged from 3.7% to 4.4% at
March 31, 2000 and 3.8% to 4.4% at December 31, 1999.
The Credit Agreements provide for changes in borrowing margins based on
financial criteria and the Company's senior unsecured debt ratings. The Credit
Agreements, Senior Notes and Euro Notes impose certain limitations on the
operations of the Company and certain of its subsidiaries. The Company was in
compliance with these requirements as of March 31, 2000.
At March 31, 2000, the Company had available lines of credit, including
those available under the Credit Agreements, of approximately $1.1 billion of
which approximately $800 million were unused.
The Company's shareholders' equity was $601,760,000 at March 31, 2000
compared to $551,030,000 at December 31, 1999. Shareholders' equity increased in
the first quarter of 2000 primarily due to net earnings of $54,983,000 partially
offset by preferred stock dividends of $17,097,000.
Other Matters
Quantitative and Qualitative Disclosures about Market Risk
For a discussion of market risks at December 31, 1999, refer to
"Management's Discussion and Analysis of Results of Operations and Financial
Condition - Quantitative and Qualitative Disclosures about Market Risk" in the
Company's 1999 Annual Report to Stockholders for the year ended December 31,
1999.
The Company is exposed to market risk from changes in interest rates and
foreign currency exchange rates, which may adversely affect its results of
operations and financial condition. The Company seeks to minimize these risks
through regular operating and financing activities and, when deemed appropriate,
through the use of derivative financial instruments. The Company does not
purchase, hold or sell derivative financial instruments for trading purposes.
16
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Interest Rates
The Company uses interest rate swaps to manage its exposure to fluctuations
in interest rates. The Company also uses interest rate collars to reduce its
exposure to fluctuations in the rate of interest by limiting interest rates to a
given range. At March 31, 2000, the Company had interest rate swaps that had the
effect of converting a portion of the Company's fixed rate debt to variable rate
debt, and an interest rate collar agreement, maturing at various dates through
November 2004, with a combined aggregate notional amount of approximately
$156,000,000 compared with forward-starting interest rate swaps and an interest
rate collar agreement with a combined aggregate notional amount of approximately
$159,000,000 at December 31, 1999.
At March 31, 2000, the carrying value of the Company's total debt was
$842,745,000, of which $491,758,000 was fixed rate debt. At December 31, 1999,
the carrying value of the Company's total debt was $824,677,000 of which
$502,244,000 was fixed rate debt.
Foreign Exchange Contracts
The Company uses interest rate and currency swaps to limit foreign exchange
exposure and limit or adjust interest rate exposure by swapping certain
borrowings in U.S. dollars for borrowings denominated in foreign currencies. At
March 31, 2000 and December 31, 1999, the Company had interest rate and currency
swap agreements, maturing through March 2002, with an aggregate notional amount
of approximately $5,000,000.
The Company uses foreign currency forwards to fix the amount payable on
certain transactions denominated in foreign currencies. At March 31, 2000, the
Company had foreign currency forward agreements, maturing through December 2000,
with an aggregate notional amount of approximately $9,000,000. At December 31,
1999, the Company did not have any material foreign currency forward contracts
outstanding.
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
17
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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.
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, (a) the need to adapt computer, accounting and other business systems
and equipment to accommodate euro-denominated transactions, (b) the need to
modify banking and cash management systems in order to be able to handle
payments between customers and suppliers in legacy currencies and euros between
1999 and 2002, (c) the requirement to change the base statutory and reporting
currency of each subsidiary in the participating countries into euros during the
transition period, (d) the foreign currency exposure changes resulting from the
alignment of the legacy currencies into the euro, and (e) 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 believes that its foreign currency
exposures have been reduced as a result of the alignment of legacy currencies.
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,
18
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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, results of operations or reportable segments.
Recently Issued Statements of Financial Accounting Standards
In June 1999, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133." This Statement defers the effective date of SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133, which the Company expects to adopt beginning January 1, 2001, 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 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 success
of certain information systems projects, 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 and acquiring new businesses, the
timing of capital expenditures, competitive factors, raw material availability
and pricing, changes in the Company's relationship with customers and suppliers,
future litigation and claims
19
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(including environmental matters) involving the Company, changes in domestic or
foreign laws or regulations, or difficulties related to the euro conversion.
20
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PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
In March 2000, the Company issued 285,378 shares of its common
stock, par value $0.10 per share ("Common Stock"), to the Profit-Sharing Plan of
the Company as part of its 1999 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.
In February 2000 and August 1999, the Company issued an
aggregate of 110,000 shares of Common Stock to consultants providing services to
the Company. The issuances of such shares were not registered under the
Securities Act because the transactions were exempt under Section 4(2) of the
Securities Act as transactions by an issuer not involving any public offering.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Number Description
10.1 Third Amendment, dated as of March 24,
2000, 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.
10.2 Consulting Agreement, dated as of
February 29, 2000, between the
Company and T. J. Dermot Dunphy
27 Financial Data Schedule.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the fiscal
quarter ended March 31, 2000.
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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
(Registrant)
Date: May 12, 2000 By /s/ Jeffrey S. Warren
----------------------
Jeffrey S. Warren
Controller
(Authorized Executive Officer
and Chief Accounting Officer)
22
EXHIBIT 10.1
CONFORMED COPY
AMENDMENT TO GLOBAL REVOLVING CREDIT AGREEMENT (364-DAY)
The Third Amendment to Global Revolving Credit Agreement (364-Day) (the
"Amendment") dated as of March 24, 2000 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 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 (as amended and extended, the "Credit Agreement"); and
WHEREAS, the parties hereto desire to further 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. Sections 1.01(a)(iv)(I) and 1.01(a)(v)(I) of the Credit Agreement
are each hereby amended by deleting the phrase "aggregate principal amount"
wherever it occurs therein and inserting in its place the phrase "Original
Dollar Amount".
