10-K/A 1 file001.txt FORM 10-K/A ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K/A [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to JARDEN CORPORATION DELAWARE 0-21052 35-1828377 State of Incorporation Commission File Number IRS Identification Number 555 THEODORE FREMD AVENUE, SUITE B302 RYE, NEW YORK 10580 REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (914) 967-9400 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------------------ ------------------------------------------ Common Stock, $.01 par value New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None 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. [X] YES [ ] NO Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of March 25, 2002, the aggregate market value of voting common stock held by non-affiliates of the registrant was $162.5 million based upon the closing market price on such date as reported on the New York Stock Exchange. All (i) executive officers and directors of the registrant and (ii) all persons filing a Schedule 13D with the Securities and Exchange Commission in respect to registrant's common stock who hold 10% or more of the registrant's outstanding common stock, have been deemed, solely for the purpose of the foregoing calculation, to be "affiliates" of the registrant. There were 6,936,244 shares outstanding of the registrant's common stock, par value $.01 per share, as of March 3, 2002. DOCUMENTS INCORPORATED BY REFERENCE Certain information required for Part III of this report is incorporated herein by reference to the proxy statement for the 2002 annual meeting of the Company's stockholders. EXPLANATORY NOTE This amendment to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 is being filed to reflect more reportable segments than previously filed. All information in this Form 10-K/A is as of December 31, 2001, and does not reflect, unless otherwise noted, any subsequent information or events other than the change mentioned above. ================================================================================ ALLTRISTA CORPORATION INDEX TO FORM 10-K
PAGE ----- PART I Item 1. Business ................................................................... 1 Item 2. Properties ................................................................. 6 Item 3. Legal Proceedings .......................................................... 7 Item 4. Submission of Matters to a Vote of Security Holders ........................ 7 Executive Officers of the Company .......................................... 8 PART II Item 5. Market for Registrant's Common Stock and Related Stockholder Matters ....... 9 Item 6. Selected Financial Data .................................................... 9 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations .............................................................. 10 Item 7a. Quantitative and Qualitative Disclosures About Market Risk ................. 17 Item 8. Financial Statements and Supplementary Data ................................ 17 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ....................................................... 41 PART III Item 10. Directors and Executive Officers of the Registrant ......................... 41 Item 11. Executive Compensation ..................................................... 41 Item 12. Security Ownership of Certain Beneficial Owners and Management ............. 41 Item 13. Certain Relationships and Related Transactions ............................. 41 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ........... 41 Signatures ......................................................................... 46 Financial Statement Schedule ....................................................... 47 Index to Exhibits .................................................................. 48
PART I ITEM 1. BUSINESS Jarden Corporation (formerly known as Alltrista Corporation) (the "Company") was incorporated in the State of Indiana in 1991 and reincorporated in the State of Delaware in December 2001. We operate two business groups, consumer products and materials based. Consumer products is the leading provider of home canning related products in North America primarily under the Ball (Registered Trademark) , Kerr (Registered Trademark) and Bernardin (Registered Trademark) brands. The materials based group has plastics manufacturing operations and is the country's largest producer of zinc strip and fabricated products, including coin blanks for U.S. and foreign mints. In addition to the information included below in this Item 1, see Item 7 (Management's Discussion and Analysis of Financial Condition and Results of Operations) and Item 8, Note 1 (Significant Accounting Policies) and Note 4 (Business Segment Information) for financial and other information concerning the Company's operations. During 2001, we repositioned our growth strategy to focus on consumer products. Our consumer products segment markets and distributes a broad line of home food preservation and preparation products that includes recognized brand name home canning jars, jar closures and related food products (including fruit pectin, Fruit-Fresh (Registered Trademark) brand fruit protector, pickle mixes and tomato mixes). Our materials based group is comprised of three segments: metals, injection molded plastics, and other. Our metals business is the sole source supplier of copper plated zinc penny blanks to both the United States Mint and the Royal Canadian Mint and is currently exploring opportunities with several other countries. In addition, we manufacture a line of industrial zinc items used in the plumbing, automotive, electrical component and European architectural markets, and the Lifejacket (Registered Trademark) anti-corrosion system. Our plastic injection molding business manufactures precision custom components for major companies in the healthcare and consumer products industries including CIBA Vision Corporation, Johnson & Johnson, Meridian Diagnostics, Inc., The Scotts Company and Winchester Ammunition. The other segment includes the manufacturing of non-injection molded plastic parts and other immaterial business activities. On December 18, 2001, at a special meeting of stockholders, our stockholders approved a proposal to reincorporate the Company in the State of Delaware. In order to reincorporate as a Delaware corporation, the Company organized a Delaware corporation as one of its subsidiaries. Effective December 19, 2001, the Company merged with the new Delaware subsidiary, and the Delaware corporation was the corporation that survived the merger. The surviving corporation (i.e., the Company) was renamed "Alltrista Corporation", the same name of the Company prior to the merger. In addition, the Company succeeded to the rights, properties and assets and assumed the liabilities held by the Company prior to the merger, and the financial statements of the Company are substantially identical to its financial statements prior to the merger, the only difference being those appropriate to reflect the Company's new corporate identity and common stock's par value of $0.01 per share. The business and management of the Company after the merger remain the same as those of the Company before the merger. However, since the merger, we are subject to the corporate laws of the State of Delaware and are no longer subject to the corporate laws of the State of Indiana. On September 24, 2001, we appointed Martin E. Franklin as Chairman and Chief Executive Officer and Ian G.H. Ashken as Vice Chairman, Chief Financial Officer and Secretary. On October 15, 2001, the Company announced the closing of its Indianapolis, Indiana corporate office. Corporate functions are now performed at the Company's new headquarters in Rye, New York and the Company's Consumer Products location in Muncie, Indiana. CONSUMER PRODUCTS Alltrista manufactures, markets and distributes a line of home food preservation products to serve value, mid-tier and premium oriented customers, which products include home canning jars, jar closures, home canning tools and other accessories. These products are marketed under the well-known Ball (Registered Trademark) , 1 Kerr (Registered Trademark) , Golden Harvest (Registered Trademark) and Bernardin (Registered Trademark) brand names. We also market and distribute related food products, including fruit pectin, Fruit-Fresh (Registered Trademark) brand fruit protector, pickle mixes, tomato mixes and all-in-one canning kits, including a jam pectin kit and jelly and salsa kits. In addition, we