-----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, O6WAtgAdk2pQwlbdWQnzJiyOolDhrv91UzI0h1vfTL9seblWyb5eIsQNjXKYRClK LiNOQA/FuRI7Rvr0v7x/yg== 0000895655-98-000010.txt : 19980812 0000895655-98-000010.hdr.sgml : 19980812 ACCESSION NUMBER: 0000895655-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980628 FILED AS OF DATE: 19980811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLTRISTA CORP CENTRAL INDEX KEY: 0000895655 STANDARD INDUSTRIAL CLASSIFICATION: COATING, ENGRAVING & ALLIED SERVICES [3470] IRS NUMBER: 351828377 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13665 FILM NUMBER: 98682010 BUSINESS ADDRESS: STREET 1: 345 S HIGH ST CITY: MUNCIE STATE: IN ZIP: 47307 BUSINESS PHONE: 7652815000 MAIL ADDRESS: STREET 1: 345 S. HIGH STREET CITY: MUNCIE STATE: IN ZIP: 47307-5004 10-Q 1 ALLTRISTA CORPORATION 2ND QUARTER 1998 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 28, 1998 OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Alltrista Corporation Indiana 0-21052 35-1828377 State of Incorporation Commission File Number IRS Identification Number 345 South High Street, Suite 200, P. O. Box 5004 Muncie, Indiana 47307-5004 Registrant's telephone number, including area code: (765) 281-5000 -------------------------------------------------------------------------- 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 practicable date. Class Outstanding at August 2, 1998 ----------------- ----------------------------- Common Stock, without par value 7,057,926 shares This document contains 11 pages. The exhibit index in on page 11 of 11. Page 1 of 11 ALLTRISTA CORPORATION AND SUBSIDIARIES Quarterly Report on Form 10-Q For the period ended June 28, 1998 INDEX Page Number PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Unaudited Condensed Consolidated Statements of Income for the three and six month periods ended June 28, 1998 and June 29, 1997 3 Unaudited Condensed Consolidated Balance Sheets at June 28, 1998 and December 31, 1997 4 Unaudited Condensed Consolidated Statements of Cash Flows for the six month periods ended June 28, 1998 and June 29, 1997 5 Notes to Unaudited Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION 10 Page 2 of 11 PART I. FINANCIAL INFORMATION Item 1. Financial Statements
ALLTRISTA CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (thousands except per share amounts) Three month period ended Six month period ended June 28, June 29, June 28, June 29, 1998 1997 1998 1997 -------- ------- ------- ------- Net sales $84,134 $78,950 $130,504 $124,592 Costs and expenses Cost of sales 58,769 54,619 94,185 89,417 Selling, general and administrative expenses 14,098 12,664 21,980 20,602 ------- -------- ------- -------- Operating earnings 11,267 11,667 14,339 14,573 Interest expense, net (652) (751) (1,053) (1,360) ------- -------- ------- ------- Income from operations before taxes 10,615 10,916 13,286 13,213 Provision for income taxes (4,034) (4,104) (5,049) (4,968) ------- -------- ------- ------- Net income $ 6,581 $ 6,812 $ 8,237 $ 8,245 ======= ======= ======= ======= Net income per share of common stock: Basic earnings per share $ .90 $ .93 $ 1.13 $ 1.11 ======= ======= ======= ======= Diluted earnings per share $ .89 $ .91 $ 1.11 $ 1.09 ======= ======= ======= ======= Weighted average shares outstanding: Basic 7,274 7,364 7,316 7,417 ======= ======= ======= ======= Diluted 7,399 7,506 7,449 7,559 ======= ======= ======= ======= See accompanying notes to unaudited condensed consolidated financial statements.
