<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended June 30, 1995
--------------------------------
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 1-804
---------------------------------
SEQUA CORPORATION
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-188-5030
--------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Indentification No.)
200 Park Avenue, New York, New York 10166
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(212) 986-5500
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 stock, as of the latest practicable
date.
Class Outstanding at August 1, 1995
----- -----------------------------
Class A Common Stock, no par value 6,535,841
Class B Common Stock, no par value 3,330,780
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
SEQUA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Thousands of dollars except per share data)
(Unaudited)
For the Six Months For the Three Months
Ended June 30, Ended June 30,
------------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES $684,797 $711,680 $357,263 $360,698
-------- -------- -------- --------
COSTS AND EXPENSES
Cost of sales 550,227 572,583 288,716 292,572
Selling, general and
administrative 116,683 111,523 61,767 57,558
-------- -------- -------- --------
666,910 684,106 350,483 350,130
-------- -------- -------- --------
OPERATING INCOME 17,887 27,574 6,780 10,568
OTHER INCOME (EXPENSE)
Interest expense (26,649) (29,543) (13,303) (14,166)
Interest income 1,627 1,353 755 633
Other, net 273 (7,143) (719) (1,836)
-------- -------- -------- --------
LOSS BEFORE INCOME TAXES (6,862) (7,759) (6,487) (4,801)
Income tax (provision) benefit (1,100) 3,950 400 2,450
-------- -------- -------- --------
LOSS BEFORE EXTRAORDINARY LOSS
ON EARLY RETIREMENT OF DEBT (7,962) (3,809) (6,087) (2,351)
Extraordinary loss on early
retirement of debt, net of
applicable income taxes - (1,083) - -
--------- -------- -------- --------
NET LOSS $ (7,962) $ (4,892) $ (6,087) $ (2,351)
PREFERRED DIVIDEND REQUIREMENTS (1,582) (1,582) (791) (791)
-------- -------- -------- --------
NET LOSS APPLICABLE TO COMMON STOCK $ (9,544) $ (6,474) $ (6,878) $ (3,142)
======== ======== ======== ========
LOSS PER SHARE
Loss before extraordinary loss $ (.97) $ (.56) $ (.70) $ (.33)
Extraordinary loss - (.11) - -
-------- -------- --------- --------
Net loss $ (.97) $ (.67) $ (.70) $ (.33)
======== ======== ======== ========
DIVIDENDS DECLARED PER SHARE
Preferred $ 2.50 - $ 1.25 -
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
SEQUA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
SUMMARY BUSINESS SEGMENT DATA (in millions)
-------------------------------------------
<CAPTION>
Operating
Sales Income (Loss)
Year to Date Year to Date
---------------- ----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Aerospace $ 397.3 $ 447.3 $ (6.9) $ 3.4
Machinery & Metal Coatings 129.6 109.8 15.4 11.1
Specialty Chemicals 120.8 118.4 19.1 20.7
Other Products 37.1 36.2 4.1 4.6
Corporate - - (13.8) (12.2)
-------- -------- ------ -----
TOTAL $ 684.8 $ 711.7 $ 17.9 $ 27.6
======== ======== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Operating
Sales Income (Loss)
Second Quarter Second Quarter
-------------- ---------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Aerospace $202.3 $217.1 $ (6.7) $ (4.7)
Machinery & Metal Coatings 77.0 64.4 8.9 7.6
Specialty Chemicals 61.0 61.2 10.1 11.1
Other Products 17.0 18.0 1.5 2.5
Corporate - - (7.0) (5.9)
----- ----- ------ ------
TOTAL $357.3 $360.7 $ 6.8 $ 10.6
====== ====== ====== ======
</TABLE>
<PAGE>
<PAGE>
Sales and Revenues
------------------
Overall sales declined 4% in the first six months of 1995
and 1% in the second quarter. Excluding sales of Gas Turbine
units that were sold, sales for both 1995 periods improved 2%
over both prior year periods.
Sales of the Aerospace segment declined 11% and 7% in the
six- and three-month periods, respectively (2% for both periods
after excluding sales of Gas Turbine units sold). At the Gas
Turbine subsidiary sales declined 16% for the six months and 8%
for the second quarter (4% and 1%, respectively, exclusive of
units sold). Both periods continued to be unfavorably affected
by intense competition and severe pricing pressure in the markets
for jet engine components. The ARC propulsion unit recorded
moderately lower sales in both 1995 periods, as declines in three
rocket motor programs (MLRS, ATACMS and Stinger) were not fully
offset by increases in a fourth rocket motor program (MK104
Standard Missile) and higher sales of airbag components.
Kollsman's sales increased 12% for the six months but declined 5%
in the second quarter. The advance for the six months reflects a
sharp increase in commercial avionics, as well as advances in
both the night targeting system (NTS) for the Cobra Helicopter
and troop simulation training units. For the three months, the
sharp advance in avionics and the increase in troop simulation
training units was more than offset by declines in the electro-
optics products area.
Sales of the Machinery and Metal Coatings segment increased
18% and 19% in the six- and three-month periods, respectively.
The Precoat Metals division recorded solid gains in both periods.
Continued improvement in the building products market, as well as
strong first-quarter gains in the container market, were the
primary reasons for the advances. Can Machinery sales were 10%
lower for the six months and on a par with the year-earlier
second quarter due to the timing of deliveries to customers.
Based on current backlog, sales for the full year are expected to
exceed the 1994 level. MEG's sales rose sharply in both 1995
periods from prior year levels, due to both increased equipment
deliveries and a favorable swing in foreign exchange rates.
Sales of the Specialty Chemicals segment increased 2% for
the six months and were on a par with the 1994 second quarter.
At the overseas unit, sales measured in local currency were lower
in both 1995 periods, as a decline in detergent product sales was
partially offset by increased sales of other specialty chemicals.
However, sales reported in US dollars were equal to the 1994 six-
month figures, and only 2% lower for the second quarter. The
reported results reflect a favorable currency rate movement in
1995. At the domestic unit, sales increased in both 1995
periods, as price increases and a favorable sales mix shift more
<PAGE>
Sales and Revenues (con't)
------------------
than offset a small volume decline. For both the six months and
the second quarter, sales were up in virtually all product lines,
with only textile chemicals registering some softness throughout
the first half.
Sales of the Other Products segment increased 2% for the six
months but declined 5% in the second quarter. Sales of the
automotive products unit increased 5% for the six months and
declined 5% in the second quarter. This primarily reflects the
impact of changes in North American production of cars and
trucks, as well as shifts in the types of vehicles sold by the
big three US automobile manufacturers. Sales of power outlets
were stronger in both periods due to increased market
penetration. At the NCS unit, six-month sales were on a par with
1994, as strong first quarter domestic sales offset a decline in
export sales primarily related to the difficulties of the Mexican
economy. In the second quarter, sales declined 5%, as a major
domestic customer reduced its overstocked inventory condition.
At Centor, the real estate unit, revenues declined approximately
10% in both periods, primarily due to a lower occupancy rate and
lower parking revenues at its office building in Clayton,
Missouri.
Operating Income
----------------
Overall operating income declined 35% in the six months of
1995 and 36% in the second quarter.
The Aerospace segment recorded a loss for the six months of
1995, whereas this segment had registered a small profit in the
same period of 1994. The segment recorded losses in the second
quarter of both 1995 and 1994. The Gas Turbine subsidiary
recorded increased losses in both 1995 periods, primarily as a
result of continued intense competitive pressures in the repair
markets and a drop in profits from units serving the OEM business
markets. Both ARC Propulsion and Kollsman had operating income
in all periods reported.
In both 1995 and 1994, Gas Turbine's results included
unusual charges. In April 1995, Gas Turbine finalized and
implemented a further cost reduction program, which resulted in a
$7.2 million charge to operating income in the second quarter.
