<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 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 1-13574
JOHNS MANVILLE INTERNATIONAL GROUP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1196355
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
717 17th Street
Denver, Colorado 80202
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(303) 978-2000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 [ ]
Johns Manville International Group, Inc. is a wholly owned subsidiary
of Johns Manville Corporation and there is no market for the registrant's
common stock. As of August 11, 1997, there were 100 shares of the registrant's
sole class of common stock outstanding.
<PAGE> 2
*PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
* "Company" when used in this report refers to Johns Manville
International Group, Inc., incorporated in the State of Delaware in
1992, and includes, where applicable, its consolidated subsidiaries.
I-1
<PAGE> 3
JOHNS MANVILLE INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and equivalents $ 96,270 $ 138,216
Marketable securities, at cost, which
approximates market 1,174 2,698
Receivables 280,489 229,585
Inventories 115,108 101,041
Receivable from parent 4,034 28,176
Prepaid expenses 5,441 6,590
Deferred tax assets 25,957 31,063
----------------------------------------
Total Current Assets 528,473 537,369
Property, Plant and Equipment,
net of accumulated depreciation of
$616,308 and $628,482, respectively 798,410 769,968
Receivable from Parent 10,324 10,115
Goodwill 185,147 127,994
Other Assets 230,672 222,095
----------------------------------------
$1,753,026 $1,667,541
===================================================================================================================
LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
Current Liabilities
Accounts and notes payable $ 115,759 $ 152,847
Compensation and employee benefits 102,041 102,136
Income taxes 14,729 15,863
Other accrued liabilities 52,481 50,049
----------------------------------------
Total Current Liabilities 285,010 320,895
Long-Term Debt, less current portion 456,927 410,658
Notes Payable to Parent 107,453 80,000
Postretirement Benefits Other Than Pensions 203,043 199,473
Deferred Income Taxes and Other Noncurrent
Liabilities 333,424 333,850
----------------------------------------
1,385,857 1,344,876
----------------------------------------
STOCKHOLDER'S EQUITY
- -------------------------------------------------------------------------------------------------------------------
Common Stock, $1 par value; 100 shares
authorized, issued and outstanding
Capital in Excess of Par Value 80,869 80,869
Retained Earnings 269,085 215,125
Cumulative Currency Translation Adjustment 17,215 26,671
----------------------------------------
367,169 322,665
----------------------------------------
$1,753,026 $1,667,541
===================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-2
<PAGE> 4
JOHNS MANVILLE INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------------------------------------------------------
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $428,036 $381,403 $807,046 $707,512
Cost of Sales 310,097 272,901 588,451 505,451
Selling, General and
Administrative 40,541 35,191 78,878 66,618
Research, Development and
Engineering 7,611 8,531 14,888 15,583
Services Provided by Parent 3,402 6,786
Other Income (Expense), net (3,569) (2,298) (6,662) 3,158
------------------------------------------------------------------------
Income from Operations 66,218 59,080 118,167 116,232
Interest Income 1,057 1,711 3,269 3,996
Interest Expense 12,271 10,915 24,881 22,259
Interest Expense - Parent 1,370 518 2,704 1,002
------------------------------------------------------------------------
Income before Income Taxes 53,634 49,358 93,851 96,967
Income Tax Expense 22,594 21,223 39,891 41,693
------------------------------------------------------------------------
Net Income $ 31,040 $ 28,135 $ 53,960 $ 55,274
===================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-3
<PAGE> 5
JOHNS MANVILLE INTERNATIONAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
---------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income $ 53,960 $ 55,274
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 38,676 33,737
Deferred taxes 4,474 8,169
Other, net 14,771 30,965
Changes in net current assets and liabilities (72,228) (61,777)
Changes in noncurrent liabilities (19,506) (14,705)
---------------------------------------
Net cash provided by operating activities 20,147 51,663
---------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------------------------------------------------------------------------------------
Purchases of property, plant and equipment (47,099) (57,582)
Acquisitions (92,995) (57,007)
Proceeds from sales of assets 9,293 1,378
Purchases of held-to-maturity securities (501) (7,574)
Purchases of available-for-sale securities (4,982)
Proceeds from maturities of held-to-maturity
securities 1,516 25,946
Proceeds from sales and maturities of
available-for-sale securities 6,082
Decrease (increase) in other assets 25,410 (3,222)
---------------------------------------
Net cash used in investing activities (104,376) (96,961)
---------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------------------------------------------------------------------------------------
Issuance of debt - External 56,000 679
Issuance of debt - Parent 30,000
Payments on debt - External (40,138) (20)
Payments of debt - Parent (2,547)
---------------------------------------
Net cash provided by financing activities 43,315 659
---------------------------------------
Effect of Exchange Rate Changes on Cash (1,032) (938)
---------------------------------------
Net Decrease in Cash and Equivalents (41,946) (45,577)
Cash and Equivalents at Beginning of Period 138,216 140,328
---------------------------------------
Cash and Equivalents at End of Period $ 96,270 $ 94,751
===================================================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
I-4
<PAGE> 6
JOHNS MANVILLE INTERNATIONAL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Johns Manville International Group, Inc., formerly Schuller International
Group, Inc. (the "Company") is a wholly-owned subsidiary of Johns Manville
Corporation (formerly Schuller Corporation). The condensed consolidated
financial statements as of June 30, 1997 and December 31, 1996 and for the
three and six month periods ended June 30, 1997 and 1996 reflect all normal,
recurring adjustments which are, in the opinion of management, necessary for a
fair presentation of the financial condition and the results of operations for
the periods presented. The year-end condensed consolidated balance sheet was
derived from audited financial statements, and as presented does not include
all disclosures required by generally accepted accounting principles. The
Company has reclassified the presentation of certain prior period information
to conform with the current presentation format. Additional information
regarding the Company's accounting policies, operations and financial position
is contained or incorporated in the Company's Form 10-K for the year ended
December 31, 1996 filed with the Securities and Exchange Commission.
