SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1997
Commission file number 1-9149
THE INTERLAKE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3428543
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
550 Warrenville Road, Lisle, Illinois 60532-4387
(Address of Principal Executive Offices) (Zip Code)
(630) 852-8800
(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
As of July 15, 1997, 23,151,792 shares of the Registrant's common stock were
outstanding.
THE INTERLAKE CORPORATION
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following consolidated financial statements as of June 29,
1997 and for the periods ended June 29, 1997 and June 30, 1996
are unaudited, but include all adjustments which the Registrant
considers necessary for a fair presentation of results of
operations and financial position for the applicable periods.
Except as noted, all adjustments are of a normal recurring nature.
<TABLE>
THE INTERLAKE CORPORATION
Consolidated Statement of Operations
For the Periods Ended
June 29, 1997 and June 30, 1996
(In thousands except per share amounts)
Second Quarter Six Months
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net Sales from Continuing Operations $185,845 $174,651 $356,019 $339,873
Cost of Products Sold 144,745 134,971 276,577 262,680
Selling & Administrative Expense 25,080 25,467 49,515 50,263
Operating Profit 16,020 14,213 29,927 26,930
Non-operating (Income) Expense (78) (1,064) (533) (1,279)
Earnings Before Interest & Taxes 16,098 15,277 30,460 28,209
Interest Expense 11,421 11,760 22,961 23,663
Interest Income (621) (339) (1,389) (829)
Income from Continuing Operations Before Taxes,
Minority Interest, Extraordinary Loss & Accounting
Change 5,298 3,856 8,888 5,375
Provision for Income Taxes 3,364 2,168 5,609 3,590
Income from Continuing Operations Before Minority
Interest, Extraordinary Loss & Accounting Change 1,934 1,688 3,279 1,785
Minority Interest in Net Income of Subsidiaries 1,266 1,080 2,530 2,043
Income (Loss) from Continuing Operations Before
Extraordinary Loss & Accounting Change 668 608 749 (258)
Income from Discontinued Operations, Net of Income
Taxes - 1,184 1,484 2,494
Extraordinary Loss, Net of Income Taxes - - (1,482) -
Cumulative Effect of Change in Accounting Principle - - - 1,610
Net Income $ 668 $ 1,792 $ 751 $ 3,846
Net Income (Loss) Per Share of Common Stock:
Continuing Operations Before Extraordinary Loss
& Accounting Change $ .02 $ .01 $ .02 $ (.01)
Discontinued Operations, Net of Income Taxes - .04 .05 .08
Extraordinary Loss, Net of Income Taxes - - (.05) -
Cumulative Effect of Change in
Accounting Principle - - - .05
Net Income $ .02 $ .05 $ .02 $ .12
Average Shares Outstanding 32,319 31,456 32,319 31,456
</TABLE>
<TABLE>
THE INTERLAKE CORPORATION
Consolidated Balance Sheet
June 29, 1997 and December 29, 1996
(Dollars in thousands)
Assets 1997 1996
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 40,289 $ 70,228
Receivables, less allowances for doubtful accounts of
$1,950 at June 29, 1997 and $2,037 at December 29, 1996 124,281 128,990
Inventories - Raw materials and supplies 19,405 22,144
- Semi-finished and finished products 41,054 37,842
Other current assets 13,687 12,893
Total Current Assets 238,716 272,097
Other Assets 44,878 40,527
Property, Plant and Equipment, at cost 392,494 387,546
Less - Depreciation and amortization (247,334) (242,447)
145,160 145,099
Total Assets $428,754 $457,723
Liabilities and Shareholders' Equity (Deficit)
Current Liabilities:
Accounts payable $ 63,489 $ 65,366
Accrued liabilities 29,223 33,921
Interest payable 10,584 10,824
Accrued salaries and wages 13,904 15,675
Income taxes payable 32,252 29,591
Debt due within one year 3,765 3,759
Total Current Liabilities 153,217 159,136
Long-Term Debt 375,785 395,060
Other Long-Term Liabilities and Deferred Credits 90,558 92,506
Preferred Stock - 2,000,000 shares authorized
Convertible Exchangeable Preferred Stock - Redeemable,
par value $1 per share, issued 40,000 shares (liquidation
value $62,310 at June 29, 1997 and $59,626 at
December 29, 1996) 39,155 39,155
Shareholders' Equity (Deficit):
Common stock, par value $1 per share, authorized
100,000,000 shares, issued 23,228,695 shares 23,229 23,229
Additional paid-in capital 2,296 3,741
Cost of common stock held in treasury (76,903 shares at
June 29, 1997 and 115,696 shares at December 29, 1996) (1,794) (2,700)
Accumulated deficit (237,204) (237,955)
Unearned compensation (3,882) (5,102)
Accumulated foreign currency translation adjustments (12,606) (9,347)
(229,961) (228,134)
Total Liabilities and Shareholders' Equity (Deficit) $428,754 $457,723
</TABLE>
<TABLE>
THE INTERLAKE CORPORATION
Consolidated Statement of Cash Flows
For the Periods Ended June 29, 1997 and June 30, 1996
(In thousands)
1997 1996
<S> <C> <C>
Cash flows from (for) operating activities:
Net income $ 751 $ 3,846
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 9,851 10,294
Discontinued operations (1,484) -
Extraordinary loss 1,482 -
Cumulative effect of change in accounting principle - (1,876)
Other operating adjustments 1,232 822
(Increase) decrease in working capital:
Accounts receivable 4,269 159
Inventories (634) (1,068)
Other current assets (810) (842)
Accounts payable (3,057) (2,914)
Other accrued liabilities (7,851) (10,247)
Income taxes payable 2,601 73
Total working capital change (5,482) (14,839)
Net cash provided (used) by operating activities 6,350 (1,753)
Cash flows from (for) investing activities:
Capital expenditures (9,918) (10,013)
Proceeds from disposal of PP&E 70 135
Acquisitions (4,853) (310)
Divestitures 1,703 -
Other investment flows 194 266
Net cash provided (used) by investing activities (12,804) (9,922)
Cash flows from (for) financing activities:
Retirements of long-term debt (21,682) (2,028)
Debt retirement costs (1,504) -
Other financing flows 345 1,005
Net cash provided (used) by financing activities (22,841) (1,023)
Effect of exchange rate changes (644) 342
Increase (Decrease) in cash and cash equivalents (29,939) (12,356)
Cash and cash equivalents, beginning of period 70,228 41,562
Cash and cash equivalents, end of period $ 40,289 $ 29,206
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Financial Statements
The interim information furnished in these financial statements is
unaudited.