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ALLTRISTA CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (thousands of dollars) June 28, December 31, 1998 1997 ----------- ------------- ASSETS Current assets Cash and cash equivalents $ 5,818 $ 26,641 Accounts receivable, net 42,911 23,646 Inventories Raw materials and supplies 11,102 9,410 Work in process and finished goods 25,676 23,773 Deferred taxes on income 4,243 4,243 Prepaid expenses 1,252 1,511 ----------- ------------- Total current assets 91,002 89,224 ----------- ------------- Property, plant and equipment, at cost 151,741 149,904 Accumulated depreciation (105,745) (104,894) ----------- ------------- 45,996 45,010 Goodwill, net 25,367 24,947 Other assets 7,966 7,396 ----------- ------------- Total assets $170,331 $166,577 =========== ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 4,286 $ 4,286 Accounts payable 18,707 18,424 Other current liabilities 17,478 12,755 ----------- ------------ Total current liabilities 40,471 35,465 ----------- ------------ Noncurrent liabilities Long-term debt 25,714 25,714 Other noncurrent liabilities 8,518 8,089 ----------- ------------ Total noncurrent liabilities 34,232 33,803 ----------- ------------ Shareholders' equity: Common stock 40,575 40,779 Retained earnings 76,549 68,312 Cumulative translation adjustment (383) (303) ----------- ------------ 116,741 108,788 Less treasury stock (21,113) (11,479) ----------- ------------ Total shareholders' equity 95,628 97,309 ----------- ------------ Total liabilities and shareholders' equity $170,331 $166,577 =========== ============ See accompanying notes to unaudited condensed consolidated financial statements.
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ALLTRISTA CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands of dollars) Six month period ended June 28, June 29, 1998 1997 ---------- -------- Cash flows from operating activities Net income $8,237 $8,245 Reconciliation of net income to net cash (used in) provided by operating activities: Depreciation and amortization 5,201 5,072 Loss on disposal of fixed assets 37 525 Deferred employee benefits 447 406 Other (366) (245) Changes in working capital components (17,613) (8,231) ---------- ---------- Net cash (used in) provided by operating activities (4,057) 5,772 ---------- ---------- Cash flows from financing activities Proceeds from revolving credit borrowings 4,431 15,967 Payments on revolving credit borrowings (4,431) (11,160) Proceeds from issuance of common stock 553 1,293 Purchase of treasury stock (10,450) (4,042) ---------- ---------- Net cash (used in) provided by financing activities (9,897) 2,058 ---------- ---------- Cash flows from investing activities Additions to property, plant and equipment (5,449) (3,617) Proceeds from sale of property, plant and equipment 23 46 Acquisition of businesses (1,000) (8,288) Cash proceeds from the sale of product line 272 - Investment in insurance contracts (685) - Other (30) (414) ---------- ---------- Net cash used in investing activities (6,869) (12,273) ---------- ---------- Net decrease in cash (20,823) (4,443) Cash and cash equivalents, beginning of period 26,641 7,611 ---------- ---------- Cash and cash equivalents, end of period $5,818 $3,168 ========== ========== See accompanying notes to unaudited condensed consolidated financial statements.
Page 5 of 11 ALLTRISTA CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Presentation of Condensed Consolidated Financial Statements Certain information and footnote disclosures, including significant accounting policies normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments necessary for a fair presentation of the results for the interim periods presented. Results of operations for the periods shown are not necessarily indicative of results for the year, particularly in view of some seasonality in the Consumer Products business. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements of Alltrista Corporation and Subsidiaries included in the Company's latest annual report. 2. Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share computations assume outstanding stock options with a dilutive effect on earnings were exercised. These common stock equivalents are added to the weighted average number of shares outstanding in the calculation of diluted earnings per share. A computation of earnings per share is as follows (in thousands except per share data):
Three month period ended Six month period ended June 28, June 29, June 28, June 29, 1998 1997 1998 1997 -------- --------- -------- ------- Basic Earnings Per Share: Net income $ 6,581 $ 6,812 $ 8,237 $ 8,245 ======== ========= ======== ======== Weighted average number of common shares outstanding 7,274 7,364 7,316 7,417 ======== ========= ======== ======== Basic earnings per share $ .90 $ .93 $ 1.13 $ 1.11 ======== ========= ======== ======== Diluted Earnings Per Share: Net income $ 6,581 $ 6,812 $ 8,237 $ 8,245 ======== ========= ======== ======== Weighted average number of common shares outstanding 7,274 7,364 7,316 7,417 Additional shares assuming conversion of stock options 125 142 133 142 -------- --------- -------- -------- Weighted average number of common and equivalent shares 7,399 7,506 7,449 7,559 ======== ========= ======== ======== Diluted earnings per share $ .89 $ .91 $ 1.11 $ 1.09 ======== ========= ======== ========