The charge reflects the severance and related costs of a 275-
person reduction in the indirect workforce, and the closing of
four small factories, whose workloads are being absorbed by other
units. In 1994, both the six months and second quarter included
unusual one-time charges totalling $10.3 million.
At the ARC propulsion unit, profits declined in both 1995
periods. For the six months the impact of lower revenues was
only partially offset by lower administrative costs. For the
<PAGE>
Operating Income (con't)
----------------
second quarter, the impact of lower sales and higher bid and
proposal costs was partially offset by the benefit of an improved
sales mix. Kollsman's profits increased sharply in both periods.
Year-to-date results benefitted from increased sales, while both
periods benefitted from an improved sales mix, as more profitable
commercial business replaced lower margined electro-optics sales,
and from recoveries on customer accounts previously reserved.
Operating income in the Machinery and Metal Coatings segment
increased 39% in the six months and 18% in the second quarter.
For the six months, all three operating units in the segment
contributed to the improvement. In the second quarter, the metal
coatings and can machinery operations advanced, while the
auxiliary press equipment unit incurred a loss equal to the 1994
second quarter. At the metal coatings unit, the improvements in
both periods were primarily related to higher sales partially
offset by additional expenses related to the start-up of the new
facility in Jackson, Mississippi. Profits in the can machinery
operations were up sharply from a low 1994 base, primarily due to
significant improvements in operating efficiencies and cost
reductions implemented in 1994. For the six months, the
auxiliary press equipment unit narrowed its loss. The benefits
of improved sales were partially offset by sharply higher selling
expenses (due to the cost of our participation in a major trade
show in Europe) and increased manufacturing, research and
development, and warranty expenses. For the second quarter, the
loss was equivalent to the same period of 1994, as the benefit of
increased sales was fully offset by these expenses.
Operating income in the Specialty Chemicals segment declined
8% and 10% in the six- and three-month periods, respectively. At
the overseas unit, lower local currency results were largely
offset by a favorable shift in foreign exchange rates. Reduced
local currency results primarily resulted from lower sales and an
inability to pass on to customers the full effect of significant
increases in raw material costs partially offset by lower selling
and administrative costs. At the domestic unit, the lag between
rapidly escalating raw materials prices and the increase in
selling prices led to a significant decline in gross margin.
This decline, together with increased selling and administrative
expenses, resulted in sharply lower profits in both periods.
Operating income in the Other Products segment declined 10%
and 39% in the six - and three-month periods, respectively. At
the automotive products unit, profits were down sharply in the
second quarter as a result of the decrease in sales. A solid
advance in first quarter profits at this unit tempered the effect
of the second quarter decline and resulted in a modest year-to-
date profit reduction. The can lid unit recorded a small profit
in each of the six month periods, and a small loss in the 1995
<PAGE>
Operating Income (con't)
----------------
second quarter compared with a small profit in the 1994 quarter.
At current sales levels, this unit operates at close to break
even. For the six months, Centor profits showed a small
improvement as lower expenses more than offset a decline in
rental income. In the second quarter the decrease in operating
expenses was not sufficient to offset the reduction in rental
income, and a small decline in profit resulted.
Interest Expense
----------------
The decrease in interest expense of $2.9 million during the
1995 six-month period and $0.9 million in the second quarter of
1995 was due to a decrease in average borrowings.
Other, Net
----------
Other, net includes gains on the sale of an investment of
$2.5 million and $0.5 million, respectively, during the six-month
and three-month periods of 1995. Other, net also includes $1.1
million and $1.3 million of charges for the amortization of
capitalized debt costs in the six-month periods of 1995 and 1994,
respectively, and $0.6 million in the three-month periods of 1995
and 1994. The Company recorded equity losses in its non-
consolidated airbag business of $0.8 million and $1.5 million in
the six-month periods of 1995 and 1994, respectively, and $0.7
million and $0.6 million in the three-month periods of 1995 and
1994, respectively. The 1995 results reflect the effect of
start-up costs at a separate airbag unit in Italy. During the
six-month period of 1994, Other, net includes a $2.7 million
mark-to-market loss on interest rate derivatives. This charge
included a $0.5 million favorable adjustment during the second
quarter of 1994. Other, net also includes discount expenses of
$1.3 million during the first six months of 1994 and $0.7 million
during the second quarter of 1994 related to the sale of accounts
receivable.
Income Tax Provision
--------------------
The Company revises its effective tax rate quarterly, if
necessary, to reflect the best current estimate of its annual
effective tax rate. The effective tax rates for the six-month
periods of 1995 and 1994 were (16%) and 51%, respectively.
These effective tax rates were based upon estimated annual pre-
tax foreign earnings and estimated annual pre-tax domestic
losses adjusted for goodwill amortization. The effective rates
also reflect the effect of a provision for state income and
franchise taxes, and the favorable tax treatment of earnings of
the Company's foreign sales corporation. Separate domestic and
foreign estimated annual effective tax rates were determined
and applied separately to actual domestic losses and actual
<PAGE>
Income Tax Provision (con't)
--------------------
foreign earnings. The tax benefit for the second quarters of
1995 and 1994 represent the difference between the year-to-date
tax (provision) benefits recorded as of June 30, 1995 and 1994
and the amounts reported for the first quarters of 1995 and
1994.
Liquidity
---------
In July 1995, the Company purchased two coil coating
operations from Enamel Products and Plating Co. (EP&P). This
transaction was primarily financed by the sale of $40.0 million
of accounts receivable under the Company's Receivables Purchase
Agreement. In addition, the Company entered into an operating
lease with a financial institution for the rental of a metal
coating line located at one of the EP&P facilities.
Management anticipates that cash flow from operations,
proceeds from the divestiture of assets, the $95.8 million of
credit available at August 4, 1995 under the revolving credit
agreement, the $5.0 million of available financing under the
Receivables Purchase Agreement, plus cash and cash equivalents
on hand at June 30, 1995 will be more than sufficient to fund
the Company's operations for the foreseeable future.
Backlog
-------
The businesses of Sequa for which backlogs are significant
are the Kollsman division, the Turbine Airfoils, Caval Tool and
Castings units of Gas Turbine, and the ARC Propulsion
operations of the Aerospace segment, and the Can Machinery, MEG
and Precoat Metals operations of the Machinery and Metal
Coatings segment. The aggregate dollar amount of backlog in
these segments at June 30, 1995 was $539.0 million ($448.3
million at December 31, 1994). There is no seasonal variation
in the Company's backlog.
Environmental Matters
---------------------
The Company's environmental department, under senior
management direction, manages all activities related to the
Company's involvement in environmental clean-up. This
department establishes the projected range of expenditures for
individual sites with respect to which the Company may be
considered a potentially responsible party under applicable
federal or state law. These projected expenditures, which are
reviewed periodically, include: remedial investigation and
feasibility studies; outside legal, consulting and remediation
project management fees; the projected cost of remediation
activities; site closure and post-remediation monitoring costs.
The assessments take into account currently available facts,
<PAGE>
Environmental Matters (con't)
---------------------
existing technology, presently enacted laws, past expenditures,
and other potentially responsible parties and their probable
level of involvement. Outside technical, scientific and legal
consulting services are used to support management's
assessments of costs at significant individual sites.
It is the Company's policy to accrue environmental
remediation costs for identified sites when it is probable that
a liability has been incurred and the amount of loss can be
reasonably estimated. The potential exposure for such costs is
estimated to range from $24 million to $50 million. At June
30, 1995, the Company's balance sheet includes accruals for
remediation costs of $46.9 million. These accruals are at
undiscounted amounts and are primarily included in accrued
expenses and other long-term liabilities. While the
possibility of recovery of some of the costs from insurance
companies exists, the Company does not recognize these
recoveries in its financial statements until they are realized.