The Registrant and its subsidiaries are referred to herein on a
consolidated basis as the Company.
Note 2 - Discontinued Operations
In the first quarter of 1997, the Company received additional
proceeds from the October, 1996 sale of its packaging
businesses resulting in income from discontinued operations of
$1.5 million, net of applicable income taxes.
Note 3 - Extraordinary Loss
In the first quarter of 1997, the Company repurchased $14.5
million in principal amount of its 12% Senior Notes at a premium
of $1.5 million. In addition, deferred debt issuance costs of $.3 million
related to the repurchased Notes were written off. An extraordinary
loss of $1.5 million, net of applicable income taxes, was reported
in the quarter.
Note 4 - Accounting Change
In the second quarter of 1996, the Company changed its method of
amortizing unrecognized actuarial gains and losses with respect to
its postretirement benefits to amortize them over a five-year
period. The method previously used was to amortize any
unrecognized gain or loss in excess of 10% of the Accumulated
Postretirement Benefit Obligation amount over 15 years. This
change was accounted for as a change in accounting principle, the
cumulative effect of which was recorded as of the beginning of
1996. As a result, net income for the first quarter of 1996 was
increased by $1.6 million for continuing operations and
$.3 million for discontinued operations.
Note 5 - Computation of Common Share Data
The weighted average number of common shares outstanding used to
compute net income per share was 32,319,000 for 1997 and
31,456,000 for 1996.
Note 6 - Income Taxes
The effective tax rate on income from continuing operations was
63.1% and 66.8% for the 1997 and 1996 six month periods,
respectively. Because most of the Company's interest expense is
borne in the United States at the parent company, the
Company had substantial taxable income in foreign and state
jurisdictions. Taxes due to foreign authorities were not offset
by U.S. federal income tax benefits.
Note 7 - Acquisitions
In the first quarter of 1997, the Company acquired the assets of
ARC Metals Inc. for $5.0 million in cash and a promissory note in
the amount of $2.8 million.
Note 8 - Environmental Matters
In connection with the reorganization of the old Interlake, Inc.
(now Acme Steel Company ("Acme")) in 1986, the Company, then
newly-formed, indemnified Acme against certain environmental
liabilities relating to properties which had been shut down or
disposed of by Acme's iron and steel division prior to the 1986
reorganization. As of June 29, 1997, the Company's reserves for
environmental liabilities totaled $1.6 million, most of which
relates to the Acme indemnification.
Based on its current estimate of its potential environmental
liabilities, including all contingent liabilities, individually
and in the aggregate, asserted and unasserted, the Company
believes that, subject to the uncertainty with respect to the
Duluth Site discussed below, the costs of environmental matters
have been fully provided for or are unlikely to have a material
adverse effect on the Company's business, future results of
operations, liquidity or financial condition. In arriving at its
current estimate of its potential environmental liabilities, the
Company has relied upon the estimates and analysis of its
environmental consultants and legal advisors, as well as its own
evaluation, and has considered: the probable scope and cost of
investigations and remediations for which the Company expects to
have liability; the likelihood of the Company being found liable
for the claims asserted or threatened against it; and the risk of
other responsible parties not being able to meet their obligations
with respect to clean-ups. The Company's estimate has not been
discounted to reflect the time-value of money, although a
significant delay in implementation of certain of the remedies
thought to be probable could result in cost estimates increasing
due to inflation.
In May 1994, the Company instituted an action seeking a
declaratory judgment against and recoveries from insurers under
policies covering nearly 30 years. This action has been stayed
pending appeal of a ruling that the Company's notice to the
insurers of environmental claims in connection with the Duluth
Site was late. The Company has entered into settlement agreements
with certain of the defendants in the litigation pursuant to which
the Company has recovered certain amounts.
The Company's current estimates of its potential environmental
liabilities are subject to considerable uncertainty due to
continuing uncertainty surrounding one of the sites for which the
Company is responsible pursuant to its indemnity of Acme --
namely, the Superfund site on the St. Louis River in Duluth,
Minnesota (the "Duluth Site"). These uncertainties primarily
relate to whether remediation of certain underwater sediments will
be required and, if so, the nature of any remedy. In the light of
these uncertainties, the Company's estimates could be subject to
change in the future. The Minnesota Pollution Control Agency
("MPCA") has requested the Company to undertake an investigation
and to evaluate remedial alternatives for the underwater
sediments. The Company's consultants have substantially completed
their initial investigation. Based on this investigation, the
Company is reviewing possible remedial alternatives for the
underwater sediments. The Company believes that, until this
review is completed, any estimate of remediating the underwater
sediments will not be meaningful. The Company also continues to
believe that the range of reasonable remedial alternatives for the
underwater sediments includes that of taking no action, thereby
avoiding the disruption of the natural remediation of the
underwater sediments which has been underway for over 30 years.
