0000043514-95-000006.txt : 19950808 0000043514-95-000006.hdr.sgml : 19950808 ACCESSION NUMBER: 0000043514-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950807 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROPAK CORP /CA/ CENTRAL INDEX KEY: 0000043514 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 953206821 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10476 FILM NUMBER: 95559248 BUSINESS ADDRESS: STREET 1: 660 S STATE COLLEGE BLVD CITY: FULLERTON STATE: CA ZIP: 92631 BUSINESS PHONE: 7148709757 MAIL ADDRESS: STREET 1: 660 SOUTH STATE COLLEGE BLVD CITY: FULLERTON STATE: CA ZIP: 92631-5138 FORMER COMPANY: FORMER CONFORMED NAME: ROPAK WEST INC/NEW DATE OF NAME CHANGE: 19850813 FORMER COMPANY: FORMER CONFORMED NAME: GREAT WESTERN GENERAL INC DATE OF NAME CHANGE: 19820509 10-Q 1 1 ---------------------------------------------------------------- ---------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 [ ] Transition Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended: June 30, 1995 Commission File No. 0-10476 ROPAK CORPORATION (Exact name of registrant as specified in its charter.) Delaware 95-3206821 (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 660 South State College Boulevard Fullerton, California 92631 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (714) 870-9757 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Common Stock, $.01 par value - 4,602,312 shares as of June 30, 1995. ---------------------------------------------------------------- ---------------------------------------------------------------- 2 PART I. FINANCIAL INFORMATION ROPAK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (Unaudited)
Six Months ended Three Months ended June 30, June 30, ----------------- ----------------- 1995 1994 1995 1994 ------- ------- ------- ------- Net sales................ $79,732 $60,959 $45,366 $35,910 Cost of sales............ 63,842 46,978 36,453 26,389 ------- ------- ------- ------- Gross profit............. 15,890 13,981 8,913 9,521 Operating expenses....... 10,297 9,214 5,481 4,874 ------- ------- ------- ------- Operating profit......... 5,593 4,767 3,432 4,647 ------- ------- ------- ------- Other (income) expense: Interest.............. 1,720 1,033 911 527 Other................. 182 184 91 91 ------- ------- ------- ------- Total other expense... 1,902 1,217 1,002 618 ------- ------- ------- ------- Income before income taxes.......... 3,691 3,550 2,430 4,029 Provision for income taxes.......... 1,587 1,526 1,045 1,732 ------- ------- ------- ------- Net income............... $ 2,104 $ 2,024 $ 1,385 $ 2,297 ======= ======= ======= ======= Net income per share: Primary............... $ 0.44 $ 0.42 $ 0.29 $ 0.51 Fully diluted......... $ 0.41 $ 0.41 $ 0.27 $ 0.46 Average shares outstanding: Primary............... 4,569 4,359 4,641 4,359 Fully diluted......... 5,146 4,993 5,217 4,993
The accompanying notes are an integral part of these financial statements. 3 ROPAK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA) (Unaudited)
June 30, December 31, 1995 1994 ---------- ---------- ASSETS: Current assets: Cash and cash equivalents......... $ 1,345 $ 1,470 Accounts receivable, less allowance for doubtful accounts of $525 and $477, respectively................... 28,039 21,178 Inventories: Raw materials.................. 7,383 7,309 Finished goods................. 16,897 14,849 Refundable income tax............. 84 177 Other............................. 567 1,075 Deferred income tax benefits...... 382 382 --------- --------- Total current assets................ 54,697 46,440 --------- --------- Improvements and equipment.......... 87,113 81,600 Less accumulated depreciation....... 48,650 45,024 --------- --------- Net fixed assets.................... 38,463 36,576 --------- --------- Investments in joint ventures....... 683 568 Goodwill............................ 7,750 7,856 Other assets........................ 2,684 2,876 --------- --------- TOTAL ASSETS........................ $ 104,277 $ 94,316 ========= =========
The accompanying notes are an integral part of these financial statements. 4 ROPAK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA) (Unaudited)
June 30, December 31, 1995 1994 ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Short-term debt................... $ 3,976 $ 3,976 Accounts payable.................. 14,117 14,997 Income taxes payable.............. 1,169 -- Accrued liabilities............... 3,186 2,986 --------- --------- Total current liabilities........... 22,448 21,959 Long-term debt less current maturities............... 39,807 34,014 Deferred income taxes............... 3,501 3,501 Due to Parent Company (see Note 1).. 5,200 5,200 --------- --------- Total liabilities................... $ 70,956 $ 64,674 --------- --------- Shareholders' Equity: Preferred stock, $.01 par value: Authorized - 3,000,000 shares none issued or outstanding Common stock, $.01 par value: Authorized - 10,000,000 shares; issued and outstanding -- 4,602,312 shares as of June 30, 1995 and 4,386,162 shares as of December 31, 1994........... 46 44 Additional paid-in capital.......... 24,714 23,807 Treasury stock...................... (34) (176) Retained earnings................... 9,127 7,218 Cumulative foreign currency translation gain (loss) as to foreign subsidiaries........ (532) (1,251) --------- --------- Shareholders' equity................ $ 33,321 $ 29,642 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................ $ 104,277 $ 94,316 ========= =========