2. Sections 1.01(b) and (c) of the Credit Agreement are hereby amended
in their entirety and as so amended shall read as follows:
(b) Subject to and upon the terms and conditions set
forth herein, ABN AMRO in its individual capacity and TD in
its individual capacity each agrees (severally, not jointly)
to make, at any time and from time to time on or after the
Effective Date and prior to the Swingline Expiry Date, a
Swingline Loan or Swingline Loans, which Swingline Loans (i)
if made by ABN AMRO, shall be made to the Company and
maintained in Dollars as Base Rate Loans or at a fixed rate
(for a period not to exceed 30 days) as quoted by ABN AMRO and
acceptable to the Company (each a "USD Offered Rate Loan")
and, if made by TD, shall be made to Sealed Air (Canada) and
(subject to Section 1.01(c)) maintained in Canadian Dollars as
Base Rate Loans or at a fixed rate (for a period not to exceed
30 days) as quoted by TD and acceptable to the Company (each a
"CAD Offered Rate Loan"), (ii) may be repaid and reborrowed in
accordance with the provisions hereof, (iii) shall not exceed
an Original Dollar Amount which, when
<PAGE>
added to the sum of (I) the Original Dollar Amount of all
Revolving Loans (exclusive of Revolving Loans which are repaid
with the proceeds of, and simultaneously with the respective
incurrence of, the Swingline Loans then being incurred) then
outstanding, (II) the aggregate principal amount of all Bid
Loans outstanding at such time (exclusive of Bid Loans which
are repaid with the proceeds of, and simultaneously with the
respective incurrence of, the Swingline Loans then being
incurred), (III) the Original Dollar Amount of all Swingline
Loans then outstanding (exclusive of Swingline Loans which are
repaid with the proceeds of, and simultaneously with the
respective incurrence of, the Swingline Loans then being
incurred) and (IV) the aggregate amount of all Letter of
Credit Outstandings at such time (exclusive of Unpaid Drawings
which are repaid with the proceeds of, and simultaneously with
the incurrence of, the Swingline Loan then being incurred),
equals the Total Revolving Loan Commitment (after giving
effect to any simultaneous reinstatement in the Total
Revolving Loan Commitment on such date pursuant to Section
1.01(d)(i)) at such time and (iv) in the case of ABN AMRO,
shall not exceed when added to the "Swingline Loans"
outstanding under the Other Credit Agreement, the Maximum
Swingline Amount and, in the case of TD, shall not exceed an
Original Dollar Amount of $50,000,000. No Swingline Lender
will make a Swingline Loan after it has received written
notice from the Required Banks stating that a Default exists
and specifically requesting that it not make any Swingline
Loans, provided that the Swingline Lenders may continue making
Swingline Loans at such time thereafter as the Default in
question has been cured or waived in accordance with the
requirements of this Agreement or the Required Banks have
withdrawn the written notice described above in this sentence.
In addition, no Swingline Lender shall be obligated to make
any Swingline Loan at a time when a Bank Default exists unless
such Swingline Lender shall have entered into arrangements
satisfactory to it and the Company to eliminate such Swingline
Lender's risk with respect to the Bank which is the subject of
such Bank Default, including by cash collateralizing such
Bank's Percentage of the outstanding Swingline Loans.
(c) On any Business Day, either Swingline Lender may, in
its sole discretion, give written notice to the Banks that its
outstanding Swingline Loans (the outstanding principal amount
of which (after conversion to Dollars, in the case of TD, as
contemplated below) shall be specified in such notice) shall
be funded with a Borrowing of Revolving Loans (provided that
in the case of Swingline Loans made by ABN AMRO such notice
shall
2
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be deemed to have been automatically given upon the occurrence
of a Default under Section 9.05 or upon the exercise of any of
the remedies provided in the last paragraph of Section 9), in
which case a Borrowing of Revolving Loans constituting Base
Rate Loans (each such Borrowing, a "Mandatory Borrowing")
shall be made, in the case of Swingline Loans made by ABN
AMRO, on the immediately succeeding Business Day and, in the
case of Swingline Loans made by TD, on the second succeeding
Business Day, in each case by all Banks (without giving effect
to any reductions of the Commitments pursuant to the last
paragraph of Section 9) pro rata based on each such Bank's
Percentage (subject to the availability of Revolving Loans as
provided in Section 1.01(a)(iv)), and the proceeds thereof
shall be applied directly to the applicable Swingline Lender
to repay such Swingline Lender for such outstanding Swingline
Loans. TD shall, immediately prior to giving a notice of a
Mandatory Borrowing as provided in the immediately preceding
sentence, convert its outstanding Swingline Loans from
Canadian Dollars to Dollars effective as of the date of the
Mandatory Borrowing using the U.S. Dollar Equivalent. From and
after the date of the Mandatory Borrowing all Swingline Loans
made by TD for which a notice of Mandatory Borrowing has been
delivered shall be denominated in Dollars and shall be Base
Rate Loans. Each Bank hereby irrevocably agrees to make
Revolving Loans upon the notice provided in this Section
1.01(c) pursuant to each Mandatory Borrowing in the amount and
in the manner specified in the first sentence of this Section
1.01(c) and on the date specified in writing by a Swingline
Lender notwithstanding (i) the amount of the Mandatory
Borrowing may not comply with the minimum amount for
Borrowings otherwise required hereunder, (ii) any condition
specified in Section 5 may not then be satisfied, (iii) the
existence of any Default, (iv) the date of such Mandatory
Borrowing and (v) the amount of the Total Revolving Loan
Commitment at such time. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code
with respect to the Company), then each Bank hereby agrees
that it shall forthwith purchase (as of the date the Mandatory
Borrowing would otherwise have occurred and in the amount such
Bank would have advanced under such Mandatory Borrowing, but
adjusted for any payments received from the Company or Sealed
Air (Canada), as applicable, on or after such date and prior
to such purchase from such Swingline Lender (without recourse
or warranty)) such participations in the outstanding Swingline
Loans as shall be necessary to cause the Banks to share in
such Swingline Loans
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ratably based upon their respective Percentages, provided that
(x) all interest payable on the Swingline Loans shall be for
the account of the applicable Swingline Lender until the date
the respective participation is required to be purchased and,
to the extent attributable to the purchased participation,
shall be payable to the participant from and after such date,
(y) at the time any purchase of participations pursuant to
this sentence is actually made, the purchasing Bank shall be
required to pay the applicable Swingline Lender interest on
the principal amount of participation purchased for each day
from and including the day upon which the Mandatory Borrowing
would otherwise have occurred to but excluding the date of
payment for such participation, at the overnight Federal Funds
Rate for the first three days and at the rate otherwise
applicable to Revolving Loans maintained as Base Rate Loans
for each day thereafter and (z) each Bank that so purchases a
participation in a Swingline Loan shall thereafter be entitled
to receive its pro rata share of each payment of principal
received on such Swingline Loan; provided further that no Bank
shall be obligated to acquire a participation in a Swingline
Loan if a Default shall have occurred and be continuing at the
time such Swingline Loan was made and the applicable Swingline
Lender had received written notice from the Required Banks in
accordance with Section 1.01(b) above prior to advancing such
Swingline Loan.
