SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the
fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 1-7834
SEALED AIR CORPORATION
(Exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation or organization:
Delaware
I.R.S. Employer Identification Number: 22-1682767
Address of principal executive offices: Park 80 East, Saddle
Brook, New Jersey 07663-5291
Registrant's telephone number, including area code: (201) 791-
7600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class: on which registered:
Common Stock, par value New York Stock Exchange
$0.01 per share
Securities registered pursuant to Section 12(g) of the Act: None
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 [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the registrant's Common Stock
held by non-affiliates of the registrant on March 15, 1996 was
approximately $1,164,756,000.
The number of outstanding shares of the registrant's Common
Stock as of March 15, 1996 was 42,376,205.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1995 Annual Report to
Stockholders are incorporated by reference into Part I and Part
II of this Annual Report on Form 10-K.
Portions of the registrant's definitive proxy statement for
its 1996 Annual Meeting of Stockholders are incorporated by
reference into Part III of this Annual Report on Form 10-K.
PART I
ITEM 1. BUSINESS
Sealed Air Corporation (together with its subsidiaries,
the "Company") is engaged primarily in the manufacture and sale
of a complementary line of protective and specialty packaging
materials and systems and selected food packaging products.
The Company's operations are conducted primarily in
North America, Europe and the Asia/Pacific region, and its
products are distributed in these areas as well as in other parts
of the world. Information by geographic area, including net
sales, operating profit and identifiable assets, for each of the
three years in the period ended December 31, 1995 appears in Note
3 of the Notes to Consolidated Financial Statements, which are
contained in the Company's 1995 Annual Report to Stockholders.
Such Note is incorporated herein by reference.
As previously reported, on January 10, 1995, the
Company acquired Trigon Industries Limited, a privately-owned New
Zealand corporation ("Trigon"). Trigon was engaged primarily in
the manufacture and sale of food packaging films and systems,
durable mailers and bags, and specialty adhesive products.
Trigon operated six manufacturing facilities in New Zealand,
England and the United States and had subsidiaries in Australia
and Germany that marketed certain of its products. During 1995,
the Company has integrated Trigon's operations into the Company's
other protective and specialty packaging operations. Further
information concerning the Trigon acquisition is set forth in
Note 2 of the Notes to Consolidated Financial Statements, which
Note appears in the Company's 1995 Annual Report to Stockholders
and is incorporated herein by reference.
PRODUCTS
The Company's principal protective and specialty
packaging products are engineered products, surface protection
and other cushioning products, and food packaging products.
Certain of these products are also produced for non-packaging
applications. The Company also manufactures and sells certain
other products discussed below.
The net sales contributed by each class of product for
each of the five years in the period ended December 31, 1995
appears in the table under the caption "Selected Financial Data"
in the Company's 1995 Annual Report to Stockholders, which data
is incorporated herein by reference.
ENGINEERED PRODUCTS
The Company's engineered products include its
Instapak(R) polyurethane foam packaging systems, specialty
polyethylene foams for packaging and non-packaging uses, and
certain other engineered packaging products.
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Instapak(R) Systems
Instapak(R) polyurethane foam packaging systems consist
of proprietary blends of polyurethane chemicals and specially
designed dispensing equipment, certain features of which are
patented. The Company also manufactures a line of Instamate(R)
polyolefin films, which are high-performance plastic films
designed for use with Instapak(R) packaging systems. Most of the
Company's net sales from Instapak(R) systems are attributable to
the sale of the polyurethane chemicals and polyolefin films used
in the systems installed at customer locations.
Instapak(R) chemicals, films and equipment are marketed
as integrated packaging systems to provide protective packaging
for a wide variety of products, including computer, electronic,
office, medical and communications equipment, compressors and
motors, furniture and spare parts, and void-fill packaging of
office supplies, books, cosmetics and other small products for
distribution. Instapak(R) systems are also used to produce
polyurethane foams used in certain non-packaging applications,
including Instapak(R) Floral, a foam used as a design base for
artificial flower arrangements. The Company's Instapak(R)
products are sold primarily in North America, Europe and the
Asia/Pacific region.
An Instapak(R) packaging system allows a customer to
create protective cushions for products of any shape and thus to
tailor its protective packaging to its individual products and
needs. When Instapak(R) chemicals are mixed together and
dispensed, they expand up to 200 times their liquid volume within
seconds after they are dispensed to form a foam cushion. Because
Instapak(R) chemicals expand significantly in volume only when
mixed together, the storage space required for the chemicals
before use is very small.
The Company purchases chemicals from various suppliers,
including major chemical companies, and blends these chemicals
according to its own proprietary formulations. The Company
offers its Instapak(R) customers a family of protective packaging
foams, ranging from low-density foams used for light cushioning
and void-fill applications to heavy-duty foams used for blocking
and bracing heavy items.
The Company produces a number of dispensing equipment
models for low, medium and high volume use and maintains an
ongoing program to develop new equipment models to meet evolving
customer needs. The Company's High-Speed Instapacker(TM)
automated system and the bench-top version of the Instapacker(TM)
system, marketed in the United States as the VersaPacker(TM)
system and in Europe as the SpeedyPacker(TM) system, produce
ready-to-use foam cushions consisting of Instamate(R) film bags
filled with Instapak(R) foam. Hand-held equipment models range
from low-volume single station systems to microprocessor-
controlled multiple station systems. During 1995, the Company
introduced new microprocessor-controlled dispensing equipment for
use in certain hand-held and foam-in-bag systems. Generally,
customers may either buy or lease equipment from the Company for
use with Instapak(R) systems.
Customers are also able to produce pre-formed
Instapak(R) foam cushions for use in packaging a wide range of
products. The Company offers assistance to its customers in
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producing, or in preparing the molds used to produce, such pre-
formed cushions. The Company offers Instamolder(TM) semi-
automated cushion molding equipment that produces Instapak(R)
cushions using the Instapacker(TM) system.
Specialty Polyethylene Foams
The Company manufactures and sells extruded plank and
laminated foams for packaging and non-packaging applications.
Extruded plank foam is offered in varying densities and
thicknesses up to three inches. Laminated foams, which are sold
under various trademarks including Polylam(R) in the United
States and Stratocell(R) in Europe, are produced in various
densities and laminated into thicknesses ranging up to six
inches. Certain of the Company's specialty polyethylene foam
product lines contain a percentage of post-consumer recycled
polyethylene resins. These foams can be produced in various
colors and are available in anti-static and fire retardant forms.
The Company's specialty polyethylene foams are
generally sold to fabricators and converters for packaging and
non-packaging applications in which a clean, non-abrasive
material is required with such properties as shock absorption,
vibration dampening, thermal insulation or buoyancy. In
packaging applications, these foams are fabricated into a wide
range of protective packaging shapes, forms and die-cuts for
designed packages in which a clean, attractive appearance and
cushioning or blocking and bracing performance is needed. Non-
packaging applications for specialty foams include construction,
automotive, sporting and athletic equipment products. The
Company's specialty polyethylene foams are sold primarily in
North America and Europe.
Other Engineered Products
The Company is engaged in the development, manufacture
and sale of Korrvu(R) suspension packaging, which is covered by
certain patents. A Korrvu(R) package suspends the product to be
packaged in the air space of its shipping container between two
strong, flexible low-slip films. Korrvu(R) packaging is sold
primarily in North America and Europe.
SURFACE PROTECTION AND OTHER CUSHIONING PRODUCTS
The Company's surface protection and other cushioning
products include air cellular cushioning materials, protective
and durable mailers and bags, thin polyethylene foams, paper
packaging products, automated packaging systems and certain other
packaging products.
Air Cellular Cushioning Materials
The Company manufactures and markets air cellular
cushioning materials primarily under the trademarks AirCap(R) and
PolyCap(R). These materials consist of air bubbles encapsulated
between two layers of plastic film, each containing a barrier
layer to retard air loss, that form a pneumatic cushion to
protect products from damage through shock or vibration
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during shipment. The Company's PolyCap(R) R line of air cellular
cushioning material is similar to AirCap(R) R cushioning in
construction except that its plastic film contains a lighter
barrier layer.
The Company's air cellular cushioning materials are
used by a wide variety of end users, including both manufacturers
and retailers. AirCap(R) R cushioning is used primarily to
protect a wide variety of lightweight and medium-weight delicate
items, such as instruments, electronic components and glassware,
that have no limitation on their shipping and shelf-life cycles.
PolyCap(R) R cushioning is used primarily for a wide variety of
lightweight products that have a relatively short shipping and
shelf-life cycle. The Company also markets anti-static forms of
its air cellular cushioning materials. The Company's air
cellular materials are manufactured and sold primarily in North
America and Europe.
The Company's air cellular cushioning materials are
produced in various forms, including continuous rolls, perforated
rolls and sheets, depending on customer preference. These
materials can be used alone or laminated to other materials such
as paper. They are also available in bag form (marketed under
the trademark Bubblebags(R)), primarily used to provide product
protection to small parts. The Company's air cellular cushioning
materials can be varied in the size, shape and spacing of their
encapsulated air bubbles and the thickness of the plastic to
provide specific types of performance in cushioning, surface
protection and void fill. The Company's AirCap(R) R and
PolyCap(R) R product lines contain post-industrial and post-
consumer recycled polyethylene resins.
The Company also manufactures and sells adhesive-coated
air cellular cushioning material under the trademark Bubble
Mask(R) and cohesive air cellular cushioning material under the
trademark Cold Seal(R) AirCap(R). Polypride(TM) air cellular
materials are multi-web materials with high tensile strength used
primarily as furniture wrapping.
Protective and Durable Mailers and Bags
The Company manufactures and markets a variety of
protective and durable mailers and bags that are made in several
standard sizes and are used for mailing or shipping a wide
variety of items for which clean, lightweight preconstructed
protective packages are desirable. They can provide the user
with significant postage savings, ease of use and enhanced
product protection relative to other types of mailers and
shipping containers.
The Company's protective mailers include lightweight,
tear-resistant mailers marketed primarily in North America and
Europe under the trademarks Jiffylite(R) and Mail Lite(R) These
mailers, which are lined with air cellular cushioning material,
are offered in heat-sealable or self-seal forms. The Company's
Jiffylite(R) R line of mailers are made from recycled kraft paper
and the Company's PolyCap(R) R air cellular cushioning materials.
These products also include the widely used Jiffy(TM)
padded mailers made from recycled kraft paper padded with
macerated recycled newspaper, Jiffy(TM) reinforced mailers,
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which are highly tear resistant and moisture retardant, Jiffy(TM)
utility mailers, which are low-cost, lightweight mailers without
padding, and Jiffy Rigi Bag(R) mailers, which are rigid mailers
without padding that are well suited for products such as books
and photographs. The Company also manufactures and markets
Jiffy(TM) foam-lined mailers and Jiffy(TM) floppy disk mailers,
which are lined with thin polyethylene foam. The kraft paper
used in many of these mailer lines and the foam lining of certain
foam mailer products contain recycled content. These mailers are
marketed primarily in North America and Europe.
The Company's durable plastic mailers and bags, which
are produced from multi-layered polyolefin film, are lightweight,
water-resistant and puncture-resistant and are available in
tamper-evident varieties. Such mailers and bags are used by a
wide range of customers including air courier, mail order,
banking, postal, security and office supply services primarily in
North America, Europe and the Asia/Pacific region. Such mailers
and bags are marketed under a number of brand names, including
ShurTuff(R), Cache-Pak(R), Lok-Sure(R), Protec(R), Keepsafe(R) and
Crush-Gard(R).
Thin Polyethylene Foams
In addition to the specialty polyethylene foams
described above, the Company manufactures thin polyethylene foams
in roll or sheet form in low, medium and special densities, in
flat, ribbed or bag form and in a number of colors and
thicknesses up to one-half inch. The Company also sells thin
polyethylene foam that has anti-static properties and foam
laminate products in which the foam is laminated to paper,
polyethylene film or other substrates for specialized
applications. Certain of the Company's thin polyethylene foam
product lines include a percentage of post-consumer recycled
resins.
Low-density thin polyethylene foam manufactured by the
Company is marketed primarily in North America and Europe under
the trademark Cell-Aire(R) and is used primarily for surface
protection and light-duty cushioning. Medium-density thin
polyethylene foam is marketed in North America and Europe under
the trademark Cellu Cushion(R) as a cushioning material to
protect products from damage through shock or vibration during
shipment. The Company's Quicksilver(TM) cohesive polyethylene
film and foam laminates and its Cellu-Mask(TM) adhesive foam
laminates, introduced in 1995, are used for masking and other
surface protection applications. The Company also manufactures
special density polyethylene foams for a variety of packaging and
non-packaging applications.
Paper Packaging Products
The Company manufactures recycled kraft, tissue and
creped paper for use as a raw material in the manufacture of the
Company's protective mailer and food packaging products or sale
to unaffiliated customers. The Company also manufactures and
sells paper packaging products under the trademarks Kushion
Kraft(R), Custom Wrap(TM), Jiffy(TM) Padwrap(R) and Void Kraft(TM)
for industrial surface protection, furniture surface protection,
moving and storage
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blankets, and for use as cushioning or void fill in various packaging
applications. The Company's paper packaging products are sold primarily
in North America and Europe.
Packaging Systems
The Company produces and markets the Instasheeter(TM)
high-speed converting system, designed for on-line packaging
applications, which automatically converts the Company's flexible
packaging materials, including air cellular cushioning materials,
thin polyethylene foam and paper packaging materials, described
above, into sheets of a pre-selected size and quantity. The
Company also produces and markets the Accu-Cut(TM) converting
system, an economical system for converting the Company's
flexible packaging materials in off-line packaging applications.
Such systems are sold primarily in North America and Europe.
The Company's Jiffy Packer(TM) high-speed paper dunnage
system, which is marketed in Europe under the name Paperboy(TM)
and in Japan under the name Eco Packer(TM), produces paper
dunnage material on site from the Company's multi-ply Void
Kraft(TM) recycled kraft paper. The Jiffy Packer(TM) system is
also offered in a bench-top version. The Company's Rapid Fill(R)
inflatable packaging system, marketed primarily in North America,
consists of a compact, portable inflator and self-sealing
inflatable plastic bags, available in several sizes. When
inflated, the bags can be used in a wide range of void fill
applications, and they can be deflated and re-inflated for reuse.
The Company sells on-site packaging systems for void
fill and light-duty cushioning applications. The systems,
marketed primarily in Europe under the trademark Fill Air(TM),
convert rolls of polyethylene film into packaging materials on
demand.
Other Surface Protection and Cushioning Products
The Company participates in a joint venture called
PolyMask Corporation with Minnesota Mining and Manufacturing
Company ("3M") that manufactures and sells protective tapes
consisting of adhesive-coated polyethylene films marketed by 3M.
These products are used primarily for protecting the surfaces of
polished metal, glass, plastic and other materials from abrasion
during fabrication, handling and shipping. This joint venture is
accounted for using the equity method.
FOOD PACKAGING PRODUCTS
The Company's food packaging products include absorbent
pads, produce bags, and flexible films, bags, pouches and related
equipment.
Absorbent Pads and Produce Bags
The Company manufactures and sells absorbent pads used
for food packaging, including its Dri-Loc(R) absorbent pads,
certain features of which are covered by patents. The
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Company also produces other absorbent pads that utilize the features of
its Dri-Loc(R) pads, including the Company's Pad-Loc(TM) pad for
the poultry processor industry. These products are used in meat,
fish and poultry trays to absorb excess fluids and are sold
primarily in North America, Europe and the Asia/Pacific region.
During 1995, the Company began offering its Dri-Loc(R) theft
sensor pads, which incorporate a component that can be used with
electronic surveillance systems in supermarkets to reduce theft.
The Company's Dri-Loc(R) pads consist of two layers of
polyethylene film sealed on all four sides which enclose a layer
of fluffed virgin wood-pulp fibers. On one side, the layer of
film has tiny openings that permit fluids to be absorbed and
retained by the enclosed fibers. The Company believes that Dri-
Loc(R) pads are more effective and aesthetically attractive than
conventional absorbent pads.