Thus, the Company believes the minimum of the range of costs of
remedial alternatives to be zero, and to date has made provision
for only the investigation, and not for the clean-up, of
underwater sediments. If a clean-up is ultimately determined to
be appropriate, the range of costs would likely be dependent in
part upon the extent to which the remedy selected called for the
removal and/or treatment of contaminated sediments and could run
from several millions to tens of millions of dollars.
In March 1996, the citizens' board of the MPCA named the
successors to certain coal tar processors at the Duluth Site (the
"tar companies") as additional responsible parties for a portion
of the underwater sediments operable unit. The Company believes
that the tar companies are the cause of a significant portion of
the underwater contamination at the site, while the tar companies
to date have maintained that their contributions were minimal.
The Company's current expectation is that cash outlays related to
its outstanding reserves for environmental matters largely will be
made during 1997 and 1998. If the Company ultimately determines
that additional charges are necessary in connection with the
underwater sediments at the Duluth Site, the Company believes it
is likely that cash outlays would occur near the end of the
decade, or later.
Note 9 - Commitments and Contingencies
The Company is engaged in certain routine litigation arising in
the ordinary course of business. Based upon its evaluation of
available information, management does not believe that any such
matters are likely, individually or in the aggregate, to have a
material adverse effect upon the Company's business, future
results of operations, liquidity or financial condition.
On July 9, 1990, the City of Toledo, Ohio (the "City"), brought an
action (the "Primary Action") in federal district court (the
"Court") in Toledo against the Company, Acme (together with the
Company, the "Interlake defendants"), Beazer Materials and
Services, Inc., succeeded by Beazer East, Inc. ("Beazer") and
Toledo Coke Corporation ("Toledo Coke") in connection with the
alleged contamination of a 1.7 acre parcel of land the City had
purchased from Toledo Coke for purposes of widening a road.
Pursuant to a memorandum of understanding dated September 30,
1996, among Beazer, the City, and the Toledo-Lucas County Port
Authority (the "Port Authority"), setting forth certain
obligations of Beazer, the City and the Port Authority for the
completion and funding of the road widening project and related
environmental work, the City, Beazer and the Interlake defendants
entered into a settlement agreement pursuant to which the City
released the Interlake defendants and Beazer from, and agreed to
dismiss with prejudice, all claims in the Primary Action. On
October 10, 1996, the Court entered a consent order dismissing
with prejudice all claims in the Primary Action, leaving only
pending cross-claims between Beazer and the Interlake defendants
at issue in the litigation. In May 1997, Beazer and the Interlake
defendants reached a tentative settlement of their cross-claims,
which if finalized would not have a material effect on the
financial condition of the Company.
On March 10, 1995, SC Holdings, Inc., a subsidiary of Waste
Management International Plc ("SC Holdings"), filed a complaint in
federal district court in Trenton, New Jersey, against Hoeganaes
Corporation, an Interlake subsidiary, and numerous other
defendants, seeking to recover amounts expended or to be expended
in the remediation of the Cinnaminson Groundwater Contamination
Site in Burlington County, New Jersey. SC Holdings claims to have
spent approximately $10 million in investigation and remediation,
and purportedly estimates the total costs of investigation and
remediation to be approximately $60 million. The site is a
broadly-defined Superfund site which encompasses a landfill
formerly operated by SC Holdings and may also include the
groundwater under Hoeganaes' Riverton, New Jersey facility.
Hoeganaes may have shipped certain materials to the landfill. SC
Holdings alleges that Hoeganaes has liability as both an
owner/operator and a generator. The parties to the litigation are
presently engaged in a court-supervised non-binding allocation
process which is presently expected to be completed in late 1997.
The Company believes Hoeganaes has meritorious defenses to both of
the alleged bases of liability.
Note 10 - Possible Sale of Handling Businesses
As previously announced, the Company is presently exploring the
sale of all of its Handling businesses.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Second Quarter 1997 Compared with Second Quarter 1996
Net sales from continuing operations of $185.8 million in the
quarter ended June 29,1997 compared with sales of $174.7 million
in the prior year period. Sales in the Engineered Materials
segment grew by 15% to $77.4 million, due to increased sales of
metal powder at Special Materials and higher fabrication sales at
Aerospace Components. In the Handling segment, sales increased 1%
to $108.4 million. Operating profit increased 13% to $16.0
million, from $14.2 million in 1996. Income from continuing
operations was $.7 million, compared with $.6 million in the 1996
quarter. Net income of $.7 million for the 1997 quarter compared
to $1.8 million in 1996. The 1996 quarter included income from
discontinued operations of $1.2 million.
Segment Results
The Company's businesses are organized into two segments:
Engineered Materials and Handling. Businesses in Engineered
Materials are Special Materials (ferrous metal powders) and
Aerospace Components (precision aerospace component fabrication
and aviation repair). Businesses in Handling are North American,
European and Asia Pacific handling operations.
Second Quarter Segment Results
Net Sales Operating Profit
1997 1996 1997 1996
(in millions)
Engineered Materials
Special Materials $ 50.7 $ 43.8
Aerospace Components 26.7 23.7
77.4 67.5 $13.6 $11.0
Handling 108.4 107.2 2.5 4.2
Corporate Items (.1) (1.0)
Consolidated Totals $185.8 $174.7 $ 16.0 $ 14.2
Engineered Materials
Sales in the Engineered Materials segment for the second quarter
increased 15% to $77.4 million, due to stronger metal powder sales
at Special Materials and higher fabrication sales at Aerospace
Components.
Special Materials' metal powder sales increased 16% compared with
the same period last year, reflecting increased industry demand.