market a line of housewares under the Golden Harvest (Registered Trademark) brand, including tumblers, beverage tappers and other glassware. Customers Our customers are a diverse group of 1,800 wholesalers and retailers in the United States and Canada. Our principal customers include grocery stores, mass merchants, and hardware stores. We have been Wal-Mart's category manager for the home canning segment since 1998. In this role, we are responsible for the home canning section within the store, including inventory management, the introduction of new items, and the creation of various reports to track inventory, sales, and margins. Sales and Marketing Our consumer products sales are made in the United States and Canada through food brokers and manufacturer representative organizations as well as through our internal sales force and house accounts. We employ regional sales managers located in key geographic areas who oversee the sales and retail activities of food brokerage firms and independent manufacturer representatives. Distribution and Fulfillment We utilize independent warehouses located in various regions of the United States and Canada to distribute our products. The largest of these warehouses is located in Muncie, Indiana and is operated by an outsourced provider, which utilizes highly automated packaging equipment allowing us to maintain our efficient and effective logistics and freight management processes. We also work with an outsourced provider for the delivery of our products in order to ensure that as many shipments as possible are processed as full truckloads, saving significant freight costs. Manufacturing We manufacture the metal closures for our home canning jars at our Muncie, Indiana facility. Lithographed tin plated steel sheet is cut and formed to produce the lids and bands. Liquid plastisol, which we formulate, is applied to lids, forming an airtight seal, which is necessary for safe and effective home canning. Finished products are packaged for integration with glass jars or sold in multi-packs as replacement lids. Intellectual Property Management believes that none of our active trademarks or patents is essential to the successful operation of our business as a whole. However, one or more trademarks or patents may be material in relation to individual products or product lines such as our property rights to use the Kerr (Registered Trademark) , Ball (Registered Trademark) , Fruit-Fresh (Registered Trademark) and Bernardin (Registered Trademark) brand names. In addition, we have developed a proprietary two-piece closure system incorporating a plastisol sealant that differentiates our jar lids from our competitors' lids. See below, "Patents and Trademarks." Raw Materials Most of our glass canning jars are supplied under an agreement with Anchor Glass Container Corporation. Such glass materials are also available from a variety of other sources at competitive prices. The tin plate raw material used in the manufacture of our home canning jar lids and closures is supplied by multiple vendors and is currently available from a variety of sources at competitive prices. Historically, the raw materials and components that are necessary for the manufacture of our products have been available in the quantities that we require. MATERIALS BASED GROUP Our materials based group is currently comprised of three segments: metals, injection molded plastics, and other. 2 METALS We believe our metals segment is the largest zinc strip casting and rolling operation in the United States. We are the sole source supplier of copper plated zinc penny blanks to both the United States Mint and the Royal Canadian Mint and are currently exploring opportunities with several other countries. In addition, we manufacture a line of industrial zinc items used in the plumbing, automotive, electrical component and European architectural markets, and the Lifejacket (Registered Trademark) anti-corrosion system. Our anticorrosion zinc Lifejacket (Registered Trademark) is gaining recognition as a cost-effective solution to arrest the corrosion of the reinforcement steel within poured concrete structures. We are affected by fluctuations in penny blank requirements of the United States Department of the Treasury and the Federal Reserve System. Although the future use of the penny as legal tender has been debated in recent years, management believes that the zinc penny will remain an important part of the currency system for the foreseeable future. Sales and Marketing Our sales and marketing staff consists of individuals with considerable technical background in the field of metallurgy. These individuals focus on leveraging our core capabilities in zinc metallurgy and electrochemistry to exploit new market opportunities. The sales and marketing staff works closely with our engineering and technical services group to deliver products to the customer. We maintain a website which contains technical information regarding the advantageous physical properties of zinc versus other metals. Manufacturing In our Greeneville, Tennessee facility, we manufacture alloys of zinc strip and fabricated zinc products in a number of configurations for our customers. We have five lines used to slit the coils into widths specific by customers. Many customers require less than the full master coil diameters, so the large coils are broken down into the requested diameters at the time they are slit. We also produce coin blanks stamped from slit coils using one of five high-speed presses. The stamped blanks are then rimmed and put into one of three electroplating lines where the copper coating is applied. Raw Materials We purchase special high-grade zinc ingot and a variety of metals, including copper, lead, titanium, magnesium, manganese and other alloys, to produce the zinc alloys we use in our various applications. These alloys have been developed by our technical staff to meet the specific physical and chemical characteristics of the finished product applications. We purchase zinc ingot based on market prices quoted on the London Metals Exchange (month-end average price) from a variety of suppliers. Certain 3 customers, including the United States Mint, provide their own purchased zinc that is utilized to manufacture product at a toll conversion price. We purchase copper for both alloying and plating purposes based on market prices quoted on the New York Commodities and Metals Exchange. As with zinc ingot, the United States Mint supplies the required copper for one-cent coin blanks. We also purchase a variety of chemicals for production and waste treatment, primarily for use in copper plating. Prices for chemicals are negotiated with suppliers based on market supply and demand conditions and volume purchase levels. INJECTION MOLDED PLASTICS We manufacture precision custom injection molded components for major companies in the healthcare and consumer products industries. We also own Yorker (Registered Trademark) Closures, a proprietary product line of plastic closures. Products for the healthcare industry include items such as intravenous harness components and surgical devices. Products for manufacturers of consumer goods primarily include packaging and sport shooting ammunition components. Customers The three major customers of our injection molded plastics business represented approximately 58% of the Company's 2001 injection molded plastics sales. We supply shotgun shell components to Winchester Ammunition, healthcare products (contact lens cases) to CIBA Vision Corporation, Ethicon, Inc., Johnson & Johnson, CB Fleet Company, Inc., and Meridian Diagnostics, Inc. and consumer products for The Scotts Company, among others. Sales and Marketing We concentrate our marketing efforts in those markets that require high levels of precision, quality, and engineering expertise. There is potential for continued growth in all product lines, especially in the healthcare market, where our quality, service and "clean room" molding operations are critical competitive factors. Manufacturing We manufacture at three facilities located in Greenville, South Carolina; Reedsville, Pennsylvania; and Springfield, Missouri. The injection-molding process involves converting plastic resin pellets to a fluid state through elevated temperature and pressure, at which point the resin is injected into a mold where it is then formed into a finished part. Molded parts are usually small, intricate components that are produced using multi-cavity tooling. Post-molding operations employ robotics and automation for assembly