<PAGE>
<PAGE>
UNITED STATES
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 period ended MARCH 31, 1998
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: 1-6690
CONTINENTAL CAN COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-2228114
(State of Incorporation) (I.R.S. Employer Identification No.)
301 Merritt 7 Corporate Park, Norwalk, CT 06856
(Address of principal executive offices) Zip Code
(203) 750-5900
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X YES NO
The number of shares outstanding of the registrant's Common Stock ($.25 par
value) as of May 8, 1998 is 3,388,547.
<PAGE>
<PAGE>
FORM 10-Q
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 1998 and 1997 and December 31, 1997
Consolidated Statements of Earnings for the Three Months Ended March 31, 1998
and 1997
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998
and 1997
Notes to Consolidated Financial Statements
2
<PAGE>
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND 1997 AND DECEMBER 31, 1997
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
MARCH 31, DEC. 31, MARCH 31,
1998 1997 1997
------------ ------------ --------------
<S> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 9,543 $ 5,486 $ 22,705
Investment securities 21,685 20,385 15,274
Accounts Receivable:
Trade accounts 68,710 62,883 63,700
Other 8,086 6,958 8,201
Less allowance for doubtful accounts (5,448) (5,549) (4,430)
------------ ------------ --------------
Accounts receivable, net 71,348 64,292 67,471
Inventories 89,513 79,113 89,679
Prepaid expenses and other current assets 4,679 4,788 6,247
------------ ------------ --------------
TOTAL CURRENT ASSETS 196,768 174,064 201,376
------------ ------------ --------------
Property, plant and equipment, at cost:
Land, building and improvements 46,462 46,405 47,748
Manufacturing machinery and equipment 213,897 212,300 208,795
Furniture, fixtures and equipment 8,612 8,683 8,757
Construction in progress 8,775 8,114 10,907
------------ ------------ --------------
277,746 275,502 276,207
Less accumulated depreciation and amortization 133,669 131,050 130,947
------------ ------------ --------------
Net property, plant and equipment 144,077 144,452 145,260
Goodwill, net of accumulated amortization 29,865 28,975 29,588
Other assets, net of accumulated amortization 25,889 27,915 24,589
------------ ------------ --------------
TOTAL ASSETS $ 396,599 $ 375,406 $ 400,813
============ ============ ==============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
MARCH 31, 1998 AND 1997 AND DECEMBER 31, 1997
(UNAUDITED)
(In thousands except share data)
<TABLE>
<CAPTION>
MARCH 31, DEC. 31 MARCH 31,
1998 1997 1997
------------- ------------ ------------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Short term borrowings $ 20,064 $ 11,778 $ 14,289
Accounts payable - trade 48,651 43,532 47,221
Accrued liabilities:
Employee compensation and benefits 17,850 17,330 18,961
Other accrued expenses 15,707 15,154 15,983
Current installments of long term debt and
obligations under capital leases 15,855 8,513 11,111
Income taxes payable 874 757 1,298
Other current liabilities 14,089 7,952 14,624
------------- ------------ ------------
TOTAL CURRENT LIABILITIES 133,090 105,016 123,487
Long term debt, excluding current installments 137,736 144,942 151,513
Obligations under capital leases, excluding
current installments 10,502 11,476 14,082
Deferred income taxes 4,747 4,725 3,603
Other 24,501 26,408 30,667
------------- ------------ ------------
TOTAL LIABILITIES 310,576 292,567 323,352
Minority interest 14,729 14,057 12,093
STOCKHOLDERS' EQUITY:
Capital stock:
First preferred stock, cumulative $25 par value.
