-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RHF3XaSGb3Grq5JMzho/yx4CzSYMkGmdA99APJPASgghI2H/aau/Et5/7je5UE8a F96+v+fqWKSkQ52XUt9Yww== 0000950148-95-000796.txt : 19951119 0000950148-95-000796.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950148-95-000796 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KERR GROUP INC CENTRAL INDEX KEY: 0000055454 STANDARD INDUSTRIAL CLASSIFICATION: GLASS CONTAINERS [3221] IRS NUMBER: 950898810 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07272 FILM NUMBER: 95592168 BUSINESS ADDRESS: STREET 1: 1840 CENTURY PARK EAST CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 3105562200 MAIL ADDRESS: STREET 1: 1840 CENTURY PARK EAST CITY: LOS ANGELES STATE: CA ZIP: 90067 FORMER COMPANY: FORMER CONFORMED NAME: KERR GLASS MANUFACTURING CORP DATE OF NAME CHANGE: 19920518 10-Q 1 QUARTERLY REPORT FOR PERIOD ENDING 9/30/95 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q /X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1995 / / 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 - 7272 KERR GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 95-0898810 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1840 Century Park East, Los Angeles, CA 90067 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (310)556-2200 - ------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last year. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of shares of Registrant's Common Stock, $.50 par value, outstanding as of October 31, 1995 was 3,933,095. - 1 - 2 KERR GROUP, INC. INDEX Page No. Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets - September 30, 1995 and December 31, 1994 3 - 4 Condensed Consolidated Statements of Earnings (Loss) - Three Months and Nine Months Ended September 30, 1995 and 1994 5 Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1995 and 1994 6 Notes to Condensed Consolidated Financial Statements 7 - 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 - 12 Part II. Other Information 13 - 2 - 3 KERR GROUP, INC. Consolidated Balance Sheets As of September 30, 1995 and December 31, 1994 (in thousands except per share data)
(Unaudited) (Audited) September 30, December 31, Assets 1995 1994 - ------ ---- ---- Current assets Cash and cash equivalents $ 271 $ 2,261 Receivables-primarily trade accounts, less allowance for doubtful accounts of $125 at September 30, 1995 and $170 at December 31, 1994 14,259 16,312 Inventories Raw materials and work in process 10,568 11,156 Finished goods 20,145 23,134 --------- --------- Total inventories 30,713 34,290 Prepaid expenses and other current assets 4,033 4,526 --------- --------- Total current assets 49,276 57,389 --------- --------- Property, plant and equipment, at cost 111,114 102,847 Accumulated depreciation and amortization (60,387) (54,506) --------- --------- Net property, plant and equipment 50,727 48,341 --------- --------- Deferred income taxes 2,966 2,192 Goodwill and other intangibles, net of amortization of $2,137 at September 30, 1995 and $1,812 at December 31, 1994 6,970 6,622 Other assets 8,933 9,156 --------- --------- $ 118,872 $ 123,700 ========= =========
See accompanying notes to condensed consolidated financial statements. - 3 - 4 KERR GROUP, INC. Consolidated Balance Sheets As of September 30, 1995 and December 31, 1994 (in thousands except per share data)
(Unaudited) (Audited) September 30, December 31, Liabilities and Stockholders' Equity 1995 1994 - ------------------------------------ --------- --------- Current liabilities Short-term debt $ 5,400 $ 5,500 Accounts payable 10,661 13,445 Accrued expenses 5,113 3,862 --------- --------- Total current liabilities 21,174 22,807 --------- --------- Accrued pension liability 12,364 15,230 Other long-term liabilities 2,750 2,610 Senior long-term debt 50,000 50,000 Stockholders' equity Preferred Stock, 487 shares authorized and issued, at liquidation value of $20 per share 9,748 9,748 Common Stock, $ .50 par value per share, 20,000 shares authorized, 4,226 shares issued at September 30, 1995 and 4,220 shares issued at December 31, 1994 2,113 2,110 Additional paid-in capital 27,239 27,210 Retained earnings 5,604 11,995 Treasury Stock at cost, 293 shares at September 30, 1995 and 543 shares at December 31, 1994 (6,913) (12,803) Excess of additional pension liability over unrecognized prior service cost, net of tax benefits (5,207) (5,207) --------- --------- Total stockholders' equity 32,584 33,053 --------- --------- $ 118,872 $ 123,700 ========= =========
See accompanying notes to condensed consolidated financial statements. - 4 - 5 KERR GROUP, INC. Condensed Consolidated Statements of Earnings (Loss) for the Three Months and Nine Months Ended September 30, 1995 and 1994 (in thousands except per share data)
(Unaudited) (Unaudited) Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1995 1994 1995 1994 ---- ---- ---- ---- Net sales $ 39,021 $ 40,624 $ 111,303 $ 111,008 Cost of sales 30,941 28,617 84,863 76,749 --------- --------- --------- --------- Gross profit 8,080 12,007 26,440 34,259 Selling, warehouse, general and administrative expense 8,549 8,559 25,106 25,337 Interest expense 1,434 1,263 4,460 3,727 Interest and other income (53) (66) (138) (297) --------- --------- --------- --------- Earnings (loss) before income taxes (1,850) 2,251 (2,988) 5,492 Provision (benefit) for income taxes (751) 941 (1,217) 2,320 --------- --------- --------- --------- Net earnings (loss) $ (1,099) $ 1,310 $ (1,771) $ 3,172 Preferred stock dividends 207 207 621 621 --------- --------- --------- --------- Net earnings (loss) applicable to common stockholders $ (1,306) $ 1,103 $ (2,392) $ 2,551 ========= ========= ========= ========= Net earnings (loss) per common share, primary and fully diluted $ (0.33) $ 0.30 $ (0.63) $ 0.69 ========= ========= ========= =========
See accompanying notes to condensed consolidated financial statements. - 5 - 6 KERR GROUP, INC. Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1995 and 1994 (in thousands)
