-----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, nonKGnsOrz8fwjKJ6fksBeivSGrrMwXS/hBuoka1VqAKDFpdIowO2AG0QW5hLqNv amGBeG0IfPHq1MwPzO0QRA== 0000950148-95-000498.txt : 19950814 0000950148-95-000498.hdr.sgml : 19950814 ACCESSION NUMBER: 0000950148-95-000498 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KERR GROUP INC CENTRAL INDEX KEY: 0000055454 STANDARD INDUSTRIAL CLASSIFICATION: GLASS CONTAINERS [3221] IRS NUMBER: 950898810 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07272 FILM NUMBER: 95561802 BUSINESS ADDRESS: STREET 1: 1840 CENTURY PARK EAST CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 3105562200 MAIL ADDRESS: STREET 1: 1840 CENTURY PARK EAST CITY: LOS ANGELES STATE: CA ZIP: 90067 FORMER COMPANY: FORMER CONFORMED NAME: KERR GLASS MANUFACTURING CORP DATE OF NAME CHANGE: 19920518 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED 6/30/95 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q /X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 1995 / / 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 - 7272 KERR GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 95-0898810 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1840 Century Park East, Los Angeles, CA 90067 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (310)556-2200 Former name, former address and former fiscal year, if changed since last year. 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 --- --- The number of shares of Registrant's Common Stock, $.50 par value, outstanding as of July 31, 1995 was 3,933,095. - 1 - 2 KERR GROUP, INC. INDEX
Page No. -------- Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets - June 30, 1995 and December 31, 1994 3 - 4 Condensed Consolidated Statements of Earnings (Loss) - Three Months and Six Months Ended June 30, 1995 and 1994 5 Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 1995 and 1994 6 Notes to Condensed Consolidated Financial Statements 7 - 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 10 Part II. Other Information 11
- 2 - 3 KERR GROUP, INC. Consolidated Balance Sheets As of June 30, 1995 and December 31, 1994 (in thousands except per share data)
(Unaudited) (Audited) June 30, December 31, Assets 1995 1994 - ------ ------------ ------------ Current assets Cash and cash equivalents $ 1,263 $ 2,261 Receivables-primarily trade accounts, less allowance for doubtful accounts of $115 at June 30, 1995 and $170 at December 31, 1994 18,227 16,312 Inventories Raw materials and work in process 10,178 11,156 Finished goods 23,596 23,134 ----------- ----------- Total inventories 33,774 34,290 Prepaid expenses and other current assets 4,618 4,526 ----------- ----------- Total current assets 57,882 57,389 ----------- ----------- Property, plant and equipment, at cost 107,977 102,847 Accumulated depreciation and amortization (58,271) (54,506) ----------- ----------- Net property, plant and equipment 49,706 48,341 ----------- ----------- Deferred income taxes 2,215 2,192 Goodwill and other intangibles, net of amortization of $2,032 at June 30, 1995 and $1,812 at December 31, 1994 6,926 6,622 Other assets 8,907 9,156 ----------- ----------- $ 125,636 $ 123,700 =========== ===========
See accompanying notes to condensed consolidated financial statements. - 3 - 4 KERR GROUP, INC. Consolidated Balance Sheets As of June 30, 1995 and December 31, 1994 (in thousands except per share data)
(Unaudited) (Audited) June 30, December 31, Liabilities and Stockholders' Equity 1995 1994 - ------------------------------------ --------- --------- Current liabilities Short-term debt $ 5,200 $ 5,500 Accounts payable 18,631 13,445 Accrued expenses 2,855 3,862 --------- --------- Total current liabilities 26,686 22,807 --------- --------- Accrued pension liability 12,529 15,230 Other long-term liabilities 2,531 2,610 Senior long-term debt 50,000 50,000 Stockholders' equity Preferred Stock, 487 shares authorized and issued, at liquidation value of $20 per share 9,748 9,748 Common Stock, $ .50 par value per share, 20,000 shares authorized, 4,226 shares issued at June 30, 1995 and 4,220 shares issued at December 31, 1994 2,113 2,110 Additional paid-in capital 27,239 27,210 Retained earnings 6,910 11,995 Treasury Stock at cost, 293 shares at June 30, 1995 and 543 shares at December 31, 1994 (6,913) (12,803) Excess of additional pension liability over unrecognized prior service cost, net of tax benefits (5,207) (5,207) --------- --------- Total stockholders' equity 33,890 33,053 --------- --------- $ 125,636 $ 123,700 ========= =========
See accompanying notes to condensed consolidated financial statements. - 4 - 5 KERR GROUP, INC. Condensed Consolidated Statements of Earnings (Loss) for the Three Months and Six Months Ended June 30, 1995 and 1994 (in thousands except per share data)
