0000950130-95-001502.txt : 19950808 0000950130-95-001502.hdr.sgml : 19950808 ACCESSION NUMBER: 0000950130-95-001502 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950807 SROS: NYSE 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: 1934 Act SEC FILE NUMBER: 001-06690 FILM NUMBER: 95559272 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 FORM 10-Q 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 JUNE 30, 1995 ---------------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______. Commission File Number: 1-6690 ------ 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.) One Aerial Way, Syosset, New York 11791 ---------------------------------------- -------- (Address of principal executive offices) Zip Code (516) 822-4940 ---------------------------------------------------- (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 preceeding 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 August 4, 1995 is 3,165,057. FORM 10-Q PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ----------------------------- Consolidated Balance Sheets as of June 30, 1995 and December 31, 1994 and June 30, 1994. Consolidated Statements of Earnings and Retained Earnings for the Three Months Ended June 30, 1995 and 1994 Consolidated Statements of Earnings and Retained Earnings for the Six Months Ended June 30, 1995 and 1994 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1995 and 1994 Notes to Consolidated Financial Statements. 2
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 1995 AND 1994 AND DECEMBER 31, 1994 (UNAUDITED) (In thousands) JUNE 30, DEC. 31, JUNE 30, 1995 1994 1994 -------- -------- -------- ASSETS: ------- Current Assets: Cash and cash equivalents $ 5,799 $ 8,776 $ 14,463 Investments - 292 295 Accounts Receivable: Trade accounts 122,354 102,255 105,637 Other 19,103 15,964 13,891 Less allowance for doubtful accounts (5,575) (5,316) (4,196) -------- -------- -------- Accounts receivable, net 135,882 112,903 115,332 Inventories 109,061 82,432 90,810 Prepaid expenses and other current assets 4,359 4,700 3,630 -------- -------- -------- TOTAL CURRENT ASSETS 255,101 209,103 224,530 -------- -------- -------- Property, plant and equipment, at cost: Land, building and improvements 51,809 48,750 45,924 Manufacturing machinery and equipment 237,843 230,365 213,030 Furniture, fixtures and equipment 9,718 8,536 8,437 Construction in progress 28,178 9,505 15,782 -------- -------- -------- 327,548 297,156 283,173 Less accumulated depreciation and amortization 136,894 116,786 102,254 -------- -------- -------- Net property, plant and equipment 190,654 180,370 180,919 Goodwill, net of accumulated 14,845 13,997 14,000 amortization Other assets 19,460 20,115 22,869 -------- -------- -------- TOTAL ASSETS $480,060 $423,585 $442,318 ======== ======== ======== See accompanying notes to consolidated financial statements.
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CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED) JUNE 30, 1995 AND 1994 AND DECEMBER 31, 1994 (UNAUDITED) (In thousands) JUNE 30, DEC. 31, JUNE 30, 1995 1994 1994 -------- -------- -------- LIABILITIES AND STOCKHOLDER'S EQUITY: ------------------------------------- Current Liabilities: Short term borrowings $ 44,919 $ 21,855 $ 29,634 Accounts payable - trade 74,017 60,540 58,284 Accrued liabilities: Employee compensation and benefits 18,599 19,072 13,386 Other accrued expenses 22,318 16,143 33,286 Current installments of long term debt and obligations under capital leases 13,993 13,043 12,808 Income taxes payable 1,860 1,160 1,167 Other current liabilities 9,411 5,942 2,160 -------- -------- -------- TOTAL CURRENT LIABILITIES 185,117 137,755 150,725 Long term debt, excluding current installments 125,882 128,363 134,432 Obligations under capital leases, excluding current installments 13,974 13,998 13,670 Deferred income taxes 4,240 3,747 3,011 Other 39,287 36,285 37,837 -------- -------- -------- TOTAL LIABILITIES 368,500 320,148 339,675 Minority interest 32,868 32,741 35,365 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 3,165,057 shares in 1995, 3,151,157 shares in Dec. 1994 and June 1994. 791 788 787 -------- -------- -------- 791 788 787 Additional paid-in capital 43,132 42,872 42,657 Retained earnings 28,556 26,187 22,930 -------- -------- -------- 72,479 69,847 66,374 Cumulative foreign currency translation 6,213 849 904 adjustment -------- -------- -------- TOTAL STOCKHOLDERS' EQUITY 78,692 70,696 67,278 -------- -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $480,060 $423,585 $442,318 ======== ======== ======== See accompanying notes to consolidated financial statements.
