FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
Commission file number 1-9340
REEBOK INTERNATIONAL LTD.
_________________________________________________________________
(Exact name of registrant as specified in its charter)
Massachusetts 04-2678061
____________________________________ ____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Technology Center Drive, Stoughton, Massachusetts 02072
_________________________________________________________________
(Address of principal executive offices) (Zip Code)
(617) 341-5000
_________________________________________________________________
(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.
Yes (X) No ( )
The number of shares outstanding of registrant's common stock, par value
$.01 per share, at November 8, 1995, was 75,576,136 shares.
<PAGE>
REEBOK INTERNATIONAL LTD.
INDEX
PART I. FINANCIAL INFORMATION:
Item 1 Financial Statements (Unaudited)
Consolidated Balance Sheets - September 30, 1995
and 1994, and December 31, 1994 . . . . . . . . 2-3
Consolidated Statements of Income - Three and
Nine Months Ended September 30, 1995 and 1994 . 4
Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 1995 and 1994 . . . 5-6
Notes to Consolidated Financial Statements . . . 7-8
Item 2
Management's Discussion and Analysis of Results
Of Operations and Financial Condition . . . . . 9-14
Part II. OTHER INFORMATION:
Item 1 Legal Proceedings . . . . . . . . . . . . . . . . 15
Items 2-5 Not Applicable . . . . . . . . . . . . . . . . . 15
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . 15
<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1995 1994 1994
__________ __________ ___________
(Amounts in thousands)
Current assets:
Cash and cash equivalents $ 104,468 $ 97,038 $ 83,936
Accounts receivable, net
of allowance for doubtful
accounts (1995, $51,617;
September 1994, $30,309;
December 1994, $44,862) 701,374 644,781 532,475
Inventory 651,004 518,367 624,625
Deferred income taxes 79,459 62,858 66,456
Prepaid expenses 26,062 29,378 29,952
__________ __________ __________
Total current assets 1,562,367 1,352,422 1,337,444
__________ __________ __________
Property and equipment, net 192,087 149,406 164,848
Non-current assets:
Intangibles, net of
amortization 96,958 97,226 96,196
Deferred income taxes 3,900 - 2,910
Other 46,696 44,191 48,063
__________ __________ __________
147,554 141,417 147,169
__________ __________ __________
$1,902,008 $1,643,245 $1,649,461
========== ========== ==========
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REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
September 30, December 31,
1995 1994 1994
__________ __________ __________
(Amounts in thousands, except share data)
Current liabilities:
Notes payable to banks $ 123,747 $ 73,585 $ 63,837
Commercial paper 60,000 - -
Current portion of
long-term debt 2,603 3,508 5,190
Accounts payable 159,727 154,193 170,622
Accrued expenses 197,105 157,689 157,479
Income taxes payable 78,784 127,567 102,392
Dividends payable 5,761 6,137 6,068
__________ __________ __________
Total current liabilities 627,727 522,679 505,588
__________ __________ __________
Long-term debt, net of
current portion 254,956 134,863 131,799
Minority interest 27,327 23,252 21,569
Commitments and contingencies
Outstanding redemption value
of equity put options 13,420 - -
Stockholders' equity:
Common stock, par value $.01;
authorized 250,000,000 shares;
issued 1995, 112,739,138;
issued September 30, 1994,
117,586,751; issued December
31, 1994, 117,155,611 1,127 1,176 1,172
Additional paid-in capital -0- 185,326 167,953
Retained earnings 1,569,775 1,381,097 1,428,058
Less 36,210,902 shares in
treasury at cost (603,241) (603,241) (603,241)
Unearned compensation (1,703) (2,746) (2,598)
Foreign currency translation
adjustment 12,620 839 (839)
__________ __________ __________
978,578 962,451 990,505
__________ __________ __________
$1,902,008 $1,643,245 $1,649,461
========== ========== ==========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
____________________ _________________
1995 1994 1995 1994
____ ____ ____ ____
Net sales $1,005,980 $ 937,148 $2,730,150 $2,571,267
Other income 281 5,382 2,334 4,336
_________ _________ __________ __________
1,006,261 942,530 2,732,484 2 575,603
Costs and expenses:
Cost of sales 614,835 561,818 1,644,079 1,550,641
Selling, general and
administrative expenses 257,296 236,157 780,608 678,776
Special charges - - 18,034 -
Amortization of intangibles 1,012 984 3,068 3,198
Minority interest 4,750 3,627 9,570 7,308
Interest expense 7,324 4,515 19,611 13,757
Interest income (1,270) (1,111) (4,962) (2,999)
_________ _________ __________ __________
883,947 805,990 2,470,008 2,250,681
_________ _________ __________ __________
Income before income taxes 122,314 136,540 262,476 324,922
Income taxes 46,112 51,885 98,953 123,470
_________ _________ __________ __________
Net income $ 76,202 $ 84,655 $ 163,523 $ 201,452
========= ========= ========== ==========
Net income per common share $ 0.96 $ 1.01 $ 2.03 $ 2.38
========= ========= ========== ==========
Dividends per common share $ 0.075 $ 0.075 $ 0.225 $ 0.225
========= ========= ========== ==========
Weighted average common and
common equivalent shares
outstanding
79,304 84,091 80,602 84,604
========= ========= ========== ==========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
________________
1995 1994
____ ____
(Amounts in thousands)
Cash flows from operating activities:
Net income $ 163,523 $ 201,452
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 28,029 24,931
Amortization of intangibles 3,068 3,198
Minority interest, net of dividends paid 9,570 8,083
Amortization of unearned compensation 1,067 678
Deferred income taxes (13,902) (6,396)
Changes in operating assets and
liabilities, exclusive of those arising
from business acquisitions:
Accounts receivable (147,930) (166,813)
Inventory (14,590) 9,588
Prepaid expenses 4,378 (7,239)
Other (18,102) (10,757)
Accounts payable (14,458) 4,975
Accrued expenses 35,473 13,006
Income taxes payable (24,779) 43,935
__________ __________
Total adjustments (152,176) (82,811)
__________ __________
Net cash provided by operating activities 11,347 118,641
__________ __________
Cash flows from investing activity:
Payments to acquire property and
equipment (53,602) (38,805)
__________ __________
Net cash (used for) investing activities (53,602) (38,805)
__________ __________
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<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
___________________
1995 1994
____ ____
(amounts in thousands)
Cash flows from financing activities:
Net borrowings of notes payable to banks $ 59,496 $ 48,299
Proceeds from issuance of commercial paper 60,000 -
Proceeds from issuance of long-term debt 230,000 -
Repayments of long term debt (110,965) (1,099)
Proceeds from issuance of common stock to
employees 7,616 6,193
Dividends paid (18,026) (18,693)
Repurchases of common stock (166,779) (87,929)
Other 326 -
________ _________
Net cash provided by (used for)
financing activities 61,668 (53,229)
________ _________
Effect of exchange rate changes on cash
and cash equivalents 1,119 (8,916)
________ _________
Net increase in cash and cash equivalents 20,532 17,691
________ _________
Cash and cash equivalents at beginning of period 83,936 79,347
________ _________
Cash and cash equivalents at end of period $104,468 $ 97,038
======== =========
Supplemental disclosures of cash flow information:
1995 1994
____ ____
Cash paid during the period for:
Interest $ 19,394 $ 16,356
Income taxes 122,561 77,143
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
______________________________
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the nine months
ended September 30, 1995 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 1994.
NOTE 2 - CONTINGENCY
______________________________
Final approval of the Company's settlement with the National Association of
Attorneys General ("NAAG") relating to the investigation by NAAG against the
Company was received on October 20, 1995 and, as a result, the previously
disclosed settlement of the class action entitled Marshall Varano v. Reebok
International Ltd. (Case No. 67348, which was filed against the Company on
February 7, 1994 in California Superior Court) has become final.
On August 29, 1995, the Company obtained a favorable ruling on its motion
for summary judgment in the lawsuit entitled Stutz Motor Car of America, Inc.
v. Reebok International Ltd., (filed on July 1, 1993 in the Central District
of Los Angeles County Superior Court as Case Number BC074579 and removed to
the United States District Court for the Central District of California where
it was assigned Civil Action No. 93-4433LGB) and, as a result, the case was
dismissed. The Plaintiff has appealed the decision. The Company believes that
the Plaintiff's appeal is without merit and is confident that the District
Court decision will be upheld.