and packaging. Raw Materials We purchase resin from regular commercial sources of supply and, in most cases, multiple sources. The supply and demand for plastic resins are subject to cyclical and other market factors. Competition The market for injection molded plastics is highly competitive. We concentrate our marketing efforts in those markets that require high levels of precision, quality, engineering expertise and cleanliness. We have differentiated ourselves from our competitors by developing long-lasting relationships with a number of specialty tooling manufacturers and by possessing strong design capabilities. We believe that the quality and cleanliness of our facilities provides another competitive advantage for us. As a result, we believe that we will continue to capture new injection molding programs as they come to market, as well as benefit from continued outsourcing trends among original equipment manufacturers. OTHER Effective November 26, 2001, we sold our underperforming thermoformed plastics operations consisting of the assets of our Triangle, TriEnda and Synergy World divisions (the "TPD Assets") to Wilbert, Inc. for $21.0 million in cash, a $1.9 million noninterest-bearing one-year note, and the assumption of certain identified liabilities. We recorded a pre-tax loss of $121.1 million in 2001 related to the sale. Effective November 1, 2001, we sold our majority interest in Microlin, LLC, a developer of proprietary battery and fluid delivery technology, for $1,000 in cash plus contingent consideration based upon future performance through December 31, 2012 and the cancellation of future funding requirements. We recorded a pre-tax loss of $1.4 million in 2001 related to the sale. Effective May 24, 1999, we sold our plastic packaging product line, which produced coextruded, high-barrier plastic sheet and containers for the food processing industry. Effective September 28, 1998, we sold the x-ray inspection equipment production line of LumenX, ending our involvement in the capital goods market. Effective September 30, 1997, we sold the machine vision inspection equipment product line of LumenX. Our other business primarily manufactures plastic white goods for a variety of customers in our Fort Smith, Arkansas facility. We also manufacture and sell extruded plastic sheet and roll stock 4 products in smooth, textured and laminated finishes for a variety of customers. Additionally, we produce plastic tables for original equipment manufacturers in our Fort Smith plant and have a proprietary line of tables selling under the Vision (Trade Mark) brand that are primarily sold to the hospitality and institutional markets. Our customers are primarily other equipment manufacturers. Our sales and marketing focuses on establishing and building relationships with major customers in our market. Our products are produced through a thermoforming process. Thermoforming is an operation in which plastic sheet is converted into a formed product through single- or twin-sheet vacuum or pressure formed in conjunction with the application of heat. After the product is formed, the process of removing the excess material, or trimming, is generally performed by automated equipment programmed to execute the appropriate steps to produce the finished part to the customer's specifications. We purchase resin directly for use in the manufacture of extruded sheet and also purchase plastic sheet from third-party suppliers in those instances where we are unable to provide for our needs internally. These raw materials are obtained from regular commercial sources of supply and, in most cases, multiple sources. The supply and demand for plastic resins are subject to cyclical and other market factors. Certain of our customers purchase the resin on our behalf, thereby providing us protection from price fluctuations. PATENTS AND TRADEMARKS The Company believes that none of its active patents or trademarks is essential to the successful operation of its business as a whole. However, one or more patents or trademarks may be material in relation to individual products or product lines such as property rights to use the Kerr (Registered Trademark) brand, Ball (Registered Trademark) brand, and Fruit-Fresh (Registered Trademark) brand names, and the Bernardin (Registered Trademark) trade name in connection with certain goods to be sold, including home food preservation supplies, kitchen housewares and packaged foods for human consumption. Pursuant to the terms of the 1993 distribution agreement with Ball Corporation, we were granted a license to use the Ball (Registered Trademark) brand name for our consumer products. In the event of a change of control of the Company which has not received the approval of a majority of the board of directors or causes us to be controlled or majority owned by a competitor of Ball, Ball has the option to terminate our license to use the Ball (Registered Trademark) brand name. Pursuant to the terms of an agreement with Kerr Group, Inc., we have a perpetual exclusive, worldwide license to use the Kerr (Registered Trademark) brand name in our consumer products division. However, in the event of a change of control of the Company which has not received the approval of a majority of the board of directors of the Company, Kerr has the option to terminate our license to use the Kerr (Registered Trademark) brand name. 5 GOVERNMENT CONTRACTS The Company enters into contracts with the United States Government which contain termination provisions customary for government contracts. See "Zinc Products" under the Materials Based Group Segment discussion above. The United States Government retains the right to terminate such contracts at its convenience. However, if the contract is terminated, the Company is entitled to be reimbursed for allowable costs and profits to the date of termination relating to authorized work performed to such date. The United States Government contracts are also subject to reduction or modification in the event of changes in government requirements or budgetary constraints. Since entering into a contract with the Company in 1981, the United States Government has not terminated the penny blank supply arrangement. BACKLOG The Company typically sells under supply contracts for minimum (generally exceeded) or indeterminate quantities and, accordingly, is unable to furnish backlog information. RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred in connection with the Company's internal programs for the development of products and processes and have not been material in recent years. ENVIRONMENTAL MATTERS Our operations are subject to federal, state and local environmental and health and safety laws and regulations, including those that impose workplace standards and regulate the discharge of pollutants into the environment and establish standards for the handling, generation, emission, release, discharge, treatment, storage and disposal of materials and substances including solid and hazardous wastes. We believe that we are in material compliance with such laws and regulations. Further, the cost of maintaining compliance has not, and we believe, in the future, will not, have a material adverse effect on our business, results of operations or financial condition. Due to the nature of our operations and the frequently changing nature of environmental compliance standards and technology, we cannot predict with any certainty that future material capital or operating expenditures will not be required in order to comply with applicable environmental laws and regulations. In addition to operational standards, environmental laws also impose obligations on various entities to clean up contaminated properties or to pay for the cost of such remediation, often upon parties that did not actually cause the contamination. We have attempted to limit our exposure to such liabilities through contractual indemnities and other mechanisms. We do not believe that any of our existing remediation obligations, including at third-party sites where we have been named a potentially responsible party, will have a material adverse effect upon our business, results of operations or financial condition. EMPLOYEES As of December 31, 2001, the Company employed approximately 800 people. Approximately 215 union workers are covered by two collective bargaining agreements at the Company's metals and consumer products manufacturing facilities. These agreements expire at the consumer products facility (Muncie, Indiana) on October 15, 2006, and at the metals facility (Greeneville, Tennessee) on October 4, 2003. The Company has not experienced a work stoppage during the past five years. Management believes that its relationships with the Company's employees and collective bargaining unions are satisfactory. ITEM 2. PROPERTIES The Company's properties are well maintained, considered adequate and being utilized for their intended purposes. Information regarding the approximate size of principal manufacturing, warehousing and office facilities is provided below. 6