(Unaudited) Nine Months Ended September 30, -------------------- 1995 1994 ---- ---- Cash flows provided (used) by operations - ---------------------------------------- Net earnings (loss) $ (1,771) $ 3,172 Add (deduct) noncash items included in net earnings (loss) Depreciation and amortization 6,571 5,773 Reduction in accrued long-term pension liability (975) (1,576) Change in deferred income taxes (672) 1,794 Other, net 511 225 Changes in other operating working capital Receivables 2,053 (8,085) Inventories 3,577 (1,106) Prepaid expenses 384 594 Accounts payable and accrued expenses (1,318) 2,518 -------- -------- Cash flows provided by operations 8,360 3,309 -------- -------- Cash flows provided (used) by investing activities - -------------------------------------------------- Capital expenditures (8,755) (8,178) Collection of accounts receivable, and payment of accounts payable and accrued and other expenses related to discontinued operations (229) (1,802) Payments associated with relocation of home canning cap and lid operation (205) (2,440) Other, net (472) (276) -------- -------- Cash flows used by investing activities (9,661) (12,696) -------- -------- Cash flows provided (used) by financing activities - -------------------------------------------------- Net borrowings (repayments) under lines of credit (100) 1,000 Dividends paid (621) (621) Other, net 32 605 -------- -------- Cash flows provided (used) by financing activities (689) 984 -------- -------- Cash and cash equivalents - ------------------------- Decrease during the period (1,990) (8,403) Balance at beginning of the period 2,261 11,329 -------- -------- Balance at end of the period $ 271 $ 2,926 ======== ======== Significant Non-Cash Transactions - --------------------------------- Contribution of 250,000 shares of Common Stock to pension plan $ 1,891 $ 0 ======== ========
See accompanying notes to condensed consolidated financial statements - 6 - 7 KERR GROUP, INC. Notes to Condensed Consolidated Financial Statements (Unaudited) 1) General The condensed consolidated financial statements include the accounts of Kerr Group, Inc. and its wholly owned subsidiary (collectively referred to as the Company). In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of September 30, 1995, and the results of operations for the three months and nine months ended September 30, 1995 and 1994, and changes in cash flows for the nine months ended September 30, 1995 and 1994. The results of operations for the first nine months of 1995 are not necessarily indicative of the results to be expected for the full year. 2) Earnings Per Share Fully diluted earnings per common share reflect when dilutive, 1) the incremental common shares issuable upon the assumed exercise of outstanding stock options, and 2) the assumed conversion of the Preferred Stock and the elimination of the related Preferred Stock dividends. The calculation of fully diluted net earnings (loss) per common share for the three months and nine months ended September 30, 1995 and 1994 was not dilutive. 3) Receivables Receivables as of September 30, 1995, as shown on the accompanying Consolidated Balance Sheet, have been reduced by $6,449,000 of net proceeds from the sale of receivables under the Company's Accounts Receivable Facility. 4) Financing and Liquidity As of September 30, 1995, the Company had short-term financing of $20,000,000 which included (i) an Accounts Receivable Facility maturing on January 18, 1997 under which the maximum amount that can be advanced to the Company pursuant to the sale of trade accounts receivable is $10,000,000 (the "Receivables Facility") and (ii) an unsecured $10,000,000 line of credit committed through April 30, 1996 (the "Line of Credit"). On October 10, 1995, the Company retained Lehman Brothers to review strategic alternatives to maximize shareholder value, including the sale of certain assets or all of the Company. The Board of Directors determined to retain Lehman Brothers because of consolidations occurring in the packaging industry. Lehman Brothers is currently in the process of disseminating information about the Company to prospective purchasers who have requested the information. No assurance can be given that any transaction will be proposed or, if proposed, that the terms of any such transaction will be acceptable to the Company or to its stockholders. - 7 - 8 On October 24, 1995, the lender under the Line of Credit reduced the Line of Credit from $10,000,000 to $6,500,000, which was then the approximate outstanding amount under the Line of Credit. The Company's total short-term financing was thus reduced from $20,000,000 to approximately $16,500,000. The Line of Credit was reduced by the lender due to a decline in the Company's financial performance. The Company is currently in discussions with prospective lenders, including present lenders to the Company, to restore the Company's total short-term financing to $20,000,000. The lender under the Receivables Facility has agreed in principle to provide an additional $3,500,000 of short-term financing under such facility. Advances under such amended receivables facility would be subject to certain limitations. The Company expects that it will be in violation of certain financial covenants under its Senior Note Agreement by December 31, 1995. The Company is currently in discussions with its lenders (collectively, the "Lenders") under its Senior Note Agreement, Line of Credit and Receivables Facility (collectively, the "Loan Facilities") concerning waivers to avoid a prospective default in regard to these financial covenants. Although the Company has received the approval of the Lenders to amend the Loan Facilities to eliminate a prospective default with regard to financial covenants on two other occasions, there can be no assurance that the Lenders will agree to amend the Loan Facilities or to grant