-----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, DuZxF9twy5PZhg6qr9/dVRxvg1U3DQtYN1LpZGrkNnUCflZlVwdwvOVi4r1pypd5 e+fR62KxQ9YR6T6X+0ppRg== 0000950131-00-003491.txt : 20000518 0000950131-00-003491.hdr.sgml : 20000518 ACCESSION NUMBER: 0000950131-00-003491 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000402 FILED AS OF DATE: 20000517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLTRISTA CORP CENTRAL INDEX KEY: 0000895655 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] 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: 638658 BUSINESS ADDRESS: STREET 1: 5875 CASTLE CREEK PARKWAY, NORTH DRIVE STREET 2: SUITE 440 CITY: INDIANAPOLIS STATE: IN ZIP: 46250-4330 BUSINESS PHONE: 3175775000 MAIL ADDRESS: STREET 1: 5875 CASTLE CREEK PARKWAY, NORTH DRIVE STREET 2: SUITE 440 CITY: INDIANAPOLIS STATE: IN ZIP: 46250-4330 10-Q 1 FORM 10-Q - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ---------------- FORM 10-Q (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 2, 2000 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 5875 Castle Creek Parkway, North Drive, Suite 440 Indianapolis, Indiana 46250-4330 Registrant's telephone number, including area code: (317) 577-5000 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 April 30, 2000 ----- ----------------------------- Common Stock, without par value 6,309,640 shares
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ALLTRISTA CORPORATION AND SUBSIDIARIES QUARTERLY REPORT ON FORM 10-Q For the period ended April 2, 2000 INDEX
Page Number ------ PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Unaudited Condensed Consolidated Statements of Income for the three month periods ended April 2, 2000 and March 28, 1999............... 3 Unaudited Statements of Comprehensive Income for the three month periods ended April 2, 2000 and March 28, 1999..................... 4 Unaudited Condensed Consolidated Balance Sheets at April 2, 2000 and December 31, 1999.................................................. 5 Unaudited Condensed Consolidated Statements of Cash Flows for the three month periods ended April 2, 2000 and March 28, 1999......... 6 Notes to Unaudited Condensed Consolidated Financial Statements...... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................ 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk.... 13 PART II. OTHER INFORMATION.............................................. 14
2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ALLTRISTA CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts)
Three month period ended ------------------ April March 28, 2, 2000 1999 ------- --------- Net sales................................................... $81,292 $51,634 Costs and expenses Cost of sales............................................. 62,597 39,341 Selling, general and administrative expenses.............. 13,398 8,207 Goodwill amortization..................................... 1,551 349 ------- ------- Operating earnings.......................................... 3,746 3,737 Interest expense, net....................................... (3,071) (568) ------- ------- Income from continuing operations before taxes and minority interest................................................... 675 3,169 Provision for income taxes.................................. (263) (1,206) Minority interest in loss of consolidated subsidiary........ 32 -- ------- ------- Income from continuing operations........................... 444 1,963 Discontinued operations: Gain on disposal of discontinued operations, net of income tax expense.............................................. -- 136 ------- ------- Net income.............................................. $ 444 $ 2,099 ======= ======= Basic earnings per share: Income from continuing operations......................... $ .07 $ .29 Discontinued operations................................... -- .02 ------- ------- Net income.............................................. $ .07 $ .31 ======= ======= Diluted earnings per share: Income from continuing operations......................... $ .07 $ .29 Discontinued operations................................... -- .02 ------- ------- Net income.............................................. $ .07 $ .31 ======= ======= Weighted average shares outstanding: Basic..................................................... 6,421 6,749 Diluted................................................... 6,474 6,844
See accompanying notes to unaudited condensed consolidated financial statements. 3 ALLTRISTA CORPORATION AND SUBSIDIARIES UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME (thousands of dollars)
Three month period ended ------------------ April 2, March 28, 2000 1999 -------- --------- Net income................................................... $444 $2,099 Foreign currency translation................................. (206) 110 ---- ------ Comprehensive income......................................... $238 $2,209 ==== ======
See accompanying notes to unaudited condensed consolidated financial statements. 4 ALLTRISTA CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (thousands of dollars)
April 2, December 31, ASSETS 2000 1999 ------ -------- ------------ Current assets Cash and cash equivalents.................................. $ 1,855 $ 17,394 Accounts receivable, net................................... 49,643 36,931 Inventories: Raw materials and supplies............................... 11,753 17,155 Work in process.......................................... 15,781 9,400 Finished goods........................................... 40,419 31,353 Deferred taxes on income..................................... 6,794 6,794 Prepaid expenses............................................. 2,624 2,449 -------- -------- Total current assets................................... 128,869 121,476 -------- -------- Property, plant and equipment, at cost....................... 177,449 174,026 Accumulated depreciation..................................... (87,541) (84,160) -------- -------- 89,908 89,866 Goodwill, net................................................ 112,998 115,276 Other assets................................................. 11,982 12,133 -------- -------- Total assets........................................... $343,757 $338,751 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities Current portion of long-term debt.......................... $ 20,344 $ 19,094 Notes payable.............................................. 