UNITED STATES
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.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For Quarter Ended June 30, 1997
Commission File Number 0-23876
JEFFERSON SMURFIT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 43-1531401
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8182 Maryland Avenue, St. Louis, Missouri 63105
(Address of principal executive offices) (Zip Code)
(314) 746-1100
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of June 30, 1997, the registrant had outstanding
110,990,339 shares of common stock, $.01 par value per share.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
JEFFERSON SMURFIT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $ 785 $ 844 $ 1,563 $ 1,760
Costs and expenses
Cost of goods sold 676 689 1,351 1,400
Selling and administrative expenses 65 63 129 130
Income from operations 44 92 83 230
Interest expense, net (47) (48) (94) (99)
Income (loss) before income taxes and
extraordinary item (3) 44 (11) 131
Provision for income taxes 1 17 51
Income (loss) before extraordinary item (4) 27 (11) 80
Extraordinary item
Loss from early extinguishment of debt,
net of income tax benefits (4) (4)
Net income (loss) $ (4) $ 23 $ (11) $ 76
Per share of common stock:
Income (loss) before extraordinary item $(.04) $ .24 $(.10) $ .72
Extraordinary item (.04) (.04)
Net income (loss) $(.04) $ .20 $(.10) $ .68
Weighted average shares outstanding 111 111 111 111
</TABLE>
See note to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
JEFFERSON SMURFIT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
June 30, December 31,
1997 1996
Assets (unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 10 $ 12
Receivables, less allowances of
$9 in 1997 and 1996 281 279
Refundable income taxes 9 1
Inventories
Work-in-process and finished goods 86 81
Materials and supplies 121 126
207 207
Deferred income taxes 42 46
Prepaid expenses and other current assets 4 7
Total current assets 553 552
Net property, plant and equipment 1,489 1,466
Timberland, less timber depletion 259 263
Goodwill, less accumulated amortization of
$54 in 1997 and $50 in 1996 243 246
Other assets 151 161
$ 2,695 $ 2,688
Liabilities and Stockholders' Deficit
Current liabilities
Current maturities of long-term debt $ 9 $ 10
Accounts payable 293 290
Accrued compensation and payroll taxes 88 92
Interest payable 25 30
Other accrued liabilities 92 103
Total current liabilities 507 525
Long-term debt, less current maturities 1,981 1,934
Other long-term liabilities 231 241
Deferred income taxes 362 363
Stockholders' deficit
Preferred stock, par value $.01 per share;
50,000,000 shares authorized; none issued
and outstanding
Common stock, par value $.01 per share;
250,000,000 shares authorized; 110,990,339
and 110,989,156 issued and outstanding in
1997 and 1996, respectively 1 1
Additional paid-in capital 1,168 1,168
Retained earnings (deficit) (1,555) (1,544)
Total stockholders' deficit (386) (375)
$ 2,695 $ 2,688
</TABLE>
See note to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
JEFFERSON SMURFIT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six months ended
June 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ (11) $ 76
Adjustments to reconcile net income (loss) to
net cash provided by operating activities
Extraordinary loss from early extinguishment of debt 7
Depreciation, depletion and amortization 71 67
Amortization of deferred debt issuance costs 6 7
Deferred income taxes 3 12
Non-cash employee benefit expense 4 6
Change in current assets and liabilities,
net of effects from acquisitions
Receivables (3) 31
Inventories 1 29
Prepaid expenses and other current assets 3 2
Accounts payable and accrued liabilities (19) 5
Interest payable (6) (7)
Income taxes payable (9) 1
Other, net (3) (4)
Net cash provided by operating activities 37 232
Cash flows from investing activities
Property additions (72) (54)
Timberland additions (7) (11)
Construction funds held in escrow 6 (9)
Acquisition of businesses, net of cash acquired (9)
Proceeds from property and timberland disposals 3 5
Net cash used for investing activities (79) (69)
Cash flows from financing activities
Net borrowings (repayments) under accounts
receivable securitization program 4 (14)
Proceeds from long-term borrowings 260
Net borrowings (repayment) of long-term debt 36 (418)
Deferred debt issuance costs (6)
Net cash provided by (used for) financing activities 40 (178)
Decrease in cash and cash equivalents (2) (15)
Cash and cash equivalents
Beginning of period 12 27
End of period $ 10 $ 12
</TABLE>
See note to consolidated financial statements.