Note 1 - Inventories
The major classes of inventories were as follows:
<TABLE>
<CAPTION>
(Thousands of dollars)
June 30, December 31,
1997 1996
--------------------------------
<S> <C> <C>
Finished goods $ 75,279 $ 60,456
Raw materials and supplies 30,952 32,113
Work-in-process 8,877 8,472
--------------------------------
$115,108 $101,041
================================
</TABLE>
Note 2 - Acquisitions
During the first quarter of 1997, the Company acquired the assets of Ergon
Nonwovens, Inc., a manufacturer of synthetic meltblown nonwoven products.
During the second quarter of 1997, the Company acquired the Mitex group of
companies. Mitex manufactures fiber glass wall covering fabrics used primarily
in commercial and industrial buildings, and has manufacturing facilities in
Sweden and the United Kingdom. The combined purchase price for these
acquisitions was $93 million, net of cash acquired, financed from existing cash
balances and borrowings of $45 million, net, from international credit
facilities. These acquisitions, associated with businesses of the Engineered
Products Segment, are accounted for under the purchase method. The excess of
the combined purchase prices over the estimated fair value of net assets
acquired, or goodwill,
I-5
<PAGE> 7
amounted to approximately $60 million and is being amortized over 20 years
using the straight line method. This allocation was based on estimates and may
be revised in the future.
Note 3 - New Accounting Pronouncements
During 1997, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
No. 130") and No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"), both effective for years beginning after
December 31, 1997. SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components. Comprehensive income
generally includes changes in separately reported components of equity along
with net income. SFAS No. 131 establishes standards for reporting information
about operating segments, along with related disclosures about products,
services, geographic areas and major customers, based on the Company's
disaggregation of an entity for internal operating decisions.
Note 4 - Business Segment Information
Beginning in 1997, the Company reorganized its business segments and will
report separately its operating results in the following three principal
business segments: Insulation, consisting of the residential, commercial and
industrial and original equipment manufacturer ("OEM") insulation businesses;
Roofing Systems, consisting of the commercial and industrial roofing
business; and Engineered Products, consisting of the mats and fibers and
filtration businesses. The 1996 results were reclassified to conform with the
current presentation format.
<TABLE>
<CAPTION>
(Thousands of dollars)
Three Months
Ended June 30,
- -------------------------------------------------------------------------------------
NET SALES 1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C>
Insulation $177,245 $167,340
Roofing Systems 136,553 100,185
Engineered Products 122,230 122,011
Corporate and Eliminations (7,992) (8,133)
- -------------------------------------------------------------------------------------
Net Sales $428,036 $381,403
=====================================================================================
INCOME FROM OPERATIONS
- -------------------------------------------------------------------------------------
Insulation $ 28,169 $ 27,703
Roofing Systems 18,646 11,984
Engineered Products 26,197 26,885
Corporate and Eliminations (6,794) (7,492)
- -------------------------------------------------------------------------------------
Income from Operations $ 66,218 $ 59,080
=====================================================================================
</TABLE>
I-6
<PAGE> 8
<TABLE>
<CAPTION>
(Thousands of dollars)
Six Months
Ended June 30,
- -------------------------------------------------------------------------------------
NET SALES 1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C>
Insulation $351,403 $322,861
Roofing Systems 235,605 162,792
Engineered Products 238,341 237,878
Corporate and Eliminations (18,303) (16,019)
- -------------------------------------------------------------------------------------
Net Sales $807,046 $707,512
=====================================================================================
INCOME FROM OPERATIONS
- -------------------------------------------------------------------------------------
Insulation $ 54,066 $ 52,504
Roofing Systems 26,122 14,776
Engineered Products 51,093 55,722
Corporate and Eliminations (13,114) (6,770)
- -------------------------------------------------------------------------------------
Income from Operations $118,167 $116,232
=====================================================================================
</TABLE>
Net sales included in Corporate and Eliminations relate principally to the
elimination of intersegment sales from the Engineered Products segment to the
Roofing Systems segment (at prices approximating market).
