-----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, IslGvY0JWdLVAS8ZGos/khAcVYFvJl99d2ju5cHnH+99Y45e7Goyem6H9M4VVO0n LttzeSUa3AqDRV+fegbqag== 0000950117-97-001859.txt : 19971114 0000950117-97-001859.hdr.sgml : 19971114 ACCESSION NUMBER: 0000950117-97-001859 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONTINENTAL CAN CO INC /DE/ CENTRAL INDEX KEY: 0000103392 STANDARD INDUSTRIAL CLASSIFICATION: METAL CANS [3411] IRS NUMBER: 112228114 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06690 FILM NUMBER: 97713075 BUSINESS ADDRESS: STREET 1: ONE AERIAL WAY CITY: SYOSSET STATE: NY ZIP: 11791 BUSINESS PHONE: 5168224940 MAIL ADDRESS: STREET 1: ONE AERIAL WAY CITY: SYOSSET STATE: NY ZIP: 11791 FORMER COMPANY: FORMER CONFORMED NAME: LOCKWOOD KESSLER & BARTLETT INC DATE OF NAME CHANGE: 19710815 10-Q 1 CONTINENTAL CAN COMPANY, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) _______ OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended SEPTEMBER 30, 1997 ----------------------- OR _______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________. Commission File Number: 1-6690 CONTINENTAL CAN COMPANY, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 11-2228114 ----------------------- ----------------------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 301 Merritt 7 Corporate Park, Norwalk, CT 06856 - -------------------------------------------------------------- (Address of principal executive offices) Zip Code (203) 750-5900 - ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X YES NO - ------- ------- The number of shares outstanding of the registrant's Common Stock ($.25 par value) as of November 7, 1997 is 3,217,355. FORM 10-Q PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 and September 30, 1996 Consolidated Statements of Earnings for the Three Months Ended September 30, 1997 and 1996 Consolidated Statements of Earnings for the Nine Months Ended September 30, 1997 and 1996 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1997 and 1996 Notes to Consolidated Financial Statements 2 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1997 AND 1996 AND DECEMBER 31, 1996 (UNAUDITED)
(In thousands) SEPTEMBER 30, DEC. 31, SEPTEMBER 30, 1997 1996 1996 ------------ ------------ ------------- ASSETS: Current Assets: Cash and cash equivalents $ 8,667 $ 15,020 $ 2,748 Investment securities 27,799 1,210 -- Accounts Receivable: Trade accounts 84,618 74,677 112,345 Other 7,241 7,217 11,984 Less allowance for doubtful accounts (4,459) (4,378) (5,502) --------- --------- --------- Accounts receivable, net 87,400 77,516 118,827 Inventories 86,476 82,911 94,761 Prepaid expenses and other current assets 6,154 5,938 5,184 --------- --------- --------- TOTAL CURRENT ASSETS 216,496 182,595 221,520 --------- --------- --------- Property, plant and equipment, at cost: Land, building and improvements 46,326 49,788 51,251 Manufacturing machinery and equipment 199,419 216,760 270,742 Furniture, fixtures and equipment 8,750 9,434 9,865 Construction in progress 17,764 8,644 31,286 --------- --------- --------- 272,259 284,626 363,144 Less accumulated depreciation and amortization 131,301 132,850 167,516 --------- --------- --------- Net property, plant and equipment 140,958 151,776 195,628 Goodwill, net of accumulated amortization 28,981 31,130 13,635 Other assets 25,808 25,531 24,603 --------- --------- --------- TOTAL ASSETS $ 412,223 $ 391,032 $ 455,386 ========= ========= =========
See accompanying notes to consolidated financial statements. 3 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED) SEPTEMBER 30, 1997 AND 1996 AND DECEMBER 31, 1996 (UNAUDITED)
(In thousands) SEPTEMBER 30, DEC. 31, SEPTEMBER 30, 1997 1996 1996 ------------ ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities: Short-term borrowings $ 17,757 $ 8,633 $ 53,134 Accounts payable - trade 54,721 44,169 54,171 Accrued liabilities: Employee compensation and benefits 17,687 18,421 19,999 Other accrued expenses 19,919 13,536 25,941 Current installments of long-term debt and obligations under capital leases 10,306 5,080 24,705 Income taxes payable 2,113 1,710 3,086 Other current liabilities 12,448 12,299 9,277 --------- --------- --------- TOTAL CURRENT LIABILITIES 134,951 103,848 190,313 Long-term debt, excluding current installments 146,916 156,373 112,434 Obligations under capital leases, excluding current installments 12,549 14,377 15,304 Deferred income taxes 4,260 3,641 3,657 Other liabilities 28,595 32,179 28,976 --------- --------- --------- TOTAL LIABILITIES 327,271 310,418 350,684 Minority interest 15,896 11,990 28,488 STOCKHOLDERS' EQUITY: Capital stock: First preferred stock, cumulative $25 par value Authorized 250,000 shares; no shares issued -- -- -- Second preferred stock, 4% non-cumulative, $100 par value. Authorized 1,535 shares; no shares issued -- -- -- Common stock, $.25 par value. Authorized 20,000,000 shares; Outstanding 3,217,355 shares in 1997, and 3,201,035 shares in December and September 1996 804 800 800 --------- --------- --------- 804 800 800 Additional paid-in capital 44,225 43,997 43,945 Retained earnings 28,535 21,182 29,124 --------- --------- --------- 73,564 65,979 73,869 Cumulative foreign currency translation adjustment (4,508) 2,645 2,345 --------- --------- --------- TOTAL STOCKHOLDERS' EQUITY 69,056 68,624 76,214 --------- --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 412,223 $ 391,032 $ 455,386 ========= ========= =========