<PAGE>
JEFFERSON SMURFIT CORPORATION
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in millions, except share data)
(Unaudited)
1. Basis of Presentation
The accompanying consolidated financial statements of Jefferson
Smurfit Corporation ("JSC" or the "Company") have been prepared in
accordance with the instructions to Form 10-Q and reflect all
adjustments which management believes necessary (which include only
normal recurring accruals) to present fairly the financial position
and results of operations. These statements, however, do not
include all information and footnotes necessary for a complete
presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles.
Interim results may not necessarily be indicative of results which
may be expected for any other interim period or for the year as a
whole. For further information refer to the consolidated financial
statements and footnotes included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, filed on February
26, 1997 with the Securities and Exchange Commission.
JSC owns 100% of the equity interest in JSCE, Inc. JSC has no
operations other than its investment in JSCE, Inc. JSCE, Inc. owns
100% of the equity interest in Jefferson Smurfit Corporation (U.S.)
("JSC (U.S.)"). JSC (U.S.) has extensive operations throughout the
United States. JSCE, Inc. has no operations other than its
investment in JSC (U.S.).
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
<TABLE>
<CAPTION>
(In millions) Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales
Paperboard/Packaging Products $ 709 $ 770 $1,420 $1,591
Newsprint 76 74 143 169
Total net sales $ 785 $ 844 $1,563 $1,760
Income from operations
Paperboard/Packaging Products $ 37 $ 73 $ 76 $ 185
Newsprint 7 19 7 45
Total income from operations $ 44 $ 92 $ 83 $ 230
</TABLE>
Net sales for the Company for the three months ended June 30, 1997
were $785 million, a decline of 7% compared to last year and, for
the six months ended June 30, 1997, were $1,563 million, a decline
of 11% compared to last year. Income from operations for the
Company declined to $44 million for the three months ended June 30,
1997 and to $83 million for the six months ended June 30, 1997.
The net sales impact of the changes in price and product mix,
shipment volumes, new plants and closed operations are shown in the
chart below. The lower net sales and income from operations for
the periods stated were due primarily to lower product pricing for
many of the Company's products.
<TABLE>
<CAPTION>
(In millions) Change in net sales analysis
Three months Six months
1997 compared to 1996 1997 compared to 1996
<S> <C> <C>
Sales price and product mix
Paperboard/Packaging Products $ (84) $(200)
Newsprint (28) (72)
(112) (272)
Sales volume
Paperboard/Packaging Products 21 29
Newsprint 30 46
51 75
Acquisitions and new facilities
Paperboard/Packaging Products 7 11
Closed or sold facilities
Paperboard/Packaging Products (5) (11)
Total net sales decrease $ (59) $(197)
</TABLE>
<PAGE>
Paperboard/Packaging Products Segment
For the three months ended June 30, 1997, net sales of the
Paperboard/Packaging Products segment decreased 8% compared to the
same period in 1996 to $709 million and income from operations
decreased 49% compared to the same period in 1996 to $37 million.
The decrease in net sales and income from operations of this
segment were primarily a result of the significant price reductions
for containerboard and corrugated shipping containers. Increases
in shipment volume for many of the Company's major products
partially offset the declines due to price. The major changes in
net sales price and shipments within the product groups of the
Paperboard/Packaging Products segment are discussed below.
Prices of corrugated shipping containers were lower than last year
by 18%, on average, during the second quarter and linerboard prices
fell below $300 per ton. The reduction in containerboard net sales
price was primarily the result of new capacity within the industry.
Reclaimed fiber prices during the three months ended June 30, 1997
were 12% higher, on average, compared to last year.
Demand for corrugated shipping containers was strong during the
second quarter causing shipments to increase by 9% compared to last
year. Folding carton and reclaimed fiber shipments were also
strong, increasing 5% and 11%, respectively, compared to last year.
For the three months ended June 30, net sales of containerboard and
corrugated shipping containers were $343 million, a decline of $67
million compared to last year. Net sales of the other major
products in this segment for the second quarter were comparable to
last year.
For the six months ended June 30, 1997, net sales of the
Paperboard/Packaging Products segment decreased 11% compared to the
same period in 1996 to $1,420 million and income from operations
decreased 59% compared to the same period in 1996 to $76 million.