APPROXIMATE LOCATION TYPE OF USE BUSINESS GROUP SQUARE FEET OWNED/LEASED -------- ----------- ---------------- ------------ ------------ Fort Smith, Arkansas Manufacturing/Warehousing Materials Based Group 140,000 Owned Greeneville, Tennessee Manufacturing/Warehousing Materials Based Group 320,000 Owned Greenville, South Carolina Manufacturing/Warehousing Materials Based Group 48,000 Owned Muncie, Indiana Manufacturing/Warehousing Consumer Products 173,000 Owned Reedsville, Pennsylvania Manufacturing/Warehousing Materials Based Group 73,000 Owned Rye, New York Corporate offices -- 3,000 Leased Springfield, Missouri Manufacturing/Warehousing Materials Based Group 43,000 Owned Toronto, Canada Warehousing Consumer Products 48,000 Leased
In 2001, the Company consolidated its home canning metal closure production from its Toronto, Canada facility into its Muncie, Indiana facility. The Toronto facility is still being used for warehousing and its lease expires in July 2004. In 1999, the Company's industrial plastics business ceased operations in El Dorado, Arkansas. The Company is currently subleasing a portion of the El Dorado, Arkansas facility where the lease expires in May 2004. On October 15, 2001 the Company announced the closing of its Indianapolis corporate office. Corporate functions are now being performed out of the Company's new headquarters in Rye, New York and the Company's Consumer Products location in Muncie, Indiana. The Company is currently seeking a sublessor for the site of its previous 9,000 square feet headquarters located in Indianapolis, Indiana, for which the annual lease payment is approximately $160,000. ITEM 3. LEGAL PROCEEDINGS We are involved in various legal disputes and environmental matters 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. Based on currently available information, the Company does not believe that the disposition of any of the legal disputes or environmental matters 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. It is possible, that as additional information becomes available, the impact on the Company of an adverse determination could have a different effect. ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS Listed below are the matters voted upon by proxy and the respective voting results associated with a special meeting of stockholders held on December 18, 2001: 7
WITHHELD/ABSTAINED/ VOTED FOR VOTED AGAINST BROKER NON-VOTES ----------- --------------- -------------------- Proposal to approve the reincorporation of the Corporation in the State of Delaware ................. 4,046,426 1,258,262 1,545 Proposal to increase the number of shares of Common Stock authorized for issuance ................. 4,109,852 1,955,308 2,181 Proposal to include a provision eliminating directors liability other than as required under Delaware law in the certificate of incorporation of the new Delaware corporation. ......................................... 3,344,362 1,382,455 579,416 Proposal to amend the Corporation's 1998 Long-Term Equity Incentive Plan to increase the number of shares of Common Stock that may be issued thereunder by 350,000 shares and to eliminate the annual automatic share increase currently provided for in the Plan. ......... 3,832,987 1,305,601 167,645 Proposal to approve the Corporation's 2001 Stock Option Plan. ................................... 3,863,823 1,432,212 10,198
EXECUTIVE OFFICERS OF THE COMPANY The executive officers of the Company are as follows: Martin E. Franklin is our Chairman and Chief Executive Officer. Mr. Franklin was appointed to our board of directors on June 25, 2001 and became Chairman and Chief Executive Officer effective September 24, 2001. Mr. Franklin is also a managing member of Marlin Management, L.L.C., the general partner of Marlin Partners II, L.P. He also has been the Chairman and Chief Executive Officer of the general partner of Marlin Capital, L.P., a private investment partnership, and its affiliates since October 1996. Mr. Franklin was the Chairman of the Board of Directors of Bolle Inc. from February 1997 until February 2000. Mr. Franklin previously held positions as Chairman and Chief Executive Officer of Lumen Technologies, Inc. (formerly BEC Group, Inc.) from May 1996 to December 1998, and Benson Eyecare Corporation from October 1992 to May 1996. Since January 1, 2002, Mr. Franklin has served as the Chairman of the Board of Directors of Find/SVP, Inc., a Nasdaq OTC Bulletin Board company. Ian G.H. Ashken is our Vice Chairman, Chief Financial Officer and Secretary. Mr. Ashken was appointed to our board of directors on June 25, 2001 and became Vice Chairman, Chief Financial Officer and Secretary effective September 24, 2001. Mr. Ashken is also a managing member of Marlin Management, L.L.C., the general partner of Marlin Partners II, L.P. He also has been the Vice Chairman and Executive Vice President of the general partner of Marlin Capital, L.P., a private investment partnership, and its affiliates since October 1996. Mr. Ashken was the Vice Chairman of the Board of Directors of Bolle, Inc. from December 1998 until February 2000; from February 1997 until his appointment as Vice Chairman, Mr. Ashken was the Chief Financial Officer and a director of Bolle. Mr. Ashken previously held positions as Chief Financial Officer and a director of Lumen Technologies, Inc. (formerly BEC Group, Inc.) from May 1996 to December 1998 and Benson Eyecare Corporation from October 1992 to May 1996. J. David Tolbert is our Vice President, Human Resources and Administration. From April 1997 to October 1998, Mr. Tolbert served as our Vice President, Human Resources and Corporate Risk. From October 1993 to April 1997, Mr. Tolbert served as our Director of Human Resources. Since joining Ball Corporation in 1987, Mr. Tolbert served in various human resource and operating positions throughout the company. 8 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Alltrista Corporation common stock is traded on the New York Stock Exchange under the symbol "ALC." There were 3,648 common stockholders of record on March 3, 2002. The Company currently does not and does not intend to pay cash dividends on its common stock in the foreseeable future, and is restricted from doing so under the terms of its credit facility. Cash generated from operations will be invested to support competitiveness and growth. For other information required by Item 5, see Item 8, Note 17 (Quarterly Stock Prices). ITEM 6. SELECTED FINANCIAL DATA
YEAR ENDED DECEMBER 31, ---------------------------------------------------------------- 2001 (A) 2000 (B) 1999 (C) 1998 (D) 1997 ------------- ------------ ------------ ------------ ----------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) STATEMENT OF OPERATIONS DATA Net sales ............................................ $ 304,978 $357,356 $ 358,031 $258,489 $249,604 Costs and expenses Cost of sales ........................................ 233,676 275,571 257,308 188,174 183,371 Selling, general and administrative expenses ......... 52,212 56,019 55,322 37,452 34,868 Goodwill amortization ................................ 5,153 6,404 4,605 1,399 1,265 Special charges (credits) and reorganization expenses ........................................... 4,978 380 2,314 1,260 -- Loss (gain) on divestiture of assets and product lines .............................................. 122,887 -- (19,678) -- -- ---------- -------- --------- -------- -------- Income (loss) before interest, taxes and minority interest ............................................. (113,928) 18,982 58,160 30,204 30,100 Interest expense, net ................................. 11,791 11,917 8,395 1,822 2,256 Income tax provision (benefit) ........................ (40,443) 2,402 19,458 10,785 10,603 Minority interest in gain (loss) of consolidated subsidiary ........................................... 