3. Section 1.02(c) of the Credit Agreement is hereby amended in its
entirety and as so amended shall read as follows:
(c) The aggregate principal amount of each Borrowing of
the Swingline Loans shall not be less than an Original Dollar
Amount of $500,000 and, if greater, shall be in an integral
multiple of 50,000 units of the relevant currency.
4. Section 1.03(b) of the Credit Agreement is hereby amended in its
entirety and as so amended shall
read as follows:
(b) Whenever the Company or Sealed Air (Canada) desires
to incur a Swingline Loan hereunder, the Company shall give
the applicable Swingline Lender (and, in instances where the
Swingline Lender is TD, the Administrative Agent as well) no
later than 12:00 Noon (New York time) (i) in the case of
Swingline Loans to be made by ABN AMRO, on the day such
Swingline Loan is to be made and (ii) in the case of Swingline
Loans to be made by TD, on the date at least two (2) Business
Days before the date such Swingline Loan is to be made,
written notice or telephonic notice promptly confirmed in
writing of such Swingline
4
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Loan to be made hereunder. Each such notice shall be
irrevocable and specify in each case (I) the date of Borrowing
(which shall be a Business Day), (II) the aggregate principal
amount of the Swingline Loan to be made pursuant to such
Borrowing and (III) whether such Swingline Loan shall be made
and maintained as a Base Rate Loan or an Offered Rate Loan. If
the Swingline Loan is being requested from TD, TD shall
calculate the Original Dollar Amount of the requested
Swingline Loan and promptly notify the Administrative Agent of
such amount (in writing or by telephone with prompt written
confirmation). The Administrative Agent shall promptly notify
TD (in writing or by telephone with prompt written
confirmation) if such amount can be borrowed in compliance
with the first sentence of Section 1.03(b).
5. Sections 1.03(c), 1.06(b)(iv), 1.09(d), 1.09(f), 1.12, and
5.02(b)(i) and the definition of "Borrowing" contained in Section 10.01 are each
hereby amended by deleting the reference to "ABN AMRO" wherever it occurs
therein and inserting in its place the phrase "the applicable Swingline Lender".
6. Section 1.05 of the Credit Agreement is hereby amended by (a)
inserting immediately following the phrase "Swingline Loans" appearing in the
third line thereof the following: "denominated in Dollars" and (b) inserting
immediately following the second sentence thereof the following:
TD, unless it determines that any applicable condition in
Section 5 has not been satisfied, will make available to
Sealed Air (Canada) Swingline Loans denominated in Canadian
Dollars at its main office in Toronto (or such other location
in Canada as TD and the Company shall agree) prior to 1:00
p.m. (Toronto time) on the date such Swingline Loan is to be
made.
7. Section 1.09(e) of the Credit Agreement is hereby amended by:
(a) deleting the word "and" at the end of clause (i) thereof;
(b) adding new clause (ii) reading in its entirety as follows:
(ii) in the case of Swingline Loans denominated in Canadian
Dollars, 2% in excess of the rate otherwise applicable to Base
Rate Loans of such type from time to time and
and (c) re-numbering clause (ii) as clause (iii).
5
<PAGE>
8. In Section 1.14(a) of the Credit Agreement, subclause (i)(y) of the
proviso is hereby amended in its entirety and as so amended shall read as
follows:
(y) the applicable Swingline Lender an amount equal
to such Replaced Bank's Percentage of any Mandatory
Borrowings and to ABN AMRO an amount equal to such
Replaced Bank's Percentage of any Unpaid Drawing
(which at such time remains an Unpaid Drawing) in
either case to the extent any such amount was not
theretofore funded by such Replaced Bank.
9. Section 4.01(a) of the Credit Agreement is hereby amended by
inserting immediately following the phrase "Administrative Agent" appearing in
the fourth line thereof the following: "(and, in the case of a prepayment of
Swingline Loans made by TD, TD)".
10. Section 4.02(a) of the Credit Agreement is hereby amended by
inserting immediately following clause (ii) thereof a new clause (iii) as
follows:
(iii) If on any date the aggregate outstanding U.S. Dollar
Equivalent of the Swingline Loans made by TD exceeds
$50,000,000, TD may by notice to the Company require Sealed
Air (Canada) to repay, and there shall be required to be
repaid by Sealed Air (Canada), on the date specified in such
notice that principal amount of such Swingline Loans in a
principal amount equal to such excess.
11. Section 4.03 of the Credit Agreement is hereby amended by inserting
immediately at the end thereof the following:
All payments under this Agreement in respect of CAD Swingline
Loans shall be made to TD by no later than 12:00 Noon (Toronto
time) on the date when due and shall be made in Canadian
Dollars (or, if such Swingline Loans have been converted to
Dollars pursuant to Section 1.01(c), in Dollars) in
immediately available funds to such office as TD may from time
to time designate in writing to the Company and Sealed Air
(Canada). TD agrees to promptly notify the Administrative
Agent of its receipt of any such payments.
6
<PAGE>
12. The defined terms "Applicable Margin," "Base Rate," "Business Day,"
"Final Maturity Date," "Offered Rate Loan," "Unutilized Revolving Loan
Commitment," and "U.S. Dollar Equivalent" 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 .475%
Category B Period .650%
Category C Period .750%
Category D Period .800%
Category E Period 1.000%
Category F Period 1.500%
"Base Rate" at any time shall mean (i) for Loans
denominated in Dollars, the higher of (x) the rate which is
1/2 of 1% in excess of the Federal Funds Rate and (y) the
Prime Lending Rate as in effect from time to time and (ii) for
Swingline Loans denominated in Canadian Dollars, the rate of
interest per annum established by TD from time to time as the
reference rate of interest for determination of interest rates
that TD charges to customers of varying degrees of
creditworthiness in Canada for Canadian Dollar loans made by
TD in Canada.