The accompanying notes are an integral part of these financial statements. Note 1: LinPac Mouldings Ltd. acquired the $5,200 outstanding preferred shares of Ropak Canada Inc., a wholly owned subsidiary, on October 14, 1994. LinPac subsequently completed a tender offer on May 2, 1995 to achieve majority ownership of Ropak Corporation, resulting in the reclassification from a minority interest as at December 31, 1994. 5 ROPAK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (Unaudited)
Six Months ended June 30, -------------------- 1995 1994 -------- -------- Cash flow from operating activities: Net income (loss)................... $ 2,104 $ 2,024 Depreciation and amortization....... 3,654 3,619 Gain on disposal of equipment....... (31) (58) Gain on disposal of investments..... (96) 0 Increase in current assets.......... (8,382) (4,441) Increase (decrease) in current liabilities.............. 391 1,660 Decrease in other assets............ 188 (39) -------- -------- (2,172) 2,765 -------- -------- Cash flow from investing activities: Acquisition of improvements and equipment...................... (5,104) (4,360) Proceeds from sale of equipment..... 35 63 Proceeds from sale of investments... 158 0 Investments in marketable securities 0 (5,098) -------- -------- (4,911) (9,395) -------- -------- Cash flow from financing activities: Issuance of long-term debt.......... 5,989 7,537 Repayment of capital lease.......... (196) (206) Exercise of stock options........... 1,112 0 Payment of preferred stock dividend. (98) (213) Purchase of treasury stock.......... (34) 0 Redemption of stock warrants........ (203) 0 -------- -------- 6,570 7,118 -------- -------- Effect of foreign currency exchange rate changes............. 388 (488) -------- -------- Net increase (decrease) in cash....... $ (125) $ 0 Cash at beginning of year............. 1,470 0 -------- -------- Cash at end of period................. $ 1,345 $ 0 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest.......................... $ 1,277 $ 922 Income taxes...................... $ 525 $ 1,689 ======== ========
The accompanying notes are an integral part of these financial statements. 6 During the six month period ending June 30, 1995 the Company accrued $97 for preferred stock dividends. ROPAK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR SIX MONTHS ENDED JUNE 30, 1995 (IN THOUSANDS, EXCEPT NUMBER OF SHARES) (Unaudited)
Foreign Common Stock Additional Currency ----------------- Paid-in Treasury Retained Translation Total Shares Amount Capital Stock Earnings Gain (loss) Equity --------- ------ ------- -------- -------- ----------- --------- Balance at December 31, 1994............ 4,386,162 $44 $23,807 $(176) $7,218 $(1,251) $29,642 Redemption of stock warrants........ -- -- (203) -- -- -- (203) Options exercised....... -- 2 1,110 -- -- -- 1,112 Dividend on preferred shares.......... -- -- -- -- (195) -- (195) Repurchase of common stock.... -- -- -- (34) -- -- (34) Liquidation of common stock held by subsidiary...... 216,150 -- -- 176 -- -- 176 Net income...... -- -- -- -- 2,104 -- 2,104 Foreign currency -- translation gain............ -- -- -- -- -- 719 719 --------- ------ ------- -------- -------- ----------- -------- Balance at June 30, 1995... 4,602,312 $46 $24,714 $(34) $9,127 $(532) $33,321 ========= ====== ======= ======== ======== =========== ========
The accompanying notes are an integral part of these financial statements. 7 ROPAK CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1995 1. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules of the Securities and Exchange Commission ("SEC") and, in the opinion of the Company, include all adjustments necessary for a fair presentation of financial position, results of operations and cash flows. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules. Reference is made to Note 1 of the Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 for a summary of significant policies utilized by the Company. It is suggested that these financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company's latest annual report. 2. The condensed consolidated statements of operations for the six months and three months ended June 30, 1995 and June 30, 1994 are not necessarily indicative of the results to be expected for the full year. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Net sales of Ropak Corporation (the "Company" or "Ropak") increased by 30.8% to $79,732,000 for the six-month period ended June 30, 1995 compared to $60,959,000 for the similar period ended June 30, 1994. Net sales increased 26.3% to $45,366,000 for the second quarter ended June 30, 1995, up from $35,910,000 for the quarter ended June 30, 1994 and up from $34,366,000 for the prior quarter ended March 31, 1995. Net sales growth is partially masked by the fluctuating effect of raw material resin prices on the ultimate selling prices of Ropak's products. Growth in pounds of resin sold in finished product amounted to an increase of 4.8% for the six-month period ended June 30, 1995 compared to the six-month period ended June 30, 1994. During the quarter ended June 30, 1995 compared to the quarter ended June 30, 1994, pounds of resin sold in finished product increased by 1.9%. 