The Company also manufactures conventional padding,
sold as individual pads and in roll stock form for use by
converters and processors to prepad trays. This padding consists
of layers of bleached crepe tissue with one or two outer layers
of polyethylene film. The Company also sells supermarket display
case liners, which are similar in construction to conventional
padding, under the trademark Cellu Liner(TM).
During 1995, the Company began offering All Star(TM)
produce bagging systems, which consist of easy-open plastic bags
with star seal bottoms that are dispensed one at a time through
dispensers supplied by the Company, for use in supermarket
produce departments.
Flexible Films and Related Equipment
The Company produces a variety of flexible films, bags
and pouches and associated packaging systems marketed and sold
primarily in Australasia and Europe and used to package a broad
range of perishable foods such as meat, poultry, fish, prepared
foods, cheese and other dairy products.
The Company produces proprietary flexible films, bags
and pouches in permeable and barrier varieties. The Company's
permeable films, bags and pouches are designed primarily for
frozen or dried foods. The oxygen permeability and water vapor
barrier properties of the film allow for the retention of fresh
product color and appearance to enhance product presentation.
The Company's barrier films, bags and pouches provide a high
barrier to oxygen and water, allowing extended storage for fresh
chilled or processed products by preserving the texture, taste
and moisture balance of the chilled or processed product. Both
permeable and barrier films and bags are produced in various
grades to meet customer requirements.
The Company markets permeable and barrier shrinkbags
under the Shrinkvac(R) trademark and barrier shrinkbags under the
Perflex(TM) trademark. Permeable and barrier vacuum skin
packaging is marketed under the Intact(R) and Tri-Fresh(TM)
trademarks. The Company also offers Tuf-Flex(TM) barrier pouches
with high puncture resistance.
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The Company's food packaging equipment offerings
include automatic film and bag making, dispensing and loading
units to package foods in vacuum or vacuum skin packages using
the Company's films. Systems are marketed to the food processing
industry under the Intact(R), Flexibag(TM) and other trademarks.
The Company also manufactures printed co-extruded films
for frozen food and similar loose product packaging as well as a
wide range of mono- and multi-layer films for other food and
general applications.
OTHER PRODUCTS
The Company's other products consist primarily of
specialty adhesive products, loose-fill polystyrene packaging,
products that control static electricity, and recreation and
energy conservation products.
Through a subsidiary in New Zealand, the Company
manufactures and sells a wide range of specialty adhesive tapes
on a variety of substrates. These specialty adhesive tapes
provide custom formulations for a wide range of applications that
include the tape strip or closure tape for disposable diapers,
foil tapes used in heating, air conditioning and refrigeration,
and cloth based tapes used in construction and underground
applications on pipe work for corrosion protection.
Subsidiaries of the Company in the Asia/Pacific region
and Mexico produce loose-fill polystyrene packaging for sale
under the trademark Mic-Pac(R) to customers in those countries.
In addition to air cellular cushioning materials and
polyethylene foam with anti-static properties, the Company sells
other products related to the elimination and neutralization of
static electricity, including conductive shielding bags and floor
and benchtop mats. Static control products, which are sold
primarily in the Asia/Pacific region, are used principally by
manufacturers of static-sensitive microelectronic devices.
In certain countries, subsidiaries of the Company sell
translucent air cellular material similar to AirCap(R) cushioning
that is fabricated into solar pool covers. In the United States,
the Company manufactures and sells solar heating systems for
swimming pools that use thermostatically controlled pumps to
circulate pool water through plastic solar collector panels.
FOREIGN OPERATIONS
The Company sells most of its product lines in a number
of foreign countries as well as in the United States, as
described more fully above. In addition, the Company has foreign
licensees that manufacture certain of its protective packaging
products in Australia, Chile, England, Germany, Japan, New Zealand,
South Africa and Sweden. Licensing revenues are not material to
the Company's consolidated financial statements.
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During 1995, 1994 and 1993, foreign net sales
represented approximately 39%, 29% and 27%, respectively, of the
Company's total net sales, while operating profit from foreign
operations represented approximately 30%, 21% and 20%,
respectively, of the Company's total operating profit. For a
discussion of the factors affecting these changes in foreign net
sales and operating profit, see Management's Discussion and
Analysis of Results of Operations and Financial Condition, which
appears in the Company's 1995 Annual Report to Stockholders and
is incorporated by reference into Item 7 of this Annual Report on
Form 10-K. In maintaining its foreign operations, the Company
runs the risks inherent in such operations, including those of
currency fluctuations.
MARKETING, DISTRIBUTION AND CUSTOMERS
The Company employs several hundred sales and account
representatives in the countries in which it has operations who
market the Company's products through a large number of
distributors, fabricators and converters as well as directly to
end users. In the United States and certain other countries, the
Company has separate sales and marketing groups for its
engineered products, its surface protection and other cushioning
products, its food packaging products and certain of its other
products. These groups often work together to develop market
opportunities for the Company's products.
To assist its marketing efforts and to provide
specialized customer services, the Company maintains packaging
laboratories in many of its United States and foreign facilities.
These laboratories are staffed by professional packaging
engineers and equipped with drop-testing and other equipment used
to develop and test cost-effective package designs to meet the
particular protective packaging requirements of each customer.
Certain of these laboratories also design and construct molds for
Instapak(R) packaging customers who prefer to use preformed foam
cushions.
The Company has no material long-term contracts for the
distribution of its packaging products. In 1995, no customer or
affiliated group of customers accounted for as much as 10% of the
Company's consolidated net sales.
RAW MATERIALS
The raw materials utilized in the Company's operations
generally have been readily available on the open market and are
purchased from several suppliers, reprocessed from scrap
generated in the Company's manufacturing operations or obtained
through participation in recycling programs. The principal raw
materials used in the Company's operations include polyethylene
resins and films, polyurethane chemicals, and paper and wood pulp
products (including recycled or reprocessed paper products,
resins, films and chemicals), and blowing agents used in foam
products.
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PRODUCT DEVELOPMENT
The Company incurred expenses of $14,597,000 related to
Company-sponsored research and development in 1995 compared with
$10,912,000 during 1994 and $9,168,000 during 1993. The Company
maintains a continuing effort to develop new products based on
its existing product lines as well as new packaging and non-
packaging applications for its products. The Company also
maintains ongoing efforts to add or increase recycled or
reprocessed content in its product lines.
PATENTS AND LICENSES
The Company is the owner or licensee of a number of
United States and foreign patents and patent applications that
relate to certain of its products, manufacturing processes and
equipment. While some of these patents and licenses, as well as
certain trademarks which the Company owns, offer some protection
and competitive advantage for the Company's products and their
manufacture, the Company believes that its success depends
primarily on its marketing, engineering and manufacturing skills
and on its research and product technology.
COMPETITION
The Company's products compete with similar products
made by others and with a number of other packaging materials,
including various forms of paper packaging products, expanded
plastics, corrugated die cuts, loosefill packaging materials, and
with envelopes, reinforced bags, boxes and other containers and
various corrugated materials. Heavy-duty applications of the
Company's engineered products also compete with various types of
molded foam plastics, fabricated foam plastics and mechanical
shock mounts and with wood blocking and bracing systems. Certain
firms producing competing products are well established and may
have greater financial resources than the Company. Competition
for most of the Company's protective and specialty packaging
products is based primarily on packaging performance
characteristics, service and price. As discussed below under
"Environmental Matters," the Company is also subject to
competitive factors affecting packaging materials that are based
upon customers' environmental preferences.
The Company believes that it is a leading manufacturer
of air cellular cushioning materials containing a barrier layer
and polyurethane foam packaging systems in the geographic areas
in which it sells these products.
There are a number of competing manufacturers of food
packaging products. The Company believes that its Dri-Loc(R)
products have a competitive advantage over conventional pads
because of their efficiency and aesthetic appearance.
Conventional pads and display case liners compete primarily on
the basis of price, absorbency and service. The Company believes
it is one of the leading suppliers of meat, fish and poultry
absorbent pads to supermarkets and poultry processors in the
United States and Europe. The Company's food packaging films and
systems compete with similar flexible films and systems produced
by other companies around the world as well as with other food
packaging materials.
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ENVIRONMENTAL MATTERS
The Company, like other manufacturers, is subject to
various laws, rules and regulations in the countries,
jurisdictions and localities in which it operates regulating the
discharge of materials into the environment or otherwise relating
to the protection of the environment. The Company believes that
compliance with current environmental laws and regulations has
not had a material effect on the Company's capital expenditures
or financial position.
In some jurisdictions in which the Company's packaging
products are sold or used, laws and regulations have been adopted
or proposed that seek to regulate, among other things, recycled
or reprocessed content, sale and disposal of packaging materials.
In addition, customer demand for packaging materials that are
viewed as being "environmentally responsible" and that minimize
the generation of solid waste continues to evolve. While these
issues have become a competitive factor in the marketplace for
packaging materials, the Company maintains active programs
designed to comply with these laws and regulations, to monitor
their evolution, and to meet such customer demand. The Company
believes that its protective packaging materials offer superior
packaging protection, enabling customers to achieve lower package
cube and weight using the Company's protective packaging
materials than with many alternative packaging methods, thereby
reducing the disposal of damaged products as well as the
generation of packaging waste. Because the Company offers both
plastic-based and paper-based protective packaging materials,
customers can select the protective packaging materials that they
consider to best meet their performance and cost needs and
environmental preferences. A number of the Company's product
lines incorporate recycled or reprocessed content, and the
Company maintains ongoing efforts to add or increase recycled or
reprocessed content in many of its product lines.
The Company also supports its customers' interests in
eliminating waste by offering or participating in collection
programs for certain of the Company's products or product
packaging and for materials used in certain of the Company's
products, including programs aimed at recovering and recycling
polyethylene materials from customers in the United States, an
Instapak(R) foam return program with return sites throughout the
United States, collection programs for packaging materials in
Germany and elsewhere in Europe, and local newspaper collection
programs to obtain materials used to produce Jiffy(TM) padded
mailers and certain other products. Whenever possible, materials
collected through these collection programs are reprocessed and
either reused in the Company's operations or offered to other
manufacturers for use in other products. Certain of the
Company's protective packaging products can be reused and, as an
alternative to recycling or disposal in solid waste landfills,
are suitable fuel sources for waste-to-energy conversion
facilities.
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EMPLOYEES
At December 31, 1995, the Company had approximately
3,940 employees, with approximately 280 employees covered by
collective bargaining agreements. The Company believes that its
employee relations are satisfactory.
ITEM 2. PROPERTIES
The Company has manufacturing facilities at twenty-five
locations in the United States, two other locations in North
America, including facilities in Canada and Mexico, fifteen
locations in Europe, including facilities in England, France,
Germany, Italy, the Netherlands, Norway, Spain and Sweden, and
six locations in the Asia/Pacific region, including two
facilities in New Zealand and facilities in Hong Kong, Malaysia,
Singapore and Taiwan. The Company occupies other facilities
containing sales, technical, warehouse or administrative offices
at several locations in the United States and in the other
countries in which the Company conducts business.
In the United States, the Company's Instapak(R)
products are manufactured at facilities in Connecticut and North
Carolina, its surface protection and other cushioning products
and certain of its other products are manufactured at facilities
in California, Georgia, Illinois, Massachusetts, Mississippi, New
Jersey, New York, North Carolina, Pennsylvania, Texas and
Washington, and its food packaging products are manufactured at
facilities in California, Mississippi, North Carolina and
Pennsylvania. Because of the light but bulky nature of the
Company's air cellular, polyethylene foam and protective mailer
products, significant freight savings may be realized by locating
manufacturing facilities for these products near markets. To
realize the benefit of such savings, the Company has facilities
for manufacturing these products in various locations in
proximity to major markets.
The Company owns twenty-four of its manufacturing
facilities, certain of which are owned subject to mortgages or
similar financing arrangements. The balance of the Company's
manufacturing facilities are located in leased premises. The
Company's manufacturing facilities are usually located in general
purpose buildings in which the Company's specialized machinery
for the manufacture of one or more products is contained. The
Company considers its manufacturing facilities to be well
maintained, suitable for their purposes, and adequate for the
Company's needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various lawsuits and
administrative and other proceedings incidental to its business,
including certain federal or state governmental environmental
proceedings or private environmental claims relating to Superfund
sites or other alleged clean-up obligations. The Company
believes that its liability with respect to such proceedings is
not material.
13
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's
stockholders during the fourth quarter of 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing in the table below sets forth
the current position or positions held by each executive officer
of the Company, his or her age as of March 15, 1996, the year in
which he or she first was elected to the position currently held,
and the year in which he or she first was elected an officer of
the Company.
All of the Company's officers serve at the pleasure of
the Board of Directors. All officers have been employed by the
Company or its subsidiaries for more than five years. There are
no family relationships among any of the Company's officers or
directors.
Name and Age as of First Elected to First Elected
Current Position March 15, 1996 Current Position an Officer
T. J. Dermot Dunphy 63 1971 1971
President, Chief
Executive Officer
and Director
William V. Hickey 51 1995 1980
Executive Vice President
and Chief Operating Officer
Elmer N. Funkhouser III 54 1984 1982
Senior Vice President
Warren H. McCandless 55 1994 1990
Senior Vice President-
Finance
Dale Wormwood 61 1991 1989
Senior Vice President
13
<PAGE>
Name and Age as of First Elected to First Elected
Current Position March 15, 1996 Current Position an Officer
Jonathan B. Baker 43 1994 1994
Vice President
James A. Bixby 52 1990 1990
Vice President
Mary A. Coventry 42 1994 1994
Vice President
Bruce A. Cruikshank 53 1990 1990
Vice President
Jean-Luc Debry 50 1992 1992
Vice President
Paul B. Hogan 56 1995 1995
Vice President
James P. Mix 44 1994 1994
Vice President
Robert A. Pesci 50 1990 1990
Vice President
Abraham N. Reichental 39 1994 1994
Vice President
Horst Tebbe 55 1986 1986
Vice President
Robert M. Grace, Jr. 49 1981 1981
General Counsel
H. Katherine White 50 1996 1996
Secretary
14
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
The information appearing under the caption "Common
Stock Information" in the Company's 1995 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing under the caption "Selected
Financial Data" in the Company's 1995 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information appearing under the caption
"Management's Discussion and Analysis of Results of Operations
and Financial Condition" in the Company's 1995 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INTERIM FINANCIAL INFORMATION (UNAUDITED)
The information appearing under the caption "Interim
Financial Information (Unaudited)" in the Company's 1995 Annual
Report to Stockholders is incorporated herein by reference.
FINANCIAL STATEMENTS AND SCHEDULE
See Index to Consolidated Financial Statements and
Schedule on page F-2 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
15
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Part of the information required in response to this
Item is set forth in Part I of this Annual Report on Form 10-K
under the caption "Executive Officers of the Registrant," and the
balance will be set forth in the Company's Proxy Statement for
its 1996 Annual Meeting of Stockholders under the caption
"Information Concerning Nominees." All such information is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required in response to this Item will
be set forth in the Company's Proxy Statement for its 1996 Annual
Meeting of Stockholders under the caption "Directors'
Compensation," under the subheadings "Summary Compensation Table"
and "Compensation Committee Interlocks and Insider Participation"
under the caption "Executive Compensation," and under the caption
"Amendment of the Restricted Stock Plan for Non-Employee
Directors - The Directors Stock Plan (as currently in effect)."
Such information is incorporated herein by reference, except such
incorporated information does not include the information under
the subheadings "Report of Organization and Compensation
Committee on Executive Compensation" and "Common Stock
Performance Comparison" under the caption "Executive
Compensation" in such Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information required in response to this Item will
be set forth in the Company's Proxy Statement for its 1996 Annual
Meeting of Stockholders under the caption "Voting Securities,"
and such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
16
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS A PART OF THIS ANNUAL REPORT ON FORM
10-K:
(i) Financial Statements and Financial Statement
Schedule
See Index to Consolidated Financial Statements and
Schedule on page F-2 herein.
