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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 0-24976
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CROWN PACIFIC PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 93-1161833
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
121 SW Morrison Street, Suite 1500, Portland, Oregon 97204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 503-274-2300
</TABLE>
-------------------------
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 the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Common Units 27,104,277
(Class) (Outstanding at November 4, 1997)
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CROWN PACIFIC PARTNERS, L.P.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
- ------------------------------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Statements of Income - Three Month and Nine Month
Periods Ended September 30, 1997 and 1996 2
Consolidated Balance Sheets -September 30, 1997 and December 31,
1996 4
Consolidated Statements of Cash Flows - Nine Months Ended
September 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II - OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K 15
Signature 16
</TABLE>
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CROWN PACIFIC PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
1997 1996
----------- ------------
Revenues ......................................... $ 121,274 $ 108,813
Operating costs:
Cost of products sold .......................... 99,474 87,936
Selling, general and administrative expenses.... 5,194 4,380
----------- ------------
Operating income ................................. 16,606 16,497
Interest expense ................................. 9,410 10,833
Amortization of debt issuance costs .............. 185 170
Other (income) expense, net ...................... 245 (413)
----------- ------------
Net income ....................................... $ 6,766 $ 5,907
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----------- ------------
Net income per Unit* ............................. $ 0.25 $ 0.25
----------- ------------
----------- ------------
Weighted average Units outstanding ............... 27,104,277 23,313,960
----------- ------------
----------- ------------
Cash flow** ...................................... $ 30,628 $ 29,412
----------- ------------
----------- ------------
*Net income per Unit is calculated based on weighted average units outstanding
after deducting the General Partners' allocation of net income.
**Cash flow is defined as EBITDDA or earnings before interest, income taxes,
depreciation, depletion, and amortization. EBITDDA is provided because
management believes EBITDDA provides useful information for evaluating the
Company's ability to service debt and support its cash distributions to
Unitholders.
See accompanying Notes to Consolidated Financial Statements.
2
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CROWN PACIFIC PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996
---------- -----------
<S> <C> <C>
Revenues .............................................. $ 364,092 $ 289,450
Operating costs:
Cost of products sold ............................... 295,398 231,084
Selling, general and administrative expenses ........ 18,897 14,301
---------- -----------
Operating income ...................................... 49,797 44,065
Interest expense ...................................... 28,194 29,387
Amortization of debt issuance costs ................... 550 451
Other income, net ..................................... 220 (287)
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Net income ............................................ $ 20,833 $ 14,514
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---------- -----------
Net income per Unit* .................................. $ 0.76 $ 0.72
---------- -----------
---------- -----------
Weighted average Units outstanding .................... 27,104,277 19,872,943
---------- -----------
---------- -----------
Cash flow** ........................................... $ 81,571 $ 75,134
---------- -----------
---------- -----------
</TABLE>
*Net income per Unit is calculated based on weighted average units outstanding
after deducting the General Partners' allocation of net income.
**Cash flow is defined as EBITDDA or earnings before interest, income taxes,
depreciation, depletion, and amortization. EBITDDA is provided because
management believes EBITDDA provides useful information for evaluating the
Company's ability to service debt and support its cash distributions to
Unitholders.
See accompanying Notes to Consolidated Financial Statements.
3
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CROWN PACIFIC PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
( IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
ASSETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
(UNAUDITED)
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................ $ 15,018 $ 16,818
Accounts receivable, net of allowances
of $533 and $275 ................................... 41,737 42,810
Notes receivable ..................................... 4,461 5,605
Inventories .......................................... 43,180 35,746
Deposits on timber cutting contracts ................. 6,414 4,771
Prepaid and other current assets ..................... 2,483 2,674
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Total current assets .............................. 113,293 108,424
Property, plant and equipment, net of
accumulated depreciation of $22,817 and
$19,927............................................... 46,887 43,679
Timber, timberlands and roads, net ..................... 515,961 511,869
Other assets ........................................... 10,594 11,789
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Total assets ...................................... $686,735 $675,761
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LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Notes payable ........................................ $ 11,500 $ 15,000
Accounts payable ..................................... 17,238 11,363
Accrued expenses ..................................... 21,495 10,470
Accrued interest ..................................... 11,242 5,369
Current portion of long-term debt .................... 1,000 1,000
--------- --------
Total current liabilities ......................... 62,475 43,202
Long-term debt ........................................ 407,500 392,000
Other non-current liabilities ......................... 407 561
--------- --------
470,382 435,763
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Commitments and contingent liabilities
Partners' capital:
General partners ................................... 2,323 2,708
Limited partners (27,104,277 Units outstanding at
September 30, 1997 and December 31, 1996).......... 214,030 237,290
--------- --------
Total partners' capital .......................... 216,353 239,998
--------- --------
Total liabilities and partners' capital .......... $686,735 $675,761
--------- --------
--------- --------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
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CROWN PACIFIC PARTNERS, L.P.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income .................................................. $ 20,833 $ 14,514
Adjustments to reconcile net income to
net cash provided by operating activities:
Depletion, depreciation and amortization ................ 32,544 31,233
Gain on sale of property ................................ (1,146) (8,545)
Other ................................................... (134) (699)
Net change in current assets and current
liabilities:
Accounts and notes receivable ........................... 4,396 (6,791)
Inventories ............................................. (12,570) 7,798
Deposits on timber cutting contracts .................... (1,643) 3,050
Prepaid and other current assets ........................ 194 (300)
Accounts payable and accrued expenses ................... 16,102 14,289
--------- ---------
Net cash provided by operating activities ..................... 58,576 54,549
--------- ---------
--------- ---------
Cash flows from investing activities:
Additions to timberlands .................................... (19,036) (213,201)
Additions to timber cutting rights .......................... (4,628) (12,842)
Additions to equipment ...................................... (8,362) (8,555)
Proceeds from sales of property ............................. 1,990 6,643
Principal payments received on notes ........................ 6,141 -
Purchase of businesses ...................................... - (6,028)
Other investing activities .................................. 53 (12)
--------- ---------
Net cash used in investing activities ......................... (23,842) (233,995)
--------- ---------
--------- ---------
Cash flows from financing activities:
Net decrease in short-term borrowings ....................... (7,500) (5,517)
Proceeds from issuance of long-term debt .................... 16,500 343,000
Repayments of long-term debt ................................ (1,000) (276,000)
Proceeds from sale of partnership interests ................. - 165,252
Distributions to partners ................................... (44,251) (28,830)
Retirement of equity interests .............................. - (4,100)
Debt and equity issuance costs .............................. (131) (10,529)
Other financing activities .................................. (152) (424)
--------- ---------
Net cash (used in) provided by financing activities ........... (36,534) 182,852
--------- ---------
Net (decrease) increase in cash and cash equivalents .......... (1,800) 3,406
Cash and cash equivalents at beginning of period .............. 16,818 10,292
--------- ---------
Cash and cash equivalents at end of period .................... $ 15,018 $ 13,698
--------- ---------
--------- ---------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
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CROWN PACIFIC PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS OR AS OTHERWISE INDICATED)
(UNAUDITED)
1: ORGANIZATION AND BASIS OF PRESENTATION
Crown Pacific Partners, L.P. (the "Partnership"), a Delaware limited
partnership, through its 99% owned subsidiary, Crown Pacific Limited
Partnership, was formed in 1994 to acquire, own and operate timberlands and
wood product manufacturing assets. The Partnership's business consists
primarily of growing and harvesting timber for sale as logs in domestic and
export markets and the manufacture and sale of lumber and other wood products.
The financial statements included in this Form 10-Q are unaudited and reflect
the consolidated financial position, results of operations and cash flows of
the Partnership. These financial statements include all the accounts of the
Partnership but do not contain all of the information required by generally
accepted accounting principles to be included in a full set of financial
statements. The financial statements in the Partnership's 1996 annual report
on Form 10-K, which includes a summary of significant accounting policies of
the Partnership, should be read in conjunction with this Form 10-Q. In the
opinion of management, all material adjustments necessary to present fairly
the results of operations for the three and nine months ended September 30,
1997 and 1996 have been included. All such adjustments are of a normal and
recurring nature and all significant intercompany transactions have been
eliminated. The results of operations for any interim period are not
necessarily indicative of the results of operations for the entire year.
Net income per unit was calculated using the weighted average number of
Common and Subordinated Units outstanding divided into net income, after
adjusting for the General Partner interest. The General Partner income
allocation was $68 and $59 for the three months ended September 30, 1997 and
1996, respectively, and $208 and $145 for the nine months ended September 30,
1997 and 1996, respectively.
NOTE 2: INVENTORIES
Inventories, consisting of lumber and logs, are stated at the lower of LIFO
cost or market. Supplies and inventories maintained at non-manufacturing
locations are valued at the lower of average cost or market. Inventories
consisted of the following:
September 30, 1997 December 31, 1996
------------------ -----------------
Finished goods $13,604 $ 9,068
Work-in-process - 6,417
Logs 26,865 16,123
Supplies 1,057 1,534
LIFO adjustment 1,654 2,604
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Total $43,180 $35,746
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NOTE 3: NEW FACILITIES
On July 22, 1997, the Board of Control of the Managing General Partner of the
Partnership ratified the Partnership's previously announced plans to build a
new high-technology studmill in Port Angeles, Washington. The Port Angeles
mill will allow the Partnership to
6
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add value to the logs harvested from its Olympic Tree Farm. Construction of
the mill is expected to be completed in the third quarter of 1998. Total
costs are expected to be approximately $18 million.
On July 22, 1997, Crown Pacific announced plans to build a $17 million
state-of-the-art sawmill at its existing mill site in Bonners Ferry, Idaho.
The Partnership expects to gain sizable efficiency and fiber realization
improvements from this new facility. Construction of the mill is expected to
be completed in the third quarter of 1998.
NOTE 4: ASSET ACQUISITIONS
In September 1997, Crown Pacific announced the acquisition of 65 thousand
acres of timberland from Trillium Corp. of Bellingham, Washington for $153
million. This acquisition closed on October 15, 1997.
NOTE 5: ASSET DISPOSITIONS
In March 1997, Crown Pacific sold substantially all of the assets of its
Redmond, Oregon remanufacturing facility for $7.4 million. In conjunction
with the sale, the Partnership entered into a long-term supply agreement with
the purchaser to supply lumber at market prices. Proceeds from the sale of
these assets have been used to fund a portion of the Partnership's mill
expansion and capital improvement program.
NOTE 6: NOTES PAYABLE
On March 31, 1997, Crown Pacific renegotiated its Working Capital and
Acquisition Credit Facilities with its lenders. Under the terms of the
amendments to these agreements, certain loan fees and rates have been reduced.
On October 10, 1997, Crown Pacific amended its Working Capital and
Acquisition Credit Facilities with its lenders. Under the terms of the
amendments to these agreements, the credit available under the Acquisition
Facility was increased from $125 million to $150 million, the terms were
extended to September 30, 2000, the definition for the purposes for utilizing
the Facilities was broadened and other terms were amended to terms more
favorable to the Partnership.
