-----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, OGCgem39yxpD1YS0aKuoTMhf0PPXW4AMnQpHCyOmqHuFqOcjWFPGiIaOdt2YRwAU mC8l/Fa/NFvHqTnYbWXsQg== 0000950137-96-000687.txt : 19960517 0000950137-96-000687.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950137-96-000687 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: US CAN CORP CENTRAL INDEX KEY: 0000895726 STANDARD INDUSTRIAL CLASSIFICATION: METAL CANS [3411] IRS NUMBER: 061094196 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13678 FILM NUMBER: 96565604 BUSINESS ADDRESS: STREET 1: 900 COMMERCE DR STREET 2: SUITE 302 CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7085712500 MAIL ADDRESS: STREET 1: 900 COMMERCE DRIVE CITY: OAK BROOK STATE: IL ZIP: 60521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED STATES CAN COMPANY /DE/ CENTRAL INDEX KEY: 0000880657 STANDARD INDUSTRIAL CLASSIFICATION: METAL CANS [3411] IRS NUMBER: 061145011 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-43734 FILM NUMBER: 96565605 BUSINESS ADDRESS: STREET 1: 900 COMMERCE DR STREET 2: SUITE 302 CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7085712500 MAIL ADDRESS: STREET 1: 900 COMMERCE DRIVE CITY: OAK BROOK STATE: IL ZIP: 60521 10-Q 1 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q JOINT QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 COMMISSION FILE NUMBER 0-21314 COMMISSION FILE NUMBER 33-43734 U.S. CAN CORPORATION UNITED STATES CAN COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) IN ITS CHARTER) 06-1094196 06-1145011 (I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.) DELAWARE DELAWARE (STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION) 900 COMMERCE DRIVE 900 COMMERCE DRIVE OAK BROOK, ILLINOIS 60521 OAK BROOK, ILLINOIS 60521 (ADDRESS OF PRINCIPAL EXECUTIVE (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) OFFICES, INCLUDING ZIP CODE) (708) 571-2500 (708) 571-2500 (REGISTRANT'S TELEPHONE NUMBER, (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) INCLUDING AREA CODE) Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No --- ---- (Explanatory Note: United States Can Company is not required by Section 13 or 15(d) of the Exchange Act to file such reports, but has agreed, pursuant to the Indenture under which its 13 1/2% Senior Subordinated Notes Due 2002 were issued, to file all reports required by Section 13 or 15(d) whether or not required by law.) As of April 30, 1996, 12,895,171 shares of U.S. Can Corporation's common stock were outstanding. As of April 30, 1996, 1,000 shares of United States Can Company's common stock were outstanding. 2 U.S. CAN CORPORATION UNITED STATES CAN COMPANY FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996 TABLE OF CONTENTS PART I FINANCIAL INFORMATION Page ---- Item 1. Financial Statements (Unaudited) U.S. Can Corporation Condensed Consolidated Balance Sheets March 31, 1996 and December 31, 1995 ....................................... 3 United States Can Company Condensed Balance Sheets March 31, 1996 and December 31, 1995 ....................................... 4 U.S. Can Corporation Condensed Consolidated Statements of Operations Quarterly Periods Ended March 31, 1996 and April 2, 1995 ................... 5 United States Can Company Condensed Statements of Operations Quarterly Periods Ended March 31, 1996 and April 2, 1995 ................... 6 U.S. Can Corporation Condensed Consolidated Statements of Cash Flows Quarterly Periods Ended March 31, 1996 and April 2, 1995 ................... 7 United States Can Company Condensed Statements of Cash Flows Quarterly Periods Ended March 31, 1996 and April 2, 1995 ................... 8 Notes to Condensed Consolidated Financial Statements and Condensed Financial Statements ....................................................... 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................................................. 15 PART II OTHER INFORMATION Item 1. Legal Proceedings .......................................................... 17 Item 6. Exhibits and Reports on Form 8-K ........................................... 17
2 3 U.S. CAN CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (000'S OMITTED, EXCEPT SHARE DATA)
ASSETS MARCH 31, DECEMBER 31, ------ 1996 1995 --------- ------------ CURRENT ASSETS: Cash and cash equivalents ........................................... $ 191 $ 136 Accounts receivable, less allowances of $5,878 and $5,451 in 1996 and 1995, respectively ................................................ 64,640 51,279 Inventories ......................................................... 88,205 78,252 Prepaid expenses and other current assets ........................... 9,495 10,786 Prepaid income taxes ................................................ 7,393 6,732 --------- --------- Total current assets ............................................. $ 169,924 $ 147,185 --------- --------- PROPERTY, PLANT AND EQUIPMENT: Land ................................................................ $ 2,575 $ 2,576 Buildings ........................................................... 45,575 44,954 Machinery, equipment and construction in process .................... 309,723 306,319 --------- --------- $ 357,873 $ 353,849 Less -- Accumulated depreciation and amortization ................... (130,685) (123,748) --------- --------- Total property, plant and equipment .............................. $ 227,188 $ 230,101 --------- --------- MACHINERY REPAIR PARTS ................................................. $ 5,217 $ 5,395 INTANGIBLES ............................................................ 62,135 62,301 OTHER ASSETS ........................................................... 10,238 10,454 --------- --------- Total assets ........................................................ $ 474,702 $ 455,436 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Current maturities of long-term debt ................................ $ 17,646 $ 17,216 Cash overdrafts ..................................................... 5,764 5,395 Accounts payable .................................................... 29,515 32,560 Accrued payrolls and benefits ....................................... 19,442 19,282 Accrued insurance ................................................... 6,157 5,830 Other current liabilities ........................................... 16,440 17,954 --------- --------- Total current liabilities ......................................... $ 94,964 $ 98,237 --------- --------- SENIOR DEBT ............................................................ $ 144,271 $ 127,360 SUBORDINATED DEBT ...................................................... 100,000 100,000 --------- --------- Total long-term debt ................................................ $ 244,271 227,360 --------- --------- OTHER LONG-TERM LIABILITIES: Postretirement benefits ............................................. 25,577 25,080 Deferred income taxes ............................................... 20,730 19,962 Other long-term liabilities ......................................... 2,476 2,970 --------- --------- Total other long-term liabilities ................................. $ 48,783 $ 48,012 --------- --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 10,000,000 shares authorized, none issued or outstanding ........................................ $ -- $ -- Common stock, $.01 par value; 50,000,000 shares authorized, 12,902,111 shares issued in 1996 and 1995 ........................... 129 129 Paid-in capital ..................................................... 104,042 103,913 Unearned restricted stock ........................................... (1,941) (2,052) Treasury common stock, at cost; 6,989 and 37,908 shares in 1996 and 1995, respectively ............................................ (32) (319) Retained deficit .................................................... (15,514) (19,844) --------- --------- Total stockholders' equity ........................................ $ 86,684 $ 81,827 --------- --------- Total liabilities and stockholders' equity ........................ $ 474,702 $ 455,436 ========= =========
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these balance sheets. 3 4 UNITED STATES CAN COMPANY CONDENSED BALANCE SHEETS (UNAUDITED) (000'S OMITTED, EXCEPT SHARE DATA)
