SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the Quarterly Period Ended
December 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
Commission file number 33-64814
SWEETHEART HOLDINGS INC.*
(Exact name of registrant as specified in its charter)
Delaware 06-1281287
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10100 Reisterstown Road, Owings Mills, 21117
Maryland (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: 410/363-1111
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of the Registrant's common stock as of
February 11, 1997:
Sweetheart Holdings Inc. Common Stock, $0.01 par value - 1,046,000 shares
* The Registrant is the guarantor of the 9 5/8 % Senior Secured Notes due
2000 and the 10 1/2% Senior Subordinated Notes due 2003 (collectively, the
"Notes") of Sweetheart Cup Company Inc., a wholly owned subsidiary of the
Registrant.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
Sweetheart Holdings Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
<CAPTION>
(Unaudited)
December 31, September 30,
1996 1996
--------------- --------------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $ 6,343 $ 4,371
Restricted cash 35,154 28,870
Receivables, less allowances of $2,525 and $2,466, respectively 70,297 88,183
Inventories 170,299 192,937
Deferred income taxes 1,771 1,771
-------- ---------
Total current assets 283,864 316,132
Property, plant and equipment 536,751 527,394
Less - Accumulated depreciation 110,198 99,561
--------- ---------
Net property, plant and equipment 426,553 427,833
Other assets 18,802 18,645
--------- ---------
Total assets $ 729,219 $ 762,610
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
-----------------------------------
CURRENT LIABILITIES
Accounts payable $ 43,461 $ 70,472
Accrued payroll and related costs 42,061 47,828
Other current liabilities 39,123 33,918
Current portion of long-term debt and bonds 1,479 1,535
--------- ---------
Total current liabilities 126,124 153,753
Long-term debt 402,507 381,879
Long-term bonds 3,700 3,700
Deferred income taxes 8,413 17,803
Other liabilities 81,013 84,060
SHAREHOLDERS' EQUITY
Common stock -- Par value $.01 per share; 3,000,000 shares authorized;
1,046,000 shares issued and outstanding 101,100 101,100
Cumulative translation adjustment (405) (322)
Retained earnings 7,190 21,060
Note receivable related to purchase of common stock (423) (423)
---------- ----------
Total shareholders' equity 107,462 121,415
--------- ---------
Total liabilities and shareholders' equity $ 729,219 $ 762,610
========= =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Sweetheart Holdings Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(In Thousands)
<CAPTION>
For the three months ended
December 31,
------------------------------
1996 1995
---------- -----------
<S> <C> <C>
Net sales $ 189,471 $ 207,893
Cost of sales 183,049 191,501
---------- ---------
Gross income 6,422 16,392
Selling, general and administrative 19,925 17,352
---------- ---------
Operating income (13,503) (960)
Interest expense 9,953 9,570
Other income, net 337 453
---------- ---------
Income (loss) before income
tax expense (benefit) (23,119) (10,077)
Income tax expense (benefit) (9,247) (4,030)
---------- ---------
Net income (loss) $ (13,872) $ (6,047)
========== =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
Sweetheart Holdings Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
<CAPTION>
For the three months ended
December 31,
----------------------------
1996 1995
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (13,872) $(6,047)
Depreciation and amortization 11,494 9,540
Deferred income tax benefit (9,222) (4,166)
Decrease in receivables 17,886 21,370
Decrease in inventories 22,638 8,495
Decrease in accounts payable (27,011) (12,443)
Other, net (4,751) (617)
---------- --------
Net cash (used in) provided by operating activities (2,838) 16,132
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (9,523) (11,493)
Proceeds from sale of property, plant and equipment
---------- -------
Net cash used in investing activities (9,523) (11,493)
---------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of debt 85,150 8,549
Repayment of debt (64,533) (8,616)
Increase in restricted cash (6,284) (7,289)
Payment received on common stock note receivable 20
---------- --------
Net cash provided by (used in) financing activities 14,333 (7,336)
--------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,972 (2,697)
--------- --------
CASH AND CASH EQUIVALENTS, beginning of period 4,371 8,001
--------- --------
CASH AND CASH EQUIVALENTS, end of period $ 6,343 $ 5,304
========= ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 1,813 $ 1,156
========== ========
Income taxes paid $ 69 $ 472
========== ========
See accompanying notes to consolidated financial statements.