(Unaudited) (Unaudited) Three Months Six Months Ended June 30, Ended June 30, -------------------------- --------------------------- 1995 1994 1995 1994 --------- --------- --------- --------- Net sales $ 41,892 $ 41,004 $ 72,282 $ 70,384 Cost of sales 32,109 28,713 53,922 48,132 --------- --------- --------- --------- Gross profit 9,783 12,291 18,360 22,252 Selling, warehouse, general and administrative expense 8,724 8,380 16,557 16,778 Interest expense 1,580 1,249 3,026 2,464 Interest and other income (39) (118) (85) (231) --------- --------- --------- --------- Earnings (loss) before income taxes (482) 2,780 (1,138) 3,241 Provision (benefit) for income taxes (197) 1,181 (466) 1,379 --------- --------- --------- --------- Net earnings (loss) $ (285) $ 1,599 $ (672) $ 1,862 Preferred stock dividends 207 207 414 414 --------- --------- --------- --------- Net earnings (loss) applicable to common stockholders $ (492) $ 1,392 $ (1,086) $ 1,448 ========= ========= ========= ========= Net earnings (loss) per common share: Primary $ (0.13) $ 0.38 $ (0.29) $ 0.39 ========= ========= ========= ========= Fully diluted $ (0.13) $ 0.36 $ (0.29) $ 0.39 ========= ========= ========= =========
See accompanying notes to condensed consolidated financial statements. - 5 - 6 KERR GROUP, INC. Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1995 and 1994 (in thousands)
(Unaudited) Six Months Ended June 30, -------------------------- 1995 1994 --------- --------- Cash flows provided (used) by operations Net earnings (loss) $ (672) $ 1,862 Add (deduct) noncash items included in net earnings (loss) Depreciation and amortization 4,310 3,838 Reduction in accrued long-term pension liability (810) (197) Other, net 542 1,170 Changes in other operating working capital Receivables (1,915) (11,965) Inventories 516 (4,391) Prepaid expenses (201) 573 Accounts payable and accrued expenses 4,394 5,596 --------- --------- Cash flows provided (used) by operations 6,164 (3,514) --------- --------- Cash flows provided (used) by investing activities Capital expenditures (5,509) (4,715) Collection of accounts receivable, and payment of accounts payable and accrued and other expenses related to discontinued operations (488) (933) Other, net (483) (540) --------- --------- Cash flows used by investing activities (6,480) (6,188) --------- --------- Cash flows provided (used) by financing activities Net borrowings (repayments) under lines of credit (300) 2,000 Dividends paid (414) (414) Other, net 32 427 --------- --------- Cash flows provided (used) by financing activities (682) 2,013 --------- --------- Cash and cash equivalents Decrease during the period (998) (7,689) Balance at beginning of the period 2,261 11,329 --------- --------- Balance at end of the period $ 1,263 $ 3,640 ========= ========= Significant Non-Cash Transactions Contribution of 250,000 shares of Common Stock to pension plan $ 1,891 $ 0 ========= =========
See accompanying notes to condensed consolidated financial statements - 6 - 7 KERR GROUP, INC. Notes to Condensed Consolidated Financial Statements (Unaudited) 1) General The condensed consolidated financial statements include the accounts of Kerr Group, Inc. and its wholly owned subsidiary (collectively referred to as the Company). In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of June 30, 1995, and the results of operations for the three months and six months ended June 30, 1995 and 1994, and changes in cash flows for the six months ended June 30, 1995 and 1994. The results of operations for the first six months of 1995 are not necessarily indicative of the results to be expected for the full year. 2) Earnings Per Share Fully diluted earnings per common share reflect when dilutive, 1) the incremental common shares issuable upon the assumed exercise of outstanding stock options, and 2) the assumed conversion of the Preferred Stock and the elimination of the related Preferred Stock dividends. The calculation of fully diluted net earnings (loss) per common share for the three months ended June 30, 1995 and the six months ended June 30, 1995 and 1994 was not dilutive. 3) Receivables Receivables as of June 30, 1995, as shown on the accompanying Consolidated Balance Sheet, have been reduced by $4,919,000 of net proceeds from the sale of receivables under the Company's Accounts Receivable Facility. 4) Debt and Accounts Receivable Facility Effective June 30, 1995, a $5,000,000 line of credit of the Company expired, which reduced the Company's short-term financing to a total of $20,000,000. The Company's short-term financing includes: i) an Accounts Receivable Facility maturing on January 18, 1997 under which the maximum amount that can be advanced to the Company pursuant to the sale of trade accounts receivable is $10,000,000 and ii) a $10,000,000 line of credit committed through April 30, 1996. 5) Common Stock During July 1995, the Company adopted a shareholders rights plan (Rights Plan), pursuant to which a dividend distribution of one Right was made for each outstanding share of Kerr Common Stock. Each Right entitles the holder to purchase a unit consisting of one one-thousandth of a share of a new issue of preferred stock, or, upon the occurrence of certain events, to purchase Kerr Common Stock at a 50% discount to the then current market price of the stock. The Rights Plan is intended to protect the interests of the Company's stockholders in the event the Company is confronted with coercive or unfair takeover tactics. - 7 - 8 KERR GROUP, INC. Computation of Earnings (Loss) Per Common Share (in thousands except per share data)