17,526 607 Accounts payable........................................... 33,166 26,895 Accrued salaries, wages and employee benefits.............. 9,629 10,889 Other current liabilities.................................. 6,059 9,380 -------- -------- Total current liabilities.............................. 86,724 66,865 -------- -------- Noncurrent liabilities Long-term debt............................................. 115,987 121,060 Deferred taxes on income................................... 11,348 11,865 Other noncurrent liabilities............................... 15,067 14,554 -------- -------- Total noncurrent liabilities........................... 142,402 147,479 -------- -------- Minority interest in subsidiary.............................. 1,388 1,382 -------- -------- Contingencies................................................ -- -- Shareholders' equity: Common stock (7,964,766 common shares issued and 6,309,703 shares outstanding at April 2, 2000)...................... 39,860 39,952 Retained earnings.......................................... 113,675 113,231 Accumulated other comprehensive loss-cumulative translation adjustment................................................ (625) (419) -------- -------- 152,910 152,764 Less: treasury stock (1,655,063 shares at cost at April 2, 2000)....................................................... (39,667) (29,739) -------- -------- Total shareholders' equity............................. 113,243 123,025 -------- -------- Total liabilities and shareholders' equity............. $343,757 $338,751 ======== ========
See accompanying notes to unaudited condensed consolidated financial statements. 5 ALLTRISTA CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands of dollars)
Three month period ended ------------------ April 2, March 2000 28, 1999 -------- -------- Cash flows from operating activities Net income............................................... $ 444 $ 2,099 Reconciliation of net income to net cash provided by operating activities: Depreciation........................................... 3,527 2,226 Amortization........................................... 1,652 408 Deferred employee benefits............................. 399 63 Minority interest...................................... (32) -- Other, net............................................. 326 (45) Changes in working capital components.................... (20,893) (22,745) -------- -------- Net cash used in operating activities................ (14,577) (17,994) -------- -------- Cash flows from financing activities Proceeds from revolving credit borrowings................ 20,082 2,900 Payments on revolving credit borrowings.................. (3,164) -- Payments on notes payable................................ (3,823) -- Proceeds from issuance of common stock................... 458 258 Purchase of treasury stock............................... (10,485) (910) -------- -------- Net cash provided by financing activities............ 3,068 2,248 -------- -------- Cash flows from investing activities Additions to property, plant and equipment............... (4,076) (4,226) Proceeds from sale of property, plant and equipment...... -- 866 Proceeds from divestitures of businesses and product lines................................................... -- 362 Investments in insurance contracts....................... -- (274) Other, net............................................... 46 (172) -------- -------- Net cash used in investing activities................ (4,030) (3,444) -------- -------- Net decrease in cash....................................... (15,539) (19,190) Cash and cash equivalents, beginning of period............. 17,394 21,454 -------- -------- Cash and cash equivalents, end of period................... $ 1,855 $ 2,264 ======== ========
See accompanying notes to unaudited condensed consolidated financial statements. 6 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 for home food preservation products. The accompanying unaudited condensed 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 Calculation Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share are calculated based on the weighted average number of outstanding common shares plus the dilutive effect of stock options as if they were exercised. A computation of earnings per share is as follows (in thousands except per share data):
Three month period ended ------------------ April 2, March 28, 2000 1999 -------- --------- Income from continuing operations..................... $ 444 $1,963 Discontinued operations............................... -- 136 ----- ------ Net income........................................ $ 444 $2,099 ===== ====== Weighted average shares outstanding................... 6,421 6,749 Additional shares assuming conversion of stock options.............................................. 53 95 ----- ------ Weighted average shares outstanding assuming conversion........................................... 6,474 6,844 ===== ====== Basic earnings per share: Income from continuing operations................... $ .07 $ .29 Discontinued operations............................. -- .02 ===== ====== Net income........................................ $ .07 $ .31 ===== ====== Diluted earnings per share--assuming conversion: Income from continuing operations................... $ .07 $ .29 Discontinued operations............................. -- .02 ----- ------ Net income........................................ $ .07 $ .31 ===== ======
7 ALLTRISTA CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 3. Pro forma Financial Information The following unaudited pro forma information presents a summary of consolidated results of operations of the Company as if the April 25, 1999 acquisition of Triangle Plastics and the May 24, 1999 disposal of the plastic packaging product line had occurred at the beginning of 1999. Pro forma adjustments give effect to an increase in goodwill amortization, increase in depreciation expense due to recording the fixed assets of Triangle Plastics at fair value and an increase in interest expense related to the acquisition financing. The pro forma adjustments do not reflect any benefits from operational synergies that may result from the acquisition of Triangle Plastics. (In thousands except per share data.)