The containerboard and corrugated shipping container price
decreases were also the primary reason for the declines in net
sales and income from operations for the six months ended June 30,
1997.
Price decreases for corrugated shipping containers which, on
average, were lower than last year by 20% for the year-to-date
period, appeared to bottom out in the second quarter. Demand for
corrugated shipping containers has been strong throughout the first
six months of 1997, with sales volume increasing by 8% compared to
last year. The Company took unplanned downtime at two of its
containerboard mills in the second quarter to reduce excess
inventories. Demand for containerboard strengthened near the end
of the second quarter, however, and the Company successfully
implemented a $40 per ton price increase for medium, which was
effective June 1.
Reclaimed fiber prices strengthened in the second quarter, and for
the six months ended June 30, 1997 were 4% higher, on average,
compared to last year. Reclaimed fiber shipments increased 10% for
the year-to-date period. Based upon the improvement in markets,
the Company announced additional paperboard and packaging price
increases to take effect in the third quarter. No assurance can be
given however, that the announced increases will be successfully
implemented.
For the six months ended June 30, net sales of containerboard and
corrugated shipping containers declined $162 million to $690
million. Net sales of the other major products in this segment for
the year-to-date period were lower than last year by 6% overall
compared to last year, but strengthened during the second quarter.
Newsprint Segment
Newsprint prices for the three months ended June 30, 1997, were
lower than last year by approximately $166 per metric ton. The
impact of the price decline was offset by increased sales volume
resulting in a moderate increase in net sales for the three months
ended June 30, 1997. Income from operations for the period was $7
million, a decrease of $12 million compared to last year. The
Company began implementing a $75 per metric ton increase in the
price of newsprint during the second quarter of 1997.
<PAGE>
For the six months ended June 30, 1997 net sales for the newsprint
segment were $143 million, a decline of $26 million compared to
last year, and income from operations declined $38 million, to $7
million. The declines were due to newsprint prices, which were
lower on a year-to-date basis by $228 per metric ton, or 31%.
Sales volume increased 29% for the year-to-date period.
Costs and Expenses
The increase in cost of goods sold as a percent of net sales for
all periods was due primarily to overall lower sales prices in
1997. In the Paperboard/Packaging Products segment the percentage
increased from 83% in 1996 to 86% in 1997 for the three months
ended June 30 and increased from 81% in 1996 to 86% in 1997 for the
six months ended June 30. For the newsprint segment, the
percentage increased from 73% in 1996 to 87% in 1997 for the three
month period and increased from 71% in 1996 to 92% in 1997 for the
six month period.
Selling and administrative expenses as a percent of net sales for
the three months and six months ended June 30, 1997 also increased
compared to last year due primarily to overall lower sales prices.
Interest expense for the three months ended June 30, 1997 was
comparable to last year and for the six months ended June 30, 1997
declined by $5 million. The decrease for the year-to-date period
was due primarily to lower average debt levels outstanding. The
average effective interest rate for the Company's outstanding debt
was comparable for both the 1997 and 1996 periods.
The provision for income taxes for the three months ended June 30,
1997 was $1 million and there was no provision for income taxes for
the six months ended June 30, 1997. The effective tax rates for
the stated periods differed from the Federal statutory tax rate due
to several factors, the most significant of which was the effect of
permanent differences from applying purchase accounting.
The Company will be required to adopt Statement of Financial
Accounting Standards No. 128, "Earnings Per Share", in the fourth
quarter of 1997. The effect of the adoption of the new rules is
expected to be immaterial to reported earnings per share for the
three months and six months ended June 30, 1997.
<TABLE>
<CAPTION>
Statistical Data Three months ended Six months ended
(In thousands of tons, June 30, June 30,
except as noted) 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Mill production:
Containerboard 473 480 952 953
Recycled boxboard and
solid bleached sulfate 205 185 408 381
Newsprint 159 123 315 275
Sales volume:
Corrugated shipping containers 533 488 1,032 956
Corrugated shipping containers
(billion square feet) 8.1 7.5 15.8 14.7
Folding cartons 116 111 227 232
Fiber reclaimed and brokered 1,171 1,056 2,354 2,135
</TABLE>
<PAGE>
Liquidity and Capital Resources
Operating activities have historically been the major source of
cash to fund the Company's capital expenditures and debt payments.
