UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission file number 0-15899
WELLMAN, INC.
-------------
(Exact name of registrant as specified in its charter)
Delaware 04-1671740
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1040 Broad Street, Shrewsbury, NJ 07702
---------------------------------------
(Address of principal executive offices)
(908) 542-7300
--------------
(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 May 2, 1995, there were 33,281,546 shares of the registrant's
common stock, $.001 par value, issued and outstanding and no shares of Class B
common stock outstanding.
<PAGE>
WELLMAN, INC.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Condensed Consolidated Statements of Income -
For the three months ended March 31, 1995 and 1994. . . . 3
Condensed Consolidated Balance Sheets -
March 31, 1995 and December 31, 1994. . . . . . . . . . . 4
Condensed Consolidated Statements of Stockholders' Equity. . . 5
Condensed Consolidated Statements of Cash Flows -
For the three months ended March 31, 1995 and 1994. . . . 6
Notes to Condensed Consolidated Financial Statements . . . . . 7 - 8
ITEM 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . 9 - 10
PART II - OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 11
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2
<PAGE>
<TABLE>
<CAPTION>
WELLMAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
THREE MONTHS
ENDED MARCH 31,
----------------------
1995 1994
-------- --------
<S> <C> <C>
Net sales $276,066 $222,577
Cost of sales 213,994 178,694
-------- --------
Gross profit 62,072 43,883
Selling, general and administrative
expenses 22,501 20,713
-------- --------
Operating income 39,571 23,170
Interest expense, net 2,899 3,704
-------- --------
Earnings before income taxes 36,672 19,466
Income taxes 13,935 8,176
-------- --------
Net earnings $ 22,737 $ 11,290
======== ========
Net earnings per common share $ 0.67 $ 0.34
======== ========
Average common shares 33,684 33,013
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
WELLMAN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 37,797 $ 21,556
Accounts receivable, less allowance
of $4,788 in 1995 and $4,733 in 1994 132,174 119,278
Inventories 118,418 122,914
Prepaid expenses and other current assets 5,695 8,479
------------ ------------
Total current assets 294,084 272,227
Property, plant and equipment, at cost:
Land, buildings and improvements 102,487 100,172
Machinery and equipment 578,939 553,834
------------ ------------
681,426 654,006
Less accumulated depreciation 219,703 206,130
------------ ------------
Property, plant and equipment, net 461,723 447,876
Cost in excess of net assets acquired, net 298,770 301,030
Other assets, net 16,191 19,507
------------ ------------
$ 1,070,768 $ 1,040,640
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 53,008 $ 53,647
Accrued liabilities 32,689 30,472
Accrued income taxes 9,507 --
Current portion of long-term debt 200 200
------------ ------------
Total current liabilities 95,404 84,319
Long-term debt 244,989 256,331
Deferred income taxes and other liabilities 126,661 122,417
------------ ------------
Total liabilities 467,054 463,067
Stockholders' equity:
Common stock, $.001 par value; 55,000,000
shares authorized, 33,267,998 shares
issued and outstanding in 1995,
33,191,987 in 1994 33 33
Class B common stock, $.001 par value;
5,500,000 shares authorized -- --
Paid-in capital 226,314 224,352
Foreign currency translation adjustments 8,219 4,783
Retained earnings 369,148 348,405
------------ ------------
Total stockholders' equity 603,714 577,573
------------ ------------
$ 1,070,768 $ 1,040,640
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
WELLMAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
COMMON STOCK CURRENCY
------------------ PAID-IN TRANSLATION RETAINED
SHARES AMOUNT CAPITAL ADJUSTMENTS EARNINGS TOTAL
---------- ------ --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 32,780,018 $ 33 $ 215,179 $ 96 $ 291,198 $ 506,506
Net earnings 64,800 64,800
Cash dividends ($0.23 per share) (7,593) (7,593)
Exercise of stock options 235,116 4,047 4,047
Issuance of common stock to
employee benefit plans 176,186 3,936 3,936
Issuance of restricted stock 667 23 23
Tax effect of exercise of stock
options 1,167 1,167
Currency translation adjustments 4,687 4,687
---------- ------ --------- ----------- --------- ---------
Balance at December 31, 1994 33,191,987 $ 33 $ 224,352 $ 4,783 $ 348,405 $ 577,573
Net earnings 22,737 22,737
Cash dividends ($0.06 per share) (1,994) (1,994)
Exercise of stock options 8,995 111 111
Issuance of common stock to
employee benefit plans 67,016 1,851 1,851