Authorized 250,000 shares; no shares issued. - - -
Second preferred stock, 4% non-cumulative,
$100 par value. Authorized 1,535 shares;
no shares issued. - - -
Common stock, $.25 par value. Authorized 20,000,000
shares; Outstanding 3,387,213 shares in 1998,
3,217,355 shares in Dec., 1997 and 3,205,835
shares in March, 1997. 843 804 801
------------- ------------ ------------
843 804 801
Additional paid-in capital 46,780 44,226 44,060
Retained earnings 30,546 29,168 22,262
------------- ------------ ------------
78,169 74,198 67,123
Cumulative foreign currency translation adjustment (6,875) (5,416) (1,755)
------------- ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 71,294 68,782 65,368
------------- ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 396,599 $ 375,406 $ 400,813
============= ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
1998 1997
-------------- ---------------
<S> <C> <C>
NET SALES $123,516 $122,610
Cost of sales 104,583 102,762
Gross profit -------------- ---------------
18,933 19,848
Selling, general and administrative expenses 13,268 14,076
-------------- ---------------
OPERATING INCOME 5,665 5,772
Other income (expense):
Interest expense, net (3,843) (4,015)
Foreign currency exchange gain 56 28
Other - net - 34
-------------- ---------------
Net other expense (3,787) (3,953)
Income before provision for income taxes
and minority interest 1,878 1,819
(Recovery) provision for income taxes (94) 473
-------------- ---------------
Income before minority interest 1,972 1,346
Minority Interest 594 266
-------------- ---------------
NET INCOME $ 1,378 $ 1,080
============== ===============
NET EARNINGS PER COMMON SHARE - BASIC $ 0.42 $ 0.34
============== ===============
NET EARNINGS PER COMMON SHARE - DILUTED $ 0.39 $ 0.33
============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
1998 1997
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,378 $ 1,080
Depreciation and amortization 5,106 5,142
Minority interest 594 266
Other adjustments (7,317) 7,197
------------- ------------
NET CASH (USED IN) PROVIDED BY OPERATING (239) 13,685
ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (6,622) (3,326)
Other (543) (13,989)
------------- ------------
NET CASH USED IN INVESTING ACTIVITIES (7,165) (17,315)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds of long term debt 328 5,615
Net proceeds from short term borrowings 8,788 5,903
Other 2,593 64
------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 11,709 11,582
Effect of exchange rate changes on cash (248) (267)
------------- ------------
Increase in cash and cash equivalents 4,057 7,685
Cash and cash equivalents at beginning of period 5,486 15,020
------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,543 $ 22,705
============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(1) Accounting Policies and Other Matters
(a) Pending Sale of Continental Can Company, Inc.
In January 1998, Suiza Foods Corporation signed a definitive
agreement to acquire the Company for stock and assumption of debt
in a purchase transaction. The transaction is expected to be
completed during the second quarter of 1998. Any impact of the
transaction on the consolidated financial statements of the
Company has not yet been determined.
(b) Basis of Presentation
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is
suggested that these consolidated financial statements be read in
conjunction with the financial statements and notes thereto
included in the Company's 1997 Annual Report on Form 10-K.
(c) Adjustments
The results for the interim period reported herein have not been
audited, however, in the opinion of management, all adjustments
necessary for a fair presentation of the interim period statements
have been made.
(d) Earnings Per Share
The following table sets forth the computation of basic and
diluted earnings per share for the three months ended March 31,
1998 and 1997.
<TABLE>
<CAPTION>
1998 1997
---- ----
(In thousands) Income Shares Income Shares
Numerator Denominator Numerator Denominator
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Basic EPS:
Net income $1,378 3,297 $1,080 3,204
Effect of dilutive
options and warrants 218 54
--- --
Diluted EPS:
Net income and
assumed conversions $1,378 3,515 $1,080 3,258
</TABLE>
7
<PAGE>
<PAGE>
(2) Reclassifications
Certain 1997 balances have been reclassified to conform to the 1998
presentation.
(3) Inventories
Inventories consist principally of packaging materials. The components
of inventory were as follows: (000's omitted)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
------------ --------------- ---------------
(in thousands)
<S> <C> <C> <C>
Finished goods $37,027 $ 37,426 $46,336
Work in process 6,759 5,665 10,665
Raw materials and supplies 49,305 39,600 35,731
----------- ----------- ----------
93,091 82,691 92,732
LIFO reserve (3,578) (3,578) (3,053)
----------- ----------- -----------
$89,513 $ 79,113 $89,679
=========== ========== ==========
</TABLE>
(4) Subsequent Events
On April 28, 1998, the Company purchased 33% of the equity in Ferembal
S.A. (Ferembal) for $19,923,000 (119.5 million FF) pursuant to stock
purchase agreements executed in December 1997 and January 1998. The
purchase increases the Company's ownership of Ferembal to 97%. The
acquisition of these shares will be accounted for as a purchase with the
excess of the fair value of the assets acquired allocated to goodwill.