NOTE 7: DISTRIBUTIONS
In both the first and second quarters of 1997, the Board of Control of the
Managing General Partner authorized the Partnership to make distributions of
$0.538 per Unit, the Second Target Distribution as defined by the Partnership
Agreement. The distributions in each quarter totaled $14.88 million
(including $0.30 million to the General Partners) and were made on May 15,
1997 and August 14, 1997.
NOTE 8: CONSENT SOLICITATION
In March 1997, Crown Pacific successfully concluded a consent solicitation of
its Unitholders to amend its Partnership Agreement to increase the number of
Common Units available for issuance by 20 million. Such Units may be sold
from time to time in the future. The Partnership intends to use the proceeds
from potential sales of such Units to finance acquisitions.
7
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NOTE 9: SHELF REGISTRATION STATEMENT
On May 17, 1997, Crown Pacific filed a shelf registration statement on Form
S-3 with the United States Securities and Exchange Commission (SEC) for the
registration of 7.5 million limited partnership units which can be issued in
an underwritten offering. The Partnership intends to use the proceeds from
any potential future sale of the units registered under the Form S-3 to
finance future acquisitions.
NOTE 10: SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosure of cash flow information is as follows:
Nine months ended September 30,
-------------------------------
1997 1996
--------- --------
Cash paid during the period for interest $ 22,325 $20,232
Property acquired through debt $ 8,938 $ -
NOTE 11: SUBSEQUENT EVENTS
On October 21, 1997, the Board of Control authorized the Partnership to make
a distribution of $0.538 per unit, the Second Target Distribution as defined
by the Partnership Agreement. The total distribution will be $14.88 million
(including $.30 million to the General Partners) and will be paid on November
14, 1997 to Unitholders of record on November 4, 1997.
In October 1997, the Partnership filed a Registration Statement on Form S-4
with the Securities and Exchange Commission, which allows for the potential
issuance of up to 4 million additional limited partnership units in exchange
for assets or stock in an acquisition.
On October 10, 1997, Crown Pacific amended its Working Capital and
Acquisition Credit Facilities with its lenders. Under these amendments, the
credit available under the Acquisition Facility was increased from $125
million to $150 million, the terms of both facilities were extended to
September 30, 2000, the purposes for which Acquisition Facility borrowings
may be used were expanded and other terms were amended in a manner favorable
to the Partnership.
On October 15, 1997, the Partnership closed its previously announced
acquisition of 65 thousand acres of timberland from Trillium Corp. of
Bellingham, Washington, for $153 million.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Crown Pacific's principal operations consist of the growing and harvesting of
timber, the sale of logs and the processing and sale of lumber and other wood
products. The Partnership's ability to implement its business strategy over
the long term and its results of operations depend upon a number of factors,
many of which are beyond its control. These factors include general industry
conditions, domestic and international prices and supply and demand for logs,
lumber and other wood products, seasonality and competition from other
supplying regions and substitute products.
8
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FORWARD-LOOKING STATEMENTS
The information contained in this report includes certain forward-looking
statements that are based on assumptions that in the future may prove not to
be accurate. Those statements, and Crown Pacific Partners, L.P.'s business
and prospects, are subject to a number of risks, including the volatility of
timber and lumber prices, factors limiting harvesting of timber including
contractual obligations, weather and access limitations, the substantial
capital expenditures required to supply its operations, environmental risks,
operating risks normally associated with the timber industry, competition,
government regulation, the value of the U.S. dollar against foreign
currencies such as the Japanese yen, and the ability of the Partnership to
implement its business strategy. These and other risks are described in the
Partnership's reports and registration statements that are available from the
United States Securities and Exchange Commission.
FINANCIAL CONDITION
The Partnership's primary sources of liquidity have been cash provided by
operating activities as well as debt and equity financings. The increase in
cash provided by operating activities in the first nine months of 1997
resulted primarily from enhanced profitability and increases in accounts
payable due to seasonal increases in log harvesting activities during the
second and third quarters, offset by increases in inventory.
Net cash used in investing activities resulted from additions to timberlands,
equipment and timber cutting rights, which was partially offset by proceeds
from notes receivable and sales of properties.
On July 22, 1997, the Board of Control of the Managing General Partner
ratified the Partnership's previously announced plans to build a new
high-technology studmill in Port Angeles, Washington. The Port Angeles mill
will allow the Partnership to add value to the logs harvested from its
Olympic Tree Farm. Total costs are expected to be approximately $18 million.
Also on July 22, 1997, Crown Pacific announced plans to construct a new $17
million state-of-the-art sawmill at its existing mill site at Bonners Ferry,
Idaho. The Partnership believes it can realize sizable efficiency and fiber
recovery improvements from this new facility. Both mills are expected to be
completed in the third quarter of 1998.
Net cash used in financing activities resulted primarily from distributions
to partners of $44.3 million and payments on the Partnership's working
capital line of $7.5 million, offset by $16.5 million of proceeds from
long-term debt.
On October 21, 1997, the Board of Control authorized the Partnership to make
a distribution of $0.538 per unit, the Second Target Distribution as defined
by the Partnership Agreement. The total distribution will be $14.88 million
(including $.30 million to the General Partners) and will be paid on November
14, 1997 to Unitholders of record on November 4, 1997.
Cash required to meet the Partnership's quarterly cash distributions (as
required by the Partnership Agreement) to pay for capital expenditures and to
satisfy interest and principal payments on indebtedness will be significant.
Capital expenditures, excluding purchases of timber and timberlands,
acquisitions of businesses and any costs incurred in connection with new
mills, are expected to be approximately $15.0 million in 1997. The Managing
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General Partner expects that capital expenditures will be funded by current
funds, cash generated from operations, property sales, and/or bank
borrowings. The new mills are expected to be financed using operating
leases. Debt service is expected to be funded from current operations. The
Partnership expects to make cash distributions from its current funds and
cash generated from operations. Capital expenditures during the nine-month
period were funded by property sales, proceeds from note collections and cash
provided by operations.
RESULTS OF OPERATIONS (THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1996)
Net sales during the third quarter ended September 30, 1997 increased 11.5%
to $121.3 million, from $108.8 million in the same quarter in 1996. The
$12.5 million increase was principally due to $33.8 million of sales from the
wholesale operation, which was acquired in September 1996. Sales increases
during the third quarter of 1997 were partially offset by decreases in sales
of plywood and remanufacturing products subsequent to the sale of associated
facilities and decreased timberland sales in the 1997 quarter.
Lumber sales, excluding sales from the wholesale operation, represented 40.8%
of sales in the third quarter of 1997, compared to 36.0% of sales in the same
quarter of 1996. Average external prices received for lumber in the Oregon
region decreased 8.3% and increased slightly in the Inland region, to $584
per thousand board feet (MBF) and $466/MBF, respectively, for the third
quarter of 1997 from prices received in the same quarter of 1996. Prices
received in the Inland region in the third quarter of 1997 decreased 3.5%
from the second quarter of 1997. The price decreases are primarily a result
of domestic overproduction, as well as an ample supply of pine being imported
from Chile and Mexico. Prices are expected to decrease slightly throughout
the fourth quarter of 1997 as the U.S. millwork industry works off existing
inventory levels. Moderate increases are expected beginning in the early part
of the first quarter of 1998 reflecting anticipated production decreases by
pine producers including the Partnership.
External lumber sales volumes, excluding sales from the wholesale operation,
increased 28.3% in the third quarter of 1997 to 96.3 million board feet
(MMBF), compared to 75.0 MMBF in the same period of 1996. Sales volumes of
Oregon lumber increased 36.4% to 41.3 MMBF in the 1997 quarter due to
increases in capacity at the Partnership's Gilchrist and Prineville, Oregon
facilities as a result of capital improvements made in the first quarter of
1997. External lumber sales volumes in the Inland region increased by 5.4%
to 46.9 MMBF in the third quarter of 1997 due to a species mix change to
cedar and white woods, which resulted in higher production volumes. External
lumber sales volume from the Marysville studmill increased to 8.1 MMBF during
the third quarter of 1997.
Log sales represented 25.2% of sales in the third quarter of 1997, compared to
33.2% in the same quarter of 1996. Average external domestic prices for
merchantable logs sold in the Oregon and Inland Tree Farms decreased 17.9% and
18.1%, respectively, to $386/MBF and $417/MBF, respectively, while prices for
logs sold in the export market from the Hamilton and Olympic Tree Farms
increased 14.0% and 53.3%, respectively, to $432/MBF and $460/MBF, respectively,
over prices received in the comparable 1996 quarter. Decreases in domestic
pricing were primarily due to the general decline in lumber and log prices and a
decrease in the sales of cedar in the Inland Tree Farm. Increases in
10
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export pricing primarily resulted from a shift in sales of mid-grade species
from the export to the domestic market, elevating the export sales mix to
higher grades, as well as a general market decline.
Sales of logs to customers involved in exporting activities (included in
total log sales above) were approximately $2.7 million, or 2.2% of sales in
the third quarter of 1997, compared to $5.3 million, or 4.9% of sales for the
same quarter in 1996. Prices received for export logs increased 6.1% to
$677/MBF while sales volumes decreased 52.4% to 4.0 MMBF in the third quarter
of 1997 from levels experienced in the same quarter of 1996. Decreases in
sales volumes resulted from a shift in Japanese preferences from the purchase
of logs to the purchase of lumber products and decreased demand for the most
expensive export-grade logs. Over the longer term, the shift to the purchase
of lesser-grade export logs in Japan may increase the total proportion of
export logs sold from the Washington Tree Farms, where these lower grades are
predominant.
Domestic log sales volumes decreased 12.1% in the third quarter of 1997 to
61.0 MMBF, compared to 69.5 MMBF in the same quarter of 1996. Domestic
volumes from the Oregon and Hamilton Tree Farms increased 27.9% and 30.5%,
respectively, to 14.7 MMBF and 7.8 MMBF, respectively, over volumes attained
in the 1996 quarter. Domestic volumes sold from the Inland and Olympic Tree
Farms decreased 1.8% and 55.5%, respectively, in the third quarter of 1997 to
28.1 MMBF and 10.4 MMBF, respectively, compared to levels attained in the
same quarter of 1996. The overall decrease in volume primarily resulted from
an abnormally large amount of harvest in the 1996 third quarter in order to
catch up after poor weather conditions during the first six months of 1996,
offset by increased stumpage sales in Oregon and Hamilton in the third
quarter of 1997.
Sales from the Partnership's wholesale operations acquired in September 1996
consisted of lumber and other wood products, most of which were not
manufactured by the Partnership, and represented 27.9% of sales in the third
quarter of 1997.
Sales of timberlands were insignificant in the third quarter of 1997,
compared to 3% of sales in the third quarter of 1996, which resulted in a
$2.3 million gain.
By-product and other revenues accounted for 2.8% of sales in the third
quarter of 1997, compared to 2.6% of sales in the same quarter of 1996. The
increase relates primarily to a 14.6% increase in the price of wood chips in
the 1997 period.
