SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 10, 1995
SEALED AIR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-7834 No. 22-1682767
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification Number)
Park 80 East
Saddle Brook, New Jersey 07663-5291
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (201) 791-7600
Not applicable
(Former name or former address, if changed since last report.)
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The financial statements and financial information of Trigon filed
herewith are listed in the Index to Financial Statements and Pro Forma
Financial Information beginning on page F-1.
(b) Unaudited Financial Information of Sealed Air.
The unaudited consolidated condensed balance sheets and the related
unaudited consolidated condensed statements of earnings of Sealed Air filed
herewith are listed in the Index to Financial Statements and Pro Forma
Financial Information beginning on page F-1.
(c) Pro Forma Financial Information.
The pro forma financial information filed herewith is listed in the
Index to Financial Statements and Pro Forma Financial Information beginning on
page F-1.
(d) Exhibits.
Exhibit Number Description
2* Share Purchase Agreement dated as of January 10, 1995 among
Sealed Air Corporation, Trigon Industries Limited, Sealed
Air Holdings (NZ) Limited, a wholly owned New Zealand
subsidiary of Sealed Air, James William Ferguson Foreman
and Diane Shirley Foreman.
4.1* Consent to Credit Agreement among Sealed Air, certain of
its subsidiaries, various financial institutions and
Bankers Trust Company, as agent, dated as of December 7,
1994.
4.2* Amendment No. 1 to Credit Agreement among Sealed Air,
certain of its subsidiaries, various financial
institutions and Bankers Trust Company, as agent, dated
as of January 3, 1995.
23 Consent of Ernst & Young to the incorporation by reference
into Sealed Air's Registration Statements on Form S-3, File
No. 33-53751, File No. 33-57441, File No. 33-58843 and
File No. 33-68614, and Registration Statement on Form S-8,
File No. 33-41734, of their report on page F-19 of
this Current Report on Form 8-K.
24* Consent of Ernst & Young to the incorporation by reference
into Sealed Air's Registration Statements on Form S-3,
File No. 33-53751, File No. 33-55739, File No. 33-66716
and File No. 33-68614, and Registration Statement on Form
S-8, File No. 33-41734, of their report on page F-19 of
this Current Report on Form 8-K.
*Previously filed
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 hereunto duly authorized.
SEALED AIR CORPORATION
(Registrant)
By s/Warren H. McCandless
Warren H. McCandless
Senior Vice President-Finance
Date: August 9, 1995
INDEX TO FINANCIAL STATEMENTS AND
PRO FORMA FINANCIAL INFORMATION
Page
Number
A. Consolidated Financial Statements of Trigon Industries
Limited (In New Zealand dollars):
Consolidated Income Statement for the year to
June 30, 1994 F-2
Consolidated Balance Sheet as at June 30, 1994 F-3
Notes to the accounts F-4
Consolidated Statement of Cash Flows for the year
ended June 30, 1994 F-18
Report of Independent Chartered Accountants dated
August 26, 1994 (December 21, 1994 as to certain
information in notes 16, 23 and 24) F-19
B. Unaudited Interim Financial Information of Trigon
Industries Limited (In New Zealand dollars)
Consolidated Income Statements for the quarters ended
September 30, 1994 and 1993 F-20
Consolidated Balance Sheet as of September 30, 1994 F-21
Notes to unaudited interim consolidated financial information F-22
C. Unaudited Financial Information of Sealed Air Corporation
(certain information previously presented in the Company's
press release made public on January 19, 1995)
Unaudited Consolidated Condensed Statement of Earnings
for the years ended December 31, 1994 and 1993 F-23
Unaudited Consolidated Condensed Balance Sheet,
December 31, 1994 and 1993 F-24
Notes to unaudited consolidated condensed financial information F-25
D. Unaudited Pro Forma Condensed Consolidating Financial Information
Unaudited Pro Forma Condensed Consolidating Statement of
Earnings for the year ended December 31, 1994 F-26
Unaudited Pro Forma Condensed Consolidating Balance Sheet,
December 31, 1994 F-27
Notes to Unaudited Pro Forma Condensed Consolidating Financial
Information F-29
<TABLE>
FINANCIAL STATEMENTS 1
(In New Zealand Dollars)
<CAPTION>
TRIGON INDUSTRIES LIMITED CONSOLIDATED INCOME STATEMENT
For the Year to 30 June 1994 Notes 1994 1993
$000 $000
<S> <C> <C> <C>
SALES REVENUE 16 123,293 118,136
OPERATING EARNINGS 2 9,702 9,021
Income Taxes (Payable) Credit 3 (3,694) (3,552)
NET PROFIT After Tax and
Available For Appropriation 6,008 5,469
Share of Associated Company Results 4 0 47
Minority Interests (89) (70)
RETAINED EARNINGS Brought Forward 14,362 10,684
Transfer from Reserves 230 32
Dividends Declared 13 (2,000) (1,800)
RETAINED EARNINGS Carried Forward 18,511 14,362
This statement is to be read in conjunction with the Notes on pages 3 to 16
F-2
</TABLE>
<TABLE>
FINANCIAL STATEMENTS 2
(In New Zealand Dollars)
TRIGON INDUSTRIES LIMITED CONSOLIDATED BALANCE SHEET
As At 30 June 1994
<CAPTION>
Notes 1994 1993
$000 $000
<S> <C> <C> <C>
SHAREHOLDERS FUNDS
Share Capital 5 5,000 5,000
Reserves 6 10,311 12,288
Retained Earnings 18,511 14,362
Total Shareholders Funds 33,822 31,650
Minority Interests 232 170
TOTAL CAPITAL FUNDS EMPLOYED 34,054 31,820
LIABILITIES
Bank Overdraft 11 1,650 3,434
Accounts Payable 14,292 12,201
Current Portion Term Liabilities 12 1,562 1,052
Provision For Tax 94 720
Provision For Dividend 13 1,250 1,100
Total Current Liabilities 18,848 18,507
Provision For Deferred Tax 522 149
Term Liabilities And Provisions 12 26,277 22,759
TOTAL LIABILITIES 45,647 41,415
79,701 73,235
ASSETS
Liquid Funds 0 0
Accounts Receivable 9 21,654 22,368
Inventories 10 14,490 15,279
Total Current Assets 36,144 37,647
Fixed Assets 7 43,515 35,535
Investments 8 42 53
TOTAL ASSETS 79,701 73,235
Equity Ratio 42.7% 43.5%
Equity Ratio Excluding Atlanta 45.7%
Director s\J. W. F. Foreman Director s\Reno Wijnstok
This statement is to be read in conjunction with the Notes on pages 3 to 16
F-3
</TABLE>
NOTES TO THE ACCOUNTS 3
(In New Zealand Dollars)
1) STATEMENT OF ACCOUNTING POLICIES
General Accounting Policies
The general accounting principles recognised as appropriate for the
measurement and reporting of earnings and financial position on an
historical cost basis are followed by the Group, with the exception
that certain fixed assets have been revalued. Accrual accounting
is used to match revenue and expenses. Reliance is placed upon the
fact that the Group is a going concern.
