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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 1-12139
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SEALED AIR CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 65-0654331
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
PARK 80 EAST, SADDLE BROOK, NEW JERSEY 07663-5291
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (201) 791-7600
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Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, par value $0.10 per share New York Stock Exchange, Inc.
Series A Convertible Preferred Stock, New York Stock Exchange, Inc.
par value $0.10 per share
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the registrant's Common Stock held by
non-affiliates of the registrant on March 22, 2000 was approximately
$3,952,000,000.
The number of outstanding shares of the registrant's Common Stock as of
March 22, 2000 was 83,821,232.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's 1999
Annual Report to Stockholders are incorporated by reference into Parts I and II
of this Form 10-K. Portions of the registrant's definitive proxy statement for
its 2000 Annual Meeting of Stockholders are incorporated by reference into
Part III of this Form 10-K.
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PART I
ITEM 1. BUSINESS
Sealed Air Corporation and its subsidiaries (collectively referred to as the
"Company" except where the context indicates otherwise) are engaged in the
manufacture and sale of a wide range of protective, food and specialty packaging
materials and systems throughout the world.
On March 31, 1998, the Company (formerly known as W. R. Grace & Co.) and
Sealed Air Corporation (US), a Delaware corporation formerly known as Sealed Air
Corporation ("old Sealed Air"), completed a series of transactions, starting
with the separation of the Cryovac packaging business ("Cryovac"), operated by
subsidiaries of the Company, from its specialty chemicals business, also
operated by subsidiaries. The specialty chemicals business then was spun off to
the Company's stockholders at that time, and that business became a separate
publicly owned corporation called W. R. Grace & Co. ("New Grace"). After
recapitalizing the Company's then-outstanding shares of common stock into new
common and preferred stock, Sealed Air Corporation (US) was merged with a
subsidiary of the Company. As a result of these transactions (collectively
referred to as the "Merger"), the Company now operates the businesses of Sealed
Air and Cryovac and is managed primarily by the former management of old Sealed
Air.
References to "Grace" in this Annual Report on Form 10-K refer to the
Company before the Merger.
SEGMENTS
The Company operates in two reportable business segments: (i) food and
specialty packaging products and (ii) protective packaging products, described
more fully below. Information concerning the Company's reportable segments
appears in Note 3 of the Notes to Consolidated Financial Statements in Item 8 of
this Annual Report on Form 10-K, which information is incorporated herein by
reference.
FOOD AND SPECIALTY PACKAGING PRODUCTS
The Company's principal food and specialty packaging products are its
flexible materials and related systems marketed primarily under the
Cryovac-Registered Trademark- trademark for a broad range of perishable food
applications. This segment also includes the Company's rigid packaging and
absorbent pads, principally foam trays used by supermarkets and food processors,
absorbent pads used for the retail packaging of meat, fish and poultry, and
rigid plastic containers for dairy and other food products.
FLEXIBLE MATERIALS AND RELATED SYSTEMS
The Company produces a variety of high-performance proprietary flexible
films, bags and associated packaging equipment marketed and sold primarily under
the Cryovac-Registered Trademark- trademark that are used to package a broad
range of perishable foods such as fresh red meat, smoked and processed meat,
cheese, poultry, processed and prepared foods (including soups and sauces for
restaurants and institutions) and produce. The Company also offers sterilized
medical bags and films for use with medical products and produce bags with
dispensing systems used by customers in supermarket produce departments.
Cryovac-Registered Trademark- food packaging products include shrink bags,
shrink films and laminated films sold for food packaging applications. Shrink
bags and films are co-extruded, multi-layered, shrinkable plastic bags and films
that, when exposed to heat, mold themselves to the shape of the product.
Laminates are multi-layered, non-shrinkable plastic materials used to package
perishable foods and shelf-stable products such as syrups and toppings. Films
and bags are sold in barrier and permeable forms, depending on the extent to
which it is desirable that oxygen or other gases pass through the material. For
fresh-cut produce, the Company produces films that permit gases to pass through
at various rates, thereby matching the varying respiration rates of different
vegetables and permitting longer shelf life.
The Company's food packaging equipment offerings include dispensing and
loading units to package foods in shrink, vacuum or vacuum skin packages using
the Company's films and bags; form, fill and seal units to package foods in
pouches made using the Company's films; shrink tunnels; bagging systems; and
auxiliary equipment. Systems are marketed to the food processing industry under
the Cryovac-Registered Trademark- trademark and other trademarks.