Cost of sales as a percentage of sales increased slightly to 82.0% in the
third quarter of 1997, compared to 80.8% in the same quarter of 1996. Higher
margin sales of the Partnership's lumber and log products in the third
quarter of 1997 were offset by lower margin sales from the Partnership's
wholesale operation. Without the effect of sales from the wholesale
operation, cost of sales would have been 76.3% of total sales for the third
quarter of 1997, reflecting the disposition of the less profitable Albeni
Falls sawmill and the Partnership's plywood and remanufacturing facilities.
Selling, general and administrative expenses increased $.8 million to $5.2
million in the third quarter of 1997, compared to $4.4 million in the third
quarter in 1996. Selling, general and administrative expenses represented
4.3% of sales in the third quarter of 1997 and
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4.0% of sales in the same quarter of 1996. Increases were primarily due
to increased marketing expenses associated with the Partnership's wholesale
operation and additional salaries, wages and other benefits needed to support
the current level of sales and marketing activities.
Interest expense decreased $1.4 million to $9.4 million in the third quarter
of 1997, from $10.8 million in the same quarter in 1996. Amounts in the 1996
quarter include interest for bridge debt used to finance the purchase of the
Olympic Tree Farm and additions to the Oregon Tree Farms in May 1996.
The Partnership pays no significant income taxes and does not include a
provision for income taxes in its financial statements.
Weighted average units outstanding in the third quarter of 1997 increased by
3.79 million compared to the same quarter of 1996 resulting from the
Partnership's public offering and sale of common units in August 1996.
RESULTS OF OPERATIONS (NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE
MONTHS ENDED SEPTEMBER 30, 1996)
Net sales during the nine months ended September 30, 1997 increased 25.8% to
$364.1 million, from $289.5 million in the same 1996 period. The $74.6
million increase was principally due to $92.4 million of sales from the
wholesale operation, which was acquired in September 1996, and increased
sales of lumber and log products due to higher prices during the first six
months of the 1997 period. Sales increases during the 1997 nine-month period
were partially offset by decreases in plywood and millwork products
subsequent to the sale of the associated facilities, decreased land sales and
decreases in the prices of wood chips and other residuals.
Lumber sales, excluding sales from the wholesale operation, represented 42.6%
of sales in the 1997 period, compared to 43.9% of sales in the 1996 period.
Average external prices received for lumber in the Oregon and Inland regions
increased 5.3% and 15.5%, respectively, to $656/MBF and $478/MBF,
respectively, for the 1997 period from prices received in the 1996 nine-month
period. Price increases were due to strong U.S. housing and residential and
commercial remodeling markets. Prices for lumber products sold from the
Partnership's studmill in Marysville, Washington, acquired in September 1996,
were $321/MBF in the 1997 nine-month period. Lumber prices decreased during
third quarter of 1997 and are expected to continue slightly downward during
the fourth quarter as the U.S. millwork industry works off existing inventory
levels. Moderate increases are expected beginning in the early part of the
first quarter of 1998 reflecting anticipated production decreases by pine
producers including the Partnership.
External lumber sales volumes, excluding sales from the wholesale operation,
increased 8.2% in the 1997 period to 282 MMBF, from 261 MMBF in the same
period in 1996. Sales volumes of Oregon lumber increased 21.8% to 116.9 MMBF
in the 1997 period due to increases in capacity at the Partnership's
Gilchrist and Prineville, Oregon facilities subsequent to capital
improvements made in the first quarter of 1997. External lumber sales
volumes in the Inland region decreased by 13.6% to 142 MMBF in the 1997
nine-month period primarily due to the closure of the Albeni Falls, Idaho
sawmill in June 1996.
12
<PAGE>
External sales volumes from the Marysville studmill were 23.2 MMBF during the
1997 period.
Total log sales represented 22.6% of sales for the nine months ended
September 30, 1997, compared to 28.7% in the same period of 1996. Average
external domestic prices received for logs sold in the Olympic and Hamilton
Tree Farms increased 36.2% and 15.4%, respectively, to $463/MBF and $526/MBF
over prices experienced in the 1996 period. Average external prices received
for logs sold from the Oregon Tree Farm decreased 16.6% to $397/MBF over
prices experienced during the 1996 period. The average external prices
received for logs sold in the Inland Tree Farm remained unchanged at
$448/MBF. Decreases in domestic pricing were primarily due to increased
sales of less expensive hemlock and lower grade cedar. Increases in export
pricing primarily resulted from a shift in sales of mid-grade species from
the export to the domestic market, elevating the export sales mix to higher
grades.
Sales of logs to customers involved in exporting activities (included in
total log sales above) were $13.0 million, or 3.6% of sales in the 1997
nine-month period, compared to $15.8 million, or 5.5% of sales for the same
period in 1996. Prices received for export logs increased 1.1% to $662/MBF
while sales volumes decreased 18.8% to 19.6 MMBF in the 1997 period from
levels experienced in the 1996 period. Decreases in sales volumes resulted
from a shift in Japanese preferences from the purchase of logs to the
purchase of lumber products and decreased demand for the most expensive
export-grade logs. Over the longer term, the shift to the purchase of
lesser-grade export logs in Japan should increase the total proportion of
export logs sold from the Washington Tree Farms, where these lower grades are
predominant.
Domestic log sales volumes decreased 8.4% in the 1997 nine-month period to
139.8 MMBF, compared to 176.8 MMBF in the same 1996 period primarily due to
reductions in stumpage sales during the first half of 1997. Domestic sales
volumes from the Oregon, Inland and Hamilton Tree Farms decreased 1.0%, 19.5%
and 16.8%, respectively, to 22.8 MMBF, 53.3 MMBF and 23.0 MMBF, respectively,
over volumes experienced in the 1996 nine-month period. Volumes sold from
the Olympic Tree Farm acquired in May 1996 increased 13.9% to 40.6 MMBF in
the 1997 nine-month period.
Sales from the Partnership's wholesale operations acquired in September 1996
consisted of lumber and other wood products, most of which were not
manufactured by the Partnership, and represented 25.4% of sales in the
nine-month period ended September 30, 1997.
Sales of timberlands were insignificant in the 1997 nine-month period,
compared to 3.8% of sales in the 1996 period, which resulted in a $7.9
million gain.
By-product and other revenues accounted for 2.5% of sales in the 1997 period,
compared to 3.9% of sales in the 1996 period. Decreases relate primarily to
a 25% decrease in the price of wood chips in the 1997 period.
Cost of sales as a percentage of sales increased slightly to 81.1% in the
nine months ended September 30, 1997, compared to 79.8% in the 1996 period.
Higher margin sales
13
<PAGE>
of the Partnership's lumber and log products in the 1997 period were offset
by lower margin sales from the Partnership's wholesale operation. Without the
effect of sales from the wholesale operation, cost of sales would have been
75.9% of total sales for the 1997 nine-month period, reflecting higher
product prices and the closure of the less profitable Albeni Falls sawmill
and the Partnership's plywood and remanufacturing facilities.
Selling, general and administrative expenses increased $4.6 million to $18.9
million in the nine months ended September 30, 1997, from $14.3 million in
the 1996 period. Selling, general and administrative expenses represented
5.2% of sales in the 1997 period and 4.9% of sales in the same period of
1996. Increases were primarily due to increased marketing expenses associated
with the Partnership's wholesale operation and additional salaries, wages and
other benefits needed to support the current level of sales and marketing
activities.
The Partnership pays no significant income taxes and does not include a
provision for income taxes in its financial statements.
Weighted average units outstanding in the 1997 nine-month period increased by
7.23 million compared to the same period of 1996 due to the Partnership's
public offering and sale of common units in August 1996.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 128, "Earnings per Share"
("SFAS 128"). This statement establishes a different method of computing net
income per unit than is currently required under the provisions of Accounting
Principles Board Opinion No. 15. Under SFAS 128, the Partnership will be
required to present both basic net income per unit and diluted net income per
unit. Basic net income per unit is expected to be comparable to the
currently presented net income per unit. Diluted net income per unit is
expected to be comparable or slightly higher than the currently presented net
income per unit since the diluted calculation will also use the average
market price instead of the higher of the average or ending market price for
its calculations. The Partnership expects to adopt SFAS 128 in the fourth
quarter of 1997 and, at that time, all historical net income per unit data
presented will be restated to conform to the provisions of SFAS 128. The
effect of adoption of such pronouncement is expected to be immaterial to the
financial statements taken as a whole.
In June 1997, the FASB issued Statement of Financial Accounting Standard No.
130, "Reporting Comprehensive Income" ("SFAS 130"). This statement
establishes standards for reporting and displaying comprehensive income and
its components in a full set of general purpose financial statements. The
objective of SFAS 130 is to report a measure of all changes in equity of an
enterprise that result from transactions and other economic events of the
period other than transactions with owners. The Partnership expects to adopt
SFAS 130 in the first quarter of 1998 and does not expect comprehensive
income to be materially different from currently reported net income.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits filed as part of this report are listed below and this list is
intended to serve as the exhibit index:
<TABLE>
<CAPTION>
Exhibit No. and Description
---------------------------
<S> <C>
2.1 Agreement for the Sale and Purchase of Business Assets dated March 28,
1997 between Registrant and Team Millwork, LLC, previously filed with
the Partnership's Form 10-Q for the quarter ended March 31, 1997 as
filed with the Securities and Exchange Commission on May 13, 1997, and
is incorporated herein by reference.
2.2 Timberlands Purchase Agreement by and between Trillium Corporation, a
Washington corporation and Crown Pacific Limited Partnership, a
Delaware limited partnership, dated September 12, 1997, previously
filed with the Partnership's Form 8-K dated October 15, 1997 as filed
with the Securities and Exchange Commission on October 28, 1997, and
is incorporated herein by reference.
2.3 Timber Purchase Agreement by and between Trillium Corporation, a
Washington corporation and Crown Pacific Limited Partnership, a
Delaware limited partnership, dated September 12, 1997 previously
filed with the Partnership's Form 8-K dated October 15, 1997 as filed
with the Securities and Exchange Commission on October 28, 1997, and
is incorporated herein by reference.
3 First Amendment to Second Amended and Restated Agreement of Limited
Partnership of Crown Pacific Partners, L.P., previously filed with the
Partnership's Form 10-Q for the quarter ended March 31, 1997 as filed
with the Securities and Exchange Commission on May 13, 1997, and is
incorporated herein by reference.
10.1 Second Amendment to Amended and Restated Credit Agreement dated as of
July 31, 1996, previously filed with the Partnership's Form 10-Q for
the quarter ended March 31, 1997 as filed with the Securities and
Exchange Commission on May 13, 1997, and is incorporated herein by
reference.
10.2 First Amendment to Amended and Restated Credit Agreement B dated as of
July 31, 1996, previously filed with the Partnership's Form 10-Q for
the quarter ended March 31, 1997 as filed with the Securities and
Exchange Commission on May 13, 1997, and is incorporated herein by
reference.
10.3 Lumber Supply Agreement, dated March 28, 1997 between Registrant and
Team Millwork, LLC, previously filed with the Partnership's Form 10-Q
for the quarter ended March 31, 1997 as filed with the Securities and
Exchange Commission on May 13, 1997, and is incorporated herein by
reference.
10.4 Third Amendment to Amended and Restated Credit Agreement dated as of
October 10, 1997.