Currency translation adjustments 3,436 3,436
---------- ------ --------- ----------- --------- ---------
Balance at March 31, 1995 33,267,998 $ 33 $226,314 $ 8,219 $ 369,148 $ 603,714
========== ====== ========= =========== ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
WELLMAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(In thousands)
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 22,737 $ 11,290
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 12,525 10,780
Amortization 3,057 3,410
Deferred income taxes 2,644 449
Common stock issued for stock plans 1,851 1,751
Changes in assets and liabilities 10,531 3,335
--------- ---------
Net cash provided by operating activities 53,345 31,015
--------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (25,267) (17,202)
Decrease in restricted cash 989 1,438
--------- ---------
Net cash used in investing activities (24,278) (15,764)
--------- ---------
Cash flows from financing activities:
Repayments of long-term debt (11,425) (10,693)
Dividends paid on common stock (1,994) (1,643)
Exercise of stock options 111 110
--------- ---------
Net cash used by financing activities (13,308) (12,226)
--------- ---------
Effect of exchange rate changes on cash
and cash equivalents 482 29
--------- ---------
Increase in cash and cash equivalents 16,241 3,054
Cash and cash equivalents at beginning of period 21,556 18,751
--------- ---------
Cash and cash equivalents at end of period $ 37,797 $ 21,805
========= =========
Supplemental cash flow data:
Cash paid during the period for:
Interest (net of amounts capitalized) $ 2,316 $ 2,531
Income taxes $ 144 $ 587
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
WELLMAN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information for the three months ended
March 31, 1995 and 1994 is unaudited)
(In thousands)
1. BASIS OF PRESENTATION
The results of operations for the three month periods are not
necessarily indicative of those for the full year.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements are presented on a basis consistent with
the audited statements, and all adjustments, which consist only of normal
recurring adjustments necessary to present fairly the financial position
and the results of operations for the periods indicated, have been
reflected.
2. NET EARNINGS PER COMMON SHARE
Net earnings per common share is based on the average number of common
and common equivalent shares outstanding.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ---------
<S> <C> <C>
Raw materials $ 59,213 $ 61,680
Finished and semi-finished goods 53,170 51,362
Supplies 13,535 14,672
--------- ---------
125,918 127,714
Less adjustments of certain
inventories to a LIFO basis 7,500 4,800
--------- ---------
$ 118,418 $ 122,914
========= =========
</TABLE>
4. LONG-TERM DEBT
On February 8, 1995, the Company entered into a $330,000 Revolving
Credit Loan (the Facility) that replaced the existing $222,000 Reducing
Revolving Credit Loan and matures in February 2000. The terms of the
Facility provide the Company with the ability to borrow under competitive
bid loans which reduce the availability under the Facility and bear
interest at the offering bank's prevailing interest rate. The Facility
has no scheduled principal repayments and any borrowings under
non-competitive bid loans bear interest, at the Company's option, at the
higher of the prime rate or the federal funds rate plus 0.50%, the LIBOR or
CD rate plus applicable margins.
7
<PAGE>
5. COMMITMENTS AND CONTINGENCIES
The Company's operations are subject to extensive laws and regulations
governing air emissions, wastewater discharges and solid and hazardous
waste management activities. The Company's policy is to accrue
environmental remediation costs when it is both probable that a liability
has been incurred and the amount can be reasonably estimated. While it is
often difficult to reasonably quantify future environmental-related
expenditures, the Company currently estimates its future non-capital
expenditures related to environmental matters to range between $12,000 and
$29,000. In connection with these expenditures, the Company has accrued
an amount at March 31, 1995 within such range representing management's
best estimate of probable non-capital environmental expenditures. In
addition, future capital expenditures aggregating approximately $10,000 to
$23,000 may be required related to environmental matters. These
non-capital and capital expenditures are estimated to be incurred over the
next 10 to 20 years. The Company believes that it is entitled to recover a
portion of these expenditures under indemnification and escrow agreements.