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CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS THREE MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED) (In thousands, except per share data) 1995 1994 -------- -------- Sales $160,952 $135,127 Cost of sales 135,636 110,289 -------- -------- Gross profit 25,316 24,838 Selling, general and administrative expenses 16,724 16,821 -------- -------- OPERATING INCOME 8,592 8,017 Other income (expense): Interest expense, net (5,150) (4,446) Foreign currency exchange gain (loss) 31 (74) Other - net 38 (35) -------- -------- NET OTHER EXPENSE (5,081) (4,555) Income before provision for income taxes, minority interest and extraordinary item 3,511 3,462 Provision for income taxes 1,153 1,478 -------- -------- Income before minority interest and extraordinary item 2,358 1,984 Minority interest 426 271 -------- -------- Income before extraordinary item 1,932 1,713 Extraordinary item, net - (73) NET INCOME $ 1,932 $ 1,640 ======== ======== Earnings (loss) per common share - Primary: Before extraordinary item $ 0.58 $ 0.53 Extraordinary item - (0.02) -------- -------- NET EARNINGS PER COMMON SHARE - PRIMARY $ 0.58 $ 0.51 ======== ======== Earnings (loss) per common share - assuming full dilution: Before extraordinary item $ 0.58 $ 0.52 Extraordinary Item - (0.02) NET EARNINGS PER COMMON SHARE ASSUMING FULL DILUTION $ 0.58 $ 0.50 ======== ======== See accompanying notes to consolidated financial statements.
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CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED) (In thousands, except per share data) 1995 1994 -------- -------- Sales $305,412 $250,977 Cost of sales 256,389 205,804 -------- -------- Gross profit 49,023 45,173 Selling, general and administrative 34,724 32,651 expenses -------- -------- OPERATING INCOME 14,299 12,522 Other income (expense): Interest expense, net (9,422) (9,054) Foreign currency exchange loss (285) (25) Other - net - 2 -------- -------- NET OTHER EXPENSE (9,707) (9,077) Income before provision for income taxes, minority interest, extraordinary item and cumulative effect of accounting change 4,592 3,445 Provision for income taxes 1,756 2,169 -------- -------- Income before minority interest, extraordinary item and cumulative effect of accounting 2,836 1,276 change Minority interest 467 (248) -------- -------- Income before extraordinary item and cumulative effect of accounting change 2,369 1,524 Extraordinary item, net - (73) Cumulative effect of accounting change, - (263) net -------- -------- NET INCOME $ 2,369 $ 1,188 ======== ======== Earnings (loss) per common share - primary: Before extraordinary item and cumulative effect of accounting change $ 0.71 $ 0.49 Extraordinary item - (0.02) Cumulative effect of accounting - (0.08) change, net -------- -------- NET EARNINGS PER COMMON SHARE - PRIMARY $ 0.71 $ 0.39 ======== ======== Earnings (loss) per common share - assuming full dilution: Before extraordinary item and cumulative effect of accounting change $ 0.71 $ 0.46 Extraordinary item - (0.02) Cumulative effect of accounting - (0.08) change, net -------- -------- NET EARNINGS PER COMMON SHARE ASSUMING FULL DILUTION $ 0.71 $ 0.36 ======== ======== See accompanying notes to consolidated financial statements.
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CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED) (In thousands) 1995 1994 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,369 $ 1,187 Depreciation and amortization 17,451 17,445 Minority interest 467 (248) Cumulative effect of accounting change, net - (73) Other adjustments (17,188) (23,053) -------- -------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 3,099 (4,742) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (20,075) (9,826) Other (372) 53 -------- -------- NET CASH USED IN INVESTING ACTIVITIES (20,447) (9,773) Net repayments of long term debt (6,436) (5,890) Net proceeds from short term borrowings 20,113 21,318 Other 263 146 -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 13,940 15,574 Effect of exchange rate changes on cash 431 663 -------- -------- Increase (decrease) in cash and cash equivalents (2,977) 1,722 Cash and cash equivalents at beginning of period 8,776 12,741 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,799 $ 14,463 ======== ======== See accompanying notes to consolidated financial statements
7 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1995 (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 1994 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. Weighted average shares outstanding in the second quarter of 1995 and 1994, were 3,350,726 and 3,229,988, respectively and for the first six months of 1995 and 1994 were 3,339,292 and 3,131,969, respectively. For both periods of 1994, earnings per common share, assuming full dilution, gives effect to the conversion of the Company's outstanding 10-3/4% Convertible Subordinated Debentures (the "Debentures") due May 1, 1994 as if such Debentures had been converted on the issue date, after elimination of related interest expense, net of income tax effect. All Debentures were converted during the second quarter of 1994. (2) Inventories Inventories consist principally of packaging materials. The components of inventory were as follows: (000's omitted)
June 30, December 31, June 30, 1995 1994 1994 --------- ------------- -------- Finished goods $ 54,164 35,985 $43,155 Work in process 11,212 7,096 9,621 Raw materials & supplies 46,657 43,275 37,948 -------- ------- ------- 112,033 86,356 90,724 LIFO reserve (2,972) (3,924) 86 -------- ------- ------- $109,061 $82,432 $90,810 ======== ======= =======