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<PAGE>
NOTE 3 - EQUITY PUT OPTIONS
___________________________
During the quarter ended September 30, 1995, the Company issued equity put
options as part of its ongoing share repurchase program. These options
provide the Company with an additional source to supplement open market
purchases of its common stock. The options are priced based on the market
value at the date of issuance. The redemption value of the options, which
represents the option price times the number of shares under option, has been
reclassified from stockholders' equity and is presented in the accompanying
Consolidated Balance Sheet at September 30, 1995 as "Outstanding redemption
value of equity put options." At September 30, 1995, 400,000 shares of
outstanding common stock are subject to repurchase under the terms and
conditions of these options. All outstanding equity put options expire by the
end of 1995.
NOTE 4 - SPECIAL CHARGES
________________________
The Company recorded special charges of $18,034,000 in the second quarter
principally related to severance and other costs associated with the
streamlining of certain segments of its operations. The special charges
consist of approximately $10,000,000 of severance and related expenses and
$8,000,000 related to facilities consolidations. The after-tax effect of
these charges was $11,235,000 or $.14 per share for the nine months ended
September 30, 1995.
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<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following table shows the percentage which amounts in the Consolidated
Statements of Income bear to net sales:
Percentage of Net Sales
_______________________
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ __________________
1995 1994 1995 1994
____ ____ ____ ____
Net sales 100.0% 100.0% 100.0% 100.0%
Other income (expense) - .6 .1 .1
______ ______ _____ _____
100.0 100.6 100.1 100.1
Costs and expenses:
Cost of sales 61.1 59.9 60.2 60.3
Selling, general and
administrative expenses 25.6 25.2 28.6 26.4
Special charges - - .7 -
Amortization of intangibles .1 .1 .1 .1
Minority interest .5 .4 .4 .3
Interest expense .7 .5 .7 .5
Interest income (.1) (.1) (.2) (.1)
______ ______ _____ _____
87.9 86.0 90.5 87.5
______ ______ _____ _____
Income before income taxes 12.2 14.6 9.6 12.6
Income taxes 4.6 5.6 3.6 4.8
______ ______ _____ _____
Net income 7.6% 9.0% 6.0% 7.8%
====== ====== ===== =====
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<PAGE>
REEBOK INTERNATIONAL LTD. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Operating Results
Third Quarter 1995 Compared to Third Quarter 1994
Net sales for the quarter ended September 30, 1995, were $1.006 billion,
a $68.8 million increase or 7.3% over the level reported for the third quarter
of 1994. This marks the first time in the Company's history when quarterly
sales exceeded $1 billion. The Reebok Division's worldwide sales were $858.3
million, an increase of 6.6% from $804.8 (A) million in the third quarter of
1994. The Reebok Division's U.S. footwear sales decreased 3.0% to $373.7
million from $385.2 million in the third quarter of 1994. This decrease is
attributed primarily to sales declines in the outdoor, running, tennis and
Preseason(R) categories, which was partially offset by increases in the
basketball, cleated and walking categories. The Reebok Division's U.S. apparel
sales increased by 30.1% to $54.9 million from $42.2 million (A) in 1994. The
increase resulted primarily from increases in the graphics, performance
running and licensed product categories. The Reebok Division's International
sales (including both footwear and apparel) were $429.7 million in the third
quarter of 1995, an increase of 13.9% from $377.4 million in the third quarter
of 1994. The International sales increase benefited from the weaker U.S.
dollar used in translation. However, the significance of the impact is
declining. For the third quarter of 1995, less than 30% of the sales gain is
currency related. On a local currency basis, thereby eliminating the impact
of foreign currency exchange changes, Canada, Italy, Spain and the United
Kingdom had increases in sales, whereas Austria, Japan and Belgium experienced
decreased sales.
_____________
(A) The 1994 sales were adjusted on a pro-forma basis to reflect Tinley
apparel sales in Avia sales. The Tinley Division was transferred to the Avia
Group from Reebok during 1994. In order to present amounts on a comparable
basis, Tinley's apparel sales for 1994 have been reclassified to Avia.
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<PAGE>
Rockport's third quarter sales increased by 18.2% to $110.4 million from
$93.4 million in 1994. This is the first time in Rockport's history when
quarterly sales exceeded $100 million. All categories reported sales gains in
the quarter. The women's lifestyle business led the group with a percentage
sales increase of approximately 23%, and the walking and outdoor categories
had strong performances as well.
Avia's third quarter sales decreased by 4.1% to $37.3 million from $38.9
million (A) in 1994. All categories except running showed decreases from the
same quarter a year ago.
Other income decreased in the third quarter of 1995 due mainly to a decline
in income from partially owned distributors as compared to amounts reported in
1994's third quarter.
Gross margins declined to 38.9% during the quarter, compared to 40.1% in
1994's third quarter, primarily as a result of additional markdowns recorded
for excess inventory on hand at September 30, 1995.
Selling, general and administrative expenses increased as a percentage of
sales from 25.2% in 1994 to 25.6% in 1995. During the third quarter of 1995
the Company continued to invest incrementally in brand building areas such as
marketing, advertising, retail presence and product development. In addition,
SG&A expenses were higher in order to support certain of the Company's high
growth businesses such as Rockport and retail, and were negatively impacted by
foreign currency translation due to the weaker dollar. Exclusive of these
areas, selling, general and administrative expenses decreased in absolute
dollars as compared to the prior year's quarter.
Minority interest represents the minority shareholders' proportionate share
of the net income of certain of the Company's consolidated subsidiaries.
Interest expense increased 62.2% as a result of increased borrowings to
finance working capital needs and the Company's share repurchase program.
The effective tax rate decreased from 38.0% in 1994 to 37.7% in 1995 due to
a change in the geographic mix of worldwide income.
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<PAGE>
Year-to-year earnings per share comparisons benefited from the share
repurchase program. Weighted average common shares outstanding for the
quarter ended September 30, 1995 declined to 79.3 million shares, compared to
84.1 million shares for the third quarter of 1994.
First Nine Months 1995 Compared to First Nine Months 1994
Net sales for the nine months ended September 30, 1995 increased by $158.9
million, 6.2% higher than the first nine months of 1994. The Reebok
Division's worldwide sales were $2.352 billion for the first nine months of
1995, an increase of 6.6% from sales of $2.206 billion (A) for the same period
in 1994. The Reebok Division's U.S. footwear sales decreased 1.2% to $1.102
billion from $1.115 billion in 1994. The decrease is due primarily to
decreases in the running, Preseason(R) and tennis categories, which were
offset in part by increases in the cleated, walking and basketball categories.
The Reebok Division's U.S. apparel sales increased by 26.3% to $134.8 million
from $106.7 million (A) in 1994. The increase resulted primarily from
increases in the graphics, licensed product and performance running
categories. The Reebok Division's International sales (including footwear and
apparel) were $1.116 billion for the first nine months of 1995, an increase of
13.4% from $984.2 million for the same period in 1994. The International
sales increase benefited from the weaker U.S. dollar used in translation. For
the nine months ended September 30, 1995, slightly less than one half of the
sales gain can be attributed to the impact of the weaker dollar. On a local
currency basis, thereby eliminating the impact of foreign currency exchange
changes, Italy, Spain and the United Kingdom had significant percentage
increases in sales whereas Austria experienced a similar decline in sales.
Rockport's sales for the nine month period increased by 14.0% to $273.6
million from $240.1 million for the same period in 1994. All categories,
except outdoor, increased in comparison with the prior year.
Avia's sales for the nine month period decreased by 16.9% to $104.1 million
from $125.3 million (A) for the same period in 1994. All categories except
running had decreases from the prior year.
Gross margin increased slightly from 39.7% in 1994 to 39.8% in 1995.
International margins were favorably impacted by the effect of exchange rates.
U.S. margins were unfavorably impacted by higher than normal markdowns taken
on excess inventory during the third quarter of 1995.