ASSETS MARCH 31, DECEMBER 31, ------ 1996 1995 --------- ------------ CURRENT ASSETS: Cash and cash equivalents ...................................... $ 191 $ 136 Accounts receivable, less allowances of $5,878 and $5,451 in 1996 and 1995, respectively ................................ 64,640 51,279 Inventories .................................................... 88,205 78,252 Prepaid expenses and other current assets ...................... 9,495 10,125 Prepaid income taxes ........................................... 6,096 6,096 ---------- ---------- Total current assets ......................................... $ 168,627 $ 145,888 ---------- ---------- PROPERTY, PLANT AND EQUIPMENT: Land ........................................................... $ 2,575 $ 2,576 Buildings ...................................................... 45,575 44,954 Machinery, equipment and construction in process ............... 309,723 306,319 ---------- ---------- $ 357,873 $ 353,849 Less -- Accumulated depreciation and amortization .............. (130,685) (123,748) ---------- ---------- Total property, plant and equipment .......................... $ 227,188 $ 230,101 ---------- ---------- MACHINERY REPAIR PARTS ........................................... $ 5,217 $ 5,395 LONG-TERM RECEIVABLE FROM PARENT ................................. 1,047 1,472 INTANGIBLES ...................................................... 62,135 62,301 OTHER ASSETS ..................................................... 10,238 10,454 ---------- ---------- Total assets ................................................... $ 474,452 $ 455,611 ========== ========== LIABILITIES AND STOCKHOLDER'S EQUITY - ------------------------------------------------------------------ CURRENT LIABILITIES: Current maturities of long-term debt ........................... $ 17,646 $ 17,216 Cash overdrafts ................................................ 5,764 5,395 Accounts payable ............................................... 29,515 32,560 Payable to Parent .............................................. 1,159 1,057 Accrued payrolls and benefits .................................. 19,442 19,282 Accrued insurance .............................................. 6,157 5,830 Other current liabilities ...................................... 16,440 17,954 ---------- ---------- Total current liabilities .................................... $ 96,123 $ 99,294 ---------- ---------- SENIOR DEBT ...................................................... $ 144,271 $ 127,360 SUBORDINATED DEBT ................................................ 100,000 100,000 ---------- ---------- Total long-term debt ........................................... $ 244,271 227,360 ---------- ---------- OTHER LONG-TERM LIABILITIES: Postretirement benefits ........................................ 25,577 25,080 Deferred income taxes .......................................... 21,469 20,701 Other long-term liabilities .................................... 2,476 2,970 ---------- ---------- Total other long-term liabilities ............................ $ 49,522 $ 48,751 ---------- ---------- COMMITMENTS AND CONTINGENCIES STOCKHOLDER'S EQUITY: Common stock, 1,000 shares authorized, issued and outstanding .. $ 1 1 Paid-in capital ................................................ 94,300 $ 94,300 Retained deficit ............................................... (9,765) (14,095) ---------- ---------- Total stockholder's equity .................................... 84,536 80,206 ---------- ---------- Total liabilities and stockholder's equity ................... $ 474,452 $ 455,611 ========== ==========
The accompanying Notes to Condensed Financial Statements are an integral part of these balance sheets. 4 5 U.S. CAN CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (000'S OMITTED, EXCEPT PER SHARE DATA)
QUARTERLY PERIOD ENDED ----------------------------- MARCH 31, APRIL 2, 1996 1995 ----------- --------- NET SALES ................................................................ $ 163,611 $ 154,061 COST OF SALES ............................................................ 142,129 132,212 --------- --------- Gross income ........................................................... $ 21,482 $ 21,849 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ............................. 6,850 6,591 --------- --------- Operating income ....................................................... $ 14,632 $ 15,258 --------- --------- INTEREST EXPENSE ON BORROWINGS ........................................... $ 6,186 $ 5,802 AMORTIZATION OF DEFERRED FINANCING COSTS ................................. 426 357 CONSOLIDATION EXPENSE .................................................... -- 82 OTHER EXPENSE ............................................................ 492 271 --------- --------- Income before income taxes ............................................. $ 7,528 $ 8,746 PROVISION FOR INCOME TAXES ............................................... (3,198) (3,624) --------- --------- NET INCOME ............................................................... $ 4,330 $ 5,122 ========= ========= PER SHARE DATA: Net income ......................................................... $ 0.33 $ 0.40 ========= ========= Weighted average shares and equivalent shares outstanding (000's) .. 13,005 12,864 ========= =========
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 5 6 UNITED STATES CAN COMPANY CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (000'S OMITTED)
QUARTERLY PERIOD ENDED ----------------------------- MARCH 31, APRIL 2, 1996 1995 ----------- ---------- NET SALES ..................................... $ 163,611 $ 154,061 COST OF SALES ................................. 142,129 132,212 --------- --------- Gross income ................................. $ 21,482 $ 21,849 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES .. 6,850 6,591 --------- --------- Operating income ............................. $ 14,632 $ 15,258 --------- --------- INTEREST EXPENSE ON BORROWINGS ................ $ 6,186 $ 5,802 AMORTIZATION OF DEFERRED FINANCING COSTS ...... 426 357 CONSOLIDATION EXPENSE ......................... -- 82 OTHER EXPENSE ................................. 492 271 --------- --------- Income before income taxes ................... $ 7,528 $ 8,746 PROVISION FOR INCOME TAXES .................... (3,198) (3,624) --------- --------- NET INCOME .................................... $ 4,330 $ 5,122 ========= =========
The accompanying Notes to Condensed Financial Statements are an integral part of these statements. 6 7 U.S. CAN CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (000'S OMITTED)
QUARTERLY PERIOD ENDED ---------------------- MARCH 31, APRIL 2, 1996 1995 ---------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ................................................ $ 4,330 $ 5,122 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization ........................... 7,957 6,764 Plant consolidation costs paid .......................... -- (1,181) Consolidation expense ................................... -- 82 Deferred income taxes ................................... 768 870 Change in operating assets and liabilities-- Accounts receivable ..................................... (13,361) (6,579) Inventories ............................................. (9,953) 4,499 Accounts payable ........................................ (3,045) (18,784) Accrued payrolls and benefits, insurance and other ...... (790) (2,436) Postretirement benefits ................................. 455 214 Other, net .............................................. 107 426 -------- -------- Net cash used in operating activities ................. $(13,532) (11,003) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ...................................... (4,281) $ (9,938) Acquisition of businesses, net of cash acquired ........... -- (15,884) Machinery repair parts usage (purchases), net ............. 178 (25) -------- -------- Net cash used in investing activities ................... $ (4,103) $(25,847) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under the revolving line of credit and changes in cash overdrafts .............................. 18,219 43,904 Borrowings of other long-term debt, including capital lease obligations ............................................. 1,976 -- Payments of other long-term debt, including capital lease obligations ............................................. (2,485) (6,667) Payments of debt refinancing costs ........................ (11) (166) Payments of common stock issuance costs ................... -- (22) Purchase of treasury stock, net ........................... (9) 6 -------- -------- Net cash provided by financing activities .............. $ 17,690 $ 37,055 -------- -------- INCREASE IN CASH AND CASH EQUIVALENTS ....................... $ 55 $ 205 CASH AND CASH EQUIVALENTS, beginning of period .............. 136 123 -------- -------- CASH AND CASH EQUIVALENTS, end of period .................... $ 191 $ 328 ======== ========