Earnings increased 16% in the quarter as flowthrough from the
additional volume was somewhat offset by lower selling prices.
Aerospace Components' sales improved 13% compared with the 1996
period, as shipments increased on several engine programs in the
fabricated components business. Profit for the quarter increased
39%, reflecting additional volume and lower manufacturing costs in
the fabrication business.
Order backlogs in this segment were $176.7 million at the end of
the quarter, up from $151.3 million at the end of the second
quarter of 1996. Special Materials' backlog, which is generally
short term in nature, was up 11%. Aerospace Components' backlog
increased 18%, to a record level, with new and follow-on orders on
a number of commercial, military and space programs.
Handling
Second quarter sales in the Handling segment increased 1% to $108.4
million, due mainly to higher sales in the Asia Pacific region.
Lower prices were partially offset by higher volume in North
America and Europe leading to a 1% decline in sales at each
location. Sales in the Asia Pacific region increased 14% due
mainly to higher shipments within Australia.
Handling's profit declined 40% compared with the second quarter of
1996. North American profit was down 73% as a result of lower
prices which were somewhat mitigated by higher volume. European
profits improved 75% as lower steel costs, reduced selling and
administrative costs and higher volume more than offset lower
prices. Changes in exchange rates did not have a material impact
on profits during the quarter.
Order backlogs in this segment were $121.7 million at the end of
the second quarter, up 30% from $93.9 million at the end of the
second quarter of 1996. Backlog at North America increased 12% and
Europe 10%, while Asia Pacific was up 88% to a record level.
First Half 1997 Compared with First Half 1996
For the first six months of 1997, net sales from continuing
operations of $356.0 million were up 5% , compared with net sales
of $339.9 million in the 1996 period. Sales in the Engineered
Materials segment grew by 16% to $150.2 million, due to increased
sales of metal powder at Special Materials and higher fabrication
sales at Aerospace Components. In the Handling segment, sales
declined 2% to $205.8 million, due to lower sales in North America
and Europe somewhat offset by higher sales in Asia Pacific.
Operating profit increased 11% to $29.9 million, from $26.9 million
in 1996. Income from continuing operations was $.7 million,
compared with a loss of $.3 million in the 1996 period. Selling,
general and administrative expenses were 13.9% of sales for the
first half of 1997 as compared to 14.8% in the 1996 period. Net
income of $.8 million, or $.02 per share compared, with net income
of $3.8 million or $.12 per share for the 1996 period. Net income
in the 1997 period included income from discontinued operations of
$1.5 million and an extraordinary loss of $1.5 million on the early
retirement of a portion of the Company's debt. Net income in the
first half of 1996 included $2.5 million income from discontinued
operations and a $1.6 million benefit from the cumulative effect of
a change in accounting principle.
Segment Results
First Half Segment Results
Net Sales Operating Profit
1997 1996 1997 1996
(in millions)
Engineered Materials
Special Materials $101.2 $ 87.1
Aerospace Components 49.0 42.1
150.2 129.2 $25.8 $19.8
Handling 205.8 210.7 4.6 8.2
Corporate Items (.5) (1.1)
Consolidated Totals $356.0 $339.9 $29.9 $26.9
Engineered Materials
Sales in the Engineered Materials segment for the first half of
1997 increased 16% to $150.2 million, due to stronger metal powder
sales at Special Materials and higher fabrication sales at
Aerospace Components. Profit for the segment increased 30%.
Special Materials' metal powder sales increased 16% compared with
the same period last year, reflecting increased industry demand.
Profits increased 25% for the first half of 1997 as flowthrough
from the additional volume was partially offset by lower prices.
Aerospace Components' sales improved 16% compared with the 1996
period, as shipments increased on several engine programs in the
fabricated components business. Profit for the first half increased
30%, reflecting additional volume and lower manufacturing costs.
Handling
Sales in the Handling segment for the first half of 1997 declined
2% to $205.8 million, due mainly to lower prices in North America
and Europe partially offset by higher volumes in North America and
Asia Pacific. Lower prices more than offset higher volume in North
America and, as a result, sales declined 6%. Sales in Europe were
down 3% because of lower prices and volumes. Sales in the Asia
Pacific region increased 11% due mainly to higher shipments
within Australia.
Handling's profit declined 44% compared with the first half of
1996. North American profit declined 63% because of lower selling
prices and a less profitable mix of business partially offset by
higher volume and lower costs. European profits improved 80% as
lower steel costs and reduced selling and administrative costs were
somewhat offset by lower prices. Changes in exchange rates did not
have a material effect on profits during the period.
Discontinued Operations
In the first quarter of 1997, the Company received additional
proceeds from the October 1996 sale of its packaging
businesses resulting in income from discontinued operations of $1.5
million, net of applicable income taxes.
Extraordinary Loss
An extraordinary loss of $1.5 million, net of applicable income
taxes, was recorded in the first quarter of 1997 for the premium
incurred and the write-off of deferred debt issuance costs related
to the repurchase and early retirement of $14.5 million in
principal amount of the Company's 12% Senior Notes.
Financial Condition
The Company's total debt at the end of the second quarter was
$379.6 million, down $19.3 million from year-end 1996. Cash
totaled $40.3 million at the end of the quarter, compared with
$70.2 million at the end of 1996, principally due to the repurchase
of $14.5 million of 12% Senior Notes in the open market, the
acquisition of ARC Metals by Special Materials, the repayment of
bank debt, increased working capital requirements and capital
expenditures. Capital expenditures of $9.9 million during the
first half of 1997 were comparable with capital spending in the
1996 period. The Company anticipates that 1997 capital spending
will be approximately $25.0 million.