I-7
<PAGE> 9
ITEM 2.
JOHNS MANVILLE INTERNATIONAL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's net sales for the second quarter of 1997 increased $46.6 million,
or 12.2 percent, to $428 million from $381.4 million for the same period of
1996. Gross profit increased $9.4 million, or 8.7 percent, to $117.9 million
from $108.5 million. Lower gross profit margins for the second quarter of 1997
compared with the second quarter of 1996 were due principally to lower selling
prices in several businesses. At the end of 1996, certain management and
financial services provided by Johns Manville Corporation were reorganized and
transferred to the Company. Therefore, services previously provided by parent
are reflected as selling, general and administrative for 1997. These expenses,
along with research, development and engineering expenses increased slightly
and were lower as a percentage of sales at 11.2 percent for 1997 compared with
12.4 percent for 1996, due primarily to acquisitions. Income from operations
for the second quarter of 1997 was $66.2 million, up 12.1 percent, compared
with $59.1 million for the second quarter of 1996.
The Company's net sales for the first six months of 1997 increased $99.5
million, or 14.1 percent, to $807 million from $707.5 million for the same
period of 1996. Gross profit increased $16.5 million, or 8.2 percent, to
$218.6 million from $202.1 million. Selling, general, administrative and
research, development and engineering expenses increased $4.8 million, or 5.4
percent, to $93.8 million, reflecting expenses of acquired companies. Income
from operations for the first six months of 1997 increased to $118.2 million
from $116.2 million for 1996. Exclusive of other income of $7.2 million from
the settlement of certain pension plans in 1996, income from operations for the
first six months of 1997 was up $9.1 million, or 8.4 percent.
Insulation Segment
The Insulation segment's net sales increased $9.9 million, or 5.9 percent, and
$28.5 million, or 8.8 percent, for the second quarter and first six months of
1997 compared with the same periods of 1996. Income from operations for this
segment increased slightly for both the second quarter and first six months of
1997. During 1997, the residential, and commercial and industrial businesses
experienced volume gains, benefiting from strong U.S. construction markets.
Competitive pricing pressures related principally to excess industry capacity,
while being offset by improved productivity for commercial and industrial
insulation, led to lower margins and decreases in operating income for
residential insulation business compared with corresponding 1996 periods.
I-8
<PAGE> 10
OEM insulation had significantly higher operating income on slightly lower
sales for both 1997 periods, reflecting improved product mix and productivity,
combined with lower overhead costs.
Roofing Systems Segment
Net sales for the Roofing Systems segment increased $36.4 million, or 36.3
percent, and $72.8 million, or 44.7 percent, for the second quarter and first
six months of 1997 compared with the same periods of 1996. Operating income
increased $6.7 million and $11.3 million for the same periods. These increases
are driven primarily by the incremental 1997 operating results of acquisitions
completed throughout 1996. Manufacturing efficiencies and absorption of
expenses over higher sales levels raised operating income and also led to
improved margins during 1997.
Engineered Products Segment
The Engineered Products segment's net sales were essentially flat at $122.2
million, and $238.3 million, for the three and six month periods ended June 30,
1997, respectively. Income from operations decreased slightly to $26.2 million
for the second quarter, and $4.6 million, or 8.3 percent, to $51.1 million for
the first half of 1997. Net sales for the U.S. mats and fibers business
increased slightly for the first half of 1997 and decreased for the second
quarter, while operating profit decreased for both periods as volume gains and
reduced costs were more than offset by declining selling prices due to
competitive pressures. Slight improvements for the Company's German operations
on higher sales volumes and improved productivity were partially offset by the
impacts of the strength of the U.S. dollar against the German mark on reported
results. Net sales for filtration increased for both 1997 periods on higher
volumes due to recent acquisitions in the synthetic filtration media markets.
These improvements were partially offset by competitive pressures, including
lower pricing which led to flat second quarter operating income and
significantly decreased operating income and margins for the first half of
1997.