Actual costs to be incurred at identified sites in future
periods may vary from the estimates, given inherent
uncertainties in evaluating environmental exposures.
With respect to all known environmental liabilities, it is
currently estimated that the Company will spend in the range of
$8 million to $12 million during each of the following several
years. Actual remedial expenditures for the first six months
of 1995 were approximately $4.8 million.
<PAGE>
<PAGE>
<TABLE>
SEQUA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Amounts in thousands)
ASSETS
<CAPTION>
(Unaudited)
June 30, December 31,
1995 1994
------------ -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 19,184 $ 18,655
Trade receivables (less allowances of
$12,726 and $12,448) 241,853 252,588
Unbilled receivables (less allowances
of $2,685 and $2,723) 35,878 35,688
Inventories 269,597 266,370
Other current assets 37,082 31,030
---------- ----------
Total current assets 603,594 604,331
---------- ----------
INVESTMENTS
Net assets of discontinued operations 147,786 154,395
Other investments 18,798 19,085
---------- ----------
166,584 173,480
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET 504,199 524,150
---------- ----------
OTHER ASSETS
Excess of cost over net assets of
companies acquired 320,588 325,530
Deferred charges and other 19,072 20,757
---------- ----------
339,660 346,287
---------- ----------
TOTAL ASSETS $1,614,037 $1,648,248
========== ==========
<FN>
The accompanying notes are an integral part of the financial
statements.
</TABLE>
<PAGE>
<TABLE>
SEQUA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Amounts in thousands, except share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
(Unaudited)
June 30, December 31,
1995 1994
---------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ 16,504 $ 15,231
Accounts payable 111,908 118,429
Taxes on income 27,151 21,128
Accrued expenses 170,563 166,558
---------- ----------
Total current liabilities 326,126 321,346
---------- ----------
LONG-TERM DEBT, NET OF
CURRENT MATURITIES 565,247 586,574
---------- ----------
DEFERRED TAXES AND OTHER LONG-TERM
LIABILITIES
Deferred taxes on income 6,101 9,494
Other long-term liabilities 151,448 164,343
---------- ----------
157,549 173,837
---------- ----------
SHAREHOLDERS' EQUITY
Preferred stock--$1 par value,
1,825,000 shares authorized,
797,000 shares of $5 cumulative
convertible stock issued in 1995
and 1994 (involuntary
liquidation value--$26,359 at
June 30, 1995) 797 797
Class A common stock--no par value,
25,000,000 shares authorized,
7,188,000 shares issued in 1995
and 1994 stated at 7,188 7,188
Class B common stock--no par value,
5,000,000 shares authorized,
3,727,000 shares issued in 1995
and 1994 stated at 3,727 3,727
Capital in excess of par value 287,204 287,204
Cumulative translation adjustment 6,140 (1,899)
Retained earnings 345,132 354,676
---------- ----------
650,188 651,693
Less: Cost of treasury stock (85,073) (85,202)
---------- ----------
Total shareholders' equity 565,115 566,491
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,614,037 $1,648,248
========== ==========
<FN>
The accompanying notes are an integral part of the financial
statements.
</TABLE>
<PAGE>
<TABLE>
SEQUA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1994 AND PERIOD ENDED JUNE 30, 1995
(Amounts in thousands, except per share data)
<CAPTION>
Class A Class B Capital in Cum.
Preferred Common Common Excess of Trans. Retained Treasury
Stock Stock Stock Par Value Adj. Earnings Stock
----- ------- ------- ---------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $ 797 $7,054 $3,861 $295,841 $(16,771) $383,617 $(98,615)
Net Loss - - - - - (25,778) -
Issuance and amortization
of restricted stock grant - - - (1,313) - - 1,366
Treasury stock contributed
to pension plan - - - (7,324) - - 12,047
Exchange of common stock - 134 (134) - - - -
Foreign currency translation
adjustment - - - - 12,897 - -
Sale of foreign subsidiary - - - - 1,975 - -
Cash dividends:
Preferred - $5.00 per share - - - - - (3,163) -
------ ------ ------ -------- -------- -------- ---------
Balance at December 31, 1994 $ 797 $7,188 $3,727 $287,204 $ (1,899) $354,676 $ (85,202)
------ ------ ------ -------- -------- -------- ---------
Net Loss - - - - - (7,962) -
Amortization of restricted
stock grant - - - - - - 129
Foreign currency translation
adjustment - - - - 8,713 - -
Sale of foreign subsidiary - - - - (674) - -
Cash dividends:
Preferred - $2.50 per share - - - - - (1,582) -
------ ------ ------ -------- -------- -------- ---------
Balance at June 30, 1995 $ 797 $7,188 $3,727 $ 287,204 $ 6,140 $345,132 $ (85,073)
====== ====== ====== ========= ======== ======== =========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
SEQUA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
<CAPTION>
For the Six Months
Ended June 30,
------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss before income taxes $ (6,862) $ (7,759)
Adjustments to reconcile loss to net cash
provided by operating activities:
Depreciation and amortization 49,191 49,835
Provision for losses on receivables 1,643 1,101
Other items not requiring (providing) cash (2,568) 1,358
Changes in operating assets and liabilities,
net of businesses sold:
Receivables 5,441 8,846
Inventories (13,948) (33,199)
Other current assets (6,187) 20,175
Accounts payable and accrued expenses (3,038) (5,324)
Other long-term liabilities (5,245) (3,875)
-------- --------
Net cash provided by continuing operations
before income taxes 18,427 31,158
Net cash provided by discontinued
operations before income taxes 3,395 30,982
Income taxes refunded (paid), net 1,973 (3,069)
-------- --------
Net cash provided by operating activities 23,795 59,071
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Businesses sold 5,162 52,448
Purchase of minority interest in subsidiary - (16,701)
Purchase of property, plant and equipment (28,744) (28,918)
Sale of property, plant and equipment 5,919 5,012
Other investing activities 53 (5,379)
-------- --------
Net cash provided by (used for) investing
activities (17,610) 6,462
-------- --------
Cash flows from financing activities:
Proceeds from issuance of debt 2,169 1,206
Payments of debt (5,796) (20,244)
Early retirement of debt - (34,839)
Dividends paid (1,582) -
-------- --------
Net cash used for financing activities (5,209) (53,877)
-------- --------
Effect of exchange rate changes on cash
and cash equivalents (447) 328
-------- --------
Net increase in cash and cash equivalents 529 11,984
Cash and cash equivalents at beginning of period 18,655 24,780
-------- --------
Cash and cash equivalents at end of period $ 19,184 $ 36,764
======== ========
<FN>
The accompanying notes are an integral part of the financial statements.
/TABLE
<PAGE>
<PAGE>
SEQUA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements of Sequa Corporation
(the "Company") include the accounts of all majority-owned
subsidiaries including those of Sequa Receivables Corp. ("SRC"),
a special purpose corporation formed for the sale of eligible
receivables. Under the terms of the receivables purchase
agreement, SRC's assets will be available to satisfy its
obligations to its creditors, which have security interests in
certain of SRC's assets, prior to any distribution to the
Company.
The consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary to fairly present the Company's results for the interim
periods presented. The Consolidated Statement of Income for the
six months ended June 30, 1994 includes a $6.0 million accrual
for the unexpected loss of a lawsuit, a $4.3 million charge to
correct an accounting irregularity, a $2.7 million charge to mark
to market the carrying value of interest-rate derivatives and a
$1.1 million after-tax extraordinary loss related to the
redemption of the Company's 10 1/2% senior subordinated notes.