SWEETHEART HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles (GAAP) for
interim financial information and with the instructions of Form 10-Q and rule
10-01 of regulation S-X. Accordingly, these statements do not include all the
information required by GAAP for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of Sweetheart Holdings Inc. and
subsidiaries' (the "Company") financial position as of December 31, 1996 and the
results of operations and cash flows for the three months ended December 31,
1996 have been included. Operating results for the three month period ended
December 31, 1996 are not necessarily indicative of the results to be expected
for the year ending September 30, 1997.
(2) RESTRICTED CASH
The cash balances of Sweetheart Receivables Corporation are restricted
from transfer to other entities within the Company. The balance of restricted
cash was $35.2 million at December 31, 1996 and $28.9 million at September 30,
1996.
(3) INVENTORIES
The components of inventories were as follows (in thousands):
December 31, September 30,
1996 1996
----------- ------------
Raw materials and supplies $ 47,880 $ 55,265
Finished goods and partly-finished products 122,419 137,672
-------- ---------
$170,299 $192,937
======== =========
(4) SWEETHEART CUP COMPANY INC. SUMMARIZED FINANCIAL INFORMATION
Sweetheart Holdings Inc. is the guarantor of the 9 5/8% Senior Secured
Notes due 2000 and the 10 1/2% Senior Subordinated Notes due 2003 of Sweetheart
Cup Company Inc., a wholly owned subsidiary of Sweetheart Holdings Inc.
Summarized financial information for Sweetheart Cup Company Inc. is presented as
follows (in thousands):
(Unaudited)
December 31, 1996 September 30,1996
----------------- ----------------
Current assets $558,408 $572,259
Noncurrent assets 173,244 174,006
Current liabilities 104,781 127,728
Noncurrent liabilities 542,032 519,635
(Unaudited)
For the three months ended
December 31,
-----------------------------------
1996 1995
------------- -------------
Net sales $189,471 $207,893
Gross income (456) 7,003
Net Loss (13,979) (7,097)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
GENERAL
The Company operates in two principal business lines: Foodservice and Food
Packaging. Foodservice products include disposable hot and cold drink cups,
lids, food containers, plates, bowls, cutlery and ice cream cones. These
products are sold directly and through distributors to fast food chains, full
service restaurants, hospitals, airlines, theaters and other institutional
customers. Food Packaging products include paper and plastic containers for the
dairy and food processing industries. Food Packaging also designs, manufactures
and leases filling and packaging machines that fill and seal the Company's
containers in customers' plants.
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
1995 (UNAUDITED)
Net sales decreased to $189.5 million for the three months ended December
31, 1996 from $207.9 million for the same period in 1995, a decrease of $18.4
million or 8.9%. The decrease in net sales reflects a 1.2% decrease in domestic
sales volume and a 6.4% decrease in domestic sales price. Foodservice sales
volume increased 0.6% while Food Packaging sales volume decreased 13.5%. Sales
volume measures the dollar value of unit sales, assuming constant prices between
periods. The increase in Foodservice volume is primarily attributable to
increases in distributor and national account volume. The decrease in Food
Packaging volume is primarily attributable to decreases in both the cultured and
frozen segments. Foodservice and Food Packaging selling prices decreased 7.0%
and 2.9%, respectively. Canadian sales decreased 7.8% from the same period in
1995.
Cost of sales decreased to $183.0 million for the three months ended
December 31, 1996 from $191.5 million for the same period in 1995, a decrease of
$8.5 million or 4.4%. As a percentage of net sales, cost of sales increased to
96.6% for the three months ended December 31, 1996 from 92.1% for the same
period in 1995. The increase in cost of sales as a percentage of net sales was
due primarily to lower production levels than in 1995, which resulted in
decreased inventory and caused less overhead costs to be absorbed into
inventory. Overhead costs are allocated and absorbed into inventory when
inventory is produced and expensed when inventory is sold. As a result, profit
comparisons can be materially affected when a change in inventory levels during
a period differs materially from the change in the prior year period.