Compared with the second quarter and first half of 1996, the Company's interest
expense increased $2.2 million and $4.3 million, respectively, for the same
periods of 1997, due primarily to increases in debt balances related to
acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
The Company's agreements with its lenders contain a number of financial and
general covenants. These include, among other things, restrictions on
borrowings, investments, stock issuances and repurchases, dividends and other
distributions, restrictions on intercompany transactions, including transfers
of cash and transactions with Johns Manville Corporation. As of June 30, 1997,
the maximum amount available for dividends to be paid to Johns Manville
Corporation under debt covenants of the Company's Senior Notes was
approximately $250 million. Noncompliance with these or other covenants, or
the occurrence of any other event of default, could result in the termination
I-9
<PAGE> 11
of existing credit agreements and the acceleration of debt owed by the Company
and its subsidiaries. At June 30, 1997, the Company was in compliance with
these covenants.
At June 30, 1997, the Company had net working capital of $243.5 million,
including cash and marketable securities totaling $97.4 million. Total cash
and marketable securities located outside the U.S. and Canada were
approximately $38.5 million. At December 31, 1996, the Company's cash and
marketable securities totaled $140.9 million. The decrease is due primarily
to acquisitions and seasonal working capital requirements. At June 30, 1997,
the Company had $100 million available under a receivables sale facility for
its domestic short-term working capital requirements. In addition, the
Company's international subsidiaries had borrowing and working capital
facilities totaling $85 million, of which approximately $31 million was
available at June 30, 1997. Under these facilities, $45 million, net, was
borrowed to partially finance acquisitions.
The Company's net operating activities provided $20.1 million of cash during
the first six months of 1997. Net operating activities provided $51.7 million
for the same period of 1996, which included proceeds from the settlement of
pension plans. The Company's cash flows from operating activities are primarily
influenced by sales volume and selling prices. As discussed in "Results of
Operations," the effects of sales volume increases during the first half of
1997 were partially offset by selling price declines. Operating activities
also included cash usages for net working capital builds in anticipation of the
construction season which typically peaks during the third quarter. For the
remainder of 1997, the Company's operating results are expected to benefit from
the integration of acquisitions. While U.S. housing starts during 1997 are
expected to be comparable to 1996, capacity-related selling price and other
competitive pressures are expected to continue for the residential insulation
business, as well as commercial and industrial insulation, mats and fibers and
filtration businesses for the remainder of the year.
The Company's investing activities for the first half of 1997 consisted of $93
million for acquisitions, net of cash acquired. The Company's capital
expenditures totaled $47.1 million for the first six months of 1997. The
Company estimates 1997 capital expenditures of approximately $100 million, of
which approximately $40 million relate to capacity expansion projects
principally to increase mats and fibers production. As of June 30, 1997,
outstanding purchase commitments for capital projects totaled $19 million.
During the first quarter of 1997, the Company received $23.8 million in
repayment of an advance made to Johns Manville Corporation in 1996 for an
acquisition which was subsequently contributed to the Company. Investing
activities for 1997 also included proceeds from the Company's June 30, 1997
disposition of its automotive molded parts business, the assets of which were
written down to estimated fair values in 1996. Investing activities for 1996
included the combined purchase prices for acquisitions of $57 million and
capital expenditures totaling $57.6 million.
I-10
<PAGE> 12
In addition to borrowings to partially finance 1997 acquisitions, the Company's
financing activities for 1997 included repayments of debt totaling $30 million
assumed in connection with 1996 acquisitions, which was refinanced with notes
payable to Johns Manville Corporation.
The Company believes that its current cash position, funds available under a
receivables facility and foreign working capital facilities, and cash generated
from operations will enable it to satisfy its debt service requirements, its
ongoing capital expansion program and its other ongoing operating costs.
However, the Company may need to access capital markets to pay the principal of
the $400 million Senior Notes, or in connection with possible significant
future acquisitions.
FORWARD-LOOKING STATEMENTS
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Statements of the Company
contained in this report concerning matters that are not historical facts,
including, without limitation, statements concerning (i) expected benefits from
the continuing integration of acquisitions and capacity expansions, (ii) effect
on the residential insulation business resulting from 1997 U.S. housing starts,
(iii) possible selling price decreases due to excess capacity and other
competitive pressures in the residential and commercial and industrial
insulation, mats and fibers and filtration industries and (iv) the Company's
expectations concerning levels of capital spending and funding of current
operations, debt service and future acquisitions, constitute such
forward-looking statements. See "Liquidity and Capital Resources."
Forward-looking statements of the Company are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in such statements. Important factors relating to such risks and
uncertainties are set forth below.