10.5 Second Amendment to Amended and Restated Credit Agreement B dated as
of October 10, 1997.
10.6 $55 million Purchase Price Note due to Trillium Corporation, a
Washington corporation, dated October 15, 1997, previously filed with
the Partnership's Form 8-K dated October 15, 1997 as filed with the
Securities and Exchange Commission on October 28, 1997, and is
incorporated herein by reference.
10.7 $52.5 million Purchase Price Note due to Trillium Corporation, a
Washington corporation, dated October 15, 1997, previously filed with
the Partnership's Form 8-K dated October 15, 1997 as filed with the
Securities and Exchange Commission on October 28, 1997, and is
incorporated herein by reference.
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter ended
September 30, 1997.
15
<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.
Date: November 7, 1997 CROWN PACIFIC PARTNERS, L.P.
By: Crown Pacific Management Limited
Partnership, as General Partner
By: /s/ Richard D. Snyder
-------------------------------------
Richard D. Snyder
Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal
Financial and Accounting Officer)
16
<PAGE>
THIRD AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"AMENDMENT"), dated as of October 10, 1997, is entered into among Crown
Pacific Limited Partnership, a Delaware limited partnership (the "COMPANY"),
the several financial institutions from time to time party to the Credit
Agreement referred to below (collectively, the "BANKS"; individually, a
"BANK"), Bank of America National Trust and Savings Association, as agent for
the Banks (in such capacity, the "AGENT"), and ABN AMRO Bank, N.V. and
Societe Generale, as co-agents for the Banks (in such capacity, the
"CO-AGENTS").
RECITALS
WHEREAS, the Company, the Banks, the Co-Agents and the Agent are
parties to the Amended and Restated Credit Agreement dated as of July 31,
1996, as amended by the First Amendment to Amended and Restated Credit
Agreement dated as of October 15, 1996, and the Second Amendment to Amended
and Restated Credit Agreement dated as of March 31, 1997 (as so amended, the
"CREDIT AGREEMENT"), pursuant to which the Banks have extended certain credit
facilities to the Company;
WHEREAS, the Company, the Banks, the Co-Agents and the Agent now
heeby wish to amend the Credit Agreement in certain respects, all as set
forth in greater detail below;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. DEFINED TERMS. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings assigned to them in the Credit
Agreement.
2. AMENDMENTS TO THE CREDIT AGREEMENT. Sections 1.1 and 6.11 of
the Credit Agreement are hereby amended as follows:
(a) The definition of "REVOLVING TERMINATION DATE" shall be
amended by deleting the date "September 30, 1999" and inserting in its stead
the date "September 30, 2000".
(b) The definition of "PERMITTED BUSINESS" shall be deleted, and
in its stead, the definition shall read:
"PERMITTED BUSINESS" means (i) any business engaged in by the
Company on the Closing Date; (ii) any business substantially
similar or related to any such business, which shall include any
1
<PAGE>
business in the forest products industry, provided that any
activity shall cease to be a Permitted Business if it causes or
would cause more than 25% of the Company's assets on a consolidated
basis valued at book value to be devoted to pulp or paper
manufacturing; and (iii) any non-forest products business that is
acquired as an incidental part of an acquisition of a Person or
substantially all of a Person's assets engaged primarily in the
forest products industry, so long as the Company sells or otherwise
disposes of the assets involved in such other business as soon as
practicable after such acquisition but in any event within one year
after such acquisition.
(c) The definition of "CASH FLOW" shall be deleted, and in its stead,
the definition shall read:
"CASH FLOW" means, at any date of determination, the sum of the
following calculated for the Company and its Subsidiaries on a
consolidated basis for the four fiscal quarter period ending on the
last day of the most recent quarter for which financial reports
pursuant to subsections 6.1(a) and (b) and a certificate pursuant
to subsection 6.2(b) have been delivered: (i) EBITDA for such
period; (ii) PLUS the Net Proceeds from the sale or other
disposition of assets permitted under subsections 7.2(a), (b), (c),
(d) or (f)(ii)(C) during such period, to the extent not otherwise
included in determining EBITDA, plus Permitted Inclusions; (iii)
PLUS or MINUS, as applicable, in connection with any businesses
(other than timberland covered by clause (iv) below) acquired by
the Company within such period, an amount equal to a good faith
estimate of such additional amounts that would be included in
determining EBITDA had such businesses been owned by the Company
for the entirety of such period, as certified with reasonable
accompanying detail by the Chief Financial Officer of the Company
based upon such Chief Financial Officer's good faith estimates of
applicable revenues and expenses arising from such businesses, and
(iv) PLUS or MINUS, as applicable, in connection with any
timberland acquired by the Company within such period, an amount
equal to a good faith estimate of such additional amounts that
would be included in determining EBITDA had such timberlands been
owned by the Company for the entirety of such period, as certified
with reasonable accompanying detail by the Chief Financial Officer
of the Company based upon such Chief Financial Officer's good faith
estimates of applicable revenues and expenses arising from such
timberlands and assuming aggregate timber harvests in an amount
that does not require proceeds to be placed in an escrow account
pursuant to Section 7.4.
2
<PAGE>
(d) The definition of "PRO FORMA CONSOLIDATED CASH FLOW" shall be
amended, so that the word "and" at the end of (v) and the entire paragraph
(vi) shall be deleted, and the following paragraphs will be inserted in their
stead:
(vi) PLUS and MINUS, as applicable, in connection with any
businesses (other than timberlands covered by clause (vii) below)
to be acquired by the Company with the proceeds of a Loan or
previously acquired within such four fiscal quarters, an amount
equal to a good faith estimate of such additional amounts that
would be included in clauses (i), (ii), (iii) and (iv) above had
such businesses been owned by the Company for the entirety of such
four fiscal quarters, as certified with reasonable accompanying
detail by the Chief Financial Officer of the Company based upon
such Chief Financial Officer's good faith estimates of applicable
revenues and expenses arising from such businesses; and
(vii) PLUS and MINUS, as applicable, in connection with any
timberland to be acquired by the Company with the proceeds of a
Loan or previously acquired within such four fiscal quarters, an
amount equal to a good faith estimate of such additional amounts
that would be included in clauses (i), (ii), (iii) and (iv) above
had such timberlands been owned by the Company for the entirety of
such four fiscal quarters, as certified with reasonable
accompanying detail by the Chief Financial Officer of the Company
based upon such Chief Financial Officer's good faith estimates of
applicable revenues and expenses arising from such timberlands and
assuming aggregate timber harvests in an amount that does not
require proceeds to be placed in an escrow or cash collateral
account pursuant to Section 7.4.
(e) The definition of "INTEREST EXPENSE" shall be deleted, and in
its stead, the definition shall read:
"INTEREST EXPENSE" means, at any date of determination, the sum
of the following calculated for the Company and its Subsidiaries on
a consolidated basis for the four fiscal quarter period ending on
the last day of the most recent quarter for which financial reports
pursuant to subsection 6.1(a) and a certificate pursuant to
subsection 6.2(b) have been delivered: (a) the interest expense of
the Company and its Subsidiaries, PLUS (b) the additional interest
expense that would have accrued on the Indebtedness incurred to
acquire businesses or timberland described in clauses (iii) or (iv)
of the definition of "Cash Flow" had such Indebtedness been
outstanding for the full four fiscal quarter period, based upon the
interest rate applicable on such date
3
<PAGE>
of determination to such Indebtedness (unless a higher interest
rate is scheduled to apply during the next four fiscal quarters, in
which case such higher interest rate shall be employed for such
portion of the prior four fiscal quarters as is scheduled to apply
during the next four fiscal quarters).
(f) The definition of "MATURITY DATE" shall be deleted, and in its
stead, the definition shall read:
"MATURITY DATE" means, if the Company properly exercises its
election to repay the Loans in installments as provided in
subsection 2.8(b), September 30, 2004, otherwise, the Revolving
Termination Date.
(g) The definition of "SENIOR DEBT" shall be deleted, and in its
stead, the definition shall read:
"SENIOR DEBT" means, as to the Company, as of any date of
determination, without duplication, all outstanding unsecured
Indebtedness of the Company of the type described in clauses (a) or
(b) of the definition of Indebtedness herein and all Indebtedness
represented by the Senior Notes, this Agreement and the Facility B
Credit Agreement (including "L/C Obligations" as defined therein),
but not including any subordinated Indebtedness.
(h) The following new definition shall be inserted in the Agreement
in its proper alphabetical order:
"TRILLIUM NOTE" means the promissory note that may be executed
by the Company in an aggregate principal amount not to exceed
$107,500,000 representing the deferred purchase price of certain
assets purchased by the Company from Trillium Corporation.
(i) Subsection 2.7(a)(iii) shall be amended by inserting the
phrase "for borrowed money" after the phrase "Senior Debt" in the second line
thereof.
(j) Subsection 2.7(b) shall be amended by deleting that portion of
the first sentence thereof that ends at the first semicolon, and inserting
the following phrase in its stead: "The Aggregate Commitment shall be
permanently reduced from time to time by the amount of any mandatory
prepayment of Loans required by subsection 2.7(a)(i) and by the amount of any
Senior Debt (other than Loans) incurred by the Company after the Effective
Date (as defined in the Third Amendment hereto) and permitted by subsection
7.6(i) excluding only Senior Debt evidenced by the Trillium Note and other
Senior Debt constituting refinancing of the Trillium Note;".
4
<PAGE>
(k) Section 6.11 shall be amended by deleting clause (ii) thereof
and inserting the following phrase in its stead: "(ii) for the cost
(including related fees, commissions and expenses) of the acquisition of any
Permitted Business or assets to be used in any Permitted Business, in all
cases not in contravention of any Requirement of Law or of any Loan Document,
and (iii) to pay the outstanding principal amount of the Trillium Note."
(l) Subsection 7.5(f) shall be deleted and the following inserted
in its stead:
(f) investments or Acquisitions not otherwise permitted
hereunder in a Person as long as (w) after giving effect to such
investment or Acquisition, the Company remains engaged in a
Permitted Business on a consolidated basis, (x) such Person is
domiciled in, and substantially all of its assets are located in,
the United States, Canada, Mexico or New Zealand, (y) such
investments do not exceed in the aggregate an amount (the "ANNUAL
INVESTMENT AMOUNT") equal to (i) in calendar year 1996, $10,000,000
and (ii) in each calendar year thereafter, the sum of (A) the
Annual Investment Amount for the preceding calendar year PLUS (B)
an increase equal to the percentage increase, if any, in the CPI
for such preceding calendar year, multiplied by such Annual
Investment Amount, and (z) the cumulative amount of such
investments during the term of this Agreement shall not exceed an
amount (the "CUMULATIVE INVESTMENT AMOUNT") equal to (i)
$51,500,000 PLUS (ii) an increase equal to the percentage increase,
if any, in the CPI from January 1, 1996 to the date of
determination, multiplied by such Cumulative Investment Amount; and
(m) Schedule 2 to the Form of Compliance Certificate shall be
replaced with Schedule 2 attached hereto.
(n) Schedule 2.1 shall be replaced with Schedule 2.1 attached hereto.
3. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Agent, the Co-Agents and the Banks as follows:
(a) No Default or Event of Default exists.
(b) The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary partnership and
corporate and other action and do not and will not require any registration
with, consent or approval of, notice to or action by, any Person (including
any Governmental Authority) in order to be effective and enforceable. The
Credit Agreement as amended by this Amendment constitutes the legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, without defense, counterclaim or
offset.
5
<PAGE>
(c) All representations and warranties of the Company contained in
the Credit Agreement are true and correct as though made on and as of the
date hereof (except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true and
correct as of such earlier date).
(d) The Company is entering into this Amendment on the basis of
its own investigation and for its own reasons, without reliance upon the
Agent, any of the Co-Agents, any Banks or any other Person.
4. EFFECTIVE DATE. This Amendment will become effective on the first
Business Day (the "Effective Date") upon which the Agent has received each of
the following, in form and substance satisfactory to the Agent and each Bank,
and in sufficient copies for each Bank:
(a) AMENDMENT. This Amendment executed by the Company, the Agent,
and each Bank;
(b) RESOLUTIONS; INCUMBENCY.
(i) Copies of the resolutions of the board of directors of
each MGP General Partner, as general partners of the Managing
General Partner, as general partner of the Company, and the
executive committee of the Board of Control of the Managing General
Partner, in each case approving and authorizing the execution,
delivery and performance by the Managing General Partner on behalf
of the Company of this Amendment and the other Loan Documents being
executed in connection herewith and the transactions contemplated
hereby and thereby, certified as of the Effective Date by the
Secretary or an Assistant Secretary of such MGP General Partner and
the Managing General Partner, as the case may be; and
(ii) A certificate of the Secretary or Assistant Secretary of
the Managing General Partner certifying the names and true
signatures of the officers of the Managing General Partner, as
general partner of the Company, authorized to execute, deliver and
perform, as applicable, this Amendment on behalf of the Company,
and all other Loan Documents to be delivered hereunder, as well as
a certificate signed by a Responsible Officer of the Company
stating that all representations and warranties contained herein
are true and correct as of the Effective Date and that no Default
or Event of Default exists as of the Effective Date;
(c) ORGANIZATION DOCUMENTS; GOOD STANDING. Each of the following
documents:
(i) the partnership certificate of the Company, the Managing
General Partner and the Master Partnership as in effect on the
Effective Date, certified by the Secretary of State (or similar,
applicable Governmental Authority) of the state of formation of
such entities as of a recent date;
(ii) the articles or certificate of incorporation of each MGP
General Partner as in effect on the Effective Date, certified by
the Secretary of State (or similar applicable Governmental
Authority) of the state of incorporation of such MGP General
6
<PAGE>
Partner as of a recent date and by the Secretary or Assistant
Secretary of such MGP General Partner as of the Effective Date, and
the bylaws of each MGP General Partner as in effect on the
Effective Date, certified by the Secretary or Assistant Secretary
of such MGP General Partner as of the Effective Date; and
(iii) a good standing certificate for the Company, the Managing
General Partner, the MGP General Partners and the Master
Partnership from the Secretary of State (or similar, applicable
Governmental Authority) of its state of incorporation or formation,
as applicable as of a recent date;
(d) LEGAL OPINION. An opinion of Ball Janik LLP, as counsel to
the Company and the Partner Entities and addressed to the Agent and the
Banks, substantially in the form of EXHIBIT A; and
(e) NOTES. Replacement Notes for each Bank that has elected to
have its Loans so evidenced, that is increasing its Commitment pursuant to
this Amendment, and that requests such a replacement Note before the
Effective Date.
5. RESERVATION OF RIGHTS. The Company acknowledges and agrees
that the execution and delivery by the Agent and the Banks of this Amendment
shall not be deemed to create a course of dealing or otherwise obligate the
Agent or the Banks to forbear or execute similar amendments under the same or
similar circumstances in the future.
6. MISCELLANEOUS.
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and
effect and all references therein and in the other Loan Documents to the
Credit Agreement shall henceforth refer to the Credit Agreement as amended by
this Amendment. This Amendment shall be deemed incorporated into, and a part
of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. No third
party beneficiaries are intended in connection with this Amendment.
(c) This Amendment shall be governed by, and construed in
accordance with, the law of the State of California; provided, however, that
the Agent and the Banks shall retain all rights arising under federal law.
(d) This Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed an original, and all such
counterparts taken together shall be deemed to constitute but one and the
same instrument.
(e) This Amendment, together with the Credit Agreement, contains
the entire and exclusive agreement of the parties hereto with reference to
the matters discussed herein and therein. This Amendment supersedes all
prior drafts and communications with respect thereto.
7
<PAGE>
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment, or
the Credit Agreement, respectively.
(g) The Company covenants to pay to or reimburse the Agent, upon
demand, for all costs and expenses (including allocated costs of in-house
counsel) incurred in connection with the development, preparation,
negotiation, execution and delivery of this Amendment.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their duly authorized officers as of the
date first above written.
CROWN PACIFIC LIMITED PARTNERSHIP, a
Delaware limited partnership
By: CROWN PACIFIC MANAGEMENT
LIMITED PARTNERSHIP, a Delaware
limited partnership,
its general partner
By:__________________________________
Title:__________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By:__________________________________
Title:__________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:__________________________________
Title:__________________________________
9
<PAGE>
ABN AMRO BANK N.V., as Co-Agent and as a
Bank
By:__________________________________
Title:__________________________________
By:__________________________________
Title:__________________________________
SOCIETE GENERALE, as Co-Agent and as a Bank
By:__________________________________
Title:__________________________________
BANK OF MONTREAL
By:__________________________________
Title:__________________________________
THE BANK OF NOVA SCOTIA
10
<PAGE>
By:__________________________________
Title:__________________________________
BANQUE PARIBAS
By:__________________________________
Title:__________________________________
By:__________________________________
Title:__________________________________
UNION BANK OF CALIFORNIA, N.A.
By:__________________________________
Title:__________________________________
KEYBANK NATIONAL ASSOCIATION
By:__________________________________
Title:__________________________________
WELLS FARGO BANK, N.A.
By:__________________________________
Title:__________________________________
11
<PAGE>
12
<PAGE>
SCHEDULE 2
CROWN PACIFIC LIMITED PARTNERSHIP
COMPLIANCE CERTIFICATE*
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
7.1(g) Judgment or Judicial attachment Maximum allowed
liens $ 5,000,000
Outstanding at month-day-year
7.1(i) Purchase money security interests Maximum allowed $ 25,000,000
Outstanding at month-day-year
7.2(c) Sales of assets Maximum allowed ("Annual Sales Amount") in
(1) 1996 calendar year $ 10,000,000
(2) each calendar year thereafter:
(a) Annual Sales Amount for preceding calendar year $
----------------
(b) percentage increase in the CPI for preceding
calendar year %
----------------
(c) (a) multiplied by (b) $
----------------
(d) sum of (a) plus (c) (Annual Sales Amount for
such calendar year) $
----------------
Cumulative dispositions from Closing Date through
month-day-year
Maximum allowed during term of Agreement
(1) Basic amount $ 51,500,000
(2) percentage increase in the CPI from January 1, 1996
to date of determination (month-day-year) %
----------------
(3) (1) multiplied by (2) $
----------------
$
----------------
(4) sum of (1) plus (3)
Cumulative dispositions from Closing Date through
month-day-year
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
7.1(g)
$
-------------
7.1(i)
$
-------------
7.2(c)
$
-------------
</TABLE>
- ------------------------------
* [The calculations set forth in this form of Compliance Certificate are by
necessity less detailed than those contained in the Credit Agreement. In the
event of any conflict between this Compliance Certificate and the Credit
Agreement, the Credit Agreement shall in all cases prevail.]
13
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
7.2(e) Exchanges of timberland Maximum allowed for timberland during term of Agreement $ 400,000,000
Cumulative exchanges through month-day-year
Maximum allowed during term of Agreement for timberland
received in exchange located in Canada, Mexico or New
Zealand plus Net Proceeds invested in productive assets
in such countries plus net proceeds of harvesting used
to purchase timber or timberlands in such countries $ 50,000,000
Actual amount of
(1) timberland received in exchange located in Canada,
Mexico or New Zealand
(2) Net Proceeds invested in productive assets in such
countries
(3) Net proceeds of harvesting used to purchase timber
or timberlands in such countries
(4) sum of (1), (2) and (3)
7.2(f) Dispositions of assets not other- Maximum Net Proceeds of disposition allowed at any time
wise permitted which are not applied to purchase assets or repay
Senior Debt $ 25,000,000
Cumulative dispositions through month-day-year
Planned Volume (1) Basic per annum amount (250 MMBF for 1996;
[year-end only] thereafter based upon prior years' adjustments):
(2) Annual Timber Increase [if applicable, to be calcu-
lated for each year after 1996]:
(a) timber acquired by Company and Subsidiaries during
calendar year (not including timber acquired with
the net proceeds of an excess harvest) MMBF
(b) timber sold by Company and its Subsidiaries during
such calendar year MMBF
(c) (a) minus (b) (Annual Timber Increase for such
calendar year)
(3) Estimated Percentage (Estimate of the number of
additional board feet of timber that will be harvested
by the Company and its Subsidiaries by virtue of the
acquisition of newly acquired standing timber that is
the basis of the Annual Timber Increase for the cur-
rent fiscal year, expressed as a percentage of such
Annual Timber Increase, but not to exceed 15%)
(4) If applicable, Annual Timber Increase amount to be
added to current year Planned Volume--(3) multiplied
by (2)(c)
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
7.2(e) $
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
7.2(f)
$
-------------
MMBF
MMBF
%
-------------
MMBF
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
(5) Annual Timber Decrease [if applicable, to be cal-
culated for each year after 1996]:
(a) Timber sold by the Company and its Subsidiaries
during calendar year MMBF
(b) Timber acquired by the Company and its Subsidi-
aries during such calendar year (not including
timber acquired with the net proceeds of excess
harvest) MMBF
(c) (a) minus (b) (Annual Timber Decrease for such
calendar year)
(6) If applicable, percentage that such Annual Timber
Decrease ((5)(c)) represents as a percentage of the
inventory of standing timber owned by the Company and
its Subsidiaries at the end of the prior calendar year
(7) If applicable, reduction in Planned Volume on
account of Annual Timber Decrease if the percentage set
forth in (6) above is 5% or greater or if the Asset