The funds for the purchase were borrowed by the Company from Suiza Foods
Corporation pursuant to a promissory note due December 31, 1998 with
annual interest of 10% payable monthly. The note is secured by all of
the Company's equity in Ferembal.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales during the first quarter of 1998 increased 1% to $123,516,00
as compared to $122,610,000 in the first quarter of 1997. Net sales would have
increased approximately 5% but for foreign currency translation rate differences
of about $4.6 million and resin price decreases of about $700,000 which reduced
reported sales.
Gross profit decreased 5% in the first quarter of 1998, as compared to
the prior year period. Gross profit as a percentage of sales decreased to 15.3%
in the first quarter of 1998 as compared to 16.2% in the same period of 1997.
The decline in gross profit despite higher sales primarily reflected a lower
margin product mix at Ferembal and Plastic Containers, Inc.(PCI).
8
<PAGE>
<PAGE>
Selling, general and administrative expense was reduced to $13.3 million
in 1998 compared to $14.1 million in the first quarter of 1997; as a percentage
of net sales such expense also decreased to 10.7% in 1998 as compared to 11.5%
in 1997. As a result, operating income amounted to $5,665,000 in the first
quarter of 1998 as compared to $5,772,000 in the first quarter of 1997.
Operating profit as a percentage of sales amounted to 4.6% and 4.7% in 1998 and
1997, respectively.
Net interest expense decreased to $3,843,000 in the first quarter of
1998 as compared to $4,015,000 in the same period of 1997. This decrease
resulted primarily from foreign currency translation rate differences.
Recovery of income taxes amounted to $94,000 in the first quarter of
1998. Provision for taxes amounted to $473,000 in the first quarter of 1997.
Minority interest during each period reflects the interests of other
shareholders in some of the Company's subsidiaries. The increase in 1998 in
minority interest primarily reflects the conversion of a convertible bond in
April 1997 by a minority shareholder of Ferembal.
Net income amounted to $1,378,000 ($.39 per common share - diluted) in
the first quarter of 1998. Net income amounted to $1,080,000 ($.33 per common
share - diluted) in the first quarter of 1997.
FINANCIAL CONDITION
CAPITAL REQUIREMENTS
The Company acquired $6.6 million of capital assets during the first
quarter of 1998 consisting primarily of packaging equipment. These assets were
acquired for cash. Similar types of assets are expected to be acquired for the
remainder of 1998. Total capital spending in 1998 is expected to amount to
approximately $25 million.
In April 1998 the Company purchased 33% of the equity in Ferembal from
the minority holders for approximately $19.9 million. The funds for the purchase
were borrowed by the Company. As a result of the purchase the Company's
ownership interest in Ferembal was increased to 97%. See Note 4.
LIQUIDITY
The Company's liquidity position declined slightly during the first
quarter of 1998. Working capital decreased to approximately $63.7 million, and
the current ratio amounted to 1.48 at March 31, 1998 compared to 1.66 at
December 31, 1997.
9
<PAGE>
<PAGE>
During the first quarter of 1998, the Company's operating activities
were essentially flat on a cash basis. The Company used $6.6 million for the
purchase of packaging equipment and invested $1.3 million in short-term
financial assets. The Company's financing activities generated $11.7 million in
cash, most of which were borrowings by its European subsidiaries. Cash increased
by $4.1 million in the first quarter.
At March 31, 1998, the Company had an available credit line under a
Revolving Credit Agreement of $2.5 million. In addition, the Company's
consolidated subsidiaries had available approximately $70 million in short term
credit lines and bank overdraft facilities at March 31, 1998. However, the
Company's ability to draw upon these lines for other than its subsidiaries'
needs is restricted.
The Company expects that cash from operations and its existing banking
facilities will be sufficient to meet its operating needs for the remainder of
1998.
10
<PAGE>
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Required
<TABLE>
<S> <C>
10.1 Promissory Note dated April 27, 1998 Page 12
10.2 Share Pledge Agreement between the Company and Suiza Foods Corporation Page 16
11 Statement re computation of per share earnings
See Note 1(d)
27 Financial data schedule
</TABLE>
All other items for which provision is made in the applicable
regulations of the Securities and Exchange Commission have been
omitted as they are not required under the related instructions or
they are inapplicable.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed since December 31, 1997.
SIGNATURE
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.