Factors that could affect the forward-looking statements generally are related
to demand for the Company's products, overall capacity levels in the industry
and the overall competitive environment in which the Company operates. These
factors are discussed in detail in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" incorporated in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
Factors that could affect the Company's expected levels of capital spending and
funding of current operations, debt service and dividends, include, without
limitation, the contingencies and commitments discussed in the Company's
financial statements included in this report for the quarter and six months
ended June 30, 1997. The Company's ability to realize expected benefits from
acquisitions depends on a number of factors including, without limitation,
successful integration of newly acquired operations, technology, products,
employees and the overall economic factors referred to above. In
I-11
<PAGE> 13
addition, the Company's ability to make future acquisitions depends upon the
ability of the Company to identify and reach agreement with viable acquisition
candidates and the availability of sources of financing for such acquisitions
on terms which are acceptable to the Company.
I-12
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit 10.3, Amendment to Amended and Restated Receivables
Purchase Agreement dated as of June 6, 1997 among Johns Manville Funding
Corporation, Johns Manville International, Inc., the financial institutions
listed therein as Buyers, and Morgan Guaranty Trust Company of New York, as
Administrative Agent and Structuring and Collateral Agent.
Exhibit 27.1, Financial Statement Schedules.
(b) Form 8-K.
None.
II-1
<PAGE> 15
SIGNATURE
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.
JOHNS MANVILLE INTERNATIONAL
GROUP, INC.
---------------------------------
(Registrant)
Date: August 13, 1997 By: R. B. Von Wald
-----------------------------
R. B. Von Wald
Executive Vice President,
General Counsel and Secretary
Date: August 13, 1997 By: K. L. Jensen
-----------------------------
K. L. Jensen
Senior Vice President and
Chief Financial Officer
II-2
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.3 Amendment to Amended and Restated Receivables Purchase Agreement
dated as of June 6, 1997 among Johns Manville Funding Corporation,
Johns Manville International, Inc., the financial institutions
listed therein as Buyers, and Morgan Guaranty Trust Company of
New York, as Administrative Agent and Structuring and Collateral
Agent.
27.1 Financial Statement Schedules.
</TABLE>
<PAGE> 1
EXHIBIT 10.3
AMENDMENT TO AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
AMENDMENT TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT dated
as of June 6, 1997 among JOHNS MANVILLE FUNDING CORPORATION, (formerly known as
Schuller Funding Corporation, "Funding"), JOHNS MANVILLE INTERNATIONAL, INC.
(formerly known as Schuller International, Inc., "Parent"), the financial
institutions listed on the signature pages hereof, as Buyers, and MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent and Structuring and
Collateral Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into an Amended
and Restated Receivables Purchase Agreement (as heretofore amended, the
"Agreement") dated as of August 15, 1994, and
WHEREAS, the parties hereto desire to amend the Agreement as set forth
herein and to restate the Agreement in its entirety to read as set forth in the
Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each capitalized term used herein which is defined in the
Agreement shall have the meaning assigned to such term in the Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other similar
reference contained in the Agreement shall from and after the date hereof refer
to the Agreement as amended and restated hereby.
SECTION 2. Amendments to Definitions. Section 1.01 of the Agreement
is amended as follows:
(a) The definition of "A-Rated Obligor" is amended and restated to
read in its entirety as follows:
"A-Rated Obligor" means, during any Report Month, an Obligor:
<PAGE> 2
(i) whose outstanding senior unsecured short-term debt
securities were rated A-1 or higher by S&P as of the end of the
immediately preceding Report Month; or
(ii) who did not have a senior unsecured short-term debt
rating by S&P as of the end of the immediately preceding Report Month,
but had a senior unsecured long-term debt rating of A+ or higher by
S&P as of the end of the immediately preceding Report Month.
(b) The definition of "Adjusted Reserve Percentage" is amended by
replacing "23%" in each place where it appears with "19%".
(c) The definition of "Collateral Agent" is amended by replacing
"J.P. Morgan Delaware" with "Morgan Guaranty Trust Company of New York".
(d) The definition of "Commitment Fee" is amended by replacing
".1875%" with ".125%".
(e) The definition of "Concentration Limit" is amended and restated
to read in its entirety as follows:
"Concentration Limit" means (i) for each A-Rated Obligor and such
Obligor's Affiliates considered as a whole, 15%, (ii) for each B-Rated Obligor
and such Obligor's Affiliates (which are not A-Rated Obligors) considered as a
whole, 7.5%, (iii) for each C-Rated Obligor and such Obligor's Affiliates
(which are not A-Rated or B-Rated Obligors) considered as a whole, 5% and (iv)
for each other Obligor and such Obligor's Affiliates (which are not A-Rated,
B-Rated or C-Rated Obligors) considered as a whole, 3%.