Particular Accounting Policies
The following particular accounting policies which materially
affect the measurement of profit and the financial position have
been applied:
PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the holding company
and all its subsidiaries accounted for using the purchase method.
All significant intercompany transactions are eliminated on
consolidation.
ASSOCIATE COMPANIES
These are companies in which the Trigon Industries Limited Group
has shareholdings of between twenty and fifty per cent or less.
The accounts of associate companies have been reflected in the
consolidated accounts on an equity accounting basis which shows the
Group's share of profits in the consolidated income statement, and
its share of post acquisition increases or decreases in net assets,
in the consolidated balance sheet.
INVENTORY VALUATION
Inventory is valued at the lower of cost and net realisable value.
For raw materials, cost is determined on a weighted average basis,
and for work in progress and manufactured inventory, cost includes
materials and direct labour, plus an appropriate proportion of
manufacturing overhead.
ACCOUNTS RECEIVABLE
Accounts Receivable are included at expected realisable values
based upon experience and information available at balance date.
INCOME TAX
The income tax expense charged to the consolidated income statement
includes both the current year expense and the income tax effects
of timing differences calculated using the liability method.
Tax effect accounting is applied on a comprehensive basis to all
timing differences. A debit balance in the deferred tax account,
arising from timing differences or income tax benefits from income
tax losses, is recognised only if there is virtual certainty of
realisation.
F-4
NOTES TO THE ACCOUNTS 4
(In New Zealand Dollars)
FIXED ASSETS AND DEPRECIATION
Fixed Assets are stated at cost or at a valuation determined by
independent registered valuers in accordance with professional
valuation standards in each country of operation.
Fixed Assets are depreciated on a straight line basis over their
anticipated useful lives. For major classes of Fixed Assets, the
expected useful lives are:
Buildings 40 -100 years
Plant and Machinery 10-25 years
Vehicles 3-5 years
Furniture and Fittings 5-10 years
LEASING
Group subsidiaries lease certain plant and equipment and land and
buildings.
Finance leases, which effectively transfer to the entity
substantially all of the risks and benefits incidental to ownership
of the leased item, are capitalised at the present value of the
minimum lease payments. The leased assets and corresponding
liabilities are disclosed and the leased assets are depreciated
over the period the entity is expected to benefit from their use.
Operating lease payments, where the lessors effectively retain
substantially all the risks and benefits of ownership of the leased
items, are included in the determination of the operating earnings
in equal instalments over the lease term.
FINANCIAL INSTRUMENTS
On balance sheet financial instruments are generally recorded at
fair market value.
The company is party to financial instruments with off balance
sheet risk to reduce exposure to fluctuations in foreign currency
exchange and interest rates. These include foreign exchange
forward contracts and option contracts. Any gains or losses
arising from valuing these contracts at the appropriate rates at
balance date are recorded for financial purposes according to the
type of transaction hedged.
FOREIGN CURRENCIES
Transactions in foreign currencies are converted at the New Zealand
rate of exchange ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies and the
financial statements of independent foreign subsidiaries have been
translated at rates ruling at balance date or at forward rates
where applicable.
Exchange gains and losses are recognised in the Income Statement
except for exchange differences arising from the translation of the
net investment in independent foreign subsidiaries which are taken
directly to the Foreign Currency Translation Reserve.
CHANGES TO ACCOUNTING POLICIES
There have been no changes in accounting policies during the year
ended 30 June 1994. All policies have been applied on bases
consistent with those used in previous years.
F-5
<TABLE>
NOTES TO THE ACCOUNTS 5
(In New Zealand Dollars)
<CAPTION>
1994 1993
$000 $000
<S> <C> <C>
2) OPERATING EARNINGS
In arriving at Operating Earnings from
Continuing Operations, the following items
have been included.
Earnings from Trading 20,832 17,609
Less : Audit Fees (202) (200)
Depreciation (5,134) (4,659)
Directors Fees (133) (54)
Interest - Loans (1,740) (1,831)
Interest - Other (1,484) (346)
Interest - re Lease of Fixed Assets (357) (253)
Operating Leases (2,080) (1,245)
Operating Earnings from Continuing Operations 9,702 9,021
3) PROVISION FOR INCOME TAX
Prima facie taxation (on Earnings from Continuing
Operations less Abnormal Items) 3,259 3,025
Permanent Adjustments 490 614
Adjustment for available Tax Losses brought forward (55) (87)
Adjustment for Dividends Received 0 0
Income Tax expense (credit) 3,694 3,552
The taxation charge is represented by:
Current Taxation 3,321 3,069
Deferred Taxation 373 483
3,694 3,552
Prima facie income tax has been arrived at using tax rates applicable in the country of operation.
NZ 33 % (1993 33 %), Aust 33 % (1993 39 %), UK 33 % (1993 35 %), US 35 % (1993 35 %),
Germany 35 % (1993 35 %).
There are no material income tax losses to carry forward.
F-6
</TABLE>
<TABLE>
<CAPTION> 1994 1993
$000 $000
<S> <C> <C>
4) ASSOCIATED COMPANIES
The share of Profits of Associated Companies
represents the results of the Groups interests
as follows:
50% of Flexipak Private Ltd - Singapore
Pre Tax 0 75
Tax 0 (26)
Post Tax 0 49
The 50% shareholding in Flexipak Private Ltd
was sold at 31 December 1992 for the net asset value
16% of PSE - France (1993 25%)
Pre Tax 0 (2)
Tax 0 0
Post Tax 0 (2)
Total Post Tax 0 47
TIL's ownership in PSE was diluted during 1994 by
way of a capital injection from other shareholders.
Trigon did not participate in the capital injection.
As a result of this reduction PSE is no longer
classified as an Associate Company.
5) SHARE CAPITAL
Authorised, Issued and Paid Up Capital
6,945,282 A ordinary shares of $0.50 each 3,473 3,473
1,272,918 B ordinary shares of $0.50 each 636 636
1,781,800 C preference shares of $0.50 each 891 891
All shares issued rank equally as to dividend,
with the C shares having preference to the
repayment of Capital.
5,000 5,000
F-7
</TABLE>
<TABLE>
NOTES TO THE ACCOUNTS 7
(In New Zealand Dollars)
<CAPTION>
1994 1993
6) RESERVES $000 $000
<S> <C> <C>
CAPITAL
Fixed Asset Revaluation A 10,256 10,900
Share Premium Account 403 403
Capital Reserve on sale of assets 308 308
10,967 11,611
REVENUE
Revenue Reserve B 638 696
Foreign Currency Translation Reserve C (1,294) (19)
(656) 677
10,311 12,288
The net movements in the Reserves are as follows :
A) The land sold at Telford during 1994 had previously been revalued by
(British pound) 153,300. Machinery was sold for a loss of $173,000.
There was also a foreign exchange loss on the UK revaluation of $52,000.
B) Grants received from the UK Government relating to development and investments
in the UK. Enterprise Zone at Telford, are amortised over the life of the assets
for which the grant was earned. During 1993/94 (British pound)33,200 was written back.