Coverage Ratio as computed below is less than
2.0:1.0--from 5(c) above
(8) Planned Volume--(1) plus (3) or minus (7), as
applicable
Asset Coverage Ratio (1) Wholesale value of Inventory:
[year-end only]
(a) Inventory at end of prior year [Insert detail sup-
porting computation of inventory of standing timber] MMBF
(b) Retail value of (a) [Attach species and price
detail]
(c) 60% of (b)
(2) Indebtedness at end of year (other than Indebted-
ness under the Working Capital Facility)
(3) Asset Coverage Ratio--
(1)(c) to (2)
Harvesting Restrictions/ (1) Maximum allowed for any one calendar year (150% of
[year-end only] Planned Volume) MMBF
Volume harvested during calendar year ending month-
day-year
(2) [1997 and thereafter] Maximum allowed for any two
consecutive calendar years (140% of Planned Volume) MMBF
Volume harvested during preceding two calendar years
ending month-day-year
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
MMBF
%
-------------
MMBF
MMBF
$
-------------
$
-------------
$
-------------
$
-------------
:1.0
MMBF
MMBF
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
(3) [1998 and thereafter] Maximum allowed for any three
calendar years (130% of Planned Volume) MMBF
Volume harvested during preceding three calendar years
ending month-day-year
(4) [1999 and thereafter] Maximum allowed for any four
consecutive calendar years (120% of Planned Volume) MMBF
Volume harvested during preceding four calendar years
ending month-day-year
7.5(f) Loans & Investments not other- Maximum allowed
wise permitted
(1) in 1996 calendar year $ 10,000,000
(2) in each calendar year thereafter:
(a) Annual Investment Amount for the preceding cal-
endar year $
----------------
(b) CPI for such preceding calendar year %
----------------
(c) (a) multiplied by (b) $
----------------
Cumulative investment for current calendar year through
month-day-year
Maximum allowed during term of this Agreement
(1) Basic amount $ 51,500,000
(2) Percentage increase in the CPI from January 1, 1996
to date of determination (month-day-year) %
----------------
(3) (1) multiplied by (2) $
----------------
(4) sum of (1) plus (3) $
----------------
Cumulative investment through month-day-year
7.6(g) Other ordinary course unsecured Maximum allowed
subordinated Indebtedness $ 10,000,000
Outstanding at month-day-year
7.11 Restricted Payments Available Cash:
(1) cash receipts of Company from all sources during
fiscal quarter ending month-day-year
(2) reduction with respect to such fiscal quarter in
cash reserves
(3) amount available to be borrowed on the last day of
such fiscal quarter under the Working Capital Facility
(4) sum of (1), (2) and (3)
(5) cash disbursements of Company during such fiscal
quarter
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
MMBF
MMBF
7.5(f)
$
-------------
$
-------------
7.6(g)
$
-------------
7.11 $
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
(6) cash reserves established with respect to such
fiscal quarter and increase with respect to such
fiscal quarter in cash reserves
(7) sum of (5) and (6)
(8) excess of (4) over (7)
7.15 Cash Flow to Interest Expense Cash Flow:
Ratio
(1) EBITDA
(a) Consolidated net income (or net loss) without
extraordinary losses or extraordinary gains
(b) Amounts treated as expenses for depreciation,
depiction and interest and amortization of
intangibles
(c) Accrued taxes on or measured by income
(d) sum of (a), (b) and (c)
(2) Net Proceeds from disposition of assets under
subsections 7.2(a), (b), (c), (d), or (f)(ii)(c)
to the extent not otherwise included in EBITDA
(3) Permitted Inclusions
(4) additional amounts that would be included in
determining EBITDA had business (other than timberland)
acquired by Company) within such four fiscal quarter
period been owned by Company (see attached for detail
as to such good faith estimate)
(5) additional amounts that would be included in
determining EBITDA had timberland acquired by Company
within such four fiscal quarter period been owned by
Company (see attached for detail as to such good faith
estimate)
(6) sum of 1(d) plus (2) plus (3) plus (4) plus (5)
Interest Expense:
(1) interest expense
(2) additional interest expense that would have accrued
on Indebtedness, if any, incurred to acquire certain
businesses
(3) additional interest expense that would have accrued
on Indebtedness, if any, incurred to acquire certain
timberlands
(4) sum of (1) plus (2) plus (3)
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
$
-------------
$
-------------
$
-------------
7.15
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
Ratio of Cash Flow to Interest Expense 2.5 to 1.0
7.15 Cash Flow to Debt Service Ratio Cash Flow (as determined above)
Debt Service:
(i) Interest Expense for the preceding four fiscal
quarters $
----------------
(ii) Amount payable by Company and its Subsidiaries on
a consolidated basis in respect of scheduled
principal payments with Subsidiaries other than
Facility B Loans $
----------------
(iii) Debt Service--(i) plus (ii)
Cash Flow to Debt Service Ratio 1.25:1.0
Total Debt to Cash Flow Ratio Total Debt
Cash Flow (See Section 7.15 Cash Flow calculation)
Total Debt to Cash Flow Ratio
Applicable Margin
Commitment Fee Percentage
Letter of Credit Rate
Pro Forma Consolidated Cash Flow Pro Forma Consolidated Cash Flow
Ratios
(1) Cash Provided by Operating Activity
(a) cash receipts (excluding cash proceeds from
Interim Capital Transactions)
(b) (i) cash operating expenditures
(ii) cash debt service payments (other than
certain payments or prepayments of principal
and premium)
(iii) cash capital expenditures
(iv) sum of (i), (ii) and (iii)
(c) reductions less additions to certain cash
reserves
(d) (a) minus (b)(iv) plus (c)
(2) Cash debt service payments to extent subtracted in
determining Cash Provided by Operating Activity
(3) Cash capital expenditures, except those relating to
Operating Capacity Acquisitions, Capital Additions and
Improvements and Interim Capital Transactions, to
extent subtracted in determining Cash Provided by
Operating Activity
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
:
-------------
7.15 $
-------------
$
-------------
:1.0
$
-------------
$
-------------
:
-------------
%
-------------
%
-------------
%
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
(4) Reductions minus additions to certain cash reserves
(5) Additions minus reductions to certain cash reserves
(6) In connection with business to be acquired or
previously acquired within such four fiscal quarters,
an amount equal to good faith estimate of such
additonal amounts that would be included in clauses
(1), (2), (3) and (4) above had such business been
owned by Company (see attached for detail as to such
good faith estimate)
(7) In connection with any timberland to be acquired
with the proceeds of a Loan or previously acquired
within such four fiscal quarters, an amount equal to
good faith estimate of such additional amounts that
would be included in clauses (1), (2), (3) and (4)
above had such timberlands been owned by Company (see
attached for detail as to such good faith estimate)
(8) Sum of (1), (2), (3), (4) and (5) plus or minus, as
applicable, (6) and (7)
Pro Forma Interest Expense
(1) Interest expense payable during four fiscal quarter
period on all Indebtedness of Company and Subsidiaries
(2) Interest expense that would have been payable
during such four fiscal quarter period in respect of
any Indebtedness proposed to be incurred on such date
of determination, and Indebtedness incurred after the
end of such four fiscal quarter period and before such
date of determination
(3) Sum of (1) and (2)
Pro Forma Maximum Debt Service
(1) Highest amount payable by Company and Subsidiaries
during any consecutive four fiscal quarters, in respect
of scheduled principal and interest with respect to all
Indebtedness of Company and Subsidiaries
(2) Interest expense accrued on Facility B Loans during
the most recent four fiscal quarters
(3) Sum of (1) and (2)
7.3, Pro Forma Consolidated Cash Flow to Pro Forma Interest
7.6(i) Expense
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
7.3,
7.6(i) :
-------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
6.4, 7.3, Pro Forma Consolidated Cash Flow to Pro Forma Maximum
7.6(i) Debt Service
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
6.4, 7.3,
7.6(i) :
-------------
</TABLE>
20
<PAGE>
21
<PAGE>
SCHEDULE 2.1
COMMITMENTS
AND PRO RATA SHARES
<TABLE>
<CAPTION>
BANK COMMITMENT PRO RATA SHARE
- ---------------------------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
Bank of America National Trust and Savings Association...................... $ 22,727,272.73 15.151515152%
ABN AMRO Bank, N.V.......................................................... 19,318,181.82 12.878787880%
Societe Generale............................................................ 19,318,181.82 12.878787880%
Bank of Montreal............................................................ 15,000,000.00 10.000000000%
The Bank of Nova Scotia..................................................... 15,000,000.00 10.000000000%
Banque Paribas.............................................................. 13,636,363.63 9.0909090880%
Key Bank.................................................................... 15,000,000.00 10.000000000%
Union Bank of California, N.A............................................... 15,000,000.00 10.000000000%
Wells Fargo Bank, N.A....................................................... 15,000,000.00 10.000000000%
TOTAL..................................................................... $ 150,000,000.00 100.000000000%
</TABLE>
22
<PAGE>
EX-10.5
SECOND AMENDMENT TO AMENDED AND
RESTATED FACILITY B CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED FACILITY B CREDIT AGREEMENT
(this "AMENDMENT"), dated as of October 10, 1997, is entered into among Crown
Pacific Limited Partnership, a Delaware limited partnership (the "COMPANY"),
the several financial institutions from time to time party to the Credit
Agreement referred to below (collectively, the "BANKS"; individually, a
"BANK"), Bank of America National Trust and Savings Association, as agent for
the Banks (in such capacity, the "AGENT"), and ABN AMRO Bank, N.V. and
Societe Generale, as co-agents for the Banks (in such capacity, the
"CO-AGENTS").
RECITALS
WHEREAS, the Company, the Banks, the Co-Agents and the Agent are parties
to the Amended and Restated Facility B Credit Agreement dated as of July 31,
1996, as amended by the First Amendment to Amended and Restated Facility B
Credit Agreement dated as of March 31, 1997 (as so amended, the "CREDIT
AGREEMENT"), pursuant to which the Banks, the Swingline Bank and the Issuing
Bank have extended certain credit facilities to the Company;
WHEREAS, the Company, the Banks, the Co-Agents and the Agent now hereby
wish to amend the Credit Agreement in certain respects, all as set forth in
greater detail below;
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
1. DEFINED TERMS. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings assigned to them in the Credit
Agreement.
2. AMENDMENTS TO SECTION 1.1 OF THE CREDIT AGREEMENT. Section 1.1
of the Credit Agreement is hereby amended as follows:
(a) The definition of "REVOLVING TERMINATION DATE" shall be amended
by deleting the date "September 30, 1999" and inserting in its stead the date
"September 30, 2000".
(b) The definition of "PERMITTED BUSINESS" shall be deleted, and in
its stead, the definition shall read:
"PERMITTED BUSINESS" means (i) any business engaged in by the
Company on the Closing Date; (ii) any business substantially similar
or related to any such business, which shall include any business in
the forest products industry, provided that any activity
1
<PAGE>
shall cease to be a Permitted Business if it causes or would cause
more than 25% of the Company's assets on a consolidated basis valued
at book value to be devoted to pulp or paper manufacturing; and
(iii) any non-forest products business that is acquired as an
incidental part of an acquisition of a Person or substantially all of
a Person's assets engaged primarily in the forest products industry,
so long as the Company sells or otherwise disposes of the assets
involved in such other business as soon as practicable after such
acquisition but in any event within one year after such acquisition.