RIGID PACKAGING AND ABSORBENT PADS
The Company manufactures and sells Cryovac-Registered Trademark- polystyrene
foam trays that are used by supermarkets and by food processors to protect and
display fresh meat, poultry and produce. The Company also manufactures and sells
absorbent pads used for food packaging, including its
Dri-Loc-Registered Trademark- absorbent pads. The Company's foam trays and
absorbent pads are often used together. The Company's case-ready packaging
customers, principally meat and poultry processors, purchase trays, pads and
specially-designed films and packaging equipment to package centrally meat and
poultry products prior to shipment to the supermarket. Case-ready packages are
virtually ready for the meat case upon arrival at the retail store. During 1999,
the Company began commercial rollout of its peelable lidding films and barrier
foam trays for low oxygen case-ready packaging of ground beef. The Company also
manufactures rigid plastic containers, primarily plastic tubs for dairy products
such as margarine and yogurt, in Australia that are marketed under the
Omicron-TM- trademark.
PROTECTIVE PACKAGING PRODUCTS
The Company's protective packaging products include its cushioning and
surface protection products and certain other products. The Company's protective
packaging products and systems are used by a wide variety of end users,
including manufacturing, distribution and retail customers. The products
produced in this segment enable the end users to provide a high degree of
protection in packaging their items, by means of cushioning or surface
protection, or a combination thereof.
CUSHIONING AND SURFACE PROTECTION PRODUCTS
The Company manufactures and markets Bubble Wrap-Registered Trademark- and
AirCap-Registered Trademark- air cellular packaging materials and bags, which
consist of air encapsulated between two layers of plastic film, each containing
a barrier layer to retard air loss, that form a pneumatic cushion to protect
products from damage through shock or vibration during shipment.
Cryovac-Registered Trademark- performance films are manufactured and sold by the
Company for non-food product display and merchandising applications. These films
are used to "shrink-wrap" a wide assortment of industrial and consumer products.
The Company's Instapak-Registered Trademark- polyurethane foam packaging systems
(which consist of proprietary blends of polyurethane chemicals, high performance
polylefin films and specially designed dispensing equipment) provide protective
packaging for a wide variety of products. CelluPlank-TM- plank foams and
Stratocell-TM- laminated polyethylene foams are generally sold by the Company to
fabricators and converters. The Company also manufactures thin polyethylene
foams in roll and sheet form under the trademarks
Cell-Aire-Registered Trademark- and Cellu-Cushion-Registered Trademark-.
The Company manufactures and markets Jiffy-TM- protective mailers and other
durable mailers and bags that are made in several standard sizes and are used
for mailing or shipping a wide variety of items. The Company's protective
mailers include lightweight, tear-resistant paper mailers marketed under various
trademarks, including Jiffylite-Registered Trademark- and Mail
Lite-Registered Trademark-, lined with air cellular cushioning material. These
products also include the widely used Jiffy-TM- padded mailers made from
recycled kraft paper padded with macerated recycled newspaper. The Company's
durable mailers and bags are marketed under the ShurTuff-Registered Trademark-,
MailTuff-TM-, Trigon-Registered Trademark-, Lab Pak-Registered Trademark-,
Keepsafe-TM- and Crush-Gard-TM- brand names. The Company also manufactures and
sells Korrvu-Registered Trademark- suspension and retention packaging. The
Company manufactures recycled kraft, tissue and crepe paper for use as a raw
material in the manufacture of the Company's protective mailer and food
packaging products. The Company also
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manufactures and sells paper packaging products under the trademarks Kushion
Kraft-Registered Trademark-, Custom Wrap-TM-, Jiffy-TM-
Padwrap-Registered Trademark- and Void Kraft-TM-. Subsidiaries of the Company in
certain foreign countries produce loose-fill polystyrene packaging for sale to
customers in those countries.
The Company offers inflatable packaging systems, including its Rapid
Fill-Registered Trademark- system, which consists of a compact, portable
inflator and self-sealing inflatable plastic bags, and its Fill-Air-TM- system,
which converts rolls of polyethylene film into continuous perforated chains of
air-filled cushions. During 1999, the Company began commercial rollout of its
improved Vistaflex-Registered Trademark- inflatable packaging system, which
consists of a microprocessor-controlled inflation system and inflatable
cushions, that produces air-filled cushions designed for each particular
packaging application. The Company produces and markets converting systems that
convert certain of the Company's packaging materials, including air cellular
cushioning materials, thin polyethylene foam and paper packaging materials, into
sheets of a pre-selected size and quantity or, for the Company's recycled kraft
paper, into paper dunnage material. The Company also offers shrink-wrap
equipment for use with the Company's shrink films.
OTHER PRODUCTS
The Company manufactures and sells a number of non-packaging products,
including specialty adhesive tapes, solar pool covers and solar heating systems
for swimming pools, recycled kraft, tissue and crepe paper sold to unaffiliated
customers, and certain products related to the elimination and neutralization of
static electricity.