Net cash provided by operating activities for the six months ended
June 30, 1997 of $37 million, net borrowings of $40 million and
excess cash at the end of 1996 were used primarily to fund capital
investments and acquisitions totaling $79 million. During the
first quarter, the Company acquired a corrugated shipping container
plant in Florida and three Chicago-area recycling plants. The
Company also shut down and sold a small uncoated recycled
paperboard mill in Monroe, MI, which was unprofitable in recent
years.
The Company's credit agreement (the "Credit Agreement") contains
various business and financial covenants including, among other
things, maintenance of minimum levels of consolidated earnings
before depreciation, interest, taxes and amortization and
maintenance of minimum interest coverage ratios. In view of the
economic downturn within the Company's business segments,
particularly in the early part of 1997, the Company sought an
amendment to the Credit Agreement to ease certain of its financial
covenants. The amendment to the Credit Agreement was granted in
June 1997. The Credit Agreement also requires prepayments if JSC
(U.S.) has excess cash flows, as defined, or receives proceeds from
certain asset sales, insurance, issuance of equity securities or
incurrence of certain indebtedness.
Such restrictions, together with the highly leveraged position of
the Company, could restrict corporate activities including the
Company's ability to respond to market conditions, to provide for
unanticipated capital expenditures or to take advantage of business
opportunities.
At June 30, 1997, the Company had $283 million of unused borrowing
capacity under its Credit Agreement and $129 million of unused
borrowing capacity under its $315 million accounts receivable
securitization program, subject to JSC (U.S.)'s level of eligible
accounts receivable. The Company believes that cash provided by
operating activities and available financing sources will be
sufficient for the next several years to pay interest on the
Company's obligations, amortize its term loans and fund capital
expenditures.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
John Sechler and Hazel Sechler et. al. vs. Smurfit Newsprint Corporation
On July 1, 1997, Smurfit Newsprint Corporation ("SNC"), a wholly-
owned subsidiary of Jefferson Smurfit Corporation ("JSC"), was
served with a complaint which was filed in the United States
District Court for the Northern District of Georgia that alleges
that Cladwood exterior siding produced by SNC and used in
manufactured or mobile homes deteriorates under normal conditions
and exposure. The suit purports to be a class action on behalf of
all owners of Cladwood-containing manufactured homes or mobile
homes. The complaint alleges causes of action for breach of
warranty and negligence, and seeks an unspecified amount of actual,
consequential and punitive damages. The Company intends to
vigorously defend the action.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Registrant's Annual Meeting of Stockholders was held on May 1,
1997. At the meeting, stockholders voted on (i) the election of
four directors for terms of office expiring at the annual meeting
of stockholders in 2000; (ii) the adoption of the Company's Amended
and Restated 1992 Stock Option Plan and (iii) the ratification of
the appointment of Ernst & Young LLP as independent auditors of the
Company for 1997. Voting on each matter was as follows:
<TABLE>
<CAPTION>
Votes Votes Withheld/ Broker
For Against Abstentions Non-Votes
<S> <C> <C> <C> <C>
1. Election of Directors
Donald P. Brennan 108,111,210 368,049
James S. Hoch 108,117,137 362,122
Michael W.J. Smurfit 108,120,088 359,171
James E. Terrill 108,109,950 369,309
2. Adoption of Amended and
Restated 1992 Stock
Option Plan 107,443,127 606,562 130,096 299,474
3. Ratification of Auditors 108,412,671 30,032 36,556
</TABLE>
Item 5. Other Information
Form S-8 regarding the registration of additional shares of the
Company's Common Stock issuable under the Company's 1992 Stock
Option Plan was filed with the Securities and Exchange Commission
on July 24, 1997.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a) The following exhibits are included in this Form 10-Q.
10.1 Amendment No. 2, dated as of June 15, 1997, to the
Amended and Restated Credit Agreement among JSC,
Jefferson Smurfit Corporation (U.S.), JSCE, Inc. and the
financial institutions party thereto.