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 7 8 UNITED STATES CAN COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (000'S OMITTED)
QUARTERLY PERIOD ENDED --------------------------- MARCH 31, APRIL 2, 1996 1995 ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ............................................. $ 4,330 $ 5,122 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization ....................... 7,957 6,764 Plant consolidation costs paid ...................... -- (1,181) Consolidation expense ............................... -- 82 Deferred income taxes ............................... 768 870 Change in operating assets and liabilities-- Accounts receivable ................................. (13,361) (6,579) Inventories ......................................... (9,953) 4,499 Accounts payable .................................... (3,045) (18,784) Accrued payrolls and benefits, insurance and other .. (790) (2,436) Postretirement benefits ............................. 455 214 Other, net .......................................... 107 426 -------- --------- Net cash used in operating activities .................. $(13,532) $ (11,003) -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ................................... $ (4,281) $ (9,938) Acquisition of businesses, net of cash acquired ........ -- (15,884) Machinery repair parts usage (purchases), net .......... 178 (25) -------- --------- Net cash used in investing activities ............... $ (4,103) $ (25,847) -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under the revolving line of credit and changes in cash overdrafts .......................... $ 18,219 $ 43,904 Changes in receivable from/payable to Parent ........... (9) (16) Borrowings of other long-term debt, including capital lease obligations ................................... 1,976 -- Payments of other long-term debt, including capital lease obligations ................................... (2,485) (6,667) Payments of debt refinancing costs ..................... (11) (166) -------- --------- Net cash provided by financing activities ........... $ 17,690 $ 37,055 -------- --------- INCREASE IN CASH AND CASH EQUIVALENTS .................... $ 55 $ 205 CASH AND CASH EQUIVALENTS, beginning of period ........... 136 123 -------- --------- CASH AND CASH EQUIVALENTS, end of period ................. $ 191 $ 328 ======== =========
The accompanying Notes to Condensed Financial Statements are an integral part of these statements. 8 9 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONDENSED FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) (1) PRINCIPLES OF REPORTING The condensed consolidated financial statements include the accounts of U.S. Can Corporation (the "Corporation") and its wholly owned subsidiary, United States Can Company ("U.S. Can"), and the condensed financial statements include only the accounts of U.S. Can. The consolidated group is hereinafter referred to as the Company. These financial statements have been prepared in accordance with generally accepted accounting principles for interim reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements, which, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation, have not been audited by independent public accountants. Operating results for any interim period are not necessarily indicative of results that may be expected for the full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission; however, management believes that the disclosures contained herein are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the previously filed financial statements and footnotes included in the Corporation's and U.S. Can's Joint Annual Report on Form 10-K/A-1 for the year ended December 31, 1995. Quarterly accounting periods are based upon two four-week periods and one five-week period. Management believes that this technique provides a more consistent view of accounting data resulting in greater comparability than the calendar month basis would provide. (2) ACQUISITIONS In early 1995, the Company completed its acquisition of the stock of Metal Litho International, Inc. and the portion of a related partnership not previously owned by MLI (collectively, "MLI") for approximately $10.1 million in cash, plus the assumption of approximately $4.2 million of debt. The former MLI plant, located in Trenton, New Jersey, is a full service metal decorating facility, providing coil shearing and tin plate coating and printing. In March 1995, the Company completed its acquisition of the stock of Plastite Corporation ("Plastite") for approximately $7.3 million, plus future contingent payments of approximately $2.5 million. The former Plastite plant, located in Morrow, Georgia, is the nation's largest manufacturer of plastic paint cans, and also manufactures plastic pails in two sizes. 9 10 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED) In April 1995, the Company completed an acquisition of certain assets of Prospect Industries Corporation ("Prospect") for approximately $8.8 million. The acquired assets, located in North Brunswick, New Jersey, are used to manufacture metal pails for the chemical and coatings industries. U.S. Can's North Brunswick operation includes coil cutting, coating and lithography, as well as manufacturing of tops and bottoms. In May 1995, the Company completed an acquisition of the stock of Hunter Container Corporation ("Hunter") for approximately $4.0 million, plus the assumption of $2.5 million of debt. The former Hunter facility, located in Vernalis, California, manufactures a broad line of proprietary and specialty metal containers. Each business acquisition was accounted for as a purchase for financial reporting purposes. Accordingly, certain recorded assets and liabilities of the acquired companies were revalued at estimated fair values as of the acquisition date. Such revaluation adjustments, all made pursuant to the purchase method of accounting, resulted in increased amortization and depreciation in periods following the acquisition. Management has used its best judgment and available information in estimating the fair value of those assets and liabilities. Any changes to these estimates are not expected to be material. The operating results of each acquired business are included in the consolidated statement of operations from the date of acquisition. Amortization of any excess purchase price over the estimated fair value of the net assets acquired is made over a period of forty years. In February 1996, the Company announced its intention to establish a paint can and general line manufacturing plant in the Dallas, Texas area. This decision followed the Company's agreement with Sherwin-Williams on the material terms of a long-term container purchase agreement. This Texas facility will initially produce gallon round paint cans for the coatings industry. In the future, if circumstances warrant, the Company may expand this facility to include steel pails, plastic pails and/or other general line containers. (3) INVENTORIES Inventories are stated at cost determined by the last-in, first-out ("LIFO") cost method, not in excess of market. Inventory costs include elements of material, labor and factory overhead. Current (first-in, first-out) cost of inventories was lower than inventories valued at LIFO by approximately $331,000 at March 31, 1996. At December 31, 1995, the current cost of inventories was approximately $150,000 higher than inventories valued at LIFO. The Company's gross income margin continues to be sufficient to absorb the 10 11 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED) higher-than-current-cost carrying value of its inventories. Inventories reported in the accompanying balance sheets were classified as follows (000's omitted):