"Business Day" shall mean (i) for all purposes other
than as covered by clauses (ii), (iii) or (iv) below, any day
except Saturday, Sunday and any day which shall be in New York
City a legal holiday or a day on which banking institutions
are authorized or required by law or other government action
to close, (ii) with respect to all notices and determinations
in connection with, and payments of principal and interest on,
Eurocurrency Loans denominated in Dollars or a Eurocurrency,
any day which is a Business Day described in clause (i) above
and which is also a day for trading by and between banks in
the London interbank Eurocurrency market, (iii) with respect
to all notices and determinations in connection with, and
payments of principal and interest on, Local Currency Loans or
Eurocurrency Loans denominated in a Local Currency, any day
which is a Business Day described in clause (i) above and on
which banks and foreign exchange markets are open for business
in the city where disbursements of or payments on such Loan
are to be made and
7
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(iv) with respect to all notices and determinations in
connection with, and payments of principal and interest on,
Swingline Loans denominated in Canadian Dollars, any day
which is a Business Day described in clause (i) above and
which is a day on which banking institutions are not
authorized or required by law or other government action to
close in Toronto, Canada.
"Final Maturity Date" shall mean March 26, 2001.
"Offered Rate Loan" shall mean any USD Offered Rate
Loan and any CAD Offered Rate Loan.
"Unutilized Revolving Loan Commitment" of any Bank at
any time shall mean the Revolving Loan Commitment of such Bank
at such time less the sum of (i) the Original Dollar Amount of
Revolving Loans made by such Bank and then outstanding and
(ii) such Bank's Percentage of the Original Dollar Amount of
then outstanding Swingline Loans and the Letter of Credit
Outstandings at such time.
"U.S. Dollar Equivalent" means the amount of Dollars
which would be realized by converting another currency into
Dollars in the spot market at the exchange rate (i) in the
case of all Loans denominated in a Eurocurrency or Local
Currency (other than Swingline Loans denominated in Canadian
Dollars), quoted by the Administrative Agent, and (ii) in the
case of Swingline Loans denominated in Canadian Dollars,
quoted by TD, in any case at approximately 11:00 a.m. (London
time, in the case of clause (i) and Toronto time, in the case
of clause (ii)) two Business Days prior to the date on which a
computation thereof is required to be made, to major banks in
the interbank foreign exchange market for the purchase of
Dollars for such other currency.
13. Section 10.01 of the Credit Agreement is hereby further amended by
(a) deleting the defined term "Total Unutilized Revolving Loan Commitment" and
(b) inserting in proper alphabetical order the following new defined terms:
"CAD Swingline Loan" shall mean any loan or loans
made by TD pursuant to Section 1.01(b).
"CAD Offered Rate Loan" shall have the meaning
provided in Section 1.01(b).
"Canadian Dollars" shall mean freely transferable
lawful money of Canada.
8
<PAGE>
"Sealed Air (Canada)" shall mean Sealed Air (Canada)
Inc. and its successors.
"Swingline Lender" shall mean ABN AMRO and TD, as
applicable.
"Swingline Loan" shall mean any USD Swingline Loan or
CAD Swingline Loan.
"TD" shall mean The Toronto-Dominion Bank in its
individual capacity.
"USD Offered Rate Loan" shall have the meaning
provided in Section 1.01(b).
"USD Swingline Loan" shall mean any loan or loans
made by ABN AMRO pursuant to Section 1.01(b).
14. Clause (x) of the second proviso to Section 13.12(a) is hereby
amended in its entirety and as so amended shall read as follows:
(x) without the consent of ABN AMRO, amend, modify or
waive any provision of Section 2 or alter its rights or
obligations with respect to Letters of Credit or without the
consent of a Swingline Lender, amend, modify or waive any
provision of Section 1.01(b) or (c) as it relates to such
Swingline Lender or alter its rights or obligations with
respect to Swingline Loans.
15. Exhibit B-4 to the Credit Agreement is hereby amended in its
entirety and as so amended shall be as set forth as Exhibit B-4 to this
Amendment.
16. TD is executing this Amendment solely for the purpose of becoming a
Swingline Lender under the Credit Agreement, as amended hereby, and shall not
have any Commitment or other obligation hereunder except as provided in those
Sections of the Credit Agreement, as amended hereby, specifically referring to
TD or a Swingline Lender, as applicable. Notwithstanding the foregoing, TD shall
be entitled to the benefit of all provisions of the Credit Agreement, including
without limitation, increased costs and indemnities, which run in favor of a
Bank; provided that TD, by its execution hereof, shall be bound by the
provisions of Sections 13.15(a) and 13.18 to the same extent as a Bank.
17. Subject to satisfaction of the conditions precedent contained in
paragraph 18 hereof, Banks that are party to the Credit Agreement immediately
prior to the Effective Time (as defined in paragraph 18) 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
9
<PAGE>
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 an amount equal to (a) the Total Commitment
immediately before the effectiveness of this Amendment less (b) the aggregate
Commitments of the non-Consenting Banks. 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.
18. This Amendment shall become effective as of the opening of business
on March 27, 2000 (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 dated March 24,
2000 certifying that attached thereto is a true and complete
copy of resolutions adopted by the Board of Directors of the
Company, authorizing the execution, delivery and performance
of this Amendment and certifying the names and true signatures
of the officers of the Company authorized to sign this
Amendment and (ii) such supporting documents as the
Administrative Agent may reasonably request;
(c) the Administrative Agent shall have received for
the account of TD a Swingline Note executed by Sealed Air
(Canada); 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 27, 2000 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
10
<PAGE>
for the necessary transfers of funds by the Borrowers have
been made and are in process).
If this Amendment becomes effective, the changes in the Applicable
Margin shall take effect with respect to any Loans or Letters of Credit
outstanding on March 27, 2000 and on each day thereafter, but any payment of
interest or Letter of Credit Fees due on or after March 27, 2000 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.
19.1. To induce the Administrative Agent, the Banks and TD to enter into
this Amendment, each Borrower and Guarantor represents and warrants to the
Administrative Agent, the Banks and TD 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.
19.2. 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.
19.3. 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.
19.4. 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.