(ii) Exhibits
Exhibit Number Description
3.1 Unofficial Composite Certificate of Incorporation
of the Company as currently in effect. (Exhibit
3.2 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1995, File
No. 1-7834, is incorporated herein by reference.)
3.2 By-Laws of the Company as currently in effect.
(Exhibit 3.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1993, File No. 1-7834, is incorporated herein by
reference.)
4.1 Credit Agreement dated as of June 8, 1994 among
the Company, certain of its subsidiaries, various
banks and Bankers Trust Company, as agent (Exhibit
4 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1994, File
No. 1-7834, is incorporated herein by reference.)
4.2 Consent to Credit Agreement among the Company,
certain of its subsidiaries, various financial
institutions and Bankers Trust Company, as agent,
dated as of December 7, 1994 (Exhibit 4.1 to the
Company's Current Report on Form 8-K, Date of
Report January 10, 1995, File No. 1-7834, is
incorporated herein by reference.)
4.3 Amendment No. 1 to Credit Agreement among the
Company, certain of its subsidiaries, various
financial institutions and Bankers Trust Company,
as agent, dated as of January 3, 1995 (Exhibit 4.2
to the Company's Current Report on Form 8-K, Date
of Report January 10, 1995, File No. 1-7834, is
incorporated herein by reference.)
4.4 Second Amendment to Credit Agreement among the
company, certain of its subsidiaries, Bankers
Trust Company, as agent, and various financial
17
<PAGE>
institutions dated as of July 21, 1995 (Exhibit 4
to the Company's Quarterly Report on Form 10-Q for
the quarterly period ending September 30, 1995,
File No. 1-7834, is incorporated herein by
reference.)
4.5 Consent to Credit Agreement among the Company,
certain of its subsidiaries, various financial
institutions and Bankers Trust Company, as agent,
dated as of November 2, 1995.
4.6 Third Amendment to Credit Agreement among the
company, certain of its subsidiaries, Bankers
Trust Company, as agent, and various financial
institutions dated as of January 11, 1996.
10.1 Contingent Stock Plan of the Company, as amended.
(Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30,
1995, File No. 1-7834, is incorporated herein by
reference.)*
10.2 Restricted Stock Plan for Non-Employee Directors
of the Company, as amended.*
10.3 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 (Exhibit 2 to the Company's
Current Report on Form 8-K, Date of Report January
10, 1995, File No. 1-7834, is incorporated herein
by reference.)
13 Portions of the Company's 1995 Annual Report to
Stockholders that are incorporated by reference
into this Annual Report on Form 10-K.
21 Subsidiaries of the Company.
23 Consent of KPMG Peat Marwick LLP.
27 Financial Data Schedule
*Compensatory plan or arrangement of management required to be
filed as an exhibit to this report on Form 10-K.
(b) REPORTS ON FORM 8-K:
The Company did not file any reports on Form 8-K during the
fiscal quarter ended December 31, 1995.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SEALED AIR CORPORATION
(Registrant)
Date: March 26, 1996 By s/T. J. DERMOT DUNPHY
T. J. Dermot Dunphy
President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date
By s/ T. J. DERMOT DUNPHY March 26, 1996
T. J. Dermot Dunphy
President and Director
(Principal Executive Officer)
By s/ WARREN H. MCCANDLESS March 26, 1996
Warren H. McCandless
Senior Vice President-Finance
(Principal Financial Officer
and Principal Accounting Officer)
By s/ JOHN K. CASTLE March 26, 1996
John K. Castle
Director
By s/ LAWRENCE R. CODEY March 26, 1996
Lawrence R. Codey
Director
19
<PAGE>
By s/ CHARLES F. FARRELL, JR. March 26, 1996
Charles F. Farrell, Jr.
Director
By s/ DAVID FREEMAN March 26, 1996
David Freeman
Director
By s/ ALAN H. MILLER March 26, 1996
Alan H. Miller
Director
By s/ R. L. SAN SOUCIE March 26, 1996
R. L. San Soucie
Director
20
<PAGE>
SEALED AIR CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Years ended December 31, 1995, 1994 and 1993
F-1
<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Page
Independent Auditors' Report *
Financial Statements:
Consolidated Statements of Earnings for the years
ended December 31, 1995, 1994 and 1993 *
Consolidated Balance Sheets - December 31, 1995 and 1994 *
Consolidated Statements of Shareholders' Equity (Deficit)
for the years ended December 31, 1995, 1994 and 1993 *
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 *
Notes to Consolidated Financial Statements *
Independent Auditors' Report on Schedule F-3
Consolidated Schedule:
II - Valuation and Qualifying Accounts F-4
*The information required appears on pages 17 through 36 of the
Company's 1995 Annual Report to Stockholders and is incorporated by
reference into this Annual Report on Form 10-K.
All other schedules are omitted, as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related notes.
F-2
<PAGE>
Independent Auditor's Report on Schedule
The Board of Directors and Shareholders
Sealed Air Corporation:
Under date of January 17, 1996, we reported on the consolidated
balance sheets of Sealed Air Corporation and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements
of earnings, shareholders' equity (deficit), and cash flows for each
of the years in the three-year period ended December 31, 1995, as
contained in the 1995 annual report to shareholders. These
consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the
year 1995. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related
consolidated financial statement schedule as listed in the
accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is
to express an opinion on this financial statement schedule based on
our audits.
In our opinion, such financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information
set forth therein.
s/KPMG Peat Marwick LLP
Short Hills, New Jersey
January 17, 1996
F-3
<PAGE>
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS - SCHEDULE II
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(In thousands of dollars)
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS AND OTHER DEDUCTIONS BALANCE AT
DESCRIPTION OF YEAR EXPENSES ACCOUNTS (1) (2) END OF YEAR
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995
Allowance for doubtful
accounts $3,970 $2,421 $ 350 $1,480 $5,261
Year ended December 31, 1994
Allowance for doubtful
accounts $2,675 $1,210 $ 764 $ 679 $3,970
Year ended December 31, 1993
Allowance for doubtful
accounts $2,665 $ 734 $ 6 $ 730 $2,675
<FN>
(1) Primarily recoveries of bad debts and allowance for doubtful accounts of
companies acquired at dates of acquisition.
(2) Primarily accounts receivable balances written off.
</FN>
</TABLE>
F-4
<PAGE>
EXHIBIT 4.5
CONSENT TO CREDIT AGREEMENT
CONSENT TO CREDIT AGREEMENT (this "Consent"), dated as of November
2, 1995, among SEALED AIR CORPORATION, a Delaware corporation (the "Company"),
SEALED AIR B. V., a corporation organized and existing under the laws of the
Netherlands, SEALED AIR LIMITED, a corporation organized and existing under
the laws of England, SEALED AIR (NZ) LIMITED, a corporation organized and
existing under the laws of New Zealand (each a "Subsidiary Borrower" and
together with the Company, the "Borrowers", and each a "Borrower"), BANKERS
TRUST COMPANY, as Agent (the "Agent") and the lenders party to the Credit
Agreement referred to below. All capitalized terms used herein and not
otherwise defined herein shall have the respective meaning as provided such
terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrowers, various lender (the "Banks") and the Agent
are parties to a Credit Agreement, dated as of June 8, 1994 (the "Credit
Agreement");
WHEREAS, the company has requested that the Banks agree to the
issuance of two Letters of Credit that have an expiry date of longer than 12
months; and
WHEREAS, in connection with the foregoing, the parties hereto wish
to consent to a modification to the Credit Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. Notwithstanding anything to the contrary contained in Section
2.01(c) (ii) (x) of the Credit Agreement, the Banks hereby agree that BTCo
may issue two Letters of Credit for the account of the Company with expiry
dates of longer than 12 months so long as such expiry dates are otherwise prior
to the Final Maturity Date.
2. This Consent 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.
3. This Consent 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 Agent.
4. THIS CONSENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
5. This Consent shall become effective on the date (the "Consent
Effective Date") when the Borrowers, the Agent and the Required Banks shall
have signed a counterpart hereof (whether the same or different counterparts)
and shall have delivered (including by way of telecopier) the same to the
Agent at its Notice office.
6. From and after the Consent Effective Date, all references in
the Credit Agreement and each of the Credit Documents to the Credit Documents
to the Credit Agreement, shall be deemed to be references to the Credit
Agreement as modified hereby.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Consent to be duly executed and delivered as of the date
first above written.
SEALED AIR CORPORATION
By s/Warren H. McCandless
Title: Senior Vice President-Finance
SEALED AIR B. V.
By s/William V. Hickey
Title: Managing Director
SEALED AIR LIMITED
By s/William V. Hickey
Title: Attorney-in-Fact
SEALED AIR (NZ) LIMITED
By s/William V. Hickey
Title: Director
BANKERS TRUST COMPANY,
Individually and as Agent
By s/______________________________
Title: Vice President
ABN AMRO BANK N. V. NEW YORK
BRANCH
By s/John W. Deegan
Title: Vice President
By s/David W. Stack
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
By s/
Title: Vice President
CAMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENE
By s/______________________________
Title:
By s/______________________________
Title:
NATIONSBANK, N.A.
By s/______________________________
Title:
UNITED JERSEY BANK
By s/______________________________
Title:
THE BANK OF NOVA SCOTIA
By s/
Title: Vice President
CAMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENE
By s/Brian O'Leary
Title: Vice President
By s/Sean Mounier
Title: First Vice President
NATIONSBANK, N.A.
By s/______________________________
Title: Vice President
UNITED JERSEY BANK
By s/Lawrence F. Zema
Title: Vice President & Regional Manager
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: s/
Title
CREDIT LYONNAIS, NEW YORK
BRANCH
By s/
Title:
CORESTATES BANK, N.A.
By s/
Title:
THE FIRST NATIONAL BANK OF
BOSTON
By s/
Title: Director
FLEET BANK N.A.
By s/
Title: Senior Vice President
THE NORTHERN TRUST COMPANY
By s/ Lawson E. Whiting
Title: Commerical Banking Officer
TORONTO DOMINION (NEW YORK),
INC.
By s/
Title: Managing Director
MIDLAND BANK PLC
NEW YORK BRANCH
By s/
Title: Authorized Signatory
Exhibit 4.6
THIRD AMENDMENT
THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
January 11, 1996, among SEALED AIR CORPORATION, a Delaware corporation (the
"Company"), SEALED AIR B.V., a corporation organized and existing under the
laws of the Netherlands, SEALED AIR LIMITED, a corporation organized and
existing under the laws of England, SEALED AIR (NZ) LIMITED, a corporation
organized and existing under the laws of New Zealand (each a "Subsidiary
Borrower" and together with the Company, the "Borrowers", and each a
"Borrower"), BANKERS TRUST COMPANY, as Agent (the "Agent") and the lenders
party to the Credit Agreement referred to below. All capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
provided such terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrowers, various lenders (the "Banks") and the Agent
are parties to a Credit Agreement, dated as of June 8, 1994 (as amended,
modified or supplemented through the date hereof, the "Credit Agreement");
and
WHEREAS, the parties hereto wish to further amend the Credit
Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. Section 8.01 of the Credit Agreement is hereby amended by (i)
deleting the word "and" appearing at the end of clause (x) thereof, (ii)
deleting the period appearing at the end of clause (xi) thereof and
inserting "; and" in lieu thereof and (iii) inserting the following new
clause (xii) at the end thereof:
"(xii) additional Liens on assets of the Company or any of its
Subsidiaries so long as such Liens (i) only attach to those assets that
comprise the non-United States operations of the Company or such Subsidiary
and (ii) the aggregate principal amount of all Indebtedness and other
obligations secured by such Liens does not exceed $10,000,000 (or the Dollar
Equivalent thereof in the case of Indebtedness or other obligations incurred
in a currency other than Dollars) at any time outstanding."
2. The Banks hereby acknowledge and agree that from and after the
Amendment Effective Date (as defined below) the Company shall not be
required to deliver the monthly reports pursuant to Section 7.01(a) of the
Credit Agreement.
3. 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.
4. 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 Agent.
5. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.
6. This Amendment shall become effective on the date (the
"Amendment Effective Date") when the Borrowers and the Required Banks
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of telecopier)
the same to the Agent at its Notice Office.
7. From and after the Amendment Effective Date, all references
in the Credit Agreement and each of the Credit Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement as
modified 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.
SEALED AIR CORPORATION
By s/ Warren H. McCandless
Title: Senior Vice President - Finance
SEALED AIR B.V.
By s/William V. Hickey
Title: Managing Director
SEALED AIR LIMITED
By s/William V. Hickey
Title: Attorney in Fact
SEALED AIR (NZ) LIMITED
By s/
Title: Director
BANKERS TRUST COMPANY,
Individually and as Agent
By s/ Dana Klein
Title: Vice President
ABN AMRO BANK N.V. NEW YORK
BRANCH
By s/__________________________
Title:
By s/__________________________
Title:
THE BANK OF NOVA SCOTIA
By s/__________________________
Title:
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By s/Brian O'Leary
Title: Vice President
By s/ Sean Mounier
Title: First Vice President
NATIONSBANK, N.A.
By s/
Title: Vice President
UNITED JERSEY BANK
By s/Lawrence F. Zema
Title: Vice President & Regional Manager
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By s/ Frederick K. Kammler
Title: Vice President
By s/ William C. Maier
Title: Vice President - Group Manager
CREDIT LYONNAIS, NEW YORK
BRANCH
By s/ Mary E. Collier
Title:
CORESTATES BANK, N.A.
By s/
Title: Vice President
THE FIRST NATIONAL BANK OF
BOSTON
By s/
Title: Director
FLEET BANK N.A.
By s/___________________________
Title: Senior Vice President
THE NORTHERN TRUST COMPANY
By s/Lawson E. Whiting
Title: Commercial Banking Officer
TORONTO DOMINION (NEW YORK),
INC.
By s/Debbie A. Greene
Title: Vice President
MIDLAND BANK PLC NEW YORK
BRANCH
By s/
Title: Authorized Signatory
Exhibit 10.2
RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
OF
SEALED AIR CORPORATION,
AS AMENDED
Section 1. Purpose. The Restricted Stock Plan for Non-Employee
Directors (the "Plan") of Sealed Air Corporation (the "Corporation") is
designed to enhance the ability of the Corporation to attract, retain and
motivate Non-Employee Directors (as defined in Section 3) of exceptional
ability and to promote the common interest of directors and stockholders in
enhancing the value of the Corporation's Common Stock. It is the intention of
the Plan to provide for payment in shares of the Corporation's common stock,
par value $0.01 per share ("Common Stock"), of all or a portion of the annual
retainer paid to each Non-Employee Director for serving as a director of the
Corporation.
Section 2. Stock Available. The stock subject to the Plan shall
be such authorized but unissued or treasury shares of Common Stock as shall
from time to time be available for issuance pursuant to the Plan. The total
amount of Common Stock which may be issued pursuant to the Plan is 75,000
shares, subject to adjustment in accordance with the provisions of Section 7.
Section 3. Eligibility. Each Non-Employee Director of the
Corporation shall be eligible to participate in the Plan. As used in the Plan,
the term "Non-Employee Director" shall include any person who, at the time of
his or her election to the Board of Directors of the Corporation, is not an
officer or employee of the Corporation or any of its Subsidiaries (as such term
is defined in Section 16). Any Non-Employee Director who becomes an officer
or employee of the Corporation or any of its Subsidiaries shall cease to be
eligible to participate in the Plan for so long as such person remains as such
an officer or employee.
Section 4. Grants of Shares. Grants of shares of Common Stock
available for issuance under the Plan shall be made as follows:
(a) Initial Grants. On the date any Non-Employee Director is first
elected a director of the Corporation on or after the Effective Date (as
defined in Section 20) of the Plan, such Non-Employee Director shall receive a
grant of 500 shares of Common Stock pursuant to the Plan; provided that such
grant shall not be made to a Non-Employee Director who was, within twelve (12)
months immediately preceding his or her election as a director, an officer or
employee of the Corporation or any of its Subsidiaries.