11.1 Calculation of Per Share Earnings.
27.1 Financial Data Schedule.
b) Reports on Form 8-K
Form 8-K regarding a complaint filed against a subsidiary of
the Company was filed with the Securities and Exchange
Commission on July 15, 1997.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
JEFFERSON SMURFIT CORPORATION
(Registrant)
Date July 31, 1997 /s/ Patrick J. Moore
Patrick J. Moore
Vice President
and Chief Financial Officer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000919226
<NAME> JEFFERSON SMURFIT CORPORATION
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 10
<SECURITIES> 0
<RECEIVABLES> 290
<ALLOWANCES> 9
<INVENTORY> 207
<CURRENT-ASSETS> 553
<PP&E> 2381
<DEPRECIATION> 892
<TOTAL-ASSETS> 2695
<CURRENT-LIABILITIES> 507
<BONDS> 1981
0
0
<COMMON> 1
<OTHER-SE> (386)
<TOTAL-LIABILITY-AND-EQUITY> 2695
<SALES> 1563
<TOTAL-REVENUES> 1563
<CGS> 1351
<TOTAL-COSTS> 1351
<OTHER-EXPENSES> 129
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 94
<INCOME-PRETAX> (11)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
EXHIBIT 11.1
<TABLE>
<CAPTION>
JEFFERSON SMURFIT CORPORATION
CALCULATION OF PER SHARE EARNINGS
(In millions, except per share data)
Three months ended Six months ended
June 30, June 30,
1997<fn1> 1996<fn2> 1997<fn1> 1996<fn2>
<S> <C> <C> <C> <C>
Primary earnings per share
Weighted average shares outstanding 111 111 111 111
Income (loss) applicable to common
shares before extraordinary item $ (4) $ 27 $ (11) $ 80
Extraordinary item (4) (4)
Net income (loss) applicable to common $ (4) $ 23 $ (11) $ 76
shares
Per share amounts
Income (loss) before extraordinary item $(.04) $ .24 $(.10) $ .72
Extraordinary item (.04) (.04)
Net income (loss) applicable to common $(.04) $ .20 $(.10) $ .68
shares
Fully diluted earnings per share
Weighted average shares outstanding 111 111 111 111
Income (loss) applicable to common
shares before extraordinary item $ (4) $ 27 $ (11) $ 80
Extraordinary item (4) (4)
Net income (loss) applicable to common $ (4) $ 23 $ (11) $ 76
shares
Per share amounts
Income (loss) before extraordinary item $(.04) $ .24 $(.10) $ .72
Extraordinary item (.04) (.04)
Net income (loss) applicable to common $(.04) $ .20 $(.10) $ .68
shares
<FN>
<fn1> The computations do not include common stock equivalents associated
with stock options which would have been antidilutive.
<fn2> The computations do not include common stock equivalents associated
with stock options since the dilutive effect on earnings per share
is not material.
</FN>
</TABLE>
EXHIBIT 10.1
AMENDMENT No. 2 dated as of June 15, 1997 (this
"Amendment"), to the Credit Agreement dated as of May 11,
1994, as amended and restated as of May 17, 1996, as
further amended by Amendment No. 1 thereto dated as of
September 30, 1996 (as so amended, the "Credit
Agreement"), among Jefferson Smurfit Corporation, a
Delaware corporation ("JSC"); Jefferson Smurfit
Corporation (U.S.), a Delaware corporation (the
"Borrower"); JSCE, Inc., a Delaware corporation ("JSCE");
the financial institutions party thereto from time to
time (the "Lenders"); The Chase Manhattan Bank, a New
York banking corporation ("Chase"), and Bankers Trust
Company, a New York banking corporation, as senior
managing agents (in such capacity, the "Senior Managing
Agents") for the Lenders; the fronting banks named
therein (the "Fronting Banks"); and Chase, as swingline
lender (in such capacity, the "Swingline Lender"), as
administrative agent (in such capacity, the
"Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent").
A. Pursuant to the terms and subject to the conditions
contained in the Credit Agreement, the Lenders, the Swingline
Lender and the Fronting Banks have extended, and have agreed to
extend, credit to the Borrower.
B. The Borrower has requested that the Credit Agreement
be amended (i) to modify certain of the financial covenants
contained therein and (ii) to replace Schedule 7.04 (Investments)
to the Credit Agreement with Exhibit A hereto.
C. The Required Lenders are willing so to amend the
Credit Agreement on the terms and subject to the conditions herein
contained.
D. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to them in the Credit
Agreement.
Accordingly, in consideration of the mutual agreements
herein contained and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Amendment to Section 7.15 of the Credit
Agreement. Section 7.15 of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"SECTION 7.15. Consolidated EBITDA. Permit Consolidated
EBITDA for any four-quarter period ending during any period
set forth below to be less than the amount set forth opposite
such period:
Period Amount
From and including
June 30, 1997 through
and including June 30,
1998 $235,000,000
From and including
September 30, 1998 through
and including December 31,
1998 $285,000,000
From and including March 31,
1999 through and including
December 31, 1999 $375,000,000
Thereafter $425,000,000"
SECTION 2. Amendment to Section 7.16 of the Credit
Agreement. Section 7.16 of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"SECTION 7.16. Interest Coverage Ratio. Permit the ratio
of (a) Consolidated EBITDA to (b) Consolidated Interest
Expense for any four-quarter period ending during any period
set forth below to be less than the amount set for the
opposite such period:
Period Ratio
From and including June 30,
1997 through and including
June 30, 1998 1.25 to 1
From and including September 30,
1998 through and including
December 31, 1998 1.50 to 1
From and including March 31,
1999 through and including
December 31, 1999 2.00 to 1
Thereafter 2.25 to 1"
SECTION 3. Substitution of Schedule. Schedule 7.04 to
the Credit Agreement is hereby deleted in its entirety and Exhibit
A hereto is hereby substituted therefor for all purposes under the
Loan Documents.
SECTION 4. Representations and Warranties. To induce
the other parties hereto to enter into this Amendment, each of JSC,
JSCE, and the Borrower represents and warrants to each of the
Lenders, the Administrative Agent, the Senior Managing Agents, the
Fronting Banks, the Swingline Lender and the Collateral Agent that,
after giving effect to this Amendment, (a) the representations and
warranties set forth in Article IV of the Credit Agreement are true
and correct in all material respects on and as of the date hereof,
except to the extent such representations and warranties expressly
relate to an earlier date and (b) no Default or Event of Default
has occurred and is continuing.
SECTION 5. Conditions to Effectiveness. This Amendment
shall become effective on the date on which the Administrative
Agent shall have received counterparts of this Amendment that, when
taken together, bear the signatures of JSC, JSCE, the Borrower and
the Required Lenders.
SECTION 6. Effect of Amendment. Except as expressly
set forth herein, this Amendment shall not by implication or
otherwise limit, impair, constitute a waiver of, or otherwise
affect the rights and remedies of the Lenders, the Fronting Banks,
the Swingline Lender, the Collateral Agent, the Administrative
Agent, the Senior Managing Agents, JSC, JSCE, the Borrower or the
Guarantors under the Credit Agreement or any other Loan Document,
and shall not alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained
in the Credit Agreement or any other Loan Document, all of which
are ratified and affirmed in all respects and shall continue in
full force and effect. Nothing herein shall be deemed to entitle
JSC, JSCE, the Borrower or the Guarantors to a consent to, or a
waiver, amendment, modification or other change of, any of the
terms, conditions, obligations, covenants or agreements contained
in the Credit Agreement or any other Loan Document in similar or
different circumstances.
SECTION 7. Counterparts. This Amendment may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
constitute but one and the same instrument. Delivery of any
executed counterpart of a signature page of this Amendment by
facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.
SECTION 8. APPLICABLE LAW. THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 9. Headings. The headings of this Amendment
are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their duly authorized officers, all
as of the date and year first above written.
JEFFERSON SMURFIT CORPORATION (U.S.),
by
/s/ Richard P. Marra
Name: Richard P. Marra
Title: Assistant Treasurer
JEFFERSON SMURFIT CORPORATION,
by
/s/ Richard P. Marra
Name: Richard P. Marra
Title: Assistant Treasurer
JSCE, INC.,
by
/s/ Richard P. Marra
Name: Richard P. Marra
Title: Assistant Treasurer
THE CHASE MANHATTAN BANK, individually and as
Administrative Agent, Collateral Agent and Senior
Managing Agent,
by
/s/ Timothy J. Storms
Name: Timothy J. Storms
Title: Managing Director
BANKERS TRUST COMPANY, individually and as Fronting
Bank and Senior Managing Agent,
by
/s/ Mary Jo Jolly
Name: Mary Jo Jolly
Title: Assistant Vice President
AERIES FINANCE LTD.