11
<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/ Daniel S. Van Riper
----------------------------
Title Senior VP & Chief
Financial Officer
SEALED AIR CORPORATION (US),
as Borrower and Guarantor
By /s/ Daniel S. Van Riper
----------------------------
Title Senior VP & Chief
Financial Officer
CRYOVAC, INC., as Borrower and
Guarantor
By /s/ Daniel S. Van Riper
----------------------------
Title Senior VP & Chief
Financial Officer
12
<PAGE>
SEALED AIR LIMITED (f/k/a Cryovac UK
Limited), as Borrower
By /s/ H. Katherine White
----------------------------
Title Director
CRYOVAC AG, as Borrower
By /s/ H. Katherine White
----------------------------
Title Director
CRYOVAC S.P.A., as Borrower
By /s/ H. Katherine White
----------------------------
Title Director
13
<PAGE>
CRYOVAC AUSTRALIA PTY. LIMITED, as
Borrower
By /s/ H. Katherine White
----------------------------
Title Director
SEALED AIR S.A., as Borrower
By /s/ H. Katherine White
----------------------------
Title Director
SEALED AIR PACKAGING
LIMITED (f/k/a Sealed Air
Limited), as Borrower
By /s/ William V. Hickey
----------------------------
Title Director
14
<PAGE>
CRYOVAC VERPACKUNGEN
GMBH, as Borrower
By /s/ Hans-Otto Bosse
----------------------------
Title Managing Director
SEALED AIR (CANADA) INC., as
Borrower
By /s/ A. Schmidt
----------------------------
Title Treasurer/Director
SEALED AIR HOLDINGS (NEW
ZEALAND) LIMITED (f/k/a Sealed
Air (NZ) Limited), as Borrower
By /s/ H. Katherine White
----------------------------
Title Director
15
<PAGE>
SEALED AIR (NEW ZEALAND)
LIMITED (f/k/a 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/ Daniel S. Van Riper
----------------------------
Title Director
16
<PAGE>
SEALED AIR FINANCE II B.V., as
Borrower
By /s/ H. Katherine White
----------------------------
Title Director
SEALED AIR AFRICA (PROPRIETARY) LTD
(f/k/a Cryovac Africa (Pty) Ltd), as
Borrower
By /s/ H. Katherine White
----------------------------
Title Director
SEALED AIR ARGENTINA S.A., as Borrower
By /s/ Wilfred Roberts
----------------------------
Title President
17
<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 Group Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
18
<PAGE>
THE TORONTO-DOMINION BANK, as a
Swingline Lender
By /s/ Carol MacLaren
----------------------------
Title Assistant Manager
Credit Compliance Group (CCG)
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
19
<PAGE>
BANK OF AMERICA, N.A. (f/k/a Bank of
America National Trust and Savings
Association)
By /s/ Eileen C. Higgins
----------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
20
<PAGE>
DEUTSCHE BANK AG NEW YORK
BRANCH AND/OR CAYMAN ISLANDS
BRANCH
By /s/ Peter Ludwig Schrickel
-------------------------------
Title Director
By /s/ Stephanie Strohe
-------------------------------
Title Associate
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
21
<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
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
22
<PAGE>
THE BANK OF NEW YORK
By /s/ Ernest Fung
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
23
<PAGE>
THE BANK OF NOVA SCOTIA
By /s/ B.S. Allen
-------------------------------
Title Managing Director
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
24
<PAGE>
CITIBANK, N.A.
By /s/ Prakash M. Chonkar
-------------------------------
Title Managing Director
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
25
<PAGE>
COMMERZBANK AG NEW YORK AND
GRAND CAYMAN BRANCHES
By /s/ Robert Donohue
-------------------------------
Title Senior Vice President
By /s/ Peter Doyle
-------------------------------
Title Assistant Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
26
<PAGE>
CREDIT AGRICOLE INDOSUEZ
By /s/ Craig Welch
-------------------------------
Title First Vice President
By /s/ Sara McClintock
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
27
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Scott R. Chappelka
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
28
<PAGE>
FIRST UNION NATIONAL BANK
By /s/ Susan A. Gallagher
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
29
<PAGE>
FLEET NATIONAL BANK
By /s/ Janet G. O'Donnell
-------------------------------
Title Managing Director
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
30
<PAGE>
HSBC BANK USA
By /s/ Diane M. Zieske
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
31
<PAGE>
SUMMIT BANK
By /s/ Edward M. Tessalone
-------------------------------
Title Senior Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
32
<PAGE>
SUNTRUST BANK
By /s/ W. David Wisdom
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
33
<PAGE>
TORONTO DOMINION (TEXAS) INC.
By /s/ Carol Brandt
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
34
<PAGE>
WACHOVIA BANK N.A.
By /s/ M. Eugene Wood, III
----------------------------
Title Senior Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
35
<PAGE>
BANCA DI ROMA
By /s/ Steven N. Paley
-------------------------------
Title First Vice President
By /s/ Alessandro Paoli
-------------------------------
Title Assistant Treasurer
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
36
<PAGE>
BANCA COMMERCIALE ITALIANA
NEW YORK BRANCH
By /s/ J. Dickerhof
-------------------------------
Title Vice President
By /s/ C. Dougherty
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
37
<PAGE>
BANK ONE, NA
By /s/ Jeffrey S. Lubatkin
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
38
<PAGE>
BANQUE NATIONALE DE PARIS
By /s/ Richard L. Sted
-------------------------------
Title Senior Vice President
By /s/ Richard Pace
-------------------------------
Title Corporate Banking Divisior
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
39
<PAGE>
CREDIT INDUSTRIEL ET COMMERCIAL
By /s/ Eric Longuet
-------------------------------
Title Vice President
By /s/ Albert Calo
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
40
<PAGE>
KBC BANK N.V.
By /s/ Robert Snauffer
-------------------------------
Title First Vice President
By /s/ Wei-Chun Wang
-------------------------------
Title Associate
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
41
<PAGE>
BANCA MONTE DEI PASCHI DI SIENA S.P.A.
By /s/ Giulio Natalicchi
-------------------------------
Title Senior Vice President &
General Manager
By /s/ Brian R. Landy
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
42
<PAGE>
THE BANK OF TOKYO-MITSUBISHI, LTD.
By /s/ William DiNicola
-------------------------------
Title Attorney-in-Fact
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
43
<PAGE>
CARIPLO-CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE SPA
By /s/ Maria Elena Greene
-------------------------------
Title Assistant Vice President
By /s/ Anthony F. Giobbi
-------------------------------
Title First Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
44
<PAGE>
MELLON BANK, N.A.
By /s/ Maria N. Sisto
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
45
<PAGE>
NORDDEUTSCHE LANDESBANK
GIROZENTRALE
By /s/ Stephanie Finnen
-------------------------------
Title Vice President
By /s/ Josef Haas
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
46
<PAGE>
THE NORTHERN TRUST COMPANY
By /s/ Kelly M. Schneck
---------------------------
Title Officer
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
47
<PAGE>
SANPAOLO IMI S.P.A.
By /s/ Luca Sacchi
-------------------------------
Title Vice President
By /s/ Carlo Persico
-------------------------------
Title Deputy General Manager
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
48
<PAGE>
UNI CREDITO ITALIANO S.P.A.