Three month period ended March 28, 1999 -------------- Net sales.................................................. $73,515 Income from continuing operations.......................... 718 Net income................................................. 854 Diluted earnings per share: Income from continuing operations........................ $ .10 Net income............................................... $ .12
4. Segment Information The Company is organized into two distinct segments: metal products and plastic products. The metal products segment includes sales of zinc and consumer products. This segment provides cast zinc strip and fabricated zinc products primarily for zinc coinage and industrial applications. It also markets a line of home food preservation products including home canning jars, home canning metal closures and related food products, which are distributed through a wide variety of retail outlets. The plastic products segment produces injection molded plastic products used in medical, pharmaceutical and consumer products and industrial thermoformed plastic parts for appliances, manufactured housing, recreational vehicles, heavy trucking, agriculture equipment, portable toilet, recreational and construction products. Effective April 25, 1999, the plastic products segment includes Triangle Plastics. Effective May 24, 1999, the multi-layer plastic sheet and formed container product lines were sold. 8 ALLTRISTA CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Net sales, operating earnings and assets employed in operations by segment are summarized as follows (thousands of dollars):
Three month period ended ------------------- April 2, March 28, 2000 1999 -------- --------- Net Sales: Metal products Consumer products...................................... $ 17,498 $ 12,380 Zinc products.......................................... 15,865 13,572 Other.................................................. 63 -- -------- -------- Total metal products................................. 33,426 25,952 -------- -------- Plastic products: Industrial thermoformed parts.......................... 36,608 9,264 Injection molded products.............................. 11,888 9,044 Plastic packaging...................................... -- 7,727 -------- -------- Total plastic products............................... 48,496 26,035 -------- -------- Intercompany............................................. (630) (353) -------- -------- Total net sales...................................... $ 81,292 $ 51,634 ======== ======== Operating earnings: Metal products........................................... $ 1,843 $ 1,671 Plastic products......................................... 2,112 2,349 Intercompany............................................. (18) (56) Unallocated corporate expenses........................... (191) (227) -------- -------- Total operating earnings............................. 3,746 3,737 Interest expense, net...................................... (3,071) (568) -------- -------- Income from continuing operations before taxes and minority interest.................................................. $ 675 $ 3,169 ======== ======== April 2, March 28, 2000 1999 -------- --------- Assets employed in operations: Metal products........................................... $110,673 $101,558 Plastic products......................................... 214,059 55,697 -------- -------- Total assets employed in operations.................. 324,732 157,255 Corporate (1)............................................ 19,025 16,031 -------- -------- Total assets......................................... $343,757 $173,286 ======== ========
- -------- (1) Corporate assets primarily include cash and cash equivalents, amounts relating to benefit plans, deferred tax assets and corporate facilities and equipment. 9 ALLTRISTA CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 5. Costs to Exit Facility In October 1999, management initiated a plan to exit the Company's plastic thermoforming facility in El Dorado, Arkansas. Operations in this facility ceased in January 2000 and were moved to the Company's Auburndale, Florida facility. The estimated total cost to exit the facility is $2.3 million and includes a $0.8 million loss on the sale and disposal of equipment, $0.6 million in future lease obligations, net of assumed sublease revenue and $0.9 million in other costs consisting primarily of employee severance, consulting and employment obligations and other related fees. Of this $2.3 million charge, which was recorded in 1999, $1.5 million has been expended through April 2, 2000. 