All other adjustments in the June 30, 1994 interim period
consisted of normal recurring items. With the exception of a
$7.3 million charge recorded by Gas Turbine during the second
quarter of 1995 for severance and plant closings, all adjustments
to the June 30, 1995 interim period consisted of normal recurring
items. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles, have been condensed or
omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto
included in the Company's latest Annual Report on Form 10-K. The
results of operations for the six months ended June 30, 1995 are
not necessarily indicative of the results to be expected for the
full year.
<PAGE>
<PAGE>
NOTE 2 - INVENTORIES
The inventory amounts at June 30, 1995 and December 31, 1994
were as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars)
(Unaudited)
June 30, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C>
Finished Goods $ 75,018 $ 68,965
Work in process 86,050 64,312
Raw materials 115,824 130,596
Long-term contract costs 9,519 7,728
Progress payments (16,814) (5,231)
-------- --------
$269,597 $266,370
======== ========
</TABLE>
NOTE 3 - DISCONTINUED OPERATIONS
Net assets of discontinued operations approximate net
realizable value and have been classified as non-current. A
summary of the net assets of discontinued operations is as
follows:
<TABLE>
<CAPTION>
(Amounts in thousands)
(Unaudited)
June 30, December 31,
1995 1994
-------- --------
<S> <C> <C>
Receivables, net $ 6,638 $ 6,774
Inventories 7,753 9,788
Investment in leveraged leases and
other investments 160,775 163,857
Property, plant, and equipment 2,959 3,515
Other assets 10,994 10,861
-------- --------
Total assets 189,119 194,795
-------- --------
Accounts payable 2,245 2,550
Accrued expenses 9,846 9,652
Debt 27,637 27,028
Other long-term liabilities 1,605 1,170
-------- --------
Total liabilities 41,333 40,400
-------- --------
Net assets of discontinued
operations $147,786 $154,395
======== ========
<FN>
Debt of discontinued operations represents the principal
amount of the $25.0 million in proceeds received from the non-
recourse securitization of Sequa Capital's leveraged lease
portfolio in March of 1994. The leveraged lease cash flow stream
will service the payment of interest and principal until the loan
is paid off. To the extent that the leveraged lease cash flow
</TABLE>
<PAGE>
NOTE 3 - DISCONTINUED OPERATIONS (con't)
stream during the next several years is less than the amount
necessary to service the debt, the principal amount of the loan
will increase. Subsequent to the payment of the secured
indebtedness, the remaining investment in leveraged leases will
be liquidated over time as rentals are received and residual
values are realized. Disposal activities are ongoing for other
discontinued assets.
NOTE 4 - LOSSES PER SHARE
Primary losses per common share in 1995 and 1994 were computed
by dividing net losses, after deducting dividend requirements on
cumulative convertible preferred stock, by the weighted average
number of shares of common stock outstanding during the periods.
These computations were based on 9,867,000 shares for the six and
three month periods in 1995 and 9,655,000 shares for the six and
three month periods in 1994.
Fully diluted losses per common share calculations for the
assumed conversion of the cumulative convertible preferred stock
were anti-dilutive in both the six-month and three-month periods
of 1995 and 1994.
NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30,
-------------------------
1995 1994
---- ----
<S> <C> <C>
Net cash provided by (used for)
discontinued operations:
Changes in working capital 1,839 (3,276)
Increase in debt 609 24,657
Principal repayments on leasing assets 3,021 4,769
Sale of leasing assets 515 6,752
Other changes in net assets (2,589) (1,920)
-------- --------
$ 3,395 $ 30,982
======== ========
</TABLE>
Other supplemental Cash Flow information:
Interest paid during the six months ended June 30, 1995 and
1994 was $26.4 million and $30.1 million, respectively.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
-----------------
Sequa is involved in a number of claims, lawsuits and
proceedings (environmental and otherwise) which arose in the
ordinary course of business. Other litigation is pending against
Sequa involving allegations that are not routine and include, in
certain cases, compensatory and punitive damage claims. Included
in this other class of litigation is an arbitration proceeding
that was formally commenced in 1992 to resolve a dispute between
the Egyptian Air Force and Chromalloy Gas Turbine. In 1994, the
arbitral tribunal issued an award of $16.3 million plus interest
in favor of Chromalloy Gas Turbine. At June 30, 1995, the
Company's Consolidated Balance Sheet includes net assets of
approximately $17.5 million related to this issue. Chromalloy
has filed a petition in the US District Court for the District of
Columbia to confirm and enforce the award, and the Egyptian Air
Force has filed a challenge to this award in the Court of Appeal
of Cairo.
On July 11, 1995, United Technologies Corporation, through
its Pratt & Whitney division, commenced an action against Sequa's
subsidiary, Chromalloy Gas Turbine Corporation, in the United
States District Court for the District of Delaware. The
complaint seeks unspecified monetary damages (including treble
and punitive damages with respect to certain claims) and
injunctive relief based upon alleged breaches of certain license
agreements, alleged infringement of patents and misuse of other
Pratt & Whitney intellectual and intangible property. This
lawsuit is in its preliminary stage and, accordingly, management
cannot make an evaluation of the likely outcome at this time.
Management intends to vigorously defend all claims, which it
regards as substantially lacking in merit, and is considering
instituting certain claims against United Technologies.
The ultimate legal and financial liability of the Company in
respect to all claims, lawsuits and proceedings referred to above
cannot be estimated with any certainty. However, in the opinion
of management, based on its examination of such matters, its
experience to date and discussions with counsel, the ultimate
outcome of these contingencies, net of liabilities already
accrued in the Company's Consolidated Balance Sheet, is not
expected to have a material adverse effect on the Company's
Consolidated financial position, although the resolution in any
reporting period of one or more matters could have a significant
impact on the Company's results of operations for that period.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
The Annual Meeting of Stockholders of Sequa Corporation was
held on May 11, 1995, for the purpose of electing directors,
approving the appointment of independent public accountants, and
voting on other proposals described below. Proxies for the
meeting were solicited pursuant to Section 14(a)
<PAGE>
<PAGE>
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (con't)
of the Securities Exchange Act of 1934, and there was no
solicitation in opposition to management's solicitations.
All of management's nominees for directors, as listed in the
proxy statement, were elected with the following vote:
Name of Nominee Votes For Votes Withheld
Norman E. Alexander 30,348,842 6,977,616
Alvin Dworman 30,357,447 6,969,011
A. Leon Fergenson 30,348,963 6,977,495
David S. Gottesman 30,361,122 6,965,336
Stuart Z. Krinsly 30,356,612 6,969,846
Donald D. Kummerfeld 30,360,632 6,965,826
Richard S. LeFrak 30,358,005 6,968,453
John J. Quicke 30,362,062 6,964,396
Fred R. Sullivan 30,350,445 6,976,013
Gerald Tsai, Jr. 30,360,200 6,966,258
The appointment of Arthur Andersen LLP as independent public
accountants was approved by the following vote:
Votes For Votes Against Votes Abstaining
30,408,081 223,011 6,695,366
Amendment Number One to the Management Incentive Bonus Plan for
Corporate Executive Officers was approved by the following vote:
Votes For Votes Against Votes Abstaining
29,527,650 632,680 7,166,128
The 1994 Corporate Staff Stock Award Plan was approved by the
following vote:
Votes For Votes Against Votes Abstaining
29,561,724 596,424 7,168,310
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(A) Exhibits
10.1 Amendment No. 4 (dated as of April 1, 1995) to
the $150 Million Amended and Restated Credit
Agreement, dated as of December 14, 1993,
filed herewith.
10.2 Amendment No. 6 (dated as of May 31, 1995) to
the Amended and Restated Receivables Purchase
Agreement, dated as of June 24, 1993, filed
herewith./R
<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (con't)
--------------------------------
11.1 Computation of earnings per share, filed
herewith.
27.1 Financial Data Schedule, filed herewith./R
(B) Reports on Form 8-K
No report on Form 8-K was filed during the
three-month period ended June 30, 1995.<PAGE>
<PAGE>
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.