By /s/ Christopher J. Eldin
-------------------------------
Title First Vice President
& Deputy Manager
By /s/ Saiyed S. Abbas
-------------------------------
Title Vice President
[SIGNATURE PAGE TO THE
THIRD AMENDMENT]
49
<PAGE>
SCHEDULE 1.01
COMMITMENTS
BANK NAME COMMITMENT
ABN AMRO Bank N.V. $18,750,000
Bank of America, N.A. $18,750,000
Deutsche Bank AG New York Branch and/or Cayman Islands Branch $18,750,000
Banca Nazionale del Lavoro S.p.A. -- New York Branch $14,375,000
The Bank of New York $14,375,000
The Bank of Nova Scotia $14,375,000
Citibank, N.A. $14,375,000
Commerzbank AG New York and Grand Cayman Branches $14,375,000
Credit Agricole Indosuez $14,375,000
Credit Lyonnais New York Branch $14,375,000
First Union National Bank $14,375,000
Fleet National Bank $14,375,000
HSBC Bank USA $14,375,000
Summit Bank $14,375,000
SunTrust Bank $14,375,000
The Toronto Dominion (Texas) Inc. $14,375,000
Wachovia Bank N.A. $14,375,000
Banca di Roma $11,250,000
Banca Commerciale Italiana $11,250,000
Bank One, NA $11,250,000
Banque Nationale de Paris $11,250,000
Credit Industriel et Commercial $11,250,000
KBC Bank N.V. $11,250,000
Banca Monte dei Paschi di Siena S.p.A. $6,250,000
The Bank of Tokyo-Mitsubishi, Ltd. $6,250,000
Cariplo-Cassa di Risparmio delle Provincie Lombarde SpA $6,250,000
Mellon Bank, N.A. $6,250,000
Norddeutsche Landesbank Girozentrale $6,250,000
The Northern Trust Company $6,250,000
Sanpaolo Imi S.p.A. $6,250,000
UNI Credito Italiano S.p.A. $6,250,000
<PAGE>
EXHIBIT B-4
SWINGLINE NOTE
- --------------- -----------, ---------
---------- --, ----
FOR VALUE RECEIVED, _______________, a corporation organized and
existing under the laws of ___________ (the "Company"), hereby promises to pay
to _______________ or its registered assigns (the "Bank"), in lawful money of
the United States of America in immediately available funds, at the office of
______________________________, on the Final Maturity Date (as defined in the
Agreement referred to below) the unpaid principal amount of all Swingline Loans
(as defined in the Agreement) made by the Bank to the Company pursuant to the
Agreement.
The Company promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.09 of the Agreement.
This Note is one of the Swingline Notes referred to in the Global
Revolving Credit Agreement (364-Day), dated as of March 30, 1998, among the
Company, Cryovac, Inc., as the initial Subsidiary Borrower, and each additional
Subsidiary Borrower (as defined in the Agreement), the Company and certain
Domestic Subsidiaries, as Guarantors, the lenders party thereto (including the
Bank) and ABN AMRO Bank N.V. as Administrative Agent, (as from time to time in
effect, the "Agreement") and is entitled to the benefits thereof and the other
Credit Documents (as defined in the Agreement). This Note is entitled to the
benefits of the Guaranty (as defined in the Agreement). As provided in the
Agreement, this Note is subject to voluntary prepayment and mandatory repayment,
in whole or in part, prior to the Swingline Expiry Date.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Company hereby waives presentment, demand, protest or notice of any
kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
------------------------
By
Name:
Title:
EXHIBIT 10.2
CONSULTING AGREEMENT
AGREEMENT dated February 29, 2000 between SEALED AIR CORPORATION, a
Delaware corporation, ("Sealed Air"), and T. J. DERMOT DUNPHY, an individual
(the "Consultant").
RECITALS
The Consultant will retire from the position of Chief Executive Officer
and from employment with Sealed Air on February 29, 2000. Thereafter, Sealed
Air wishes to retain the Consultant to provide consulting services to Sealed
Air on the terms and conditions set forth below, and the Consultant wishes to
provide such services on such terms and conditions.
NOW, THEREFORE, the parties agree as follows:
Section 1. Retention and Term. Sealed Air agrees to retain the Consultant
as a consultant, and the Consultant agrees to provide the services set forth in
this Agreement during the term hereof. The term of this Agreement shall
commence on March 1, 2000 and continue through February 28, 2003 (the "Term"),
unless terminated earlier as provided in Section 4.
Section 2. Nature of Duties. The Consultant shall serve as a consultant to
the Chief Executive Officer of Sealed Air on projects as mutually agreed by the
Chief Executive Officer and the Consultant.
Section 3. Compensation and Reimbursement of Expenses.
(a) Consulting Fees. In consideration for the services to be rendered by
the Consultant hereunder, Sealed Air shall transfer to the Consultant from
Sealed Air's treasury 60,000 shares (the "Shares") of Sealed Air's common
stock, par value $0.10 per share ("Common Stock"), which shares shall be
transferred subject to the option, restrictions and conditions set forth in
Section 7 below. Sealed Air will deliver a certificate representing the Shares
promptly after execution of this Agreement.
(b) Reimbursement of Expenses. Sealed Air shall reimburse the Consultant
for all reasonable out-of-pocket expenses incurred by the Consultant in
providing consulting services.
Section 4. Termination. The term of the Consultant's retention as a
consultant under this Agreement shall terminate prior to the end of the Term,
upon (i) the death of the Consultant, (ii) written notice of termination by
Sealed Air upon disability of the Consultant that prevents the Consultant from
providing the services required under this Agreement for a period of at least
90 days; (iii) upon the expiration of the restrictions of Section 4(c) provided
for in the Restricted Stock Plan for Non-Employee Directors of Sealed Air
Corporation due to a "Change in Control" under such Plan; or (iv) written
notice of termination by Sealed Air to Consultant for cause, which includes
dishonesty or fraudulent conduct, breach of fiduciary duty, or material
<PAGE>
2
breach by the Consultant of his obligations under this Agreement. If there
should be a dispute whether the Consultant is disabled, the reasonable decision
of Sealed Air's Board of Directors on that issue shall be final.
Section 5. Certain Agreements.