Under its bank credit agreement, the Company has available
revolving facilities of up to an additional $22.1 million over the
June 29, 1997 revolving indebtedness. If current levels of
performance are maintained, the Company anticipates it will be in
compliance with the covenants under its bank credit agreement. The
Company believes that it will have adequate liquidity to meet its
debt service and operating requirements in 1997, based on expected
operating cash flow, cash on hand, and the availability of
additional revolver borrowings under the Company's bank credit
agreement.
Sale of Handling Businesses
As previously announced, the Company is presently exploring the
sale of all of its Handling businesses.
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The nature of the Company's business is such that it is regularly
involved in legal proceedings incidental to its business. None of
these proceedings is material within the meaning of regulations of
the Securities and Exchange Commission.
The Company is a party in certain litigation and a proceeding
before a governmental agency which relate to the contamination of
the environment. These matters are described in Note 8 and Note 9
of Notes to Consolidated Financial Statements included herein.
Reference is also made to the Company's Annual Report on Form 10-K
for the fiscal year ended December 29, 1996, Part I, Item 3--Legal
Proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 24, 1997, at the annual meeting of the Corporation,
Frederick C. Langenberg, William G. Mitchell and Erwin E. Schulze
were reelected as directors to serve until the year 2000 annual
meeting of the Corporation. The vote tally was:
Election of Directors: For Withheld Broker non-votes
Frederick C. Langenberg 15,471,391 1,594,238 0
William G. Mitchell 15,668,043 1,457,986 0
Erwin E. Schulze 15,663,763 1,462,266 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 4.1 Eleventh Amendment, dated as of January 10,
1997, to the Amended and Restated Credit
Agreement
Exhibit 4.2 Twelfth Amendment, dated as of June 27, 1997,
to the Amended and Restated Credit Agreement
Exhibit 27 Financial Data Schedule for the quarter ended June 29, 1997
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
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.
THE INTERLAKE CORPORATION
July 25, 1997 /s/STEPHEN GREGORY
Stephen Gregory
Vice President - Finance
and Chief Financial Officer
Exhibit 4.1
ELEVENTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
ELEVENTH AMENDMENT (the "Amendment"), dated as of January 10, 1997
among THE INTERLAKE CORPORATION, a Delaware corporation (the "Company"), each
Subsidiary Borrower party to the Credit Agreement referred to below, The
Interlake Corporation Employee Stock Ownership Trust (the "ESOP Borrower"),
acting by and through the LaSalle National Trust, N.A. (successor to LaSalle
National Bank), not in its individual or corporate capacity, but solely in
its capacity as trustee of the ESOP Trust (the "ESOP Trustee" and together
with the Company and the Subsidiary Borrowers, the "Credit Parties"), THE
CHASE MANHATTAN BANK (as successor to CHEMICAL BANK), individually and as
Administrative Agent (the "Administrative Agent"), THE FIRST NATIONAL BANK
OF CHICAGO, individually and as Co-Agent (the "Co-Agent"), and the financial
institutions party to the Credit Agreement referred to below and listed on
the signature pages hereto (the "Banks"). All capitalized terms used herein
and not otherwise defined herein shall have the respective meanings provided
such terms in the Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, each of the Credit Parties, the Banks, the Administrative
Agent and the Co-Agent are parties to that certain Amended and Restated
Credit Agreement dated as of September 27, 1989 and amended and restated as
of May 28, 1992 and as further amended by the First Amendment dated as of
August 14, 1992, the Second Amendment and Waiver dated as of October 30,
1992, the Third Amendment and Waiver dated as of August 20, 1993, the Fourth
Amendment dated as of December 22, 1993, the Fifth Amendment dated as of
February 23, 1994, the Sixth Amendment dated as of August 16, 1994, the
Seventh Amendment dated as of January 24, 1995, the Eighth Amendment dated
as of February 1, 1995 and the Ninth Amendment dated as of June 1, 1995 and
the Tenth Amendment dated as of September 25, 1996 (as so amended and
restated and further amended and as the same may hereafter be amended,
modified or supplemented from time to time, the "Credit Agreement"); and
WHEREAS, the Company, the Subsidiary Borrowers and the Banks wish
to amend the Credit Agreement as herein provided;
NOW THEREFORE, it is agreed:
1. On the Eleventh Amendment Effective Date, Section 3.01 of
the Credit Agreement is hereby amended by deleting the number "150" on the
first line of clause (i) and inserting "210" in lieu thereof.
2. On the Eleventh Amendment Effective Date, Section 4.02(d)
of the Credit Agreement is hereby amended by deleting the number "150" which
appears in the proviso in the last sentence thereof and inserting in lieu
thereof the number "210".
3. On the Eleventh Amendment Effective Date, Section 7 of the
Credit Agreement is hereby amended by inserting a new Section 7.17 as follows:
"7.17. Consent Solicitation. (a) In the event that the Consent
Solicitation shall have become effective, the Company will have satisfied all
of the requirements of the Consent Solicitation in accordance with the terms
thereof and to the reasonable satisfaction of the Administrative Agent, which
Consent Solicitation will have been completed or terminated in accordance
with its terms by the Expiration Date (as defined in the Consent Solicitation
Statement).
4. On the Eleventh Amendment Effective Date, Section 8.05 is
hereby amended by (i) deleting the number "5,000,000" appearing in
clause (g)(v)(x) thereof and inserting in lieu thereof the number "10,000,000"
and (ii)(A) deleting the "and" at the end of clause (l), (B) deleting the
period at the end of clause (m) and inserting "; and" in lieu thereof and
(C) adding the following clause (n) at the end thereof:
"(n) the Company's Thai Subsidiary shall be permitted to incur
Indebtedness of up to $1,500,000.