MARCH 31, DECEMBER 31, 1996 1995 --------- ------------ Raw materials ........................... $ 20,510 $ 21,066 Work in process ......................... 44,338 34,138 Finished goods .......................... 19,766 19,549 Machine shop inventory .................. 3,591 3,499 --------- --------- $ 88,205 $ 78,252 ========= =========
(4) REVOLVING CREDIT AGREEMENT On April 29, 1994, U. S. Can entered into a four-year credit agreement (the "Credit Agreement") with a group of banks providing a $130 million line of credit consisting of a $95 million revolving credit line (the "Revolving Credit Facility") and a $35 million term loan (the "Term Loan"). As of March 31, 1996, $5,250,000 of the Term Loan had been repaid under the terms of the Credit Agreement. Funds available under the Credit Agreement are used for working capital and other general corporate purposes, including acquisitions. The loans outstanding under the Credit Agreement bear interest at a floating rate equal to, at the election of U.S. Can, one of the following: (i) the Base Rate per annum (currently 8.25%), or (ii) based on the current pricing ratio, a reserve-adjusted Eurodollar rate plus 1.125% per annum, for specified interest periods (selected by U.S. Can) of one, two, three or six months. The "Base Rate" is the higher of: (i) the Federal Funds rate plus 1/2 of 1% per annum or (ii) the rate of interest publicly announced from time to time by Bank of America Illinois, Chicago, Illinois as its "reference rate." For letters of credit issued under the Credit Agreement, U.S. Can pays fees equal to: (a) the applicable Eurodollar Margin, currently 1.125% per annum, multiplied by the aggregate face amount outstanding on each such letter of credit and (b) an amount payable to the issuing bank equal to 0.2% per annum of the aggregate face amount outstanding on each such letter of credit, both of which are payable quarterly in arrears. Currently, U.S. Can is required to pay a commitment fee of 0.375% per annum of the average daily unused portion of each lender's commitment under the Credit Agreement. The Credit Agreement is secured by the accounts receivable and inventory of U.S. Can. The Term Loan is also secured by a mortgage on U.S. Can's Elgin, Illinois facility and certain equipment located at the Elgin facility. As of March 31, 1996, borrowings under the Credit Agreement totaled $107.1 million, an additional $11.7 million in letters of credit had been issued pursuant thereto, and $6.0 million of unused credit 11 12 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED) remained available thereunder. In early April 1996, the lenders under the Credit Agreement provided U.S. Can a temporary $10 million increase in the Revolving Credit Facility due to seasonal inventory requirements. In late April 1996, these lenders provided U.S. Can an additional temporary $20 million increase in the Revolving Credit Facility due to the acquisition of certain assets from Alltrista Corporation ("Alltrista"). For a discussion of the Alltrista acquisition, see Note (7) of these Notes. The terms of the Credit Agreement impose restrictions that affect, among other things, U.S. Can's ability to (i) incur additional indebtedness, (ii) create liens on assets, (iii) sell assets, (iv) engage in mergers, acquisitions or consolidations, (v) make investments, (vi) pay dividends or make distributions and (vii) engage in certain transactions with affiliates and subsidiaries. The Credit Agreement also requires U.S. Can to comply with certain financial ratios and tests. Under and pursuant to the Credit Agreement, U.S. Can may pay cash dividends on account of any shares of any class of capital stock of U.S. Can (or on any warrants, options or rights with respect thereto) in an amount not to exceed 25% of Net Income (as defined in the Credit Agreement) in any given fiscal year, but in any event not more than 25% of consolidated cumulative Net Income attributable to the period commencing subsequent to April 29, 1994, and ending on the date of such proposed cash dividends; provided that either: (i) the Term Loan has been indefeasibly paid in full in cash or (ii) the Leverage Ratio (as defined in the Credit Agreement) as of the last day of the last fiscal quarter of such fiscal year does not exceed 3.50 to 1.00; and, provided further, that no Default or Event of Default (as defined in the Credit Agreement) exists immediately prior to any such cash dividend or would result therefrom. Notwithstanding the foregoing, in no event may U.S. Can pay such cash dividends prior to the later to occur of (a) April 29, 1995, and (b) the delivery of the annual audited consolidated financial statements to the banks for the fiscal year ended in which either of the conditions contained in clauses (i) or (ii) above has been satisfied. Because amounts remain outstanding under the Term Loan, the Credit Agreement currently prohibits U.S. Can from paying cash dividends. The Credit Agreement also contains subjective covenants providing that U.S. Can would be in default if, in the judgment of the lenders, there is a material adverse change in the financial condition of U.S. Can. Management is not aware of, nor does it anticipate, any facts, events or occurrences which could reasonably be expected to have a material adverse effect on the operations of U.S. Can that would cause the lenders to demand repayment of the amounts borrowed under the Senior Credit Agreement prior to April 29, 1998. Accordingly, the borrowings thereunder have been classified as long-term debt in the accompanying balance sheets. U.S. Can was in compliance with all terms and restrictive covenants of the Credit Agreement and its other long-term debt agreements as of March 31, 1996. 12 13 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED) (5) SUPPLEMENTAL CASH FLOW INFORMATION U.S. Can paid interest on borrowings of $9,374,000 and $9,097,000 for the quarterly periods ended March 31, 1996 and April 2, 1995, respectively. The Corporation and U.S. Can paid approximately $15,000 and $602,000 of income taxes for the quarterly periods ended March 31, 1996 and April 2, 1995, respectively. During the quarterly periods ended March 31, 1996 and April 2, 1995, the Corporation issued common stock valued at approximately $425,000 and $250,000, respectively, into certain of its employee benefit plans. (6) LEGAL PROCEEDINGS On February 28, 1995, Continental Holdings Inc. ("CHI"), an affiliate of Peter Kiewit Sons', Inc. ("Kiewit"), filed a Complaint against U.S. Can and others in the United States District Court of the State of New Jersey, asserting claims based upon alleged indemnity obligations of U.S. Can to Kiewit, as successor in interest to Continental Can Company, USA, Inc. ("CCC"), arising from the 1987 acquisition by U.S. Can of the general packaging business of CCC. These alleged indemnity obligations relate to environmental liabilities, reimbursable insurance deductibles and reinsurance amounts, and certain personal injury claims and employment discrimination claims. The Complaint includes counts for breach of contract, declaratory judgment, indemnification and contribution, CERCLA remedies, state environmental law remedies and unjust enrichment. CHI seeks unspecified compensatory damages, consequential and incidental damages, interest, attorneys' fees and costs of litigation, equitable relief, environmental response costs, and restitution. No aggregate dollar amount of damages is specified in the Complaint. However, in an initial discovery disclosure served on U.S. Can, CHI alleged that its damages to the date of such disclosure were approximately $4.4 million. U.S. Can has filed an Answer to the Complaint, asserted affirmative defenses and made counterclaims against CHI seeking reimbursement for expenses and accruals relating to postretirement medical and life insurance benefits for former employees of CCC, and expenses incurred as a result of CCC's breach of its contractual indemnification obligations to U.S. Can. The case has been transferred to the United States District Court for the Northern District of Illinois. U.S. Can believes it has meritorious defenses to all of CHI's claims. The National Labor Relations Board has issued a decision finding the Company in violation of certain sections of the National Labor Relations Act as a result of the Company's closure of certain facilities in 1991 and failure to offer inter-plant job opportunities to affected employees. Management does not believe that the resolution of this matter will have a material adverse effect on the Company's financial condition or results of operations. 