(c) The definition of "CASH FLOW" shall be deleted, and in its
stead, the definition shall read:
"CASH FLOW" means, at any date of determination, the sum of the
following calculated for the Company and its Subsidiaries on a
consolidated basis for the four fiscal quarter period ending on the
last day of the most recent quarter for which financial reports
pursuant to subsections 7.1(a) and (b) and a certificate pursuant to
subsection 7.2(b) have been delivered: (i) EBITDA for such period;
(ii) PLUS the Net Proceeds from the sale or other disposition of assets
permitted under subsections 8.2(a), (b), (c), (d) or (f)(ii)(C) during
such period, to the extent not otherwise included in determining EBITDA,
plus Permitted Inclusions; (iii) PLUS or MINUS, as applicable, in
connection with any businesses (other than timberland covered by
clause (iv) below) acquired by the Company within such period, an amount
equal to a good faith estimate of such additional amounts that would
be included in determining EBITDA had such businesses been owned by the
Company for the entirety of such period, as certified with reasonable
accompanying detail by the Chief Financial Officer of the Company based
upon such Chief Financial Officer's good faith estimates of applicable
revenues and expenses arising from such businesses, and (iv) PLUS or
MINUS, as applicable, in connection with any timberland acquired by the
Company within such period, an amount equal to a good faith estimate
of such additional amounts that would be included in determining EBITDA
had such timberlands been owned by the Company for the entirety of such
period, as certified with reasonable accompanying detail by the Chief
Financial Officer of the Company based upon such Chief Financial
Officer's good faith estimates of applicable revenues and expenses
arising from such timberlands and assuming aggregate timber harvests
in an amount that does not require proceeds to be placed in an
escrow account pursuant to Section 8.4.
2
<PAGE>
(d) The definition of "PRO FORMA CONSOLIDATED CASH FLOW" shall be
amended, so that the word "and" at the end of (v) and the entire paragraph
(vi) shall be deleted, and the following paragraphs will be inserted in their
stead:
(vi) PLUS and MINUS, as applicable, in connection with any
businesses (other than timberlands covered by clause (vii) below)
to be acquired by the Company with the proceeds of a Loan or previously
acquired within such quarters, an amount equal to a good faith
estimate of such additional amounts that would be included in clauses
(i), (ii), (iii) and (iv) above had such businesses been owned by the
Company for the entirety of such four fiscal quarters, as certified
with reasonable accompanying detail by the Chief Financial Officer of
the Company based upon such Chief Financial Officer's good faith
estimates of applicable revenues and expenses arising from such
businesses; and
(vii) PLUS and MINUS, as applicable, in connection with any
timberland to be acquired by the Company with the proceeds of a Loan
or previously acquired within such four fiscal quarters,
an amount equal to a good faith estimate of such additional amounts
that would be included in clauses (i), (ii), (iii) and (iv) above had
such timberlands been owned by the Company for the entirety of such
four fiscal quarters, as certified with reasonable accompanying detail
by the Chief Financial Officer of the Company based upon such Chief
Financial Officer's good faith estimates of applicable revenues and
expenses arising from such timberlands and assuming aggregate timber
harvests in an amount that does not require proceeds to be placed in
an escrow or cash collateral account pursuant to Section 8.4.
(e) The definition of "INTEREST EXPENSE" shall be deleted, and in
its stead, the definition shall read:
"INTEREST EXPENSE" means, at any date of determination, the
sum of the following calculated for the Company and its Subsidiaries
on a consolidated basis for the four fiscal quarter period ending on
the last day of the most recent quarter for which financial reports
pursuant to subsection 7.1(a) and a certificate pursuant to subsection
7.2(b) have been delivered: (a) the interest expense of the Company
and its Subsidiaries, PLUS (b) the additional interest expense that
would have accrued on the Indebtedness incurred to acquire
businesses or timberland described in clauses (iii) or (iv) of
the definition of "Cash Flow" had such Indebtedness been outstanding
for the full four fiscal quarter period, based upon the interest
rate applicable on such date
3
<PAGE>
of determination to such Indebtedness (unless a higher interest rate
is scheduled to apply during the next four fiscal quarters, in which
case such higher interest rate shall be employed for such portion of
the prior four fiscal quarters as is scheduled to apply during the
next four fiscal quarters).
(f) The definition of "SENIOR DEBT" shall be deleted, and in its
stead, the definition shall read:
"SENIOR DEBT" means, as to the Company, as of any date of
determination, without duplication, all outstanding unsecured
Indebtedness of the Company of the type described in clauses (a)
or (b) of the definition of Indebtedness herein, and all Indebtedness
represented by the Senior Notes, this Agreement (including L/C
Obligations) and the Facility A Credit Agreement, but not including
any subordinated Indebtedness.
(g) Subsection 7.5(f) shall be deleted and the following inserted in
its stead:
(f) investments or Acquisitions not otherwise permitted
hereunder in a Person as long as (w) after giving effect to such
investment or Acquisition, the Company remains engaged in a
Permitted Business on a consolidated basis, (x) such Person
is domiciled in, and substantially all of its assets are located
in, the United States, Canada, Mexico or New Zealand, (y) such
investments do not exceed in the aggregate an amount (the "ANNUAL
INVESTMENT AMOUNT") equal to (i) in calendar year 1996, $10,000,000
and (ii) in each calendar year thereafter, the sum of (A) the
Annual Investment Amount for the preceding calendar year PLUS
(B) an increase equal to the percentage increase, if any, in
the CPI for such preceding calendar year, multiplied by such Annual
Investment Amount, and (z) the cumulative amount of such investments
during the term of this Agreement shall not exceed an amount
(the "CUMULATIVE INVESTMENT AMOUNT") equal to (i) $51,500,000
PLUS (ii) an increase equal to the percentage increase, if any,
in the CPI from January 1, 1996 to the date of determination,
multiplied by such Cumulative Investment Amount; and
(h) Schedule 2 to the Form of Compliance Certificate shall be
replaced with Schedule 2 attached hereto.
3. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Agent, the Co-Agents and the Banks as follows:
4
<PAGE>
(a) No Default or Event of Default exists.
(b) The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary partnership and
corporate and other action and do not and will not require any registration
with, consent or approval of, notice to or action by, any Person (including
any Governmental Authority) in order to be effective and enforceable. The
Credit Agreement as amended by this Amendment constitutes the legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, without defense, counterclaim or
offset.
(c) All representations and warranties of the Company contained in the
Credit Agreement are true and correct as though made on and as of the date
hereof (except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true and correct as of
such earlier date).
(d) The Company is entering into this Amendment on the basis of its
own investigation and for its own reasons, without reliance upon the Agent,
any of the Co-Agents, any Banks or any other Person.
4. EFFECTIVE DATE. This Amendment will become effective on the date
that the Agent has received from the Company and the Required Banks a duly
executed original of this Amendment.
5. RESERVATION OF RIGHTS. The Company acknowledges and agrees that the
execution and delivery by the Agent and the Banks of this Amendment shall not
be deemed to create a course of dealing or otherwise obligate the Agent or
the Banks to forbear or execute similar amendments under the same or similar
circumstances in the future.
6. MISCELLANEOUS.
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and
effect and all references therein and in the other Loan Documents to the
Credit Agreement shall henceforth refer to the Credit Agreement as amended by
this Amendment. This Amendment shall be deemed incorporated into, and a part
of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. No third
party beneficiaries are intended in connection with this Amendment.
(c) This Amendment shall be governed by, and construed in accordance
with, the law of the State of California; provided, however, that the Agent
and the Banks shall retain all rights arising under federal law.
5
<PAGE>
(d) This Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed an original, and all such
counterparts taken together shall be deemed to constitute but one and the
same instrument.
(e) This Amendment, together with the Credit Agreement, contains the
entire and exclusive agreement of the parties hereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior
drafts and communications with respect thereto.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall be
invalidated without affecting the remaining provisions of this Amendment, or
the Credit Agreement, respectively.
(g) The Company covenants to pay to or reimburse the Agent, upon
demand, for all costs and expenses (including allocated costs of in-house
counsel) incurred in connection with the development, preparation,
negotiation, execution and delivery of this Amendment.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their duly authorized officers as of the date
first above written.
CROWN PACIFIC LIMITED PARTNERSHIP, a
Delaware limited partnership
By: CROWN PACIFIC MANAGEMENT LIMITED
PARTNERSHIP, a Delaware limited
partnership,
its general partner
By:
--------------------------------
Title:
-----------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By:
--------------------------------
Title:
-----------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank, as the
Swingline Bank and as the Issuing Bank
By:
--------------------------------
Title:
-----------------------------
7
<PAGE>
ABN AMRO BANK N.V., as Co-Agent and as a
Bank
By:
--------------------------------
Title:
-----------------------------
By:
--------------------------------
Title:
-----------------------------
SOCIETE GENERALE, as Co-Agent and as
a Bank
By:
--------------------------------
Title:
-----------------------------
BANK OF MONTREAL
By:
--------------------------------
Title:
-----------------------------
THE BANK OF NOVA SCOTIA
By:
--------------------------------
Title:
-----------------------------
8
<PAGE>
BANQUE PARIBAS
By:
--------------------------------
Title:
-----------------------------
By:
--------------------------------
Title:
-----------------------------
UNION BANK OF CALIFORNIA, N.A.
By:
--------------------------------
Title:
-----------------------------
KEYBANK NATIONAL ASSOCIATION
By:
--------------------------------
Title:
-----------------------------
WELLS FARGO BANK, N.A.
By:
--------------------------------
Title:
-----------------------------
9
<PAGE>
SCHEDULE 2
CROWN PACIFIC LIMITED PARTNERSHIP
COMPLIANCE CERTIFICATE*
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
2.7(a)(v) Clean-Up Period Identify the period of 30 consecutive days during the
immediately preceding 12 calendar months ending
month-day-year during which the Effective Amount of
Syndicated Loans and Swingline Loans was $0
8.1(g) Judgment or Judicial attachment Maximum allowed
liens $ 5,000,000
Outstanding at month-day-year
8.1(i) Purchase money security interests Maximum allowed $ 25,000,000
Outstanding at month-day-year
8.2(c) Sales of assets Maximum allowed ("Annual Sales Amount") in
(1) 1996 calendar year $ 10,000,000
(2) each calendar year thereafter:
(a) Annual Sales Amount for preceding calendar year $
----------------
(b) percentage increase in the CPI for preceding
calendar year %
----------------
(c) (a) multiplied by (b) $
----------------
(d) sum of (a) plus (c) (Annual Sales Amount for
such calendar year) $
----------------
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
2.7(a)(v)
from
to
8.1(g)
$
-------------
8.1(i)
$
-------------
8.2(c)
</TABLE>
- ------------------------
* [The calculations set forth in this form of Compliance Certificate are by
necessity less detailed than those contained in the Credit Agreement. In the
event of any conflict between this Compliance Certificate and the Credit
Agreement, the Credit Agreement shall in all cases prevail.]
