-----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, BPFUYFJ8vUDXQxikVuQ3wYDFmVjTY/cWR5rUk/srSA4vX4f642REjZqe49n8GQYl 5jlIjK4KWQ3zukJDwTVN/g== 0000916641-97-000452.txt : 19970508 0000916641-97-000452.hdr.sgml : 19970508 ACCESSION NUMBER: 0000916641-97-000452 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970507 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN FILTRONA CORP CENTRAL INDEX KEY: 0000005009 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PLASTIC PRODUCTS [3080] IRS NUMBER: 540574583 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07163 FILM NUMBER: 97597196 BUSINESS ADDRESS: STREET 1: 3951 WESTERRE PARKWAY STREET 2: SUITE 300 CITY: RICHMOND STATE: VA ZIP: 23233 BUSINESS PHONE: 8043462400 MAIL ADDRESS: STREET 1: P O BOX 31640 CITY: RICHMOND STATE: VA ZIP: 23294 10-Q 1 1ST QUARTER 10-Q Page 1 of 7 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 For the quarterly period ended March 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-7163 AMERICAN FILTRONA CORPORATION (Registrant) Virginia 54-0574583 (State of incorporation) (I.R.S. employer identification no.) 3951 WESTERRE PARKWAY, SUITE 300 RICHMOND, VIRGINIA 23233 (Executive offices) (Zip code) Registrant's telephone number: 804-346-2400 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 at least the past 90 days. Yes. X No. Number of shares of common stock outstanding as of May 6, 1997: 3,816,629 -1- AMERICAN FILTRONA CORPORATION INDEX Page No. -------- Part I. Financial Information Condensed Consolidated Balance Sheet 3 Condensed Consolidated Statement of Income 4 Condensed Consolidated Statement of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 5 Management's Discussion and Analysis of Financial Statements 6 Part II. Other Information 7 Signatures 7 -2- PART I. FINANCIAL INFORMATION AMERICAN FILTRONA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET March 31, 1997 (Unaudited) and December 31, 1996
1997 1996 ----------- ----------- ASSETS Current assets Cash and equivalents $ 44,197,689 $ 43,267,438 Accounts receivable 21,048,142 17,573,501 Inventories 18,293,910 18,621,047 Prepaid expenses and deferred income taxes 3,243,314 2,889,743 ------------ ------------ Total current assets 86,783,055 82,351,729 Property, plant and equipment 27,073,032 27,699,964 Other assets Excess cost over net assets of businesses acquired 4,585,196 4,692,821 Notes receivable 2,434,843 2,434,843 Other assets 354,376 374,536 ------------ ------------ 7,374,415 7,502,200 ------------ ------------ $121,230,502 $117,553,893 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 14,469,086 $ 15,342,954 Accrued expenses 5,047,745 5,165,485 Income taxes 2,824,969 1,367,795 ------------ ------------ Total current liabilities 22,341,800 21,876,234 Other liabilities Deferred income taxes 1,046,647 516,417 Other liabilities 354,191 1,764,276 ------------ ------------ 1,400,838 2,280,693 Shareholders' equity Common stock, $1 par value 3,816,629 3,754,758 Additional capital 2,542,910 926,673 Retained earnings 92,238,150 89,703,400 Cumulative translation adjustment (1,109,825) (987,865) ------------ ------------ 97,487,864 93,396,966 ------------ ------------ $121,230,502 $117,553,893 ============ ============
-3- AMERICAN FILTRONA CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME Three-Month Periods Ended March 31, 1997 and 1996 (Unaudited) 1997 1996 ----------- ----------- Revenues Net sales $52,966,728 $47,700,214 Investment income 368,431 329,985 ----------- ----------- 53,335,159 48,030,199 Costs and expenses Cost of products sold 41,784,987 38,459,662 Selling, research, administrative and general 5,896,761 5,187,476 ----------- ----------- 47,681,748 43,647,138 ----------- ----------- Income before income taxes 5,653,411 4,383,061 Income taxes 2,050,000 1,550,000 ----------- ----------- Net income $ 3,603,411 $ 2,833,061 =========== =========== Average shares outstanding 3,805,358 3,737,391 Earnings per share $.95 $ .76 Dividends per share $.28 $.265 -4- AMERICAN FILTRONA CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Three-Month Periods Ended March 31, 1997 and 1996 (Unaudited)
1997 1996 ----------- ----------- Operating Net income $ 3,603,411 $ 2,833,061 Reconciling items Depreciation and amortization 1,488,919 1,515,984 Deferred income taxes 254,999 (245,571) (Decrease) from noncash working capital (2,760,277) (1,904,386) Other - net (1,449,820) 145,656 ----------- ----------- 1,137,232 2,344,744 Investing Acquisitions of property, plant and equipment (816,428) (1,388,286) Financing Issuance of common stock 1,678,109 87,900 Repurchase of common stock - (20,981) Dividends paid (1,068,662) (990,118) ----------- ----------- 609,447 (923,199) ----------- ----------- Net increase in cash and equivalents $ 930,251 $ 33,259 =========== ===========