SEQUA CORPORATION
BY:/S/ WILLIAM P. KSIAZEK
William P. Ksiazek
Vice President and Controller
August 14, 1995
<TABLE>
EXHIBIT 11
SEQUA CORPORATION
CALCULATION OF PRIMARY AND FULLY DILUTED LOSSES PER SHARE
---------------------------------------------------------
<CAPTION>
(Unaudited)
For the Six Months
Ended June 30,
-----------------
1995 1994
---- ----
<S> <C> <C>
PRIMARY
-------
Losses
Loss before extraordinary loss $ (7,962) $ (3,809)
Preferred stock dividend requirements (1,582) (1,582)
------- --------
Loss applicable to common
shareholders before extraordinary loss (9,544) (5,391)
Extraordinary loss on early retirement of
debt - (1,083)
-------- ---------
Net loss applicable to common
shareholders $ (9,544) $ (6,474)
======== ========
Shares
Common and common equivalent shares 9,867 9,655
======== ========
Primary loss per common share
Loss before extraordinary loss $ (.97) $ (.56)
Extraordinary loss on early retirement of
debt - (.11)
------- --------
Net loss $ (.97) $ (.67)
======= ========
*FULLY DILUTED
-------------
Losses
Loss before extraordinary loss $ (7,962) $ (3,809)
Extraordinary loss on early retirement of
debt - (1,083)
-------- --------
Net loss $ (7,962) $ (4,892)
======== ========
Shares
Common and common equivalent shares 10,705 10,493
======== ========
Fully diluted loss per common share
Loss before extraordinary loss $ (.74) $ (.37)
Extraordinary loss on early retirement
of debt - (.10)
-------- --------
Net loss $ (.74) $ (.47)
======== ========
SHARES
------
Weighted average common shares outstanding 9,867 9,655
Preferred stock assumed to be converted 838 838
-------- --------
Common and common equivalent shares 10,705 10,493
======== ========
<FN>
(*)The 1995 and 1994 fully diluted losses per share calculations are
anti-dilutive; therefore, fully diluted losses per share have not been
presented in the Consolidated Statement of Income.
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 11
SEQUA CORPORATION
CALCULATION OF PRIMARY AND FULLY DILUTED LOSSES PER SHARE
---------------------------------------------------------
<CAPTION>
(Unaudited)
For the Three Months
Ended June 30,
-----------------
1995 1994
---- ----
<S> <C> <C>
PRIMARY
-------
Losses
Net loss $ (6,087) $ (2,351)
Preferred stock dividend requirements (791) (791)
-------- --------
Net loss applicable to common
stockholders $ (6,878) $ (3,142)
======== ========
Shares
Common and common equivalent shares 9,867 9,655
======== ========
Primary net loss per common share $ (.70) $ (.33)
======== ========
*FULLY DILUTED
-------------
Losses
Net loss $ (6,087) $ (2,351)
======== ========
Shares
Common and common equivalent shares 10,705 10,493
======== ========
Fully diluted net loss per
common share $ (.57) $ (.22)
======== ========
SHARES
Weighted average common shares outstanding 9,867 9,655
Preferred stock assumed to be converted 838 838
-------- --------
Common and common equivalent shares 10,705 10,493
======== ========
<FN>
* The 1995 and 1994 fully diluted losses per share calculations are
anti-dilutive; therefore, fully diluted losses per share have not been
presented in the Consolidated Statement of Income.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 19,184
<SECURITIES> 0
<RECEIVABLES> 293,142
<ALLOWANCES> 15,411
<INVENTORY> 269,597
<CURRENT-ASSETS> 603,594
<PP&E> 1,070,457
<DEPRECIATION> 566,258
<TOTAL-ASSETS> 1,614,037
<CURRENT-LIABILITIES> 326,126
<BONDS> 565,247
<COMMON> 10,915
0
797
<OTHER-SE> 553,403
<TOTAL-LIABILITY-AND-EQUITY> 1,614,037
<SALES> 684,797
<TOTAL-REVENUES> 684,797
<CGS> 550,227
<TOTAL-COSTS> 666,910
<OTHER-EXPENSES> (1,900)
<LOSS-PROVISION> 1,643
<INTEREST-EXPENSE> 26,649
<INCOME-PRETAX> (6,862)
<INCOME-TAX> 1,100
<INCOME-CONTINUING> (7,962)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,962)
<EPS-PRIMARY> (0.97)
<EPS-DILUTED> (0.74)
</TABLE>
<PAGE> EXECUTION
COPY
AMENDMENT NO. 4 CONSENT AND WAIVER
Dated as of April 1, 1995
to
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 14, 1993
Sequa Corporation, a Delaware corporation (the
"Borrower"), The Bank of New York, as Administrative Agent (the
"Administrative Agent"), The Bank of New York, The Bank of Nova
Scotia and Chemical Bank, as Managing Agents (the "Managing
Agents"), Bank of America National Trust and Savings Association,
Chase Manhattan Bank, N.A. and The Nippon Credit Bank, Ltd., as Co-
Agents (the "Co-Agents"), and the banks listed on the signature
pages hereto (the "Banks") agree as follows:
Section 1. CREDIT AGREEMENT. Reference is made to the
Amended and Restated Credit Agreement, dated as of December 14,
1993, among the Borrower, the Administrative Agent, the Managing
Agents, the Co-Agents and the Banks, as amended by Amendment No. 1,
dated as of June 13, 1994, Amendment No. 2, dated as of December
14, 1994, and Amendment No. 3 and Waiver, dated as of March 3, 1995
(as so amended, the "Credit Agreement").
Capitalized terms used herein but not defined herein shall have the
meanings ascribed thereto in the Credit Agreement. The Credit
Agreement as amended by this Amendment No. 4, Consent and Waiver,
is and shall continue to be in full force and effect and is hereby
in all respects ratified and confirmed.
Section 2. AMENDMENTS. Upon and after the Effective
Date (as defined in Section 6 hereof), the Credit Agreement
shall be amended as follows:
(a) Section 4.06 is restated in its entirety as
follows:
"Section 4.06. RESTRICTED PAYMENTS. Make or
declare or otherwise become obligated to make any
Restricted Payment; provided, however, that this Section
4.06 shall not apply to the payment of any dividend on
account of shares of the $5.00 cumulative Convertible
Preferred Stock of the Borrower, so long as (x) no
Default exists at the time of the declaration or payment
of such dividend, both before and after giving effect to
the declaration and payment thereof and (Y) the aggregate
amount of all such dividends paid in any consecutive
three month period shall not exceed $800,000."