153 (259) -- -- -- ---------- -------- --------- -------- -------- Income (loss) from continuing operations .............. (85,429) 4,922 30,307 17,597 17,241 ========== ======== ========= ======== ======== Loss from discontinued operations ..................... -- -- (87) (1,870) (2,404) Extraordinary loss from early extinguishment of debt (net of income taxes) ........................... -- -- (1,028) -- -- ---------- -------- --------- -------- -------- Net income (loss) ..................................... $ (85,429) $ 4,922 $ 29,192 $ 15,727 $ 14,837 ========== ======== ========= ======== ======== Basic earnings (loss) per share: Income (loss) from continuing operations ............. (13.43) .78 4.50 2.48 2.33 Loss from discontinued operations .................... -- -- ( .01) ( .26) ( .33) Extraordinary loss from early extinguishment of debt (net of income taxes) ......................... -- -- ( .15) -- -- ---------- -------- --------- -------- -------- $ (13.43) $ .78 $ 4.34 $ 2.22 $ 2.00 ========== ======== ========= ======== ======== Diluted earnings (loss) per share: Income (loss) from continuing operations ............. (13.43) .77 4.44 2.45 2.28 Loss from discontinued operations .................... -- -- ( .01) ( .26) ( .32) Extraordinary loss from early extinguishment of debt (net of income taxes) ......................... -- -- ( .15) -- -- ---------- -------- --------- -------- -------- $ (13.43) $ .77 $ 4.28 $ 2.19 $ 1.96 ========== ======== ========= ======== ========
9
YEAR ENDED DECEMBER 31, ------------------------------------------------------ 2001 (A) 2000 (B) 1999 (C) 1998 (D) 1997 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) BALANCE SHEET DATA (AT END OF YEAR) Cash and cash equivalents .......... $ 6,376 $ 3,303 $ 17,394 $ 21,454 $ 26,641 Working capital .................... 8,035 22,975 54,611 46,923 53,759 Total assets ....................... 161,303 308,739 338,751 165,831 166,577 Total debt ......................... 84,875 137,060 140,761 25,715 30,000 Total stockholders' equity ......... 35,129 118,221 123,025 94,893 97,309
---------- (a) 2001 special charges (credits) and reorganization expenses include: a $2.3 million pretax charge associated with corporate restructuring; $2.6 million of pretax separation costs related to the management reorganization; $1.4 million of pretax costs to evaluate strategic options, $1.4 million of pretax costs to exit facilities; a $2.4 million pretax charge for stock option compensation; $4.1 million of pretax income associated with the discharge of deferred compensation obligations; and a $1.0 million pretax gain related to an insurance recovery. (b) 2000 special charges (credits) and reorganization expenses included $1.6 million of pretax income associated with the reduction in long-term performance-based compensation, $1.4 million of pretax litigation charges, net of recoveries and $.6 million of costs to evaluate strategic options. (c) 1999 special charges (credits) and reorganization expenses were a $2.3 million charge to exit a plastic thermoforming facility. (d) 1998 special charges (credits) and reorganization expenses were a $1.3 million pretax charge to exit a plastic injection molding facility. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MANAGEMENT AND CORPORATE OFFICE REORGANIZATION On September 24, 2001, our board of directors appointed Martin E. Franklin as our Chairman and Chief Executive Officer and Ian G.H. Ashken as our Vice Chairman, Chief Financial Officer and Secretary. On October 15, 2001, we announced the closing of our Indianapolis, Indiana corporate office. Corporate functions have been transitioned to our new headquarters in Rye, New York, and our consumer products location in Muncie, Indiana. Following the sale of the TPD Assets and the third quarter 2001 appointment of new executive management, we reorganized our business segments to reflect the new business and management strategy. We are now organized into two groups: consumer products and materials based. Within these two groups there are four business segments, with three of the segments comprising the materials based group. Prior periods have been reclassified to conform to the current segment definitions. DIVESTITURES IN 2001 Effective November 26, 2001, we sold the TPD Assets to Wilbert, Inc. for $21.0 million in cash, a $1.9 million noninterest-bearing one-year note, and the assumption of certain identified liabilities. We recorded a pre-tax loss of $121.1 million in 2001 related to the sale. The cash proceeds from the sale were used to pay down our term debt. As a result of the sale, in January 2002 we recovered approximately $15.7 million of federal income taxes paid in 1999 and 2000, received a further federal income tax refund of $22.2 million in March 2002 and are anticipating an additional $.6 million federal income tax refund from the enactment, in March 2002, of the Job Creation and Workers' Assistance Act of 2002 by utilizing the carryback of a tax net operating loss generated in 2001 (See Notes 2 and 19 to our Consolidated Financial Statements). This refund was used to pay down our debt. The combined net sales of the TPD Assets included in our historical results were $63.8 million in 2001 (through the date of sale), $100.3 million in 2000 and $70.7 million in 1999. Operating earnings (losses) associated with these assets were $(12.0) million in 2001, $(8.4) million in 2000 and $2.8 million in 1999. Effective November 1, 2001, we sold our majority interest in Microlin, LLC, a developer of proprietary battery and fluid delivery technology, for $1,000 in cash plus contingent consideration based 10 upon future performance through December 31, 2012 and the cancellation of future funding requirements. We recorded a pre-tax loss of $1.4 million in 2001 related to the sale. Excluding the TPD Assets, Microlin, LLC and other divested businesses, Alltrista's net sales for 2001, 2000 and 1999 would have been $241.7 million, $258.1 million and $275.0 million, respectively, and Alltrista's EBITDA for 2001, 2000 and 1999 would have been $36.3 million, $36.6 million and $44.7 million, respectively. RECENT DEVELOPMENTS We expect that the net sales and operating income of our materials based group for the three months ended March 31, 2002 will be lower than the comparable period in 2001. Our metals segment has experienced reduced sales to the United States Mint, which announced in the fourth quarter of 2001 that it was implementing an inventory reduction program for all coinage. We anticipate that this inventory reduction program will result in lower sales and earnings for metals compared to prior years until the fourth quarter of 2002. RESULTS OF OPERATIONS -- COMPARISON OF 2001 AND 2000 We reported consolidated net sales of $305.0 million in 2001, a decrease of 14.7% from sales of $357.4 million in 2000. Our loss before interest and taxes for the year ended December 31, 2001 was $113.9 million, including special charges and reorganization expenses of $5.0 million and a total loss on divestiture of assets and product lines of $122.9 million. For the year ended December 31, 2001, excluding all of these one-time items, earnings before interest and taxes was $13.9 million. These results compare to earnings before interest, taxes and minority interest for the year ended December 31, 2000 of $19.0 million. Sales of the consumer products segment were relatively constant in 2001 compared to 2000. Domestic increases were offset by Canadian decreases due to unfavorable weather conditions and customers carrying higher levels of inventory over from 2000. Sales within the materials based group for 2001 decreased by $52.6 million due primarily to (i) lower demand for industrial thermoformed parts (part of the divested TPD Assets) in the heavy truck and material handling markets, (ii) the fact that full year sales in 2001 did not include December sales for the divested TPD Assets, and (iii) the decline in sales of the metals segment resulting from lower demand in all of our zinc product lines. Gross margin percentages increased to 23.4% in 2001 from 22.9% in 2000. Gross margin increased for consumer products due primarily to cost efficiencies which continued during 2001 as the benefits of the segment's SAP system implementation continued to be realized. This increase was offset by a decrease in gross margin for the materials based group in 2000 due primarily to lower sales of plastic thermoformed parts (part of the divested TPD Assets) resulting from decreased demand in the heavy truck, material handling and manufactured housing markets. Smaller orders reduced the length of production runs, and, thus, diminished operating efficiencies. These declines in the other segment were partially offset by an