FOREIGN OPERATIONS
The Company operates in the United States and in 45 other countries, and its
products are distributed in those countries as well as in other parts of the
world. Since the Merger, the Company has extended its protective packaging
product offerings into countries where Cryovac had established operations prior
to the Merger and where old Sealed Air had not, including several European,
Latin American and Asia/Pacific countries and South Africa, and has also
extended these product offerings into Israel. In maintaining its foreign
operations, the Company runs the risks inherent in such operations, including
those of currency fluctuations. Information on currency exchange risks is
incorporated by reference in Item 7A of this Annual Report on Form 10-K.
Financial information about geographic areas, including net sales and total
long-lived assets, for each of the three years in the period ended December 31,
1999 appears in Note 3 of the Notes to Consolidated Financial Statements
incorporated by reference in Item 8 of this Annual Report on Form 10-K, which
information is incorporated herein by reference.
MARKETING, DISTRIBUTION AND CUSTOMERS
The Company employs over 1,300 sales and technical support representatives
in the countries in which it operates who market the Company's products through
a large number of distributors, fabricators and converters as well as directly
to end users. In the United States and certain other countries, the Company has
separate sales and marketing groups for many of its product lines. These groups
often work together to develop market opportunities for the Company's products.
To support the Company's food packaging customers, the Company has food
science laboratories in a number of locations that assist customers in
identifying the appropriate food packaging materials and systems to meet their
needs. The Company also offers customized graphic design services to its food
packaging and mailer customers.
To assist its marketing efforts for its protective packaging products and to
provide specialized customer services, the Company maintains packaging
laboratories in many of its United States and foreign facilities. These
laboratories are staffed by professional packaging engineers and equipped with
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drop-testing and other equipment used to develop and test cost-effective package
designs to meet the particular protective packaging requirements of each
customer.
The Company has no material long-term contracts for the distribution of its
products. In 1999, no customer or affiliated group of customers accounted for as
much as 10% of the Company's consolidated net sales.
Although net sales of both food and specialty packaging products and
protective packaging tend to be slightly higher in the fourth quarter, the
Company does not consider seasonality to be a material factor.
COMPETITION
Competition for most of the Company's packaging products is based primarily
on packaging performance characteristics, service and price. Since competition
is also based upon innovations in packaging technology, the Company's ongoing
research and development programs are intended to enable the Company to maintain
technological leadership. Certain companies producing competing products are
well established and may have greater financial resources than the Company.
There are a number of competing manufacturers of food packaging products,
including companies offering similar products that operate on a global basis as
well as those that operate in a region or single country. Competing
manufacturers produce a wide variety of food packaging based on plastic, paper,
metals and other materials. The Company believes that it is one of the leading
suppliers of flexible food packaging materials and related systems in the
principal geographic areas in which it offers those products and one of the
leading suppliers of absorbent pads for food products to supermarkets and
poultry processors in the United States.
The Company's protective packaging products compete with similar products
made by others and with a number of other packaging materials, all of which are
used to provide protection against damage to the packaged product during its
shipment and storage. Competitive materials include various forms of paper
packaging products, expanded plastics, corrugated die cuts, loosefill packaging
materials, strapping, envelopes, reinforced bags, boxes and other containers and
various corrugated materials. Heavy-duty applications of the Company's
Instapak-Registered Trademark- packaging and its plank and laminated foam
products also compete with various types of molded foam plastics, fabricated
foam plastics and mechanical shock mounts and with wood blocking and bracing
systems. The Company believes that it is one of the leading suppliers of air
cellular cushioning materials containing a barrier layer, shrink films for
industrial and commercial applications, and polyurethane foam packaging systems
in the geographic areas in which it sells these products.
As discussed below under "Environmental Matters," the Company is also
subject to competitive factors affecting packaging materials that are based upon
customers' environmental preferences.
RAW MATERIALS
The raw materials utilized in the Company's operations generally have been
readily available on the open market and in most cases are available from
several suppliers. Some materials used in the Company's protective packaging
products are reprocessed from scrap generated in the Company's manufacturing
operations or obtained through participation in recycling programs. The
principal raw materials used in the Company's food and specialty products
include polyolefin and other resins and films, paper and wood pulp products and
blowing agents used in foam products. The principal raw materials used in the
Company's protective packaging products include raw materials similar to those
used in its food and specialty products, as well as polyurethane chemicals. The
Company also offers a wide variety of specialized packaging equipment, some of
which it assembles and some of which it purchases from other suppliers.