(b) Annual Grants. On the date on which each Non-Employee Director
is elected a director of the Corporation at each annual meeting of the
stockholders of the Corporation, held on or after the Effective Date of the
Plan, such Non-Employee Director shall receive a grant of shares of Common
Stock pursuant to the Plan calculated by dividing $15,000 by the Fair Market
Value per Share (as defined in Section 4(d)) of the Corporation's Common Stock
at the close of business on such date. In the event that such quotient is
other than a round lot of shares of the Corporation's Common Stock, the number
of shares to be issued to such Non-Employee Director pursuant to such grant
shall be rounded up or down to the next nearest round lot in accordance with
Section 4(e).
(c) Interim Grants. In the event that, on or after the Effective
Date of the Plan, any Non-Employee Director is elected a director at other
than an annual meeting of the stockholders of the Corporation, in addition to
any shares of Common Stock granted to such director pursuant to Section 4(a),
such Non-Employee Director shall also receive on the date of such Non-Employee
Director's election a grant of shares of Common Stock pursuant to the Plan
calculated by (i) dividing $15,000 by the Fair Market Value Per Share of the
Corporation's Common Stock at the close of business on such date and (ii)
multiplying such quotient by a fraction the numerator of which shall be the
number of days remaining from the date of such Non-Employee Director's election
to the date of the next annual meeting of the stockholders of the Corporation
provided for in accordance with the By-Laws of the Corporation as then in
effect and the denominator of which shall be 365. In the event that such
product is other than a round lot of shares of the Corporation's Common Stock,
the number of shares to be issued to such Non-Employee Director pursuant to
such grant shall be rounded up or down to the next nearest round lot in
accordance with Section 4(e).
(d) Fair Market Value Per Share. As used in the Plan, the term
"Fair Market Value Per Share" shall mean the last sales price of the Common
Stock as reported on the composite transaction reporting system for New York
Stock Exchange listed issues on the day on which a grant is made pursuant to
the Plan or, if no sales occurred on such date, the last sales price on such
composite transaction reporting system on the most recent day prior to such
day on which a sale occurred.
(e) Rounding. In the event that rounding of a grant is required
pursuant to Section 4(b) or 4(c), an odd lot of 50 or more shares of Common
Stock shall be rounded to the next highest round lot and an odd lot of less
than 50 shares of Common Stock shall be rounded to the next lowest round lot.
(f) Non-Transferability of Grants. Except as provided below, no
grant of shares of Common Stock pursuant to the Plan shall be transferable by
the recipient of such grant, and no shares of Common Stock issued pursuant to
the Plan, or any interest therein, may be sold, transferred, pledged, encumbered
or otherwise disposed of (including without limitation by way of gift o
r donation) by the Non-Employee Director to whom such shares are issued as long
as such Non-Employee Director shall remain a director of the Corporation. Each
Non-Employee Director may provide the Corporation with a written designation in
form satisfactory to the Corporation's counsel designating a person or persons
("Beneficiary") entitled to receive shares to be issued pursuant to a grant of
shares under the Plan upon the death of such Non-Employee Director after such
grant but prior to the issuance of shares pursuant to such grant. The
Corporation shall honor each such written designation, provided that the
Beneficiary named in such designation shall take all steps necessary to comply
with the Plan, including the payment of the Issue Price (as defined below) for
such shares if not paid by the Non-Employee Director and the execution of any
agreement reasonably required by counsel to the Corporation in order to comply
with the Plan or with federal or state securities laws or other legal
requirements.
(g) Execution of Agreement. Each grant of Common Stock pursuant to
this Section 4 shall be contingent upon and subject to (i) payment by such
Non-Employee Director pursuant to Section 5 of the Issue Price for the shares
covered by such grant and (ii) the execution by the Non-Employee Director (or
by his or her Beneficiary) of a document agreeing to hold the shares of Common
Stock covered by such grant in accordance with the terms and conditions of the
Plan (including without limitation Sections 4(c) and 13) and containing such
other terms and conditions as may be required by counsel to the Corporation
in order to comply with federal or state securities laws or other legal
requirements.
Section 5. Issue Price of Common Stock. Prior to the issuance of
Common Stock to a Non-Employee Director pursuant to the Plan, the Non-Employee
Director shall pay to the Corporation an amount of money per share ("Issue
Price") equal to the lesser of (a) $1.00 per share and (b) ten percent (10%)
of the Fair Market Value Per Share thereof; provided, however, that such amount
shall not be less per share than the par value per share of the Common Stock.
The Issue Price for shares of Common Stock granted pursuant to the Plan shall
be tendered to the Corporation within thirty (30) days after notice of the
amount thereof is given by the Corporation to the recipient of such shares.
Section 6. Change in Control. Notwithstanding any other provision
of the Plan, in the event that (i) the Corporation is merged into or
consolidated with another corporation or other entity and as a result of such
merger or consolidation less than 70% of the combined voting power of the
outstanding voting securities of the surviving or resulting corporation or
other entity shall, after giving effect to such merger or consolidation, be
"beneficially owned" (within the meaning of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Securities Exchange Act"))
in the aggregate, directly or indirectly, by the former stockholders of the
Corporation (excluding from such computation any such securities beneficially
owned, directly or indirectly, by "affiliates" of the Corporation (as defined
in Rule 12b-2 under the Securities Exchange Act) and any such securities so
beneficially owned, directly or indirectly, by a party to such merger or
consolidation), (ii) the Corporation shall sell all or substantially all of
its assets, (iii) any "person" is or becomes the "beneficial owner" (as the
terms "person" and "beneficial owner" are used in Sections 13(d) and 14(d) of
the Securities Exchange Act), directly or indirectly, of securities of the
Corporation representing 30% or more of the combined voting power of the
Corporation's then outstanding securities, (iv) as a result of any
solicitation subject to Rule 14a-11 under the Securities Exchange Act (or any
successor rule thereto) one or more persons not recommended by or opposed for
election to the Board of Directors by one-third or more of the directors of the
Corporation then in office is or are elected a director of the Corporation, or
(v) the Corporation shall become subject for any reason to a voluntary or
involuntary dissolution or liquidation, then, in any such event, as of the
close of business at the principal executive office of the Corporation on the
business day immediately preceding the date on which such event occurs, for
purposes of the Plan and to the extent that the provisions of the Plan remain
applicable to shares granted under the Plan, the restriction provided for in
Section 4(f) of the Plan shall without further act expire and cease to apply to
any securities granted under the Plan, the requirement of a legend on stock
certificates provided for in Section 9 of the Plan shall without further act
expire and cease to apply to any securities granted under the Plan, and each
Non-Employee Director holding shares issued under the Plan shall thereupon have
the right to receive an unlegended certificate as set forth in the last
sentence of Section 9 of the Plan.
Section 7. Adjustments. In the event of changes in the Common Stock
of the Corporation after the Effective Date of the Plan by reason of any stock
dividend, split-up, combination of shares, reclassification, recapitalization,
merger, consolidation, reorganization or liquidation: (a) the restrictions
provided in Section 4(f) and the requirement of a legend on stock certificates
provided in Sections 9 and 10(d) shall apply to any securities issued in
connection with any such change in respect of stock which has been granted
under the Plan and (b) appropriate adjustments shall be made by the Board of
Directors as to (i) the number of shares to be delivered and the Issue Price
where such change occurred after the date of the grant but before the date the
stock covered by the grant is delivered and (ii) the number and class of shares
available under the Plan in the aggregate, which changes shall be made in the
same manner as such items are adjusted for purposes of the Contingent Stock
Plan of Sealed Air Corporation as then in effect.
Section 8. Action by Corporation. Neither the existence of the Plan
nor the issuance of Common Stock pursuant thereto shall impair the right of the
Corporation or its stockholders to make or effect any adjustments,
recapitalizations or other change in the Common Stock referred to in Section 7,
any change in the Corporation's business, any issuance of debt obligations or
stock by the Corporation or any grant of options on stock of the Corporation.
Section 9. Legend on Stock Certificates. Every certificate of
Common Stock issued pursuant to the Plan shall, so long as the restrictions
imposed by the Plan (including without limitation Section 4(f)) remain
in effect, bear a legend in substantially the following form:
This certificate and the shares represented hereby are held
subject to the terms of the Restricted Stock Plan for Non-Employee
Directors of Sealed Air Corporation, which Plan provides that
neither the shares issued pursuant thereto, nor any interest
therein, may be sold, transferred, pledged, encumbered or otherwise
disposed of (including without limitation by way of gift or donation)
except in accordance with such Plan. A copy of such Plan is
available for inspection at the executive offices of Sealed Air
Corporation.
Each Non-Employee Director may surrender to the Corporation the certificate or
certificates representing such shares in exchange for a new certificate or
certificates, free of the above legend, at any time after either such
Non-Employee Director has ceased to be a director of the Corporation or the
restriction set forth in Section 4(f) has otherwise ceased to apply to the
shares covered by such certificate.
Section 10. Government and Other Regulations and Restrictions.
(a) In General. The issuance by the Corporation of any shares of
Common Stock pursuant to the Plan shall be subject to all applicable laws,
rules and regulations and to such approvals by governmental agencies as may
be required.
(b) Registration of Shares. The Corporation shall use its
reasonable commercial efforts to cause the grants of shares of Common Stock to
be made pursuant to this Plan to be registered under the Securities Act of
1933, as amended (the "Securities Act"), but shall otherwise be under no
obligation to register any shares of Common Stock issued under the Plan under
the Securities Act or otherwise. If, at the time any shares of Common Stock
are issued pursuant to the Plan, there shall not be on file with the Securities
and Exchange Commission an effective Registration Statement under the Securities
Act covering such shares of Common Stock, the Non-Employee Director to whom
such shares are to be issued will execute and deliver to the Corporation upon
receipt by him or her of any such shares an undertaking, in form and substance
satisfactory to the Corporation, that (i) such Non-Employee Director has had
access or will, by reason of such person's service as a director of the
Corporation, or otherwise, have access to sufficient information concerning
the Corporation to enable him or her to evaluate the merits and risks of the
acquisition of shares of the Corporation's Common Stock pursuant to the Plan,
(ii) such Non-Employee Director has such knowledge and experience in financial
and business matters that such person is capable of evaluating such
acquisition, (iii) it is the intention of such Non-Employer Director to acquire
and hold such shares for investment and not for the resale or distribution
thereof, (iv) such Non-Employer Director will comply with the Securities Act
and the Securities Exchange Act with respect to such shares, and (v) such
Non-Employer Director will indemnify the Corporation for any costs, liabilities
and expenses which the Corporation may sustain by reason of any violation of
the Securities Act or the Securities Exchange Act occasioned by any act or
omission on his or her part with respect to such shares.
(c) Resale of Shares. Without limiting the generality of Section 4
(f), shares of Common Stock acquired pursuant to the Plan shall not be sold,
transferred or otherwise disposed of unless and until either (i) such shares
shall have been registered by the Corporation under the Securities Act, (ii)
the Corporation shall have received either a "no action" letter from the
Securities and Exchange Commission or an opinion of counsel acceptable to the
Corporation to the effect that such sale, transfer or other disposition of the
shares may be effected without such registration, or (iii) such sale, transfer
or disposition of the shares is made pursuant to Rule 144 of the General Rules
and Regulations promulgated under the Securities Act, as the same may from time
to time be in effect, and the Corporation shall have received an opinion of
counsel acceptable to the Corporation to such effect.
(d) Legend on Certificates. The Corporation may
require that any certificate or certificates evidencing shares
issued pursuant to the Plan bear a restrictive legend, and be
subject to stop-transfer orders or other actions, intended to
effect compliance with the Securities Act or any other applicable
regulatory measures.
Section 11. Corporation's Right to Terminate
Retention; Non-Exclusivity. Nothing contained in the Plan shall
prevent the Board of Directors from adopting other or additional
compensation arrangements or modifying existing compensation
arrangements for Non-Employee Directors, subject to stockholder
approval if such approval is required by applicable statute, rule
or regulation; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of
the Plan shall not confer upon any member of the Board of
Directors of the Corporation any right to continued membership on
the Board of Directors of the Corporation.
Section 12. No Rights in Common Stock. No Non-
Employee Director or Beneficiary shall have any interest in or be
entitled to any voting rights or dividends or other rights or
privileges of stockholders of the Corporation with respect to any
shares of Common Stock granted pursuant to the Plan unless, and
until, shares of Common Stock are actually issued to such person
and then only from the date such person becomes the record owner
thereof.
Section 13. Tax Withholding. The Corporation shall
make appropriate provisions for the payment of any Federal, state
or local taxes or any other charges that may be required by law
to be withheld by reason of a grant or the issuance of shares of
Common Stock pursuant to the Plan.
Section 14. No Liability. No member of the Board of
Directors of the Corporation, nor any officer or employee of the
Corporation acting on behalf of the Board of Directors of the
Corporation, shall be personally liable for any action,
determination or interpretation taken or made in good faith with
respect to the Plan, and all members of the Board of Directors
and each and any officer or employee of the Corporation acting on
their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Corporation in respect of any
such action, determination or interpretation.
Section 15. Successors. The provisions of the Plan
shall be binding upon and inure to the benefit of all successors
of any person receiving Common Stock of the Corporation pursuant
to the Plan, including, without limitation, the estate of such
person and the executors, administrators or trustees thereof, the
heirs and legatees of such person, and any receiver, trustee in
bankruptcy or representative of creditors of such person.
Section 16. Subsidiaries. For the purposes of the
Plan, the term "Subsidiaries" includes those corporations 50 per
cent or more of whose outstanding voting stock is owned or
controlled, directly or indirectly, by the Corporation and those
partnerships and joint ventures in which the Corporation owns
directly or indirectly a 50 per cent or more interest in the
capital account or earnings.
Section 17. Expenses. The expenses of administering
the Plan shall be borne by the Corporation.
Section 18. Pronouns. Masculine pronouns and other
words of masculine gender shall refer to both men and women.
Section 19. Termination and Amendment of the Plan.
The Board of Directors may from time to time amend this Plan, or
discontinue the Plan or any provisions thereof; provided that no
amendment or modification of the Plan shall, without the prior
approval of the stockholders of the Corporation:
(a) increase the number of shares of Common Stock
available for grant under the Plan;
(b) materially increase the benefits accruing to
participants under the Plan;
(c) modify the requirements as to eligibility for
participation under the Plan; or
(d) change any of the provisions of this Section
19.
No amendment or discontinuation of the Plan or any provision
thereof shall, without the written consent of the participant,
adversely affect any shares theretofore granted to such
participant under the Plan.
Section 20. Effective Date. The Plan became effective
(the "Effective Date") on May 17, 1991 and was amended as of
February 7, 1996.
<TABLE>
EXHIBIT 13
SEALED AIR CORPORATION
1995 ANNUAL REPORT
Selected Financial Data
(In thousands of dollars except per share data)
<CAPTION>
1995(1) 1994 1993 1992 1991(2)
<S> <C> <C> <C> <C> <C>
Consolidated Earnings Statement Data
Net sales by class of product:
Engineered products $252,535 $208,363 $180,508 $176,541 $165,926
Surface protection and other
cushioning products 345,592 242,864 209,909 206,447 199,800
Food packaging products 103,866 56,444 51,023 52,727 49,207
Other products 21,127 11,515 10,254 10,343 20,195
Total 723,120 519,186 451,694 446,058 435,128
Cost of sales 466,952 327,423 282,147 278,427 271,006
Marketing, administrative and
development expenses 147,288 107,854 95,434 95,441 94,642
Operating profit 108,880 83,909 74,113 72,190 69,480
Other income (expense), net (21,726) (22,706) (28,652) (33,372) (38,014)
Earnings before income taxes 87,154 61,203 45,461 38,818 31,466
Income taxes 34,426 23,987 19,547 18,050 15,291
Earnings before cumulative effect of
accounting change and early
redemption of subordinated notes 52,728 37,216 25,914 20,768 16,175
Cumulative effect of accounting change(3) - - 1,459 - -
Early redemption of subordinated
notes, net of income taxes(4) - (5,576) - - -
Net earnings $ 52,728 $ 31,640 $ 27,373 $ 20,768 $ 16,175
Earnings per common share(5):
Before cumulative effect of accounting
change and early redemption of
subordinated notes $ 1.25 $ .94 $ .66 $ .54 $ .44
Cumulative effect of accounting change(3) - - .04 - -
Early redemption of subordinated notes,
net of income taxes(4) - (.14) - - -
Net earnings $ 1.25 $ .80 $ .70 $ .54 $ .44
________________________________________________________________________________________________________
Consolidated Balance Sheet Data
Working capital $ 41,945 $ 15,767 $ 33,828 $ 29,417 $ 18,495
Total assets 443,545 331,117 279,818 268,264 274,877
Long-term debt, less
current installments 149,808 155,293 190,058 225,278 253,746
Shareholders' equity (deficit) 106,338 11,012 (29,419) (66,311) (94,626)
<FN>
(1)Includes the operations of Trigon Industries Limited from the date of its acquisition in January
1995.
