-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, BH74dvqoCumAXSWkk3qxtvTwf8tgUnhYzb8ozTpaL55/XJ2O0S8QXJiruxolI1Gw OGTVTRu6Pk67fLp5t+oJuA== 0000950130-94-001211.txt : 19940815 0000950130-94-001211.hdr.sgml : 19940815 ACCESSION NUMBER: 0000950130-94-001211 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONTINENTAL CAN CO INC /DE/ CENTRAL INDEX KEY: 0000103392 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94543683 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, 1994 ---------------------- 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 11, 1994 is 3,151,157. FORM 10-Q PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ----------------------------- Consolidated Balance Sheets as of June 30, 1994 and December 31, 1993 and June 30, 1993. Consolidated Statements of Earnings and Retained Earnings for the Three Months Ended June 30, 1994 and 1993 Consolidated Statements of Earnings and Retained Earnings for the Six Months Ended June 30, 1994 and 1993 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1994 and 1993 Notes to Consolidated Financial Statements 2
CONTINENTAL CAN COMPANY, INC. CONSOLIDATED BALANCE SHEETS JUNE 30, 1994 AND 1993 AND DECEMBER 31, 1993 (In thousands) June 30, December 31, June 30, 1994 1993 1993 ---------------------------------- ASSETS Current assets: Cash and cash equivalents $ 14,463 $ 12,741 $ 15,496 Investments 295 317 823 Accounts receivable: Trade accounts 105,637 71,899 90,201 Other 13,891 8,357 5,770 Less allowance for doubtful accounts (4,196) (3,522) (3,514) ---------------------------------- Accounts receivable, net 115,332 76,734 92,457 Inventories 90,810 69,503 82,000 Prepaid expenses and other current assets 3,630 4,911 3,683 ---------------------------------- Total current assets 224,530 164,206 194,459 Property, plant and equipment, at cost: Land, building and building improvements 45,924 43,733 44,877 Manufacturing machinery and equipment 213,030 206,423 188,907 Furniture, fixtures and equipment 8,437 7,379 7,497 Construction in progress 15,782 9,732 17,095 ---------------------------------- 283,173 267,267 258,376 Less accumulated depreciation and amortization 102,254 84,192 72,682 ---------------------------------- Net property, plant and equipment 180,919 183,075 185,694 Goodwill, net of accumulated amortization 14,000 13,369 13,818 Investments - non-current 50 96 101 Other assets 22,819 25,161 24,359 ---------------------------------- Total assets $442,318 $385,907 $418,431 ==================================
See accompanying notes to consolidated financial statements. 3
CONTINENTAL CAN COMPANY, INC. CONSOLIDATED BALANCE SHEETS JUNE 30, 1994 AND 1993 AND DECEMBER 31, 1993 (In thousands) June 30, December 31, June 30, 1994 1993 1993 --------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short term borrowings $ 29,634 $ 6,378 $ 16,553 Accounts payable - trade 58,284 40,828 47,345 Accrued liabilities: Employee compensation and benefits 13,386 16,075 19,695 Other accrued expenses 33,286 15,887 19,863 Current installments of long term debt and obligations under capital leases 12,808 13,487 8,863 Income taxes payable 1,167 635 649 Other liabilities 2,160 4,811 7,483 --------------------------------- Total current liabilities 150,725 98,101 120,451 Long term debt, excluding current installments 134,432 140,481 144,831 Obligations under capital leases, excluding current installments 13,670 13,501 14,429 Deferred income taxes 3,011 2,717 3,267 Other 37,837 38,137 40,886 --------------------------------- Total liabilities 339,675 292,937 323,864 Minority interest 35,365 32,115 33,748 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 3,151,157 shares in 1994, 2,858,026 shares in Dec. 1993 and 2,873,078 shares in Jun. 1993. 787 720 718 ---------------------------------- 787 720 718 Additional paid-in capital 42,657 41,414 41,370 Retained earnings 22,930 21,742 20,836 ---------------------------------- 66,374 63,876 62,924 Cumulative foreign currency translation adjustment 904 (3,021) (2,105) ---------------------------------- Total stockholders' equity 67,278 60,855 60,819 ---------------------------------- $442,318 $385,907 $418,431 ==================================
See accompanying notes to consolidated financial statements. 4
CONTINENTAL CAN COMPANY, INC. CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS THREE MONTHS ENDED JUNE 30, 1994 AND 1993 (In thousands, except per share data) 1994 1993 -------- -------- Sales $135,127 $127,460 Cost of goods sold 110,289 103,087 -------- -------- Gross profit 24,838 24,373 Selling, general and administrative expenses 16,821 15,997 -------- -------- Operating income 8,017 8,376 Other income (expense): Interest expense, net (4,446) (5,864) Foreign currency exchange gain (loss) (74) 35 Other - net (35) 63 -------- -------- Net other expense (4,555) (5,766) -------- -------- Income before provision for income taxes, minority interest and extraordinary item 3,462 2,610 Provision for income taxes 1,478 1,677 -------- -------- Income before minority interest and extraordinary item 1,984 933 Minority interest 271 (25) -------- -------- 1,713 958 Extraordinary Item (73) - -------- -------- Net income $ 1,640 $ 958 ======== ======== Net earnings (loss) per common share - Primary: Before extraordinary item $ 0.53 $ 0.32 Extraordinary item (0.02) - -------- -------- Net earnings per common share $ 0.51 $ 0.32 ======== ======== Earnings (loss) per common share, assuming full dilution: Before extraordinary item $ 0.52 $ 0.29 Extraordinary item (0.02) - -------- -------- Net earnings (loss) per common share assuming full dilution $ 0.50 $ 0.29 ======== ======== RETAINED EARNINGS Balance at beginning of period $ 21,290 $ 19,930 Net income 1,640 958 -------- -------- 22,930 20,888 Dividends declared - 52 -------- -------- Balance at end of period $ 22,930 $ 20,836 ======== ========