8 The 32% increase in revenue recorded for the quarter ended June 30, 1995 over the immediately preceding quarter ended March 31, 1995 is due to seasonal demand for Ropak products in both the fishing and agricultural markets and is consistent with past experience. Gross profit expressed as a percentage of sales for the six-month period ended June 30, 1995 of 19.9% is down from 22.9% recorded for the six-month period ended June 30, 1994. Gross margin for the second quarter ended June 30, 1995 of 19.6% was also down from 26.5% for the similar quarter ended June 30, 1994 and down from the 20.3% reported for the preceding quarter ended March 31, 1995. Reductions in gross margin percentages reflect a general slowing of economic activity during the second quarter ended June 30, 1995 and the impact of higher priced resin included in both Ropak's finished product costs and higher unit selling prices. Resin cost per pound during the quarter ended June 30, 1995 was 54% higher than the same quarter a year ago. Indications from the Company's resin supply sources are that supply is abundant and prices have already started to decline, which has prompted competitors to offer lower selling prices in anticipation of gaining market share, creating a further negative influence on margins. Operating expenses as a percentage of net sales for the six-month period ended June 30, 1995 and 1994 were 12.9% and 15.1%, respectively. For the second quarter ended June 30, 1995 and 1994 and the immediately preceding quarter ended March 31, 1995, operating expenses expressed as a percentage of sales were 12.1%, 13.6% and 14.0%, respectively. Operating expenses were $10,297,000 for the six-month period ended June 30, 1995, up from $9,214,000 for the six-month period ended June 30, 1994. For the quarters ended June 30, 1995, June 30, 1994 and the immediately preceding quarter ended March 31, 1995, operating expenses were $5,481,000, $4,874,000 and $4,816,000, respectively. The increase in operating expenses reflect higher level of costs required to support the higher sales volumes being generated and anticipated in the Materials Handling Division and to a lesser degree in container divisions. Operating profits for the six-month period ended June 30, 1995 were $5,593,000, up from $4,767,000 for the six-month period ended June 30, 1994. Operating profits for the quarter ended June 30, 1995 and June 30, 1994 were $3,432,000 and $4,647,000. For the preceding quarter ended March 31, 1995 an operating profit of $1,977,000 was recorded. 9 Interest expense for the six-month period ended June 30, 1995 amounted to $1,720,000, up from $1,033,000 for the same six-month period of 1994. Interest expense for the quarters ended June 30, 1995, June 30, 1994 and March 31, 1995 were $911,000, $527,000 and $809,000, respectively. Interest expense has increased during the six-month period ended June 30, 1995 compared to the six-month period ended June 30, 1994 due mainly to the increase in short term variable interest rates charged by lending institutions and increased debt to finance higher working capital levels as a result of higher raw material costs included in inventories and accounts receivable. In addition, the threat of a raw materials resin supply shortage in the later part of 1994 and early months of 1995 prompted Ropak to increase its inventories to substantial levels in early 1995. Net profit, after provision for income taxes, for the six-month period ended June 30, 1995 was $2,104,000 up from $2,024,000 for the six-month period ended June 30, 1994. Net profits for the quarters ended June 30, 1995, June 30, 1994 and March 31, 1995 were $1,385,000, $2,297,000 arid $719,000, respectively. The 1995 second quarter earnings are lower than a year ago 1994 second quarter earnings due to several contributing factors. It is estimated that market resistance to higher pricing and Ropak's unsuccessful attempts to pass on resin cost increases has eroded the Company's margins by approximately three percentage points. Competitive pricing has been severe and Ropak's reluctance to lose market share has reduced margins. A devaluation of inventories on June 1, 1995 due to a resin price reduction accounts for the remainder of the gross margin erosion. Liquidity and Capital Resources As at June 30, 1995, Ropak's working capital was $32,249,000, an increase of $7,768,000 over $24,481,000 reported at December 31, 1994, and an increase of $2,063,000 from $30,186,000 reported at March 31, 1995. The increase in working capital from December 31, 1994 to June 30, 1995 of $7,768,000 is primarily attributable to the following factors. Accounts receivable increased during the quarter by approximately $6,900,000 due to increased sales activity and inventories increased by approximately $2,100,000 to accommodate a plant relocation and agriculture harvests that require long lead times to build product for immediate delivery. Current liabilities increased by approximately $500,000, again the consequence of increased business activity. 