8
<PAGE>
WELLMAN, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1994
Net sales for the three months ended March 31, 1995 increased 24% to $276.1
million from $222.6 million for the three months ended March 31, 1994. Sales
increased in the 1995 period for each of the Company's three groups: Fibers
Group, Manufactured Products Group (MPG) and New England CRInc. (CRInc).
Substantially all of the increase in sales for the Company's domestic fibers
business was due to higher polyester fiber selling prices. At Wellman
International Limited (WIL), the Company's Irish fiber subsidiary, sales
increased primarily due to higher polyester fiber selling prices and, to a
lesser extent, increased sales volumes. The increased selling prices in the
Fibers Group reflect continued strong worldwide demand and the pass through of
higher raw material costs for polyester fiber. Sales for the MPG increased in
1995 as a result of the full-quarter contribution from the polyethylene
terephthalate (PET) resin business, which commenced operation in March 1994.
At CRInc., sales increased due to significantly higher commodity prices and the
operation of an additional materials recovery facility.
Gross profit for the three months ended March 31, 1995 amounted to $62.1
million versus $43.9 million for the 1994 period. The gross profit margin for
1995 was 22.5% compared to 19.7% in 1994. Gross profit for the Fibers Group
increased primarily due to higher selling prices. MPG gross profit was higher
due to the aforementioned contribution from the PET resin business.
Selling, general and administrative expenses amounted to $22.5 million, or
8.2% of sales, for the 1995 period compared to $20.7 million, or 9.3% of sales,
for the 1994 period.
As a result of the foregoing, operating income was $39.6 million for the
first three months of 1995 versus $23.2 million for the first three months of
1994.
Net interest expense was $2.9 million in the first three months of 1995
compared to $3.7 million in the first three months of 1994. Interest expense
was favorably impacted by a decrease in outstanding borrowings, partially
offset by higher interest rates.
The effective income tax rate was 38% in the first quarter of 1995 versus
42% in the comparable 1994 period, reflecting the positive impact of strong
domestic and Irish earnings. The Irish tax rate for manufacturing operations
is significantly lower than the U.S. statutory rate.
As a result of the foregoing, net earnings in the first three months of
1995 were $22.7 million, or $0.67 per share, compared to $11.3 million, or
$0.34 per share, for the first three months of 1994.
OUTLOOK
Demand for the Company's polyester fibers is expected to remain healthy in
1995. Together with increasing chemical and recycled raw material costs,
upward pressure on polyester fiber selling prices may continue in 1995. The
ability to increase fiber selling prices commensurate with increased costs will
affect future profitability.
9
<PAGE>
Continued strong demand and insufficient chemical raw material supplies for
polyester products worldwide has increased demand and decreased the
availability of recycled raw materials in the United States, particularly
postconsumer PET soft drink bottles. As a result, the Company plans to curtail
production of recycled polyester fibers at its Johnsonville, SC facility by
approximately 10% in mid-1995, representing 3% of the Company's total annual
worldwide fiber production capacity.
The Company expects to complete a significant expansion of PET resin
production capacity, for which chemical raw materials are available, at the
Palmetto Plant in Darlington, SC during the second quarter of 1995. Continued
strong worldwide demand for PET resin has enabled the Company to enter into
long-term contracts with certain customers which generally permit the Company
to increase selling prices in order to offset increasing chemical raw material
costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash from operations of $53.3 million for the three
months ended March 31, 1995 compared to $31.0 million for the three months
ended March 31, 1994. The increase in cash from operations was primarily the
result of significantly higher net earnings.
Net cash used in investing activities amounted to $24.3 million in 1995
compared to $15.8 million in 1994. Additions to property, plant and equipment
amounted to $25.3 million in 1995 compared to $17.2 million in 1994.