increase in the metals segment gross margin from 28% in 2000 to 29% in 2001. The injection molded plastics segment gross margin declined from 18% in 2000 to 15% in 2001 primarily due to lower sales volume and fixed overhead costs therefore being allocated to less sales. Selling, general and administrative expenses decreased 6.8% to $52.2 million in 2001 from $56.0 million in 2000. Consumer products expenses decreased primarily due to lower expenses associated with sales and marketing, warehousing and shipping. Expenses within the materials based group decreased primarily as a result of the cost savings realized due to a third quarter 2000 realignment and consolidation of our divested thermoformed operations. Selling, general and administrative expenses in the metals and injection molded plastics segments remained relatively constant. Selling, general and administrative expenses as a percentage of sales increased from 15.7% in 2000 to 17.1% in 2001 due primarily to lower overall sales. Goodwill amortization decreased from $6.4 million in 2000 to $5.2 million in 2001 due primarily to our November 2001 sale of the TPD Assets included in the other segment. We incurred net special charges (credits) and reorganization expenses of $5.0 million and $0.4 million for 2001 and 2000, respectively. These amounts were comprised of the following (in millions): 11
2000 2001 --------- --------- Costs to evaluate strategic options ............................ $ 0.6 $ 1.4 Discharge of deferred compensation obligations ................. -- (4.1) Separation costs for former officers ........................... -- 2.6 Stock option compensation ...................................... -- 2.4 Corporate restructuring costs .................................. -- 2.3 Costs to exit facilities ....................................... -- 0.8 Reduction of long-term performance-based compensation .......... (1.6) -- Litigation charges ............................................. 1.4 -- Items related to divested thermoforming operations ............. -- (0.4) ------ ------ $ 0.4 $ 5.0 ====== ======
During 2001, certain participants in our deferred compensation plans agreed to forego balances in those plans in exchange for loans from us in the same amounts. The loans, which were completed during 2001, bear interest at the applicable federal rate and require the individuals to secure a life insurance policy having the death benefit equivalent to the amount of the loan payable to us. All accrued interest and principal on the loans mature and are payable upon the death of the participant and their spouse. We recognized $4.1 million of pretax income during 2001 related to the discharge of the deferred compensation obligations. Separation costs for former officers were associated with the 2001 management reorganization described above. During September 2001, options were granted to participants under our 2001 Stock Option Plan. Because the options granted under this new plan were still subject to stockholder approval at the time of grant, the options resulted in a one-time charge of $2.4 million, which was recorded in the fourth quarter of 2001, following stockholder approval of the 2001 Stock Option Plan on December 18, 2001. During the fourth quarter of 2001, we incurred corporate restructuring costs in the amount of $2.3 million. These include costs related to the transitioning of the corporate office function from Indianapolis, Indiana to Rye, New York and Muncie, Indiana, costs to reincorporate in Delaware and to hold a special meeting of shareholders, and related costs including professional fees. In late 2001, we consolidated our home canning metal closure production from our Bernardin, Ltd. Toronto, Ontario facility into our Muncie, Indiana manufacturing operation. The total cost to exit the Toronto facility was $0.8 million and includes a $0.3 million loss on the sale and disposal of equipment, and $0.5 million of employee severance costs. We will continue to distribute our products in Canada through Bernardin, Ltd. During 2001, items recognized related to the divested TPD Assets included a pre-tax gain of $1.0 million in connection with an insurance recovery associated with a property casualty. Also in 2001 we vacated our former Triangle Plastics facility in Independence, Iowa and integrated personnel and capabilities into its other operating and distribution facilities in the area. The total cost to exit this Iowa facility was $0.6 million and includes $0.4 million in future lease obligations and an additional $0.2 million of costs related to the leased facility. During 2000, we recorded a pretax gain of $1.6 million related to a reduction in long-term performance-based compensation. Also during 2000, we reached settlements in legal disputes incurring $1.4 million in net settlement and legal expenses. In 2001, we recognized a $121.1 million pretax loss on the sale of the TPD Assets and a $1.4 million pre-tax loss on the sale of its interest in Microlin, LLC. Net interest expense in 2001 was $11.8 million compared to $11.9 million for 2000. The effects of lower average borrowings outstanding and lower interest rates during 2001 were offset by the write-off of $1.5 million of previously deferred debt issuance and amendment costs in connection with the November 2001 amendment of our term loan and revolving credit facility. Our effective interest rate for 12 the year ended December 31, 2001 was 7.7%. As a result of decreasing interest rates during the year ended December 31, 2001, our interest rate swaps, which were at a fixed interest rate of 5.7%, resulted in additional interest expense to us during the year ended December 31, 2001. Our effective tax rate was 32.2% for 2001 compared to 34.0% for 2000. The effective rate for 2001 is lower than the statutory federal rate primarily because it includes a valuation allowance for tax benefits associated with the loss on the sale of the TPD Assets that may not be realizable. The effective rate for 2000 reflects the recognition of a tax benefit from exiting the Central European home canning test market. RESULTS OF OPERATIONS -- COMPARISON OF 2000 AND 1999 We reported consolidated net sales of $357.4 million in 2000, a slight decrease from sales of $358.0 million in 1999. Earnings before interest, taxes and minority interest were $19.0 million for the year ended December 31, 2000 compared to $58.2 million for the year ended December 31, 1999. Consumer products reported lower sales and operating earnings, and the materials based group reported increased sales and lower operating earnings. Sales of consumer products decreased $12.7 million to $120.4 million in 2000 from $133.1 in 1999 as home canning sales volumes returned to more normal levels compared to the 1999 season, which was influenced by the Year 2000 phenomenon. Within the materials based group the injection molded plastics segment sales increased by $5.7 million. Sales for the other segment increased from $121.6 million to $130.5 million primarily due to the acquisition of Triangle Plastics and its wholly owned subsidiary, TriEnda. This increase was partially offset in 2000 as competitive pricing pressures and dramatically lower demand, chiefly in the heavy truck, manufactured housing and material handling markets, negatively impacted sales of thermoformed plastic parts. 