11
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
Cumulative dispositions from Closing Date through
month-day-year
Maximum allowed during term of Agreement
(1) Basic amount $ 51,500,000
(2) percentage increase in the CPI from January 1, 1996
to date of determination (month-day-year) %
----------------
(3) (1) multiplied by (2) $
----------------
(4) sum of (1) plus (3) $
----------------
Cumulative dispositions from Closing Date through
month-day-year
8.2(e) Exchanges of timberland Maximum allowed for timberland during term of Agreement $ 400,000,000
Cumulative exchanges through month-day-year
Maximum allowed during term of Agreement for
timberland received in exchange located in Canada,
Mexico or New Zealand PLUS Net Proceeds invested in
productive assets in such countries PLUS net proceeds
of harvesting used to purchase timber or timberlands in
such countries $ 50,000,000
Actual amount of
(1) timberland received in exchange located in Canada,
Mexicoor New Zealand
(2) Net Proceeds invested in productive assets in such
countries
(3) Net proceeds of harvesting used to purchase timber
ortimberlands in such countries
(4) sum of (1), (2) and (3)
8.2(f) Dispositions of assets not Maximum Net Proceeds of disposition allowed at any time
otherwise permitted which are not applied to purchase assets or repay
Senior Debt $ 25,000,000
Cumulative dispositions through month-day-year
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
$
-------------
8.2(e) $
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
8.2(f)
$
-------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
8.4 Planned Volume (1) Basic per annum amount (250 MMBF for 1996;
[year-end only] thereafter based upon prior years' adjustments):
(2) Annual Timber Increase [if applicable, to be
calculated for each year after 1996]:
(a) timber acquired by Company and Subsidiaries during
calendar year (not including timber acquired
with the net proceeds of an excess harvest) MMBF
(b) timber sold by Company and its Subsidiaries during
such calendar year MMBF
(c) (a) minus (b) (Annual Timber Increase for such
calendar year)
(3) Estimated Percentage (Estimate of the number of
additional board feet of timber that will be harvested
by the Company and its Subsidiaries by virtue of the
acquisition of newly acquired standing timber that is
the basis of the Annual Timber Increase for the current
fiscal year, expressed as a percentage of such Annual
Timber Increase, but not to exceed 15%)
(4) If applicable, Annual Timber Increase amount to be
added to current year Planned Volume--(3) multiplied by
(2)(c)
(5) Annual Timber Decrease [if applicable, to be
calculated for each year after 1996]:
(a) Timber sold by the Company and its Subsidiaries
during calendar year MMBF
(b) Timber acquired by the Company and its Subsidiaries
during such calendar year (not including timber
acquired with the net proceeds of excess harvest) MMBF
(c) (a) minus (b) (Annual Timber Decrease for such
calendar year)
(6) If applicable, percentage that such Annual Timber
Decrease ((5)(c)) represents as a percentage of the
inventory of standing timber owned by the Company and
its Subsidiaries at the end of the prior calendar year
(7) If applicable, reduction in Planned Volume on
account of Annual Timber Decrease if the percentage set
forth in (6) above is 5% or greater or if the Asset
Coverage Ratio as computed below is less than 2.0:1.0 -
from 5(c) above
(8) Planned Volume--(1) plus (3) or minus (7), as
applicable
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
8.4
MMBF
MMBF
%
-------------
MMBF
MMBF
%
-------------
MMBF
MMBF
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
Asset Coverage Ratio (1) Wholesale value of Inventory:
[year-end only] (a) Inventory at end of prior year [Insert detail
supporting computation of inventory of
standing timber]
(b) Retail value of (a) [Attach species and price
detail]
(c) 60% of (b)
(2) Indebtedness at end of year (other than
Indebtedness under the Working Capital Facility)
(3) Asset Coverage Ratio--
(1) (c) to (2)
Harvesting Restrictions/ (1) Maximum allowed for any one calendar year (150% of
[year-end only] Planned Volume) MMBF
Volume harvested during calendar year ending month-
day-year
(2) [1997 and thereafter] Maximum allowed for any two
consecutive calendar years (140% of Planned Volume) MMBF
Volume harvested during preceding two calendar years
ending month-day-year
(3) [1998 and thereafter] Maximum allowed for any three
calendar years (130% of Planned Volume) MMBF
Volume harvested during preceding three calendar years
ending month-day-year
(4) [1999 and thereafter] Maximum allowed for any four MMBF
consecutive calendar years (120% of Planned Volume)
Volume harvested during preceding four calendar years
ending month-day-year
8.5(f) Loans & Investments not otherwise Maximum allowed
permitted (1) in 1996 calendar year $ 10,000,000
(2) in each calendar year thereafter:
(a) Annual Investment Amount for the preceding calendar
year $
----------------
(b) CPI for such preceding calendar year %
----------------
(c) (a) multiplied by (b) $
----------------
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
MMBF
$
-------------
$
-------------
$
-------------
$
-------------
:1.0
MMBF
MMBF
MMBF
MMBF
MMBF
8.5(f)
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
Cumulative investment for current calendar year through
month-day-year
Maximum allowed during term of this Agreement
(1) Basic amount $ 51,500,000
(2) Percentage increase in the CPI from January 1, 1996
to date of determination (month-day-year) %
----------------
(3) (1) multiplied by (2) $
----------------
(4) sum of (1) plus (3) $
----------------
Cumulative investment through month-day-year
8.6(g) Other ordinary course unsecured Maximum allowed
subordinated Indebtedness $ 10,000,000
Outstanding at month-day-year
8.11 Restricted Payments Available Cash:
(1) cash receipts of Company from all sources during
fiscal quarter ending month-day-year
(2) reduction with respect to such fiscal quarter in
cash reserves
(3) amount available to be borrowed on the last day of
such fiscal quarter under the Credit Agreement
(4) sum of (1), (2) and (3)
(5) cash disbursements of Company during such fiscal
quarter
(6) cash reserves established with respect to such
fiscal quarter and increase with respect to such fiscal
quarter in cash reserves
(7) sum of (5) and (6)
(8) excess of (4) over (7)
8.15 Cash Flow to Interest Expense Cash Flow:
Ratio
(1) EBITDA
(a) Consolidated net income (or net loss) without
extraordinary losses or extraordinary gains
(b) Amounts treated as expenses for depreciation,
depletion and interest and amortization of intangibles
(c) Accrued taxes on or measured by income
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
$
-------------
$
-------------
8.6(g)
$
-------------
8.11 $
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
8.15
$
-------------
$
-------------
$
-------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
(d) sum of (a), (b) and (c)
(2) Net Proceeds from disposition of assets under
subsections 8.2(a), (b), (c), (d), or (f)(ii)(c) to
the extent not otherwise included in EBITDA
(3) Permitted Inclusions
(4) additional amounts that would be included in
determining EBITDA had business (other than timberland)
acquired by Company within such four fiscal quarter
period been owned by Company (see attached for detail
as to such good faith estimate)
(5) additional amounts that would be included in
determining EBITDA had timberland acquired by Company
within such four fiscal quarter period been owned by
Company (see attached for detail as to such good faith
estimate)
(6) sum of 1(d) plus (2) plus (3) plus (4) plus (5)
Interest Expense:
(1) interest expense
(2) additional interest expense that would have accrued
on Indebtedness, if any, incurred to acquire certain
businesses
(3) additional interest expense that would have accrued
on Indebtedness, if any, incurred to acquire certain
timberlands
(4) sum of (1) plus (2) plus (3)
Ratio of Cash Flow to Interest Expense 1.5 to 1.0
Total Debt to Cash Flow Ratio Total Debt
Cash Flow (See Section 8.15 Cash Flow calculation)
Applicable Margin
Commitment Fee Percentage
Letter of Credit Rate
Total Debt to Cash Flow Ratio
Pro Forma Consolidated Cash Flow Pro Forma Consolidated Cash Flow
Ratios
(1) Cash Provided by Operating Activity
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
:
-------------
$
-------------
$
-------------
%
-------------
%
-------------
%
-------------
:
-------------
$
-------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
(a) cash receipts (excluding cash proceeds from
Interim Capital Transactions)
(b) (i)cash operating expenditures
(ii) cash debt service payments (other than
certain payments or prepayments of principal
and premium)
(iii) cash capital expenditures
(iv) sum of (i), (ii) and (iii)
(c) reductions less additions to certain cash reserves
(d) (a) minus (b)(iv) plus (c)
(2) Cash debt service payments to extent subtracted in
determining Cash Provided by Operating Activity
(3) Cash capital expenditures, except those relating to
Operating Capacity Acquisitions, Capital Additions and
Improvements and Interim Capital Transactions, to
extent subtracted in determining Cash Provided by
Operating Activity
(4) Reductions minus additions to certain cash reserves
(5) Additions minus reductions to certain cash reserves
(6) In connection with any business to be acquired or
previously acquired within such four fiscal quarters,
an amount equal to good faith estimate of such
additional amounts that would be included in clauses
(1), (2), (3) and (4) above had such business been
owned by Company (see attached for detail as to such
good faith estimate)
(7) In connection with any timberland to be acquired or
previously acquired within such four fiscal quarters,
an amount equal to good faith estimate of such
additional amounts that would be included in clauses
(1), (2), (3) and (4) above had such timberlands been
owned by Company (see attached for detail as to such
good faith estimate)
(8) Sum of (1), (2), (3), (4) and (5) plus or minus, as
applicable, (6) and (7)
Pro Forma Interest Expense
(1) Interest expense payable during four fiscal quarter
period on all Indebtedness of Company and Subsidiaries
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
SECTION REQUIREMENT COMPUTATIONS ALLOWED/REQUIRED
- ---------- --------------------------------- ------------------------------------------------------- ----------------
<S> <C> <C> <C>
(2) Interest expense that would have been payable
during such four fiscal quarter period in respect
of any Indebtedness proposed to be incurred on such
date of determination, and Indebtedness incurred
after the end of such four fiscal quarter period
and before such date of determination
(3) Sum of (1) and (2)
Pro Forma Maximum Debt Service
(1) Highest amount payable by Company and Subsidiaries
during any consecutive four fiscal quarters, in respect
of scheduled principal and interest with respect to all
Indebtedness of Company and Subsidiaries
(2) Interest expense accrued on Facility B Loans during
the most recent four fiscal quarters
(3) Sum of (1) and (2)
8.3, 8.6(i) Pro Forma Consolidated Cash Flow to Pro Forma Interest
Expense
7.4, 8.3, Pro Forma Consolidated Cash Flow to Pro Forma Maximum
8.6(i) Debt Service
<CAPTION>
ACTUAL
SECTION AMOUNT
- ---------- -------------
<S> <C>
$
-------------
$
-------------
$
-------------
$
-------------
$
-------------
8.3, 8.6(8)
:
-------------
7.4, 8.3,
8.6(i) :
-------------
</TABLE>
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 15,018
<SECURITIES> 0
<RECEIVABLES> 46,731
<ALLOWANCES> 533
<INVENTORY> 43,180
<CURRENT-ASSETS> 113,293
<PP&E> 69,704
<DEPRECIATION> 22,817
<TOTAL-ASSETS> 686,735
<CURRENT-LIABILITIES> 62,475
<BONDS> 408,500
0
0
<COMMON> 216,353
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 686,735
<SALES> 364,092
<TOTAL-REVENUES> 364,092
<CGS> 295,398
<TOTAL-COSTS> 295,398
<OTHER-EXPENSES> 18,897
<LOSS-PROVISION> 303
<INTEREST-EXPENSE> 28,744
<INCOME-PRETAX> 20,833
<INCOME-TAX> 0
<INCOME-CONTINUING> 20,833
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,833
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.76
</TABLE>