Net cash used in financing activities amounted to $13.3 million for 1995
and $12.2 million for 1994. Net repayments of long-term debt amounted to $11.4
million in 1995 compared to $10.7 million in 1994.
The Company's long-term capital investment program includes approximately
$105.0 million in planned expenditures in 1995. The exact amount and timing of
the capital spending is difficult to predict, however, since certain projects
may extend into 1996 and beyond depending upon equipment delivery and
construction schedules. The 1995 capital expenditure plan includes expansion
of PET resin production capacity at the Palmetto Plant during the second
quarter of 1995 and expansions and continued equipment upgrades at the
Company's fiber operations.
The Company's financing agreements contain normal financial and restrictive
covenants. The Company believes that the financial resources available to it,
including approximately $270.0 million available at March 31, 1995 under its
$330.0 million revolving credit facility (see note 4 to the condensed
consolidated financial statements), unused, short-term uncommitted lines of
credit aggregating $115.0 million and internally generated funds will be
sufficient to meet its foreseeable working capital, capital expenditure and
dividend payment requirements.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
4(a) Loan note participations with the Banco di Napoli dated
February 17, 1994, First Fidelity Bank, N.A. dated June 13,
1994 (Exhibit 4(y)(2) of the Company's Form 10-Q for the
quarter ended June 30, 1994 incorporated by reference
herein)
4(b) Commercial Loan Master Note with Midlantic Bank, N.A. dated
April 5, 1995
(b) Reports on Form 8-K.
None.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WELLMAN, INC.
Dated May 8, 1995 By /s/ Keith R. Phillips
----------- ------------------------
Keith R. Phillips
Vice President, Chief Financial
Officer and Treasurer (Principal
Financial Officer)
Dated May 8, 1995 By /s/ Mark J. Rosenblum
------------- ------------------------
Mark J. Rosenblum
Vice President, Controller
(Principal Accounting Officer)
12
Exhibit 4(b)
March 30, 1995
Ms. Audrey Goodman
Assistant Treasurer
Wellman, Inc.
1040 Broad Street, Suite 302
Shrewsbury, New Jersey 07702
Dear Audrey:
We are pleased to advise you that Midlantic Bank, N.A., hereafter known as the
"Bank" has approved a credit facility for Wellman, Inc. hereafter known as ("the
Borrower") under terms of which the Bank will entertain requests for credit up
to the amount stated below. We emphasize that requests for advances will be
subject to approval on an individual basis and may be disapproved at the Bank's
discretion, and that this facility is independent of our participation in the
February 8, 1995 $330,000,000 Revolving Credit Facility (the "Senior Bank Loan
Agreement"), except as to the cross-default provision detailed below.
BORROWER:
- --------
Wellman, Inc., a Corporation organized under the laws of Delaware.
MAXIMUM AMOUNT:
- --------------
Fifteen Million Dollars ($15,000,000,00)
PURPOSE:
- -------
Advances approved under this facility will be used only for short term working
capital requirements.
PROMISSORY NOTE:
- ---------------
In form attached.
INTEREST RATE:
- -------------
To be negotiated at the time of advance, but not to exceed Midlantic Bank,
N.A.'s Prime Rate of interest.
The Prime Lending Rate "Prime Rate" is the rate of interest announced from time
to time by Midlantic Bank, N.A. as its "Prime Rate" or "Prime Lending Rate".
This rate of interest is determined from time to time by Midlantic Bank, N.A. as
a means of pricing some loans to its customers and is neither tied to any
external rate of interest or index nor does it necessarily reflect the lowest
rate of interest charged by Midlantic Bank, N.A. to any particular class or
category of customers of Midlantic Bank, N.A.
<PAGE>
Wellman, Inc.
March 30, 1995
Page 2
PERIOD:
- ------
Availability of advances will expire on March 31, 1996, and are subject to the
provisions of the Note and the Bank's continued satisfaction with the financial
condition of the Borrower.
During the period of this Line, the Borrower is required to repay all funds for
a period of at least Thirty (30) consecutive days,
AVAILABILITY:
- ------------
Each request for an advance will have stated maturities from 1 to 90 days,
subject to a minimum advance of One Million ($1,000,000,00) Dollars.