1999 other segment sales also included $13.0 million from a plastic packaging product line, which was disposed of on May 24, 1999. Metals segment sales decreased by $2.2 million. Gross margin percentages decreased from 28.1% in 1999 to 22.9% in 2000. Gross margin decreased for the consumer products group due to a decline in sales of home canning products from the abnormally high 1999 levels (due to Year 2000 concerns of consumers) accompanied by slightly higher sales of a lower margin consumer product line contributed to the decrease in the consumer products group. Gross margin decreased for the materials based group due primarily to raw material price increases, reduced sales volumes and operating inefficiencies from several new customer programs for the other segment, as well as lower coinage and battery can volumes for the metals segment. Selling, general and administrative expenses increased 1.3% to $56.0 million in 2000 from $55.3 million in 1999. Expenses within the consumer products group increased primarily due to higher depreciation expense on a new information system. For the other segment, the acquisition of Triangle Plastics and disposal of the plastic packaging product line resulted in a net increase as Triangle Plastics maintained the personnel necessary to offer customers extensive design, engineering and development services, while the operations of the divested plastic packaging product line did not require this level of staffing. The write-down of fixed assets and severance costs of $1.2 million associated with the realignment and consolidation of certain thermoforming operations within the other segment also contributed to the increase. Additionally, research and development costs within the metals segment increased. These increases were offset somewhat by a decrease in incentive compensation expense throughout the Company. Selling, general and administrative expenses as a percentage of sales increased from 15.5% in 1999 to 15.7% in 2000. Goodwill amortization increased to $6.4 million in 2000 from $4.6 million in 1999. This was the result of a full year of amortization being recorded in 2000 related to the 1999 acquisition of Triangle Plastics within the other segment. Special charges (credits) and reorganization expenses were $0.4 million for 2000, and consisted of $1.4 million of litigation charges (net of recoveries) and $0.6 million of costs to evaluate strategic options, offset by a $1.6 million gain related to a reduction in long-term performance-based compensation. Special charges (credits) and reorganization expenses for 1999 consisted of $2.3 million of costs to exit a plastic thermoforming facility. In 1999, we recognized a $19.7 million pretax gain on the sale of a plastic packaging product line. 13 Net interest expense in 2000 was $11.9 million compared to $8.4 million for 1999. The increase was due primarily to increased average borrowings driven by the Triangle Plastics acquisition. Our effective tax rate decreased from 39.1% in 1999 to 34.0% in 2000 due primarily to the recognition of a tax benefit from exiting the Central European home canning test market. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES In conjunction with the sale of the TPD Assets, in November 2001, the Company entered into an agreement with its lenders to amend certain provisions of its term loan and revolving credit facilities. The amendment reduced the revolving credit facility from $50 million to $40 million, shortened the facility termination date by one year, accelerated the required principal payments to conform with the shortened term of the facility, modified certain financial covenants, and required that the $21 million of cash proceeds from the sale of the TPD Assets and $15 million from the recovery of income taxes associated with the net operating loss carryback be used to prepay term debt. As a result of these significant changes to the facility, the Company wrote off the unamortized costs of $1.5 million relating to the issuance and previous amendments of the Company's credit facility. In accordance with the terms of the amendment, the Company applied the $21.0 million of proceeds from the sale of the TPD assets to the outstanding term loan balance. In January 2002, the Company utilized $15.0 million of proceeds from the income tax refund related to the thermoformed sale to further pay down the term loan. The term loan, as amended and reflecting the payments mentioned above, requires quarterly payments of principal of $3.1 million through the first quarter of 2003, with quarterly payments of $11.2 million for the remainder of the term (through March 31, 2004). Interest on borrowings under the term loan and the revolving credit facility are based upon fixed increments over the adjusted London Interbank Offered Rate or the agent bank's alternate borrowing rate as defined in the agreement. The agreement also requires the payment of commitment fees on the unused balance. As of December 31, 2001 and 2000, the outstanding balances of the term loan were $75.5 million and $120.0 million, respectively. As of December 31, 2001 and 2000, borrowings outstanding under the revolving credit facility were $9.4 million and $16.0 million, respectively. In May 1999, the Company entered into a three-year interest rate swap with an initial notional value of $90 million. The swap effectively fixed the interest rate on approximately 60% of the Company's term debt at a maximum rate of 7.98% for the three-year period. The effective interest rate on the swaps was 5.7% during the year ended December 31, 2001. The swap matures and terminates in March 2002. Due to the prepayment of term debt in accordance with the amendment described above, as of December 31, 2001, the swap effectively fixed the interest rate on all of the Company's term debt. During 2000, the Company repurchased 452,600 shares of the Company's stock for $10.5 million. No shares were repurchased during 2001. Dividends are not presently paid on the Company's common stock nor does the Company anticipate paying dividends in the foreseeable future and is restricted from doing so under the terms of its credit facility. Net current assets decreased to $8.0 million at December 31, 2001 from $23.0 million at December 31, 2000 due primarily to the sale of the TPD assets. Cash flow generated from operations totaled approximately $39.9 million for the year ended December 31, 2001 and reflects an $11.2 million decrease in inventories resulting from an increased focus on inventory management and a $4.4 million decrease in accounts receivable due to better collection policies and procedures. Capital expenditures were $9.7 million in 2001 compared to $13.6 million in 2000 and were largely related to maintaining facilities and improving manufacturing efficiencies. Investments in 2001 included, among other items, new injection molding machines and presses, a co-extrusion line for the production of plastic sheet used in thermoforming operations and the repair and replacement of portions of a building and equipment damaged in a weather-related roof collapse. During 2001, certain participants in the Company's deferred compensation plans agreed to forego balances totaling $4.1 million in those plans in exchange for loans from the Company in the same 14 amounts. The loans, which were completed during 2001, bear interest at the applicable federal rate and require the individuals to secure a life insurance policy having the death benefit equivalent to the amount of the loan payable to the Company. All accrued interest and principal on the loans mature and are payable upon the death of the participant and their spouse. In June 2001, the Company surrendered the variable rate life insurance contracts used to fund all deferred compensation obligations. The proceeds from this surrender were $6.7 million. The Company believes that existing funds, cash generated from operations and its debt facility are adequate to satisfy its working capital and capital expenditure requirements for the foreseeable future. CONTINGENCIES The Company is involved in various legal disputes and environmental matters 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. Based on currently available information, the Company does not believe that the disposition of any of the legal disputes or environmental matters 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. It is possible, that as additional information becomes available, the impact on the Company of an adverse determination could have a different effect. STOCK PLANS Effective September 24, 2001, the Company established the 2001 Stock Option Plan for the purpose of granting options for the purchase of common shares to the Company's executive officers and independent directors. Options vest to, and are exercisable by, participants on the earlier of 1) the date the Company's closing stock price equals or exceeds $17 per share or 2) the seventh anniversary of the grant date. During September, 570,000 options were granted to participants under this new plan. The Company's stock price exceeded $17 in January 2002, thereby vesting all option grants under this plan. Because the options granted under this new plan were still subject to stockholder approval at the time of grant, the options resulted in a one-time charge of $2.4 million, which was recorded in the fourth quarter of 2001. The charge represents the difference between the exercise price of the options of $10.95 (the fair value at the date of grant) and the fair value of the Company's stock at the time of stockholder approval on December 18, 2001 of $15.20. This charge is included in Special Charges (Credits) and Reorganization Expenses on the Consolidated Statement of Operations. NEW ACCOUNTING PRONOUNCEMENTS The Company adopted Statement of Financial Accounting Standard 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities, on January 1, 2001. The statement requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Hedge ineffectiveness, the amount by which the change in the value of a hedge does not exactly offset the change in the value of the hedged item, will be immediately recognized in earnings. The adoption of SFAS 133 on January 1, 2001 did not have a material impact on the Company's results of operations or financial position. In July 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill (and intangible assets deemed to have indefinite lives) will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. During 2002, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets, but does not anticipate a material impact on its results of operations or financial position. 