(2)Includes the operations of Sentinel Holdings, Inc. from the date of its acquisition in August 1991.
(3)Reflects cumulative effect of the implementation as of January 1, 1993 of Financial Accounting
Standard No. 109, "Accounting for Income Taxes." (See notes 1 and 7 to the Consolidated Financial
Statements.)
(4)Reflects charge arising from the early redemption in 1994 of the Company's 12-5/8% Senior
Subordinated Notes, net of applicable income taxes. (See note 4 to the Consolidated Financial
Statements.)
(5)Per common share data has been restated for periods prior to 1995 to reflect the two-for-one stock
split in the nature of a 100% stock dividend distributed on September 29, 1995 to shareholders of record
at the close of business on September 15, 1995. Per common share data for 1991 has been restated to
reflect the two-for-one stock split distributed in September 1992.
</FN>
</TABLE>
Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Net Sales
Net sales increased 39% in 1995 compared with 1994 and 15% in 1994
compared with 1993.
Approximately two-fifths of the increase in net sales in 1995
resulted from the added sales of Trigon Industries Limited ("Trigon"),
which the Company acquired in early January 1995. Trigon, originally
based in New Zealand, is a multi-national manufacturer of food packaging
materials and systems, durable mailers and bags, and specialty adhesive
products. During 1995, the Company integrated Trigon's operations into
the Company's other operations. The increase in net sales also reflects
higher average selling prices for certain products, increased unit
volume, and the added net sales of other foreign businesses acquired
during 1994. Foreign currency translation did not have a significant
effect on the Company's operating results in 1995.
The increase in net sales in 1994 resulted primarily from increased
unit volume in the Company's major classes of products and, to a lesser
extent, the additional net sales of businesses acquired in 1994 and
1993. Higher average selling prices also contributed modestly to the
increase in net sales. Foreign currency translation did not have a
significant effect on the Company's operating results in 1994.
Net sales from domestic operations increased 20% in 1995 compared
with 1994 and 12% in 1994 compared with 1993. The increase in 1995 was
due primarily to higher average selling prices for certain products, the
added net sales of Trigon's U.S. operations, and higher unit volume in
certain of the Company's major classes of products. The increase in
1994 resulted primarily from increased unit volume in certain of the
Company's major classes of products and the additional sales of
Shurtuff(R) durable mailer products, a product line that was acquired in
August 1993.
Net sales from foreign operations increased 86% in 1995 compared
with 1994 primarily due to the added net sales of Trigon's operations
outside of the United States, the added net sales of other foreign
businesses acquired during 1994 as discussed below, increased unit
volume in the Company's major classes of products, higher average
selling prices for certain products and the modest contribution of
foreign currency translation. Net sales from foreign operations
increased 22% in 1994 compared with 1993 primarily due to increased unit
volume of the Company's major classes of products and the additional
sales of products added as a result of acquisitions that the Company
made in Europe during 1994.
Net sales of engineered products, which consist primarily of
Instapak(R) products and
thick polyethylene foams, increased 21% in 1995 compared with 1994 and
15% in 1994 compared with 1993. The increase in 1995 was due primarily
to increased unit volume of Instapak(R) products and higher average
selling prices for certain products. The increase in 1994 was due
primarily to increased unit volume of Instapak(R) products, thick
polyethylene foams and Korrvu(R) suspension packaging. Contributing to
the increased sales in both 1995 and 1994 were the added net sales of
fabricated packaging materials produced by a small French company
acquired in May 1994.
Net sales of surface protection and other cushioning products,
primarily air cellular products, thin polyethylene foam products and
protective and durable mailers, increased 42% in 1995 compared with 1994
and 16% in 1994 compared with 1993. The increase in 1995 resulted
primarily from the added net sales of Trigon's durable mailer and bag
products, higher average selling prices for certain products, the added
sales of businesses acquired during 1994, and increased unit volume for
certain products. The businesses acquired in 1994 include manufacturers
of air cellular and other protective packaging products in Norway and
Italy which the Company acquired in September and December, 1994,
respectively. The increase in 1994 was primarily due to increased unit
volume of certain products and the additional sales of businesses
acquired during 1994 and 1993.
Net sales of food packaging products, which consist primarily of
Dri-Loc(R) pads as well as Trigon's food packaging films and systems,
increased 84% in 1995 compared with 1994 and 11% in 1994 compared with
1993. The increase in 1995 was due primarily to the added sales of
Trigon's food packaging products and, to a lesser extent, increased unit
volume. The increase in 1994 was due primarily to increased unit
volume. Contributing to the increase in both 1995 and 1994 were the
added sales of a small English manufacturer of absorbent food pads that
the Company acquired in July 1994.
Net sales of other products increased to $21,127,000 in 1995 from
$11,515,000 in 1994 primarily due to the added net sales of Trigon's
specialty adhesive products.
Costs and Expenses
Cost of sales increased 43% in 1995 compared with 1994 and 16% in
1994 compared with 1993 reflecting primarily the higher level of net
sales in each period combined with certain higher raw material costs in
each period as well as the impact of the Trigon and other acquisitions.
In 1994, the effect of certain higher raw material costs was partially
offset by certain production efficiencies. Cost of sales as a percentage
of net sales was 64.6%, 63.1%, and 62.5% in 1995, 1994 and 1993,
respectively.
Gross profit increased 34% in 1995 compared with 1994 and 13% in
1994 compared with 1993 reflecting the higher level of net sales in each
period, the changes in raw material costs discussed above, and changes
in product mix.
Marketing, administrative and development expenses increased 37% in
1995 compared with 1994 and 13% in 1994 compared with 1993. The increase
in both 1995 and 1994 reflects primarily the Company's higher level of
net sales. The increase in 1995 also reflects the added marketing,
administrative and development expenses of Trigon and other acquired
companies, and costs associated with the integration of Trigon and other
recent acquisitions. Also contributing to the increase in 1994 were the
added marketing, administrative and development expenses of acquired
companies, and costs associated with integrating acquisitions completed
in 1994. Marketing, administrative and development expenses declined
modestly as a percentage of net sales each year from 1993 to 1995
primarily reflecting higher net sales, certain operating efficiencies
and certain cost control measures.
Operating Profit
Operating profit increased 30% in 1995 compared with 1994 and 13%
in 1994 compared with 1993 primarily due in each year to the Company's
higher net sales and the relative changes inthe Company's costs and
expenses discussed above.
Domestic operating profit increased 15% in 1995 compared with 1994
and 12% in 1994 compared with 1993, primarily due to higher net sales
and the relative changes in costs and expenses discussed above.
Foreign operating profit increased 83% in 1995 compared with 1994
and 20% in 1994 compared with 1993 primarily due to higher net sales
partially offset by changes in certain costs and expenses.
Other Income (Expense)
Other income expense, net decreased to $21,726,000 in 1995 compared
with $22,706,000 in 1994 and $28,652,000 in 1993. Interest expense,
which is the principal component of this item, decreased to $19,106,000
in 1995 from $19,363,000 in 1994 and $28,828,000 in 1993. Although the
Company had higher levels of outstanding indebtedness during the course
of 1995 compared with 1994 primarily due to borrowings made in
connection with the Trigon acquisition, the effective interest rates on
such indebtedness were lower than those which prevailed in 1994
primarily due to the refinancing in July 1994 of the Company's 12-5/8%
Senior Subordinated Notes (the "12-5/8% Notes".) The lower amount of
interest expense in 1994 compared with 1993 resulted primarily from
lower average borrowings as well as, in 1994, the refinancing of the 12-
5/8% Notes.
Income Taxes
The Company's effective income tax rate was 39.5%, 39.2% and 43.0%
in 1995, 1994 and 1993, respectively. The Company's effective tax rate
was higher than the statutory U.S. federal income tax rate in each year
primarily due to state income taxes, foreign withholding taxes on the
assumed repatriation of accumulated earnings from the Company's foreign
subsidiaries and additional United States income taxes on such
accumulated foreign earnings. The Company anticipates that its
effective income tax rate in 1996 will remain at a rate comparable to
that in 1995.
As of January 1, 1993, the Company implemented Financial Accounting
Standards Board ("FASB") Statement No. 109, "Accounting for Income
Taxes" ("FAS 109"). The cumulative effect of this accounting change
resulted in a credit to earnings of $1,459,000, or $0.04 per share, in
1993.
Early Redemption of Senior Subordinated Notes
The early redemption in 1994 of the 12-5/8% Notes resulted in an
after-tax charge to earnings of $5,576,000, or $.14 per share, in 1994
reflecting the 4.734% call premium paid on the redemption of the 12-5/8%
Notes and the write-off of the related unamortized deferred financing
costs.
Earnings
Excluding the extraordinary charge to earnings in 1994 attributable
to the refinancing of the 12-5/8% Notes and the cumulative effect of the
accounting change in 1993 related to the implementation of FAS 109,
earnings increased 42% in 1995 compared with 1994 and 44% in 1994
compared with 1993. After giving effect to these items, net earnings
increased 67% in 1995 compared with 1994 and 16% in 1994 compared with
1993.
The foregoing earnings per share figures reflect the effect of a
two-for-one stock split in the nature of a stock dividend distributed on
September 29, 1995 to holders of record of the Company's common stock at
the close of business on September 15, 1995.
Liquidity and Capital Resources
The Company's principal sources of liquidity are cash flows from
operations and amounts available under the Company's existing lines of
credit. The Company has met, and currently expects that it will
continue to meet, substantially all of its working capital and capital
expenditure requirements as well as its debt servicing requirements with
funds provided by operations and borrowings made either under its
available lines of credit or otherwise.
Cash flows from operating activities were $75,218,000 in 1995,
$62,941,000 in 1994 and $53,100,000 in 1993. The increase each year was
due primarily to increased earnings and increased levels of depreciation
and amortization partially offset by changes in operating assets and
liabilities. Among the Company's operating assets and liabilities
reflected in the Company's cash flows at December 31, 1995, the
increases in accounts receivable, inventories and accrued liabilities
were due primarily to the Company's higher level of net sales and the
timing of cash disbursements and cash receipts.
Cash flows used in investing activities were $47,993,000 in 1995,
$32,518,000 in 1994 and $23,438,000 in 1993. Such cash was used
primarily to fund capital expenditures and acquisitions. The
fluctuation between years was primarily due to the timing of
acquisitions, particularly the Trigon acquisition in 1995, and capital
expenditures.
Cash flows used in financing activities were $30,912,000 in 1995,
$39,097,000 in 1994 and $36,206,000 in 1993. The lower amount of net
cash used in financing activities in 1995 primarily reflects the higher
level of net repayments of outstanding debt in the 1995 period partially
offset by an increase in notes payable.
At December 31, 1995 the Company had working capital of
$41,945,000, or 9% of total assets, compared to working capital of
$15,767,000, or 5% of total assets, at December 31, 1994. The increase
in working capital was due primarily to increases in accounts receivable
and inventory and a decrease in current portion of long-term debt
partially offset by increases in accrued liabilities and notes payable,
which were primarily due to the effect of the Trigon acquisition, the
Company's higher level of operations and the timing of payments and debt
maturities.
The Company's ratio of current assets to current liabilities
(current ratio) was 1.3 at December 31, 1995 and 1.1 at December 31, 1994.
The Company's ratio of current assets less inventory to current liabilities
(quick ratio) was 0.9 at December 31, 1995 and 0.8 at December 31, 1994.
The increase in the current ratio in 1995 resulted primarily from the
increase in working capital discussed above.
The Company's principal credit facility is an unsecured 1994 credit
agreement, as amended, with Banker's Trust Company, as agent for a
syndicate of banks (the "1994 Credit Facility"), which provides for a
$200 million revolving credit facility (the "1994 Revolving Credit
Facility") and a term loan (the "1994 Term Loan") in the original
aggregate principal amount of $100 million, both of which terminate on
June 30, 1999. The 12-5/8% Notes were redeemed on July 8, 1994 with the
proceeds of $178 million of borrowings under the 1994 Credit Facility.
Long-term debt, less current installments declined to $149,808,000
at December 31, 1995 from $155,293,000 at December 31, 1994 due primarily
to a net reduction of outstanding long-term indebtedness during 1995, partially
offset by $25,592,000 of additional borrowings that the Company incurred in
connection with the Trigon acquisition in January 1995 primarily under
the 1994 Credit Facilty and approximately $25 million of Trigon's net
long-term indebtedness that the Company assumed as a result of the
acquisition. The majority of such Trigon indebtedness has since been
replaced by indebtedness under the 1994 Credit Facility. Current
installments of long-term debt declined to $17,953,000 at December 31,
1995 from $22,579,000 at December 31, 1994 reflecting the timing of
scheduled maturities.
The 1994 Term Loan is repayable at the rate of $20,000,000
aggregate principal amount per year in equal quarterly installments
through June 30, 1999. The 1994 Revolving Credit Facility has no
required annual minimum paydown provision, but the available commitment
under such Facility will be reduced by $25,000,000 on each of June 30,
1997 and June 30, 1998. The 1994 Credit Facility terminates on June 30,
1999, and all outstanding loans thereunder must be repaid on or before
such date.
The Company's obligations under the 1994 Credit Facility and
certain other lines of credit bear interest at floating rates. The
Company has entered into certain interest rate swap agreements that have
the effect of converting a portion of the Company's floating rate debt
to fixed rate debt. The 1994 Credit Facility provides for changes in
interest rate margins based on certain financial criteria and imposes
certain limitations on the operations of the Company that include
restrictions on the incurrence of additional indebtedness, the creation
of liens, the making of investments and capital expenditures,
dispositions of property or assets, certain transactions with affiliates
and the payment by the Company of cash dividends to its stockholders, as
well as certain financial covenants including requirements as to
interest coverage and debt leverage. The Company was in compliance with
these requirements as of December 31, 1995.
The Company expects that the payment of principal and interest on
its indebtedness will remain a significant use of the Company's funds
for the foreseeable future. The Company expects to continue to make the
principal and interest payments on its outstanding indebtedness as well
as to meet its working capital and capital expenditure requirements
primarily with funds provided by operations and borrowings under its
available lines of credit. As of December 31, 1995, such lines of
credit amounted to approximately $242 million of which approximately
$140 million were unused. The ability of the Company to make payments
of principal and interest on its indebtedness, and to comply with the
financial covenants to which it is subject in connection with such
indebtedness, is dependent on the Company's future performance and
business growth, which are subject to financial, economic, competitive
and other factors affecting the Company, many of which may be beyond the
Company's control.
The Company's shareholders' equity increased to $106,338,000 at
December 31, 1995 from $11,012,000 at December 31, 1994 primarily as a
result of the Company's net earnings for 1995, the value of shares of
common stock issued in connection with the Trigon acquisition, and the
value of shares of common stock issued for non-cash compensation.
Impact of Inflation
Inflation did not have a material impact on the Company's
consolidated financial statements in the 1993 to 1995 period.