CONTINENTAL CAN COMPANY, INC.
(REGISTRANT)
By: /s/ Abdo Yazgi
----------------------------
Principal Financial Officer
and on behalf of registrant
DATED: MAY 11, 1998
11
STATEMENT OF DIFFERENCE
The section symbol shall be expressed as............................'SS'
<PAGE>
<PAGE>
Exhibit 10.1
PROMISSORY NOTE
$20,000,000 Dallas, Texas April 27, 1998
FOR VALUE RECEIVED, the undersigned, Continental Can Company, Inc., a
Delaware corporation ("Maker"), hereby unconditionally promises to pay to the
order of Suiza Foods Corporation, a Delaware corporation ("Payee"), at 3811
Turtle Creek Boulevard, Suite 1300, Dallas Texas, 75205, or such other address
in Dallas County, Texas, as may be given to Maker by Payee, the principal sum of
TWENTY MILLION and No/100 Dollars ($20,000,000.00) or so much thereof as may be
advanced by Payee to Maker hereunder, in lawful money of the United States of
America, together with interest on the unpaid principal balance from day-to-day
remaining, computed from the date of advance until maturity at the rate per
annum which shall from day-to-day be equal to the lesser of (a) the Maximum Rate
(hereinafter defined) or (b) 10% per annum, calculated on the basis of a year of
360 days, and for the actual number of days elapsed.
The term "Maximum Rate," as used herein, shall mean, with respect to the
holder hereof, the maximum nonusurious interest rate, if any, that at any time,
or from time to time, may be contracted for, taken, reserved, charged, or
received on the indebtedness evidenced by this Note under the laws which are
presently in effect of the United States and the State of Texas applicable to
such holder and such indebtedness or, to the extent permitted by law, under such
applicable laws of the United States and the State of Texas which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow. To the extent that Chapter 1D of the Texas Credit
Title (Tex. Rev. Civ. Stat. Ann. art. 5069 'SS''SS' 1.01 et seq.) (the "Act"),
as the same may be codified as part of the Texas Finance Code, is relevant to
any holder of this Note for the purposes of determining the Maximum Rate, each
such holder elects to determine such applicable legal rate under the Act
pursuant to the applicable "weekly ceiling," from time to time in effect
pursuant to the Act, subject to any right such holder may have subsequently,
under applicable law, to change the method of determining the Maximum Rate.
Accrued interest on this Note shall be due and payable on the last
business day of each month, commencing May 29, 1998. All principal of, and
accrued but unpaid interest on, this Note shall be due and payable on December
31, 1998 (the "Maturity Date"). Should the Maturity Date be any day other than a
business day, the maturity hereof shall be extended to the next succeeding
business day and interest shall be payable with respect to such extension.
Payments made to Payee by Maker hereunder shall be applied first to accrued
interest and then to principal.
12
<PAGE>
<PAGE>
All past due principal and, to the extent permitted by applicable law,
interest upon this Note shall bear interest at the Maximum Rate, or if no
Maximum Rate is established by applicable law, then at the rate of 18% per
annum.
Maker, and each surety, endorser, guarantor or other party ever liable
for payment of any sums of money payable on this Note, jointly and severally
waive diligence, demand for payment, presentment, protest, notice of protest and
non-payment or other notice of default, notice of intention to accelerate the
maturity of this Note and notice of acceleration of the maturity of this Note
and agree that their liability under this Note shall not be affected by any
renewal or extension in the time of payment hereof, or by any indulgences, or by
any release or change in any security for the payment of this Note, and hereby
consent to any and all renewals, extensions, indulgences, releases or changes,
regardless of the number of such renewals, extensions, indulgences, releases or
changes.
This Note is secured by, among other things, that certain DECLARATION DE
GAGE DE COMPTE D'INSTRUMENTS FINANCIERS NANTISSEMENT D'ACTIONS, of even date
herewith, executed by Maker and Payee (the "Security Document"), whereby Maker
pledges all capital stock of Ferembal S.A., now owned or hereafter acquired by
Maker (the "Property").
No waiver by Payee of any of its rights or remedies hereunder or under
any other document evidencing or securing this Note or otherwise shall be
considered a waiver of any other subsequent right or remedy of Payee; no delay
or omission in the exercise or enforcement by Payee of any rights or remedies
shall ever be construed as a waiver of any right or remedy of Payee; and no
exercise or enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Payee.