6. Contingencies On May 19, 1997 the Company purchased certain assets and assumed certain liabilities of Viking Industries. To date, the Company has paid $9.4 million and, in accordance with the terms of the asset purchase agreement and subsequent amendment, could pay up to an additional $4.0 million based upon incremental sales over the next fourteen months. The former owner has initiated arbitration proceedings in an effort to accelerate payment of the additional $4.0 million. The Company has been named a defendant in a lawsuit with respect to a royalty agreement, whereby the licensee believes the Company is obligated to extend a paid-up royalty-free license to the plaintiff. The plaintiff (licensee) alleges damages in excess of $500,000. In addition, at April 2, 2000, the Company had a receivable of approximately $749,000 recorded in its consolidated balance sheet for royalties due from the licensee. Subsequent collections have reduced this receivable to $191,000. The Company is prepared to vigorously defend the action and pursue collection of its remaining receivable; however, collection of the receivable and future royalties are dependent upon the ultimate outcome of the lawsuit. In accordance with the terms of the Triangle Plastics asset purchase agreement, the former owner is obligated to pay the first $500,000 of defense costs related to this action. The Company is involved in various legal disputes in the ordinary course of business. In addition, the Environmental Protection Agency has designated the Company as a potentially responsible party, along with numerous other companies, for the clean up of several hazardous waste sites. Information at this time does not indicate that disposition of any of the legal or environmental disputes the Company is currently involved in will have a material, adverse effect upon the financial condition, results of operations, cash flows or competitive position of the Company. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Continuing Operations--Comparing First Quarter 2000 to First Quarter 1999 The Company reported net sales of $81.3 million for the first three months of 2000, an increase of 57.4% from sales of $51.6 million for the same 1999 period. Operating earnings of $3.7 million for the first three months were level with the 1999 period. The metal products segment reported higher sales and earnings. The plastic products segments reported higher sales with lower earnings. Net sales within the metal products segment increased from $26.0 million in the first three months of 1999 to $33.4 million in 2000. Sales of consumer products increased $5.1 million primarily due to early demand from retailers for home canning supplies. Sales of zinc products increased $2.3 million with the majority of the increase coming from the sale of strip and other industrial products. Penny blank shipments to the U.S. Mint were substantially equal to last year while shipments to the Royal Canadian Mint decreased. The average price of zinc ingot increased 9.6% in the first three months of 2000 compared to the same 1999 period adding approximately $1.4 million to sales. The Company passes on fluctuations in zinc ingot prices to those customers who do not purchase their own zinc ingot. Net sales within the plastic products segment increased from $26.0 million in the first three months of 1999 to $48.5 million in 2000. Triangle Plastics, which was acquired on April 25, 1999, contributed $26.4 million to 2000 sales. Industrial thermoformed part sales to appliance manufacturers increased $1.8 million on increased demand for refrigerators. Bath product sales decreased $1.1 million, as the manufactured housing market remains soft. The Company does not anticipate a recovery in the manufactured housing market during 2000. Sales of injection molded products increased by $2.8 million. New customers and increased sales to ammunition manufacturers accounted for $2.0 million of this increase. Sales from the plastic packaging product line (disposed of May 24, 1999) were $7.7 million in the first three months of 1999. The Company anticipates sales of truck parts will be lower in 2000 as compared to the previous year. Orders for truck parts have declined as manufacturers have slowed production. The ability of operators to purchase trucks has diminished due to increased fuel and interest costs. Parts for Class 8 (heavy) trucks accounted for approximately 18% of the Company's 1999 net sales within the plastic products segment on a pro forma basis, as if the acquisition of Triangle Plastics and the disposal of the plastic packaging product line had occurred at the beginning of 1999. Gross margin percentages decreased from 23.8% in the first three months of 1999 to 23.0% in the first three months of 2000. Plastic products, which generally sell for lower margins than metal products, represented 59% of total 2000 net sales compared to 50% in 1999. Gross margin percentages on plastic products decreased slightly from 20.0% in 1999 to 19.5% in 2000 due to several factors. First, resin prices have steadily increased concurrent with petroleum prices. In the majority of the Company's supply agreements, price increases can be passed on to customers. However, some contracts do not allow all increases to be passed on and others call for pass-through delays. Second, the Company has experienced operating inefficiencies relating to the transfer of bath product production from the El Dorado, Arkansas facility to the Auburndale, Florida facility. Efficiencies are expected to improve for the remainder of the year. As previously noted, the manufactured housing market remains soft. The full benefit from the facility consolidation will not be realized until market conditions improve. Third, sales of material handling products have shifted from higher margin proprietary products to lower margin custom dunnage for the automotive industry. This shift was partly due to a decision made by the United States Postal Service in 1999 not to purchase hampers from the Company in 2000. Finally, gross margins on the plastic packaging products for the first three months of 1999 were extraordinarily high. The Company did not believe these margins were