Gross income decreased to $6.4 million for the three months ended
December 31, 1996 from $16.4 million for the same period in 1995, a decrease of
$10.0 million due to the reasons described above.
Selling, general and administrative expenses increased to $19.9
million for the three months ended December 31, 1996 from $17.4 million for the
same period in 1995, an increase of $2.5 million or 14.4%. As a percentage of
net sales, selling, general and administrative expenses increased to 10.5% for
the three months ended December 31, 1996 from 8.3% for the same period in 1995.
This increase is primarily attributable to an expanded marketing effort in the
Foodservice line, and maintenance and depreciation on the new MIS system.
Operating loss increased to $13.5 million for the three months ended
December 31, 1996 from $1.0 million for the same period in 1995, an increase of
$12.5 million due to the reasons described above.
Interest expense increased to $10.0 million for the three months ended
December 31, 1996 from $9.6 million for the same period in 1995, an increase of
$0.4 million or 4.2%.
Income tax benefit increased to $9.2 million for the three months
ended December 31, 1996 from $4.0 million for the same period in 1995.
Net loss increased to $13.9 million for the three months ended
December 31, 1996 from $6.0 million for the same period in 1995, an increase of
$7.9 million, due to the reasons described above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business is highly seasonal with the majority of its net
cash inflows from operations realized in the second and third quarters of the
calendar year. The Company builds inventory to prepare for the high seasonal
demands of the summer months when away-from-home consumption increases. As a
result, the Company requires access to working capital lines to meet its
production requirements during periods of reduced cash flow.
For the three months ended December 31, 1996, $9.5 million of net
capital additions, $0.4 million reduction of Canadian operating facility
borrowings, $2.8 million of cash used for operations, $2.0 million increase in
cash balances, and a $6.3 million increase in restricted cash were funded
through $21.0 million of domestic revolving loan borrowings. At December 31,
1996, the Company had approximately $30.0 million of combined availability under
its domestic revolving loan and Canadian operating facilities. The maximum
combined month end outstanding balance of the domestic revolving loan and
Canadian operating facilities during the three months ended December 31, 1996
was $43.9 million, while the average balance outstanding totaled approximately
$37.8 million.
For the three months ended December 31, 1995, $11.5 million of net
capital additions, $1.4 million of Canadian term loan reductions, and a $7.3
million increase in restricted cash were funded through $16.1 million of cash
provided by operations, $1.4 million of Canadian operating facility borrowings,
and a $2.7 million decrease in cash balances. At December 31, 1995, the Company
had approximately $66.8 million of combined availability under its domestic
revolving loan and Canadian operating facilities. The maximum combined month
end outstanding balance of the domestic revolving loan and Canadian operating
facilities during the three months ended December 31, 1995 was $3.7 million,
while the average balance outstanding totaled approximately $3.8 million.
The Company's principal uses of cash for the next several years will
be working capital requirements, capital expenditures, and debt service
requirements. Management expects that annual capital expenditures will remain
at or near historical levels during the next few years as the Company continues
to pursue new product development and cost reduction opportunities. In
addition, the Company may be required to fund various contingent liabilities at
any time, including amounts accrued for litigation, claims and assessments
reflected on the balance sheet as other current liabilities.
Management believes that cash generated by operations and funds
available for working capital borrowings under the domestic revolving loan
facility and the Canadian operating facility will be sufficient to meet the
Company's expected operating needs, planned capital expenditures and debt
service requirements.
NET OPERATING LOSS CARRYFORWARDS
As of September 30, 1996, the Company had approximately $126 million
of net operating loss ("NOL") carryforwards for federal income tax purposes.