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<PAGE>
Selling, general and administrative expenses increased as a percentage of
sales from 26.4% in 1994 to 28.6% in 1995, primarily as a result of increased
marketing, selling and distribution costs. In addition, SG&A expenses were
higher in certain of the high growth businesses such as Rockport and retail
and were negatively impacted by foreign currency translation due to the weaker
dollar.
The Company recorded special charges of $18,034,000 in the second quarter of
1995 principally related to severance and other costs associated with the
streamlining of certain segments of its operations.
Minority interest represents the minority shareholders' proportionate share
of the net income of certain of the Company's consolidated subsidiaries.
Interest expense increased 42.5% as a result of increased borrowings to
finance working capital needs and the Company's share repurchase program.
The effective tax rate decreased from 38.0% in 1994 to 37.7% in 1995 due to
a change in the geographic mix of the worldwide income.
Year-to-year earnings per share comparisons benefited from the share
repurchase program. Weighted average common shares outstanding for the nine
months ended September 30, 1995, declined to 80.6 million shares, compared to
84.6 million shares for the first nine months of 1994.
Liquidity and Sources of Capital
The Company's financial position remains strong. Working capital increased
$104.9 million, or 12.6% from the same period a year ago. The current ratio
at September 30, 1995, was 2.5 to 1, as compared to 2.6 to 1 at December 31,
1994, and 2.6 to 1 at September 30, 1994.
Accounts receivable increased from September 30, 1994, by $56.6 million, or
8.8%, which is in line with the sales increase for the third quarter of 1995.
Approximately $18.9 million of the year-to-year increase was due to changes in
foreign currency exchange rates. Inventory increased by $132.6 million from
September 30, 1994, reflecting increases in most divisions. Much of this
increase was in the Company's growth businesses. In addition, approximately
$7.4 million of the year-to-year increase was due to changes in foreign
currency exchange rates, and $4.7 million of the increase was
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<PAGE>
due to inventories of subsidiaries that the Company acquired since the end of
the third quarter of 1994. A portion (approximately $40 million) of the
increase in inventories on hand at September 30, 1995, as compared to the
prior year's quarter, is considered excess and is being disposed of through
the Company's inventory reduction programs.
During the third quarter of 1995, the Company redeemed its $100 million 9
3/4% Debentures due September 15, 1998 and replaced them with $100 million 6
3/4% Debentures due September 15, 2005.
During the twelve months ended September 30, 1995, cash and cash equivalents
increased by $7.4 million, and outstanding borrowings increased by $229.3
million, while $191.0 million of the Company's common stock was repurchased.
Outstanding borrowings are expected to be lower by the end of 1995 due to cash
generated from operations. Cash provided by operations during 1995's first
nine months was $11.3 million. The timing of certain third quarter tax
payments of foreign subsidiaries, which in the prior year were made in the
fourth quarter, have adversely affected the net cash provided by operating
activities through the nine months ended September 30, 1995. Cash generated
from operations, together with the Company's existing credit lines and other
financing sources, is expected to adequately finance the Company's current and
planned cash requirements.
On October 19, 1995, the Company's Board of Directors authorized the
additional repurchase of up to $200 million in Reebok common stock in open
market or privately-negotiated transactions. This new authorization will be
added to the remainder of the prior program, which as of September 30, 1995
had approximately $57 million available for repurchase. As of September 30,
1995, the Company had repurchased 41,099,902 shares of its common stock at an
average price of $22.85 per share since April, 1991.
-14-
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Final approval of the Company's settlement with the National Association of
Attorneys General ("NAAG") relating to the investigation by NAAG against the
Company was received on October 20, 1995 and, as a result, the previously
disclosed settlement of the class action entitled Marshall Varano v. Reebok
International Ltd. (Case No. 67348, which was filed against the Company on
February 7, 1994 in California Superior Court) has become final.
On August 29, 1995, the Company obtained a favorable ruling on its motion
for summary judgment in the lawsuit entitled Stutz Motor Car of America, Inc.
v. Reebok International Ltd., (filed on July 1, 1993 in the Central District
of Los Angeles County Superior Court as Case Number BC074579 and removed to
the United States District Court for the Central District of California where
it was assigned Civil Action No. 93-4433LGB) and, as a result, the case was
dismissed. The Plaintiff has appealed the decision. The Company believes that
the Plaintiff's appeal is without merit and is confident that the District
Court decision will be upheld.
Items 2 - 5
Not Applicable
Item 6
(a) Exhibits:
10. Amendment No. 1, dated October 31, 1995, to the Credit Agreement
dated November 1, 1994 and Amendment No. 1, dated October 31, 1995, to the
Loan Agreement dated November 1, 1994, each among the Company, the Lenders
named therein and Credit Suisse as Administrative Agent and Arranger.
11. Statement Re Computation of Per Share Earnings
12. Computation of Ratio of Earnings to Fixed Charges
27. Financial Data Schedule
(b) Reports on Form 8-K: A report on Form 8-K was filed by the Company on
September 21, 1995, which provided the computation of the Company's ratio of
earnings to fixed charges for the year ended December 31, 1994 and for the six
months ended June 30, 1995, amending Exhibit 12 to the Company's Registration
Statement on Form S-3 (No. 33-62301) filed with the Securities and Exchange
Commission on September 1, 1995.
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<PAGE>
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.
Dated: November 13, 1995
REEBOK INTERNATIONAL LTD.
BY: /s/ KENNETH WATCHMAKER
_________________________
Kenneth Watchmaker
Executive Vice President and
Chief Financial Officer
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<PAGE>
AMENDMENT NO. 1 TO CREDIT AGREEMENT
This AMENDMENT NO. 1 (this "Amendment") to the Credit
Agreement (as defined below) is entered into as of October
31, 1995 by and among Reebok International Ltd., a Massachusetts
corporation (the "Borrower"), the banks and financial
institutions party to the Credit Agreement (together with their
respective permitted assignees, the "Lenders"), and Credit
Suisse, a bank organized under the laws of Switzerland, as
Administrative Agent for the Lenders (in such capacity, the
"Administrative Agent"), and Credit Suisse, as Arranger (the
"Arranger").
WHEREAS, the Borrower, the Lenders and the Administrative
Agent are party to a Credit Agreement dated as of November 1,
1994 (as amended, supplemented or modified from time to time, the
"Credit Agreement"; capitalized terms used but not defined herein
shall have their respective meanings specified in the Credit
Agreement); and
WHEREAS, the Borrower has requested that the Lenders and
the Administrative Agent agree, and the Lenders and the
Administrative Agent are willing, to amend the Credit Agreement,
on the terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
Section 1. Amendments. Subject to the satisfaction of the
conditions to effectiveness specified in Section 5 hereof, the
Credit Agreement shall be amended as follows:
(a) The Recital to the Credit Agreement is hereby
amended by deleting the number "$200,000,000" therein and
substituting the number "$150,000,000" therefor.
(b) Section 1.01 of the Credit Agreement is hereby
amended by amending the definition of "Applicable Margin" to
read in its entirety as follows:
"Applicable Margin" means 0.19%."
(c) Section 2.04(a) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(a) Facility Fee. The Borrower agrees to pay to
the Administrative Agent, for the ratable accounts
of the Lenders, a facility fee (the "Facility
Fee") on the average daily Commitment of each
Lender, whether used or unused, from the date
hereof, in the case of each Lender that is
signatory hereto, and from the effective date
specified in the Assignment and Acceptance
pursuant to which it became a Lender, in the case
of each other Lender, until the Commitment
Termination Date, at the rate of 0.06% per annum.
The Facility Fee shall be payable quarterly in
arrears on the last Business Day of each December,
March, June and September, and on the Commitment
Termination Date."
(d) Section 2.05(b) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(b) Facility Termination. The Facility shall be
terminated on the date (the "Commitment Termination
Date") that is the earlier of (x) October 30, 1996 and
(y) the date upon which the Borrower terminates in
whole the Commitments of the Lenders in accordance with
Section 2.05(a)."
(e) Section 8.07(a) of the Credit Agreement is hereby
amended by deleting the number "$13,333,333.33" therein and
substituting the number "$10,000,000.00" therefor.
(f) Schedule I to the Credit Agreement shall be
amended and restated in its entirety as set forth on Annex A
hereto.