sustainable and the product line was divested in the second quarter of 1999. Gross margin percentages on metal products increased slightly from 27.6% to 28.0%. Selling, general and administrative expenses as a percentage of net sales increased from 15.9% in the first three months of 1999 to 16.5% for the first three months of 2000. Expenses within the plastics segment have increased during the first three months of 2000 compared to the first three months of 1999 due to the Company's 11 formation of a dedicated marketing organization for its plastic furniture line and addition of sales, engineering and product development personnel. The acquisition of Triangle Plastics and disposal of the plastic packaging product line also resulted in increased expenses during the first three months of 2000 compared to the first three months of 1999. Triangle Plastics maintains a significant sales force and personnel necessary to offer customers extensive design, engineering and development services. The operations of the plastic packaging product line did not support such services. Warehousing, freight and sales and marketing costs for consumer products also increased expenses in the metal products segment. Higher fuel cost and a higher concentration of consumer products shipped to the west coast increased freight cost. The Company experienced higher levels of glass breakage relating to a recently introduced specialty glassware item. The Company has modified the packaging of this product to reduce damages and is filing a claim with the vendor. Also in the metals segment, the Company's research and development of new battery technology applications and a two-week maintenance shut down of the zinc products facility, delayed from December 1999, increased expenses as a percentage of sales. The maintenance shut down cost was approximately $350,000. Goodwill amortization expense increased from $0.3 million in 1999 to $1.6 million in 2000 due to the acquisition of Triangle Plastics. Interest expense, net in the first three months of 2000 was $3.1 million compared to $0.6 million for the same period last year. The increase was primarily due to increased borrowings to finance the Triangle Plastics acquisition. The Company's effective tax rate increased from 38.0% in the first three months of 1999 to 39.0% in the first three months of 2000 due primarily to foreign losses for which a tax benefit has not been recorded. Income from continuing operations decreased from $2.0 million in the first three months of 1999 to $0.4 million in the first three months of 2000. Diluted earnings per share from continuing operations was $0.07 for the first three months of 2000 compared to $0.29 for the same 1999 period. Diluted weighted average shares outstanding decreased from 6,844,000 in the first three months of 1999 to 6,474,000 in 2000 due to the Company purchasing its common stock in the open market. Due to the seasonality of home food preservation, the Company's first quarter results of operations have less of an impact on full year results. Financial Condition, Liquidity and Capital Resources Working capital (excluding the current portion of long-term debt and notes payable) increased $5.7 million from $74.3 million at year-end 1999 to $80.0 million at April 2, 2000. Accounts receivable increased $12.7 million on increased sales across most product lines. Inventories and accounts payable increased $10.0 million and $6.3 million, respectively, due to the customary build-up in anticipation of seasonal home canning activity. Cash and cash equivalents decreased $15.5 million and short-term borrowings increased $16.9 million to fund seasonal working capital requirements and to fund the Company's stock repurchase program. During the first three months of 2000, the Company repurchased 452,600 shares of the Company's stock for $10.5 million. In 1999, the Company's board of directors approved the repurchase of up to 500,000 shares. Through April 2, 2000 the Company repurchased 402,400 shares under this program. In addition, the Company has a policy to annually repurchase shares to offset the dilutive effect of shares issued under employee benefit plans. Capital expenditures were $4.1 million in the first three months of 2000 compared to $4.2 million for the same period in 1999 and are largely related to maintaining facilities and improving manufacturing efficiencies. The largest 2000 expenditures included new injection molding machines to support growth and an investment in a new high precision slitting line for zinc products. The Company believes that existing funds, cash generated from operations and the debt facility 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. 