waivers to avoid a prospective default with regard to these financial covenants at this time. If the Loan Facilities are in default, the Lenders would be entitled to exercise certain remedies, including the acceleration of the borrowings under the Loan Facilities. Borrowings under the Line of Credit and the Senior Note Agreement are unsecured. Based on the Company's past experience in obtaining waivers or amendments of the Loan Facilities and because the Company has retained Lehman Brothers as noted above, the Company believes that even if the Lenders do not agree to amend the Loan Facilities to eliminate the prospective default, or to waive any defaults thereunder, the Lenders will not accelerate the Loan Facilities or otherwise exercise remedies thereunder. Since the Line of Credit expires on April 30, 1996, the Company will need to extend the maturity of the Line of Credit or refinance it on or before such date. Whether such financing can be obtained will depend upon the financial condition of the Company at that time. However, there is no assurance that the Lender under the Line of Credit will agree to an extension of the maturity date or that other sources of financing will be available on terms acceptable to the Company. 5) Common Stock During July 1995, the Company adopted a shareholders rights plan (Rights Plan), pursuant to which a dividend distribution of one Right was made for each outstanding share of Kerr Common Stock. Each Right entitles the holder to purchase a unit consisting of one one-thousandth of a share of a new issue of preferred stock, or, upon the occurrence of certain events, to purchase Kerr Common Stock at a 50% discount to the then current market price of the stock. The Rights Plan is intended to protect the interests of the Company's stockholders in the event the Company is confronted with coercive or unfair takeover tactics. - 8 - 9 KERR GROUP, INC. Computation of Earnings (Loss) Per Common Share (in thousands except per share data)
(Unaudited) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ---------------------- 1995 1994 1995 1994 ---- ---- ---- ---- Primary Net Earnings (Loss) Per Common Share - -------------------------------------------- Net earnings (loss) $(1,099) $ 1,310 $ (1,771) $ 3,172 Less Preferred Stock dividends (207) (207) (621) (621) ------- ------- ---------- ------- Net earnings (loss) applicable to primary earnings per common share $(1,306) $ 1,103 $ (2,392) $ 2,551 ======= ======= ========== ======= Weighted average number of common shares outstanding 3,933 3,677 3,812 3,673 ======= ======= ========== ======= Primary net earnings (loss) per common share $ (0.33) $ 0.30 $ (0.63) $ 0.69 ======= ======= ========== ======= Fully Diluted Net Earnings (Loss) Per Common Share - -------------------------------------------------- Net earnings (loss) applicable to primary earnings per common share $(1,306) $ 1,103 $ (2,392) $ 2,551 Add Preferred Stock dividends 207 207 621 621 ------- ------- ---------- ------- Net earnings (loss) applicable to fully diluted earnings per common share $(1,099) $ 1,310 $ (1,771) $ 3,172 ======= ======= ========== ======= Weighted average number of common shares outstanding 3,933 3,677 3,812 3,673 Common shares issuable upon assumed conversion of Preferred Stock 709 709 709 709 Incremental common shares issuable upon assumed exercise of outstanding stock options 17 22 20 22 ------- ------- ---------- ------- Adjusted weighted average number of common shares outstanding 4,659 4,408 4,541 4,404 ======= ======= ========== ======= Fully diluted net earnings (loss) per common share: As computed $ (0.24) $ 0.30 $ (0.39) $ 0.72 ======= ======= ========== ======= As reported(a) $ (0.33) $ 0.30 $ (0.63) $ 0.69 ======= ======= ========== =======
(a) The calculation of fully diluted net earnings (loss) per common share for the three months and nine months ended September 30, 1995 and 1994 was not dilutive. -9- 10 KERR GROUP, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three Months and Nine Months Ended September 30, 1995 and 1994 Results of Operations Net sales for the three months ended September 30, 1995 were $39,021,000 as compared to $40,624,000 for the three months ended September 30, 1994, a decrease of $1,603,000 or 4%. The decrease in net sales for the three months ended September 30, 1995 over the comparable period in 1994 was due to lower sales of home canning supplies because of adverse growing conditions. Net sales for the nine months ended September 30, 1995 were $111,303,000 as compared to $111,008,000 for the nine months ended September 30, 1994, an increase of $295,000 or less than 1%. The increase in net sales for the nine months ended September 30, 1995 over the comparable period in 1994 was due to higher sales in the Plastic Products Business. Cost of sales for the three months ended September 30, 1995 were $30,941,000 as compared to $28,617,000 for the three months ended September 30, 1994, an increase of $2,324,000 or 8%. The increase in the 1995 period over the comparable period in 1994 was due primarily to higher resin and other raw material costs in the Plastic Products Business. Cost of sales for the nine months ended September 30, 1995 were $84,863,000 as compared to $76,479,000 for the nine months ended September 30, 1994, an increase of $8,114,000 or 11%. The increase in the 1995 period over the comparable period in 1994 was due primarily to higher resin and other raw material costs in the Plastic Products Business, and higher raw material costs and the sale of higher cost inventory produced during 1994 in the Consumer Products Business. Gross profit as a percent of net sales for the three months ended September 30, 1995 decreased to 21% as compared to 30% for the three months ended September 30, 1994. Gross profit as a percent of net sales for the nine months ended September 30, 1995 decreased to 24% as compared to 31% for the nine months ended September 30, 