C) The Foreign Currency Translation Reserve reflects the change in the net investment
in offshore subsidiaries. The movement results from changes in exchange rates due
to the strengthening of the NZ dollar.
7) FIXED ASSETS
Land At Valuation 1,491 2,054
Buildings At Valuation 11,430 5,640
Accumulated Depreciation (334) (211)
Book Value 11,096 5,429
Plant & Machinery At Cost or Valuation 47,440 40,687
Accumulated Depreciation (19,883) (16,070)
Book Value 27,557 24,617
Equipment, Vehicles & Other at Cost or Valuation 7,025 7,340
Accumulated Depreciation (3,654) (3,905)
Book Value 3,371 3,435
Net Carrying Value 43,515 35,535
Leased Assets
Included in Fixed Assets are assets costing $8,222,100 which are financed by lease
arrangements. These are made up of Land and Buildings at Atlanta costing $5,216,000
(BV = $5,216,000), Plant and Machinery costing $1,985,200 (Acc Depn = $1,058,500 BV
= $926,700) and Equipment and Vehicles costing $1,020,900 (Acc Depn = $499,000 BV
= $521,900).
F-8
</TABLE>
NOTES TO THE ACCOUNTS 8
(In New Zealand Dollars)
<TABLE>
<CAPTION>
Valuation
Freehold Land and Buildings and major items of Plant & Machinery (Extrusion, Printing and
Conversion Machines) were revalued on 31 December 1991 by the following registered valuers:
Edward Rushton New Zealand Ltd
Brian Rushton Ltd (UK)
Frank Innes Ltd (UK)
American Appraisal Associates (USA)
These assets were revalued using the 'existing use' valuation basis.
1994 1993
$000 $000
<S> <C> <C>
8) INVESTMENTS
Interest in subsidiary companies at cost (Note 18) 0 0
Amounts due from subsidiary companies 0 0
Interests in associated companies (Note 19)
At cost 16 16
Share of increase in Net Assets 26 37
42 53
Total Investments 42 53
9) ACCOUNTS RECEIVABLE
Trade Receivables, Bills Receivable, Sundry
Deposits and Prepayments 21,397 20,969
Loans to Shareholders / Employee Trust 257 1,399
21,654 22,368
10) INVENTORIES
Raw Materials 4,510 5,291
Work in Progress 2,489 2,676
Finished Goods 7,491 7,139
Goods in Transit 0 173
14,490 15,279
F-9
</TABLE>
<TABLE>
NOTES TO THE ACCOUNTS 9
(In New Zealand Dollars)
1994 1993
$000 $000
<S> <C> <C>
11) BANK OVERDRAFT
Lloyd's Bank (UK) 1,938 3,563
Miscellaneous Bank Balances 903 304
Secured by way of floating charges and/or
guarantees over company undertakings.
2,841 3,867
Less Liquid Funds (1,191) (433)
1,650 3,434
Interest rates applicable to overdrafts vary
within the range of 6.00% to 12.00%.
12) TERM LIABILITIES AND PROVISIONS
Hire Purchase Contracts 441 2,094
Mortgages 0 3,374
Term Loans & Capitalised Leases 27,398 18,343
27,839 23,811
Term Liabilities are repayable as follows:
Current Portion payable within 12 months 1,562 1,052
Long Term Portion payable after 12 months 26,277 22,759
27,839 23,811
All term loans are secured by way of debenture,
mortgage or other specific charges over assets.
Interest rates applicable to term loans and
mortgages vary within the following range:
Term Loans 5.60% - 7.75%
Hire Purchase 7.88% - 11.30%
Repayable as follows:
One to Two Years 18,398 17,394
Two to Three Years 178 1,392
Three to Four Years 160 802
Four to Five Years 160 791
Five Years + 7,381 2,380
26,277 22,759
13) DIVIDENDS
Interim Dividend Declared and Paid 750 700
Final Dividend Proposed 1,250 1,100
2,000 1,800
F-10
</TABLE>
<TABLE>
NOTES TO THE ACCOUNTS 10
(In New Zealand Dollars)
<CAPTION>
14) RECONCILIATION OF NET PROFIT AFTER
TAXATION WITH CASH INFLOW FROM 1994 1993
OPERATING ACTIVITIES $000 $000
<S> <C> <C>
Reported surplus after taxation and before including
share of retained surplus of associate 6,008 5,469
Add non-cash items:
Depreciation 5,134 4,659
Movement in deferred taxation 373 483
Unrealised foreign currency translation losses 127 725
5,634 5,867
Gross Cash Flow From Operating Activities 11,642 11,336
Movement in working capital:
Increase (decrease) in trade creditors 2,091 (3,626)
Increase (decrease) in taxation payable (626) (656)
(Increase) decrease in debtors 714 (3,326)
(Increase) decrease in inventory 789 (919)
2,968 (8,527)
Net Cash Inflow From Operating Activities 14,610 2,809
</TABLE>
<TABLE>
<CAPTION>
15) COMMITMENTS 1994 1993
$000 $000
<S> <C> <C>
(Other than provided for in accounts)
Contracts for capital expenditure 5,045 635
Operating lease commitments
less than one year 2,791 2,223
between one and two years 2,428 1,915
between two and five years 5,165 4,605
greater than five years 9,404 7,695
19,788 16,438
24,833 17,073
F-11
</TABLE>
<TABLE>
NOTES TO THE ACCOUNTS 11
(In New Zealand Dollars)
<CAPTION>
16) SEGMENT INFORMATION
Industry Segments Packaging Other Elimination Consolidated
1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
External Sales 111,944 104,513 11,349 13,623 123,293 118,136
Inter segment Sales 41 0 1,161 1,384 (1,202) (1,384) 0 0
Total Sales 111,985 104,513 12,510 15,007 (1,202) (1,384)123,293 118,136
Segment Result 9,838 7,844 1,683 1,164 11,521 9,008
Unallocated Expenses & Taxation (5,513) (3,539)
Group Operating Profit 6,008 5,469
Segment Assets 72,655 65,618 3,694 3,171 76,349 68,789
Unallocated Assets 3,351 4,447
Total Assets 79,700 73,236
</TABLE>
<TABLE>
<CAPTION>
Geographic Segments New Zealand Australia United States Europe Elimination Consolidated
1994 1993 1994 1993 1994 1993 1994 1993 1994 1993 1994 1993
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
External Sales 50,847 48,375 12,075 9,503 23,737 22,536 36,634 37,722 123,293 118,136
Inter segment Sales 11,795 10,301 0 0 0 0 428 0 (12,223)(10,301) 0 0
Total Sales 62,642 58,676 12,075 9,503 23,737 22,536 37,062 37,722 (12,223)(10,301) 123,293 118,136
Segment Result 5,169 5,433 (23) 224 2,795 2,549 1,761 577 0 238 9,702 9,021
Unallocated Expenses & Taxation (3,694) (3,552)
Group Operating Profit 6,008 5,469
Segment Assets 35,530 35,624 5,279 4,584 14,989 7,648 23,902 25,380 0 0 79,700 73,236
</TABLE>
<TABLE>
<CAPTION>
The group operates predominantly in one industry - packaging, and in four geographical areas- New Zealand,
Australia, United States and Europe. The packaging operations comprise the manufacture and distribution of food
packaging products and plastic envelopes. The group also provides other ancillary products to industry. Intersegment
sales are generally at market price and are payable on normal commercial terms and conditions.