13 14 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1996 (UNAUDITED) The Company understands that the groundwater in San Leandro, California is contaminated at shallow and intermediate depths, and that the area of concern partially extends to the groundwater below a facility formerly owned by the Company. In late April 1996, the California Department of Toxic Substances Control ("CDTSC") issued to certain of the past and present owners of this facility, including U.S. Can, an order directing such owners to conduct remediation activities at this site. Although there can be no assurance that the Company will not incur material costs and expenses in connection with the CDTSC order, extensive environmental testing has been performed at this facility and management does not believe that substantial remediation activities at this facility are justified. Management is evaluating the CDTSC order to formulate an appropriate response. The San Leandro facility was closed in 1989 and was sold, except for a related parcel of land, in 1994. The remaining parcel was sold in 1995. In connection with the sale, the Company agreed to indemnify the purchaser against any environmental claims related to the Company's ownership of the property. The Company is involved in various other environmental and legal actions and administrative proceedings. Management is of the opinion that their outcome will not have a material effect on the Company's financial position or results of operations. (7) RECENT DEVELOPMENTS On April 29, 1996, U.S. Can acquired from Alltrista substantially all of the machinery, equipment and coatings and inks inventory, as well as certain proprietary technology used in, Alltrista Metal Services ("AMS"), a division of Alltrista (collectively referred to hereinafter as the "Assets"), and assumed a liability of approximately $0.5 million. The Assets were purchased for approximately $9.6 million. U.S. Can has also agreed to purchase the Chicago, Illinois; Baltimore, Maryland; and Trussville, Alabama real property and buildings formerly used in AMS's business for approximately $4.8 million, subject to satisfaction of certain conditions relating to title, survey and environmental matters. AMS was engaged in the business of metal cutting and decorating, as well as the manufacture, sale and licensure of certain proprietary products. U.S. Can intends to operate the acquired plants with the existing workforce while evaluating its facilities' alignment and integration of the additional business into U.S. Can. 14 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following narrative discusses the results of operations, liquidity and capital resources for the Corporation and U.S. Can on a consolidated basis. The consolidated group is referred to herein as the Company. The Corporation's only business interest is in its ownership of U.S. Can's common stock. Operating results for the Company and U.S. Can are identical. This section should be read in conjunction with the Corporation's and U.S. Can's Joint Annual Report on Form 10-K/A-1 for the fiscal year ended December 31, 1995. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein. RESULTS OF OPERATIONS QUARTERLY PERIOD ENDED MARCH 31, 1996 VS. QUARTERLY PERIOD ENDED APRIL 2, 1995 Net Sales Net sales for the quarterly period ended March 31, 1996 totaled $163.6 million, an increase of 6.2% over the corresponding period in 1995. Acquisitions completed in 1995 were the primary factor contributing to the sales growth. U.S. Can has realized additional sales as a result of the 1995 acquisitions of the stock of MLI, Plastite and Hunter, and of certain assets of Prospect. Increased unit volumes in aerosol containers and custom and specialty products, as well as increased revenue from Metal Services, also contributed to the sales growth. Gross Income Gross income of $21.5 million for the first quarter of 1996 was $0.4 million, or 1.7%, lower than gross income for the first quarter of 1995. Gross margin declined to 13.1% of net sales in the first quarter of 1996 from 14.2% of net sales in the first quarter of 1995. The Company made a significant advance purchase of steel in late 1994 and, as a result, the Company did not feel the full impact of the 1995 steel price increase in the first quarter of 1995. The cost savings in 1995 realized from this advance purchase of steel and increased sales in 1996 in lower margin products contributed to the decrease in gross income and margin. Operating Income The Company's operating income of $14.6 million for the first quarter of 1996 was $0.7 million, or 4.1%, lower than operating income for the first quarter of 1995. Operating income as a percent of net sales was 8.9% for the first quarter of 1996 as compared to 9.9% for the first quarter of 1995. The decrease was attributable to lower gross income in 1996, as discussed above, in addition to a slight increase in selling, general and administrative expenses period to period. However, these expenses as a percent of net sales decreased from 4.3% of net sales in the first quarter of 1995 to 4.2% of net sales in the first quarter of 1996. Interest and Other Expenses Interest expense on borrowings increased by approximately $384,000 in the first quarter of 1996 as compared to the first quarter of 1995. The increase is a result of increased borrowing, primarily to finance the Company's 1995 acquisitions. Amortization of deferred financing costs and other expense increased in the first quarter of 1996 by $290,000 as compared to the first quarter of 1995. The increase is primarily a result of new borrowings and goodwill amortization related to the 1995 acquisitions. 15 16 Net Income Due to the factors discussed above, net income in the first quarter of 1996 was $4.3 million, compared to $5.1 million in the first quarter of 1995. Primary earnings per share were $0.33 in the first quarter of 1996 on a slightly higher number of shares outstanding, compared to $0.40 in the first quarter of 1995. LIQUIDITY AND CAPITAL RESOURCES The Company's cash requirements for operations, acquisitions and capital expenditures during the quarterly period ended March 31, 1996 were financed by internally generated cash flows and borrowings under the Revolving Credit Facility. The Revolving Credit Facility is provided to U.S. Can under the Credit Agreement. For a more detailed discussion of the Credit Agreement, see Note (4) of the unaudited Notes to Condensed Consolidated Financial Statements and Condensed Financial Statements. In early April 1996, the lenders under the Credit Agreement provided U.S. Can a temporary $10 million increase in the Revolving Credit Facility due to seasonal inventory requirements. In late April 1996, these lenders provided U.S. Can an additional temporary $20 million increase in the Revolving Credit Facility due to the acquisition of certain assets from Alltrista. The Revolving Credit Facility will be automatically reduced by $10 million on September 30, 1996, and by $20 million on December 31, 1996. The Company is exploring a number of financing alternatives due to the scheduled reductions in availability under the Revolving Credit Facility. In April 1996, U.S. Can completed the acquisition of certain assets from Alltrista for a purchase price of approximately $14.9 million. The cash portion of the purchase price was funded by the Revolving Credit Facility. For a more detailed discussion of this acquisition, see Note (7) of the unaudited Notes to Condensed Consolidated Financial Statements and Condensed Financial Statements. Under the terms of the Credit Agreement, $7,000,000 of the term loan had been repaid as of April 30, 1996. As of March 31, 1996, U.S. Can had borrowings of $107.1 million outstanding under the Credit Agreement, $11.7 million in letters of credit had been issued pursuant thereto, and $6.0 million of unused credit remained available thereunder. As of May 9, 1996, U.S. Can had borrowings of $121.9 million outstanding under the Credit Agreement, $11.7 million in letters of credit had been issued pursuant thereto, and $19.4 million of unused credit remained available thereunder (including the two temporary increases to the Revolving Credit Facility). As of March 31, 1996, U.S. Can was in compliance with all restrictive covenants of the Credit Agreement and its other long-term debt agreements. Management believes that cash flow from operations, amounts available under the Revolving Credit Facility and proceeds from equipment financings should provide sufficient funds to meet short-term and long-term capital expenditure and debt amortization requirements, and other cash needs in the ordinary course of business. The Company would expect to finance acquisitions and investments through some combination of cash, stock and/or debt. "SAFE HARBOR" statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, the matters discussed in this Joint Form 10-Q are forward-looking statements that involve risks and uncertainties including, but not limited to, market conditions, competition, raw material costs, environmental laws and regulations, and other risks indicated in the Company's other filings with the Securities and Exchange Commission. 