(f) The definitions of "Dilution Horizon" and "Dilution Ratio" are
amended by replacing "Dilution Adjustment" in each place where it appears with
"Variable Dilution Adjustment".
(g) The definition of "Eurodollar Rate" is amended by replacing
".50%" with ".375%" and "2.50% with "2.375%" in clause (ii)(C) of such
definition.
(h) The definition of "Expiration Date" is amended by replacing
"August 29, 2000" with the date "August 29, 2002".
(i) The definition of "Fixed CD Rate" is amended by replacing ".625%"
with ".50%" and "2.625%" with "2.50%" in clause (ii)(C) of such definition.
2
<PAGE> 3
(j) The definition of "Net Pool Balance" is amended and restated to
read in its entirety as follows:
"Net Pool Balance" means, at any time, the Outstanding Balance of the
Eligible Receivables at such time, reduced by the Contractual Dilution Reserve
at such time, less the aggregate amount by which the Outstanding Balance of
Eligible Receivables of each Obligor and its Affiliates considered as a whole
at such time, as so reduced, exceeds (x) the aggregate Outstanding Balance of
all Eligible Receivables at such time, as so reduced, multiplied by (y) the
Concentration Limit for such Obligor and its Affiliates.
(k) The following definitions are added:
"Additional Qualified Dilution Adjustment" means any Dilution
Adjustment that is attributable to a customer incentive program of Parent (i)
which is reported and calculated with a comparable level of accuracy to the
Roofing Dilution Adjustment, (ii) that is approved by the Agent and would not
result in a reduction or withdrawal of the current rating by S&P, (iii) for
which prior notice of inclusion in the Contractual Dilution Reserve calculation
has been provided to the Purchase Parties and (iv) which will be calculated and
set forth under section "E" of the "Net Pool Balance" calculation in both
Exhibits D and E as such exhibits are amended to reflect such calculations.
"B-Rated Obligor" means, during any Report Month, an Obligor (which is
not an A-Rated Obligor):
(i) whose outstanding senior unsecured short-term debt
securities were rated A-2 by S&P as of the end of the immediately
preceding Report Month, or
(ii) who did not have a senior unsecured short-term rating by
S&P as of the end of the immediately preceding Report Month, but had a
senior unsecured long-term debt rating of BBB+ or higher by S&P as of
the end of the immediately preceding Report Month.
"Building Insulation Dilution Adjustment" means the Dilution
Adjustments attributable to quarterly and annual rebate programs for Parent's
building insulation business as calculated and set forth under section "E" of
the "Net Pool Balance" calculation in both Exhibits D and E; provided that the
Building Insulation Dilution Adjustment shall not be part of the Contractual
Dilution Reserve until Johns Manville Funding Corporation and the Servicer
represent, to the satisfaction of S&P and the Agent, that the reported
calculations contained in the Building Insulation Dilution Adjustment meet the
standards of accuracy in all
3
<PAGE> 4
material respects consistent with the other calculations provided in the Daily
and Monthly Reports.
"C-Rated Obligor" means, during any Report Month, an Obligor (which
is not an A-Rated or B-Rated Obligor):
(i) whose outstanding senior unsecured short-term debt
securities were rated A-3 by S&P as of the end of the immediately
preceding Report Month, or
(ii) who did not have a senior unsecured short-term debt
rating by S&P as of the end of the immediately preceding Report Month,
but had a senior unsecured long-term debt rating of BBB- or higher by
S&P as of the end of the immediately preceding Report Month.
"Contractual Dilution Reserve" means (i) Dilution Adjustments
attributable to cash discounts set forth under section "E" of the "Net Pool
Balance" calculation in Exhibits D and E, (ii) the Roofing Dilution Adjustment,
(iii) the Building Insulation Dilution Adjustment and (iv) any Additional
Qualified Dilution Adjustment; provided that the Roofing Dilution Adjustment
and Building Insulation Dilution Adjustment shall not be part of Contractual
Dilution Reserve until Johns Manville Funding Corporation and the Servicer
represent, to the satisfaction of S&P and the Agent, that the reported
calculations contained in the Roofing Dilution Adjustment and Building
Insulation Dilution Adjustment meet the standards of accuracy in all material
respects consistent with the other calculations provided in the Daily and
Monthly Reports.
"Roofing Dilution Adjustment" means the Dilution Adjustments
attributable to quarterly and annual rebate programs for Parent's roofing
business as calculated and set forth under section "E" of the "Net Pool
Balance" calculation in both Exhibits D and E; provided that the Roofing
Dilution Adjustment shall not be part of the Contractual Dilution Reserve until
Johns Manville Funding Corporation and the Servicer represent, to the
satisfaction of S&P and the Agent, that the reported calculations contained in
the Roofing Dilution Adjustment meet the standards of accuracy in all material
respects consistent with the other calculations provided in the Daily and
Monthly Reports.