10 In January 1995 the Company amended its bank credit facility to provide for a $24,500,000 revolving line of credit and a $9,500,000 term loan together with a special revolving loan commitment of $5,500,000. The combined maximum credit allowed is not to exceed $35,000,000. The special revolving loan is available to finance up to 70% of new capital expenditures and is repayable in twenty equal quarterly installments amortized on the principal loan balance outstanding on December 31, 1994. The revolving loan matures on July 1, 1996. The total line of credit bears interest at the bank's reference rate and may be fixed at any time at LIBOR plus 1.75%. The credit facility requires the Company to observe certain restrictive covenants, among which are a minimum tangible net worth plus subordinated debt, restrictions on certain additional indebtedness and requirements to maintain certain financial ratios. Capital additions to plant and equipment amounted to $2,613,000 for the second quarter and $5,104,000 for the six-months ended June 30, 1995. This compares to $3,199,000 and $4,360,000 for the second quarter and six months ended June 30, 1994, respectively. It is expected that capital expenditures will amount to approximately $10,000,000 in 1995. Management believes that sufficient capacity exists within the credit available under its banking and other credit arrangements and internally generated funds from operations to meet the Company's capital requirements. The Company believes it is in compliance with air, water and solid waste discharge regulations applicable to its business and properties, and is not aware of any material expenditures required for compliance with environmental regulations. Ropak has no material unfunded commitments for post retirement benefits. The Company is not a party to any material legal proceedings. Effect of FASB Statements In December 1990, the Financial Accounting Standards Board ("FASB") issued Statement No. 106 "Employer's Accounting for Postretirement Benefits Other Than Pensions". The Statement has not have a material effect upon the Company's financial statements. In February 1992, the FASB issued Statement No. 109 "Accounting for Income Taxes". The Company adopted Statement No. 109 effective January 1, 1993. This statement supersedes FASB No. 96 "Accounting for Income Taxes" which was adopted by the Company in 1987. The adoption of FASB 109 has had no material effect upon the Company's financial statements. 11 PART II -- OTHER INFORMATION ITEMS 1, 2 AND 3 ARE NOT APPLICABLE AND HAVE BEEN OMITTED. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The 1995 annual meeting of Ropak's stockholders was held on May 16, 1995. The only matter voted on at the annual meeting was the election of two Class II directors to Ropak's Board of Directors, as described in the Company's proxy statement dated March 27, 1995 (definitive copies of which were filed with the Securities and Exchange Commission). The results of voting on matters presented to the meeting were as follows: Incumbent directors Nigel V. Roe, Robert E. Roper and David A. Williams were reelected as directors of the Company, each to serve for a term of three years as directors in Class II until the annual meeting of stockholders in 1998. ITEM 5. OTHER INFORMATION On May 3, 1995, LINPAC Mouldings Ltd. of Birmingham, England announced that based on a preliminary count by its depositary, 1,968,969 shares of Ropak Corporation common stock had been tendered to LINPAC pursuant to LINPAC's tender offer to purchase all of the outstanding common stock of Ropak Corporation at $11.00 per share. The offer expired at midnight on May 2, 1995. LINPAC stated it has accepted for purchase all validly tendered shares. Upon purchase of all shares tendered pursuant to its tender offer, LINPAC will beneficially own approximately 96.8% of the outstanding shares of Ropak's common stock. On June 21, 1995, the Company filed with the Securities and Exchange Commission a Form 15 Certification and Notice of Termination of Registration under Section 12(g) of the Securities Exchange Act of 1934 as provided by Rule 12g-4(a)(1)(i) of that Act. As a result of that filing, Ropak's obligations to file reports under the Securities Exchange Act of 1934 are expected to terminate on approximately September 19, 1995. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. The following exhibits are filed as a part of this Report: Exhibit No. Description ----------- ----------------- 27 Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended June 30, 1995. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 5, 1995 ROPAK CORPORATION (Registrant) By: /s/ William H. Roper --------------------- William H. Roper, Chief Executive Officer By: /s/ Ronald W. Cameron ---------------------- Ronald W. Cameron, Chief Financial Officer EXHIBIT INDEX ------------- Exhibit No. Description ------ ------------ 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary information extracted from Ropak Corporation's Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets and is qualified in its entirety by reference to such financial Statements. 0000043514 ROPAK CORPORATION 1,000 DEC-31-1995 JUN-30-1995 6-MOS 1,345 0 28,564 525 24,280 54,697 87,114 48,650 104,277 22,448 39,807 0 0 46 33,275 104,277 79,732 79,732 63,842 63,842 10,297 0 1,720 3,691 1,587 2,104 0 0 0 2,104 0.44 0.41