F-12
NOTES TO THE ACCOUNTS 12
(In New Zealand Dollars)
<S> <C> <C>
17) CONTINGENT LIABILITIES
There are no contingent liabilities at Balance Date.
18) GROUP COMPANIES (All companies have a June Balance Date)
Name of Company Principal Activity Percentage Paid Up
Held
Holding Company
Trigon Industries Limited Overall control of Group Operations NZ$5,000,000
Subsidiary Companies
Trigon Packaging Systems Manufacture and marketing of packaging systems, 100% NZ$400,000
(NZ) Limited flexible packaging and Telflex envelopes
Trigon Engineering Limited Contract, develop and manufacture flexible 100% NIL
packaging systems equipment
Danco (NZ) Limited Manufacture of self-adhesive tapes 95.25% NZ$146,000
Foreman Investments Limited Property owning 100% NZ$300,000
Trigon Packaging Systems European Holding Company and property owning 100% UK(pound)575,000
(Europe) Limited
Trigon Packaging Systems Manufacture and marketing of packaging systems 100% UK(pound)100
(UK) Limited and flexible packaging
Trigon Cambridge Limited Manufacture and marketing of envelopes in UK 100% UK(pound)500,000
Trigon Packaging Corporation Manufacture and marketing of envelopes in USA 100% US$55,000
Trigon Verpackungssysteme Marketing of packaging systems and flexible 100% DM450,000
GmbH packaging in Europe
Trigon Packaging Systems Marketing of packaging systems, flexible packaging 100% A$50,000
(Australia) Pty Limited and Telflex envelopes in Australia
Trigon Consumer Products Non-trading 100% NZ$750,000
Limited
Trigon Finance Limited Non-trading 100% NIL
Tri-Vinyl Limited Non-trading 100% NZ$10,000
Pak-Line Distributors Limited Non-trading 100% NIL
Tri-Engle Systems Limited Non-trading 100% NZ$5,000
(Shares owned by Trigon Packaging (NZ) Ltd)
Balance Date = 30/06/94
</TABLE>
<TABLE>
19) ASSOCIATE COMPANIES
TIL's ownership in PSE was diluted during 1994 by way of a capital injection from other shareholders.
Trigon did not participate in the capital injection. As a result of this reduction PSE is no longer
classified as an associate company.
F-13
NOTES TO THE ACCOUNTS 13
(In New Zealand Dollars)
20) RELATED PARTY TRANSACTIONS
During the year there have been no material transactions with related parties.
No related party debts have been written off or forgiven during the year.
21) FINANCIAL INSTRUMENTS
CREDIT RISK
Financial instruments which potentially subject the Group to credit risk principally consist of bank
balances, debtors and financial guarantees.
The Group performs credit evaluations on all customers requiring credit and generally does not
require collateral.
The Group continuously monitors the credit quality of the major international financial institutions
that are counter parties to its off balance sheet financial instruments and does not anticipate non
performance by the counter parties.
1994 1994
The fair value of the financial instruments as at balance date are:
Amount Value
$'000 $'000
<S> <C> <C>
Bank Balances (1,650) (1,650)
Accounts Receivable 21,654 21,654
Short Term Debt (1,562) (1,562)
Long Term Debt (26,277) (26,277)
Accounts Payable (14,292) (14,292)
Forward Exchange Contracts 0 10
The following methods and assumptions were used to estimate the fair value of each class of financial
instrument:
Bank Balances, Accounts Receivable, Short Term Debt and Accounts Payable
The carrying amounts of these balances are equivalent to their fair value.
Long Term Debt
The fair value of long term debt is estimated based on current market interest rates available to the
Group for debt of similar maturities.
Forward Exchange Contracts
The fair value of the profit or loss of forward exchange contracts is estimated based on the quoted
market price of these instruments. Total contracts outstanding at balance date were $3,007,266.
OFF BALANCE SHEET RISKS
Currency and interest rate swaps may be employed to convert foreign currency borrowing into New
Zealand dollar liabilities and to manage currency and interest rate exposure. In addition, foreign
currency forward exchange contracts and option agreements are used to manage other foreign
currency exposure. Fluctuations in foreign currency exchange rates and interest rates give rise
to market risk.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Group to concentrations of credit risk consist
principally of cash and debtors.
Concentrations of credit risk with respect to debtors are limited due to the large number of
customers included in the Group's customer base.
F-14
NOTES TO THE ACCOUNTS 14
(In New Zealand Dollars)
22) EMPLOYEE SHARE OWNERSHIP PLAN
The company operates an Employee Share Ownership Plan (ESOP) under which current employees of the
Trigon Group are eligible. The ESOP consists of both custodial and beneficially held shares managed
by appointed Trustees under whose control voting rights are vested. Voting rights rank pari passu
with other shares. The directors of Trigon Industries Ltd have the power to appoint and/or remove
trustees. At June 1994 the ESOP held custodially 1,843,843 shares and beneficially 5,002 shares
fully paid at a total cost of $924,423.
1994
Abbreviated Statement of Earnings $'000
<S> <C>
Income
Dividends Received 55
Interest Received from Employees 92
Revenue from Share Transactions 694
Total Income 841
Expenses
Audit Fees 2
Interest Paid 57
Total Expenses 59
Net Income Before Tax 782
Taxation Expense 11
Net Income After Tax 771
Accumulated Funds Brought Forward 334
Transfer to Reserves (694)
Accumulated Funds Carried Forward 411
Abbreviated Balance Sheet
Assets
Shares in Trigon Industries Ltd 19
Advances to Executives 881
Advance to Trigon Industries Ltd 1,266
Total Assets 2,166
Liabilities
Accruals 2
Provision for Taxation 7
Provision for Diminution in Value of Shares 447
Total Liabilities 456
Equity Funds
Accumulated Funds 411
General Reserve 1,299
Total Equity Funds 1,710
Total Equity Funds and Liabilities 2,166
F-15
NOTES TO THE ACCOUNTS 15
(In New Zealand Dollars)
23) SIGNIFICANT EVENTS AFTER BALANCE DATE
On 29 November 1994 a letter of intent was signed with Sealed Air Corporation ("SAC"), a company
incorporated in the United States of America, whereby SAC will acquire 100% of the shares of Trigon
Industries Limited. It is proposed that the sale and purchase agreement will be signed on January 10,
1995. The directors do not currently envisage any event occurring that will prevent the acquisition
proceeding as scheduled.
On the date of and in relation to the acquisition certain employees of Trigon Industries Limited will
be entitled to compensation for loss of office.