See accompanying notes to consolidated financial statements. 5
CONTINENTAL CAN COMPANY, INC. CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS SIX MONTHS ENDED JUNE 30, 1994 AND 1993 (In thousands except per share data) 1994 1993 -------- -------- Sales $250,977 $238,232 Cost of goods sold 205,804 193,753 -------- -------- Gross profit 45,173 44,479 Selling, general and administrative expenses 32,651 31,327 -------- -------- Operating income 12,522 13,152 Other income (expense): Interest expense, net (9,054) (11,589) Foreign currency exchange loss (25) (50) Other - net 2 100 -------- -------- Net other expense (9,077) (11,539) -------- -------- Income before provision for income taxes,minority interest, extraordinary item and cumulative effect of accounting change 3,445 1,613 Provision for income taxes 2,169 2,060 -------- -------- Income (loss) before minority interest, extraordinary item and cumulative effect of accounting change 1,276 (447) Minority interest (248) (581) -------- -------- Income before extraordinary item and cumulative effect of accounting change 1,524 134 Extraordinary Item (73) - Cumulative effect of accounting change, net (263) - -------- --------- Net income $ 1,188 $ 134 ======== ======== Earnings (loss) per common share - Primary: Before cumulative effect of accounting change $ 0.49 $ 0.04 Extraordinary Item (0.02) - Cumulative effect of accounting change (0.08) - -------- -------- Net earnings per common share $ 0.39 $ 0.04 ======== ======== Earnings (loss) per common share, assuming full dilution: Before cumulative effect of accounting change $ 0.46 $ 0.05 Extraordinary Item (0.02) - Cumulative effect of accounting change (0.08) - -------- -------- Net earnings per common share, assuming full dilution $ 0.36 $ 0.05 ======== ======== RETAINED EARNINGS Balance at beginning of period $ 21,742 $ 20,754 Net income 1,188 134 -------- -------- 22,930 20,888 Dividends Declared - 52 -------- -------- Balance at end of period $ 22,930 $ 20,836 ======== ========
See accompanying notes to consolidated financial statements. 6
CONTINENTAL CAN COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1994 AND 1993 (In thousands) 1994 1993 -------- -------- Cash Flows From Operating Activities: Net income $ 1,187 $ 134 Depreciation and Amortization 17,445 16,880 Minority Interest (248) (581) Cumulative Effect of Accounting (73) - Change, Net Other Adjustments (23,053) (12,885) -------- -------- Net Cash Provided by (Used in) Operating Activities (4,742) 3,548 Net Cash Provided by (Used in) Investing Activities: Capital Expenditures (9,826) (9,306) Other 53 104 -------- -------- Net Cash Used in Investing Activities (9,773) (9,202) Net Cash Provided by Financing Activities 15,574 7,009 Effect of Exchange Rate Changes on Cash 663 (134) -------- -------- Net Increase in Cash 1,722 1,221 Cash at Beginning of Period 12,741 14,275 -------- -------- Cash at End of Period $ 14,463 $ 15,496 ======== ========
See accompanying notes to consolidated financial statements. 7 CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1994 (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 1993 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 1994 and 1993, were 3,229,988 and 3,031,979, respectively and for the first six months of 1994 and 1993 were 3,131,969, and 3,033,119, respectively. For both periods of 1993 and 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. See Note 4. (2) Inventories Inventories consist principally of packaging materials. The components of inventory were as follows: (000's omitted)
June 30, December 31, June 30, 1994 1993 1993 -------- ------------ -------- Finished goods $43,155 $31,720 $39,632 Work in process 9,621 5,834 8,761 Raw materials & supplies 37,948 31,774 33,495 ------- ------- ------- 90,724 69,328 81,888 LIFO reserve 86 175 112 ------- ------- ------- $90,810 $69,503 $82,000 ======= ======= =======
(3) Merger of Subsidiaries During the second quarter of 1994, the Company's subsidiaries Onena Bolsas de Papel S.A. (Onena), Industrias Gomariz S.A. (Ingosa) and Dixie Union S.A. legally merged with effect from January 1, 1994. The provincial government through SODENA, an economic development corporation, was issued 41% of the merged entity, Onena Bolsas de Papel S.A., in exchange for the elimination of $3,905,000 (534 million pesetas) in overdue local taxes owed by Ingosa. In addition, SODENA provided a loan in the amount of $2,272,000 (309 million pesetas) on an interest-free basis for three years. These transactions have been 8 accounted for under the purchase method with the excess over the negotiated value of SODENA's equity interest ($1,097,000;150 million pesetas) and the excess over the loan amount discounted at a 7% annual rate ($439,000;57 million pesetas), being allocated to property, plant and equipment. (4) Common Stock During the second quarter of 1994, the Company's Debentures, totaling $1,164,187 in principal amount, matured. All of the Debentures were surrendered for conversion and 267,799 shares of common stock were issued. Holders of the Debentures had two options with regard to the conversion, one of which required the payment of additional cash. Pursuant to this option $146,152 was received, $146,152 principal amount of Debentures were surrendered, and 38,974 shares of Common Stock were issued. The remaining $1,018,035 principal amount of Debentures were surrendered for 228,825 shares of Common Stock. The elimination of the Debentures and the additional cash received resulted in the reduction of Long Term Debt by $1,164,187, an increase in the Common Stock account of $66,950 and an increase in the Paid-in Capital account of $1,243,389. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ---------------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- Sales during the second quarter of 1994 increased 6% to $135,127,000, as compared to $127,460,000 in the second quarter of 1993. Sales in the first six months of 1994 increased 5% to $250,977,000 from $238,232,000 in the same prior year period. Higher 1994 sales resulted from volume increases in each of the Company's packaging subsidiaries, as well as from the acquisition of Ingosa in late 1993. Reducing the amount of the sales improvement was the effect of foreign currency translation rate differences which lowered reported sales by the Company's European operations by approximately 5% ($4.7 million) in the first six months of 1994 and 3% ($2.3 million) in the second quarter of 1994, as compared to the same prior year periods. Gross profit was higher in each period of 1994 than the same prior year period although gross profit as a percentage of sales declined approximately 0.7% in the second quarter and first six months of 1994 from the same periods of 1993. This decline primarily resulted from a higher mix of lower margin business at Ferembal and competitive pressure in the European flexible film business in Europe, which more than offset margin improvement at PCI. Selling, general and administrative expense as a percentage of sales declined approximately 0.4% in the first six months of 1994 versus the same prior year period. Selling, general and administrative expense as a percentage of sales in the second quarter of 1994 and 1993 was approximately equal over both periods. Selling, general and administrative expense was negatively impacted during both periods of 1994 by expenses relating to the merger of Ingosa and Onena. See Note 3. Because of these various factors, operating income amounted to $8,017,000 and $12,522,000 in the second quarter and first six months of 1994, respectively, as compared to $8,376,000 and $13,152,000 in the same periods of 1993. Net interest expense declined to $4,446,000 in the second quarter of 1994 from $5,864,000 in the same period of 1993. Net interest expense declined to $9,054,000 in the first six months of 1994 as compared to $11,589,000 in the same period of 1993. This decline resulted from lower consolidated debt levels, and lower interest rates principally at the Company's European subsidiaries. Provision for income taxes amounted to $1,478,000 and $2,169,000 in the second quarter and first six months of 1994, respectively, as compared to $1,677,000 and $2,060,000 in the second quarter and first six months of 1993, reflecting a lower level of tax benefits for accounting purposes in loss operations than 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. 9 Net income before extraordinary items amounted to $1,713,000 ($.53 per share)in the second quarter of 1994 as compared to $958,000 ($.32 per share) in the second quarter of 1993. 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. Net income in the first six months of 1994 amounted to $1,187,000 ($.39 per share) as compared to net income of $134,000 ($.04 per share) in 1993. FINANCIAL CONDITION ------------------- CAPITAL REQUIREMENTS -------------------- The Company acquired $3,032,000 and $9,826,000 of capital assets during the second quarter and first six months of 1994, 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 1994 and total capital expenditures are expected to amount to approximately $24 million. The Company intends to actively pursue acquisition possibilities in 1994. 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 second quarter of 1994. Working capital decreased to approximately $73.8 million, and the current ratio amounted to 1.49 at June 30, 1994 compared to 1.67 at December 31, 1993. For the six months ended June 30, 1994, net cash used by operating activities amounted to $4,742,000 and was to fund an 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 $9,773,000 during the first six months of 1994. The cash required for the Company's operating and investing activities for this period in excess of that provided by net income and depreciation 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, 1994, the Company had an available credit line under a Revolving Credit Agreement of $2.1 million. In addition, the Company's consolidated subsidiaries had available approximately $26 million in credit lines and bank overdraft facilities at June 30, 1994. 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 1994. 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 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. 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, 1994. 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: AUGUST 11, 1994 11 -----END PRIVACY-ENHANCED MESSAGE-----