An "Event of Default" shall exist hereunder if any one or more of the
following events shall occur and be continuing:
(a) Maker shall fail or refuse to pay when due any principal of,
or interest upon, this Note.
(b) any statement, representation or warranty made by Maker to
Payee shall prove to be untrue or inaccurate in any material respect;
(c) default shall occur in the performance of any of the
covenants or agreements of Maker contained herein or in any instrument executed
or delivered to Payee in connection herewith (other than the payment of
principal and interest as referred to in (a) above), and such default is not
cured within 15 days after Payee gives written notice thereof to Maker;
(d) Maker shall (i) apply for or consent to the appointment of a
receiver, trustee, custodian, intervenor or liquidator of Maker or of all or a
substantial part of its assets, (ii) file a voluntary petition in bankruptcy,
admit in writing that Maker is unable to pay its debts as they become due or
generally not pay its debts as they become due, (iii) make a general assignment
for the benefit of creditors, (iv) file a petition or answer seeking
reorganization or an
13
<PAGE>
<PAGE>
arrangement with creditors or to take advantage of any bankruptcy or insolvency
laws, (v) file an answer admitting the material allegations of, or consent to,
or default in answering, a petition filed against Maker in any bankruptcy,
reorganization or insolvency proceeding, or (vi) take corporate action for the
purpose of effecting any of the foregoing;
(e) An involuntary petition or complaint shall be filed against
Maker seeking bankruptcy or reorganization of Maker or the appointment of a
receiver, custodian, trustee, intervenor or liquidator of Maker, or of all or
substantially all of Maker's assets, and such petition or complaint shall not
have been dismissed within 60 days of the filing thereof; or an order, order for
relief, judgment or decree shall be entered by any court of competent
jurisdiction or other competent authority approving a petition or complaint
seeking reorganization of Maker or appointing a receiver, custodian, trustee,
intervenor or liquidator of Maker, or of all or substantially all of its assets,
and such order, judgment or decree shall continue unstayed and in effect for a
period of 60 days;
(f) the failure of Maker to pay any money judgment against Maker
at least ten days prior to the date on which its assets may be sold to satisfy
such judgment;
(g) the failure to have discharged within a period of ten days
after the commencement thereof any attachment, sequestration, or similar
proceedings against any of Maker's assets; or
(h) the liens and security interests granted to Payee pursuant to
the Security Document cease to be valid and perfected first priority security
interests in the Property or any default or event of default shall occur under
the Security Document.
Upon the occurrence of any Event of Default or other default hereunder,
under the Security Document or under any other agreement or instrument securing
or assuring the payment of this Note or executed in connection herewith,
including, without limitation, any guaranty delivered to Payee in connection
herewith, the holder hereof may, at its option, declare the entire unpaid
balance of principal and accrued interest on this Note to be immediately due and
payable, and foreclose all liens and security interests securing payment hereof
or any part hereof.
Maker reserves the right to prepay the outstanding principal balance of
this Note, in whole or in part at any time and from time to time without premium
or penalty. Any such prepayment shall be made together with payment of interest
accrued on the amount of principal being prepaid through the date of such
prepayment.
Any provision herein, or in any document securing this Note, or any
other document executed or delivered in connection herewith, or in any other
agreement or commitment, whether written or oral, expressed or implied, to the
contrary notwithstanding, neither Payee nor any holder hereof shall in any event
be entitled to contract for, receive or collect, nor shall or may amounts
received hereunder be credited, so that Payee or any holder hereof shall be
paid, as interest, a sum greater than the maximum amount permitted by applicable
law to be charged to the person(s), partnership(s), firm(s) or corporation(s)
primarily obligated to pay this Note at the
14
<PAGE>
<PAGE>
time in question. If any construction of this Note or any document securing this
Note, or any and all other papers, agreements or commitments, indicate a
different right given to Payee or any holder hereof to contract for, ask for,
demand or receive any larger sum as interest, such is a mistake in calculation
or wording which this clause shall override and control, it being the intention
of the parties that this Note, and all other instruments securing the payment of
this Note or executed or delivered in connection herewith shall in all events
comply with applicable law; and proper adjustments shall automatically be made
accordingly. In the event that Payee or any holder hereof ever contracts for,
receives, collects, or applies as interest, any sum in excess of the amount
calculated at the Maximum Rate, if any, such excess amount shall be applied to
the reduction of the unpaid principal balance of this Note, and if this Note is
paid in full, any remaining excess shall be paid to Maker. In determining
whether or not the interest paid or payable, under any specific contingency,
exceeds the amount calculated at the Maximum Rate, if any, Maker and Payee or
any holder hereof shall, to the maximum extent permitted under applicable law:
(a) characterize any nonprincipal payment as an expense or fee rather than as
interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
"spread" the total amount of interest throughout the entire term of this Note;
provided that if this Note is paid and performed in full prior to the end of the
full contemplated term hereof, and if the interest received for the actual
period of existence thereof exceeds the Maximum Rate, if any, Payee or any
holder hereof shall refund to Maker the amount of such excess, or credit the
amount of such excess against the aggregate unpaid principal balance of all
advances made by the Payee or any holder hereof under this Note at the time in
question.