The consummation of the acquisition will result in the net assets of Trigon Industries Limited
exceeding those at 30 June 1994.
24) SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN NEW ZEALAND GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The consolidated financial statements are prepared in accordance with accounting principles generally
accepted in New Zealand ("NZ GAAP"), which differs in certain significant respects from generally
accepted accounting principles in the United States("US GAAP"). The significant differences are detailed
below.
(a) Revaluations
Under NZ GAAP, certain properties and plant have been revalued. Resulting changes in values are
included, as Shareholders' equity, in the Asset Revaluation Reserve. US GAAP would not allow
revaluation of these assets. Depreciation has been calculated for accounting purposes on the full
revalued amount.
(b) Declared Dividends
NZ GAAP requires dividends declared by the Board of Directors after the end of an accounting period,
but in respect of that accounting period, to be deducted from Retained Earnings at the end of the
accounting period. Under US GAAP, such dividends are provided in the period in which they are
proposed by the Board of Directors.
(c) Statement of Cashflows
Under NZ GAAP, bank overdrafts are included within cash on hand. US GAAP requires bank overdrafts
to be classified as a financing activity.
(d) Foreign Exchange
Under NZ GAAP, the financial statements of foreign subsidiaries, which are denominated in a foreign
currency are translated into NZ dollars at the exchange rate ruling at balance sheet date. Under US
GAAP, the earnings statement of such financial statements would be translated at an average of the rates
that prevailed during the year.
F-16
NOTES TO THE ACCOUNTS 16
(In New Zealand Dollars)
(e) Capitalisation of Interest Cost relating to the Construction of Property, Plant and Equipment
Under US GAAP, interest cost incurred in connection with the expenditures for the construction of fixed
assets is required to be capitalised during the period required to prepare the fixed asset for its intended
use. NZ GAAP allows capitalisation of interest for a similar period but does not require capitalisation to
occur.
(f) US GAAP and Securities Exchange Commission (SEC) Disclosures
The financial statements have been prepared under NZ GAAP. However, if the financial statements
had been prepared to comply with US GAAP and SEC disclosure requirements, additional
financial statement disclosures would need to be made.
F-17
</TABLE>
<TABLE>
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S 17
(In New Zealand Dollars)
<CAPTION>
For the Year Ended 30 June 1994 Notes 1994 1993
$000 $000
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was Provided From:
Receipts from Customers 126,699 114,882
Cash was Applied To:
Payments to Suppliers 77,815 80,009
Payments to Employees 27,115 26,409
Taxation Paid 3,578 3,049
Interest Paid 3,581 2,606
112,089 112,073
NET CASH FLOWS FROM OPERATING ACTIVITIES 14,610 2,809
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was Provided From:
Proceeds from Sale of Fixed Assets 125 779
Proceeds from Sale of Associate Company 0 528
Proceeds from Loans and Advances 0 3,793
125 5,100
Cash was Applied To:
Purchase of Fixed Assets 8,150 8,699
Repayment of Loans and Advances 1,188 0
9,338 8,699
NET CASH FLOWS FROM INVESTING ACTIVITIES (9,213) (3,599)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was Provided From:
Finance Leases 0 1,576
Sale of Shares 2,182 0
2,182 1,576
Cash was Applied To:
Finance Leases 3,945 0
Dividends Paid 1,850 1,550
5,795 1,550
NET CASH FLOWS FROM FINANCING ACTIVITIES (3,613) 26
NET INCREASE (DECREASE) IN CASH HELD 1,784 (764)
ADD OPENING CASH BROUGHT FOWARD (3,434) (2,670)
CLOSING CASH (1,650) (3,434)
This statement is to be read in conjunction with the Notes on Pages 3 to 16
F-18
</TABLE>
Auditor's Report
To the Shareholders of
Trigon Industries Limited
We have audited the financial statements on pages 1 to 17. The
financial statements provide information about the past financial
performance and financial position of the group as at 30 June 1994.
This information is stated in accordance with the accounting
policies set out on pages 3 to 4.
Directors' Responsibilities
The directors are responsible for the preparation of financial
statements which comply with generally accepted accounting practice
and give a true and fair view of the financial position of the
group as at 30 June 1994 and of the results of its operations and
cash flows for the year ended on that date.
Auditor's Responsibilities
It is our responsibility to express an independent opinion on the
financial statements presented by the directors and report our
opinion to you.
Basis of Opinion
An audit includes examining, on a test basis, evidence relevant to
the amounts and disclosures in the financial statements. It also
includes assessing:
- the significant estimates and judgments made by the directors
in the preparation of the financial statements; and
- whether the accounting policies are appropriate to the group
circumstances, consistently applied and adequately disclosed.
We conducted our audit in accordance with generally accepted
auditing standards in New Zealand. We planned and performed our
audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient
evidence to give reasonable assurance that the financial statements
are free from material misstatements, whether caused by fraud or
error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial
statements.
Our firm carries out other assignments for the group in the area of
taxation advice. The firm has no other relationship with, or
interest in, the company or any of its subsidiaries.
Unqualified Opinion
We have obtained all the information and explanations we have
required.
In our opinion:
- proper accounting records have been kept by the company as far
as appears from our examination of those records; and
- the financial statements on pages 1 to 17:
- comply with generally accepted accounting practice in New
Zealand; and
- give a true and fair view of the financial position of
the group as at 30 June 1994 and the results of its
operations and cash flows for the year ended on that date
so far as concerns members of the company.
Our audit was completed on 26 August 1994 (21 December 1994 as to
certain information in Notes 16, 23 and 24) and our unqualified
opinion is expressed as at that date.
s/Ernst & Young
Ernst & Young
Auckland, New Zealand
F-19
<TABLE>
<CAPTION>
Trigon Industries Limited
Consolidated Income Statement
For the quarters ended September 30, 1994 and 1993
(In thousands of New Zealand dollars)
(Prepared in accordance with New Zealand
generally accepted accounting principles)
(Unaudited)
September 30,
1994 1993
<S> <C> <C>
Sales $ 28,364 $ 28,435
Cost of sales 15,111 14,820
Gross profit 13,253 13,615
Other income 18 245
Total gross profit 13,271 13,860
Overheads:
Manufacturing 4,196 4,317
Depreciation 1,295 1,142
Warehouse & distribution 639 615
Selling & marketing 2,237 2,262
Administration 3,573 4,154
Finance costs 630 566
Total overheads 12,570 13,056
Net income before income taxes 701 804
Income taxes payable 266 494
Net income after income taxes 435 310
Less minority interests 23 18
Net income to Trigon Industries
on an equity basis 412 292
Retained earnings brought forward 18,511 14,361
Retained earnings carried forward $ 18,923 $ 14,653
See accompanying notes to unaudited interim consolidated financial information.