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PRODUCT DEVELOPMENT
The Company maintains a continuing effort to develop new products and
improvements to its existing products and processes as well as new packaging and
non-packaging applications for its products. From time to time the Company also
acquires promising new packaging designs or techniques developed by others and
commercializes them. Since the Merger, the Company has instituted ongoing
programs of joint research and development projects combining the technical
capabilities of Cryovac and old Sealed Air. The Company incurred expenses of
$56,452,000 related to Company-sponsored research and development in 1999
compared with $57,524,000 during 1998 and $40,675,000 during 1997.
PATENTS AND LICENSES
The Company is the owner or licensee of a number of United States and
foreign patents and patent applications that relate to certain of its products,
manufacturing processes and equipment. While some of these patents and licenses,
as well as certain trademarks which the Company owns, offer some protection and
competitive advantage for the Company's products and their manufacture, the
Company believes that its success depends primarily on its marketing,
engineering and manufacturing skills and on its ongoing research and development
efforts. Therefore, the Company believes that the expiration or unenforceability
of any of such patents, applications or licenses would not be material to the
Company's business or financial position.
ENVIRONMENTAL MATTERS
The Company, like other manufacturers, is subject to various laws, rules and
regulations in the countries, jurisdictions and localities in which it operates
regulating the discharge of materials into the environment or otherwise relating
to the protection of the environment. The Company believes that compliance with
current environmental laws and regulations has not had a material effect on the
Company's capital expenditures or financial position.
In some jurisdictions in which the Company's packaging products are sold or
used, laws and regulations have been adopted or proposed that seek to regulate,
among other things, recycled or reprocessed content, sale and disposal of
packaging materials. In addition, customer demand for packaging materials that
are viewed as being "environmentally responsible" and that minimize the
generation of solid waste continues to evolve. While these issues can be a
competitive factor in the marketplace for packaging materials, the Company
maintains active programs designed to comply with these laws and regulations, to
monitor their evolution, and to meet such customer demand.
The Company believes that its packaging materials offer superior packaging
protection, enabling customers to achieve lower package cube and weight using
the Company's packaging materials than with many alternative packaging methods,
thereby reducing the disposal of damaged products as well as the generation of
packaging waste. Because the Company offers both plastic-based and paper-based
protective packaging materials, customers can select the protective packaging
materials that they consider to best meet their performance and cost needs and
environmental preferences. A number of the Company's protective packaging
product lines incorporate recycled or reprocessed content, and the Company
maintains ongoing efforts to add or increase recycled or reprocessed content in
many of its protective packaging product lines.
The Company also supports its customers' interests in eliminating waste by
offering or participating in collection programs for certain of the Company's
products or product packaging and for materials used in certain of the Company's
products, and, when possible, materials collected through these collection
programs are reprocessed and either reused in the Company's protective packaging
operations or offered to other manufacturers for use in other products.
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EMPLOYEES
At December 31, 1999, the Company had approximately 15,000 employees
worldwide.
ITEM 2. PROPERTIES
The Company's food and specialty packaging products are produced in 40
manufacturing facilities (15 in North America, 10 in Europe, 5 in Latin America,
9 in the Asia Pacific region, and 1 in South Africa). Protective packaging
products are produced in 69 manufacturing facilities (30 in North America, 20 in
Europe, 6 in Latin America, 11 in the Asia Pacific region, and 2 in South
Africa, including certain small converting facilities). Several of the Company's
manufacturing facilities serve both segments. The Company occupies other
facilities containing fabricating or converting operations or sales,
distribution, technical, warehouse or administrative functions at a number of
locations in the United States and in various foreign countries.
In the United States, the Company's food and specialty products are
manufactured at facilities in California, Indiana, Iowa, Mississippi, Missouri,
New York, North Carolina, Pennsylvania, South Carolina and Texas. Its protective
packaging products are manufactured at facilities in California, Connecticut,
Georgia, Illinois, Massachusetts, Mississippi, New Jersey, New York, North
Carolina, Pennsylvania, South Carolina, Texas and Washington. Because of the
light but voluminous nature of the Company's air cellular, polyethylene foam and
protective mailer products, significant freight savings may be realized by
locating manufacturing facilities for these products near markets. To realize
the benefit of such savings, the Company has facilities for manufacturing these
products in various locations in proximity to major markets.
The Company owns the large majority of its manufacturing facilities, certain
of which are owned subject to mortgages or similar financing arrangements. The
balance of the Company's manufacturing facilities are located in leased
premises. The Company's manufacturing facilities are usually located in general
purpose buildings in which the Company's specialized machinery for the
manufacture of one or more products is contained. The Company believes that its
manufacturing facilities are well maintained, suitable for their purposes, and
adequate for the Company's needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various lawsuits and administrative and other
proceedings incidental to its business, including certain federal or state
governmental environmental proceedings or private environmental claims relating
to the cleanup of Superfund sites or other sites. While it is often difficult to
estimate potential environmental liabilities and the future impact of
environmental matters, based upon the information currently available to the
Company and its experience in dealing with such matters, the Company believes
that its potential liability with respect to such sites is not material. The
Company believes, after consulting with counsel, that the disposition of its
lawsuits and other legal proceedings, including environmental matters, will not
have a material adverse effect on the Company's results of operations or
consolidated financial position.