16 17 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS For a discussion of the San Leandro, California remediation order, see Note (6) of the unaudited Notes to Condensed Consolidated Financial Statements and Condensed Financial Statements contained in Item 1 of Part I of this report (which is incorporated herein in its entirety by this reference). ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits
Incorporation Exhibit by Reference Number Description of Document (if applicable) - ------- ----------------------- --------------- 3.1 Restated Certificate of Incorporation of U.S. Can Corporation * 4.3 3.2 Restated Certificate of Incorporation of United States Can Company @ 3.1 3.3 By-Laws of U.S. Can Corporation & 4.1 3.4 By-Laws of United States Can Company X 3.3 4.1 Amendment No. 5 to Credit Agreement, dated April 1, 1996 4.2 Amendment No. 6 to Credit Agreement, dated April 26, 1996 27.1 Financial Data Schedule
- ---------------------- * Previously filed with Registration Statement on Form S-3 of the Corporation, filed on June 1, 1994 (Registration No. 33-79556). @ Previously filed with Form 10-K Annual Report of U.S. Can for the fiscal year ended December 31, 1992. & Previously filed with Registration Statement on Form S-8 of the Corporation, filed on March 23, 1994 (Registration No. 33-76742). X Previously filed with Registration Statement on Form S-1 of U.S. Can, filed on November 1, 1991 (Registration No. 33-43734). (b) Neither U.S. Can Corporation nor United States Can Company filed any reports on Form 8-K during the quarterly period ended March 31, 1996. 17 18 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. U.S. CAN CORPORATION Date: May 15, 1996 By: /s/ Timothy W. Stonich ------------------------------------------ Timothy W. Stonich Executive Vice President--Finance, Chief Financial Officer and Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in his capacity as the principal financial officer of the registrant. Date: May 15, 1996 /s/ Timothy W. Stonich ------------------------------------------ Timothy W. Stonich Executive Vice President--Finance, Chief Financial Officer and Secretary 18 19 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. UNITED STATES CAN COMPANY Date: May 15, 1996 By: /s/ Timothy W. Stonich ------------------------------------ Timothy W. Stonich Executive Vice President--Finance, Chief Financial Officer and Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in his capacity as the principal financial officer of the registrant. Date: May 15, 1996 /s/ Timothy W. Stonich --------------------------------------- Timothy W. Stonich Executive Vice President--Finance, Chief Financial Officer and Secretary 19 20 EXHIBIT INDEX
Exhibit Sequential Number Description of Exhibit Page Number - ------- ---------------------- ----------- 4.1 Amendment No. 5 to Credit Agreement, dated April 1, 1996 4.2 Amendment No. 6 to Credit Agreement, dated April 26, 1996 27.1 Financial Data Schedule
20 EX-4.1 2 AMEND. #5 TO CREDIT AGREEMENT 1 CRDAMD.5 EXHIBIT 4.1 AMENDMENT NO. 5 DATED AS OF APRIL 1, 1996 TO CREDIT AGREEMENT DATED AS OF APRIL 29, 1994 AMONG UNITED STATES CAN COMPANY (THE "BORROWER") CERTAIN FINANCIAL INSTITUTIONS, AS THE LENDERS AND BANK OF AMERICA ILLINOIS, AS AGENT 2 Amendment No. 5 THIS Amendment No. 5 (this "Amendment"), dated as of April 1, 1996, among United States Can Company, a Delaware corporation (the "Borrower"), the various financial institutions that are or may become parties to the Credit Agreement described hereinbelow (individually, a "Lender" and collectively, the "Lenders") and Bank of America Illinois, an Illinois banking corporation and formerly Continental Bank N.A., as agent for the Lenders (in such capacity, the "Agent"), is made pursuant to Section 9.1 of that certain Credit Agreement, dated as of April 29, 1994 (as amended or modified and in effect on the date hereof, the "Credit Agreement"; capitalized terms therein defined have the same respective meanings herein, unless herein otherwise defined), among the Borrower, the Lenders and the Agent. WITNESSETH WHEREAS, the Borrower has requested that the Lenders amend the Credit Agreement in the manner hereinafter appearing; and, subject to the terms and conditions set forth herein, the Lenders have agreed to so amend the Credit Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE I - AMENDMENTS 1.1 The definition of "EBITDA" contained in Schedule I of the Credit Agreement is hereby deleted and Schedule I of the Credit Agreement is hereby amended by inserting the following definition in its place: "EBITDA" means, with respect to any period, as determined in accordance with GAAP, the sum for such period of (a) Operating Income plus (b) Depreciation plus (c) the $8 million pre-tax Overhead Reduction Provision. 1.2 Schedule I of the Credit Agreement is hereby amended by inserting the following definition: "Overhead Reduction Provision" means the $8 million charge taken in the fourth quarter of 1995 by the Company and identified on the Consolidated Statement of Operations of the Company's Financial Statements for 1995 as "Overhead Reduction Provision." 1.3 The definition of "Revolving Credit Commitment Amount" contained in Schedule I of the Credit Agreement is hereby amended 3 by deleting the dollar amount "$95,000,000" where it appears in the first line therein and inserting the dollar amount "$105,000,000" in its place therefor. 1.4 Section 2.2 of the Credit Agreement is hereby amended by inserting a new Section 2.2.2 at the end of such Section to read as follows: "SECTION 2.2.2 Mandatory. The Revolving Credit Commitment Amount shall be automatically and permanently reduced by $10,000,000 from $105,000,000 to $95,000,000 on September 30, 1996." 1.5 Schedule 5.1(i) of the Credit Agreement is hereby amended to add the following item described on Schedule 1 hereto to such schedule. ARTICLE II - CONDITIONS 2.1 This Amendment No. 5 shall become effective as of the date hereof on the date (the "Amendment No. 5 Effective Date") that the Agent shall have received each of the following, in form and substance satisfactory to it: (a) counterparts hereof executed by the Borrower and the Lenders; (b) a certificate, dated as of the Amendment No. 5 Effective Date, of the Secretary or Assistant Secretary of the Borrower as to resolutions of its Board of Directors then in full force and effect authorizing the execution and delivery of this Amendment No. 5 and the incumbency and signature of its officers signing this Amendment No. 5; (c) a certificate, dated as of the Amendment No. 5 Effective Date, of an authorized officer of the Borrower as to (i) no Default or Event of Default as of the Amendment No. 5 Effective Date after giving effect to this Amendment, (ii) the correctness of the representatives and warranties contained in the Loan Documents in all material respects as of the Amendment No. 5 Effective Date after giving effect to this Amendment, (iii) no amendments or other modifications to the Borrower's Certificate of Incorporation and By-Laws having occurred since the date that the certified copies of such documents were delivered by the Borrower pursuant to Sections 4.1(b) and 4.1(c) of the Credit Agreement, respectively, and (d) the satisfaction of - 2 - 4 each of the conditions precedent contained in this Article II; and (d) an opinion of counsel for the Borrower as to this Amendment and the transactions contemplated hereby, in form and substance satisfactory to the Agent. 