F-20
</TABLE>
<TABLE>
<CAPTION>
Trigon Industries Limited
Consolidated Balance Sheet
September 30, 1994
(In thousands of New Zealand dollars)
(Prepared in accordance with New Zealand
generally accepted accounting principles)
(Unaudited)
September 30, 1994
<S> <C>
Shareholders' funds
Share capital $ 5,000
Reserves 10,193
Retained earnings 18,923
Total shareholders funds 34,116
Minority interests 255
Shareholders equity 34,371
Liabilities
Accounts payable 13,813
Current portion term liabilities 1,874
Provision for tax 95
Provision for dividend 1,250
Total current liabilities 17,032
Provision for deferred tax 555
Term liabilities and provisions 27,236
Total liabilities 44,823
79,194
Assets
Cash 103
Accounts receivable 20,151
Inventories 15,177
Total current assets 35,431
Fixed assets, net 43,721
Investments 42
Total assets $ 79,194
See accompanying notes to unaudited interim consolidated financial information.
F-21
</TABLE>
Trigon Industries Limited
Notes to Unaudited Interim Consolidated Financial Information
For the Quarters Ended September 30, 1994 and 1993
(Prepared in accordance with New Zealand
generally accepted accounting principles)
(1) Presentation of Interim Financial Statements
The consolidated financial information presented as of
September 30, 1994 and for the quarters ended September 30, 1994
and 1993 has been prepared from the books and records of Trigon
Industries Limited without audit. The accounting policies used are
consistent with those used in the previous published annual
financial as at June 30, 1994 which were prepared in accordance
with New Zealand generally accepted accounting principles.
(2) Commitments and Contingencies
Commitments as of September 30, 1994 are not materially
different to those at June 30, 1994 other than a payment having
been made for plant and equipment totaling $740,000 (New Zealand).
No significant contingent liabilities exist at September 30,
1994.
F-22
<TABLE>
<CAPTION>
SEALED AIR CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
For the years ended December 31, 1994 and 1993
(In thousands of U.S. dollars except share data)
(Unaudited)
1994 1993
<S> <C> <C>
Net sales $519,186 $451,694
Cost of sales 327,423 282,147
Gross profit 191,763 169,547
Marketing, administrative and development
expenses 107,854 95,434
Operating profit 83,909 74,113
Other income (expense):
Interest expense (19,363) (28,828)
Other, net (3,343) 176
(22,706) (28,652)
Earnings before taxes 61,203 45,461
Income taxes 23,987 19,547
Earnings before cumulative effect of
accounting change and early extinguishment
of subordinated notes 37,216 25,914
Cumulative effect of accounting change - 1,459
Early extinguishment of subordinated notes,
net of income taxes (5,576) -
Net earnings $ 31,640 $ 27,373
Earnings (loss) per share:
Before cumulative effect of accounting
change and early extinguishment of
subordinated notes $ 1.87 $ 1.32
Cumulative effect of accounting change - 0.08
Early extinguishment of subordinated notes (0.28) -
Net earnings $ 1.59 $ 1.40
Weighted average number of common
shares outstanding (000) 19,942 19,584
See accompanying notes to unaudited consolidated condensed financial information.
F-23
</TABLE>
<TABLE>
<CAPTION>
SEALED AIR CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
December 31, 1994 and 1993
(In thousands of U.S. dollars)
(Unaudited)
1994 1993
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 11,153 $ 19,392
Accounts receivable, less allowance
for doubtful accounts of $3,970 in
1994 and $2,675 in 1993 91,321 66,966
Inventories 38,259 32,035
Other current assets 11,098 9,768
Total current assets 151,831 128,161
Property and equipment, net 136,170 120,750
Intangible assets, net of accumulated
amortization 29,357 16,538
Other assets 13,759 14,369
Total assets $331,117 $279,818
Liabilities and shareholders' equity (deficit)
Current liabilities:
Notes payable and current installments
of long-term debt $ 30,508 $ 15,618
Accounts payable 43,009 22,908
Income taxes payable 16,577 11,040
Accrued interest and other current
liabilities 45,970 44,767
Total current liabilities 136,064 94,333
Long-term debt, less current installments 155,293 190,058
Deferred credits - income taxes and other
non-current liabilities 28,748 24,846
Total liabilities 320,105 309,237
Shareholders' equity (deficit):
Common stock 201 199
Additional paid-in capital 114,686 108,361
Retained earnings (deficit) (106,036) (137,676)
Accumulated translation adjustment 6,126 5,063
Deferred compensation and cost of
treasury stock (3,965) (5,366)
Total shareholders' equity (deficit) 11,012 (29,419)
Total liabilities and shareholders'
equity $331,117 $279,818
See accompanying notes to unaudited consolidated condensed financial information.
F-24
</TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Condensed Financial Information
December 31, 1994 and 1993
(1) Principles of Consolidation
The consolidated financial statements include the accounts of
Sealed Air Corporation and its subsidiaries (the "Company"). All
significant intercompany transactions and balances have been
eliminated in consolidation. In management's opinion, all
adjustments necessary for a fair presentation of the results of
operations for the year ended December 31, 1994 have been made.
For further financial information refer to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993 and
Quarterly Reports filed on Form 10-Q for the fiscal quarters ended
March 31, June 30 and September 30, 1994.
(2) Early Redemption of Subordinated Notes
On June 8, 1994, the Company entered into a credit agreement with
Bankers Trust Company, as agent, and a syndicate of banks and
called for redemption all of its outstanding $170,000,000 12-5/8%
Senior Subordinated Notes (the "12-5/8% Notes") at a price of
104.734% of their aggregate principal amount together with accrued
interest to the date of redemption. The 12-5/8% Notes were
redeemed on July 8, 1994 from the proceeds of a $100 million term-
loan borrowing and $78 million of revolving credit borrowings under
such credit agreement. The early redemption of the 12-5/8% Notes
resulted in an after-tax charge to earnings of $5,576,000, or $.28
per share, in the second quarter of 1994, reflecting the 4.734%
call premium due on the redemption of the 12-5/8% Notes and the
write-off of the related unamortized deferred financing costs.
(3) Acquisitions
In May 1994, the Company acquired the outstanding capital stock of
Delsopak, S.A. of France and an exclusive license and option to
purchase certain patents. In July 1994, the Company acquired the
outstanding capital stock of Hereford Paper and Allied Products
Limited of England. In September 1994, the Company acquired the
outstanding capital stock of Emballasje-Teknikk A/S of Norway. In
December 1994, the Company acquired the outstanding capital stock
of SPIC Srl of Italy. These transactions, each of which was
effected in exchange for shares of the Company's common stock
and/or cash, were not material to the Company's consolidated
financial statements.
F-25
<TABLE>
<CAPTION>
SEALED AIR CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidating Statement of Earnings
For the year ended December 31, 1994
(In thousands of U.S. dollars except per share data)
The following unaudited pro forma condensed consolidated statement of earnings has been prepared as if the acquisition of Trigon
Industries Limited, discussed in Note 1 of the notes to pro forma condensed consolidating financial information, had occurred on
January 1, 1994. This unaudited pro forma statement of earnings for the year ended December 31, 1994 combines the consolidated
statement of earnings of the Company for the year ended December 31, 1994 with the consolidated income statement of Trigon
Industries Limited for the twelve months ended September 30, 1994. The statement gives effect to adjustments necessary to account
for the acquisition as a purchase.