In connection with the Merger, New Grace retained, and agreed to indemnify
and defend the Company against, all liabilities of Grace, whether accruing or
occurring before or after the Merger, other than liabilities arising from or
relating to Cryovac's operations. As a result, New Grace is obligated to
indemnify and defend the Company in a small number of actions raising
asbestos-related claims in which the Company has been named as a defendant as
the alleged successor to Grace because of the Merger. The Company believes that
such claims are without merit as to the Company and intends to defend vigorously
these actions. Based upon currently available information, the Company believes
that future costs, if any, related to such actions and other indemnified
liabilities will not have a material adverse effect on the Company's results of
operations or consolidated financial position.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's stockholders during the
fourth quarter of 1999.
EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing in the table below sets forth the current position
or positions held by each executive officer of the Company, his or her age as of
March 15, 2000, the year in which he or she first was elected to the position
currently held with the Company or with old Sealed Air (as indicated in the
footnote to the table), and the year in which he or she first was elected an
officer of the Company or of old Sealed Air (as indicated in the footnote to the
table).
All of the Company's officers serve at the pleasure of the Board of
Directors. All officers have been employed by the Company or its subsidiaries
for more than five years except for Mr. Van Riper, who was elected Senior Vice
President and Chief Financial Officer of the Company effective July 1, 1998.
Previously Mr. Van Riper was a partner in the accounting firm of KPMG LLP, which
was the independent auditor for old Sealed Air for many years prior to the
Merger and has acted as the independent auditor for the Company since the
Merger. There are no family relationships among any of the Company's officers or
directors.
NAME AND AGE AS OF FIRST ELECTED TO FIRST ELECTED
CURRENT POSITION MARCH 15, 2000 CURRENT POSITION* AN OFFICER*
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William V. Hickey................................... 55 2000 1980
President, Chief Executive Officer and Director
Leonard R. Byrne.................................... 58 1999 1998
Senior Vice President
Bruce A. Cruikshank................................. 57 1996 1990
Senior Vice President
Robert A. Pesci..................................... 54 1997 1990
Senior Vice President
Daniel S. Van Riper................................. 59 1998 1998
Senior Vice President and Chief Financial Officer
Jonathan B. Baker................................... 47 1994 1994
Vice President
James A. Bixby...................................... 56 1990 1990
Vice President
Mary A. Coventry.................................... 46 1994 1994
Vice President
Jean-Luc Debry...................................... 54 1992 1992
Vice President
Paul B. Hogan....................................... 60 1995 1995
Vice President
James P. Mix........................................ 48 1994 1994
Vice President
Manuel Mondragon.................................... 50 1999 1999
Vice President
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NAME AND AGE AS OF FIRST ELECTED TO FIRST ELECTED
CURRENT POSITION MARCH 15, 2000 CURRENT POSITION* AN OFFICER*
- ---------------------------------------------------- -------------- ----------------- -------------
J. Stuart K. Prosser................................ 54 1999 1999
Vice President
Abraham N. Reichental............................... 43 1994 1994
Vice President
Hugh L. Sargant..................................... 51 1999 1999
Vice President
Horst Tebbe......................................... 59 1998 1986
Vice President
Alan S. Weinberg.................................... 58 1998 1998
Vice President
Tod S. Christie..................................... 41 1999 1999
Treasurer
Jeffrey S. Warren................................... 46 1996 1996
Controller
H. Katherine White.................................. 54 1998 1996
General Counsel and Secretary
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* Messrs. Byrne, Christie, Mondragon, Prosser, Sargant, Van Riper and Weinberg
were first appointed to executive officer positions after the Merger. All
other persons listed in the table were executive officers of old Sealed Air
prior to the Merger.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information appearing under the caption "Capital Stock Information" in
the Company's 1999 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing under the caption "Selected Financial Data" in the
Company's 1999 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information appearing under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition" in the Company's 1999
Annual Report to Stockholders is incorporated herein by reference.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information appearing under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Quantitative and
Qualitative Disclosures about Market Risk" in the Company's 1999 Annual Report
to Stockholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Consolidated Financial Statements and Schedule on page F-2 of
this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Part of the information required in response to this Item is set forth in
Part I of this Annual Report on Form 10-K under the caption "Executive Officers
of the Registrant," and the balance will be set forth in the Company's Proxy
Statement for its 2000 Annual Meeting of Stockholders under the captions
"Information Concerning Nominees" and "Section 16(a) Beneficial Ownership
Reporting Compliance." All such information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required in response to this Item will be set forth in the
Company's Proxy Statement for its 2000 Annual Meeting of Stockholders under the
captions "Directors' Compensation," "Summary Compensation Table" and
"Compensation Committee Interlocks and Insider Participation." Such information
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required in response to this Item will be set forth in the
Company's Proxy Statement for its 2000 Annual Meeting of Stockholders under the
caption "Voting Securities." Such information is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in response to this Item will be set forth in the
Company's Proxy Statement for its 2000 Annual Meeting of Stockholders under the
caption "Summary Compensation Table." Such information is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) DOCUMENTS FILED AS A PART OF THIS ANNUAL REPORT ON FORM 10-K:
(i) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
See Index to Consolidated Financial Statements and Schedule on page F-2 of
this Annual Report on Form 10-K.