<PAGE>
(b) Section 4.15 is amended by replacing the
figure "$565,000,000" in clause (i) thereof with the words
"(A)" on or prior to March 31, 1995, $565,000,000, and (B)
thereafter, $550,000,000";
(c) Section 6.01(d) is restated in its entirety as
follows:
"(d) (i) (A) Any Loan Party or any Subsidiary
of any Loan Party shall fail to pay, in accordance with
its terms and when due and payable, the principal of or
interest on any Indebtedness (other than the Loans)
having a then aggregate outstanding principal amount in
excess of $5,000,000, (B) the maturity of any such
Indebtedness shall, in whole or in part, have been
accelerated, or any such Indebtedness shall, in whole or
in part, have been required to be prepaid prior to the
stated maturity thereof, in accordance with the
provisions of any Contract evidencing, providing for the
creation of or concerning such Indebtedness, or (C) (1)
any event shall have occurred and be continuing that
permits (or, with the passage of time or the giving of
notice or both, would permit) any holder or holders of
such Indebtedness, any trustee or agent acting an behalf
of such holder or holders or any other Person so to
accelerate such maturity or require any such prepayment
and (2) if the Contract evidencing, providing for the
creation of or concerning such Indebtedness provides for
a cure period for such event, such event shall not be
cured prior to the end of such cure period or such
shorter period of time as the Administrative Agent may
specify or (ii) (A) any Loan Party or any Subsidiary of
any Loan Party shall fail to pay the rental payments when
due and payable (after any applicable cure period) under
any operating lease in respect of equipment which had a
fair market value in excess of $5,000,000 at the
commencement of the term of such operating lease, (B) any
such operating lease shall have been terminated,
according to its terms, by the lessor thereunder prior to
its stated termination date as a result of a default of
the lessee thereunder or (C) (1) any event shall have
occurred and be continuing that permits (or, with the
passage of time or the giving of notice or both, would
permit) the lessor under any such operating lease to so
terminate such operating lease as a result of a default
of the lessee thereunder and (2) if such operating lease
provides for a cure period for such event, such event
shall not be cured prior to the end of such cure period
or such shorter period of time as the Administrative
Agent may specify;"; and
(d) section 10.01 is amended by restating the definition
of "Permitted Acquisition" therein in its entirety as follows:
<PAGE>
"'Permitted Acquisition' means (i) the
acquisition of certain assets by the Borrower (or a
Subsidiary designated by the Borrower) as such acquisition
is described in the Borrower's letter to the
Administrative Agent dated June 2, 1994 or as such
acquisition as therein described may be modified as set
forth in the memorandum from Kenneth A. Drucker to the
Banks dated March 1, 1995, and the letter from the
Borrower to the Administrative Agent dated May 22, 1995;
provided the purchase price for such assets does not
exceed the aggregate amount set forth in such letter of
May 22, 1995, and (ii) each other Acquisition which has
been specifically consented to in writing by the Required
Banks from time to time."
Section 3. CONSENT. Upon and after the Effective
Date (as defined in Section 6 hereof), pursuant to Section
4.04(x) of the Credit Agreement, the Required Banks hereby
consent to the execution and delivery by the Borrower of:
(i) the Guaranty Agreement to be entered into between the
Borrower and Fleet credit corporation, substantially in
the form of Annex A hereto, guaranteeing the Liabilities
of Sequa Coatings under the Master Equipment Lease
Agreement No. 31925, to be entered into between Fleet
Credit Corporation and Sequa Coatings, and the Lease
Schedule Number 1, each substantially in the form of Annex
B hereto; and
(ii) the Guaranty Agreement to be entered into between the
Borrower and FINOVA Capital Corporation, substantially in
the form of Annex C hereto, guaranteeing the Liabilities
of Sequa Coatings under the Lease Agreement to be entered
into between FINOVA Capital Corporation and Sequa
Coatings, substantially in the form of Annex D hereto.
Section 4. WAIVER. Upon and after the Effective Date
(as defined in Section 6 hereof), the Banks shall waive any
Default arising prior to the Effective Date as a result of the
Borrower's failure to comply with Section 4.15 of the Credit
Agreement to the extent that such Default would not have arisen
had this Amendment No. 4, Consent and Waiver been in effect on
April 1, 1995.
Section 5. REPRESENTATIONS AND WARRANTIES. Each of
the Borrower and each Guarantor (as defined after giving effect
to this Amendment No. 4, Consent and Waiver) has the power, and
has taken all necessary action (including any necessary
stockholder action) to authorize it, to execute, deliver and
perform in accordance with its terms Amendment No. 4, Consent
and Waiver and the Credit Agreement as amended by Amendment No.
4, Consent and Waiver. Amendment No. 4, Consent and Waiver has
been duly executed and delivered by the Borrower and each such
Guarantor and is a legal, valid and binding obligation of each
Loan Party that is a party thereto, enforceable against such
Loan Party in accordance with its terms, except an
enforceability may
<PAGE>
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally. The execution,
delivery and performance in accordance with its terms by the
Borrower and such Guarantors of Amendment No. 4, Consent and
Waiver and the Credit Agreement as amended by Amendment No. 4,
Consent and Waiver do not and (absent any change in any
Applicable Law or applicable Contract) will not (a) require any
Governmental Approval or any other consent or approval,
including any consent or approval of any Subsidiary or any
consent or approval of the stockholders of the Borrower or any
Subsidiary or (b) violate or conflict with, result in a breach
of, constitute a default under, or result in or require the
creation of any Lien upon any assets of the Borrower or any
Subsidiary under, (i) any Contract to which the Borrower or any
Subsidiary is a party or by which the Borrower or any
Subsidiary or any of their respective properties may be bound,
the breach of which, either singly or in the aggregate with all
other such Contracts, would have a Materially Adverse Effect
upon the Borrower or any Subsidiary, or (ii) any Applicable
Law.
Section 6. EFFECTIVE DATE; CONDITION TO
EFFECTIVENESS. This Amendment No. 4, Consent and Waiver shall
become effective as of the date first written above (the
"Effective Date") on the first date on which this Amendment NO.
4, Consent and Waiver shall have been duly executed and
delivered by the Borrower, the Guarantors and the Required
Banks.
Section 7. GOVERNING LAW. This Amendment No. 4,
Consent and Waiver shall be construed in accordance with and
governed by the substantive law of the State of New York.
section 8. HEADING. Section headings in this
Amendment No. 4, Consent and Waiver are included herein for
convenience and reference only and shall not constitute a part
of this Amendment No. 4, Consent and Waiver for any other
purpose.
Section 9. COUNTERPARTS. This Amendment NO. 4,
Consent and Waiver may be executed in any number of
counterparts and on separate counterparts, each of which shall
be deemed to be an original and shall be binding upon the
parties, their successors and assigns.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment No. 4, Consent and Waiver, or caused it to be
executed and delivered by their duly authorized officers, all
as of the day and year first above written.
SEQUA CORPORATION
By
Name: Jenny S. Kade
Title: Assistant Treasurer
CASCO INVESTORS CORPORATION
CHROMALLOY AMERICAN CORPORATION
CHROMALLOY GAS TURBINE CORPORATION
SEQUA CHEMICALS, INC.
CASCO PRODUCTS CORPORATION
SEQUA FINANCIAL CORPORATION
KOLLSMAN MANUFACTURING COMPANY, INC.
NORTHERN TECHNOLOGIES, INC.
GLENROCK CAN SYSTEM, INC.
NORTHERN SYSTEMS, INC.
NORTHERN CAN SYSTEMS OF WISCONSIN, INC.,
each as a Guarantor.
By
Name: Jenny S. Kade
Title: Assistant Treasurer
THE BANK OF NEW YORK, as Administrative
Agent, as a Managing Agent and as a Bank
By
Name:
Title:
THE "BANK OF NOVA SCOTIA, as a Managing
Agent and as a Bank
By
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment No. 4, Consent and Waiver, or caused it to be
executed and delivered by their duly authorized officers, all
as of the day and year first above written.
SEQUA CORPORATION
By
Name:
Title:
CASCO INVESTORS CORPORATION
CHROMALLOY AMERICAN CORPORATION
CHROMALLOY GAS TURBINE CORPORATION
SEQUA CHEMICALS, INC.
CASCO PRODUCTS CORPORATION
SEQUA FINANCIAL CORPORATION
KOLLSMAN MANUFACTURING COMPANY, INC.
NORTHERN TECHNOLOGIES, INC.
GLENROCK CAN SYSTEMS, INC.
NORTHERN CAN SYSTEMS, INC.
NORTHERN CAN SYSTEMS OF WISCONSIN, INC.,
each as a Guarantor,
By
Name:
Title:
BANK OF NEW YORK, as Administrative
Agent, as a Managing Agent and as a Bank
BY
Name: William A. Kerr
Title: VP
THE BANK OF NOVA SCOTIA, as a Managing
Agent and as a Bank
By
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 4, Consent and Waiver, or caused it to be executed and
delivered by their duly authorized officers, all as of the day and
year first above written.