Trigon
Sealed Air Industries Adjustments
Corporation Limited(Note 4) (Note 3) Pro Forma
<S> <C> <C> <C> <C>
Net sales $519,186 $ 72,343 $ $591,529
397 (b)
Cost of sales 327,423 46,199 (515)(d) 373,504
Gross profit 191,763 26,144 118 218,025
Marketing, administrative and 4,243 (b)
development expenses 107,854 18,600 (3,040)(d) 127,657
Operating profit 83,909 7,544 (1,085) 90,368
Other income (expense):
Interest expense (19,363) (1,425) (1,333)(e) (22,121)
Other, net (3,343) 62 (3,281)
(22,706) (1,363) (1,333) (25,402)
Earnings before income taxes 61,203 6,181 (2,418) 64,966
Income taxes 23,987 2,048 (119)(f) 25,916
Earnings before extraordinary item $ 37,216 $ 4,133 $ (2,299) $ 39,050
Earnings per share before extra-
ordinary item $ 1.87 $ 1.88
Weighted average number of common
shares outstanding during the period
and as adjusted to give effect to the
issuance of shares for the acquisition
of Trigon Industries Limited (000) 19,942 883 20,825
See accompanying notes to unaudited pro forma condensed consolidating financial information.
Letter references under "Adjustments" refer to Note 3.
F-26
</TABLE>
<TABLE>
<CAPTION>
SEALED AIR CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidating Balance Sheet
December 31, 1994
(In thousands of U.S. dollars)
The following unaudited pro forma condensed consolidated balance sheet has been prepared as
if the acquisition of Trigon Industries Limited, discussed in Note 1 of the notes to unaudited
pro forma condensed consolidating financial information, had occurred on December 31, 1994.
This balance sheet combines the consolidated balance sheet of the Company at December 31, 1994
with the consolidated balance sheet of Trigon Industries Limited at September 30, 1994, giving
effect to adjustments necessary to account for the acquisition as a purchase.
Trigon
Sealed Air Industries Adjustments
Corporation Limited(Note 4) (Note 3) Pro Forma
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,153 $ 62 $ $ 11,215
Accounts receivable, less allowance
for doubtful accounts 91,321 12,146 103,467
Inventories 38,259 9,147 47,406
Other current assets 11,098 0 11,098
Total current assets 151,831 21,355 0 173,186
Property and equipment at cost, net
of accumulated depreciation and
amortization 136,170 21,396 5,872 (a) 163,438
Intangible assets, net of accumu-
lated amortization 29,357 0 28,999 (a) 58,356
Other assets 13,759 25 12,798 (a) 26,582
$331,117 $ 42,776 $ 47,669 $421,562
(continued)
F-27
</TABLE>
<TABLE>
<CAPTION>
SEALED AIR CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidating Balance Sheet (continued)
Trigon
Sealed Air Industries Adjustments
Corporation Limited(Note 4) (Note 3) Pro Forma
<S> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Notes payable and current install-
ments of long-term debt $ 30,508 $ 1,127 $ 6,630 (c) $ 38,265
Accounts payable 43,009 8,325 51,334
Accrued interest and other accrued
liabilities 45,970 0 45,970
Income taxes payable 16,577 57 16,634
Total current liabilities 136,064 9,509 6,630 152,203
Long-term debt, less current
installments 155,293 16,415 25,496 (a) 197,204
Other non-current liabilities 28,748 720 154 (a) 29,622
Total liabilities 320,105 26,644 32,280 379,029
Shareholders' equity:
Common stock 201 3,014 (3,005)(a) 210
Additional paid-in capital 114,686 243 31,269 (a) 146,198
(6,630)(c)
Retained earnings (deficit) (106,036) 13,571 (6,941)(a) (106,036)
Accumulated translation adjustment 6,126 (850) 850 (a) 6,126
14,977 15,978 15,543 46,498
Less deferred compensation and cost
of common stock held as treasury
stock (3,965) 0 (3,965)
Minority interest 0 154 (154)(a) 0
Shareholders' equity 11,012 16,132 15,389 42,533
$331,117 $ 42,776 $ 47,669 $421,562
See accompanying notes to unaudited pro forma condensed consolidating financial information.
Letter references under "Adjustments" refer to Note 3.
F-28
</TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidating Financial
Information
December 31, 1994
Note 1 Acquisition
On January 10, 1995, Sealed Air Corporation (the "Company")
acquired all of the outstanding capital stock of Trigon Industries
Limited, a privately-owned, New Zealand corporation ("Trigon") in
exchange for 882,930 shares of the Company's common stock at a
price of approximately $35.70 per share and $25,496,000 in cash.
The cash portion of the purchase price was paid by borrowings by
the Company and certain of its subsidiaries under available lines
of credit, including primarily borrowings under the Company's
Credit Agreement dated June 8, 1994 with Bankers Trust Company, as
agent, and the financial institutions party thereto (the "1994
Credit Agreement").
Note 2 Basis of Presentation
The pro forma condensed consolidating statement of earnings
for the year ended December 31, 1994 combines the consolidated
statement of earnings of the Company for the year ended December
31, 1994 with the consolidated income statement of Trigon for the
year ended September 30, 1994. The pro forma condensed
consolidating balance sheet at December 31, 1994 combines the
consolidated balance sheet of the Company at December 31, 1994 with
the consolidated balance sheet of Trigon at September 30, 1994. The
Trigon consolidated income statement for the year ended September
30, 1994 and the consolidated Trigon balance sheet at September 30,
1994 have been prepared in accordance with United States generally
accepted accounting principles (see note 4).
Note 3 Pro Forma Adjustments
The pro forma financial information gives effect primarily
to:
(a) The preliminary allocation of the excess of the purchase
price of the acquisition of Trigon over the historical net assets
after payment of the pre-acquisition dividend to the Trigon
shareholders. This allocation is based upon the results of studies
which are in the process of being completed. The preliminary
allocation is as follows (in thousands of U.S. dollars):
Purchase price $57,017
Historical net assets after payment of
a pre-acquisition dividend to the
Trigon shareholders (see note (c)) 9,348
Excess of purchase price over historical
net assets acquired 47,669
Adjustments of historical costs to fair value:
Property and equipment 5,872
Non-compete agreements 12,798
Trademarks 6,079
Excess of cost over net assets acquired $22,920
F-29
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidating
Financial Information (continued)
December 31, 1994
Note 3 Pro Forma Adjustments (continued)
(b) Amortization of the excess of cost over fair value of net
assets acquired to be amortized over its estimated life (20 years),
amortization of trademarks acquired to be amortized over their
estimated average useful lives (15 years), amortization of non-
compete agreements related to the acquisition to be amortized over
the lives of the agreements (5 years), and depreciation of property
and equipment reflecting acquisition value.
(c) Pre-acquisition dividend to Trigon shareholders.