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(ii) EXHIBITS
EXHIBIT NUMBER DESCRIPTION
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2.1 Agreement and Plan of Merger dated as of August 14, 1997 by
and among Grace, Packco Acquisition Corp. and Sealed Air
Corporation. [Exhibit 2.1 to Grace's Current Report on
Form 8-K, Date of Report August 14, 1997, File No. 1-12139,
is incorporated herein by reference.]
2.2 Distribution Agreement dated as of March 30, 1998 among the
Company, W. R. Grace & Co.-Conn. ("Grace-Conn."), and New
Grace. [Exhibit 2.2 to the Company's Current Report on
Form 8-K, Date of Report March 31, 1998, File No. 1-12139,
is incorporated herein by reference.]
3.1 Amended and Restated Certificate of Incorporation of the
Company as currently in effect. [Exhibit 3.2 to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1999, File No. 1-12139, is
incorporated herein by reference.]
3.2 Amended and Restated By-Laws of the Company as currently in
effect.
3.3 Amendments to the By-Laws of the Company, effective
November 3, 1999.
10.1 Employee Benefits Allocation Agreement dated as of
March 30, 1998 among the Company, Grace-Conn. and New Grace.
[Exhibit 10.1 to the Company's Current Report on Form 8-K,
Date of Report March 31, 1998, File No. 1-12139, is
incorporated herein by reference.]
10.2 Tax Sharing Agreement dated as of March 30, 1998 by and
among the Company, Grace-Conn. and New Grace. [Exhibit 10.2
to the Company's Current Report on Form 8-K, Date of Report
March 31, 1998, File No. 1-12139, is incorporated herein by
reference.]