5. On the Eleventh Amendment Effective Date, Section 8.06(xix)
and (xx) of the Credit Agreement is hereby amended by deleting the
number "150" contained therein and inserting in lieu thereof the
number "210".
6. On the Eleventh Amendment Effective Date, Section 8.13 is
hereby amended by adding the following proviso at the end of clause (ii)
thereof:
"provided, that the Company shall be permitted to amend the Senior
Note Indenture as set forth in the Consent Solicitation,"
7. On the Eleventh Amendment Effective Date, Section 10 of the
Credit Agreement is hereby amended by adding the following definitions in
alphabetical order:
"Consent Solicitation" shall mean the Consent Solicitation of the
Company with respect to the Senior Notes soliciting the consent of a majority
of the holders of the Senior Notes to amendments to the Senior Notes
Indenture which would allow the Company to repay Indebtedness subordinate in
right of payment to the Senior Notes.
"Consent Solicitation Statement" shall mean the Consent
Solicitation Statement issued in connection with the Consent Solicitation.
"Senior Note Indenture" shall mean the indenture, dated as of June
26, 1995, to the 12% Senior Notes, due 2001 between the Company and Bank One,
Columbus, N.A., as Trustee.
8. In order to induce the Banks to enter into this Amendment,
each of the Credit Parties (other than the ESOP Trustee) hereby (a) certifies
that no Default or Event of Default exists and that each of the
representations, warranties and agreements contained in Section 6 of the
Credit Agreement on the Eleventh Amendment Effective Date, both before and
after giving effect to this Amendment, is true and correct in all material
respects, and (b) confirms that it has and will continue to comply with all
of its obligations contained in the Credit Agreement and the other Credit
Documents including with respect to each of the Borrowers, but not limited
to, all of its obligations contained in Section 7.10(b) of the Credit
Agreement.
9. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
10. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,
each of which counterparts when executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A
complete set of counterparts shall be lodged with the Company and the
Administrative Agent.
11. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
12. This Amendment shall become effective on the date (the
"Eleventh Amendment Effective Date") when each of the following conditions
shall have been satisfied:
(a) On or prior to the Eleventh Amendment Effective Date, the
Company, the Subsidiary Borrowers, the ESOP Trustee, the Administrative
Agent, the Co-Agents and the Required Banks shall have signed a copy
hereof (whether the same or different copies) and shall have delivered
(including by way of telecopier) such copies to the Administrative
Agent; and
(b) The Company shall have paid all fees and expenses (including
legal fees and expenses) then due and owing to the Administrative Agent.
13. From and after the Eleventh Amendment Effective Date,
all references in the Credit Agreement and each of the Credit Documents or
any other agreement to the Credit Agreement shall be deemed to be references
to such Credit Agreement as amended hereby.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the
date first above written.
THE INTERLAKE CORPORATION
By /s/Stephen Gregory
Title: Vice President-Finance
SUBSIDIARY BORROWERS
DEXION (AUSTRALIA) PTY. LTD.
A.C.N. 000 083 956
By /s/Stephen R. Smith
Title: Authorized Agent
S.A. DEXION-REDIRACK N.V.
By /s/Stephen R. Smith
Title: Authorized Agent
DEXION INTERNATIONAL LIMITED
By /s/Stephen R. Smith
Title: Authorized Agent
DEXION GmbH
By /s/Stephen Gregory
Title: Authorized Agent
THE INTERLAKE CORPORATION EMPLOYEE
STOCK OWNERSHIP TRUST, acting by
and through the LASALLE NATIONAL
TRUST, N.A. (successor to LaSalle
National Bank), not in its in-
dividual or corporate capacity
(except for the representations and
warranties contained in Section
6.01(b)(y) of the Credit Agreement)
but solely in its capacity as ESOP
Trustee
By /s/
Title:Assistant Vice President
BANKS
THE CHASE MANHATTAN BANK
Individually, and as
Administrative Agent
By /s/Ann Kurinskas
Title:Managing Director
THE FIRST NATIONAL BANK
OF CHICAGO
Individually, and as Co-Agent
By_________________________
Title:
THE MITSUI TRUST AND BANKING
COMPANY LIMITED
By /S/Margaret Holloway
Title: Vice President & Manager
NATIONAL BANK OF CANADA
By /s/C. F. Martin, Jr.
Title: VP & Manager
By /s/William W. Mucker
Title:Asst. Vice President
NATIONAL WESTMINSTER BANK PLC
By /s/
Title: Senior Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/
Title: SVP
BANK OF AMERICA ILLINOIS
By /s/
Title: SVP
THE FUJI BANK, LIMITED
By /s/ Peter L. Chinnici
Title: Joint General Manager
THE NIPPON CREDIT BANK, LTD.
By /s/
Title: Senior Manager
THE BANK OF NOVA SCOTIA
By /s/F.C.H. Ashby
Title:Senior Manager Loan Operations
BANK OF YOKOHAMA
By_______________________
Title:
GIROCREDIT BANK AG
DER SPARKASSEN,
CAYMAN ISLAND BRANCH
By /s/
Title:
By /s/
Title:
SENIOR DEBT PORTFOLIO
By Boston Management and
Research, as Investment Advisor
By /s/
Title:Vice President
LEHMAN COMMERCIAL PAPER INC.
By /s/ Michele Swanson
Title: Authorized Signatory
RESTRUCTURED OBLIGATIONS
BACKED BY SENIOR ASSETS, B.V.