SEQUA CORPORATION
By
Name:
Title:
CASCO INVESTORS CORPORATION
CHROMALLOY AMERICAN CORPORATION
CHROMALLOY GAS TURBINE CORPORATION
SEQUA CHEMICALS, INC.
CASCO PRODUCTS CORPORATION
SEQUA FINANCIAL CORPORATION
KOLLSMAN MANUFACTURING COMPANY, INC.
NORTHERN TECHNOLOGIES, INC.
GLENROCK CAN SYSTEMS, INC.
NORTHERN CAN SYSTEMS, INC.
NORTHERN CAN SYSTEMS OF WISCONSIN, INC.,
each as a Guarantor,
By
Name:
Title:
THE BANK OF NEW YORK, as Administrative
Agent, as a Managing Agent and as a Bank
By
Name:
Title:
THE BANK OF NOVA SCOTIA, an a Managing
Agent and as a Bank
Name:
Title:
<PAGE>
CHEMICAL BANK, as a Managing Agent and
as a Bank
By
Name:
Title: Peter C. Eckstein
Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Co-Agent and as
a Bank
By
Name:
Title:
CHASE MANHATTAN BANK, N.A., as a Co-Agent
and as a Bank
By
Name:
Title:
THE NIPPON CREDIT BANK, LTD., as a Co-
Agent and as a Bank
By
Name:
Title:
BANK BRUSSELS LAMBERT, NEW YORK BRANCH
By
Name:
Title:
By:
Name:
Title:
<PAGE>
CHEMICAL BANK, as a Managing Agent and as
a Bank
By:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Co-Agent and as
a Bank
By:
Name:
Title:
CHASE MANHATTAN BANK, N.A., as a Co-Agent
and as a Bank
By:
Name:
Title:
THE NIPPON CREDIT BANK, LTD., as a Co-
Agent and as a Bank
By:
Name:
Title:
BANK BRUSSELS LAMBERT, NEW YORK
BRANCH
By:
Name: Eric Hollanders
Title: Senior Vice President
Credit Department
By:
Name: Eileen Stekeur
Title: Assistant Vice President
<PAGE>
ANNEX A
(IN FILES)
<PAGE>
ANNEX B
[IN FILES]
<PAGE>
ANNEX C
[IN FILES)
<PAGE>
ANNEX D
(IN FILES)
<PAGE>
(EXECUTION CITY)
AMENDMENT NO. 6
Dated as of May 31, 1995
to
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
Dated an of June 24, 1993
Sequa Receivables Corp., a New York corporation ("SRC" or
the "Seller"), Sequa Corporarion, a Delaware corporation (in
its individual capacity and as Servicer, "Sequa), the
financial institution parties hereto (the "Purchasers") and
Chemical Bank, as managing agent (the "Managing Agent") agree
as follows:
Section 1. RECEIVABLES PURCHASE AGREEMENT. Reference is
made to the Amended and Restated Receivables Purchase
Agreement dated as of June 24, 1993, and as amended by
Amendment No. 1 dated as of September 30, 1993, Amendment
No. 2 dated as of December 1, 1993, Amendment No. 3 dated as
of December 14, 1993, Amendment No. 4 dated as of July 1, 1994
and Amendment No. 5 dated as of March 3, 1995, among SRC,
Sequa, the Managing Agent and the Purchasers (the "Receivables
Purchase Agreement"). Capitalized terms used herein but not
defined herein shall have the meanings ascribed thereto in the
Receivables Purchase Agreement. The Receivables Purchase
Agreement, as amended by this Amendment No. 6 (this "Amendment
No. 6"), is, and shall continue to be, in full force and
affect and is hereby in all respects ratified and confirmed.
Section 2. AMENDMENTS. Upon and after the Effective
Date (as defined in Section 4 hereof), the Receivables
Purchase Agreement shall be amended as follows:
(a) Section 5.02(e) of the Receivables Purchase
Agreement shall be amended in its entirely to read as
follows:
"(a) Consolidated Net Worth to be less than
(a) $565,000,000 at any time on or prior to
March 31, 1995, and (b) $550,000,000, plus
fifty percent of its Consolidated Net Income
(but not less than zero) at any time
thereafter, in each case for each full quarter
commencing April 1, 1995 until the time of
determination;"
<PAGE>
(b) Section 7.03(k)(i) of the Receivables Purchase
Agreement shall be restated in its entirety to read as
follows:
"(i) Consolidated Net Worth to be less than (a)
$565,000,000 at any time on or prior to March 31,
1995, and (b) $550,000,000, plus fifty percent of
its Consolidated Net Income (but not less than
zero) at any time thereafter, in each case for each
full quarter commencing April 1, 1995 until the
time of determination;"
(c) Section 10.01(e) of the Receivables Purchase
Agreement shall be amended by inserting the following
language immediately prior to the concluding semicolon of
such section:
"(iii) (A) the Seller or Sequa shall fail to pay
any rental payments when due and payable (after any
applicable cure period) under any Operating Lease
in respect of equipment which had a fair market
value in excess of $5,000,000 at the commencement
of the term of such Operating Lease, (B) any such
Operating Lease shall have been terminated,
according to its terms, by the lessor thereunder
prior to its stated termination date as a result of
a default of the lessee thereunder or (C) (1) any
event shall have occurred and be continuing that
permits (or, with the passage of time or the giving
of notice or both, would permit) the lessor under
any such Operating Lease to so terrminate such
operating lease as a result of a default of the
lessee thereunder and (2) if such operating lease
provides for a cure period for such event, such
event shall not be cured prior to the end of such
cure period or such shorter period of time as the
Managing Agent may specify;"
Section 3- LIMITED WAIVER. Upon and after the Effective
Date (as defined in Section 5 hereof), the Purchasers shall
waive compliance with, or, in the case of conditions
precedent, satisfaction of, (i) Section 7.03(k)(i) and Section
5.02(e) of the Receivables Purchase Agreement to the extent
such provisions relate to the Consolidated Net Worth of Sequa
and (ii) Section 10.01(e)(i)(A) of the Receivables Purchase
Agreement to the extent such provision relates to defaults
other than those arising out of non-payment of amounts due and
payable in respect of Indebtedness, in each case only to the
extent that such default would not have arisen had the
amendments effected by this Amendment No. 6 been in effect on
April 1, 1995.
<PAGE>
Section 4. PURCHASE LIMIT. In connection with that
certain letter agreement dated May 24, 1995, from Sequa and
SRC to the Purchasers, in which the Sequa, SRC, the Purchasers
and the Managing Agent agreed to lower the purchase limit to
$10,000,000, Sequa, SRC, the Purchasers and the Managing Agent
agree to increase and hereby do increase the Purchase Limit
from $10,000,000 to $45,000,000, such increase to be effective
on the Effective Date.
Section 5. COVENANTS, REPRESENTATIONS AND WARRANTIES.