Page 6 of 11 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During the first quarter of 1998, the Company, as part of a newly launched vision and strategy, redefined its businesses into two new distinct segments: plastic products and metal products. The plastic products segment includes the Plastic Packaging (coextruded sheet and formed containers for processed human and pet food), Unimark Plastics (injection molding for medical, consumer products and packaging markets) and Industrial Plastics (heavy gauge sheet extrusion and thermoforming for appliance, manufactured housing and recreational vehicle markets) operations. The metal products segment includes the Consumer Products (home canning supplies and related products), Zinc Products (zinc strip and products fabricated from that strip) and LumenX (industrial inspection systems for the automotive and automotive component industries) operations. Previously reported segment information was reclassified to correspond with the current presentation. Results of Operations - Comparing Year to Date 1998 to Year to Date 1997 The Company reported net sales of $130.5 million for the first six months of 1998 an increase of 5% from sales of $124.6 million for the same period last year. Operating earnings of $14.3 million for the six months of 1998 decreased 2% from $14.6 million in the first six months of 1997. The increase in sales was primarily due to new consumer product offerings that the company began marketing during the year and the May 1997 acquisition of Viking Plastics. Earnings decreased however due to lower battery can production and intense competition in the plastic packaging industry. On a segment basis, sales increased in plastic and metal products 10% and 2%, respectively, while operating earnings within these segments were essentially unchanged compared to a year ago. Within the metal products segment, Consumer Products sales and operating earnings for the first six months of 1998 increased 28% and 11% respectively compared to the same period last year. The increase in sales and operating earnings was primarily due to (i) the Company marketing and distributing new consumer products in 1998, (ii) good home garden growing conditions, especially in the northern two thirds of the United States and Canada and (iii) the increased usage of palletized home canning product displays in mass merchandiser stores. Despite the drought conditions in the southern third of the United States and assuming favorable growing conditions continue in the remainder of the United States and Canada, the Company anticipates another good year in the home canning business. Zinc Products recorded a decrease in sales and earnings primarily due to a customer's decision to move production of its zinc/carbon batteries to Mexico City and to no longer purchase battery cans from the Company. The decrease in sales was also attributed to the average price of zinc raw material dropping 15% in the first six months of 1998 compared to the same period last year. Penny blank shipments to the U.S. Mint increased 4% for the first six months of 1998 compared to the same period last year. The Company anticipates U.S Mint penny blank shipments to increase over 50% in the second half of the year compared to the first half of 1998. LumenX recorded a decrease in sales for the six months due to the September 1997 divestiture of the machine vision inspection product line. The remaining x-ray inspection equipment product line operated at a slight loss for the six months. Management continues to assess its plans for the remaining business. If a determination to exit this business is made, there can be no assurance that the entire value of its net assets ($4.0 million as of June 28, 1998) would be recovered. However, no impairment of the long-lived assets, under the provisions of FAS 121 is currently indicated. Within the plastic products segment, Industrial Plastics had an increase in sales primarily due to the May 1997 acquisition and subsequent integration of Viking Plastics. Industrial Plastics also recorded increased sales and operating earnings from the appliance components product line. Unimark Plastics recorded an increase in sales and operating earnings, which is the result of new business including the transfer of a customer's in-house production to the Company's Springfield, Missouri facility. Cost reduction programs at Unimark Plastics also contributed to the improved earnings. Plastic Packaging had a decrease in sales and operating earnings due to lower volume and a more intense competitive environment. Page 7 of 11 Overall, gross margin percentages decreased slightly in the first six months of 1998 compared to the same period last year. The decline in gross margin percentages was primarily due to the industry wide margin erosion in plastic packaging and increased employee benefit costs and a less favorable product mix at Consumer Products. This decline was offset in part by increased plant utilization at Unimark Plastics, a decrease in zinc raw material prices and an increase in coinage and industrial volume produced at Zinc Products. Selling, general and administrative expenses as a percentage of sales increased in the first