Although the Company has taken certain steps to allow utilization of the NOL
carryforwards and anticipates that a substantial portion of its NOL
carryforwards will be available to offset future taxable income, there can be no
assurance that its NOL carryforwards will become available or that the Company
will generate future taxable income. Accordingly, all or a portion of its NOL
carryforwards could expire unutilized, which could adversely affect the
Company's ability to satisfy its obligations as they become due. The Company
has reserved a portion of the tax benefit of its NOL carryforwards for financial
statement purposes. The Company believes that future taxable income will be
attainable due primarily to management's commitment to cost reduction strategies
(as indicated by the Company's intent to continue significant capital spending
for cost reduction opportunities) and significantly reduced interest expense due
to the Company's new capital and debt structure.
EFFECT OF INFLATION
Inflation may increase the Company's costs, including the cost of
borrowing and raw materials. Depending upon business conditions, the Company
attempts to increase the sales price of its products to mitigate the effect of
such potential increases. There can be no assurance that the Company will be
successful in increasing the prices of its products to offset all, or any
portion, of any cost increases.
ACCOUNTING PRONOUNCEMENTS
In October 1996, the Company adopted SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The adoption of SFAS 121 did not
have a material impact on net income.
In October 1996, the Company adopted SFAS No. 123, Accounting for Stock
Based Compensation, which provides an alternative to APB Opinion No. 25,
Accounting for Stock Issued to Employees in accounting for stock based
compensation issued to employees. The company has adopted only the disclosure
provisions of Statement 123, and the impact was not material.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.33 Promissory Note dated September 24, 1996 between Sweetheart
Holdings Inc. and the State of Maryland Department of Business
and Economic Development (relating to the Loan Agreement filed
as exhibit 10.27 to the Company's September 30, 1996 Form 10-
K)
27.0 Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the three month
period ended December 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, its duly authorized officer and principal financial officer.
SWEETHEART HOLDINGS INC.
(registrant)
Date: February 11, 1997 By: /s/ Roger A. Lindahl
----------------- --------------------
Roger A. Lindahl
Treasurer (Principal Financial Officer
and Principal Accounting Officer)
</TABLE>
PROMISSORY NOTE
$1,080,000 September 24, 1996
(Financed Amount)
FOR VALUE RECEIVED, SWEETHEART CUP COMPANY INC., a Delaware corporation
(the "Borrower"), promises to pay to the order of DEPARTMENT OF BUSINESS AND
ECONOMIC DEVELOPMENT, one of the principal departments of the State of Maryland
(the "Department"), the principal sum of $1,080,000 (the "Loan") or so much as
has been disbursed to the Borrower under the terms of a Loan Agreement of even
date herewith between the Borrower and the Department (the "Loan Agreement"),
together with interest thereon at the rate or rates hereafter specified and any
and all other sums which may be owing to the Department by the Borrower pursuant
to this Promissory Note (the "Note"). All terms used herein that are defined in
the Loan Agreement have the meanings given such terms in the Loan Agreement,
unless the context clearly indicates a contrary meaning herein. The following
terms shall apply to this Note.
1. Interest. The unpaid principal balance outstanding from time to time
--------
pursuant to this Note shall bear interest at the rate of 6 percent per annum.
2. Calculation of Interest. Interest shall be calculated on the basis of
------------------------
three hundred sixty (360) days per year factor applied to the actual days on
which there exists an unpaid balance hereunder.
3. Repayment.
----------
a. Commencing on the date of initial disbursement of Loan proceeds
under the Loan Agreement (the "Initial Disbursement"), and continuing to
December 31, 1997 (the "Deferral Period"), interest shall accrue on the
principal balance of the Loan, but the Borrower's payment of such accrued
interest shall be deferred during the Deferral Period;
b. Subsequently, commencing on January 1, 1998 and continuing on the
same day of each succeeding third month to and including the day which is 120
months after Initial Disbursement (the "Non-Deferral Term"), the Borrower shall
make equal quarterly installments, each consisting of (i) a payment of
principal; (ii) together with a payment of the deferred interest that has
accrued during the Deferral Period (the "Deferred Interest"); and (iii) the
accrued interest on the outstanding principal balance under this Note, each in
an amount that will reduce the principal balance and Deferred Interest on the
Loan over the Term. Interest shall accrue on the Deferred Interest beginning on
January 1, 1998.