By Chancellor LGT Senior Secured
Management, Inc. as Portfolio
Advisor
By /s/ Christopher A. Bondy
Title: Vice President
STICHTING RESTRUCTURED
OBLIGATIONS BACKED BY SENIOR
ASSETS 2, (ROSA 2)
By Chancellor LGT Senior Secured
Management, Inc. as Portfolio
Advisor
By /s/ Christopher A. Bondy
Title: Vice President
CERES FINANCE LTD.
By /s/
Title: Director
MFS HIGH INCOME FUND
By_______________________
Title:
ACCEPTED AND CONSENTED TO:
INTERLAKE DRC LIMITED
By /s/ Stephen Gregory
Title: Authorized Agent
DEXION GROUP PLC
By /s/ Stephen R. Smith
Title: Authorized Agent
Exhibit 4.2
TWELFTH AMENDMENT AND WAIVER TO
AMENDED AND RESTATED CREDIT AGREEMENT
TWELFTH AMENDMENT AND WAIVER (the "Amendment"), dated as of June
27, 1997 among THE INTERLAKE CORPORATION, a Delaware corporation (the
"Company"), each Subsidiary Borrower party to the Credit Agreement referred
to below, The Interlake Corporation Employee Stock Ownership Trust (the "ESOP
Borrower"), acting by and through the LaSalle National Trust, N.A. (successor
to LaSalle National Bank), not in its individual or corporate capacity, but
solely in its capacity as trustee of the ESOP Trust (the "ESOP Trustee" and
together with the Company and the Subsidiary Borrowers, the "Credit
Parties"), THE CHASE MANHATTAN BANK (as successor to CHEMICAL BANK),
individually and as Administrative Agent (the "Administrative Agent"), THE
FIRST NATIONAL BANK OF CHICAGO, individually and as Co-Agent (the "Co-Agent"),
and the financial institutions party to the Credit Agreement
referred to below and listed on the signature pages hereto (the "Banks").
All capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided such terms in the Credit Agreement referred
to below.
W I T N E S S E T H :
WHEREAS, each of the Credit Parties, the Banks, the Administrative
Agent and the Co-Agent are parties to that certain Amended and Restated
Credit Agreement dated as of September 27, 1989 and amended and restated as
of May 28, 1992 and as further amended by the First Amendment dated as of
August 14, 1992, the Second Amendment and Waiver dated as of October 30,
1992, the Third Amendment and Waiver dated as of August 20, 1993, the Fourth
Amendment dated as of December 22, 1993, the Fifth Amendment dated as of
February 23, 1994, the Sixth Amendment dated as of August 16, 1994, the
Seventh Amendment dated as of January 24, 1995, the Eighth Amendment dated
as of February 1, 1995, the Ninth Amendment dated as of June 1, 1995, the
Tenth Amendment dated as of September 25, 1996 and the Eleventh Amendment
dated as of January 10, 1997 (as so amended and restated and further amended
and as the same may hereafter be amended, modified or supplemented from time
to time, the "Credit Agreement"); and
WHEREAS, the Company, the Subsidiary Borrowers and the Banks wish
to amend the Credit Agreement as herein provided;
NOW THEREFORE, it is agreed:
1. On the Twelfth Amendment Effective Date, Section 4.02(h)
of the Credit Agreement is hereby waived with respect to Dexion (Australia)
Pty. Ltd. to the extent necessary to allow Dexion (Australia) Pty. Ltd. to
repay (i) first, its outstanding Subsidiary Revolver B Loan and then
(ii) second, its Subsidiary Term Loan, with proceeds received from its
incurrence of Indebtedness pursuant to Section 8.05(n).
2. On the Twelfth Amendment Effective Date, Section 8.01 of
the Credit Agreement is hereby amended by (i) deleting the word "and" at the
end of clause (viii) thereof, (ii) deleting the period appearing at the end
of clause (ix) and inserting "; and" in lieu thereof and (iii) inserting the
following new clause (x) after clause (ix):
"(x) Liens securing Indebtedness incurred by Dexion (Australia)
Pty. Ltd. pursuant to Section 8.05(n)."
3. On the Twelfth Amendment Effective Date, Section 8.05 of
the Credit Agreement is hereby amended by (i) deleting the word "and" at the
end of clause (l) thereof, (ii) deleting the period appearing at the end of
clause (m) and inserting "; and" in lieu thereof and (iii) inserting the
following new clause (n) after clause (m):
"(n) Indebtedness incurred by Dexion (Australia) Pty. Ltd., not
to exceed AUS$17,250,000 at any one time outstanding, from the time
after the Twelfth Amendment Effective Date, so long as in connection
with the first incurrence of such Indebtedness, Dexion (Australia) Pty.
Ltd. shall pay off its outstanding Subsidiary Revolving B Loan (and
which such Subsidiary Revolving B Loan may not be reborrowed) and its
outstanding Subsidiary Term Loan, and upon the repayment by Dexion
(Australia) Pty. Ltd. of such Loans, (i) it shall cease to be a
Subsidiary Borrower under this Agreement and (ii) any security interests
in collateral of Dexion (Australia) Pty. Ltd. securing such Loans shall
be released and the Administrative Agent shall be authorized to execute
all necessary documentation to effect such releases."
4. On the Twelfth Amendment Effective Date, Section 8.14 of
the Credit Agreement is hereby amended by (i) inserting the following
parenthetical immediately after the first appearance of the word
"Subsidiaries" in clause (II) thereof:
"(other than Dexion (Australia) Pty. Ltd.)".
5. On the Twelfth Amendment Effective Date, Section 10 of
the Credit Agreement is hereby amended by adding the following definitions
in alphabetical order:
"Australian Dollars" and the sign "AUS$" shall each mean freely
transferable lawful money of Australia (expressed in Australian dollars).
"Twelfth Amendment Effective Date" shall have the meaning provided
in the Twelfth Amendment to the Credit Agreement dated as of June 27, 1997."