Section 2. Assignment and Acceptances. Notwithstanding
anything to the contrary contained in Section 8.07 to the Credit
Agreement, (i) the assignment of Commitments pursuant to the
Assignment and Acceptances executed and delivered by the Lenders
on the Amendment Closing Date in order to effect this Amendment
shall be permitted under the Credit Agreement and (ii) no
processing and recordation fee shall apply in connection with
such Assignment and Acceptances.
Section 3. Representations and Warranties. The Borrower
represents and warrants as of the date hereof that: (a) this
Amendment has been duly executed and delivered by the Borrower
and that this Amendment constitutes the Borrower's legal, valid
and binding obligation, enforceable against the Borrower in
accordance with its terms, (b) no Default has occurred and is
continuing and(c) the representations and warranties made or
deemed to have been made by the Borrower in Article IV of the
Credit Agreement are true and correct in all material respects on
and as of the date hereof (or, if any such representation or
warranty is expressly stated to have been made as of a specific
earlier date, as of such date). It shall be an Event of Default
for all purposes of the Credit Agreement if any of the
representations and warranties made herein shall be, or shall
prove to have been, false or misleading as of the time made in
any material respect.
Section 4. No Other Amendments or Consents. Except as
specifically provided in this Amendment, no other consents,
waivers or amendments are made or permitted hereby to the Credit
Agreement. All other terms and conditions of the Credit
Agreement remain in full force and effect and apply fully to this
Amendment.
Section 5. Effectiveness. This Amendment shall become
effective on October 31, 1995 (the "Amendment Closing Date");
provided, that the following conditions precedent to
effectiveness shall have been satisfied on or before the
Amendment Closing Date (including, without limitation, that each
document to be received by the Administrative Agent shall be in
form and substance satisfactory to the Administrative Agent):
(a) The Administrative Agent shall have received
counterparts of this Amendment, duly executed by the
Borrower, the Administrative Agent and the Lenders;
(b) The Administrative Agent shall have received
all Fees that are due and expenses (as provided in
Section 8.04 of the Credit Agreement and as otherwise
agreed between the Borrower and the Administrative
Agent, the Arranger or any Lender) of the
Administrative Agent, the Arranger and the Lenders that
are due to the extent such Fees and expenses have been
presented to the Borrower for payment;
(c) The Administrative Agent shall have received
duly executed copies of Assignment and Acceptances
pursuant to Section 8.07 of the Credit Agreement as are
necessary to effect this Amendment;
(d) The Administrative Agent shall have received
a copy of the articles of organization of the Borrower
and each amendment thereto, certified as of a recent
date prior to the Amendment Closing Date by the
Secretary of State of The Commonwealth of Massachusetts
as being a true and correct copy thereof;
(e) The Administrative Agent shall have received
a copy of (x) a certificate or certificates of the
Secretary of State of The Commonwealth of
Massachusetts, dated as of a recent date prior to the
Amendment Closing Date, listing the charter and all
amendments thereto of the Borrower on file in his or
her office and certifying that (A) such amendments are
the only amendments to the Borrower's charter on file
in his or her office, and (B) the Borrower is duly
incorporated and in good standing under the laws of
such state and (y) a certificate of the Massachusetts
Department of Revenue as to the tax good standing of
the Borrower under the laws of The Commonwealth of
Massachusetts (or a certificate of the Treasurer of the
Borrower regarding same in form and substance
reasonably satisfactory to the Administrative Agent to
be followed by a certificate of the Massachusetts
Department of Revenue as soon as practicable);
(f) The Administrative Agent shall have received
a certificate of the Borrower, signed on behalf of the
Borrower by its President or any Vice President and the
Clerk or any Assistant Clerk, dated the Amendment
Closing Date, certifying as to (A) the absence of any
amendments to the articles of organization of the
Borrower since the date of the Secretary of State's
certificate referred to in Section 5(e) hereof, (B) a
true and correct copy of the bylaws of the Borrower as
in effect on the Amendment Closing Date, (C) the due
organization and good standing of the Borrower as a
corporation under the laws of its state of
incorporation, and the absence of any proceeding for
the dissolution or liquidation of the Borrower, (D) the
truth in all material respects of the representations
and warranties contained herein, (E) the absence of any
event occurring and continuing, or resulting from the
Borrowing(s) (if any), on the Amendment Closing Date
that constitutes a Default, (F) the adoption of
resolutions by the Executive Committee of the Board of
Directors of the Borrower in the form attached thereto
authorizing and approving this Amendment, and that such
resolutions have not been rescinded, modified or
amended and remain in full force and effect, (G) other
documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to
this Amendment, and (H) the names and true signatures
of the officers of the Borrower authorized to sign this
Amendment and the other documents to be delivered
hereunder;
(g) The Administrative Agent shall have received
a favorable opinion of Ropes & Gray, counsel to the
Borrower, in substantially the form of Exhibit A
hereto, given upon the express instructions of the
Borrower, and as to such other matters as any Lender
through the Administrative Agent may reasonably
request; and
(h) The Administrative Agent shall have received
such other documents as the Administrative Agent or any
Lender may reasonably request.
Upon such effectiveness, the Administrative Agent shall promptly
notify the Borrower and each of the Lenders of such
effectiveness.
Section 6. Counterparts. This Amendment may be executed in
any number of counterparts, each of which shall be identical and
all of which, when taken together, shall constitute one and the
same instrument, and any of the parties hereto may execute this
Amendment by signing any such counterpart.
Section 7. Binding Effect. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
Section 8. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of
New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the day and year first above
written.
REEBOK INTERNATIONAL LTD.,
as Borrower
By: /s/ Leo S. Vannoni
Name: Leo S. Vannoni
Title: Treasurer
CREDIT SUISSE, as Administrative Agent
By: /s/ Heather J. Riekenberg
Name: Heather J. Riekenberg
Title: Associate
By: /s/ Ira Lubinsky
Name: Ira Lubinsky
Title: Associate
Lenders:
CREDIT SUISSE
By: /s/ David W. Kratovil
Name: David W. Kratovil
Title: Member of Senior Management
By: /s/ Robert B. Potter
Name: Robert B. Potter
Title: Member of Senior Management
ABN AMRO BANK N.V.
By: /s/ James E. Davis
Name: James E. Davis
Title: Vice President
By: /s/ Charles J. Wahle
Name: Charles J. Wahle
Title: Assistant Vice President
CIBC, INC.
By: /s/ Christopher P. Kleczkowski
Name: Christopher P. Kleczkowski
Title: Vice President
CITIBANK, N.A.
By: /s/ Robert D. Wetrus
Name: Robert D. Wetrus
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Robert Ivosevich
Name: Robert Ivosevich
Title: Senior Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: /s/ Robert Ivosevich
Name: Robert Ivosevich
Title: Authorized Signatory
ISTITUTO BANCARIO SAN PAOLO DI TORINO
By: /s/ Gerard M. McKenna
Name: Gerard M. McKenna
Title: Vice President
By: /s/ Wendell Jones
Name: Wendell Jones
Title: Vice President
STANDARD CHARTERED BANK
By: /s/ David D. Cutting
Name: David D. Cutting
Title: Senior Vice President
THE BANK OF TOKYO TRUST COMPANY
By: /s/ Michael J. Cronin
Name: Michael J. Cronin
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Richard D. Hill, Jr.
Name: Richard D. Hill, Jr.
Title: Director
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ David L. Gaines
Name: David L. Gaines
Title: Senior Vice President
Annex A
SCHEDULE I
Lenders and Commitments
Lender Commitment
CREDIT SUISSE $22,500,000.00
- Domestic Lending Office:
12 East 49th Street
New York, New York 10017
- Notices:
Relationship: Lynn Allegaert
12 East 49th Street
New York, New York 10017
Telephone: (212) 238-5412
Telecopy: (212) 238-5439
Administration: Julia Kingsbury
Credit Suisse/Ref: Reebok
12 East 49th Street
New York, New York 10017
Telephone: (212) 238-5063
Telecopy: (212) 238-5073
- Eurodollar Lending Office:
Credit Suisse New York Branch
c/o Credit Suisse
12 East 49th Street
New York, New York 10017
- - Remittance Instructions:
Credit Suisse
Federal Reserve Bank of New York
ABA # 0260-0917-9
For Further Credit to: Credit Suisse
New York Account # 90499602
Attention: Loan Department
Re: Reebok International Ltd.