2.2 The Agent agrees to (i) notify the Borrower and the Lenders of such Amendment No. 5 Effective Date promptly after such Amendment No. 5 Effective Date occurs and (ii) pay to each other Lender its pro rata portion of the amendment fee promptly following such Amendment No. 5 Effective Date. ARTICLE III - GENERAL To induce the Agent and the Lenders to enter into this Amendment, the Borrower warrants to the Agent and the Lenders that: (a) except as set forth on Exhibit A to this Amendment No. 5, the warranties contained in the Loan Documents, as amended by the Amendment, are true and correct in all material respects as of the date hereof with the same effect as though made on the date hereof; (b) after giving effect to this Amendment, no Event of Default or Default exists; (c) this Amendment has been duly authorized by all necessary corporate proceedings and duly executed and delivered by the Borrower, and the Credit Agreement, as amended hereby, and each of the other Loan Documents are the legal, valid and binding obligations of the applicable Loan Party, enforceable against such Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors' rights or by general principles of equity; (d) no consent, approval, authorization, order, registration or qualification with any Governmental Authority or securities exchange is required for, and in the absence of which would adversely affect, the legal and valid execution and delivery or performance by the Borrower of this Amendment or the performance by the Borrower of the Credit Agreement, as amended hereby, or any other Loan Document to which it is a party; and (e) the Agent has a first priority lien in the Collateral subject to no other liens, claims or encumbrances whatsoever. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Except as specifically provided above, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed in all respects. The execution, delivery, and effectiveness of this Amendment - 3 - 5 shall not, except as expressly provided herein, operate as a waiver of any right, power, or remedy of the Agent or any Lender under the Credit Agreement or any of the other Loan Documents, nor constitute a waiver or modification of any provision of any of the other Loan Documents, and the Obligations shall continue to be secured in all respects by the Collateral. On and after the Amendment No. 5 Effective Date, each reference in the Credit Agreement and related documents to "Credit Agreement," "this Agreement" or words of like import, shall, unless the context otherwise requires, be deemed to refer to the Credit Agreement as amended hereby. The Borrower agrees to pay on demand all costs and expenses of the Agent (including the reasonable attorney fees and expenses for the Agent) in connection with the preparation, negotiation, execution and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith. This Amendment shall be binding upon the Borrower, the Agent, the Lenders and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Agent, the Lenders and their respective successors and assigns as provided in the Credit Agreement. - 4 - 6 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. UNITED STATES CAN COMPANY By: /s/ Peter Andres -------------------------------- Title: VP - Treasurer ----------------------------- BANK OF AMERICA ILLINOIS, as Agent By: /s/ David A. Johanson -------------------------------- Title:Agency Management Services ----------------------------- Senior Agency Officer ----------------------------- BANK OF AMERICA ILLINOIS, individually By: /s/ Tracy J. Alfery -------------------------------- Title: Vice President ----------------------------- BANQUE PARIBAS, CHICAGO BRANCH By: /s/ Nicholas C. Mast -------------------------------- Title: Vice President ----------------------------- By: /s/ Russell A. Pomerantz -------------------------------- Title: Vice President ----------------------------- FIRST CHICAGO NBD CORPORATION By: /s/ Julia F. Maslanka -------------------------------- Title: Assistant Vice President ----------------------------- HARRIS TRUST AND SAVINGS BANK By: /s/ Ronald L. Dellartino -------------------------------- Title: Vice President ----------------------------- FLEET BANK OF MASSACHUSETTS, N.A. By: /s/ S.P. Kanarian -------------------------------- Title: VP ----------------------------- - 5 - 7 BANK OF SCOTLAND By: /s/ Catherine M. Oniffrey ------------------------------- Title: Vice President ----------------------------- THE NORTHERN TRUST COMPANY By: /s/ Arthur J. Fogel ------------------------------- Title: Vice President ----------------------------- - 6 - 8 SCHEDULE I KIEWIT CLAIM Kiewit Claims. In March 1994, the Borrower received a letter from Peter Kiewit Sons', Inc. notifying it of alleged indemnity obligations of the Borrower to Kiewit (as successor in interest to Continental Can Company, USA, Inc. ("CCC")), arising from the 1987 acquisition of the general packaging business of CCC. These alleged indemnity obligations relate to environmental liabilities, reimbursable insurance deductibles and reinsurance amounts and certain personal injury claims. The Borrower does not believe it is responsible for these claims and it has informed Kiewit of its position. In July 1994, the Borrower received another letter from Kiewit reiterating its claims and rejecting the Borrower's position that it is not responsible to CCC for the amounts claimed. In that letter, Kiewit stated that its claims aggregate approximately $3.5 million. In January 1995, Kiewit claimed that the Borrower is responsible for two employment discrimination claims aggregating $200,000 filed against CCC prior to the Borrower's acquisition of CCC's general packaging business. The Borrower has informed Kiewit that it does not believe it is responsible for these employment discrimination claims. On February 28, 1995, Continental Holdings Inc. ("CHI"), an affiliate of Kiewit, filed a Complaint against the Borrower and others in the United States District Court of the State of New Jersey, reiterating the claims described above. The Complaint includes counts for breach of contract, declaratory judgment, indemnification and contribution, CERCLA remedies, state environmental law remedies and unjust enrichment. CHI is seeking unspecified compensatory damages, consequential and incidental damages, interest, attorneys' fees and costs of litigation, equitable relief, environmental response costs, and restitution. No aggregate dollar amount of damages is specified in the Complaint. However, in an initial discovery disclosure served on the Borrower, CHI alleged that its damages to the date of disclosure were approximately $4.4 million. The Borrower intends to contest this suit vigorously, and has filed an Answer and asserted affirmative defenses to the Complaint. The Borrower has also filed a counterclaim against Kiewit for reimbursement of costs incurred by the Borrower subsequent to and as a result of the 1987 acquisition. On the Borrower's motion, the action was transferred from the District of New Jersey to the U.S. District Court for the Northern District of Illinois, where it is now pending. There can be no assurance that U.S. Can will succeed in this matter. - 7 - EX-4.2 3 AMEND. #6 TO CREDIT AGREEMENT 1 CRDAMD.6 EXHIBIT 4.2 AMENDMENT NO. 6 THIS AMENDMENT NO. 6 (this "Amendment"), dated as of April 26, 1996, among United States Can Company, a Delaware corporation (the "Borrower"), the various financial institutions that are or may become parties to the Credit Agreement described hereinbelow (individually, a "Lender" and collectively, the "Lenders") and Bank of America Illinois, an Illinois banking corporation, as agent for the Lenders (in such capacity, the "Agent"), is made pursuant to Section 9.1 of that certain Credit Agreement, dated as of April 29, 1994 (as amended or modified and in effect on the date hereof, the "Credit Agreement"; capitalized terms therein defined have the same respective meanings herein, unless herein otherwise defined), among the Borrower, the Lenders and the Agent. WITNESSETH: WHEREAS, the Borrower has requested that the Lenders amend the Credit Agreement in the manner hereinafter appearing; and, subject to the terms and conditions set forth herein, the Lenders have agreed to so amend the Credit Agreement to provide additional credit to fund the purchase of certain assets (the "Purchased Assets"); NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE 1. - AMENDMENTS 1.1 The definition of "Revolving Credit Commitment Amount" contained in Schedule I of the Credit Agreement is hereby amended by deleting the dollar amount "$105,000,000" where it appears in the first line therein and inserting the dollar amount "$125,000,000" in its place therefor. 