six months of 1998 compared to the same period last year due to lower sales volume and a more intense competitive environment in the plastic packaging industry and lower battery can production at Zinc Products. Interest expense, net for the first six months of 1998 was $1.1 million compared to $1.4 million in the first six months of 1997. Lower net interest expense was primarily the result of earnings on higher levels of short-term investment balances. The effective income tax rate increased slightly from 37.6% to 38.0% in the first six months of 1998 versus 1997. Results of Operations - Comparing Second Quarter 1998 to Second Quarter 1997 The Company reported net sales of $84.1 million for the second quarter of 1998 an increase of 7% from sales of $79.0 million for the same period of 1997. Operating earnings of $11.3 million for the quarter decreased 3% from $11.7 million in the second quarter of 1997. The increase in sales was primarily due to new consumer product offerings that the company began marketing during the year and the May 1997 acquisition of Viking Plastics. Operating earnings decreased however due to lower battery can production and more intense competition in the plastic packaging industry. On a segment basis, metal products recorded an 8% and 2% increase in sales and operating earnings, respectively. Consumer Products recorded a 29% and 12% increase in sales and operating earnings, respectively, for the quarter. The increase in sales and earnings was primarily due to (i) the Company marketing and distributing new consumer products in 1998, (ii) good growing conditions, especially in northern two thirds of the United States and Canada and (iii) the increased usage of palletized home canning product displays in mass merchandiser stores. Zinc Products recorded a 16% and 7% decrease in sales and operating earnings, respectively, primarily due to a customer's decision to move production of its zinc/carbon batteries to Mexico City and to no longer purchase battery cans from the Company. LumenX recorded a decrease in sales for the quarter primarily due to the September 1997 divestiture of the machine vision inspection product line. With a decrease in sales within the remaining x-ray inspection equipment product line, LumenX operated at a loss for the quarter. Sales increased 4% and operating earnings decreased 11% in the plastic products segment. Industrial Plastics had an increase in sales and operating earnings primarily due to the May 1997 acquisition and subsequent integration of Viking Plastics. Industrial Plastics also recorded increased sales and operating earnings from the appliance components product line. Unimark Plastics recorded an increase in sales and operating earnings, which is the result of new business including the transfer of a customer's in-house production to the Company's Springfield, Missouri facility. Cost reduction programs at Unimark Plastics also contributed to the improved operating earnings. Plastic Packaging had a decrease in sales and operating earnings due to lower volume and a more intense competitive environment. Overall, gross margin percentages decreased in the second quarter of 1998 compared to the same period last year. The decline in gross margin percentages was primarily due to the industry wide margin erosion in plastic packaging and a less favorable product mix and increased employee benefit costs at Consumer Products. This decline was offset in part by increased plant utilization at Unimark Plastics, a decrease in zinc raw material prices and an increase in coinage and industrial volume produced at Zinc Products. Selling, general and administrative expenses as a percentage of sales increased in the second quarter of 1998 compared to the same period last year due to lower sales volume and a more intense competitive environment in the plastic packaging industry and lower battery can production at Zinc Products. Page 8 of 11 Financial Condition, Liquidity and Capital Resources Working capital (excluding the current portion of long-term debt) as of June 28, 1998 decreased $3.2 million to $54.8 million from the 1997 year-end level. During the first six months of 1998, the company purchased $10.5 million (402,000 shares) of its common stock. It is the Company's policy to annually repurchase shares to offset the dilutive effect of shares issued under employee benefit plans. In May 1997, the Company's board of directors approved a 600,000 share repurchase program. As of June 28, 1998, the Company may purchase up to 314,250 additional shares under this program. The increase in accounts receivable, inventories and other current liabilities is reflective of customary seasonal activity, particularly in the consumer products business. The Company has $30 million outstanding under a long-term financing agreement with a fixed interest rate of 7.8%. Maturities are $4.3 million per year for seven years beginning in December 1998. The Company has a revolving credit agreement with a group of banks whereby the Company can borrow up to $50 million through March 31, 2000 when all borrowings mature. There were no borrowings outstanding under this agreement at June 28, 1998 or at December 31, 1997. The Company also has available from various banks $74 million in committed and uncommitted short-term