1994. The decrease in gross profit as a percent of net sales for both periods in 1995 over the comparable periods in 1994 was attributable primarily to cost-price pressures, including substantially higher resin costs, in the Plastic Products Business and the sale of higher cost inventory produced in 1994 in the Consumer Products Business. Selling, warehouse, general and administrative expenses decreased $10,000 or less than 1% during the three months ended September 30, 1995, as compared to the same period in 1994. Selling, warehouse, general and administrative expenses decreased $231,000 or 1% during the nine months ended September 30, 1995, as compared to the same period in 1994. Net interest expense increased $184,000 and $892,000 during the three month and nine month periods ended September 30, 1995, as compared to the same periods in 1994, respectively, primarily as a result of higher levels of short-term financing and higher interest rates. Earnings before income taxes decreased $4,101,000 and $8,480,000 during the three month and nine month periods ended September 30, 1995 as compared to the same periods in 1994, respectively, due primarily to lower earnings in the Plastic Products and Consumer Products Businesses and higher interest expense. Earnings in the Plastic Products Business were adversely impacted by continued cost-price pressures, including substantially higher resin costs. Earnings in the Consumer Products Business declined due primarily to lower sales volume and the sale of higher cost inventory produced during 1994. The provision for income taxes decreased $1,692,000 and $3,537,000 during the three month and nine month periods ended September 30, 1995 as compared to the same periods in 1994, respectively, due to lower pretax earnings. - 10 - 11 Sales and earnings of the home canning supplies business are higher in the second and third quarters and lower in the first and fourth quarters because of the seasonal nature of the business. Financial Condition During the first nine months of 1995, cash flow of $8,360,000 was provided by operations, which includes cash flow of $6,449,000 related to net proceeds from the sale of receivables under the Company's Accounts Receivable Facility. The principal use of cash flow was to fund investing activities, primarily capital expenditures of $8,755,000. During the first nine months of 1994 cash flow of $3,309,000 was provided by operations. The principal use of cash flow was to fund investing activities, primarily capital expenditures of $8,178,000. Cash flow was also provided through the reduction of the Company's cash balances of $8,403,000 and net borrowings under lines of credit of $1,000,000. On May 10, 1995, the Company contributed 250,000 shares of its Common Stock, at a price of $7.56 per share, to the Kerr Group, Inc. Retirement Income Plan. The contribution reduced Kerr's pension liability by $1,891,000. Since the third quarter of 1990, the Company has not declared any dividends on its Common Stock. The Company's Senior Note Agreement, Accounts Receivable Facility and line of credit limit the payment of dividends on Common Stock. Under the most restrictive covenant of such agreements, the payment of dividends on Common Stock is not permitted as of September 30, 1995. The ratio of current assets to current liabilities decreased to 2.3 at September 30, 1995 from 2.5 at December 31, 1994. The ratio of total debt to total capitalization was 63% at September 30, 1995 and December 31, 1994. As of September 30, 1995, the Company had short-term financing of $20,000,000 which included (i) an Accounts Receivable Facility maturing on January 18, 1997 under which the maximum amount that can be advanced to the Company pursuant to the sale of trade accounts receivable is $10,000,000 (the "Receivables Facility") and (ii) an unsecured $10,000,000 line of credit committed through April 30, 1996 (the "Line of Credit"). At September 30,1995, the Company had unused sources of liquidity consisting of cash and cash equivalents of $271,000, unused committed credit under the Line of Credit of $4,600,000, of which $3,122,000 could be borrowed under the terms of the Company's Senior Note Agreement, and additional advances under the Receivables Facility of $3,551,000 of which $2,240,000 was available. In addition, the Company has tax net operating loss carryforwards of $4,686,000, and certain tax credit carryforwards of $1,137,000. On October 10, 1995, the Company retained Lehman Brothers to review strategic alternatives to maximize shareholder value, including the sale of certain assets or all of the Company. The Board of Directors determined to retain Lehman Brothers because of consolidations occurring in the packaging industry. Lehman Brothers is currently in the process of disseminating information about the Company to prospective purchasers who have requested the information. No assurance can be given that any transaction will be proposed or, if proposed, that the terms of any such transaction will be acceptable to the Company or to its stockholders. On October 24, 1995, the lender under the Line of Credit reduced the Line of Credit from $10,000,000 to $6,500,000, which was then the approximate outstanding amount under the Line of Credit. The Company's total short-term financing was thus reduced from $20,000,000 to approximately $16,500,000. The Line of Credit was reduced by the lender due to a decline in the Company's financial performance. The Company is currently in discussions with prospective lenders, including present lenders to the Company, to restore the Company's total short-term financing to $20,000,000. The lender under the Receivables Facility has agreed in principle to provide an additional $3,500,000 of short-term financing under such facility. Advances under such amended receivables facility would be subject to certain limitations. - 11 - 12 The Company expects that it will be in violation of certain