1.2 Section 2.2.2 of the Credit Agreement is hereby amended to state in its entirety as follows: "SECTION 2.2.2. Mandatory. The Revolving Credit Commitment Amount shall be automatically and permanently reduced by $10,000,000 from $125,000,000 to $115,000,000 on September 30, 1996 and by $20,000,000 from $115,000,000 to $95,000,000 on December 31, 1996." 2 ARTICLE 2. - CONDITIONS 2.1. This Amendment No. 6 shall become effective as of the date hereof on the date (the "Amendment No. 6 Effective Date") that the Agent shall have received each of the following, in form and substance satisfactory to it: (a) counterparts hereof executed by the Borrower and the Lenders; (b) certificate, dated as of the Amendment No. 6 Effective Date, of the Secretary or Assistant Secretary of the Borrower as to resolutions of its Board of Directors then in full force and effect authorizing the execution and delivery of this Amendment No. 6 and the incumbency and signatures of its officers signing this Amendment No. 6; (c) a certificate, dated as of the Amendment No. 6 Effective Date, of an authorized officer of the Borrower as to (i) no Default or Event of Default as of the Amendment No. 6 Effective Date after giving effect to this Amendment, (ii) the correctness of the representations and warranties contained in the Loan Documents in all material respects as of the Amendment No. 6 Effective Date after giving effect to this Amendment, (iii) no amendments or other modifications to the Borrower's Certificate of Incorporation and By-Laws having occurred since the date that the certified copies of such documents were delivered by the Borrower pursuant to Sections 4.1(b) and 4.1(c) of the Credit Agreement, respectively, and (d) the satisfaction of each of the conditions precedent contained in this Article II; (d) an opinion of counsel for the Borrower as to this Amendment and the transactions contemplated hereby, in form and substance satisfactory to the Agent; and (e) payment to the Agent of a $50,000 amendment fee to be shared among the Lenders based upon their respective Percentages. 2.2. The Agent agrees to notify the Borrower and the Lenders of such Amendment No. 6 Effective Date promptly after such Amendment No. 6 Effective Date occurs. -2- 3 ARTICLE 3. - GENERAL To induce the Agent and the Lenders to enter into this Amendment, the Borrower warrants to the Agent and the Lenders that: (a) the warranties contained in the Loan Documents, as amended by the Amendment, are true and correct in all material respects as of the date hereof with the same effect as though made on the date hereof; (b) the Purchased Assets and their locations are properly described in Schedule I hereto; (c) after giving effect to this Amendment, no Event of Default or Default exists; (d) this Amendment has been duly authorized by all necessary corporate proceedings and duly executed and delivered by the Borrower, and the Credit Agreement, as amended hereby, and each of the other Loan Documents are the legal, valid and binding obligations of the applicable Loan Party, enforceable against such Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors' rights or by general principles of equity; (e) no consent, approval, authorization, order, registration or qualification with any Governmental Authority or securities exchange is required for, and in the absence of which would adversely affect, the legal and valid execution and delivery or performance by the Borrower of this Amendment or the performance by the Borrower of the Credit Agreement, as amended hereby, or any other Loan Document to which it is a party; and (f) the Agent has a first priority lien in the Collateral subject to no other liens, claims or encumbrances whatsoever. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Except as specifically provided above, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed in all respects. The execution, delivery, and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power, or remedy of the Agent or any Lender under the Credit Agreement or any of the other Loan Documents, nor constitute a waiver or modification of any provision of any of the other Loan Documents, and the Obligations shall continue to be secured in all respects by the Collateral. On and after the Amendment No. 6 Effective Date, each reference in the Credit Agreement and related documents to "Credit Agreement," "this Agreement" or words of like import, shall, unless the context otherwise requires, be deemed to refer to the Credit Agreement as amended hereby. -3- 4 The Borrower agrees to pay on demand all costs and expenses of the Agent (including the reasonable attorney fees and expenses for the Agent, including the allocated cost of internal counsel) in connection with the preparation, negotiation, execution and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith. This Amendment shall be binding upon the Borrower, the Agent, the Lenders and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Agent, the Lenders and their respective successors and assigns as provided in the Credit Agreement. -4- 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. UNITED STATES CAN COMPANY By: /s/ Peter J. Andres -------------------------------- Title: VP - Treasurer ----------------------------- BANK OF AMERICA ILLINOIS, as Agent By: /s/ David L. Graham -------------------------------- Title: Vice President ----------------------------- BANK OF AMERICA ILLINOIS, individually By: /s/ Tracy J. Alfery -------------------------------- Title: Vice President ----------------------------- THE FIRST NATIONAL BANK OF CHICAGO By: /s/ J. Garland Smith -------------------------------- Title: Managing Director ----------------------------- HARRIS TRUST AND SAVINGS BANK By: /s/ Ronald L. Dellartino -------------------------------- Title: Vice President ----------------------------- FLEET NATIONAL BANK By: /s/ S.P. Kanarian -------------------------------- Title: VP ----------------------------- -5- 6 BANK OF SCOTLAND By: /s/ Catherine M. Oniffrey ---------------------------- Title: Vice President ------------------------- THE NORTHERN TRUST COMPANY By: /s/ Arthur J. Fogel ---------------------------- Title: Vice President ------------------------- -6- 7 SCHEDULE 1 Purchased Assets and Locations CHICAGO 4100 W. 42nd Place Chicago, IL 60632 Litho ----- 2 Single color metal lithographic press lines 2 Two color metal lithographic press lines 7 Metal lithographic coating lines Steel ----- 1 Littell BR-3 metal shearing line with side trimmer 1 Littell BR-5 metal shearing line 1 Wean metal shearing line 3 Metal coil slitting lines BALTIMORE 901 W. Ostend St. Baltimore, Maryland 21230 Litho ----- 1 Single color metal lithographic press line 1 Two color metal lithographic press line 1 Four color metal lithographic press line 2 Incinerating units for volatile organic compound destruction Steel ----- 1 Littell LM-1E metal shearing line with electronic feed and side trimmer 1 Littell LM-1 metal shearing line 1 Branner metal coil slitting line BIRMINGHAM 5051 Cardinal St. Trussville, Alabama 35173 Litho ----- 1 Single color metal lithographic press line 1 Two color metal lithographic press line 1 Metal lighographic coating line 1 Incinerating unit for volatile organic compound destruction Steel ----- 1 Littell LM-1 metal shearing line 1 Heavy gauge cold rolled steel shearing line with side trimmer
EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEETS AT MARCH 31, 1996 (UNAUDITED) AND THE CONDENSED STATEMENT OF OPERATIONS FOR THE QUARTER PERIOD ENDED MARCH 31, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000895726 U.S. CAN CORPORATION 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 191 0 70,518 5,878 88,205 169,924 357,873 130,685 474,702 94,964 244,271 0 0 129 86,555 474,702 163,611 163,611 142,129 142,129 873 45 6,186 7,528 3,198 4,330 0 0 0 4,330 0.33 0.33
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