(a) Confidential Information. The Consultant agrees that, while retained
pursuant to this Agreement and permanently thereafter, the Consultant shall not
directly or indirectly use for any purpose (except to provide services to
Sealed Air under this Agreement or as a director of Sealed Air), or disclose or
permit to be disclosed to any person, any Confidential Information, other than
as specifically requested by Sealed Air in writing. For purposes of this
Agreement, the term "Confidential Information" shall mean any nonpublic
information relating to Sealed Air or any of its subsidiaries or affiliates or
the business, operations, financial affairs, performance, assets, technology,
processes, products, contracts, customers, licensees, sublicensees, suppliers,
personnel, plans or prospects of any of them, whether or not in written form
and whether or not expressly designated as confidential, including without
limitation any such information consisting of or otherwise relating to trade
secrets, know-how, technology, designs, drawings, processes, license or
sublicense arrangements, formulae, proposals, customer lists or preferences,
pricing lists, referral sources, marketing or sales techniques or plans,
operations manuals, service manuals, financial information or projections,
lists of suppliers or distributors or sources of supply. Without limiting the
foregoing, the Consultant also will comply with Sealed Air's current Trade
Secret Policy and with any amendment in such Policy in effect from time to time
during the Term.
(b) Property of Sealed Air. All records, files, drawings, documents,
computer software and disks, and other written or recorded information relating
to the business of Sealed Air or any of Sealed Air's subsidiaries or affiliates
possessed by or to which the Consultant has access in the course of his
retention, whether prepared by the Consultant or otherwise, and all equipment
and other assets purchased or provided to the Consultant by Sealed Air shall
remain the exclusive property of Sealed Air and shall be returned to Sealed Air
upon the expiration or earlier termination of the Term and at Sealed Air's
request at any other time.
(c) Rights. The Consultant represents, warrants and covenants for the
benefit of Sealed Air that all inventions, discoveries, works subject to
copyright, techniques, systems, methods, processes, improvements, developments,
enhancements, modifications and other proprietary or intangible rights or
information (collectively, "Rights") that Consultant may, either solely or
jointly with others and whether or not during the Consultant's working hours,
acquire, discover, invent, originate, make, conceive or have rights to with
respect to any project relating to his services performed for Sealed Air, shall
be the sole property of Sealed Air. The Consultant shall disclose to Sealed Air
all such Rights conceived prior to or during the term of his retention hereunder
and for a period of one (1) year thereafter. In particular, the Consultant
agrees that all written material prepared in connection with the services
provided hereunder shall be considered work for hire as defined in the U.S.
Copyright Act of 1976, as amended, 17 U.S.C. ss. 101 et seq., and any copyright
mark shall be in the name of Sealed Air. The Consultant further
<PAGE>
3
covenants and agrees that he will, at the request of Sealed Air, promptly
execute such assignments, applications and other documents and provide such
assistance as Sealed Air may reasonably request in order to vest title to such
Rights in Sealed Air or its designee and to enable it to obtain, maintain and
enforce its exclusive right, title and interest in and to such Rights throughout
the world.
(d) Non-Competition. During the term of this Consulting Agreement and for
two years following the end of such term, the Consultant shall not, without the
written consent of the Chief Executive Officer of Sealed Air, (i) either
directly or indirectly compete with or in any way engage his talents for the
benefit of a competitor of Sealed Air or (ii) act as an officer, director,
employee, consultant, partner or stockholder owning more than five percent of a
corporation, business or enterprise that is in the business of designing,
developing, manufacturing, selling, servicing or promoting a product that
competes with any of the products manufactured, sold or under development by
Sealed Air during the Consultant's employment with or retention as a consultant
by Sealed Air. The Consultant acknowledges and represents that his background
and experience adequately qualify him to engage in other profitable lines of
endeavor and that he will not be subject to undue hardship by reason of this
non-competition commitment.
(e) Survival of Agreements. The agreements contained or referred to in
this Section 5 shall survive the termination or expiration of the Consultant's
retention with Sealed Air. No such termination or expiration shall in any event
discharge or extinguish any claims or rights of either party with respect to
any breach or default of this Agreement prior to the date of any such
termination.
Section 6. Additional Representations and Agreements
(a) The Consultant represents and agrees that (a) he has had access by
reason of his service as Chief Executive Officer and Chairman of the Board of
Directors to sufficient information concerning Sealed Air to enable him to
evaluate the merits and risks of the acquisition of the Shares under this
Agreement, (b) he has such knowledge and experience in financial and business
matters that he is capable of evaluating such acquisition, (c) it is his
intention to acquire and hold the Shares for investment and not for the resale
or distribution thereof, (d) he will comply with the Securities Act of 1933, as
amended (the "Securities Act"), and the Securities Exchange Act of 1934, as
amended (the "Securities Exchange Act"), and (e) he will indemnify Sealed Air
for any costs, liabilities and expenses that it may sustain because of any
violation of the Securities Act or the Securities Exchange Act due to any act
or omission on his part with respect to the Shares.
(b) The Shares may not be sold, transferred or otherwise disposed of unless
either (i) the Shares shall have been registered by Sealed Air under the
Securities Act; (ii) Sealed Air shall have received either a "no action" letter
from the Securities and Exchange Commission or an opinion of counsel acceptable
to Sealed Air to the effect that such sale, transfer or disposition may be made
without such registration, or (iii) such sale, transfer or disposition is made
under
<PAGE>
4
Rule 144 under the Securities Act, and Sealed Air shall have received such
documentation related thereto as counsel to Sealed Air deems acceptable.
(c) The Consultant agrees that Sealed Air may require that any certificate
evidencing the Shares bear a restrictive legend and be subject to stop-transfer
orders or other actions intended to ensure compliance with the Securities Act
or any other applicable regulatory measures.
Section 7. Sealed Air's Right to Reacquire the Shares.
(a) Option to Reacquire. During the Term, the Shares shall be subject to
an option (the "Option") in favor of Sealed Air to reacquire the Shares.
Neither the Shares nor any interest in such Shares may be sold, transferred or
encumbered until the Option to reacquire such Shares may no longer become
exercisable. The Option shall cease to be exercisable as to all Shares at the
end of the Term or upon the earlier termination of this Agreement under
subsections (i), (ii) or (iii) of Section 4. The Option shall become
exercisable only if (i) this Agreement should be terminated under subsection
(iv) of Section 4 or (ii) the Consultant should materially breach his
obligations under this Agreement. If Sealed Air notifies the Consultant that
Sealed Air intends to exercise the Option, then the Consultant will deliver the
certificates representing the Shares to Sealed Air within 30 days following
written notice of exercise by Sealed Air. The Consultant shall not be entitled
to be paid any cash or other consideration upon or in connection with the
reacquisition of Shares upon Sealed Air's exercise of the Option.