"Variable Dilution Adjustments" means Dilution Adjustments which are
not part of Contractual Dilution Reserve.
(l) The definitions of SFC, Schuller and Schuller Group are changed to
be definitions of "Funding", "Parent" and "Johns Manville Group", respectively,
and
4
<PAGE> 5
references in the Program Documents to SFC, Schuller and Schuller Group are
deemed to be references to Funding, Parent and Johns Manville Group.
SECTION 2. Amendment of Section 2.14. Section 2.14 is amended
by extending each of the dates contained therein by two years.
SECTION 3. Amendment of Section 4.03. Section 4.03(i) is
amended by replacing "June 30, 1994" in each place where it appears with "March
31, 1997."
SECTION 4. Addition of Notice of Change in Rebate Programs.
Section 5.01 of the Agreement is amended to include the following:
(s) Notice of Change in Rebate Programs. Funding shall give
the Purchase Parties and S&P prior notice of any material changes to
its rebate or other programs or policies that constitute Dilution
Adjustments.
SECTION 5. Replacement of Exhibits D and E. Exhibits D and E
are deleted and replaced with Exhibits D and E to this Amendment.
SECTION 6. Changes in Commitments. With effect from and
including the date this Amendment and Restatement becomes effective in
accordance with Section 9, (i) the Person listed on the signature pages hereof
which is not a party to the Agreement (the "New Buyer") shall become a Buyer
party to the Agreement and (ii) the Commitment of each Buyer shall be the
amount set forth opposite the name of such Buyer on the signature pages hereof.
Any Buyer whose Commitment is changed to zero shall upon such effectiveness
cease to be a Buyer party to the Agreement, and all accrued fees and other
amounts (other than such Buyer's interest in the Aggregate Net Investment)
payable under the Agreement for the account of such Buyer shall be due and
payable on such date; provided that the provisions of Sections 8.02 and 8.03 of
the Agreement shall continue to inure to the benefit of each such Buyer. If
any Tranches are outstanding on such date and, as a result of changes in the
Commitments of the Banks, the interests in such Tranches are not held by the
continuing Banks ratably in proportion to their Commitments, the Banks shall,
as appropriate, buy and sell the interests in such Tranches such that, after
giving effect to such purchases, the interests in such Tranches are held
ratably, and Section 2.13 of the Agreement shall apply to any such purchases.
SECTION 7. Representations and Warranties. Funding hereby
represents and warrants that as of the date hereof and after giving effect
thereto:
(a) no Termination Event or Potential Termination Event has occurred
and is continuing; and
5
<PAGE> 6
(b) each representation and warranty of Funding set forth in the
Agreement after giving effect to this Amendment and Restatement is true and
correct as though made on and as of such date.
SECTION 8. Governing Law. This Amendment and Restatement shall
be governed by and construed in accordance with the laws of the State of New
York.
SECTION 9. Counterparts; Effectiveness. This Amendment and
Restatement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Amendment and Restatement shall become
effective on the date that each of the following conditions shall have been
satisfied:
(i) receipt by the Administrative Agent of duly executed
counterparts hereof signed by each of the parties hereto (or, in the
case of any party as to which an executed counterpart shall not have
been received, the Administrative Agent shall have received
telegraphic, telex or other written confirmation from such party of
execution of a counterpart hereof by such party);
(ii) the Administrative Agent shall have received new
Buyers' Certificates for the Buyers;
(iii) S&P shall have rated the Buyer's Certificates AAA and
Funding shall have paid any fees and expenses of S&P in connection
with the rating of the Buyers' Certificates;
(iv) an amendment to the Purchase and Sale Agreement in
the form of Annex I hereto shall have been executed;
(v) the filings and other actions necessary in connection
with the change of name of the Parent and Funding, as listed in Annex
II, shall have been made or taken;
(vi) receipt by the Administrative Agent of all documents
it may reasonably request relating to the existence of Funding and
Parent, the corporate authority for and the validity of the Agreement
as amended and restated hereby, and any other matters relevant hereto,
all in form and substance satisfactory to the Administrative Agent;
and
(vii) receipt by the Administrative Agent of an opinion of
the General Counsel of Parent substantially to the effect that the
conditions in paragraphs (v) & (vi) of this section have been
satisfied;
6
<PAGE> 7
provided that this Amendment and Restatement shall not become effective or
binding on any party hereto unless all of the foregoing conditions are
satisfied not later than June 30, 1997. The Administrative Agent shall
promptly notify the parties hereto of the effectiveness of this Amendment and
Restatement, and such notice shall be conclusive and binding on all parties
hereto.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
JOHNS MANVILLE
FUNDING CORPORATION
By /s/ W. S. BULLOCK
-------------------------------
Title: President
JOHNS MANVILLE
INTERNATIONAL, INC.