FEES:
- ----
None.
COMPENSATING BALANCE REQUIREMENT:
- --------------------------------
No specific compensating balance requirement.
COLLATERAL:
- ----------
None.
REQUIRED FINANCIAL INFORMATION:
- ------------------------------
Satisfaction of reporting requirements under the Senior Bank Loan Agreements
will satisfy the following two reporting requirements:
Consolidated financial statements audited by an Independent Certified Public
Accountant within Ninety Days (90) after the end of the Borrower's fiscal year,
together with Form 10-K.
Borrower's interim statements including Form 10-Q, within Sixty Days (60) after
the end of each fiscal quarter.
FINANCIAL COVENANTS:
- -------------------
This credit facility will be "cross-defaulted" with the Senior Bank Loan
Agreement in accordance with the terms of that certain Loan Agreement dated as
of February 8, 1995 as the same may be amended from time to time.
APPROVAL:
- --------
By signing this letter Borrower acknowledges the Bank's reliance upon all
financial and other information previously or hereafter furnished to the Bank by
or on behalf of Borrower, and represents and warrants that all such information
is and will be to the best of Borrower's knowledge and belief true and correct.
<PAGE>
Wellman, Inc.
March 30, 1995
Page 3
This letter shall be void if any of such information proves to have been
incorrect in any material respect, any material adverse change occurs in the
financial condition or business of Borrower, or the following additional
condition is not satisfied:
execution and delivery, within Thirty days (30) after your acceptance
hereof, of the Note and Corporate Resolution required by the Bank, all in
form and substance satisfactory to the Bank,
This letter creates no rights in anyone other than Borrower, and no rights
hereunder are assignable by Borrower. No amendment or waiver of any provision
of this letter shall be effective unless in writing and signed by an authorized
officer of the Bank and authorized representative of Borrower. This letter and
all provisions thereof, shall be governed by the laws of the State of New
Jersey.
I shall appreciate your confirming our understanding by signing and returning
the enclosed copy within Fifteen days (15) from the date of this letter.
Very truly yours,
/s/ Patrick M. Wallace
Patrick M. Wallace
Senior Vice President
(908) 776-5002
PMW:kam
Enclosure
Confirmed: WELLMAN, INC.
Attest:/s/ Claudia Schwinn By: /s/ Audrey Goodman, Ass't Treasurer
------------------- -----------------------------------
Date: April 5, 1995
-------------
<PAGE>
COMMERCIAL LOAN MASTER NOTE
---------------------------
Amount: $15,000,000.00
Dated: April 5, 1995
FOR VALUE RECEIVED, Wellman, Inc. (the "Borrower") promises to pay MIDLANTIC
BANK, N.A. a National Banking Association (the "Bank"), at its offices located
at 60 Neptune Boulevard, Neptune, New Jersey, or at such other place as the Bank
may direct, FIFTEEN MILLION AND 00/100 DOLLARS, or such lesser principal amount
of unpaid and outstanding borrowings, together with interest, as follows:
1) INTEREST: (a) Interest under this Note will accrue on the unpaid
principal balance of each advance at the annual rate(s) set forth in
subparagraph (b) of this section (calculated on the actual number of
days elapsed over a 360-day year). At no time, however, shall the
interest rate exceed the maximum allowable by law. (c) The interest
rate on individual advances under this Note will be quoted individually
and fixed to the maturity date of the particular advance.
2) TERM: Individual advances under this Note will each have a specific
maturity date. The maturity date will be specified by the Borrower at
the time of each advance. In no event, may any advance have a maturity
date later than March 31, 1996 (the "Final Maturity").
All Loans made by Bank pursuant to this Note, and all payments made on
account of principal hereof, may be recorded by Bank on the grid attached
to and made a part of the Note. Amounts recorded on such grid, or any
amounts recorded by Bank electronically, by computer or otherwise in
accordance with its customary practices, shall be conclusive absent
manifest error, but failure to make or error in any such recordation
shall not affect Borrower's obligation to repay the amounts due under
this Note.