Lender Commitment
ABN AMRO BANK N.V. $19,000,000.00
- - Domestic Lending Office:
ABN AMRO Bank N.V.
Cayman Islands Branch
c/o ABN AMRO New York
335 Madison Avenue
New York, NY 10017
- - Notices:
Relationship: James E. Davis
ABN AMRO Bank N.V.
53 State Street
Boston, MA 02109
Telephone: (617) 723-1450
Telecopy: (617) 523-2277
Telex: 216308
Administration: Donna M. Connolly
ABN AMRO Bank N.V.
53 State Street
Boston, MA 02109
Telephone: (617) 723-1450
Telecopy: (617) 523-2277
Telex: 216308
- Eurodollar Lending Office:
(same as domestic lending office)
- Remittance Instructions:
ABN AMRO Bank N.V.
335 Madison Avenue
New York, NY 11017
ABA # 026 009580
Capital ABN AMRO Bank N.V. Boston
Account # 651 0010 27841
Re: Reebok International Ltd.
Lender Commitment
CITIBANK, N.A. $19,000,000.00
- - Domestic Lending Office:
Citibank, N.A.
399 Park Avenue
New York, NY 10043
- - Notices:
Relationship: Imran Kuresky/Robert Parr
399 Park Avenue
8th Floor
New York, NY 10043
Telephone: (212) 559-2649
Telecopy: (212) 793-3053
Administration: Andrea Calamaras
399 Park Avenue
12th Floor, Zone 16
New York, NY 10043
Telephone: (212) 559-4221
Telecopy: (212) 793-3963
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
Credit to Citibank, N.A.
111 Wall St.
New York, NY 10043
ABA # 0210-0008-9
WGC Loan Payment
Account #4054-8046
Re: Reebok International Ltd.
Lender Commitment
CIBC, INC. $16,500,000.00
- - Domestic Lending Office:
Canadian Imperial Bank
of Commerce
425 Lexington Ave.
New York, NY 10017
- - Notices:
Relationship: Christopher P. Kleczkowski
Canadian Imperial Bank of
Commerce
425 Lexington Ave.
New York, NY 10017
Telephone: (212) 856-3560
Telecopy: (212) 856-3991
Administration: Mike Dorr
2727 Paces Ferry Road, Suite
1200
Atlanta, GA 30339
Telephone: (404) 319-4815
Telecopy: (404) 319-4950
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
(VIA FED)
Morgan Guaranty
60 Wall St.
New York, NY 10260
ABA # 021-000-238
Favor of CIBC
Acct. # 630-00-480
Lender Commitment
CREDIT LYONNAIS $16,500,000.00
NEW YORK BRANCH/CAYMAN ISLAND BRANCH
- - Domestic Lending Office:
Credit Lyonnais New York Branch
1301 Ave. of the Americas
New York, NY 10019
- - Notices:
Relationship: Bruce A. Bernier
Assistant Vice President
Credit Lyonnais
53 State Street
Boston, MA 02109
Telephone: (617) 723-2615
Telecopy: (617) 723-4803
Administration: Lisa L. Leahy
Credit Lyonnais
53 State Street
Boston, MA 02109
Telephone: (617) 723-2615
Telecopy: (617) 723-4803
- - Eurodollar Lending Office:
Credit Lyonnais Cayman Island Branch
c/o Credit Lyonnais New York Branch
1301 Ave. of the Americas
New York, NY 10019
- - Remittance Instructions:
F/O Credit Lyonnais New York Branch
ABA # 026008073
Attn: Loan Servicing
Re: Reebok International Ltd.
Lender Commitment
WACHOVIA BANK OF GEORGIA, N.A. $16,500,000.00
- - Domestic Lending Office:
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, GA 30303
- - Notices:
Relationship: Kay Reedy
Linda M. Harris
U.S. Corporate Division
Wachovia Corporate Services, Inc.
191 Peachtree Street, N.E. MC 373
Atlanta, GA 30303
Telephone: (404) 332-5262
Telecopy: (404) 332-6898
Telex: 542553
Answerback: WACH FEX-ATL
Administration: Gwen Miles
U.S. Corporate Division
Wachovia Corporate Services Inc.
191 Peachtree Street, N.E. MC 373
Atlanta, GA 30303
Telephone: (404) 332-5355
Telecopy: (404) 332-1118
Telex: 542553
Answerback: WACH FEX-ATL
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
Wachovia Bank of Georgia, N.A.
Atlanta, GA
ABA # 061-000-010
Account # 18-171-498
Attn: Loan Specialist
Lender Commitment
THE BANK OF TOKYO TRUST COMPANY $10,000,000.00
- - Domestic Lending Office:
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
New York, NY 10116-3138
- - Notices:
Relationship: Michael J. Cronin
Vice President and Manager
125 Summer Street, Suite 1170
Boston, Ma 02110
Telephone: (617) 330-7410
Telecopy: (617) 330-7422
Adminstration: Lucille Alvarez
Harborside Financial Center
34 Exchange Place, Plaza 3
Jersey City, NJ 07311
Telephone: (201) 413-8052
Telecopy: (212) 732-1678
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
The Bank of Tokyo Trust Company
New York, NY
ABA # 026-009687
Attn: Loan Administration Department
Acct # : 97770477
Re: Reebok International Ltd.
Lender Commitment
THE FIRST NATIONAL BANK OF BOSTON $10,000,000.00
- - Domestic Lending Office:
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
- - Notices:
Relationship: Richard D. Hill, Jr.
100 Federal Street
Boston, MA 02110
Telephone: (617) 434-4080
Telecopy: (617) 434-0637
Administration: Angela Moore
Commercial Loan Service
100 Rust Craft Road
Dedham, MA 02026
Telephone: (617) 467-2292
Telecopy: (617) 467-2276
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
Bank of Boston
100 Federal Street
Boston, MA
ABA # 011-000-390
Attn: Commercial Loan Services
Admin # 42, Angela Moore
For: Reebok
Lender Commitment
ISTITUTO BANCARIO SAN PAOLO $10,000,000.00
DI TORINO SPA
- - Domestic Lending Office:
Istituto Bancario San Paolo di Torino SPA
245 Park Avenue, 35th Floor
New York, NY 10167
Telephone: (212) 692-3000
Telecopy: (212) 599-5303
Telex No: 220045 SPAOL UR
- - Notices:
Relationship: Luca Sacchi
245 Park Avenue, 35th Floor
New York, NY 10167
Telephone: (212) 692-3130
Telecopy: (212) 599-5303
Administration: Luca Sacchi
245 Park Avenue, 35th Floor
New York, NY 10167
Telephone: (212) 692-3130
Telecopy: (212) 599-5303
- - Eurodollar Lending Office:
Istituto Bancario San Paolo di Torino Bahamas SPA
245 Park Avenue, 35th Floor
New York, NY 10167
Telephone: (212) 692-3000
Telecopy: (212) 599-5303
- - Remittance Instructions:
First Chicago International
New York
ABA # 026-009-797
San Paolo Bank
Acct. # No: 1002209
Lender Commitment
STANDARD CHARTERED BANK $10,000,000.00
- - Domestic Lending Office:
Standard Chartered Bank
160 Water Street
New York, NY 10038
Telephone: (212) 269-3100
Telecopy: (212) 612-0225
Telex No: 232120
Answerback: SCBNYUW
- - Notices:
Relationship: David Godwin
160 Water Street
New York, NY 10038
Telephone: (212) 612-0546
Telecopy: (212) 612-0225
Administration: David Godwin
160 Water Street
New York, NY 10038
Telephone: (212) 612-0546
Telecopy: (212) 612-0225
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
Standard Chartered Bank
160 Water Street
New York, NY 10038
ABA # 0260-0256-1
Attn: Loan Accounting A/C # 1703488
Re: Reebok Int'l Ltd.