8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ---------------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- Sales during the second quarter of 1995 increased 19% to $160,952,000, as compared to $135,127,000 in the second quarter of 1994. Sales in the first six months of 1995 increased 22% to $305,412,000 from $250,977,000 in the same prior year period. Higher 1995 sales resulted from volume increases primarily at the Company's plastic subsidiaries, the effect of foreign currency translation rate differences which increased reported sales by the Company's European operations by approximately $20 million in the first six months of 1995 and $12 million in the second quarter of 1995, and resin price increase pass-throughs which increased sales by $17 million in the first six months of 1995 and $10 million in the second quarter of 1995, all as compared to the same prior year periods. Gross profit was higher in each period of 1995 than the same prior year period although gross profit as a percentage of sales declined to 15.7% and 16.1% in the second quarter and first six months of 1995, respectively, as compared to 18.4% and 18%, respectively, in the same periods of 1994. These declines reflect resin increase pass-throughs at PCI which increase both sales and costs resulting in lower percentage margins and competitive pressure at Ferembal and, to a lesser extent, in the European flexible film business. Selling, general and administrative expense as a percentage of sales declined to 11.4% in the first six months of 1995 from 13% in the same prior year period. Selling, general and administrative expense as a percentage of sales declined to 10.4% in the second quarter of 1995 from 12.4% in the second quarter of 1994. These declines reflect the fixed nature of many of these expenses in relation to increased sales. Because of these various factors, operating income amounted to $8,592,000 and $14,299,000 in the second quarter and first six months of 1995, respectively, as compared to $8,017,000 and $12,522,000 in the respective periods of 1994. Net interest expense increased to $5,150,000 in the second quarter of 1995 from $4,446,000 in the same period of 1994. Net interest expense increased to $9,422,000 in the first six months of 1995 as compared to $9,054,000 in the same period of 1994. These increases resulted from higher interest rates at the Company's European subsidiaries in 1995 than 1994. Provision for income taxes amounted to $1,153,000 and $1,756,000 in the second quarter and first six months of 1995, respectively, as compared to $1,478,000 and $2,169,000 in the second quarter and first six months of 1994, reflecting offsetting levels of tax benefits for accounting purposes in loss operations and tax expense in the Company's profitable operations. Minority interest during each period reflects the interests of other shareholders in some of the Company's subsidiaries. Net income amounted to $1,932,000 ($0.58 per share) in the second quarter of 1995 and $2,369,000 ($0.71 per share) in the first six months of 1995. Net income amounted to $1,640,000 ($.50 per share)in the second quarter of 1994. Net income in the first six months of 1994 amounted to $1,188,000 ($.36 per share). During the second quarter and first six months of 1994, the Company recognized an extraordinary charge amounting to $73,000 ($0.02 per share) related to the purchase and cancellation by PCI of $3 million of its 10.75% Senior Secured Notes. During the first six months of 1994, the Company recorded a charge amounting to $263,000 ($.08 per share) resulting from the cumulative effect of an accounting change. 9 FINANCIAL CONDITION ------------------- CAPITAL REQUIREMENTS The Company acquired $10.6 million and $20.1 million of capital assets during the second quarter and first six months of 1995, 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 1995 and total annual capital expenditures are expected to amount to approximately $31 million. The Company intends to actively pursue acquisition possibilities in 1995. 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. LIQUIDITY The Company's liquidity position declined slightly during the first six months of 1995. Working capital decreased to approximately $70 million, and the current ratio amounted to 1.38 at June 30, 1995 compared to 1.52 at December 31, 1994. For the six months ended June 30, 1995, net cash provided by operating activities amounted to $3.1 million. Operating activities also funded a large increase in working capital. The increase in the Company's working capital requirements in the second and third quarters of each year is primarily a result of the seasonality of Ferembal's business which peaks at these periods because of the harvest of vegetable crops for canning. Net cash used in investing activities, primarily capital expenditures, amounted to $20.4 million during the first six months of 1995. The cash required for the Company's investing activities for this period in excess of that provided by operations was financed with short term borrowings which were also used to make payments of long term debt. 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. At June 30, 1995, the Company had an available credit line under a Revolving Credit Agreement of $3.3 million. In addition, the Company's consolidated subsidiaries had available approximately $33 million in credit lines and bank overdraft facilities at June 30, 1995. 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 1995. On a long term basis the Company believes that existing funds, cash generated by operations and its existing banking facilities will be sufficient to meet its cash needs. 10 PART II OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ------------------------------------------------------------ At the annual meeting of stockholders on May 17, 1995, 2,267,408 votes were cast in favor of the election as directors of each of Messrs. D. Bainton, K. Bainton, DiGiovanna, Greeven, Hoenig, O'Neill, Utting, Yazgi, C. Zapata and J.L. Zapata. Votes withheld were 10,909 for each person. Votes cast in favor of each of Messrs. R. Bainton, Benson, Marquardt and Serrell were 2,267,208 and 11,109 votes were withheld for each person. The 1995 Restricted Stock Compensation Plan was approved by a vote of 2,134,034 for, 127,210 against, and 17,073 abstained. 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 12 All other items for which provision is made in the applicable regulations of the Securities and Exchange ommission 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 have been filed since March 31, 1995. 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 -------------- Principal Financial Officer and on behalf of registrant DATED: AUGUST 4, 1995 11 EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 5,799 0 141,457 5,575 109,061 255,101 327,548 136,894 480,060 185,117 139,856 791 0 0 77,901 480,060 305,412 305,412 256,389 291,113 9,707 0 9,422 4,592 1,756 2,369 0 0 0 2,369 .71 .71