by
/s/ Andrew Ian Wignall
Name: Andrew Ian Wignall
Title: Director
ARAB BANKING CORPORATION
by
/s/ Grant E. McDonald
Name: Grant E. McDonald
Title: Vice President
BANKBOSTON, N.A.
by
/s/ Timothy M. Barns
Name: Timothy M. Barns
Title: Division Executive
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
by
/s/ Christopher R. Gernhard
Name: Christopher R. Gernhard
Title: Vice President
BANK OF IRELAND
by
/s/ John G. Cusack
Name: John G. Cusack
Title: Assistant Vice President
BANK OF MONTREAL
by
/s/ Bill R. Grieve
Name: Bill R. Grieve
Title: Managing Director
THE BANK OF NEW YORK
by
/s/ William A. O'Daly
Name: William A. O'Daly
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
by
/s/ F.C.H. Ashby
Name: F.C.H. Ashby
Title: Senior Manager Loan
Operations
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
by
/s/ David C. McLaughlin
Name: David C. McLaughlin
Title: Vice President
BANQUE FRANCAISE DU COMMERCE EXTERIEUR NYB
by
/s/ Kevin Dooley
Name: Kevin Dooley
Title: Vice President
by
/s/ Frederick K. Kammler
Name: Frederick K. Kammler
Title: Vice President
BANQUE PARIBAS
by
/s/ Nicholas C. Mast
Name: Nicholas C. Mast
Title: Vice President
by
/s/ Joli Anne Bruns
Name: Joli Anne Burns
Title: Assistant Vice President
CERES FINANCE LTD.
by
/s/ John H. Cullinane
Name: John H. Cullinane
Title: Director
CHRISTIANIA BANK OG KREDITKASSE
ASA, NEW YORK BRANCH
by
/s/ Carl-Petter Svendsen
Name: Carl-Petter Svendsen
Title: First Vice President
by
/s/ Justin F. McCarty, III
Name: Justin F. McCarty, III
Title: Vice President
CITIBANK, N.A.
by
/s/ Marjorie Futornick
Name: Marjorie Futornick
Title: Vice President
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE
by
/s/ Sean Mounier
Name: Sean Mounier
Title: First Vice President
by
/s/ Marcus Edward
Name: Marcus Edward
Title: Vice President
DRESDNER BANK AG NEW YORK AND GRAND CAYMAN BRANCHES
by
/s/ J.W. Sweeney
Name: J.W. Sweeney
Title: Assistant Vice President
by
/s/ B. Sacin
Name: B. Sacin
Title: Assistant Treasurer
FALCON 94 LTD.
by
/s/ John C. R. Collis
Name: John C. R. Collis
Title: Director
FIRST NATIONAL BANK OF CHICAGO
by
/s/ Randall Taylor
Name: Randall Taylor
Title: First Vice President
THE FUJI BANK
by
/s/ Teiji Teramoto
Name: Teiji Teramoto
Title: Vice President & Manager
GENERAL ELECTRIC CAPITAL CORPORATION
by
/s/ Janet Williams
Name: Janet Williams
Title: Duly Authorized Signatory
GOLDMAN SACHS CREDIT PARTNERS L.P.
by
/s/ John E. Urban
Name: John E. Urban
Title: Authorized Signer
HELLER FINANCIAL, INC.
by
/s/ Kathi J. Inorio
Name: Kathi J. Inorio
Title: Vice President
IMPERIAL BANK
by
/s/ Ray Vadalma
Name: Ray Vadalma
Title: Senior Vice President
THE INDUSTRIAL BANK OF JAPAN, LTD.
by
/s/ Takuya Honjo
Name: Takuya Honjo
Title: Senior Vice President
KEYPORT LIFE INSURANCE COMPANY
by CHANCELLOR LGT SENIOR
SECURED MANAGEMENT, INC.,
as Portfolio Advisor
/s/ Christopher A. Bondy
Name: Christopher A. Bondy
Title: Vice President
LEHMAN COMMERCIAL PAPER INC.
by
/s/ Michele Swanson
Name: Michele Swanson
Title: Authorized Signatory
LONG TERM CREDIT BANK OF JAPAN, LTD.