(b) Legending of Certificates. Every certificate representing Shares
issued pursuant to this Agreement shall, so long as the Option remains
exercisable, bear a legend in substantially the following form and shall have
in effect a stop-transfer order with respect thereto:
This certificate and the shares represented hereby are held subject
to the terms of an agreement between T. J. Dermot Dunphy and Sealed Air
Corporation pursuant to which these shares are subject to an option in
favor of Sealed Air Corporation to reacquire such shares upon the
occurrence of certain events and pursuant to which neither these shares
nor any interest therein may be sold, transferred or encumbered until the
expiration of such option. If such option is exercised, the holder of the
shares represented by this certificate will have no further rights with
respect to such shares, and this certificate will be deemed void. A copy
of such Agreement is available for inspection at the executive offices of
Sealed Air Corporation.
Upon expiration of the Option, the Consultant may surrender to Sealed Air the
certificate or certificates representing such Shares in exchange for a new
certificate or certificates, free of the above legend.
(c) Adjustments. In the event of changes in the Common Stock after the
date of this Agreement by reason of any stock dividend, split-up, combination
of shares, reclassification,
<PAGE>
5
recapitalization, merger, consolidation, reorganization or liquidation (i) the
terms and conditions of this Agreement shall apply to any securities issued in
connection with any such change with respect to the Shares and (ii) appropriate
adjustments shall be made as to the securities to be delivered upon the exercise
of the Option.
Section 8. Equitable Remedies, Etc. The Consultant acknowledges that the
provisions of Section 5 of this Agreement are reasonably necessary to protect
the legitimate business interests of Sealed Air and that any violation of any
of such provision will result in irreparable injury to Sealed Air for which
damages will not be an adequate remedy. The Consultant therefore agrees that,
if he violates or threatens to violate any of such provisions, in addition to
any compensatory, punitive or other damages that Sealed Air shall be entitled
to recover, Sealed Air shall be entitled to preliminary and injunctive relief
and any other available equitable remedies in connection with such violation or
threatened violation. The prevailing party shall be entitled to recover from
the other party the costs of obtaining legal or equitable relief, including
reasonable attorneys' fees, upon breach of any provision of this Agreement.
Section 9. Contingent Stock Awards. On August 14, 1997 and April 2, 1998
the Consultant was awarded 60,000 and 80,000 shares, respectively, of Common
Stock under the Contingent Stock Plan of Sealed Air Corporation that remain
subject to Sealed Air's option to repurchase such shares should his employment
end before October 13, 2000 and June 1, 2001, respectively. The Organization
and Compensation Committee of Sealed Air's Board of Directors has agreed to
waive the exercise of such option upon the termination of his employment on
February 29, 2000, on the condition that such option shall remain exercisable
as to each award during the remainder of its respective option period as
provided under such Plan if his service as a consultant to and a director of
Sealed Air should cease during that time other than as a result of the
Consultant's death or permanent and total disability, and the Consultant agrees
to such continued option.
Section 10. Severability. Each provision of this Agreement is separable
from every other provision of this Agreement, and each part of each provision
of this Agreement is separable from every other part of such provision. If the
scope or enforceability of this Agreement is in any way disputed at any time, a
court or other trier of fact may modify and enforce the provisions hereof to
the extent it believes to be reasonable under the circumstances existing at
such time.
Section 11. Consultant Status. The Consultant is an independent contractor
and shall not be deemed by virtue of this Agreement to be an employee of Sealed
Air or to be entitled to receive any compensation as an employee or to
participate in any employee benefit program except for such as are expressly
provided for in this Agreement, provided, that this shall not affect his
eligibility for compensation or benefits as a retired employee, a director or
Chairman of the Board of Directors.
Section 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when personally
delivered or when placed
<PAGE>
6
in the mails and forwarded by registered or certified mail, return receipt
requested, postage prepaid, or transmitted by facsimile or similar means of
electronic communication, addressed to the party to whom such notice is being
given as follows or at such other address as either party may designate by
notice to the other:
If to Sealed Air, to: Sealed Air Corporation
Park 80 East
Saddle Brook NJ 07663
Attention: Chief Executive Officer
Fax: (201) 703-4171
with a copy to: Sealed Air Corporation
Park 80 East
Saddle Brook, NJ 07663
Attention: General Counsel
Fax: (201) 703-4113
If to the Consultant, to: T. J. Dermot Dunphy
P. O. Box 669
Far Hills, NJ 07931
Fax: (908) 234-0193
Section 13. Assignment. This Agreement may not be assigned by either party
except with the prior written consent of the other party.
Section 14. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware.
Section 15. Complete Agreement. This Agreement constitutes the entire
agreement between the parties concerning the provision of consulting services
by the Consultant to Sealed Air and supersedes all prior agreements and
understandings among the parties with respect to such services.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
pursuant to due authorization on the date first set forth above.
SEALED AIR CORPORATION
s/ T. J. Dermot Dunphy
- ------------------------
T. J. DERMOT DUNPHY By: s/ William V. Hickey
-----------------------
Name: William V. Hickey
Title: President
<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, 2000 and the
consolidated balance sheet at March 31, 2000 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 1012100
<NAME> SEALED AIR CORPORATION
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 17,721,000
<SECURITIES> 0
<RECEIVABLES> 494,326,000
<ALLOWANCES> 21,271,000
<INVENTORY> 265,675,000
<CURRENT-ASSETS> 830,985,000
<PP&E> 1,944,363,000
<DEPRECIATION> 937,915,000
<TOTAL-ASSETS> 3,871,994,000
<CURRENT-LIABILITIES> 571,385,000
<BONDS> 706,902,000
1,701,407,000
0
<COMMON> 8,415,000
<OTHER-SE> 593,345,000
<TOTAL-LIABILITY-AND-EQUITY> 3,871,994,000
<SALES> 716,588,000
<TOTAL-REVENUES> 716,588,000
<CGS> 458,599,000
<TOTAL-COSTS> 458,599,000
<OTHER-EXPENSES> 142,068,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,088,000
<INCOME-PRETAX> 100,887,000
<INCOME-TAX> 45,904,000
<INCOME-CONTINUING> 54,983,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,983,000
<EPS-BASIC> 0.49
<EPS-DILUTED> 0.45
</TABLE>