Other Matters
The Company's worldwide operations are subject to environmental
laws and regulations which, among other things, impose limitations on
the discharge of pollutants into the air and water and establish
standards for the treatment, storage and disposal of solid and hazardous
wastes. The Company reviews the effects of environmental laws and
regulations on its operations and believes that it is in substantial
compliance with all material applicable environmental laws and
regulations.
At December 31, 1995, the Company was a party to, or otherwise
involved in, several federal and state government environmental
proceedings or private environmental claims for the cleanup of superfund
or other sites. The Company may have potential liability for
investigation and clean up of such sites. At most of such sites,
numerous companies, including either the Company or one of its
predecessor companies, have been identified as potentially responsible
parties ("PRPs") under superfund or related laws. It is the Company's
policy to provide for environmental cleanup costs if it is probable that
a liability has been incurred and if an amount which is within the
estimated range of the costs associated with various alternative
remediation strategies is reasonably estimable without giving effect to
any possible future insurance proceeds. As assessments and cleanups
proceed, these liabilities are reviewed periodically and adjusted as
additional information becomes available. At December 31, 1995 and
1994, such environmental related provisions were not material and the
Company believes that its potential liability with respect to such sites
is not material. Environmental liabilities are paid over an extended
period, and the timing of such payments cannot be predicted with
certainty.
New Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," which becomes effective for fiscal
years beginning after December 15, 1995. The Company adopted such
statement effective January 1, 1996. The Company currently anticipates
that the implementation of such statement will not have a material
effect on the Company's consolidated financial statements.
The FASB issued Statement No. 123, "Accounting For Stock-Based
Compensation," which becomes effective for transactions entered into
after December 15, 1995. The Company, as permitted by Statement No.
123, has not adopted the recognition provision of this statement when
accounting for stock-based compensation and the Company believes any
requirements in connection with such statement will not have a material
effect on the consolidated financial statements.
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings
Years Ended December 31, 1995, 1994 and 1993
(In thousands of dollars except per share data)
<CAPTION>
1995 1994 1993
________________________________________________________________________________________
<S> <C> <C> <C>
Net sales $723,120 $519,186 $451,694
Cost of sales 466,952 327,423 282,147
Gross profit 256,168 191,763 169,547
Marketing, administrative and
development expenses 147,288 107,854 95,434
Operating profit 108,880 83,909 74,113
Other income (expense):
Interest income 1,187 1,140 1,145
Interest expense (19,106) (19,363) (28,828)
Other, net (3,807) (4,483) (969)
Other income (expense), net (21,726) (22,706) (28,652)
Earnings before income taxes 87,154 61,203 45,461
Income taxes 34,426 23,987 19,547
Earnings before cumulative effect of
accounting change and early redemption
of subordinated notes 52,728 37,216 25,914
Cumulative effect of accounting change - - 1,459
Early redemption of subordinated notes,
net of income taxes - (5,576) -
Net earnings $ 52,728 $ 31,640 $ 27,373
Earnings per common share:
Before cumulative effect of accounting change
and early redemption of subordinated notes $ 1.25 $ 0.94 $ 0.66
Cumulative effect of accounting change - - 0.04
Early redemption of subordinated notes,
net of income taxes - (.14) -
Net earnings per common share $ 1.25 $ 0.80 $ 0.70
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1995 and 1994
(In thousands of dollars except share data)
<CAPTION>
1995 1994
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 7,661 $ 11,153
Accounts receivable, less allowance for doubtful
accounts of $5,261 in 1995 and $3,970 in 1994 116,446 91,321
Other receivables 6,170 3,866
Inventories 54,500 38,259
Prepaid expenses 2,470 1,009
Deferred income taxes 8,912 6,223
Total current assets 196,159 151,831
Property and equipment:
Land and buildings 77,603 67,226
Machinery and equipment 177,832 141,981
Leasehold improvements 6,766 5,029
Furniture and fixtures 11,956 12,224
Construction in progress 10,711 5,864
284,868 232,324
Less accumulated depreciation and amortization 115,012 96,154
Property and equipment, net 169,856 136,170
Patents and patent rights, less accumulated
amortization of $13,619 in 1995 and $11,819 in 1994 12,107 9,647
Excess of cost over fair value of net assets acquired, less
accumulated amortization of $7,607 in 1995 and
$4,715 in 1994 41,932 19,710
Other assets 23,491 13,759
$443,545 $331,117
See accompanying notes to consolidated financial statements.
1995 1994
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $18,887 $ 7,929
Current installments of long-term debt 17,953 22,579
Accounts payable 44,460 43,009
Accrued wages, salaries and related costs 26,759 20,788
Accrued interest 1,560 1,323
Other accrued liabilities 28,865 23,859
Income taxes payable 15,730 16,577
Total current liabilities 154,214 136,064
Long-term debt, less current installments 149,808 155,293
Deferred income taxes 21,875 17,215
Deferred credits and other liabilities 11,310 11,533
Total liabilities 337,207 320,105
Commitments and contingent liabilities (notes 5 and 8)
Shareholders' equity:
Preferred stock, no par value. Authorized 1,000,000
shares, none issued in 1995 and 1994 - -
Common stock, $.01 par value. Authorized: 60,000,000
shares in 1995 and 35,000,000 shares in 1994; Issued:
42,506,573 shares in 1995 and 20,111,618 shares in 1994 425 201
Additional paid-in capital 158,400 114,686
Retained earnings (deficit) (53,308) (106,036)
Accumulated translation adjustment 7,279 6,126
112,796 14,977
Less:
Deferred compensation 6,232 3,717
Treasury stock at cost: 224,758 shares held
in 1995 and 122,306 shares held in 1994 226 248
Shareholders' equity 106,338 11,012
$443,545 $331,117
</TABLE>
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity (Deficit)
Years Ended December 31, 1995, 1994 and 1993
(In thousands of dollars)
<CAPTION>
Additional Retained Accumulated
Common Paid-in Earnings Translation Deferred Treasury
Stock Capital (Deficit) Adjustment Compensation Stock
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 $ 194 $ 95,551 $(165,049) $ 6,723 $ (3,468) $ (262)
Net earnings - - 27,373 - - -
Proceeds from awards of
contingent stock, net 2 199 - - - -
Excess of fair value over
proceeds from awards of
contingent stock, net - 4,591 - - (4,591) -
Amortization - - - - 2,929 -
Tax benefit in excess of
amortization on stock awards - 542 - - - -
Contingent stock forfeited - (10) - - 10 (1)
Non-cash compensation 1 1,807 - - - -
Shares issued in acquisitions 2 5,681 - - - 17
Foreign currency translation _______ (1,660) ______ ______
Balance, December 31, 1993 199 108,361 (137,676) 5,063 (5,120) (246)
Net earnings - - 31,640 - - -
Proceeds from awards of
contingent stock, net 1 52 - - - -
Excess of fair value over
proceeds from awards of
contingent stock, net - 1,615 - - (1,615) -
Amortization - - - - 2,957 -
Tax benefit in excess of
amortization on stock awards - 664 - - - -
Contingent stock forfeited - (61) - - 61 (2)
Non-cash compensation 1 2,360 - - - -
Shares issued in acquisitions - 1,695 - - - -
Foreign currency translation 1,063 ______ ____
Balance, December 31, 1994 201 114,686 (106,036) 6,126 (3,717) (248)
Net earnings - - 52,728 - - -
Proceeds from awards of
contingent stock, net - 160 - - - -
Excess of fair value over
proceeds from awards of
contingent stock, net 2 5,931 - - (5,933) -
Amortization - - - - 3,370 -
Tax benefit in excess of
amortization on stock awards - 527 - - - -
Contingent stock forfeited - (48) - - 48 (2)
Non-cash compensation 1 3,239 - - - -
Shares issued in acquisitions 9 34,117 - - - 24
Stock split 212 (212) - - - -
Foreign currency translation 1,153 _______ ______
Balance, December 31, 1995 $ 425 $ 158,400 $(53,308) $ 7,279 $ (6,232) $ (226)
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
(In thousands of dollars)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 52,728 $ 31,640 $ 27,373
Adjustments to net earnings to reconcile to
net cash provided by operating activities:
Cumulative adjustment for effect of accounting
change - - (1,459)
Early redemption of subordinated notes - 5,576 -
Depreciation and amortization of property
and equipment 20,473 14,921 14,334
Other depreciation and amortization 14,807 8,599 10,210
Deferred tax provision (1,375) 385 2,886
Net losses on disposals of property and equipment 273 397 408
Non-cash compensation 3,491 3,100 2,293
Other, net 876 (505) (2,172)
Change in operating assets and liabilities:
Receivables (13,016) (17,478) (1,716)
Inventories (5,953) (4,018) (2,466)
Prepaid expenses (1,441) 666 (664)
Accounts payable (9,262) 14,913 1,555
Accrued interest 237 (9,810) (519)
Other accrued liabilities 10,813 4,264 1,892
Income taxes payable 2,567 10,291 1,145
Net cash provided by operating activities 75,218 62,941 53,100
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment (21,056) (17,470) (22,474)
Proceeds from sales of property and equipment 776 226 203
Net cash utilized in purchase of subsidiaries (27,713) (15,274) (1,167)
Net cash used in investing activities (47,993) (32,518) (23,438)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 75,271 203,857 5,501
Principal payments on long-term debt (114,281) (234,613) (43,753)
Net (payments) proceeds on notes payable 8,098 (293) 2,046
Subordinated debt redemption premium - (8,048) -
Net cash used in financing activities (30,912) (39,097) (36,206)
Effect of exchange rate changes on
cash and cash equivalents 195 435 (106)
CASH AND CASH EQUIVALENTS:
Decrease during the period (3,492) (8,239) (6,650)
Balance, beginning of period 11,153 19,392 26,042
Balance, end of period $ 7,661 $ 11,153 $ 19,392
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 18,582 $ 28,645 $ 26,735
Income taxes $ 33,898 $ 14,349 $ 16,058
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
SEALED AIR CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies
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. Certain of the Company's non-U.S. subsidiaries are
included in the consolidated financial statements on a calendar year
basis while the remaining non-U.S. subsidiaries are included on the
basis of a fiscal year ended November 30.
Prior years' financial statement amounts have been reclassified to
conform with their 1995 presentation.
Foreign Currency
All balance sheet accounts are translated at year-end exchange rates,
and statement of earnings items are translated at applicable month-end
exchange rates. Resulting translation adjustments are made directly to
a separate component of shareholders' equity.
Earnings before income taxes include aggregate exchange losses of
$828,000, $697,000 and $86,000 for the years ended December 31, 1995,
1994 and 1993, respectively.
Cash and Cash Equivalents
The Company's policy is to invest cash in excess of short-term operating
and debt service requirements in temporary cash investments with
original maturities of three months or less. Such short-term
investments amounted to $6,134,000 and $7,426,000 at December 31, 1995
and 1994, respectively. These instruments consisted of money market and
commercial paper amounts stated at cost, which approximates market
because of the short maturity of these instruments.
Financial Instruments
The Company has a limited involvement with various financial instruments
with off-balance-sheet risk. These financial instruments include
interest rate and foreign currency swap agreements, interest rate swap
agreements, foreign exchange forward contracts and foreign currency
option contracts. Such financial instruments are used to limit, fix or
offset certain interest rate or foreign currency exposures with respect
to the Company's borrowings, and trade activities. The Company does not
purchase, hold or sell financial instruments for trading purposes. The
Company would be exposed to credit risk in the event of non-performance
by the counterparties to such financial instruments. However, the
Company seeks to minimize such risk by entering into such transactions
with counterparties who are major financial institutions with high
credit ratings.
Gains and losses on the various financial instruments are included in
the carrying amounts of those underlying assets or liabilities for which
the financial instruments were entered and are recognized in income as
part of those carrying amounts. Gains and losses related to qualifying
hedges of firm commitments or anticipated transactions are deferred and
are recognized in income or as adjustments of carrying amounts when the
hedged transaction occurs. Gains and losses on financial instruments
that do not qualify as hedges are recognized as other income or expense
on a current basis.
Inventories
Inventories are stated at the lower of cost or market. The majority of
U.S. inventories are valued using the last-in, first-out ("LIFO")
method; other U.S. inventories, principally parts used in packaging
systems, are valued using the first-in, first-out ("FIFO") method.
Inventories of foreign operations are valued using primarily the FIFO
method. Had the FIFO method (which approximates current cost) been used
for all inventory at December 31, 1995, inventories would have been
higher by $4,557,000 ($4,848,000 and $1,158,000 in 1994 and 1993,
respectively). The cost elements of work in process and finished goods
inventories are raw materials, direct labor and manufacturing overhead.
Because the cost of certain inventories is determined on the LIFO
method, it is not practicable to present separately the components of
inventories (raw materials, work in process and finished goods).
Property and Equipment
Property and equipment are stated at acquisition cost. Property and
equipment no longer in use or surplus to the Company's needs are carried
at the lower of cost or fair value. Depreciation of buildings and
equipment is provided over the estimated useful lives (generally periods
ranging up to 40 years and 10 years, respectively) of the related
assets. Amortization of leasehold improvements is provided over the
lesser of the term of the lease and the asset's useful life. The Company
uses primarily the straight-line method of depreciation for financial
reporting purposes and accelerated methods of depreciation for income
tax purposes.
Intangibles and Other Assets
Patents and patent rights are stated at acquisition cost. Amortization
of patents is recorded using the straight-line method over the legal
lives of the patents, generally for periods ranging up to 17 years. The
excess of cost over fair value of net assets acquired is amortized over
periods ranging up to 40 years. Other intangible assets, including
non-competition agreements, included in other assets are amortized over
the life of such agreements usually ranging from 1 to 5 years. The
carrying value of intangible assets is periodically reviewed by the
Company and impairments are recognized when the expected future non-
discounted operating cash flows derived from such intangible assets are
less than their carrying value.
Deferred financing costs, which were incurred by the Company in
connection with various financing instruments, are capitalized and
charged to operations as additional interest expense over the life of
the underlying indebtedness using the interest method adjusted to give
effect to any early repayments.
Employee Benefit Plans
The Company has a non-contributory profit-sharing plan covering most
U.S. employees except those employees covered by collective bargaining
agreements that do not provide for their participation. Contributions
to this plan, which are made at the discretion of the Board of
Directors, may be made in cash, shares of the Company's common stock, or
in a combination of cash and shares of the Company's common stock. The
Company also has a thrift and section 401(k) plan in which most U.S.
employees of the Company are eligible to participate except those
employees who are covered by certain collective bargaining agreements
that do not provide for participation in the plan. Under this plan, the
Company matches 50% of each employee's contributions to a maximum
Company contribution of 3% of the employee's compensation. Forfeitures
of nonvested interests in each of these plans remain in the respective
plans for the benefit of the remaining participants. The Company also
has pension or profit-sharing plans for employees of certain foreign
subsidiaries and certain U.S. employees who are covered by collective
bargaining agreements. Company contributions to or provisions for its
profit-sharing, thrift and pension plans, net of forfeitures, are
charged to operations and amounted to $10,069,000 in 1995 ($8,718,000
and $6,734,000 in 1994 and 1993, respectively).
The Company provides various other benefit programs to active employees
including group medical, insurance and other welfare benefits. The
costs of these benefit programs are charged to operations as incurred.
Eligibility to participate in these programs generally ceases upon
retirement or other separation from service except as required by
applicable law.
Research and Development Costs
Research and development costs are charged to operations as incurred and
amounted to $14,597,000 in 1995 ($10,912,000 and $9,168,000 in 1994 and
1993, respectively).
Environmental Expenditures
Environmental expenditures that relate to ongoing business activities
are expensed or capitalized, as appropriate. Expenditures that relate
to an existing condition caused by past operations, and which do not
contribute to current or future revenues, are expensed. Liabilities are
recorded when the Company determines that environmental assessments or
remediations are probable and that the costs or a range of costs to the
Company associated therewith can be reasonably estimated.
Income Taxes
The Company and its domestic subsidiaries file a consolidated U.S.
federal income tax return. The Company's non-U.S. subsidiaries file
income tax returns in their respective local jurisdictions.