By /s/ W. S. BULLOCK
-------------------------------
Title: Treasurer
MORGAN GUARANTY
TRUST COMPANY OF NEW YORK,
as Administrative Agent and
Structuring and Collateral Agent
By /s/ ROBERT J. HENCHEY
-------------------------------
Title: Robert J. Henchey
Vice President
500 Stanton Christiana Road
Newark, DE 19713
<PAGE> 9
BUYERS:
Commitment: $20,000,000 MORGAN GUARANTY
TRUST COMPANY OF NEW YORK
By /s/ ROBERT J. HENCHEY
-------------------------------
Title: Vice President
Commitment: $20,000,000 MELLON BANK, N.A.
By /s/ JAMES M. WILBER
-------------------------------
Title: Vice President
Commitment: $20,000,000 BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By /s/ RAHUL ARORA
-------------------------------
Title: as Attorney-in-Fact
Commitment: $20,000,000 THE BANK OF NEW YORK
By /s/ ROBERT LOUK
-------------------------------
Title: Vice President
<PAGE> 10
Commitment: $10,000,000 NATIONSBANK OF TEXAS, N.A.
By /s/ NATALIE HEBERT
-------------------------------
Title: Vice President
Commitment: $0 NATIONSBANK, N.A. (formerly known as
NATIONSBANK, N.A., (CAROLINAS))
By /s/ NATALIE HEBERT
-------------------------------
Title: Vice President
Commitment: $10,000,000 THE FIRST NATIONAL BANK
OF CHICAGO
By /s/ ILLEGIBLE
-------------------------------
Title: FVP
TOTAL
COMMITMENTS: $100,000,000
<PAGE> 11
Annex I
AMENDMENT TO PURCHASE AND SALE AGREEMENT
AMENDMENT dated as of June 6, 1997 to the Purchase and Sale Agreement
dated as of August 15, 1994 (the "Agreement") between JOHNS MANVILLE
INTERNATIONAL, INC. (formerly known as Schuller International, Inc.) and JOHNS
MANVILLE FUNDING CORPORATION (formerly known as Schuller Funding Corporation).
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Agreement has the
meaning assigned to such term in the Agreement. Each reference to "hereof",
"hereunder", "herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference contained in the
Agreement shall, after this Amendment becomes effective, refer to the Agreement
as amended hereby.
SECTION 2. Amendment of Sections 4.01 and 4.02 of the Agreement.
Sections 4.01(g) and 4.02(h) of the Agreement are amended by replacing "June
30, 1994" in each place where it appears with "March 31, 1997".
SECTION 3. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 4. Counterparts. This Amendment may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signature thereto and hereon were upon the same instrument.
SECTION 5. Effectiveness. This Amendment shall become effective as
of the date hereof on the date when it has been executed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
<PAGE> 12
JOHNS MANVILLE INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
JOHNS MANVILLE FUNDING CORPORATION
By:
------------------------------------
Name:
Title:
<PAGE> 13
Annex II
[Actions to be taken in connection with name change]
1. UCC-1s - amend existing UCC-1s for debtor name change
2. Accounts - directions to change names on Lockbox Accounts and Collection
Account from SFC to Funding
3. Authority - to provide corporate documents authorizing and evidencing name
change
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1997 FORM 10-Q OF JOHNS MANVILLE INTERNATIONAL GROUP, INC. AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 96,270
<SECURITIES> 1,174
<RECEIVABLES> 282,319
<ALLOWANCES> 7,722
<INVENTORY> 115,108
<CURRENT-ASSETS> 528,473
<PP&E> 1,414,718
<DEPRECIATION> 616,308
<TOTAL-ASSETS> 1,753,026
<CURRENT-LIABILITIES> 285,010
<BONDS> 456,927
0
0
<COMMON> 0
<OTHER-SE> 367,169
<TOTAL-LIABILITY-AND-EQUITY> 1,753,026
<SALES> 807,046
<TOTAL-REVENUES> 807,046
<CGS> 588,451
<TOTAL-COSTS> 588,451
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 486
<INTEREST-EXPENSE> 27,585
<INCOME-PRETAX> 93,851
<INCOME-TAX> 39,891
<INCOME-CONTINUING> 53,960
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,960
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