(Unaudited) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 1995 1994 1995 1994 ------- ------- ------- ------- Primary Net Earnings (Loss) Per Common Share Net earnings (loss) $ (285) $ 1,599 $ (672) $ 1,862 Less Preferred Stock dividends (207) (207) (414) (414) ------- ------- ------- ------- Net earnings (loss) applicable to primary earnings per common share $ (492) $ 1,392 $(1,086) $ 1,448 ======= ======= ======= ======= Weighted average number of common shares outstanding 3,826 3,675 3,752 3,671 ======= ======= ======= ======= Primary net earnings (loss) per common share $ (0.13) $ 0.38 $ (0.29) $ 0.39 ======= ======= ======= ======= Fully Diluted Net Earnings (Loss) Per Common Share Net earnings (loss) applicable to primary earnings per common share $ (492) $ 1,392 $(1,086) $ 1,448 Add Preferred Stock dividends 207 207 414 414 ------- ------- ------- ------- Net earnings (loss) applicable to fully diluted earnings per common share $ (285) $ 1,599 $ (672) $ 1,862 ======= ======= ======= ======= Weighted average number of common shares outstanding 3,826 3,675 3,752 3,671 Common shares issuable upon assumed conversion of Preferred Stock 709 709 709 709 Incremental common shares issuable upon assumed exercise of outstanding stock options 17 14 17 14 ------- ------- ------- ------- Adjusted weighted average number of common shares outstanding 4,552 4,398 4,478 4,394 ======= ======= ======= ======= Fully diluted net earnings (loss) per common share: As computed $ (0.06) $ 0.36 $ (0.15) $ 0.42 ======= ======= ======= ======= As reported (a) $ (0.13) $ 0.36 $ (0.29) $ 0.39 ======= ======= ======= =======
(a) The calculation of fully diluted net earnings (loss) per common share for the three months ended June 30, 1995 and the six months ended June 30, 1995 and 1994 was not dilutive. -8- 9 KERR GROUP, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three Months and Six Months Ended June 30, 1995 and 1994 Results of Operations Net sales for the three months ended June 30, 1995 were $41,892,000 as compared to $41,004,000 for the three months ended June 30, 1994, an increase of $888,000 or 2%. The increase in net sales for the three months ended June 30, 1995 over the comparable period in 1994 was due primarily to higher sales in the Plastic Products Business for prescription packaging, child-resistant closures and plastic containers and the pass-through of a portion of resin cost increases. Net sales for the six months ended June 30, 1995 were $72,282,000 as compared to $70,384,000 for the six months ended June 30, 1994, an increase of $1,898,000 or 3%. The increase in net sales for the six months ended June 30, 1995 over the comparable period in 1994 was due primarily to higher sales in the Plastic Products Business for prescription packaging and plastic containers and the pass-through of a portion of resin cost increases and higher unit sales and prices in the Consumer Products Business. Cost of sales for the three months ended June 30, 1995 were $32,109,000 as compared to $28,713,000 for the three months ended June 30, 1994, an increase of $3,396,000 or 12%. Cost of sales for the six months ended June 30, 1995 were $53,922,000 as compared to $48,132, 000 for the six months ended June 30, 1994, an increase of $5,790,000 or 12%. The increase for both periods in 1995 over comparable periods in 1994 was due primarily to higher resin costs in the Plastic Products Business and the sale of higher cost inventory produced in 1994 in the Consumer Products Business. Gross profit as a percent of net sales for the three months ended June 30, 1995 decreased to 23% as compared to 30% for the three months ended June 30, 1994. Gross profit as a percent of net sales for the six months ended June 30, 1995 decreased to 25% as compared to 32% for the six months ended June 30, 1994. The decrease in gross profit as a percent of net sales for both periods in 1995 over the comparable periods in 1994 was attributed to lower-margin sales mix, higher resin and other raw material costs, and competition-driven price reductions for plastic jars in the Plastic Products Business and the sale of higher cost inventory produced in 1994 in the Consumer Products Business. Selling, warehouse, general and administrative expenses increased $344,000 or 4% during the three months ended June 30, 1995, as compared to the same period in 1994. Selling, warehouse, general and administrative expenses decreased $221,000 or 1% during the six months ended June 30, 1995, as compared to the same period in 1994. Net interest expense increased $410,000 and $708,000 during the three month and six month periods ended June 30, 1995, as compared to the same periods in 1994, respectively, primarily as a result of higher levels of short-term financing and higher interest rates. Earnings before income taxes decreased $3,262,000 and $4,379,000 during the three month and six month periods ended