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE A. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring accruals) which the Company considers necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results of operations for the three-month period ended March 31, 1997 are not necessarily indicative of the results to be expected for the entire year. The financial statements have been prepared in accordance with instructions to Form 10-Q and, therefore, do not include all information and notes necessary for a fair presentation in conformity with generally accepted accounting principles. For additional information regarding significant accounting policies and other financial data see the Company's December 31, 1996 Form 10-K. -5- NOTE B. MERGER OF COMPANY On February 19, 1997 the Company entered into a definitive merger agreement with WBT Holdings, LLC (WBT Holdings), a limited liability company owned by several trusts of which a director of the Company is a co-trustee. The agreement provides for a merger between the Company and a wholly-owned subsidiary of WBT Holdings in which shareholders of the Company (except for WBT Holdings and its affiliates) will receive a per share cash price of $46.52. In addition WBT Holdings has executed a definitive acquisition agreement with Bunzl plc, an international paper and plastics group quoted on the London Stock Exchange, pursuant to which, following the merger, the Company will sell its bonded fibers business to Bunzl plc for $72,450,000 in cash, subject to certain adjustments. Consummation of any transaction would be subject to normal regulatory filings, shareholder approval, and certain other conditions. NOTE C. INVENTORIES At March 31, 1997 and December 31, 1996 inventories consisted of (in thousands): 1997 1996 ---- ---- FIFO Finished products $11,006 $10,522 Work in process 1,444 1,448 Raw materials 8,360 9,098 ------- ------- 20,810 21,068 Less excess of FIFO over LIFO inventory value 2,516 2,447 ------- ------- $18,294 $18,621 ======= ======= Inventories stated at LIFO approximated $9,210 (1996 - $9,103). MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS The Company has entered into a definitive merger agreement which provides for its shareholders to receive a per share cash price of $46.52 (see Note B of Notes to Condensed Consolidated Financial Statements). BALANCE SHEET The Company's strong financial condition and liquidity were maintained in the 1997 first quarter. Cash and equivalents represented 36% of total assets at March 31, 1997 compared to 37% at December 31, 1996. The ratio of current assets to current liabilities was 3.9 at March 31, 1997 compared to 3.8 at December 31, 1996. The accounts receivable increase from the historically lower year-end amount reflects the higher level of business activity in the quarter. The change in other liabilities arose primarily from the January, 1997 distribution of performance shares for the three-year period ended December 31, 1996 and the adjustment of related deferred income taxes. INCOME STATEMENT Comparison Between Three-Month Periods Ended March 31, 1997 and 1996 Net sales increased 11% between the first quarters of each year. The bonded fibers segment had higher sales in each of its product lines with very significant increases in tobacco filters and diagnostic test device components. -6- The plastic products segment growth resulted from a solid increase by the plastic extrusion companies which more than offset the expected lower sales of the Canadian flexible packaging company. Investment income increased 12% between the first quarters primarily as a result of the higher level of investments. Cost of products sold increased 9% while selling, research, administrative and general expenses increased at a somewhat higher rate. However, the overall increase was also 9% for total costs and expenses. Bonded fibers segment operating earnings increased very substantially for the 1997 first quarter because of the higher sales and improved operating efficiencies. The plastic products segment recorded a strong rise in operating earnings. Overall performance of the plastic extrusion companies was very good and the Canadian flexible packaging company posted a profit compared to a modest loss in 1996's first quarter. The combination of these factors produced a 29% increase in pretax income. Income taxes increased 32% reflecting the higher level of income and estimate of the effective tax rate for 1997. Therefore, net income and related earnings per share increased by 27% and 25%. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (b) Reports on Form 8-K -- The Company filed Current Reports on Form 8-K on February 14, 1997 and February 28, 1997. 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. AMERICAN FILTRONA CORPORATION (Registrant) Date May 6, 1997 /s/ John D. Barlow, Jr. ------------------------------------------- John D. Barlow, Jr., Vice President-Finance (Chief Financial Officer) -7- EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS Dec-31-1997 Mar-31-1997 44,198 0 21,564 516 18,294 86,783 69,539 42,466 121,231 22,342 0 0 0 3,817 93,671 121,231 52,967 53,335 41,785 47,682 0 0 0 5,653 2,050 3,603 0 0 0 3,603 .95 .95
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