by
/s/ Richard E. Stahl
Name: Richard E. Stahl
Title: Sr. Vice President and
Joint General Manager
MEDICAL LIABILITY MUTUAL INSURANCE CO.
by CHANCELLOR LGT SENIOR
SECURED MANAGEMENT, INC.,
as Investment Manager
by
/s/ Christopher A. Bondy
Name: Christopher A. Bondy
Title: Vice President
MEES PIERSON NV
by
/s/ John O'Connor
Name: John O'Connor
Title: Senior Vice President
MERCANTILE BANK NATIONAL ASSOCIATION
by
/s/ Edward A. Cheney
Name: Edward A. Cheney
Title: Vice President/Group Manager
MERRILL LYNCH PRIME RATE PORTFOLIO
by MERRILL LYNCH ASSET MANAGEMENT, L.P.,
as Investment Advisor
by
/s/ Gilles Marchand, CFA
Name: Gilles Marchand, CFA
Title: Authorized Signatory
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
by
/s/ Gilles Marchand, CFA
Name: Gilles Marchand, CFA
Title: Authorized Signatory
THE MITSUBISHI TRUST AND BANKING CORPORATION
by
/s/ Toshihiro Hayashi
Name: Toshihiro Hayashi
Title: Senior Vice President
MITSUI LEASING (U.S.A.) INC.
by
/s/ Yuichi Kamizawa
Name: Yuichi Kamizawa
Title: Vice President
ML CBO IV (CAYMAN) LTD
by PROTECTIVE ASSET MANAGEMENT,
L.L.C. AS COLLATERAL MANAGER
by
/s/ James Dondero CPA, CFA
Name: James Dondero, CPA, CFA
Title: President Protective
Asset Management, L.L.C.
MORGAN STANLEY SENIOR FUNDING, INC.
by
/s/ Christopher A. Pucillo
Name: Christopher A. Pucillo
Title: Vice President
NATIONSBANK
by
/s/ Michael Short
Name: Michael Short
Title: Sr. Vice President
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS B.V.
by CHANCELLOR LGT SENIOR
SECURED MANAGEMENT, INC., as
Portfolio Advisor
by
/s/ Christopher A. Bondy
Name: Christopher A. Bondy
Title: Vice President
THE SAKURA BANK, LIMITED
by
/s/ Yoshikazu Nagura
Name: Yoshikazu Nagura
Title: Vice President
SENIOR DEBT PORTFOLIO
by BOSTON MANAGEMENT AND
RESEARCH AS INVESTMENT
ADVISOR
by
/s/ Payson F. Swaffield
Name: Payson F. Swaffield
Title: Vice President
SENIOR HIGH INCOME PORTFOLIO, INC.
by
/s/ Gilles Marchand, CFA
Name: Gilles Marchand, CFA
Title: Authorized Signatory
SOCIETE GENERALE NEW YORK BRANCH
by
/s/ Karen M. Sager
Name: Karen M. Sager
Title: Vice President
STRATA FUNDING LTD.
by
/s/ John H. Cullinane
Name: John H. Cullinane
Title: Director
THE SUMITOMO BANK, LIMITED
by
/s/ Suresh Tata
Name: Suresh Tata
Title: Senior Vice President
TORONTO DOMINION (TEXAS), INC.
by
/s/ Lisa Allison
Name: Lisa Allison
Title: Vice President
TRANSAMERICA BUSINESS CREDIT CORPORATION
by
/s/ Perry Vavoules
Name: Perry Vavoules
Title: Senior Vice President
THE TRAVELERS INDEMNITY COMPANY
by
/s/ Robert M. Mills
Name: Robert M. Mills
Title: Investment Officer
THE TRAVELERS INSURANCE COMPANY
by
/s/ Robert M. Mills
Name: Robert M. Mills
Title: Investment Officer
TRUST COMPANY OF THE WEST
by
/s/ Mark L. Gold
Name: Mark L. Gold
Title: Managing Director
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
by
/s/ Jeffrey W. Maillet
Name: Jeffrey W. Maillet
Title: Senior Vice President
Portfolio Manager
THE YASUDA TRUST & BANKING CO., LTD.
by
/s/ Joseph C. Meek
Name: Joseph C. Meek
Title: Deputy General Manager