financial covenants under its Senior Note Agreement by December 31, 1995. The Company is currently in discussions with its lenders (collectively, the "Lenders") under its Senior Note Agreement, Line of Credit and Receivables Facility (collectively, the "Loan Facilities") concerning waivers to avoid a prospective default in regard to these financial covenants. Although the Company has received the approval of the Lenders to amend the Loan Facilities to eliminate a prospective default with regard to financial covenants on two other occasions, there can be no assurance that the Lenders will agree to amend the Loan Facilities or to grant waivers to avoid a prospective default with regard to these financial covenants at this time. If the Loan Facilities are in default, the Lenders would be entitled to exercise certain remedies, including the acceleration of the borrowings under the Loan Facilities. Borrowings under the Line of Credit and the Senior Note Agreement are unsecured. Based on the Company's past experience in obtaining waivers or amendments of the Loan Facilities and because the Company has retained Lehman Brothers as noted above, the Company believes that even if the Lenders do not agree to amend the Loan Facilities to eliminate the prospective default, or to waive any defaults thereunder, the Lenders will not accelerate the Loan Facilities or otherwise exercise remedies thereunder. Since the Line of Credit expires on April 30, 1996, the Company will need to extend the maturity of the Line of Credit or refinance it on or before such date. Whether such financing can be obtained will depend upon the financial condition of the Company at that time. However, there is no assurance that the Lender under the Line of Credit will agree to an extension of the maturity date or that other sources of financing will be available on terms acceptable to the Company. Assuming the maturity date of the Line of Credit is extended or the Line of Credit is refinanced, the Company believes that its financial resources, including internally generated funds and amounts available under its Receivables Facility, are adequate to meet its needs for the foreseeable future. - 12 - 13 PART II - OTHER INFORMATION Item 1. Legal Proceedings In October 1995, Canadian regulatory authorities determined that Kerr had been dumping home canning products in Canada, and that such dumping had caused injury to Canadian producers. As a result of this determination, Kerr expects that it will be required to increase its prices for home canning products in Canada in 1996. The determination by the Canadian regulatory authorities will have no impact on previous sales by Kerr into Canada. Item 6. Exhibits and Reports on Form 8-K a. Exhibits 10.5 Amendment dated September 25, 1995 of the Note Agreement dated as of September 15, 1993 between Kerr Group, Inc. and the Purchasers identified therein. 10.6 Consent to amendment dated September 25, 1995 pursuant to the Receivables Purchase Agreement dated as of January 19, 1995 between Kerr Group, Inc., as the seller, and PNC Bank, N.A., as the purchaser. 10.7 Consent to amendment dated September 29, 1995 pursuant to Line of Credit between Bank of Boston and Kerr Group, Inc. b. Reports on Form 8-K On July 24, 1995, the Company filed a Form 8-K Current Report with respect to the Company's shareholder rights plan. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KERR GROUP, INC. November 13, 1995 By /s/ D.Gordon Strickland ----------------------------------- D. Gordon Strickland Senior Vice President, Finance, Chief Financial Officer November 13, 1995 By /s/ J. Stephen Grassbaugh ----------------------------------- J. Stephen Grassbaugh Vice President, Controller, Chief Accounting Officer - 13 - EX-10.5 2 EXHIBIT 10.5 - AMENDMENT OF THE NOTE AGREEMENT 1 EXHIBIT 10.5 [KERR LOGO] To: Each Holder of 9.45% Series A Senior Notes due September 15, 2003 and Each Holder of 8.99% Series B Senior Notes due September 15, 1999 of Kerr Group, Inc. Date: September 25, 1995 Reference is hereby made to the several Note Agreements, dated as of September 15, 1993 (the "Note Agreements"), between Kerr Group, Inc. (the "Company") and each of the purchasers listed on the Schedule of Purchasers attached to said Note Agreements (the "Purchasers"), relating to the issue and sale by the Company of its 9.45% Series A Senior Notes due September 15, 2003 and its 8.99% Series B Senior Notes due September 15, 1999 (collectively, the "Notes"). Capitalized terms used herein and not otherwise defined have the meanings ascribed thereto in the Note Agreements. I. Amendment Subject to the conditions set forth herein, the Note Agreements are hereby amended as follows: A. Section 10.1 of the Note Agreements is hereby amended and restated in its entirety to read as follows: 10.1 Fixed Charge Coverage Ratio. The Company will not at any time on or after December 31, 1993, permit the Fixed Charge Coverage Ratio for the four consecutive fiscal quarters most recently ended (i.e., a "rolling" four quarters) to be less than the ratios indicated below for the periods indicated:
Minimum Fixed Charge Periods Coverage Ratio ------------------------------------- -------------- Dec. 31, 1993 - June 30, 1994 1.20 to 1 July 1, 1994 - June 30, 1995 1.30 to 1 July 1, 1995 - June 30, 1996 1.00 to 1 July 1, 1996 - Sept. 30, 1996 1.40 to 1 Oct. 1, 1996 - Dec. 31, 1996 1.50 to 1 Jan. 1, 1997 - June 30, 1997 1.60 to 1 July 1, 1997 - June 30, 2003 1.75 to 1
2 B. Section 10.9 of the Note Agreements is hereby amended and restated in its entirety to read as follows: 10.9 Ratio of Debt to Adjusted Tangible Net Worth. The Company will not at any time permit the ratio of the total Debt of the Company to Adjusted Tangible Net Worth to exceed the following ratios for the indicated periods:
Periods Maximum Ratio ---------------------------------- ------------- Sept. 15, 1993 - Nov. 30, 1993 1.85 to 1 Dec. 1, 1993 - Feb. 28, 1994 1.95 to 1 Mar. 1, 1994 - Aug. 31, 1994 2.00 to 1 Sept. 1, 1994 - Nov. 30, 1994 1.85 to 1 Dec. 1, 1994 - June 30, 1995 1.95 to 1 July 1, 1995 - Nov. 30, 1995 1.80 to 1 Dec. 1, 1995 - Aug. 31, 1996 1.95 to 1 Sept. 1, 1996 - Dec. 31, 1996 1.70 to 1 Jan. 1, 1997 - June 30, 1997 1.85 to 1 July 1, 1997 - Nov. 30, 1997 1.50 to 1 Dec. 1, 1997 - June 30, 1998 1.80 to 1 during each year thereafter July 1 - Nov. 30 1.50 to 1 Dec. 1 - June 30 1.80 to 1
II. Miscellaneous A. Limited Nature of Agreement. The amendments and modifications to the Note Agreements set forth above do not and shall not, now or in the future, either implicitly or explicitly (a) alter, waive or amend, except as expressly provided herein, any provision of the Note Agreements, or (b) impair any right or remedy of any purchaser under the Note Agreements with respect to any violation of any provision of the Note Agreements. The provisions hereof do not waive, now or in the future, compliance with any covenant, term or condition to be performed or complied with nor do they impair any rights or remedies of any Purchaser under the Note Agreements, as amended hereby, with respect to any such violation. B. Note Agreements Remain in Effect. Except as expressly provided herein, all provisions, terms and conditions of the Note Agreements shall remain in full force and effect. As amended hereby, the Note Agreements are ratified and confirmed in all respects. - 2 - 3 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: /s/ Stephen J. Blewitt -------------------------------------- BARNETT & CO. By: -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: -------------------------------------- - 3 - 4 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: /s/ Stephen J. Blewitt -------------------------------------- BARNETT & CO. By: /s/ Richard McCormick -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: -------------------------------------- - 3 - 5 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- BARNETT & CO. By: -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: /s/ Gianfranco Capasso -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: -------------------------------------- - 3 - 6 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- BARNETT & CO. By: -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: /s/ Richard C. Morrison -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: /s/ Richard C. Morrison -------------------------------------- - 3 - EX-10.6 3 EXHIBIT 10.6 - CONSENT TO AMENDMENT DATED 9/25/95 1 EXHIBIT 10.6 PNC BANK, N.A. National Corporate Banking 55 S. Lake Avenue, Suite 650 Pasadena, CA 91101 September 25, 1995 KERR GROUP, INC. 1840 Century Park East Los Angeles, California 90067 Ladies and Gentlemen: Reference is hereby made to (i) that certain Receivables Purchase Agreement, dated as of January 19, 1995 (the "Receivables Purchase Agreement"), between the Bank and the Company, (ii) the several Note Agreements, dated as of September 15, 1993 (the "Note Agreements"), between the Company and each of the purchasers listed on the Schedule of Purchasers attached to such Note Agreements (the "Purchasers"), relating to the sale by the Company of its 9.45% Series A Senior Notes due September 15, 2003 and its 8.99% Series B Notes due September 15, 1999, and (iii) that certain letter agreement, dated September 25, 1995, in the form attached hereto as Exhibit A (the "Letter Agreement"), between the Company and the Purchasers. The Bank hereby acknowledges receipt of the Letter Agreement, and hereby consents to the amendments to the Note Agreements set forth in the Letter Agreement. Notwithstanding any provision in the Note or the Receivables Purchase Agreement to the contrary, any reference to the Note Agreements contained in the Note and the Receivables Purchase Agreement shall mean the Note Agreements as amended thereby. This consent shall not alter, waive or amend, except as expressly provided herein, any provision of the Note or the Receivables Purchase Agreement or impair any right or remedy of the Bank with respect to any violation of any provision thereunder, and shall not constitute a waiver of compliance with any covenant, term or condition to be performed or complied with thereunder. Except as expressly provided herein, all provision, terms and condition of each of the Note and the Receivables Purchase Agreement shall remain in full force and effect, and each of the Note and the Receivables Purchase Agreement is ratified and confirmed in all respects. Very truly yours, PNC BANK, NATIONAL ASSOCIATION By: /s/ Cynthia G. Osofsky ------------------------ Cynthia G. Osofsky Senior Vice President and Regional Manager ACKNOWLEDGED AND AGREED: KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ----------------------------------- Name: Geoffrey A. Whynot Title: Treasurer 2 [KERR LETTERHEAD] To: Each Holder of 9.45% Series A Senior Notes due September 15, 2003 and Each Holder of 8.99% Series B Senior Notes due September 15, 1999 of Kerr Group, Inc. Date: September 25, 1995 Reference is hereby made to the several Note Agreements, dated as of September 15, 1993 (the "Note Agreements"), between Kerr Group, Inc. (the "Company") and each of the purchasers listed on the Schedule of Purchasers attached to said Note Agreements (the "Purchasers"), relating to the issue and sale by the Company of its 9.45% Series A Senior Notes due September 15, 2003 and its 8.99% Series B Senior Notes due September 15, 1999 (collectively, the "Notes"). Capitalized terms used herein and not otherwise defined have the meanings ascribed thereto in the Note Agreements. I. Amendment Subject to the conditions set forth herein, the Note Agreements are hereby amended as follows: A. Section 10.1 of the Note Agreements is hereby amended and restated in its entirety to read as follows: 10.1 Fixed Charge Coverage Ratio. The Company will not at any time on or after December 31, 1993, permit the Fixed Charge Coverage Ratio for the four consecutive fiscal quarters most recently ended (i.e., a "rolling" four quarters) to be less than the ratios indicated below for the periods indicated:
Minimum Fixed Charge Periods Coverage Ratio ------------------------------------- -------------- Dec. 31, 1993 - June 30, 1994 1.20 to 1 July 1, 1994 - June 30, 1995 1.30 to 1 July 1, 1995 - June 30, 1996 1.00 to 1 July 1, 1996 - Sept. 30, 1996 1.40 to 1 Oct. 1, 1996 - Dec. 31, 1996 1.50 to 1 Jan. 1, 1997 - June 30, 1997 1.60 to 1 July 1, 1997 - June 30, 2003 1.75 to 1
3 B. Section 10.9 of the Note Agreements is hereby amended and restated in its entirety to read as follows: 10.9 Ratio of Debt to Adjusted Tangible Net Worth. The Company will not at any time permit the ratio of the total Debt of the Company to Adjusted Tangible Net Worth to exceed the following ratios for the indicated periods:
Periods Maximum Ratio ----------------------------------- ------------- Sept. 15, 1993 - Nov. 30, 1993 1.85 to 1 Dec. 1, 1993 - Feb. 28, 1994 1.95 to 1 Mar. 1, 1994 - Aug. 31, 1994 2.00 to 1 Sept. 1, 1994 - Nov. 30, 1994 1.85 to 1 Dec. 1, 1994 - June 30, 1995 1.95 to 1 July 1, 1995 - Nov. 30, 1995 1.80 to 1 Dec. 1, 1995 - Aug. 31, 1996 1.95 to 1 Sept. 1, 1996 - Dec. 31, 1996 1.70 to 1 Jan. 1, 1997 - June 30, 1997 1.85 to 1 July 1, 1997 - Nov. 30, 1997 1.50 to 1 Dec. 1, 1997 - June 30, 1998 1.80 to 1 during each year thereafter July 1 - Nov. 30 1.50 to 1 Dec. 1 - June 30 1.80 to 1
II. Miscellaneous A. Limited Nature of Agreement. The amendments and modifications to the Note Agreements set forth above do not and shall not, now or in the future, either implicitly or explicitly (a) alter, waive or amend, except as expressly provided herein, any provision of the Note Agreements, or (b) impair any right or remedy of any purchaser under the Note Agreements with respect to any violation of any provision of the Note Agreements. The provisions hereof do not waive, now or in the future, compliance with any covenant, term or condition to be performed or complied with nor do they impair any rights or remedies of any Purchaser under the Note Agreements, as amended hereby, with respect to any such violation. B. Note Agreements Remain in Effect. Except as expressly provided herein, all provisions, terms and conditions of the Note Agreements shall remain in full force and effect. As amended hereby, the Note Agreements are ratified and confirmed in all respects. - 2 - 4 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: /s/ Stephen J. Blewitt -------------------------------------- BARNETT & CO. By: -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: -------------------------------------- - 3 - 5 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: /s/ Stephen J. Blewitt -------------------------------------- BARNETT & CO. By: /s/ Richard McCormick -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: -------------------------------------- - 3 - 6 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- BARNETT & CO. By: -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: /s/ Gianfranco Capasso -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: -------------------------------------- - 3 - 7 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- BARNETT & CO. By: -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: /s/ Richard C. Morrison -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: /s/ Richard C. Morrison -------------------------------------- - 3 - EX-10.7 4 EXHIBIT 10.7 - CONSENT TO AMENDMENT DATED 9/29/95 1 EXHIBIT 10.7 BANK OF BOSTON September 29, 1995 KERR GROUP, INC. 1840 Century Park East Los Angeles, California 90067 Ladies and Gentlemen: Reference is hereby made to (i) that certain letter dated February 9, 1995, between The First National Bank of Boston (the "Bank") and Kerr Group, Inc., a Delaware corporation (the "Company"), (ii) that certain Commercial Promissory Note, dated February 1, 1995, in the principal amount of $10,000,000 (the "Note"), executed by the Company in favor of the Bank, (iii) the several Note Agreements, dated as of September 15, 1993 (the "Note Agreements"), between the Company and each of the purchasers listed on the Schedule of Purchasers attached to such Note Agreements (the "Purchasers"), relating to the sale by the Company of its 9.45% Series A Senior Notes due September 15, 2003 and its 8.99% Series B Notes due September 15, 1999, and (iv) that certain letter agreement, dated September 25, 1995, in the form attached hereto as Exhibit A (the "Letter Agreement"), between the Company and the Purchasers. The Bank hereby acknowledges receipt of the Letter Agreement, and hereby consents to the amendments to the Note Agreements set forth in the Letter Agreement. Notwithstanding any provision in the Note or the Receivables Purchase Agreement to the contrary, any reference to the Note Agreements contained in the Note and the Receivables Purchase Agreement shall mean the Note Agreements as amended thereby. This consent shall not alter, waive or amend, except as expressly provided herein, any provision of the Note or impair any right or remedy of the Bank with respect to any violation of any provision of the Note, and shall not constitute a waiver of compliance with any covenant, term or condition to be performed or complied with under the Note. Except as expressly provided herein, all provisions, terms and conditions of each of the Note shall remain in full force and effect, and the Note is ratified and confirmed in all respects. Very truly yours, FIRST NATIONAL BANK OF BOSTON By: /s/ S. Karen Langstaff ----------------------- Name: S. Karen Langstaff Title: Director ACKNOWLEDGED AND AGREED: KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ----------------------------------- Name: Geoffrey A. Whynot Title: Treasurer 2 [KERR LETTERHEAD] To: Each Holder of 9.45% Series A Senior Notes due September 15, 2003 and Each Holder of 8.99% Series B Senior Notes due