AMENDMENT NO. 1 TO LOAN AGREEMENT
This AMENDMENT NO. 1 (this "Amendment") to the Loan
Agreement (as defined below) is entered into as of October 31,
1995 by and among Reebok International Ltd., a Massachusetts
corporation (the "Borrower"), the banks and financial
institutions party to the Loan Agreement (together with their
respective permitted assignees, the "Lenders"), and Credit
Suisse, a bank organized under the laws of Switzerland, as
Administrative Agent for the Lenders (in such capacity, the
"Administrative Agent"), and Credit Suisse, as Arranger (the
"Arranger").
WHEREAS, the Borrower, the Lenders and the Administrative
Agent are party to a Loan Agreement dated as of November 1, 1994
(as amended, supplemented or modified from time to time, the
"Loan Agreement"; capitalized terms used but not defined herein
shall have their respective meanings specified in the Loan
Agreement); and
WHEREAS, the Borrower has requested that the Lenders
and the Administrative Agent agree, and the Lenders and the
Administrative Agent are willing, to amend the Loan Agreement,
on the terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the premises and
the mutual agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
Section 1. Amendments. Subject to the satisfaction of
the conditions to effectiveness specified in Section 5 hereof,
the Loan Agreement shall be amended as follows:
(a) The Recital to the Loan Agreement is hereby
amended by deleting the number "$100,000,000" therein and
substituting the number "$150,000,000" therefor.
(b) Section 1.01 of the Loan Agreement is hereby
amended by amending the definition of "Applicable Margin" to
read in its entirety as follows:
"Applicable Margin" means (i) 0.18% so long as Senior
Unsecured Debt of the Borrower shall be rated at least
AA- by S&P and Aa3 by Moody's, (ii) 0.16% so long as
Senior Unsecured Debt of the Borrower shall be rated at
least A- by S&P and A3 by Moody's, (iii) 0.225% so long
as Senior Unsecured Debt of the Borrower shall be rated
at least BBB by S&P and Baa2 by Moody's, (iv) 0.35% so
long as Senior Unsecured Debt of the Borrower shall be
rated at least BBB- by S&P and Baa3 by Moody's and (v)
0.60% at any other time (including, without limitation,
any time that there shall be Senior Unsecured Debt of
the Borrower outstanding and not rated by both S&P and
Moody's); provided that if there shall be no Senior
Unsecured Debt of the Borrower outstanding at any time,
the Applicable Margin shall be determined by reference
to the most recent previously existing ratings of
Senior Unsecured Debt of the Borrower. Any change in
the Applicable Margin as provided above shall be
effective as of the date on which the rating change is
first announced by either S&P or Moody's and shall
apply until the date immediately preceding the date of
the announcement of the next such rating change."
(c) Section 2.04(a) of the Loan Agreement is
hereby amended to read in its entirety as follows:
"(a) Facility Fee. The Borrower agrees to pay to the
Administrative Agent, for the ratable accounts of the
Lenders, a facility fee (the "Facility Fee") on the
average daily Commitment of each Lender, whether used
or unused, from the date hereof, in the case of each
Lender that is signatory hereto, and from the effective
date specified in the Assignment and Acceptance
pursuant to which it became a Lender, in the case of
each other Lender, until the Commitment Termination
Date, at the rate of (i) 0.07% per annum so long as
Senior Unsecured Debt of the Borrower shall be rated at
least AA- by S&P and Aa3 by Moody's, (ii) 0.09% per
annum so long as Senior Unsecured Debt of the Borrower
shall be rated at least A- from S&P and A3 by Moody's,
(iii) 0.125% per annum so long as Senior Unsecured
Debt of the Borrower shall be rated at least BBB by
S&P and Baa2 by Moody's, (iv) 0.20% per annum so long
as Senior Unsecured Debt of the Borrower shall be rated
at least BBB- by S&P and Baa3 by Moody's and (v) 0.275%
per annum at any other time (including, without
limitation, any time that there shall be Senior
Unsecured Debt of the Borrower outstanding and not
rated by both S&P and Moody's); provided that if there
shall be no Senior Unsecured Debt of the Borrower
outstanding at any time, the Facility Fee shall be
determined by reference to the most recent previously
existing ratings of Senior Unsecured Debt of the
Borrower. Any change in the Facility Fee as provided
above shall be effective as of the date on which the
rating change is first announced by either S&P or
Moody's and shall apply until the date immediately
preceding the date of the announcement of the next such
rating change. The Facility Fee shall be payable
quarterly in arrears on the last Business Day of each
December, March, June and September, and on the
Commitment Termination Date."
(d) Section 2.05(b) of the Loan Agreement is hereby
amended to read in its entirety as follows:
"(b) Facility Termination. The Facility
shall be terminated on the date (the
"Commitment Termination Date") that is the
earlier of (x) November 1, 2000 and (y) the
date upon which the Borrower terminates in
whole the Commitments of the Lenders in
accordance with Section 2.05(a)."
(e) Section 8.07(a) of the Loan Agreement is hereby
amended by deleting the number "$6,666,666.66" therein and
substituting the number "$10,000,000.00" therefor.
(f) Schedule I to the Loan Agreement is hereby
amended and restated in its entirety as set forth on Annex A
hereto.
Section 2. Assignment and Acceptances. Notwithstanding
anything to the contrary contained in Section 8.07 to the Loan
Agreement, (i) the assignment of Commitments pursuant to the
Assignment and Acceptances executed and delivered by the Lenders
on the Amendment Closing Date in order to effect this Amendment
shall be permitted under the Loan Agreement and (ii) no
processing and recordation fee shall apply in connection with
such Assignment and Acceptances.
Section 3. Representations and Warranties. The Borrower
represents and warrants as of the date hereof that: (a) this
Amendment has been duly executed and delivered by the Borrower
and that this Amendment constitutes the Borrower's legal, valid
and binding obligation, enforceable against the Borrower in
accordance with its terms, (b) no Default has occurred and is
continuing and (c) the representations and warranties made or
deemed to have been made by the Borrower in Article IV of the
Loan Agreement are true and correct in all material respects on
and as of the date hereof (or, if any such representation or
warranty is expressly stated to have been made as of a specific
earlier date, as of such date). It shall be an Event of Default
for all purposes of the Loan Agreement if any of the
representations and warranties made herein shall be, or shall
prove to have been, false or misleading as of the time made in
any material respect.
Section 4. No Other Amendments or Consents. Except as
specifically provided in this Amendment, no other consents,
waivers or amendments are made or permitted hereby to the Loan
Agreement. All other terms and conditions of the Loan Agreement
remain in full force and effect and apply fully to this
Amendment.