(d) Specific cost reductions which management expects to realize
from the combined operations of the Company and Trigon
include manufacturing cost savings of approximately $515,000
arising from (a) savings to Trigon on certain raw materials due to
more favorable pricing available to the Company and (b) savings on
the cost of printing certain of the Company's mailer products using
Trigon's in-house printing equipment rather than more expensive
outside printing services previously used by the Company. Such
specific cost reductions also include approximately $3,040,000 of
marketing, administrative and development cost savings derived
primarily from the closing of Trigon's headquarters office in
Auckland, New Zealand, as well as the elimination of certain other
duplicate management, marketing and administrative costs in other
locations, partially offset by certain additional administrative
costs.
Subsequent to the completion of the Trigon acquisition, the Company
has realized certain of these pro forma cost savings, which include
the elimination of 16 employees, 12 of whom departed on or before
June 30, 1995, and savings on the raw materials referred to above.
In addition, Trigon's Auckland headquarters office was closed
effective April 30, 1995. The Company believes that the foregoing
pro forma cost reductions should be substantially realized in 1995.
(e) Interest expense from the borrowings by the Company and
certain of its subsidiaries, including borrowings under the 1994
Credit Agreement, used to finance the acquisition. Such borrowings
and related interest expense are detailed as follows:
<TABLE>
<CAPTION>
Amount of Pro Forma
Debt Borrowing Rate Interest
<S> <C> <C> <C>
U.S. Dollar Denominated
Borrowings $12,804,000 5.07% $ 649,000
U.S. Dollar equivalent of
New Zealand Dollar Borrowings 12,692,000 5.39% 684,000
Totals: $25,496,000 $1,333,000
The borrowing rates indicated above are based on the prevailing rates that would
have been in effect if the foregoing borrowings had been made under the Company's
1994 Credit Agreement with Banker's Trust Company, as Agent, on January 1, 1994.
(f) Tax benefit of pro forma adjustments net of non-deductible charges.
F-30
</TABLE>
<TABLE>
<CAPTION>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidating Financial
Information (continued)
Note 4 New Zealand - United States Adjustments
The reconciliation of the condensed consolidated income statement
of Trigon Industries Limited prepared in accordance with New
Zealand generally accepted accounting principles (NZ GAAP) to
United States generally accepted accounting principles (US GAAP) is
as follows:
For the twelve months ended September 30, 1994
Trigon Industries Trigon Industries Trigon Industries
Limited Limited Limited
NZ GAAP Adjustments US GAAP US GAAP (vi)
(NZ $000) (NZ $000) (NZ $000) (US $000)
<S> <C> <C> <C> <C>
Net sales 124,117 1,156 (iii) 125,273 72,343
15,158 (i)
(659)(ii)
Cost of sales 64,816 685 (iii) 80,000 46,199
Gross profit 59,301 (14,028) 45,273 26,144
Overheads 49,644 (49,644)(i) 0 0
32,112 (i)
Marketing, administrative (229)(ii)
and development expenses 0 325 (iii) 32,208 18,600
Operating profit 9,657 3,408 13,065 7,544
Other income(expense) net:
(2,481)(i)
16 (ii)
Interest expense 0 (2)(iii) (2,467) (1,425)
Other, net 0 107 (i) 107 62
0 (2,360) (2,360) (1,363)
Earnings before interest
and taxes 9,657 1,048 10,705 6,181
Income taxes 3,498 49 (iii) 3,547 2,048
Net income 6,159 999 7,158 4,133
(continued)
F-31
</TABLE>
<TABLE>
<CAPTION>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidating Financial Information (continued)
Note 4 New Zealand - United States Adjustments (continued)
The reconciliation of the condensed consolidated balance sheet of Trigon Industries Limited prepared
in accordance with New Zealand generally accepted accounting principles (NZ GAAP) to United States
generally accepted accounting principles (US GAAP) is as follows:
As of September 30, 1994
Trigon Trigon Trigon
Industries Industries Industries
Limited Limited Limited
NZ GAAP Adjustments US GAAP US GAAP(vi)
(NZ $000) (NZ $000) (NZ $000) (US $000)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents 103 103 62
Accounts receivable, less
allowance for doubtful
accounts 20,151 20,151 12,146
Inventories 15,177 15,177 9,147
Total current assets 35,431 0 35,431 21,355
Property and equipment at cost,
net of accumulated depreciation
and amortization 43,721 (8,220)(iv) 35,501 21,396
Other assets 42 42 25
79,194 (8,220) 70,974 42,776
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Notes payable and current
installments of long-term debt 1,874 1,874 1,127
Accounts payable 13,813 13,813 8,325
Provision for dividend 1,250 (1,250)(v) 0 0
Income taxes payable 95 95 57
Total current liabilities 17,032 (1,250) 15,782 9,509
Long-term debt, less current
installments 27,236 27,236 16,415
Other non-current liabilities 555 638 (v) 1,193 720
Total liabilities 44,823 (612) 44,211 26,644
Shareholders' equity
Common stock 5,000 5,000 3,014
Additional paid-in capital 0 402 (v) 402 243
(10,878)(iv)
Reserves 10,193 685 (v) 0 0
2,658 (iv)
Retained earnings 18,923 936 (v) 22,517 13,571
Accumulated translation adjustment 0 (1,411)(v) (1,411) (850)
34,116 (7,608) 26,508 15,978
Minority interest 255 255 154
Shareholders' equity 34,371 (7,608) 26,763 16,132
79,194 (8,220) 70,974 42,776
(continued)
F-32
</TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidating Financial
Information (continued)
Note 4 New Zealand - United States Adjustments (continued)
(i) Reclassification of income and expense items to conform to US
GAAP.
(ii) Adjustment of depreciation expense related to the revaluation
of property andequipment, and adjustment of depreciation expense on
capitalized interest related to constructed equipment.
(iii) Adjustment to give effect to the translation of the
operations of Trigon's foreign subsidiaries using a weighted
average exchange rate for the period. Under NZ GAAP, such
operations were translated using the closing foreign exchange rate
at the end of the period.
(iv) Adjustment of cost and accumulated depreciation, net, to
historical cost (under NZ GAAP property and equipment has been
periodically revalued to approximate fair value) and capitalize
interest related to constructed equipment, net of related
accumulated depreciation.
(v) Reclassification of asset, liability and shareholders' equity
items to conform to US GAAP, principally for provision for dividend
and deferred revenue.
(Vi) In accordance with Financial Accounting Standards Board
Statement No. 52, all balance sheet accounts are translated at the
September 30, 1994 exchange rate, and income statement items are
translated at a weighted average of month-end exchange rates during
the twelve months ended September 30, 1994.
F-33
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Form S-3 No. 33-53751, No. 33-57441, No. 33-68614,
No. 33-58843; Form S-8 No. 33-41734) of Sealed Air Corporation of
our report dated 26 August 1994 (21 December 1994 as to certain
information in Notes 16, 23 and 24), with respect to the
consolidated financial statements of Trigon Industries Limited as
of 30 June 1994 and for the year then ended included in this
Current Report (Form 8-K).
s/Ernst & Young
Auckland, New Zealand Chartered Accountants
9 August 1995