10.3 Contingent Stock Plan of the Company, as amended.
[Exhibit 4.3 to the Company's Registration Statement on
Form S-8, Registration No. 333-59197, is incorporated herein
by reference.]*
10.4 Restricted Stock Plan for Non-Employee Directors of the
Company. [Annex E to the Company's Proxy Statement for the
1998 Annual Meeting of Stockholders is incorporated herein
by reference.]*
10.5 Grace 1996 Stock Incentive Plan, as amended. [Exhibit 10.1
to the Quarterly Report on Form 10-Q of Grace for the
quarter ended March 31, 1997, File No. 1-12139, is
incorporated herein by reference.]*
10.6 Grace 1994 Stock Incentive Plan, as amended. [Exhibit 10.6
to the Current Report on Form 8-K filed October 10, 1996 of
Grace, File No. 1-12139, is incorporated herein by
reference.]*
10.7 Grace 1989 Stock Incentive Plan, as amended. [Exhibit 10.5
to the Current Report on Form 8-K filed October 10, 1996 of
Grace, File No. 1-12139, is incorporated herein by
reference.]*
10.8 Grace 1986 Stock Incentive Plan, as amended. [Exhibit 10.4
to the Current Report on Form 8-K filed October 10, 1996 of
Grace, File No. 1-12139, is incorporated herein by
reference.]*
10
EXHIBIT NUMBER DESCRIPTION
- -------------- ------------------------------------------------------------
10.9 Information concerning Grace's stock options and deferred
payment arrangements for Grace's LTIP awards that were
assumed by the Company. [Information under the headings
"Stock Options" and "LTIP" on pages 15-16 of the Proxy
Statement for the Company's 1999 Annual Meeting of
Stockholders is incorporated herein by reference.]*
10.10 Sealed Air Corporation Deferred Compensation Program for
Cryovac Employees. [Exhibit 10.10 to the Annual Report on
Form 10-K for the year ended December 31, 1998, File
No. 1-12139, is incorporated herein by reference.]*
10.11 Form of Contingent Stock Agreement--Officer. [Exhibit 4.5 to
the Company's Registration Statement on Form S-8,
Registration No. 333-59197, is incorporated herein by
reference.]*
10.12 Form of Contingent Stock Agreement--Section 162(m) Officer.
[Exhibit 4.6 to the Company's Registration Statement on
Form S-8, Registration No. 333-59197, is incorporated herein
by reference.]*
10.13 Form of Restricted Stock Purchase Agreement. [Exhibit 4.4 to
the Company's Registration Statement on Form S-8,
Registration No. 333-59195, is incorporated herein by
reference.]*
10.14 Global Revolving Credit Agreement (5-year) dated as of
March 30, 1998 among the Company, certain of its
subsidiaries including Cryovac, Inc., ABN AMRO Bank N.V.,
Bankers Trust Company, Bank of America National Trust and
Savings Association, NationsBank, N. A., and the other banks
party thereto. [Exhibit 10.3 to the Company's Current Report
on Form 8-K, Date of Report March 31, 1998, File
No. 1-12139, is incorporated herein by reference.]
10.15 Global Revolving Credit Agreement (364-day) dated as of
March 30, 1998 among the Company, certain of its
subsidiaries including Cryovac, Inc., ABN AMRO Bank N.V.,
Bankers Trust Company, Bank of America National Trust and
Savings Association, NationsBank, N. A., and the other banks
party thereto. [Exhibit 10.4 to the Company's Current Report
on Form 8-K, Date of Report March 31, 1998, File
No. 1-12139, is incorporated herein by reference.]
10.16 First Amendment, dated as of March 16, 1999, to Global
Revolving Credit Agreement (5-year), among the Company,
certain of the Company's subsidiaries as borrowers and
guarantors thereunder, ABN AMRO Bank N.V., as Administrative
Agent, and certain other banks party thereto. [Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999, File No. 1-12139, is
incorporated herein by reference.]
10.17 First Amendment, dated as of March 16, 1999, to Global
Revolving Credit Agreement (364-day), among the Company,
certain of the Company's subsidiaries as borrowers and
guarantors thereunder, ABN AMRO Bank N.V., as Administrative
Agent, and certain other banks party thereto. [Exhibit 10.2
to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999, File No. 1-12139, is
incorporated herein by reference.]
11
EXHIBIT NUMBER DESCRIPTION
- -------------- ------------------------------------------------------------
10.18 Second Amendment, dated as of June 2, 1999, to Global
Revolving Credit Agreement (5-year), among the Company,
certain of the Company's subsidiaries as guarantors and/or
borrowers thereunder, ABN AMRO Bank N.V., as Administrative
Agent, and certain other banks party thereto. [Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999, File No. 1-12139, is
incorporated herein by reference.]
10.19 Second Amendment, dated as of June 2, 1999, to Global
Revolving Credit Agreement (364-day), among the Company,
certain of the Company's subsidiaries as guarantors and/or
borrowers thereunder, ABN AMRO Bank N.V., as Administrative
Agent, and certain other banks party thereto. [Exhibit 10.2
to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999, File No. 1-12139, is
incorporated herein by reference.]
10.20 Agreement dated as of April 6, 1999, between the Company and
J. Gary Kaenzig, Jr. [Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999, File No. 1-12139, is incorporated herein by
reference.]*
10.21 Performance-Based Compensation Program of the Company (as
adopted effective for the 2000 fiscal year) subject to
stockholder approval at the 2000 Annual Meeting.*
13 Portions of the Company's 1999 Annual Report to Stockholders
that are incorporated by reference into this Annual Report
on Form 10-K.
21 Subsidiaries of the Company.
23.1 Consent of KPMG LLP.
23.2 Consent of PricewaterhouseCoopers LLP
27 Financial Data Schedule
- ------------------------
* Compensatory plan or arrangement of management required to be filed as an
exhibit to this report on Form 10-K.