As of January 1, 1993, the Company implemented FASB Statement No. 109
("FAS 109"), "Accounting for Income Taxes," which prescribes the
liability method of accounting for income taxes. Prior to January 1,
1993, the Company accounted for income taxes as prescribed by Accounting
Principles Board Opinion No. 11 ("APB 11") under which deferred taxes
were recorded based on the current period's tax rates and laws and were
not adjusted for subsequent changes in tax rates or laws. Under the
liability method, deferred taxes are determined based on the difference
between the financial statement and tax bases of assets and liabilities
using enacted tax rates in effect in the years in which the differences
are expected to reverse. Deferred tax assets are recorded when it is
more likely than not such tax benefits will be realized (note 7).
Earnings Per Common Share
Earnings per common share are computed on the basis of the weighted
average number of shares of common stock outstanding during the year,
including contingent stock awards and shares issued as non-cash
compensation (note 6). The weighted average number of common shares
outstanding in 1995 was 42,057,000 (39,884,000 and 39,168,000 in 1994
and 1993, respectively) after reflecting the effect of the 1995 stock
split (note 6).
Risks and Uncertainties
The Company is primarily engaged in a single line of business: the
manufacture and sale of protective and specialty packaging materials and
systems to a diverse group of customers throughout the world. The
Company performs ongoing credit evalualtions of its customers' financial
condition and generally requires no collateral from its customers. No
single customer or affiliated group of customers accounts for more than
10% of the Company's net sales.
In conformity with generally accepted accounting principles, management
of the Company has made a number of estimates and assumptions relating
to the reporting of assets and liabilities and the disclosure of
contingent liabilities to prepare the Company's consolidated financial
statements. Actual results could differ from these estimates.
Note 2 Acquisitions
On January 10, 1995, the Company acquired Trigon Industries Limited
("Trigon"), a privately owned, New Zealand based manufacturer of food
packaging films and systems, durable mailers and bags and specialty
adhesive products, for 882,930 newly issued shares of common stock
valued at $35.70 per share and $25,592,000 in cash primarily provided by
proceeds from borrowings under the 1994 Credit Facility (note 4),
representing a purchase price of approximately $57 million. The net
assets of Trigon acquired included property and equipment of
approximately $28,400,000, intangible assets of approximately
$43,000,000 including trademarks, non-compete agreements, and the excess
of cost over the fair value of net assets acquired, $25,000,000 of net
indebtedness, and working capital of approximately $12,000,000. Such
acquisition was accounted for as a purchase.
In December 1995, the Company acquired certain assets of LF&P Inc., a
United States manufacturer of certain protective packaging materials.
In November 1995, the Company acquired the assets of Poly-Cell,Inc., a
United States manufacturer of multi-web air cellular products. These
transactions, each of which was effected in exchange for shares of the
Company's common stock, cash or a combination of the Company's common
stock and cash, were accounted for as purchases, and were not material
to the Company's consolidated financial statements.
In December 1994, the Company acquired SPIC Srl, an Italian
manufacturer of air cellular and other protective packaging products.
In September 1994, the Company acquired Emballasje-Teknikk A/S, a
Norwegian manufacturer of air cellular and other protective packaging
products. In July 1994, the Company acquired Hereford Paper and Allied
Products Limited, an English manufacturer of absorbent food pads. In
May 1994, the Company acquired Delsopak S.A., a French fabricator of
polyethylene foam and other protective packaging products, and an
exclusive license and option to purchase certain patents related to its
business. These transactions, each of which was effected in exchange
for shares of the Company's common stock, cash or a combination of
shares of the Company's common stock and cash, were accounted for as
purchases, and were not material to the Company's consolidated
financial statements.
In August 1993, the Company acquired the assets of the Shurtuff Division
of Shuford Mills, Inc., a manufacturer of durable protective mailers.
In July 1993, the Company acquired the assets of Polypride, Inc., a
manufacturer of multi-web air cellular materials. These transactions,
each of which was effected in exchange for shares of the Company's
common stock, cash or a combination of shares of the Company's common
stock and cash, were accounted for as purchases, and were not material
to the Company's consolidated financial statements.
Note 3 Geographic Areas
The Company's operations are conducted primarily in the United States,
Europe, the Asia/Pacific region, Canada and Mexico and its products are
distributed in these areas as well as other parts of the world. Net
sales for each major geographic area include transfers to other
geographic areas. Such transfers are made at prices intended to provide
reasonable and appropriate returns to the selling unit, and applicable
eliminations have been applied to the intergeographic transactions.
Operating profit consists of net sales less operating expenses. Other
income (expense), net and income taxes have not been added or deducted
in the computation of operating profit for each geographic area.
Corporate expenses have been allocated to the geographic areas for whose
benefit the expenses were incurred.
Identifiable assets are those assets that are used in the Company's
operations in each geographic area.
<TABLE>
Information by Major Geographic Area:
(In thousands of dollars)
<CAPTION>
Net Operating Identifiable
Sales Profit Assets
<S> <C> <C> <C>
1995
United States $ 464,820 $ 75,828 $ 224,877
Europe 188,558 24,617 148,787
Asia/Pacific & Other 94,864 8,435 69,719
Eliminations (25,122) - -
Consolidated $ 723,120 $ 108,880 $ 443,383
1994
United States $385,484 $ 65,884 $185,510
Europe 107,990 13,882 116,800
Asia/Pacific & Other 44,681 4,143 28,807
Eliminations (18,969) - -
Consolidated $519,186 $ 83,909 $331,117
1993
United States $341,321 $ 59,059 $191,014
Europe 87,939 12,433 65,780
Asia/Pacific & Other 34,893 2,621 23,024
Eliminations (12,459) - -
Consolidated $451,694 $ 74,113 $279,818
</TABLE>
NOTE: Net sales shown for the United States, Europe and Asia/Pacific
and other include transfers to other geographic areas as follows:
United States, 1995 -$18,412,000; 1994 -$14,850,000; 1993 -$11,130,000;
Europe, 1995 -$2,398,000; 1994 -$1,368,000; 1993 -$754,000; Asia/Pacific
and other, 1995 -$4,312,000; 1994 -$2,751,000; 1993 -$575,000.
Note 4 Long-Term Debt
<TABLE>
A summary of long-term debt at December 31, 1995 and 1994 follows:
<CAPTION>
(In thousands of dollars)
1995 1994
<S> <C> <C>
1994 Credit Facility $146,611 $155,681
Other foreign loans 16,352 20,729
Other 4,798 1,462
Total 167,761 177,872
Less current installments 17,953 22,579
Long-term debt, less current
installments $149,808 $155,293
</TABLE>
The Company and certain of its subsidiaries are parties to a credit
agreement dated as of June 8, 1994, as amended, with Bankers Trust
Company, as agent for a syndicate of banks (the "1994 Credit Facility"),
which provides for an unsecured five-year $200 million revolving credit
facility (the "1994 Revolving Credit Facility") and an unsecured five-
year $100 million term loan (the "1994 Term Loan"). On July 8, 1994,
the Company redeemed all of its outstanding 12-5/8% Senior Subordinated
Notes (the "12-5/8% Notes") from the proceeds of the 1994 Term Loan and
a $78 million borrowing under the 1994 Revolving Credit Facility. The
early redemption of the 12-5/8% Notes resulted in a charge to earnings
of $5,576,000, or $.14 per share, after giving effect to an income tax
benefit of $3,716,000 in 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. At December 31, 1995, the
Company's borrowings under the 1994 Credit Facility consisted of
$83,611,000 of indebtedness under the 1994 Revolving Credit Facility and
$63,000,000 of indebtedness under the 1994 Term Loan. The weighted
average interest rate under the 1994 Credit Facility was approximately
7.1% at December 31, 1995 and December 31, 1994.
Under the terms of the 1994 Credit Facility, $20 million aggregate
principal amount of the 1994 Term Loan is repayable each year in equal
quarterly installments through June 30, 1999. There is no required
annual minimum paydown provision under the 1994 Revolving Credit
Facility, but the available commitment under this Facility will be
reduced by $25 million on each of June 30, 1997 and June 30, 1998. The
1994 Credit Facility terminates on June 30, 1999.
The Company's obligations under the 1994 Credit Facility and certain
other loans and other lines of credit bear interest at floating rates.
The Company has entered into certain interest rate swap agreements in
the notional amount of $50 million which effectively fix interest rates
on borrowings of that amount. The 1994 Credit Facility provides for
changes in interest rates based on certain financial criteria and
imposes certain limitations on the operations of the Company that
include restrictions on the incurrence of additional indebtedness, the
creation of liens, the making of investments and capital expenditures,
dispositions of property or assets, certain transactions with
affiliates, and the payment by the Company of cash dividends to its
stockholders as well as certain financial covenants including
requirements as to interest coverage and debt leverage. The Company was
in compliance with these requirements as of December 31, 1995.
Other foreign loans, certain of which are secured by foreign assets, are
due in varying annual installments through 2010 with fixed and variable
interest rates with weighted average interest rates of 7.8% and 9.2% at
December 31, 1995 and 1994, respectively.
Under the 1994 Credit Facility and other credit facilities, the Company
had available lines of credit at December 31, 1995 of approximately $242
million of which approximately $140 million were unused. The Company is
not subject to any material compensating balance requirements in
connection with its lines of credit.
Scheduled annual maturities of long-term debt for the five years
subsequent to December 31, 1995 are as follows: 1996-$17,953,000; 1997-
$23,266,000; 1998-$23,107,000; 1999-$82,894,000 and 2000-$15,094,000.
Note 5 Financial Instruments
The Company is required by generally accepted accounting principles to
disclose its estimate of the fair value of material financial
instruments, including those recorded as assets or liabilities in its
consolidated financial statements and derivative financial instruments.
Such estimates are subjective and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the Company's
estimates. The carrying amounts and estimated fair values of the
Company's financial instruments at December 31, 1995 and 1994 are as
follows:
<TABLE>
(In thousands of dollars)
<CAPTION>
1995 1994
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 7,661 $ 7,661 $ 11,153 $ 11,153
Accounts receivable, net 116,446 116,446 91,321 91,321
Other assets (derivatives) - - 1,086 1,484
Financial liabilities:
Accounts payable 44,460 44,460 43,009 43,009
Notes payable 18,887 18,887 7,929 7,929
Debt:
1994 Credit Facility 146,611 146,611 155,681 155,681
Derivatives - (254) - 156
1994 Credit Facility, net 146,611 146,357 155,681 155,837
Other Foreign Loans 16,352 16,530 20,729 20,733
Other 4,798 5,001 1,462 1,302
</TABLE>
The carrying amounts of cash and cash equivalents, accounts receivable,
net of the allowance for doubtful accounts, notes payable and, accounts
payable approximate fair value due to their short-term maturity.
The fair value estimates of the Company's various debt instruments were
derived by evaluating the nature and terms of each instrument,
considering prevailing economic and market conditions, and examining the
cost of similar debt offered at the balance sheet date.
Other assets (derivatives) in the preceding table includes foreign
currency options and forwards and interest rate caps. Foreign currency
options and forwards are generally used by the Company to limit the risk
on anticipated international transactions. At December 31, 1995 the
Company was party to foreign currency options with an aggregate notional
amount of approximately $14 million as well as several foreign currency
fowards with an aggregate notional amount of approximately $1.2 million.
At December 31, 1994, the Company was party to foreign currency options
with an aggregate notional amount of approximately $59 million,
primarily for the purchase of New Zealand dollars in anticipation of the
Company's acquisition of Trigon. The Company believes that its risk of
accounting loss on such options is limited to unamortized premium paid
for such options, which amortization is not material to the Company's
financial statements.
Interest rate swaps and caps limit exposure to rising interest rates.
Interest rate swaps effectively fix the rate of interest the Company
pays on debt in the amount of the notional amount of the swaps. At
December 31, 1995 the Company was party to interest rate swaps with
various expiration dates up to June 1999 with an aggregate notional
amount of $50 million. Such instruments were designated as hedges
against borrowings under the 1994 Credit Facility. At December 31, 1994
the Company was not party to any interest rate swap agreements.
Interest rate caps give the Company the right to receive, at specified
intervals, the difference between certain fixed and floating interest
rates multiplied by agreed notional principal amounts. At December 31,
1994 the Company was party to several interest rate caps with various
expiration dates up to December 1997 with an aggregate notional amount
of $90 million. At December 31, 1995 the Company was no longer party to
any interest rate cap agreements.
Debt derivatives in the preceding table includes interest rate and
currency swaps which allow the Company to swap borrowings denominated in
U.S. dollars for borrowings denominated in foreign currencies, gaining
access to additional sources of international financing while limiting
foreign exchange risk. At December 31, 1995 and 1994, the Company was
party to several such interest rate and currency swaps with an aggregate
notional amount of approximately $43.5 million and $22.8 million,
respectively, and various expiration dates up to June 1999. Such
instruments were designated as hedges against borrowings under the 1994
Credit Facility.
The fair values of the Company's various derivative instruments, as
advised by the Company's bankers, generally reflect the estimated
amounts that the Company would receive or pay to terminate the contracts
at the reporting date, thereby taking into account the current
unrealized gains or losses of open contracts.
Realized gains and losses on its financial instruments and derivatives
were not material to the Company's consolidated financial statements.
The Company is exposed to credit losses in the event of non-performance
by the counterparties to its interest rate and currency swaps and
foreign currency options and forwards but it does not expect any
counterparties to fail to meet their obligations given their high credit
ratings and financial strength. The Company believes that off-balance
sheet risk in conjunction with interest rate and currency swaps would
not be material in the case of non-performance on the part of
counterparties on such agreements. The Company believes that there is
minimal off-balance sheet risk relating to interest rate caps.
Note 6 Shareholders' Equity
The Company's shareholders' equity increased to $106,338,000 at December
31, 1995 from $11,012,000 at December 31, 1994 primarily as a result of
the Company's net earnings in 1995, the value of shares of common stock
issued in connection with the Trigon acquisition, and the value of
shares of common stock issued for non-cash compensation and other
acquisitions.
A two-for-one stock split in the nature of a 100% stock dividend (the
"1995 stock split") was distributed on September 29, 1995 to the holders
of record of the Company's common stock at the close of business on
September 15, 1995. As a result, a transfer was made from additional
paid-in-capital to common stock in an amount equal to the aggregate par
value of the shares of common stock issued pursuant to this stock split.
All per share data and share information in the consolidated financial
statements and notes there to have been adjusted to give retroactive
effect to the 1995 stock split where appropriate.
<TABLE>
A summary of changes in issued and outstanding shares of common stock
and shares of treasury stock of the Company follows:
<CAPTION>
1995 1994 1993
<S>____________________________________<C>__________<C>____________<C>____________________
Changes in common stock:
Number of shares issued, 20,111,618 19,924,661 19,343,238
Non-cash compensation 80,400 78,200 70,900
Awards of contingent stock 157,550 52,000 294,200
Shares issued in acquisitions 957,335 56,757 216,323
Two-for-one stock split 21,199,670 - -
Number of shares issued, end
of year 42,506,573 20,111,618 19,924,661
Changes in treasury stock:
Number of shares held,
beginning of year 122,306 119,306 126,986
Shares issued in acquisition (11,927) - (8,180)
Contingent stock forfeited 2,000 3,000 500
Two-for-one stock split 112,379 - -
Number of shares held, end of year 224,758 122,306 119,306
</TABLE>
Non-cash compensation in each year includes shares issued for a portion
of the Company's contribution to its profit-sharing plan for the
respective preceding year and shares issued to non-employee directors in
the form of awards under the restricted stock plan for non-employee
directors discussed below. The aggregate amount of non-cash
compensation charged to operations amounted to $3,491,000, $3,100,000
and $2,293,000 in 1995, 1994 and 1993, respectively.