Section 5. Effectiveness. This Amendment shall become
effective on October 31, 1995 (the "Amendment Closing Date");
provided, that the following conditions precedent to
effectiveness shall have been satisfied on or before the
Amendment Closing Date (including, without limitation, that each
document to be received by the Administrative Agent shall be in
form and substance satisfactory to the Administrative Agent):
(a) The Administrative Agent shall have received
counterparts of this Amendment, duly executed by the
Borrower, the Administrative Agent and the Lenders;
(b) The Administrative Agent shall have received all
Fees that are due and expenses (as provided in Section 8.04
of the Loan Agreement and as otherwise agreed between the
Borrower and the Administrative Agent, the Arranger or any
Lender) of the Administrative Agent, the Arranger and the
Lenders that are due to the extent such Fees and expenses
have been presented to the Borrower for payment;
(c) The Administrative Agent shall have received duly
executed copies of Assignment and Acceptances pursuant to
Section 8.07 of the Loan Agreement as are necessary to
effect this Amendment;
(d) The Administrative Agent shall have received a
copy of the articles of organization of the Borrower and
each amendment thereto, certified as of a recent date prior
to the Amendment Closing Date by the Secretary of State of
The Commonwealth of Massachusetts as being a true and
correct copy thereof;
(e) The Administrative Agent shall have received a
copy of (x) a certificate or certificates of the Secretary
of State of The Commonwealth of Massachusetts, dated as of a
recent date prior to the Amendment Closing Date, listing
the charter and all amendments thereto of the Borrower on
file in his or her office and certifying that (A) such
amendments are the only amendments to the Borrower's charter
on file in his or her office, and (B) the Borrower is duly
incorporated and in good standing under the laws of such
state and (y) a certificate of the Massachusetts Department
of Revenue as to the tax good standing of the Borrower under
the laws of The Commonwealth of Massachusetts (or a
certificate of the Treasurer of the Borrower regarding same
in form and substance reasonably satisfactory to the
Administrative Agent to be followed by a certificate of the
Massachusetts Department of Revenue as soon as practicable);
(f) The Administrative Agent shall have received a
certificate of the Borrower, signed on behalf of the
Borrower by its President or any Vice President and the
Clerk or any Assistant Clerk, dated the Amendment Closing
Date, certifying as to (A) the absence of any amendments to
the articles of organization of the Borrower since the date
of the Secretary of State's certificate referred to in
Section 5(e) hereof, (B) a true and correct copy of the
bylaws of the Borrower as in effect on the Amendment Closing
Date, (C) the due organization and good standing of the
Borrower as a corporation under the laws of its state of
incorporation, and the absence of any proceeding for the
dissolution or liquidation of the Borrower, (D) the truth in
all material respects of the representations and warranties
contained herein, (E) the absence of any event occurring and
continuing, or resulting from the Borrowing(s) (if any), on
the Amendment Closing Date that constitutes a Default, (F)
the adoption of resolutions by the Executive Committee of
the Board of Directors of the Borrower in the form attached
thereto authorizing and approving this Amendment, and that
such resolutions have not been rescinded, modified or
amended and remain in full force and effect, (G) other
documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this
Amendment, and (H) the names and true signatures of the
officers of the Borrower authorized to sign this Amendment
and the other documents to be delivered hereunder;
(g) The Administrative Agent shall have received a
favorable opinion of Ropes & Gray, counsel to the Borrower,
in substantially the form of Exhibit A hereto, given upon
the express instructions of the Borrower, and as to such
other matters as any Lender through the Administrative Agent
may reasonably request; and
(h) The Administrative Agent shall have received such
other documents as the Administrative Agent or any Lender
may reasonably request.
Upon such effectiveness, the Administrative Agent shall promptly
notify the Borrower and each of the Lenders of such
effectiveness.
Section 6. Counterparts. This Amendment may be executed in
any number of counterparts, each of which shall be identical and
all of which, when taken together, shall constitute one and the
same instrument, and any of the parties hereto may execute this
Amendment by signing any such counterpart.
Section 7. Binding Effect. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
Section 8. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of
New York.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the day and year first
above written.
REEBOK INTERNATIONAL LTD.,
as Borrower
By: /s/ Leo S. Vannoni
Name: Leo S. Vannoni
Title: Treasurer
CREDIT SUISSE, as Administrative Agent
By: /s/ Heather J. Riekenberg
Name: Heather J. Riekenberg
Title: Associate
By: /s/ Ira Lubinsky
Name: Ira Lubinsky
Title: Associate
Lenders:
CREDIT SUISSE
By: /s/ David W. Kratovil
Name: David W. Kratovil
Title: Member of Senior Management
By: /s/ Robert B. Potter
Name: Robert B. Potter
Title: Member of Senior Management
ABN AMRO BANK N.V.
By: /s/ James E. Davis
Name: James E. Davis
Title: Vice President
By: /s/ Charles J. Wahle
Name: Charles J. Wahle
Title: Assistant Vice President
CIBC, INC.
By: /s/ Christopher P. Kleczkowski
Name: Christopher P. Kleczkowski
Title: Vice President
CITIBANK, N.A.
By: /s/ Robert D. Wetrus
Name: Robert D. Wetrus
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Robert Ivosevich
Name: Robert Ivosevich
Title: Senior Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: /s/ Robert Ivosevich
Name: Robert Ivosevich
Title: Authorized Signatory
ISTITUTO BANCARIO SAN PAOLO DI TORINO
By: /s/ Gerard M. McKenna
Name: Gerard M. McKenna
Title: Vice President
By: /s/ Wendell Jones
Name: Wendell Jones
Title: Vice President
STANDARD CHARTERED BANK
By: /s/ David D. Cutting
Name: David D. Cutting
Title: Senior Vice President
THE BANK OF TOKYO TRUST COMPANY
By: /s/ Michael J. Cronin
Name: Michael J. Cronin
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Richard D. Hill, Jr.
Name: Richard D. Hill, Jr.
Title: Director
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ David L. Gaines
Name: David L. Gaines
Title: Senior Vice President
Annex A
SCHEDULE I
Lenders and Commitments
Lender Commitment
CREDIT SUISSE $22,500,000.00
- - Domestic Lending Office:
12 East 49th Street
New York, New York 10017
- - Notices:
Relationship: Lynn Allegaert
12 East 49th Street
New York, New York 10017
Telephone: (212) 238-5412
Telecopy: (212) 238-5439
Administration: Julie Kingsbury
Credit Suisse/Ref: Reebok
12 East 49th Street
New York, New York 10017
Telephone: (212) 238-5063
Telecopy: (212) 238-5073
- Eurodollar Lending Office:
Credit Suisse New York Branch
c/o Credit Suisse
12 East 49th Street
New York, New York 10017
- Remittance Instructions:
Credit Suisse
Federal Reserve Bank of New York
ABA # 0260-0917-9
For Further Credit to: Credit Suisse
New York Account # 90499602
Attention: Loan Department
Re: Reebok International Ltd.
Lender Commitment
ABN AMRO BANK N.V. $19,000,000.00
- - Domestic Lending Office:
ABN AMRO Bank N.V.
Cayman Islands Branch
c/o ABN AMRO New York
335 Madison Avenue
New York, NY 10017
- - Notices:
Relationship: James E. Davis
ABN AMRO Bank N.V.
53 State Street
Boston, MA 02109
Telephone: (617) 723-1450
Telecopy: (617) 523-2277
Telex: 216308
Administration: Donna M. Connolly
ABN AMRO Bank N.V.
53 State Street
Boston, MA 02109
Telephone: (617) 723-1450
Telecopy: (617) 523-2277
Telex: 216308
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
ABN AMRO Bank N.V.
335 Madison Avenue
New York, NY 11017
ABA # 026 009580
Capital ABN AMRO Bank N.V. Boston
Account # 651 0010 27841
Re: Reebok International Ltd.
Lender Commitment
CITIBANK, N.A. $19,000,000.00
- - Domestic Lending Office:
Citibank, N.A.
399 Park Avenue
New York, NY 10043
- - Notices:
Relationship: Imran Kuresky/Robert Parr
399 Park Avenue
8th Floor
New York, NY 10043
Telephone: (212) 559-2649
Telecopy: (212) 793-3053
Administration: Andrea Calamaras
399 Park Avenue
12th Floor, Zone 16
New York, NY 10043
Telephone: (212) 559-4221
Telecopy: (212) 793-3963
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
Credit to Citibank, N.A.
111 Wall St.
New York, NY 10043
ABA # 0210-0008-9
WGC Loan Payment
Account #4054-8046
Re: Reebok International Ltd.
Lender Commitment
CIBC, INC. $16,500,000.00
- - Domestic Lending Office:
Canadian Imperial Bank of Commerce
425 Lexington Ave.
New York, NY 10017
- - Notices:
Relationship: Christopher P. Kleczkowski
Canadian Imperial Bank of Commerce
425 Lexington Ave.
New York, NY 10017
Telephone: (212) 856-3560
Telecopy: (212) 856-3991
Administration: Mike Dorr
2727 Paces Ferry Road, Suite 1200
Atlanta, GA 30339
Telephone: (404) 319-4815
Telecopy: (404) 319-4950
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
(VIA FED)
Morgan Guaranty
60 Wall St.
New York, NY 10260
ABA # 021-000-238
Favor of CIBC
Acct. # 630-00-480
Lender Commitment
CREDIT LYONNAIS $16,500,000.00
NEW YORK BRANCH/CAYMAN ISLAND BRANCH
- - Domestic Lending Office:
Credit Lyonnais New York Branch
1301 Ave. of the Americas
New York, NY 10019
- - Notices:
Relationship: Bruce A. Bernier
Assistant Vice President
Credit Lyonnais
53 State Street
Boston, MA 02109
Telephone: (617) 723-2615
Telecopy: (617) 723-4803
Administration: Lisa L. Leahy
Credit Lyonnais
53 State Street
Boston, MA 02109
Telephone: (617) 723-2615
Telecopy: (617) 723-4803
- - Eurodollar Lending Office:
Credit Lyonnais Cayman Island Branch
c/o Credit Lyonnais New York Branch
1301 Ave. of the Americas
New York, NY 10019
- - Remittance Instructions:
F/O Credit Lyonnais New York Branch
ABA # 026008073
Attn: Loan Servicing
Re: Reebok International Ltd.