credit lines. There were no borrowings outstanding under these credit lines at June 28, 1998 or at December 31, 1997. After reducing debt by the cash balance, the debt-to-total capital ratio was 20.2% at the end of the second quarter of 1998. This is higher than the 3.3% at December 31, 1997, primarily as a result of funding normal seasonal operating activities. Capital expenditures for property, plant and equipment were $5.4 million for the first six months ended June 28, 1998 compared to $3.6 million for the same period last year. Capital expenditures are largely related to maintaining manufacturing facilities. The increase in 1998 capital spending is primarily due to investments in new injection molding machines for Unimark Plastics and new integrated information systems and other capital improvements for Industrial Plastics. Overall, capital expenditures are expected to be at slightly higher levels for the full year 1998 compared to 1997. The Company believes that existing funds, cash generated from operations and existing sources of debt financing are adequate to satisfy its working capital and capital expenditure requirements for the foreseeable future. However, the Company may raise additional capital from time to time to take advantage of favorable conditions in the capital markets or in connection with the Company's corporate development activities. The Company is subject to and involved in claims arising out of the conduct of its business including those relating to product liability, environmental and safety and health matters. The Company's information at this time does not indicate that the resolution of the aforementioned claims will have a material, adverse effect upon financial condition, results of operations, capital expenditures or competitive position of the Company. The Company is currently assessing its exposure to potential Year 2000 computer-related issues within its businesses. At this time, management does not believe the Company will incur significant problems or costs associated with its own financial or operational systems. Each division is either undertaking or will be undertaking a study of vendors and customers to determine whether their potential Year 2000 problems will have a material effect on the Company. The Company's information at this time does not indicate that Year 2000 issues will have a material, adverse effect upon the financial condition, results of operations, cash flows or competitive position of the Company. This Quarterly Report on Form 10-Q includes certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Those statements include, but may not be limited to, discussions regarding expectations of future sales and profitability, anticipated demand for the Company's products and expectations regarding operating and other expenses. Reliance on forward-looking statements involves risks and uncertainties. Although the Company believes that the assumptions upon which the forward-looking statements contained herein are reasonable, any of those assumptions could prove to be inaccurate. As a result, the forward-looking statements based on those assumptions could also be inaccurate. Please see the Company's Report on Form 8-K, dated June 10, 1997, for a list of factors which could cause the Company's actual results to differ materially from those projected in the Company's forward-looking statements. Page 9 of 11 PART II. OTHER INFORMATION Item 4. Submission of matters to a vote of security holders The Company held its Annual Meeting of Shareholders on May 13, 1998. Matters voted upon by proxy were the election of two directors for three-year terms expiring in 2001, to act upon a proposal to approve the Alltrista Corporation 1998 Long-Term Equity Incentive Plan and the ratification of the appointment of Ernst & Young LLP as independent accountants for 1998. The results of the vote are as follows:
Voted For Voted Against Withheld/Abstained ------------- --------------- -------------------- Election of directors for terms expiring in 2001: Richard L. Molen 6,261,669 106,946 Lynda Watkins Popwell 6,260,125 108,490 Approval of the Alltrista Corporation 1998 Long- 4,100,243 1,638,666 71,408 Term Equity Incentive Plan Appointment of Ernst & Young LLP as independent accountants for 1998 6,360,815 4,459 3,341
Item 6. Exhibits and Reports on Form 8-K a. Exhibits 27 Financial Data Schedule b. Reports on Form 8-K There were no events required to be reported under Form 8-K for the quarter ending June 28, 1998. 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. Alltrista Corporation (Registrant) Date: August 11, 1998 By: /s/ Kevin D. Bower -------------------- ------------------- Kevin D. Bower Senior Vice President and Chief Financial Officer Page 10 of 11 ALLTRISTA CORPORATION AND SUBSIDIARIES QUARTERLY REPORT ON FORM 10-Q June 28, 1998 EXHIBIT INDEX Exhibit Description Page 27 Financial Data Schedule [EDGAR filing only] Page 11 of 11 EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF INCOME FOUND IN THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1000 6-MOS DEC-31-1998 JUN-28-1998 5818 0 42911 0 36778 91002 151741 105745 170331 40471 25714 0 0 40575 55053 170331 130504 130504 94185 116165 0 0 1053 13286 5049 8237 0 0 0 8237 1.13 1.11
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