c. On the day which is 120 months after Initial Disbursement, the
Borrower's final payment shall consist of the remaining principal balance,
remaining Deferred Interest and accrued and unpaid interest and any other
amounts outstanding under the Loan Documents, and on such day this Note shall
mature and all such amounts shall be due and payable thereon (the "Maturity
Date").
d. Notwithstanding Section 3.a.-c. of this Note, the Department will
forgive $1,080,000 of the principal amount of the Loan ("Forgiven Principal")
and the Deferred Interest attributable to the Forgiven Principal if:
(i) Borrower is not in default under the Loan Documents;
(ii) Borrower is not in default under the County Loan Documents;
(iii) Borrower invests the Borrower's Contribution in the
Project by the Facility Completion Date;
(iv) In the reasonable discretion of the Department, the
requisite number of Existing Employee Positions have been filled with Permanent,
Full-Time Employees from April 30, 1996 to the Employee Completion Date;
(v) In the reasonable discretion of the Department, the Borrower
hires Permanent, Full-Time Employees in the New Employee Positions by the
Facility Completion Date and maintains the requisite number until the Employee
Completion Date;
(vi) Borrower installs new printing equipment at the Facility by
the Facility Completion Date; and
(vii) Borrower has completed the relocation of its
headquarters to the Facility by the Facility Completion Date.
e. Before the Department is obligated to provide the forgiveness set
forth in Section 3d. above, Borrower must provide the Department at least 60
days prior written notice of the anticipated date Borrower will have satisfied
the requirements of Section 3d. above and supporting documentation acceptable to
the Department.
4. Late Payment Charge. If any payment due hereunder is not received by
-------------------
the Department within 15 calendar days after its due date, the Borrower shall
pay a late payment charge equal to five percent (5%) of the amount then due.
5. Application of Payments. All payments made pursuant to this Note
------------------------
shall be applied first to late payments, charges or other sums owed to the
Department, next to accrued interest, and then to principal, or in such other
order or proportion as the Department, in the Department's sole discretion, may
elect from time to time.
6. Prepayment. The Borrower may prepay this Note in whole or in part at
-----------
any time or from time to time without penalty or premium. The Department shall
apply any voluntary prepayment first to accrued interest, late charges and
default interest and then to principal in the inverse order of scheduled
maturities.
7. Place of Payment. All payments due under this Note shall be made
-----------------
during regular business hours, without notice, to the attention of MILA/MICRF
Department of Business and Economic Development, Loan Administration, 22nd
Floor, Redwood Tower, 217 East Redwood Street, Baltimore, Maryland 21202, or to
any other place that Department may designate in writing, and shall be made in
coin or currency of the United States of America which at the time of payment is
legal tender for the payment of public or private debts. Prepayments shall be
sent to the attention of the Director of the Community Financing group,
Department of Business and Economic Development, 217 East Redwood Street, 22nd
Floor, Baltimore, Maryland 21202, or to such other address as directed by the
Department.
8. Acceleration. Upon a Default, the Department, in the Department's
-------------
sole and absolute discretion and without further notice or demand, may declare
the entire unpaid principal balance of this Note plus accrued interest and all
other sums due under this Note to be immediately due and payable and may
exercise any and all rights and remedies available under any of the Loan
Documents. Reference is made to the Loan Documents, for further and additional
rights of the Department to declare the entire unpaid principal balance plus
accrued interest and all other sums due under this Note to be immediately due
and payable.
9. Confession of Judgment. Upon a Default, the Borrower authorizes the
-----------------------
clerk or any attorney of any court of record to appear for it and enter judgment
by confession without prior notice or opportunity for prior hearing for the
principal balance then outstanding under this Note, together with interest,
court costs and an attorney's fee equal to 15% of the sum of the principal
balance then outstanding and interest then due hereunder, hereby waiving and
releasing, to the extent permitted by law, all errors and all rights of
exemption, appeal, stay of execution, inquisition, and extension upon levy on
real estate or personal property to which the Borrower may otherwise be entitled
under the laws of the United States of America or of any state or possession of
the United States of America now in force or which may hereafter be passed. The
authority and power to appear for and enter judgment against the Borrower shall
not be exhausted by one or more exercises thereof, or by any imperfect exercise
thereof, and shall not be extinguished by any judgment entered pursuant thereto.