(B) REPORTS ON FORM 8-K:
The Company did not file any reports on Form 8-K during the fiscal quarter
ended December 31, 1999.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SEALED AIR CORPORATION
(Registrant)
Date: March 27, 2000 By /s/ WILLIAM V. HICKEY
-----------------------------------------
William V. Hickey
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
President, Chief Executive
By /s/ WILLIAM V. HICKEY Officer and Director
------------------------------------------- (Principal Executive March 27, 2000
William V. Hickey Officer)
Senior Vice President and
By /s/ DANIEL S. VAN RIPER Chief Financial Officer
------------------------------------------- (Principal Financial March 27, 2000
Daniel S. Van Riper Officer)
By /s/ JEFFREY S. WARREN
------------------------------------------- Controller (Principal March 27, 2000
Jeffrey S. Warren Accounting Officer)
By /s/ T. J. DERMOT DUNPHY
------------------------------------------- Chairman of the Board and March 27, 2000
T. J. Dermot Dunphy Director
By /s/ HANK BROWN
------------------------------------------- Director March 27, 2000
Hank Brown
By /s/ JOHN K. CASTLE
------------------------------------------- Director March 27, 2000
John K. Castle
13
SIGNATURE TITLE DATE
--------- ----- ----
By /s/ CHRISTOPHER CHENG
------------------------------------------- Director March 27, 2000
Christopher Cheng
By /s/ LAWRENCE R. CODEY
------------------------------------------- Director March 27, 2000
Lawrence R. Codey
By /s/ CHARLES F. FARRELL, JR.
------------------------------------------- Director March 27, 2000
Charles F. Farrell, Jr.
By /s/ DAVID FREEMAN
------------------------------------------- Director March 27, 2000
David Freeman
By /s/ SHIRLEY A. JACKSON
------------------------------------------- Director March 27, 2000
Shirley A. Jackson
By /s/ VIRGINIA A. KAMSKY
------------------------------------------- Director March 27, 2000
Virginia A. Kamsky
By /s/ ALAN H. MILLER
------------------------------------------- Director March 27, 2000
Alan H. Miller
By /s/ JOHN E. PHIPPS
------------------------------------------- Director March 27, 2000
John E. Phipps
14
SEALED AIR CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
F-1
SEALED AIR CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
PAGE
--------
Independent Auditors' Reports............................... *
Financial Statements:
Consolidated Statements of Earnings for the years ended
December 31, 1999, 1998 and 1997........................ *
Consolidated Balance Sheets--December 31, 1999 and 1998... *
Consolidated Statements of Equity for the years ended
December 31, 1999, 1998 and 1997........................ *
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998, and 1997....................... *
Consolidated Statements of Comprehensive Income for the
years ended December 31, 1999, 1998 and 1997............ *
Notes to Consolidated Financial Statements................ *
Independent Auditors' Reports on Schedule................... F-3
Consolidated Schedule:
II--Valuation and Qualifying Accounts....................... F-5
- ------------------------
* The information required appears on pages 26 through 57 of the Company's
1999 Annual Report to Stockholders and is incorporated by reference into
this Annual Report on Form 10-K.
All other schedules are omitted, as the required information is inapplicable
or the information is presented in the consolidated financial statements or
related notes.
F-2
INDEPENDENT AUDITORS' REPORT ON SCHEDULE
The Board of Directors
Sealed Air Corporation:
Under date of January 25, 2000, we reported on the consolidated balance sheets
of Sealed Air Corporation and subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements of earnings, equity, comprehensive income,
and cash flows for the years then ended, as contained in the 1999 Annual Report
to Shareholders of Sealed Air Corporation. These consolidated financial
statements and our report thereon are incorporated by reference in this Annual
Report on Form 10-K. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related 1999 and 1998
consolidated financial statement schedule as listed in the accompanying index.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
s/ KPMG LLP
KPMG LLP
Short Hills, New Jersey
January 25, 2000
F-3
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
Sealed Air Corporation
Our audit of the consolidated financial statements referred to in our report
dated February 23, 1998, contained in the 1999 Annual Report to Shareholders of
Sealed Air Corporation (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedule for the year ended December 31, 1997,
listed in the Index to Consolidated Financial Statements and Schedule of this
Form 10-K. In our opinion, the Financial Statement Schedule for the period
referred to above presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related consolidated financial
statements.
s/PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Ft. Lauderdale, Florida
February 23, 1998
F-4
SEALED AIR CORPORATION AND SUBSIDIARIES
SCHEDULE II
Valuation and Qualifying Accounts
Years Ended December 31, 1999, 1998 and 1997
(In thousands of dollars)
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING COSTS AND TO OTHER END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS (1) DEDUCTIONS (2) OF YEAR
- ----------- ---------- ---------- ------------ -------------- ----------
Year ended December 31, 1999
Allowance for doubtful accounts.... 17,945 6,662 1,936 (5,147) 21,396
====== ====== ===== ====== ======
Year ended December 31, 1998
Allowance for doubtful accounts.... 7,256 11,300 5,539 (6,150) 17,945
====== ====== ===== ====== ======
Year ended December 31, 1997
Allowance for doubtful accounts.... 5,734 2,695 1,511 (2,684) 7,256
====== ====== ===== ====== ======
- ------------------------
(1) In 1998, primarily allowance for doubtful accounts of old Sealed Air
acquired on March 31, 1998.
(2) Primarily accounts receivable balances written off.
F-5