6. In order to induce the Banks to enter into this Amendment,
each of the Credit Parties (other than the ESOP Trustee) hereby (a) certifies
that no Default or Event of Default exists and that each of the
representations, warranties and agreements contained in Section 6 of the
Credit Agreement on the Twelfth Amendment Effective Date as defined in
Section 10 below, both before and after giving effect to this Amendment,
is true and correct in all material respects, and (b) confirms that it has
and will continue to comply with all of its obligations contained in the
Credit Agreement and the other Credit Documents including with respect to
each of the Borrowers, but not limited to, all of its obligations contained
in Section 7.10(b) of the Credit Agreement.
7. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
8. This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Company and the Administrative
Agent.
9. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
10. This Amendment shall become effective on the date (the
"Twelfth Amendment Effective Date") when each of the following conditions
shall have been satisfied:
(a) On or prior to the Twelfth Amendment Effective Date, the
Company, the Subsidiary Borrowers, the ESOP Trustee, the Administrative
Agent, the Co-Agents and the Required Banks shall have signed a copy
hereof (whether the same or different copies) and shall have delivered
(including by way of telecopier) such copies to the Administrative
Agent; and
(b) The Company shall have paid all fees and expenses (including
legal fees and expenses) then due and owing to the Administrative Agent.
11. From and after the Twelfth Amendment Effective Date, all
references in the Credit Agreement and each of the Credit Documents or any
other agreement to the Credit Agreement shall be deemed to be references to
such Credit Agreement as amended hereby.
* * *
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the
date first above written.
THE INTERLAKE CORPORATION
By /s/Stephen Gregory
Title: Vice President-Finance
SUBSIDIARY BORROWERS
DEXION (AUSTRALIA) PTY. LTD.
A.C.N. 000 083 956
By /s/ Stephen R. Smith
Title: Authorized Agent
S.A. DEXION-REDIRACK N.V.
By /s/Stephen R. Smith
Title: Authorized Agent
DEXION INTERNATIONAL LIMITED
By /s/Stephen R. Smith
Title: Authorized Agent
DEXION GmbH
By /s/Stephen Gregory
Title: Authorized Agent
THE INTERLAKE CORPORATION EMPLOYEE
STOCK OWNERSHIP TRUST, acting by
and through the LASALLE NATIONAL
BANK, not in its individual or
corporate capacity (except for the
representations and warranties
contained in Section 6.01(b)(y) of
the Credit Agreement) but solely in
its capacity as ESOP Trustee
By /s/ Jeffrey S. Schiedemeyer
Title: Vice President
BANKS
THE CHASE MANHATTAN BANK
Individually, and as
Administrative Agent
By /s/Timothy Storms
Title: Managing Director
THE FIRST NATIONAL BANK
OF CHICAGO
Individually, and as Co-Agent
By Karen F. Kizer
Title: Senior Vice President
THE MITSUI TRUST AND BANKING
COMPANY LIMITED
By /s/Yoshiki Karatau
Title: Deputy General Manager
NATIONAL BANK OF CANADA
By /s/Leroy A. Irvin
Title: Vice President
/s/C.F.(Boot) Martin, Jr.
Vice President & Manager
By_________________________
Title:
NATIONAL WESTMINSTER BANK PLC
By /s/David Yewer
Title:Senior Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/Lewis W. Solimene, Jr.
Title:Senior Vice President
BANK OF AMERICA ILLINOIS
By /s/Lewis W. Solimene,Jr.
Title:Senior Vice President
THE FUJI BANK, LIMITED
By /s/Tetsuo Kamatsu(K-219)
Title:Joint General Manager
THE NIPPON CREDIT BANK, LTD.
By_______________________
Title:
THE BANK OF NOVA SCOTIA
By /s/A.S. Norsworthy
Title:Sr. Team Leader-Loan Operations
BANK OF YOKOHAMA
By_______________________
Title:
GIROCREDIT BANK AG
DER SPARKASSEN,
CAYMAN ISLAND BRANCH
By/s/John Redding
Title: VP
By/s/Richard Stone
Title: FVP
By_______________________
Title:
SENIOR DEBT PORTFOLIO
By Boston Management and
Research, as Investment Advisor
By /s/Scott Page
Title:Vice President
LEHMAN COMMERCIAL PAPER INC.
By /s/Michele Swanson
Title:Authorized Signatory
RESTRUCTURED OBLIGATIONS
BACKED BY SENIOR ASSETS, B.V.
By Chancellor LGT Senior Secured
Management, Inc. as Portfolio
Advisor
By /s/Christopher A. Bondy
Title:Vice President
STICHTING RESTRUCTURED
OBLIGATIONS BACKED BY SENIOR
ASSETS 2, (ROSA 2)
By Chancellor LGT Senior Secured
Management, Inc. as Portfolio
Advisor
By_________________________
Title:
CERES FINANCE LTD.
By /s/John M. Cullinane
Title:Director
MFS HIGH INCOME FUND
By_______________________
Title:
ACCEPTED AND CONSENTED TO:
INTERLAKE DRC LIMITED
By/s/ Stephen Gregory
Title: Authorized Agent
DEXION GROUP PLC
By /s/ Stephen R. Smith
Title: Authorized Agent
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> JUN-29-1997
<CASH> 6886
<SECURITIES> 33403
<RECEIVABLES> 126231
<ALLOWANCES> 1950
<INVENTORY> 60459
<CURRENT-ASSETS> 238716
<PP&E> 392494
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0
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<COMMON> 23229
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<TOTAL-LIABILITY-AND-EQUITY> 428754
<SALES> 356019
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<CGS> 276577
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