See accompanying notes to consolidated financial statements. 4 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
(In thousands, except per share data) 1997 1996 ------------ ---------- Net sales $ 153,294 $ 170,882 Cost of sales 129,531 142,722 --------- --------- Gross profit 23,763 28,160 Restructuring charges -- 400 Selling, general and administrative expenses 11,648 17,310 --------- --------- OPERATING INCOME 12,115 10,450 Other income (expense): Interest expense, net (4,080) (5,005) Foreign currency exchange (loss) gain 54 (69) Other - net (19) (123) --------- --------- NET OTHER EXPENSE (4,045) (5,197) Income before provision for income taxes and minority interest 8,070 5,253 Provision for income taxes 2,726 1,523 --------- --------- Income before minority interest 5,344 3,730 Minority interest 1,598 1,088 --------- --------- NET INCOME $ 3,746 $ 2,642 ========= ========= NET EARNINGS PER COMMON SHARE $ 1.07 $ 0.80 ========= =========
See accompanying notes to consolidated financial statements. 5 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
(In thousands, except per share data) 1997 1996 --------- ---------- Net sales $ 414,365 $ 443,527 Cost of sales 347,130 374,981 --------- --------- Gross profit 67,235 68,546 Restructuring charges -- 1,500 Selling, general and administrative expenses 40,248 48,295 --------- --------- OPERATING INCOME 26,987 18,751 Other income (expense): Interest expense, net (12,195) (14,826) Foreign currency exchange gain (loss) 124 153 Other - net (21) (90) --------- --------- NET OTHER EXPENSE (12,092) (14,763) Income before provision for income taxes and minority interest 14,895 3,988 PROVISION FOR INCOME TAXES 4,612 1,618 --------- --------- Income before minority interest 10,283 2,370 Minority interest 2,930 (12) --------- --------- NET INCOME $ 7,353 $ 2,382 ========= ========= NET EARNINGS PER COMMON SHARE $ 2.10 $ 0.72 ========= =========
See accompanying notes to consolidated financial statements. 6 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
(In thousands) 1997 1996 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 7,353 $ 2,382 Depreciation and amortization 15,538 26,322 Minority interest 2,930 (12) Other adjustments (4,619) (17,496) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 21,202 11,196 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (11,622) (25,815) Other (25,999) (219) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (37,621) (26,034) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from long term debt 1,351 1,148 Net proceeds from short term borrowings 10,253 6,954 Other (123) 78 -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 11,481 8,180 Effect of exchange rate changes on cash (1,415) 481 -------- -------- Decrease in cash and cash equivalents (6,353) (6,177) Cash and cash equivalents at beginning of period 15,020 8,925 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,667 $ 2,748 ======== ========
See accompanying notes to consolidated financial statements. 7 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (1) Accounting Policies and Other Matters (a) Basis of Presentation Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's 1996 Annual Report to Stockholders. (b) Adjustments The results for the interim period reported herein have not been audited; however, in the opinion of management, all adjustments necessary for a fair presentation of the interim period statements have been made. (c) Earnings Per Common Share Earnings per common share is based on the weighted average number of common and common equivalent shares outstanding. Common equivalent shares include dilutive stock options (using the treasury stock method) exercisable under the Company's option plans and warrants. Weighted average shares outstanding in the third quarter of 1997 and 1996 were 3,511,243 and 3,285,967, respectively, and for the first nine months of 1997 and 1996 were 3,501,642 and 3,289,370, respectively. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"), Earnings per Share, which supersedes APB No. 15, Earnings per Share. The new pronouncement is effective for the December 31, 1997 financial statements and earlier adoption is not permitted. Upon adoption, the Company will be required to change its current method of computing earnings per share and to restate all prior periods. Under SFAS No. 128, primary earnings per share will be replaced with basic earnings per share. Basic earnings per share will exclude the dilutive effect of stock options. In addition, the new pronouncement requires that diluted earnings per share, formerly known as fully diluted earnings per share, be calculated using the treasury stock method of applying the average market price for the period rather than the higher of the average market price or the ending market price. Under SFAS No. 128, for the three and nine months ended September 30, 1997, the Company's basic earnings per share would have been $1.17 and $2.29 and its diluted earnings per share would have been $1.09 and $2.20, respectively. 8 (2) Inventories Inventories consist principally of packaging materials. The components of inventory were as follows: (000's omitted)
September 30, December 31, September 30, 1997 1996 1996 --------------- -------------- -------------- Finished goods $ 44,610 $ 39,746 $ 44,851 Work in process 10,246 6,627 10,066 Raw materials 34,673 40,785 41,869 --------------- -------------- -------------- $ 89,529 $ 87,158 $ 96,786 LIFO reserve (3,053) (4,247) (2,025) --------------- -------------- -------------- $ 86,476 $ 82,911 $ 94,761 =============== ============== ==============
(3) Property, Plant and Equipment Effective January 1, 1997, the Company revised its estimates of the useful lives of certain machinery and equipment. These changes were made to better reflect the estimated periods during which these assets will remain in service. For the quarter and nine months ended September 30, 1997, the change had the effect of decreasing depreciation expense by $1,204,000 and $3,724,000, respectively. After adjusting for an assumed tax rate of 38% and minority interest, this change increased net income by $530,000 ($0.15 per share) for the third quarter and $1,746,000 ($0.50 per share) for the first nine months of 1997. (4) Restructuring Charges The Company's subsidiary, Plastic Containers, Inc. (PCI), recorded charges of $1,100,000 and $400,000 in the second and third quarters of 1996, respectively, in connection with a plan to consolidate certain manufacturing operations, reduce operating costs and better position itself to achieve its corporate objectives. The charges primarily reflected severance costs from workforce reductions. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sales during the third quarter of 1997 amounted to $153,294,000 as compared to $170,882,000 in the third quarter of 1996. Sales in the first nine months of 1997 decreased to $414,365,000 from $443,527,000 in the same prior year period. The decline in sales primarily reflected foreign currency translation rate differences amounting to $15.6 million and $28.3 million in the third quarter and first nine months of 1997, respectively. On a consolidated basis, resin price increase pass-throughs amounting to $3.6 million in the third quarter of 1997 and $15.2 million in the first nine months of 1997 offset declines resulting from the deconsolidation of Onena of $4.8 million for the third quarter and $16 million for the first nine months of 1997. Gross profit was lower in each period of 1997 than the same prior year period. Gross profit as a percentage of sales decreased by approximately 1% in the third quarter and increased by 1% in the first nine months of 1997 from the same periods of 1996. 9 Results for the third quarter and first nine months of 1996 included a $400,000 and $1.5 million restructuring charge, respectively, for plant rationalization and realignment at PCI. These amounts reflected severance costs for employees at two plants which will be closed. The remaining business from those facilities, which had not previously been relocated as a result of changes in customers' filling locations, were consolidated in PCI's other facilities. Selling, general and administrative expenses was lower in each period of 1997 than 1996. Selling, general and administrative expenses as a percentage of sales decreased by approximately 1.2% in the first nine months of 1997 versus the same prior year period. Selling, general and administrative expenses as a percentage of sales in the third quarter of 1997 was approximately 2.5% lower than in 1996. The change in selling, general and administrative expenses as a percentage of sales primarily reflects cost reductions. Because of these various factors, operating income amounted to $12,115,000 and $26,987,000 in the third quarter and first nine months of 1997, respectively, compared to $10,450,000 and $18,751,000 in the third quarter and first nine months of 1996, respectively. Net interest