Lender Commitment
WACHOVIA BANK OF GEORGIA, N.A. $16,500,000.00
- - Domestic Lending Office:
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, GA 30303
- - Notices:
Relationship: Kay Reedy
Linda M. Harris
U.S. Corporate Division
Wachovia Corporate Services, Inc.
191 Peachtree Street, N.E. MC 373
Atlanta, GA 30303
Telephone: (404) 332-5262
Telecopy: (404) 332-6898
Telex: 542553
Answerback: WACH FEX-ATL
Administration: Gwen Miles
U.S. Corporate Division
Wachovia Corporate Services, Inc.
191 Peachtree Street, N.E. MC 373
Atlanta, GA 30303
Telephone: (404) 332-5355
Telecopy: (404) 332-1118
Telex: 542553
Answerback: WACH FEX-ATL
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
Wachovia Bank of Georgia, N.A.
Atlanta, GA
ABA # 061-000-010
Account # 18-171-498
Attn: Loan Specialist
Lender Commitment
THE BANK OF TOKYO TRUST COMPANY $10,000,000.00
- - Domestic Lending Office:
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
New York, NY 10116-3138
- - Notices:
Relationship: Michael J. Cronin
Vice President and Manager
125 Summer Street, Suite 1170
Boston, Ma 02110
Telephone: (617) 330-7410
Telecopy: (617) 330-7422
Adminstration: Lucille Alvarez
Harborside Financial Center
34 Exchange Place, Plaza 3
Jersey City, NJ 07311
Telephone: (201) 413-8052
Telecopy: (212) 732-1678
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
The Bank of Tokyo Trust Company
New York, NY
ABA # 026-00968 7
Attn: Loan Administration Department
Acct # : 97770477
Re: Reebok International Ltd.
Lender Commitment
THE FIRST NATIONAL BANK OF BOSTON $10,000,000.00
- - Domestic Lending Office:
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
- - Notices:
Relationship: Richard D. Hill, Jr.
100 Federal Street
Boston, MA 02110
Telephone: (617) 434-4080
Telecopy: (617) 434-0637
Administration: Angela Moore
Commercial Loan Service
100 Rust Craft Road
Dedham, MA 02026
Telephone: (617) 467-2292
Telecopy: (617) 467-2276
- - Eurodollar Lending Office:
(same as domestic lending office)
- - Remittance Instructions:
Bank of Boston
100 Federal Street
Boston, MA
ABA # 011-000-390
Attn: Commercial Loan Services
Admin # 42, Angela Moore
For: Reebok
Lender Commitment
ISTITUTO BANCARIO SAN PAOLO DI TORINO SPA $10,000,000.00
- - Domestic Lending Office:
Istituto Bancario San Paolo di Torino SPA
245 Park Avenue, 35th Floor
New York, NY 10167
Telephone: (212) 692-3000
Telecopy: (212) 599-5303
Telex No: 220045 SPAOL UR
- - Notices:
Relationship: Luca Sacchi
245 Park Avenue, 35th Floor
New York, NY 10167
Telephone: (212) 692-3130
Telecopy: (212) 599-5303
Administration: Luca Sacchi
245 Park Avenue, 35th Floor
New York, NY 10167
Telephone: (212) 692-3130
Telecopy: (212) 599-5303
- - Eurodollar Lending Office:
Istituto Bancario San Paolo di Torino Bahamas SPA
245 Park Avenue, 35th Floor
New York, NY 10167
Telephone: (212) 692-3000
Telecopy: (212) 599-5303
- - Remittance Instructions:
First Chicago International
New York
ABA # 026-009-797
San Paolo Bank
Acct. # No: 1002209
Lender Commitment
STANDARD CHARTERED BANK $10,000,000.00
- - Domestic Lending Office:
Standard Chartered Bank
160 Water Street
New York, NY 10038
Telephone: (212) 269-3100
Telecopy: (212) 612-0225
Telex No: 232120
Answerback: SCBNYUW
- - Notices:
Relationship: David Godwin
160 Water Street
New York, NY 10038
Telephone: (212) 612-0546
Telecopy: (212) 612-0225
Administration: David Godwin
160 Water Street
New York, NY 10038
Telephone: (212) 612-0546
Telecopy: (212) 612-0225
- - Eurodollar Lending Office
(same as domestic lending office)
- - Remittance Instructions:
Standard Chartered Bank
160 Water Street
New York, NY 10038
ABA # 0260-0256-1
Attn: Loan Accounting A/C # 1703488
Re: Reebok Int'l Ltd.
REEBOK INTERNATIONAL LTD.
(Amounts in Thousands, Except Per Share Data)
<TABLE>
Exhibit 11 - Statement RE: Computation of Per Share Earnings
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ _________________
1995 1994 1995 1994
____ ____ ____ ____
<S> <C> <C> <C> <C>
Primary
________________________________
Average shares outstanding 77,618 81,968 79,264 82,626
Net effect of dilutive stock options 1,686 2,123 1,338 1,978
_______ _______ _______ _______
Total 79,304 84,091 80,602 84,604
======= ======= ======= =======
Net income $76,202 $84,655 $163,523 $201,452
======= ======= ======= =======
Per share amount $ 0.96 $ 1.01 $ 2.03 $ 2.38
======= ======= ======= =======
Fully Diluted
________________________________
Average shares outstanding 77,618 81,968 79,264 82,626
Net effect of dilutive stock options 1,686 2,228 1,338 2,228
_______ _______ _______ _______
Total 79,304 84,196 80,602 84,854
======= ======= ======= =======
Net income $76,202 $84,655 $163,523 $201,452
======= ======= ======= =======
Per share amount $ 0.96 $ 1.01 $ 2.03 $ 2.37
======= ======= ======= =======
</TABLE>
<PAGE>
Exhibit 12
REEBOK INTERNATIONAL LTD.
(Amounts in Thousands)
Exhibit 12 - Statement RE: Computation of Ratio of Earnings to
Fixed Charges
Nine Months Ended
September 30, September 30,
1995 1994
____________ ____________
Earnings
Pretax Income $262,476 $324,922
Add:
Interest on indebtedness 19,611 13,757
Amortization of debt
discount issuance costs 628 647
Portion of rent representative
of the interest factor 7,188 7,218
_______ _______
Income as adjusted $289,903 $346,544
======= =======
Fixed Charges
Interest on indebtedness $ 19,611 $ 13,757
Amortization of debt discount
and issuance costs 628 647
Portion of rent representative
of the interest factor 7,188 7,218
_______ _______
Fixed charges $ 27,427 $ 21,622
======= =======
Ratio of earnings to fixed
charges 10.6 16.0
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1995 CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT
OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000770949
<NAME> REEBOK INTERNATIONAL LTD.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 104,468
<SECURITIES> 0
<RECEIVABLES> 752,991
<ALLOWANCES> 51,617
<INVENTORY> 651,004
<CURRENT-ASSETS> 1,562,367
<PP&E> 336,602
<DEPRECIATION> 144,515
<TOTAL-ASSETS> 1,902,008
<CURRENT-LIABILITIES> 627,727
<BONDS> 254,956
<COMMON> 1,127
0
0
<OTHER-SE> 977,451
<TOTAL-LIABILITY-AND-EQUITY> 1,902,008
<SALES> 2,730,150
<TOTAL-REVENUES> 2,730,150
<CGS> 1,644,079
<TOTAL-COSTS> 1,644,079
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,239
<INCOME-PRETAX> 262,476
<INCOME-TAX> 98,953
<INCOME-CONTINUING> 163,523
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 163,523
<EPS-PRIMARY> 2.03
<EPS-DILUTED> 2.03
</TABLE>