This Note is being executed and delivered, and is intended to be
performed in Dallas County, State of Texas. Except to the extent that the laws
of the United States may apply to the terms hereof, the substantive laws of the
State of Texas shall govern the validity, construction, enforcement and
interpretation of this Note. In the event of a dispute involving this Note or
any other instruments executed in connection herewith, the undersigned
irrevocably agrees that venue for such dispute shall lie in any court of
competent jurisdiction in Dallas County, Texas.
If this Note is placed in the hands of an attorney for collection, or if
it is collected through any legal proceedings at law or in equity or in
bankruptcy, receivership or other court proceedings, Maker promises to pay all
costs and expenses of collection including, but not limited to, court costs and
the reasonable attorneys' fees of the holder hereof.
CONTINENTAL CAN COMPANY, INC.
By: /s/ Abdo Yazgi
--------------------
Name: Abdo Yazgi
Title: Executive Vice President
15
<PAGE>
<PAGE>
Exhibit 10.2
SHARE PLEDGE AGGREEMENT
BETWEEN:
CONTINENTAL CAN COMPANY (the "Constituant"), and
SUIZA FOODS CORPORATION (the "Beneficiary").
WHEREAS:
- - The Constituant holds 256,910 shares of Ferembal, a societe anonyme with a
capital of 40,083,000 FF, with registered offices at 6, boulevard of
General Leclerc, 92110, Clichy, registered at the Company register of
Nanterre under the number No. B 334 384 054 (the "Company").
- - The Beneficiary has granted a loan to the Constituant in an amount of
$20,000,000 which has been granted pursuant to the terms and conditions of
the Promissory Note attached hereto dated 27 April, 1998 (hereafter the
"Loan Agreement").
- - As a guarantee of the loan, the Constituant has accepted to affect in
guarantee all of the shares which it holds in the company Ferembal S.A.
pursuant to the terms and conditions set forth below.
NOW THEREFORE IT IS AGREED AS FOLLOWS:
1. The Constituant declares by the present document, affecting as security, in
conformity with the provisions of article 29 of the law number 83-1 of 3
January 1983, for the benefit of the Beneficiary, 256,910 nominative shares
of the Company which are registered in the account opened in the name of
the Constituant in the books of the Company (the Shares").
2. The Constituant warrants that the bylaws of Ferembal SA do not contain any
dispositions which submit the sale or transfer of shares to a third party
to a preliminary approval "agreement") of the Board of Directors. The
Constituant irrevocably undertakes to the Beneficiary not to modify the
bylaws of the Company in order to introduce an "agreement" provision, such
undertaking remaining in effect up to the complete repayment to the
Beneficiary of the principal amount of the loan provided for in the Loan
Agreement, together with all interest, expenses and accessory amounts
related thereto.
3. The Constituant warrants that the constitution of the present pledge for
the benefit of the Beneficiary has been the subject of all approvals and
authorizations which are necessary pursuant to all legal, statutory and
by-law provisions which are applicable to it.
16
<PAGE>
<PAGE>
4. The present pledge is granted to guarantee the reimbursement of all amounts
in principal, interest, expenses and accessory amounts and with respect to
all obligations for which the Constituant may be liable with respect to the
Beneficiary pursuant to the Loan Agreement.