expense decreased to $4,080,000 in the third quarter of 1997 from $5,005,000 in the third quarter of 1996. Net interest expense declined to $12,195,000 in the first nine months of 1997 versus $14,826,000 in the first nine months of 1996. The decline in net interest expense reflects both lower net debt levels and lower interest rates. Provision for income taxes amounted to $2,726,000 and $4,612,000 in the third quarter and first nine months of 1997, respectively, and provision for income taxes amounted to $1,523,000 and $1,618,000 in the third quarter and first nine months of 1996, respectively, reflecting offsetting amounts of tax benefits and charges for accounting purposes in the Company's subsidiaries. Minority interest during each period reflects the interests of other shareholders in some of the Company's subsidiaries. Net income amounted to $3,746,000 ($1.07 per share) in the third quarter and $7,353,000 ($2.10 per share) in the first nine months of 1997. Net income amounted to $2,642,000 ($.80 per share) in the third quarter and $2,382,000 ($0.72 per share) in the first nine months of 1996. FINANCIAL CONDITION CAPITAL REQUIREMENTS The Company acquired $5,736,000 and $11,622,000 of capital assets during the third quarter and first nine months of 1997, respectively, consisting primarily of packaging equipment. These assets were acquired for cash. Similar types of assets are expected to be acquired for the remainder of the year and total capital expenditures are expected to amount to approximately $20 million in 1997. In April 1997 the holder of $1.8 million principal amount of convertible bonds in Ferembal converted such bonds into stock representing 25% of the equity of Ferembal. As a result of the conversion the Company's ownership interest in Ferembal was reduced to 64%. The Company intends to actively pursue acquisition possibilities in 1997. It is presently the Company's intention to finance any acquisitions by leveraging the assets of the business to be acquired, with existing cash, through bank borrowings or, possibly, through the issuance of stock. 10 LIQUIDITY The Company's liquidity position improved during the first nine months of 1997. Working capital amounted to approximately $81.5 million, and the current ratio amounted to 1.6 at September 30, 1997 compared to 1.76 at December 31, 1996. For the nine months ended September 30, 1997, net cash provided by operating activities amounted to $21,202,000 all of which is attributable to PCI. Ferembal typically uses cash in the third quarter of each year primarily as a result of the seasonality of its business which peaks at this period because of the harvest of vegetable crops for canning. Net cash used in investing activities amounted to $37,621,000 during the first nine months of 1997. Of this amount $11.6 million related to capital expenditures with the remainder being invested in short-term interest bearing assets. In the same period, the Company increased short term borrowings by approximately $10 million and funded the remainder of its needs with existing cash. The Company expects that, as Ferembal collects receivables and reduces its seasonally high inventories relating to vegetable canning, these short term borrowings will be repaid or refinanced. At September 30, 1997, the Company's consolidated subsidiaries had available approximately $65 million in credit lines and bank overdraft facilities. However, the Company's ability to draw upon these lines for other than its subsidiaries' needs is restricted. The Company expects that cash from operations and its existing banking facilities will be sufficient to meet its operating needs for the remainder of 1997. 11 PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Required (11) Statement re computation of per share earnings See Note 1(c) on..............................................Page 8 (27) Financial Data Schedule.......................................Page 13 All other items for which provision is made in the applicable regulations of the Securities and Exchange Commission have been omitted as they are not required under the related instructions or they are inapplicable. (b) Reports on Form 8-K No Reports on Form 8-K were filed in the quarter ended September 30, 1997. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CONTINENTAL CAN COMPANY, INC. (REGISTRANT) By: /s/ Abdo Yazgi _____________________________________ Abdo Yazgi Principal Financial Officer and on behalf of registrant DATED: NOVEMBER 8, 1997 12 EX-27 2 EXHIBIT 27
5 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 8,667 27,779 91,859 4,459 86,476 216,476 272,259 131,301 412,223 134,951 125,000 804 0 0 68,252 412,223 414,365 414,365 347,130 387,378 12,092 0 12,195 14,895 4,612 7,353 0 0 0 7,353 2.10 2.10
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