Such authority and power may be exercised on one or more occasions, from time to
time, in the same or different jurisdictions, as often as the Department shall
deem necessary or desirable, for all of which this Note shall be a sufficient
warrant.
10. Expenses of Collection. If this Note is referred to an attorney for
-----------------------
collection after a Default, the Borrower shall pay all costs of collection,
including an attorney's fee equal to 15% of the sum of the principal balance
then outstanding and interest then due hereunder.
11. Subsequent Holder. The Department may pledge, transfer, or assign
------------------
this Note and its rights under the Loan Documents. Any pledging, transferring
or assigning of rights shall also apply to any renewals, extensions or
modifications. A transferee, pledgee, or assignee shall have the same rights as
the Department hereunder with respect to this Note.
12. Waiver of Protest. The Borrower, and all parties to this Note,
------------------
whether maker, endorser, or guarantor waive presentment, notice of dishonor and
protest.
13. Choice of Law; Modifications; Cumulative Rights; Extensions of
Maturity. The Borrower acknowledges this Note and all other Loan Documents
shall be governed by the laws of the State. No modification or amendment of
this Note shall be effective unless in writing signed by the Department and the
Borrower, and each such modification or amendment, if any, shall apply only with
respect to the specific instance involved. No waiver of any provision of this
Note shall be deemed to be made by the Department unless in writing signed by
the Department. Any such waiver shall apply only with respect to the specific
instance involved. By accepting partial payment of any amount due an payable
under this Note, the Department shall not be deemed to waive the right either to
require prompt payment when due of all other amounts due and payable under this
Note or to exercise any rights and remedies available to it in order to collect
all other amounts due and payable under this Note. Each right, power and remedy
of the Department hereunder or under applicable law shall be cumulative and
concurrent and the exercise of any one or more of them shall not preclude the
simultaneous or later exercise by the Department of any or all such other
rights, powers, or remedies. No failure or delay by the Department to insist
upon the strict performance of any one or more provisions of this Note or to
exercise any right, power, or remedy consequent upon a breach thereof shall
constitute a waiver thereof, or preclude the Department from exercising any such
right, power or remedy.
14. Illegality. In case any provision (or any part of any provision)
-----------
contained in this Note shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision (or remaining part of the affected
provision) of this Note, but this Note shall be construed as if such invalid,
illegal or unenforceable provision (or any part thereof) had never been
contained herein, but only to the extent it is invalid, illegal or
unenforceable.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
undersigned executes this Note under seal as Borrower on the above written date.
WITNESS: SWEETHEART CUP COMPANY INC.
By: /s/ Larry W. Ward, Jr. (SEAL)
-----------------------------
Lawrence W. Ward, Jr.
Vice President and Chief Financial
Officer
STATE OF MARYLAND, CITY/COUNTY OF TO WIT:
I HEREBY CERTIFY that on this 24th day of September 1996, before me, a
Notary Public in and for the State and City/County aforesaid, personally
appeared Lawrence W. Ward, Jr., who acknowledged him to be the Vice President
and Chief Financial Officer of Sweetheart Cup Company Inc., known or
satisfactorily proven to me to be the person whose name is subscribed to the
within instrument, and acknowledged that he executed the same for the purposes
therein contained as its duly authorized Vice President and Chief Financial
Officer.
AS WITNESS my hand and Notarial Seal
/s/ Marlene Theresa Glaeser
---------------------------
Notary Public
My Commission expires: 4/27/99
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Sweetheart Holdings Inc. First quarter 1997 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 41497
<SECURITIES> 0
<RECEIVABLES> 72822
<ALLOWANCES> 2525
<INVENTORY> 170299
<CURRENT-ASSETS> 283864
<PP&E> 536751
<DEPRECIATION> 110198
<TOTAL-ASSETS> 729219
<CURRENT-LIABILITIES> 126124
<BONDS> 406207
0
0
<COMMON> 10460
<OTHER-SE> 97002
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