September 15, 1999 of Kerr Group, Inc. Date: September 25, 1995 Reference is hereby made to the several Note Agreements, dated as of September 15, 1993 (the "Note Agreements"), between Kerr Group, Inc. (the "Company") and each of the purchasers listed on the Schedule of Purchasers attached to said Note Agreements (the "Purchasers"), relating to the issue and sale by the Company of its 9.45% Series A Senior Notes due September 15, 2003 and its 8.99% Series B Senior Notes due September 15, 1999 (collectively, the "Notes"). Capitalized terms used herein and not otherwise defined have the meanings ascribed thereto in the Note Agreements. I. Amendment Subject to the conditions set forth herein, the Note Agreements are hereby amended as follows: A. Section 10.1 of the Note Agreements is hereby amended and restated in its entirety to read as follows: 10.1 Fixed Charge Coverage Ratio. The Company will not at any time on or after December 31, 1993, permit the Fixed Charge Coverage Ratio for the four consecutive fiscal quarters most recently ended (i.e., a "rolling" four quarters) to be less than the ratios indicated below for the periods indicated:
Minimum Fixed Charge Periods Coverage Ratio ------------------------------------- -------------- Dec. 31, 1993 - June 30, 1994 1.20 to 1 July 1, 1994 - June 30, 1995 1.30 to 1 July 1, 1995 - June 30, 1996 1.00 to 1 July 1, 1996 - Sept. 30, 1996 1.40 to 1 Oct. 1, 1996 - Dec. 31, 1996 1.50 to 1 Jan. 1, 1997 - June 30, 1997 1.60 to 1 July 1, 1997 - June 30, 2003 1.75 to 1
3 B. Section 10.9 of the Note Agreements is hereby amended and restated in its entirety to read as follows: 10.9 Ratio of Debt to Adjusted Tangible Net Worth. The Company will not at any time permit the ratio of the total Debt of the Company to Adjusted Tangible Net Worth to exceed the following ratios for the indicated periods:
Periods Maximum Ratio ----------------------------------- ------------ Sept. 15, 1993 - Nov. 30, 1993 1.85 to 1 Dec. 1, 1993 - Feb. 28, 1994 1.95 to 1 Mar. 1, 1994 - Aug. 31, 1994 2.00 to 1 Sept. 1, 1994 - Nov. 30, 1994 1.85 to 1 Dec. 1, 1994 - June 30, 1995 1.95 to 1 July 1, 1995 - Nov. 30, 1995 1.80 to 1 Dec. 1, 1995 - Aug. 31, 1996 1.95 to 1 Sept. 1, 1996 - Dec. 31, 1996 1.70 to 1 Jan. 1, 1997 - June 30, 1997 1.85 to 1 July 1, 1997 - Nov. 30, 1997 1.50 to 1 Dec. 1, 1997 - June 30, 1998 1.80 to 1 during each year thereafter July 1 - Nov. 30 1.50 to 1 Dec. 1 - June 30 1.80 to 1
II. Miscellaneous A. Limited Nature of Agreement. The amendments and modifications to the Note Agreements set forth above do not and shall not, now or in the future, either implicitly or explicitly (a) alter, waive or amend, except as expressly provided herein, any provision of the Note Agreements, or (b) impair any right or remedy of any purchaser under the Note Agreements with respect to any violation of any provision of the Note Agreements. The provisions hereof do not waive, now or in the future, compliance with any covenant, term or condition to be performed or complied with nor do they impair any rights or remedies of any Purchaser under the Note Agreements, as amended hereby, with respect to any such violation. B. Note Agreements Remain in Effect. Except as expressly provided herein, all provisions, terms and conditions of the Note Agreements shall remain in full force and effect. As amended hereby, the Note Agreements are ratified and confirmed in all respects. - 2 - 4 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: /s/ Stephen J. Blewitt -------------------------------------- BARNETT & CO. By: -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: -------------------------------------- - 3 - 5 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: /s/ Stephen J. Blewitt -------------------------------------- BARNETT & CO. By: /s/ Richard McCormick -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: -------------------------------------- - 3 - 6 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- BARNETT & CO. By: -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: /s/ Gianfranco Capasso --------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: -------------------------------------- - 3 - 7 C. Counterparts. This letter may be executed in any number of counterparts, each of which when executed and delivered shall be an original, but all of which together shall constitute one and the same instrument. D. Governing Law. This letter shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York, including all matters of construction, validity and performance. In consideration of your execution and delivery of this letter, the Company agrees to pay to you, upon such execution and delivery by all of the Purchasers, a fee in aggregate sum of $150,000 allocated in proportion to each Purchaser's respective principle amount. If you are in agreement with the foregoing, please sign the accompanying counterparts of this letter and return one of the same to the Company, whereupon this letter shall become a binding agreement between you and the Company. Very truly yours, KERR GROUP, INC. By: /s/ Geoffrey A. Whynot ------------------------------ Title: Vice President, Treasurer The foregoing Agreement is hereby agreed to as of the date thereof. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY By: -------------------------------------- BARNETT & CO. By: -------------------------------------- NEW YORK LIFE INSURANCE COMPANY By: -------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: /s/ Richard C. Morrison -------------------------------------- MASSMUTUAL/CARLSON CBO, N.V. By: /s/ Richard C. Morrison -------------------------------------- - 3 - EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 271 0 14,259 125 30,713 49,276 111,114 60,387 118,872 21,174 50,000 2,113 0 9,748 20,723 118,872 111,303 111,441 84,863 84,863 25,106 0 4,460 (2,988) (1,217) (1,771) 0 0 0 (1,771) (0.63) (0.63)
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