The Company's contingent stock plan provides for the granting to
employees of awards to purchase common stock (during the succeeding 60-
day period) for less than 100% of fair market value at the date of
award. Shares issued under the contingent stock plan ("Contingent
Stock") are restricted as to disposition by the holders for a period of
three years after issue. In the event of termination of employment
prior to lapse of the restriction, the shares are subject to an option
to repurchase by the Company at the price at which the shares were
issued. Such restriction will lapse prior to the expiration of the
three-year period if certain events occur which affect the existence or
control of the Company. At December 31, 1995, 725,000 shares of common
stock were reserved for issuance under such plan.
The excess of fair value over the award price of Contingent Stock is
charged to operations as compensation over the three-year vesting
periods of such awards. In 1995, such charges amounted to $3,370,000
($2,957,000 and $2,929,000 in 1994 and 1993, respectively).
The aggregate fair value of Contingent Stock issued is credited to
common stock and additional paid-in capital accounts, and the
unamortized portion of the compensation is deducted from shareholders'
equity.
The Company's restricted stock plan for non-employee directors provides
for initial grants of shares to newly elected non-employee directors and
annual grants of shares to non-employee directors for less than 100% of
fair value at date of grant in lieu of cash payments for certain
directors' fees. Shares issued under this plan are restricted as to
disposition by the holders as long as such holders remain directors of
the Company. The excess of fair value over the granting price of shares
issued under this plan is charged to operations at the date of such
grant. In 1995 the Company issued 1,500 shares under such plan (5,600
and 3,600 in 1994 and 1993, respectively). At December 31, 1995,
161,400 shares of common stock were reserved for issuance under such
plan.
The Company currently has the authority to issue 1,000,000 shares of
preferred stock, without par value, none of which were issued at
December 31, 1995.
The FASB issued Statement No. 123, "Accounting For Stock-Based
Compensation," which becomes effective for transactions entered into
after December 15, 1995. The Company, as permitted by Statement No.
123, has not adopted the recognition provision of this statement when
accounting for stock-based compensation and the Company believes any
requirements in connection with such statement will not have a material
effect on the consolidated financial statements.
Note 7 Income Taxes
The Company adopted FAS 109 effective January 1, 1993. FAS 109 provides
a liability method under which deferred taxes are provided based upon
enacted tax rates and laws applicable to the periods in which the taxes
become payable. For periods prior to January 1, 1993, the Company
accounted for income taxes as prescribed by APB 11 under which deferred
taxes were recorded based on the current period's tax rates and laws
without adjustment for subsequent changes in such tax rates and laws.
The cumulative effect of this change at January 1, 1993 was a reduction
of deferred tax liability and a corresponding credit to earnings of
$1,459,000, or $0.04 per share.
The components of earnings before income taxes and the cumulative effect
of this accounting change in 1993 and the early redemption of the 12-
5/8% Notes in 1994 (note 4) follow:
<TABLE>
(In thousands of dollars)
<CAPTION>
1995 1994 1993
_____________________________________________________________________________
<S> <C> <C> <C>
Domestic $ 61,007 $ 44,150 $ 32,721
Foreign 26,147 17,053 12,740
$ 87,154 $ 61,203 $ 45,461
</TABLE>
<TABLE>
The components of the provision for income taxes on earnings before the cumulative effect of accounting
change in 1993 and the early redemption of the 12-5/8% Notes in 1994 follow:
<CAPTION>
(In thousands of dollars)
1995 1994 1993
<S>________________________________<C>_______________<C>______________<C>_______
Current tax provision:
U.S. federal $ 20,624 $ 13,543 $ 9,816
U.S. state and local 5,830 3,981 2,210
Foreign 9,347 6,078 4,635
35,801 23,602 16,661
Deferred tax provision (benefit):
Domestic (2,589) 631 3,090
Foreign 1,214 (246) (204)
(1,375) 385 2,886
Provision for income taxes $ 34,426 $ 23,987 $ 19,547
</TABLE>
<TABLE>
The Company's deferred tax liability net of deferred tax assets at December 31, 1995 and 1994 amounted
to $12,452,000 and $10,444,000, respectively. The significant components of the Company's deferred tax
assets and liabilities at December 31, 1995 and 1994 as established in accordance with FAS 109 are as
follows:
<CAPTION>
(In thousands of dollars)
1995 1994
______________________________________________________________________________
<S> <C> <C>
Deferred tax assets:
Facilities consolidation and integration $ 4,485 $ 3,207
Accrued expenses 3,057 1,970
Property and equipment 3,076 3,431
Deferred revenue 694 609
Patents and other intangibles 933 126
Other 4,493 3,711
16,738 13,054
Valuation allowance (522) (725)
Deferred tax asset $16,216 $12,329
Deferred tax liabilities:
Property and equipment $21,670 $16,394
Deferred revenue 1,230 954
Patents and other intangibles 756 1,927
Other 5,012 3,498
Deferred tax liability $28,668 $22,773
</TABLE>
The Company expects that it is more likely than not that the net
deferred tax assets of $16,216,000 at December 31, 1995 will be realized
based on the future reversals of existing deferred tax liabilities and
the continuation of earnings, which may be affected by factors outside
the Company's control. The valuation allowance of $522,000 is
maintained for certain foreign deferred tax assets primarily relating to
insignificant net operating losses. The net change in the valuation
allowance for deferred tax assets was a decrease of $203,000 in 1995
related to benefits arising from these net operating losses.
<TABLE>
An explanation of the difference between the effective income tax rate
and the statutory U.S. federal income tax rate expressed as a percentage
of earnings before income taxes for the years ended December 31, 1995,
1994 and 1993 follows:
<CAPTION>
1995 1994 1993
_____________________________________________________________________________
<S> <C> <C> <C>
Statutory U.S. federal income tax rate 35.0% 35.0% 35.0%
Provision for foreign withholding taxes
and additional U.S. taxes on
repatriated and accumulated earnings of
foreign subsidiaries 0.1 1.4 1.8
Tax effect of expenses not subject
to tax benefit 1.7 0.5 1.7
State income taxes, net of U.S.
federal income tax benefit 4.0 4.1 4.2
Taxes on foreign earnings at other than the
statutory U.S. federal income tax rate (0.4) (1.0) (1.1)
Other miscellaneous items (0.9) (0.8) 1.4
Effective income tax rate 39.5% 39.2% 43.0%
</TABLE>
The Company's tax provisions for 1995, 1994 and 1993 give effect to
foreign withholding taxes on the repatriation of accumulated earnings
from the Company's foreign subsidiaries and additional U.S. taxes on
such accumulated earnings. The Company has provided U.S. and foreign
income taxes on the accumulated earnings of the Company's foreign
subsidiaries through December 31, 1995.
The Company's Dutch subsidiary is entitled to certain tax incentives to
manufacture certain product lines under agreements with local tax
authorities. The total amount of such incentives is dependent on the
profitability of such product lines over a period extending through
1999.
Note 8 Commitments and Contingent Liabilities
The Company is obligated under the terms of various leases covering many
of the facilities occupied by the Company. The Company accounts for
substantially all of its leases as operating leases. Net rental expense
for 1995 was $10,228,000 ($8,281,000 and $7,803,000 in 1994 and 1993,
respectively). Estimated future minimum annual rental commitments under
noncancelable real property leases expiring through 2006 are as follows:
1996 - $8,220,000; 1997 - $7,053,000; 1998 - $5,741,000; 1999 -
$4,279,000; 2000 - $3,714,000; and subsequent years - $11,922,000.
The Company's worldwide operations are subject to environmental laws and
regulations which, among other things, impose limitations on the
discharge of pollutants into the air and water and establish standards
for the treatment, storage and disposal of solid and hazardous wastes.
The Company reviews the effects of environmental laws and regulations on
its operations and believes that it is in substantial compliance with
all material applicable environmental laws and regulations.
At December 31, 1995, the Company was a party to, or otherwise involved
in, several federal and state government environmental proceedings or
private environmental claims for the cleanup of superfund or other
sites. The Company may have potential liability for investigation and
clean-up of such sites. At most of such sites, numerous companies,
including either the Company or one of its predecessor companies, have
been identified as potentially responsible parties ("PRPs") under
superfund or related laws. It is the Company's policy to provide for
environmental cleanup costs if it is probable that a liability has been
incurred and if an amount which is within the estimated range of the
costs associated with various alternative remediation strategies is
reasonably estimable, without giving effect to any possible future
insurance proceeds. As assessments and cleanups proceed, these
liabilities are reviewed periodically and adjusted as additional
information becomes available. At December 31, 1995 and 1994, such
environmental related provisions are not material, and the Company
believes that its potential liability with respect to such sites is not
material. Environmental liabilities may be paid over an extended
period, and the timing of such payments cannot be predicted with
certainty.
The Company is also involved in various legal actions incidental to its
business. Company management believes, after consulting with counsel,
that the disposition of its litigation and other legal proceedings and
matters, including environmental matters, will not have a material
effect on the Company's consolidated financial statements.
The Board of Directors and Shareholders
Sealed Air Corporation:
We have audited the accompanying consolidated balance sheets of
Sealed Air Corporation and subsidiaries as of December 31, 1995
and 1994 and the related consolidated statements of earnings,
shareholders' equity (deficit) and cash flows for each of the
years in the three-year period ended December 31, 1995. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. These standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Sealed Air Corporation and subsidiaries as of
December 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the years in the three-year
period ended December 31, 1995 in conformity with generally
accepted accounting principles.
As discussed in notes 1 and 7 to the consolidated financial
statements, the Company changed its method of accounting for
income taxes in 1993.
s/KPMG Peat Marwick LLP
Short Hills New Jersey
January 17, 1996
<TABLE>
Interim Financial Information (Unaudited)
(In thousands of dollars except per share data)
<CAPTION>
Quarter Net Sales Gross Profit Net Earnings
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
First $173,354 $117,461 $ 60,807 $ 44,458 $ 11,573 $ 7,548
Second(1) 182,087 126,761 63,154 47,754 12,623 3,093
Third 178,536 131,121 62,432 47,932 13,442 10,309
Fourth 189,143 143,843 69,775 51,619 15,090 10,690
Year $723,120 $519,186 $256,168 $191,763 $ 52,728 $ 31,640
Earnings Per Share (2)
1995 1994
<S> <C> <C>
First $ .28 $ .19
Second(1) .30 .08
Third .32 .26
Fourth .35 .28
$ 1.25 $ .80
<FN>
(1)Included in net earnings and earnings per share for the second quarter of 1994 is an after-tax charge
of $5,576,000, or $0.14 per share, resulting from the early redemption of the Company's 12-5/8% Senior
Subordinated Notes.
(2) Earnings per share adjusted to reflect the effect of the September 1995 two-for-one stock split paid
in the nature of a 100% stock dividend.
</FN>
</TABLE>
<TABLE>
Common Stock Information
<CAPTION>
The Company's Common Stock
is listed the New York Stock 1994 High Low
<S> <C> <C>
Exchange(trading symbol: SEE). First Quarter $15-13/16 $14-1/16
The adjacent table sets forth the Second Quarter $15-1/16 $13-5/16
high and low sales prices for the
Company's Common Stock for each
quarterduring the two-year period Third Quarter $18-1/8 $13-13/16
ended December 31, 1995. Fourth Quarter $18-1/8 $15-1/4
The Company is currently subject
to certain covenants in loan 1995
documentsthat limit the payment
of cash dividends. No dividends
were paid in 1995 or 1994. First Quarter $22-3/4 $17-15/16
Second Quarter $22-7/8 $20-1/8
As of March 4, 1996, there were
approximately 1,319 holders of Third Quarter $28-1/4 $22-1/8
record of the Company's Common
Stock. Fourth Quarter $30-3/4 $24-1/4
Stock prices for periods prior to the fourth
quarter of 1995 have been adjusted to reflect
the effect of a two-for-one stock split in the
nature of a 100% stock dividend distributed on
September 29,1995 to stockholders of record at
the close of business on September 15,1995.
</TABLE>
Exhibit 21
SUBSIDIARIES OF THE COMPANY
The following table sets forth the name and state or other jurisdiction of
incorporation of the Company's subsidiaries. Except as otherwise indicated,
each subsidiary is wholly-owned, directly or indirectly, by the Company. Such
subsidiaries do business under their corporate names.
Aire Sellado, S.A. de C.V. Mexico
Cascades Sealed Air Inc.* Canada
Danco (NZ) Limited New Zealand
Delsopak S.A. France
Emballasje Teknikk A/S Norway
Instapak France S.A. France
PolyMask Corporation* Delaware
Polypride, Inc. Delaware
Sealed Air N.V. Belgium
Sealed Air Holdings (Brazil) Limited Brazil
Sealed Air of Canada Limited Ontario, Canada
Sealed Air Espana, S.A. Spain
Sealed Air (FPD) Limited England
Sealed Air Limited England
Sealed Air S.A.** France
Sealed Air (Far East) Limited Hong Kong
Sealed Air GmbH Germany
Sealed Air (NZ) Limited New Zealand
Sealed Air Japan Limited Nevada
Sealed Air S.p.A. Italy
Sealed Air (Korea) Limited Korea
Sealed Air (Malaysia) Sdn. Bhd. Malaysia
Sealed Air B.V. Netherlands
Sealed Air (Singapore) Pte. Limited Singapore
Sealed Air Svenska AB Sweden
Sealed Air Taiwan Limited Taiwan
Sealed Air Thailand Limited Thailand
Sealed Air Trucking, Inc. Delaware
Trigon Packaging Systems (NZ) Limited New Zealand
Trigon Packaging Systems
(Aust.) Pty. Limited Queensland, Australia
Trigon Packaging Corporation Washington
*The Company owns 50% of the outstanding shares.
**The Company indirectly owns a majority of the outstanding shares.
Certain subsidiaries are omitted from the above table. Such subsidiaries,
if considered in the aggregate as a single subsidiary, would not constitute a
significant subsidiary as of December 31, 1995.
EXHIBIT 23
Independent Auditors' Consent
The Board of Directors
Sealed Air Corporation:
We consent to incorporation by reference in the Registration
Statement No. 33-41734 on Form S-8, Registration Statement No.
333-341 on Form S-3, Registration Statement No. 33-68614 on Form
S-3, Registration Statement No. 33-57441 on Form S-3,
Registration Statement No. 33-58843 on Form S-3 and Registration
Statement No. 33-53751 on Form S-3 of Sealed Air Corporation of
our reports dated January 17, 1996, relating to the consolidated
balance sheets of Sealed Air Corporation and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated
statements of earnings, shareholders' equity (deficit), and
cash flows for each of the years in the three-year period ended
December 31, 1995, and related schedule, which reports appear or
are incorporated by reference in the December 31, 1995 annual
report on Form 10-K of Sealed Air Corporation. Our report on
the aforementioned consolidated financial statements refers to
a change in the Company's method of accounting for income taxes in 1993.
s/KPMG Peat Marwick LLP
Short Hills, New Jersey
March 26, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information extracted from the consolidated
statement of earnings for the twelve months ended December 31, 1995 and the
consolidated balance sheet at December 31, 1995 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<CIK> 0000088204
<NAME> SEALED AIR CORPORATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 7,661,000
<SECURITIES> 0
<RECEIVABLES> 121,707,000
<ALLOWANCES> 5,261,000
<INVENTORY> 54,214,000
<CURRENT-ASSETS> 196,159,000
<PP&E> 284,868,000
<DEPRECIATION> 115,012,000
<TOTAL-ASSETS> 443,545,000
<CURRENT-LIABILITIES> 154,214,000
<BONDS> 0
<COMMON> 425,000
0
0
<OTHER-SE> 105,913,000
<TOTAL-LIABILITY-AND-EQUITY> 443,545,000
<SALES> 723,120,000
<TOTAL-REVENUES> 723,120,000
<CGS> 466,952,000
<TOTAL-COSTS> 466,952,000
<OTHER-EXPENSES> 147,288,000
<LOSS-PROVISION> 2,421,000
<INTEREST-EXPENSE> 19,106,000
<INCOME-PRETAX> 87,154,000
<INCOME-TAX> 34,426,000
<INCOME-CONTINUING> 52,728,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,728,000
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 0
</TABLE>