(a) Each of SRC and Sequa has the power, and has taken all
necessary action (including any necessary stockholder action)
to authorize, execute, deliver and perform in accordance with
its terms this Amendment No. 6. This Amendment No. 6 has been
duly executed and delivered by SRC and Sequa and is a legal,
valid and binding obligation of each such party, enforceable
against such party in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors, rights generally;
(b) The execution, delivery and performance in accordance
with its terms by SRC and Sequa of this Amendment No. 6 and
the Receivables Purchase Agreement, as amended by this
Amendment No. 6 (including, without limitation, each
Reinvestment under the Receivables Purchase Agreement), do not
and (absent any change in any applicable law or applicable
Transaction Document) will not (i) require any governmental
approval or any other consent or approval, including any
consent or approval of the stockholders of SRC or Sequa, other
than consents and approvals that have been obtained, are final
and not subject to review on appeal or to collateral attack
and are in full force and effect, or (ii) violate or conflict
with, result in a breach of, constitute a default under, or
result in or require the creation of any lien upon any assets
of SRC, Sequa or any Originator under, (A) any Transaction
Document to which SRC, Sequa or any Originator is a party or
by which SRC, Sequa or any Originator or any of their
respective properties may he bound, the breach of which,
either singly or in the aggregate with all other such
breaches, would have a Materially Adverse Effect upon SRC,
Sequa or any Originator, or (B) any applicable law or
judgment;
(c) Each of SRC and Sequa hereby reaffirms all agreements,
covenants, representations and warranties made in the
Receivables Purchase Agreement and, to the extent the same are
not amended hereby, agrees that all such agreements,
covenants, representations and warranties shall be deemed to
have been remade as of the Effective Date. Each of SRC and
Sequa hereby further represents and warrants that as of the
Effective Date no event has occurred and is continuing or will
<PAGE>
result from the execution, delivery and performance by it of this
Amendment No. 6 which constitutes a Liquidation Event or event
which after notice or lapse of time or both, would constitute a
Liquidation Event; and
(d) Except as specifically amended herein, the Receivables
Purchase Agreement shall remain in full force and affect and
is hereby ratified and confirmed. The execution, delivery and
effectiveness of this Amendment No. 6 shall not operate as a
waiver of any right, power or remedy of the Managing Agent or
any of the Purchasers under the Receivables Purchaae Agreement
or any other document, instrument or agreement executed and
delivered in connection therewith, except specifically set
forth herein.
Section 6. EFFECTIVE DATE; CONDITIONS TO EFFECTIVENESS.
This Amendment No. 6 shall become effective as of the date
first written above on the first day (the "Effective Date") on
which each of the following conditions is satisfied:
(a) The Managing Agent shall have received an officer's
certificate, dated the Effective Date, in the form attached
hereto as Schedule 1;
(b) This Amendment No. 6 shall have been duly executed
and delivered by SRC, Sequa and the Purchasers; and
(c) No material adverse change has occurred in respect
of the Receivables or operating or financial condition of
Sequa or SRC since December 31, 1994.
Section 7. GOVERNING LAW. This Amendment No. 6 shall be
construed in accordance with and governed by the substantive
law of the State of New York.
Section 8. HEADINGS. Section headings in this Amendment No.
6 are included herein for convenience and reference only and
shall not constitute a part of this Amendment No. 6 for any
other purpose.
Section 9, COUNTERPARTS. This Amendment No. 6 may be
executed in any number of counterparts and on separate
counterparts, each of which shall be deemed to be an original
and shall be binding upon the parties, their successors and
assigns.
Section 10. CROS-REFERENCES. References in this Amendment
No. 6 to any Section or Subsection, unless otherwise
Specified, refer to such Section or Subsectior of this
Amendment No. 6.
<PAGE>
Section 11. INSTRUMENT PURSUANT TO RECEIVABLES PURCHAS
AGREEMENT. This Amendment No. 6 is an instrument executed
pursuant to the Receivables Purchase Agreement and shall
(unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and
provisions of the Receivables Purchase Agreement, including
Article XIV thereof.
<PAGE>
<PAGE>
In WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 6, or caused it to be executed and delivertd by their
duly authorized officers, all as of the day and year first above
written.
SEQUA RECEIVABLES CORP.,
as Seller
By:
Name:
Title:
SEQUA CORPORATION,
individually and as Servicer
By:
Name:
Title:
CHEMICAL BANK,
as managing Agent and Purchaser
By:
Name:
Title:
THE BANK OF NEW YORK,
an Purchaser
By:
Name:
Title:
<PAGE>
THE BANK OF NOVA SCOTIA,
as Purchaser
By:
Name:
Title:
<PAGE>
Schedule 1
[FORM OF]
SEQUA CORPORATION
OFFICERS'S CERTIFICATE
I, Kenneth A. Drucker, do hereby certify that I am the duly
elected and qualified Vice President and Treasurer of SEQUA
CORPORATION, a Delaware corporation (the "Company"), that I am
authorized to execute this Certificate, and that as of the date
hereof, the following statements ara true and correct.
Capitalized terms used herein but not otherwise defined herein
shall have the meanings assigned thereto in Appendix A to that
certain Amended and Restated Receivables Purchase Agreement dated
June 25, 1993, as amended by Amendment No. 1 thereto dated as of
September 30, 1993, Amendment No. 2 thereto dated as of December
14, 1993, Amendment No. 3 thereto dated as of December 14, 1993,
Amendment No. 4 thereto dated as of July 1, 1994, Amendment No. 5
thereto dated as of March 3, 1995 and Amendment No. 6 thereto
dated as May 31, 1995 (the "Receivables Purchase Agreement"),
among the Company, Sequa Receivables Corp. ("SRC"), Chemical
Bank, as Managing Agent, and the financial institution parties
thereto.
(i) The representations, warranties and covenants made by
the Company and SRC in the Receivables Purchase Agreement and in
the certificates delivered by officers of the Company or SRC (as
the case may be) in connection therewith, are true and correct in
all material respects on and as of the date hereof, with the same
effect as if made on the date hereof, and the Company and SRC
have complied with all agreements and satisfied all conditions to
be performed or satisfied on their part at or prior to the
execution of Amendment No. 6 to the Receivables Purchase
Agreement; and
(ii) As of the date hereof, no event has occurred and is
continuing or will result from the execution, delivery and
performance by the Company or SRC of Amendment No. 6 to the
Receivables Purchase Agreement which constitutes a
Liquidation Event or which, after notice or lapse of time or
both, would constitute a Liquidation Event.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of this ------ day of May, 1995.
Kenneth A. Drucker
Treasurer
<PAGE>
<PAGE>
Schedule 1
SEQUA CORPORATION
OFFICERS'S CERTIFICATE
I, Kenneth A. Drucker, do hereby certify that I am the duly
elected and qualified Vice President and Treasurer of SEQUA
CORPORATION, a Delaware corporation (the "Company"), that I am
authorized to execute this Certificate, and that as of the date
hereof, the following statements ara true and correct.
Capitalized terms used herein but not otherwise defined herein
shall have the meanings assigned thereto in Appendix A to that
certain Amended and Restated Receivables Purchase Agreement dated
June 25, 1993, as amended by Amendment No. 1 thereto dated as of
September 30, 1993, Amendment No. 2 thereto dated as of December
14, 1993, Amendment No. 3 thereto dated as of December 14, 1993,
Amendment No. 4 thereto dated as of July 1, 1994, Amendment No. 5
thereto dated as of March 3, 1995 and Amendment No. 6 thereto
dated as May 31, 1995 (the "Receivables Purchase Agreement"),
among the Company, Sequa Receivables Corp. ("SRC"), Chemical
Bank, as Managing Agent, and the financial institution parties
thereto.
(i) The representations, warranties and covenants made by
the Company and SRC in the Receivables Purchase Agreement and in
the certificates delivered by officers of the Company or SRC (as
the case may be) in connection therewith, are true and correct in
all material respects on and as of the date hereof, with the same
effect as if made on the date hereof, and the Company and SRC
have complied with all agreements and satisfied all conditions to
be performed or satisfied on their part at or prior to the
execution of Amendment No. 6 to the Receivables Purchase
Agreement; and
(ii) As of the date hereof, no event has occurred and is
continuing or will result from the execution, delivery and
performance by the Company or SRC of Amendment No. 6 to the
Receivables Purchase Agreement which constitutes a
Liquidation Event or which, after notice or lapse of time or
both, would constitute a Liquidation Event.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of this 31st day of May, 1995.
Kenneth A. Drucker
Treasurer