3) PAYMENTS: The Borrower shall pay principal and interest on this Note as
follows: (a) Interest is due and payable at maturity for advances with a
term of 60 days or less. Interest is due and payable monthly in arrears
and at maturity for advances with a term greater than 60 days. (b) The
principal amount of each advance is sue and payable on the maturity date
of such advances but in no event later than Final Maturity. All payments
will be applied first to accrued interest and then to principal.
4) DEFAULT: Each of the following shall constitute an "Event of Default"
hereunder: a) failure of Borrower to pay or perform any of its
liabilities or obligations to Bank under this Note, whether now existing
or hereafter arising, when due to be paid or performed; or b) if any
default shall have occurred and be continuing after any applicable grace
period under that certain Loan Agreement dated February 8, 1995 by and
between Borrower and Fleet National Bank, as Administrative Agent, and
the other financial institutions parties thereto providing for a $330
million Revolving Credit Loan (as it may be amended from time to time the
"Senior Bank Loan Agreement") which had resulted in the acceleration of
Borrower's obligation under such Senior Bank Loan Agreement.
Upon the occurrence of any default, the entire amount of interest,
principal, and any other sums due under this Note shall become due and
payable immediately. Until such sums are received, interest shall
accrue at the rate(s) of interest equal to 1,00% per annum in excess of
rates of interest which were in effect on each advance immediately prior
to the default if default had not occurred.
<PAGE>
6) WAIVERS: The Bank is not required to do any of the following before
enforcing its rights under this Note:
(a) Accelerate payment of amount due;
(b) Give notice that amounts due have not been paid;
(c) Obtain an official certificate of nonpayment;
(d) Provide notice to any other lender that is party to the February 8,
1995 $330,000,000.00 Bank Group Revolving Credit Facility as
amended, to which the Bank's loan hereunder is cross-defaulted.
7) NOTE BINDING ON EACH BORROWER AND SUCCESSORS: All obligations under this
Note are the joint and several unconditional obligations of Borrower and
all who succeed the Borrower's rights and interests.
8) OTHER PROVISIONS: The Borrower acknowledges receipt of a copy of this
Note and its consent to the choice of terms set forth in this Note.
9) CHANGES: This Note can only be changed by an agreement in writing signed
by the Borrower and the Bank.
10) GOVERNING LAW: This Note shall be construed according to the laws of the
State of New Jersey, and the Borrower consents to the jurisdiction of the
courts of the State of New Jersey to determine any questions of fact or
law arising under this Note. Bank and Borrower waives any right to trial
by jury of any claim arising under this Note.
11) ACTIONS INVOLVING THIS NOTE: If this Note is referred to any attorney
for collection, the Borrower agrees to pay all reasonable costs of
collection, including court costs and attorney's fees.
WITNESSED OR ATTESTED BY: WELLMAN, INC.
/s/ Claudia Schwinn By: /s/ Audrey Goodman
- -------------------- --------------------
Name: Claudia Schwinn Name: Audrey Goodman
Title: Executive Assistant Title: Assistant Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ART. 5 FDS for first quarter 1995 10-q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 37,797
<SECURITIES> 0
<RECEIVABLES> 132,174
<ALLOWANCES> 4,788
<INVENTORY> 118,418
<CURRENT-ASSETS> 294,084
<PP&E> 681,426
<DEPRECIATION> 219,703
<TOTAL-ASSETS> 1,070,768
<CURRENT-LIABILITIES> 95,404
<BONDS> 244,989
<COMMON> 0
0
33
<OTHER-SE> 603,681
<TOTAL-LIABILITY-AND-EQUITY> 1,070,768
<SALES> 276,066
<TOTAL-REVENUES> 276,066
<CGS> 213,994
<TOTAL-COSTS> 213,994
<OTHER-EXPENSES> 22,501
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,899
<INCOME-PRETAX> 36,672
<INCOME-TAX> 13,935
<INCOME-CONTINUING> 22,737
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,737
<EPS-PRIMARY> .67
<EPS-DILUTED> .67
</TABLE>