5. Pursuant to Law No. 83-1 of January 3, 1983, all shares, other securities
and financial instruments which may be substituted for or become
supplementary to the Shares set forth as a pledge, due to exchanges,
bringing together, splits, free attributions, subscriptions in cash or
otherwise, as well as the products thereof, in all currencies, are included
in the base of the present pledge.
6. The Constituant warrants that is the sole owner (in both "bare property"
and "usufruct") of the Shares and is, therefore, legally entitled to
constitute a pledge on the Shares in favor of the Beneficiary.
The Constituant warrants that no pledge, privilege or other security
interest on all or any part of the pledged Shares has been granted to date
and that no "opposition" or other reason exists to block the present
pledge.
The Constituant further warrants that there does not exist any "convention
de croupier" or similar agreement relating to all or part of the Shares.
7. The Constituant undertakes that as long as the present pledge shall remain
in effect it shall not:
(i) constitute another pledge or security interest on all or any part of
the Shares;
(ii) sell or transfer, directly or indirectly, in whole or in part, the
Shares;
(iii) permit the Company to be operated other than in the normal course of
business in a prudent manner;
(iv) permit any legal transformations involving the Company, such as
mergers and contributions of assets, to take place.
8. In order to notify the present Pledge Agreement to the Company, a copy of
the present document is at this time delivered to the Beneficiary for
delivery to the Company, which Company shall debit the Shares in the
Constituant's account and shall credit a special "pledge" account in the
name of the Beneficiary on the books of the Company.
9. The Beneficiary may, eight days after notice to the Constituant given to it
directly in hand or sent by registered letter, request the executive of the
present pledge pursuant to article 93 of the Commercial Code or it may
request a court to attribute the pledged Shares to it in conformity with
the provisions of article 2078 of the Civil code, the preceding
17
<PAGE>
<PAGE>
dispositions applying notable in the event of a simple declaration by the
Beneficiary of an "Event of Default" pursuant to the Loan Agreement, all of
this without prejudice to any other recourse available against the
Constituant.
10. The Beneficiary undertakes that at the latest eight days from the receipt
of full payment by the Constituant of all principal of the loan which is
the subject of the Loan Agreement, and of all the interest, expenses and
accessory amounts related thereto, that it will notify the Company and the
Constituant by registered letter return receipt requested of the
termination of the present pledge. This Pledge Agreement will continue in
effect until all of such sums have been duly paid to the Beneficiary or
until otherwise provided by law in the event of the executive of the
present pledge.
11. The stamp duties and registration taxes, as will as all taxes, penalties
and expenses (including fees of legal counsel) which result from the
executive of the present pledge due to the coming into existence of one or
the other of the cases foreseen in paragraph 8 above, are for the exclusion
account of the Constituant.
12. For the purposes of this agreement, the parties elect domicile at their
respective corporated offices as indicated above.
13. The present pledge is subject to and shall be interpreted under French law
(without application of its conflict of law principles).
14. All disputes arising under the present pledge will be subject to the
exclusive jurisdiction of the courts of the jurisdiction of the Court of
Appeals of Paris and each party declares irrevocably accepting such
jurisdiction and waiving all objections with respect thereto.
CONTINENTAL CAN COMPANY, INC. SUIZA FOODS CORPORATION
By: /s/ Abdo Yazgi By: /s/ J. Michael Lewis
--------------------------- ------------------------
Executive Vice President Vice President
18
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,543
<SECURITIES> 21,685
<RECEIVABLES> 76,796
<ALLOWANCES> 5,448
<INVENTORY> 89,513
<CURRENT-ASSETS> 196,768
<PP&E> 277,746
<DEPRECIATION> 133,669
<TOTAL-ASSETS> 396,599
<CURRENT-LIABILITIES> 133,090
<BONDS> 125,000
<COMMON> 843
0
0
<OTHER-SE> 70,451
<TOTAL-LIABILITY-AND-EQUITY> 396,599
<SALES> 123,516
<TOTAL-REVENUES> 123,516
<CGS> 104,583
<TOTAL-COSTS> 117,851
<OTHER-EXPENSES> 3,787
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,843
<INCOME-PRETAX> 1,878
<INCOME-TAX> (94)
<INCOME-CONTINUING> 1,378
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,378
<EPS-PRIMARY> .42
<EPS-DILUTED> .39
</TABLE>