12 In October 1999, management initiated a plan to exit the Company's plastic thermoforming facility in El Dorado, Arkansas. Operations in this facility ceased in January 2000 and were moved to the Company's Auburndale, Florida facility. The estimated total cost to exit the facility is $2.3 million and includes a $0.8 million loss on the sale and disposal of equipment, $0.6 million in future lease obligations, net of assumed sublease revenue and $0.9 million in other costs consisting primarily of employee severance, consulting and employment obligations and other related fees. Of this $2.3 million charge, which was recorded in 1999, $1.5 million has been expended through April 2, 2000. Contingencies On May 19, 1997 the Company purchased certain assets and assumed certain liabilities of Viking Industries. To date, the Company has paid $9.4 million and, in accordance with the terms of the asset purchase agreement and subsequent amendment, could pay up to an additional $4.0 million based upon incremental sales over the next fourteen months. The former owner has initiated arbitration proceedings in an effort to accelerate payment of the additional $4.0 million. The Company has been named a defendant in a lawsuit with respect to a royalty agreement, whereby the licensee believes the Company is obligated to extend a paid-up royalty-free license to the plaintiff. The plaintiff (licensee) alleges damages in excess of $500,000. In addition, at April 2, 2000, the Company had a receivable of approximately $749,000 recorded in its consolidated balance sheet for royalties due from the licensee. Subsequent collections have reduced this receivable to $191,000. The Company is prepared to vigorously defend the action and pursue collection of its remaining receivable; however, collection of the receivable and future royalties are dependent upon the ultimate outcome of the lawsuit. In accordance with the terms of the Triangle Plastics asset purchase agreement, the former owner is obligated to pay the first $500,000 of defense costs related to this action. The Company is involved in various legal disputes in the ordinary course of business. In addition, the Environmental Protection Agency has designated the Company as a potentially responsible party, along with numerous other companies, for the clean up of several hazardous waste sites. Information at this time does not indicate that disposition of any of the legal or environmental disputes the Company is currently involved in will have a material, adverse effect upon the financial condition, results of operations, cash flows or competitive position of the Company. Forward-Looking Information 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 forward-looking statements contained herein are based on reasonable assumptions, any of those assumptions could prove to be inaccurate. As a result, the forward-looking statements based on those assumptions could also be incorrect. Please see the Company's 1999 Form 10-K 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. Item 3. Quantitative and Qualitative Disclosure About Market Risk In general, business enterprises can be exposed to market risks including fluctuations in commodity prices, foreign currency values, and interest rates that can affect the cost of operating, investing, and financing. The Company's exposures to these risks are low. Over 90% of the Company's zinc business is conducted on a tolling basis whereby customers supply zinc to the Company for processing or supply contracts provide for fluctuations in the price of zinc to be passed on to the customer. The Company from time to time invests in short-term financial instruments with original maturities usually less than thirty days. The Company is exposed to short-term interest rate variations with respect to London Interbank Offered Rate ("LIBOR") on its term and revolving debt obligations. A portion of this risk has been 13 managed through the use of an interest rate swap, completed in 1999, whereby the Company effectively pays a maximum interest rate of 7.48% on 60% of the outstanding term debt balance for a period of three years. Changes in LIBOR interest rates would affect the earnings of the Company either positively or negatively depending on the changes in short-term interest rates. Assuming that LIBOR rates increased 100 basis points over period end rates on the outstanding term and revolver debt, the Company's interest expense, after considering the effects of its interest rate swap, would have increased by approximately $150,000 for the three month period ended April 2, 2000. The amount was determined by considering the impact of the hypothetical interest rates on the Company's borrowing cost, short-term investment rates, interest rate swap and estimated cash flow. Actual changes in rates may differ from the assumptions used in computing this exposure. Since the debt obligation and related interest rate swap to which this exposure relates was put in place during the second quarter of 1999, a comparative analysis of the impact of interest rate changes on prior periods would not be meaningful. The Company does not invest or trade in any derivative financial or commodity instruments, nor does it invest in any foreign financial instruments. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits 27 Financial Data Schedule
b. Reports on Form 8-K None. 14 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) /s/ Kevin D. Bower By: _________________________________ Kevin D. Bower Senior Vice President and Chief Financial Officer Date: May 15, 2000 _________________________________ 15 ALLTRISTA CORPORATION AND SUBSIDIARIES QUARTERLY REPORT ON FORM 10-Q April 2, 2000 EXHIBIT INDEX
Exhibit Description Page ------- ----------- ---- 27 Financial Data Schedule [EDGAR filing only]
16 EX-27 2 FINANCIAL DATA SCHEDULE
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 3-MOS DEC-31-2000 APR-02-2000 1855 0 49643 0 67953 128869 177449 87541 343757 86724 115987 0 0 39860 73383 343757 81292 81292 62597 77546 (32) 0 3071 707 263 444 0 0 0 444 .07 .07
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