June 30, 1995 as compared to the same periods in 1994, respectively, due primarily to lower earnings in the Plastic Products and Consumer Products Businesses and higher interest expense. Earnings in the Plastic Products Business were adversely impacted by a lower-margin sales mix, higher resin and other raw material costs, and competition-driven price reductions for plastic jars. Earnings in the Consumer Products Business declined due primarily to the sale of higher cost inventory produced during 1994. The provision for income taxes decreased $1,378,000 and $1,845,000 during the three month and six month periods ended June 30, 1995 as compared to the same periods in 1994, respectively, due to lower pretax earnings. - 9 - 10 The Company expects full year 1995 results will be substantially lower than those of 1994. Sales and earnings of the home canning supplies business are higher in the second and third quarters and lower in the first and fourth quarters because of the seasonal nature of the business. Financial Condition During the first six months of 1995, cash flow of $6,164,000 was provided by operations, which includes cash flow of $4,919,000 related to net proceeds from the sale of receivables under the Company's Accounts Receivable Facility. The principal use of cash flow was to fund investing activities, primarily capital expenditures of $5,509,000. During the first six months of 1994, the principal uses of cash flow were to fund investing activities, primarily capital expenditures of $4,715,000, and to fund operations, which included increased working capital requirements of $10,187,000, primarily as a result of the seasonal increase in receivables and inventories related to the Consumer Products Business. Cash flow was provided through the reduction of the Company's cash balances of $7,689,000 and net borrowings under lines of credit of $2,000,000. On May 10, 1995, the Company contributed 250,000 shares of its Common Stock, at a price of $7.56 per share, to the Kerr Group, Inc. Retirement Income Plan. The contribution reduced Kerr's pension liability by $1,891,000. Since the third quarter of 1990, the Company has not declared any dividends on its Common Stock. The Company's Senior Note Agreement, Accounts Receivable Facility and line of credit limit the payment of dividends on Common Stock. Under the most restrictive covenant of such agreements, $500,000 was available for the payment of dividends on Common Stock as of June 30, 1995. The ratio of current assets to current liabilities decreased to 2.2 at June 30, 1995 from 2.5 at December 31, 1994. The ratio of total debt to total capitalization decreased to 62% at June 30, 1995 from 63% at December 31, 1994. As of June 30, 1995, the Company had short-term financing of $20,000,000 which includes: i) an Accounts Receivable Facility maturing on January 18, 1997 under which the maximum amount that can be advanced to the Company pursuant to the sale of trade accounts receivable is $10,000,000 and ii) a $10,000,000 line of credit committed through April 30, 1996. At June 30, 1995, the Company had unused sources of liquidity consisting of cash and cash equivalents of $1,263,000, unused committed credit under a bank line of credit of $4,800,000, of which $4,562,000 could be borrowed under the terms of the Company's Senior Note Agreement, additional available net advances under the Company's Accounts Receivable Facility of $5,081,000, tax net operating loss carryforwards of $4,399,000 and certain tax credit carryforwards of $1,830,000. The Company believes that its financial resources, including internally generated funds and amounts available under its Accounts Receivable Facility and line of credit, are adequate to meet its foreseeable needs. - 10 - 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings An agency of the Canadian government has made a preliminary determination of dumping of home canning supplies in Canada by U.S. exporters, which includes Kerr. An inquiry is in process to determine whether Canadian producers of home canning supplies were materially injured by the dumping. If the Canadian producers cannot prove material injury, the proceedings will be terminated. The Company believes that it has meritorious defenses in the proceedings. Item 6. Exhibits and Reports on Form 8-K a. Exhibits None b. Reports on Form 8-K There were no reports filed on Form 8-K for the three months ended June 30, 1995. 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. KERR GROUP, INC. August 10, 1995 By /s/ D. Gordon Strickland ------------------------------- D. Gordon Strickland Senior Vice President, Finance, Chief Financial Officer August 10, 1995 By /s/ J. Stephen Grassbaugh ------------------------------ J. Stephen Grassbaugh Vice President, Controller, Chief Accounting Officer - 11 - EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 1,263 0 18,342 115 33,774 57,882 107,977 58,271 125,636 26,686 50,000 2,113 0 9,748 22,029 125,636 72,282 72,367 53,922 53,922 16,557 0 3,026 (1,138) (466) (672) 0 0 0 (672) (0.29) (0.29)
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