15 In June 2001, the FASB issued Statement of Financial Accounting Standard No. 143 (SFAS 143), Accounting for Asset Retirement Obligations, effective for fiscal years beginning after June 15, 2002. This standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. SFAS 143 is effective for the Company beginning with the first quarter of 2003, and its adoption is not expected to have a material impact on the Company's results of operations or financial position. In August 2001, the FASB issued Statement of Financial Accounting Standard No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets, effective for fiscal years beginning after December 15, 2001. This standard supercedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and provides a single accounting model for long-lived assets to be disposed of. The new standard also supersedes the provisions of APB Opinion 30 with regard to reporting the effects of a disposal of a segment of a business and requires expected future operating losses from discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are incurred. SFAS 144 is effective for the Company beginning with the first quarter of 2002, and its adoption is not expected to have a material impact on the Company's results of operations or financial position. FORWARD-LOOKING STATEMENTS From time to time, we may make or publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, and similar matters. Such statements are necessarily estimates reflecting management's best judgment based on current information. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Such statements are usually identified by the use of words or phases such as "believes," "anticipates," "expects," "estimates," "planned," "outlook," and "goal." Because forward-looking statements involve risks and uncertainties, our actual results could differ materially. In order to comply with the terms of the safe harbor, we note that a variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in forward-looking statements. While it is impossible to identify all such factors, the risks and uncertainties that may affect the operations, performance and results of our business include the following: o Reductions, cancellations or delays in customer purchases would adversely affect our profitability; o We may be adversely affected by the trend towards retail trade consolidation; o Some of our products may suffer because of unfavorable weather conditions and market trends; o Competition in our industries may hinder our ability to execute our business strategy, achieve profitability, or maintain relationships with existing customers; o If we fail to develop new or expand existing customer relationships, our ability to grow our business will be impaired; o Our operations are subject to a numbers of federal, state and local environmental regulations; o We depend on key personnel; o We enter into contracts with the United States government and other governments; o Our operating results can be adversely affected by changes in the cost or availability of raw materials o Continuation of the US penny as a currency denomination; o The nature and extent of any current or future state and federal environmental regulations on our operations and the amount of any costs which may be incurred for the clean up of several hazardous waste sights; 16 o Our business could be adversely affected because of risks which are particular to international operations; o Certain of our employees are represented by labor unions; and o Any other factors which may be identified from time to time in our periodic SEC filings and other public announcements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statement, we do not intend to update forward-looking statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES 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. Most 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 conducts a portion of its business through its Canadian subsidiary, Bernardin, Ltd., and as a result, is subject to the exposure that arises from foreign exchange rate movements between the Canadian and U.S. dollars. Such exposure arises pimarily from the translation of the results of operations of Bernardin. Sales of Bernardin were less than 5% of total consolidated sales during 2001. 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 the LIBOR on its term and revolving debt obligations. To manage a portion of this risk, in May 1999, the Company entered into a three-year interest rate swap which effectively fixed the interest rate on approximately 60% of the Company's term debt at a maximum rate of 7.98% for the three-year period. Due to the prepayment of term debt in accordance with the November 2001 amendment of the Company's credit facility, as of December 31, 2001, the swap effectively fixed the interest rate on 100% of the Company's term debt. 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 $535,000 and $620,000 for the years ended December 31, 2001 and 2000, respectively. 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. The Company does not invest or trade in any derivative financial or commodity instruments, nor does it invest in any foreign financial instruments. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 17 REPORT OF INDEPENDENT AUDITORS Board of Directors and Shareholders Alltrista Corporation and Subsidiaries We have audited the accompanying consolidated balance sheets of Alltrista Corporation and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2001. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Alltrista Corporation and subsidiaries at December 31, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. As discussed in Note 4, the business segment information has been revised to report additional segments. /s/ ERNST & YOUNG LLP Indianapolis, Indiana January 23, 2002, Except for Note 19, as to which the date is March 27, 2002 and Note 4, as to which the date is October 14, 2002 18 ALLTRISTA CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31, ----------------------------------------- 2001 2000 1999 ------------- ----------- ----------- Net sales ........................................................... $ 304,978 $ 357,356 $ 358,031 Costs and expenses Cost of sales ...................................................... 233,676 275,571 257,308 Selling, general and administrative expenses ....................... 52,212 56,019 55,322 Goodwill amortization .............................................. 5,153 6,404 4,605 Special charges (credits) and reorganization expenses .............. 4,978 380 2,314 Loss (gain) on divestitures of assets and product lines ............ 122,887 -- (19,678) ---------- --------- --------- Income (loss) before interest, taxes and minority interest .......... (113,928) 18,982 58,160 Interest expense, net ............................................... (11,791) (11,917) (8,395) ---------- --------- --------- Income (loss) from continuing operations before taxes and minority interest .................................................. (125,719) 7,065 49,765 Income tax (provision) benefit ...................................... 40,443 (2,402) (19,458) Minority interest in loss (gain) of consolidated subsidiary ......... (153) 259 -- ---------- --------- --------- Income (loss) from continuing operations ............................ (85,429) 4,922 30,307 Discontinued operations: Loss on disposal of discontinued operations, net of income tax benefit of $54.................................................... -- -- (87) Extraordinary loss from early extinguishment of debt, net of income tax benefit of $635.......................................... -- -- (1,028) ---------- --------- --------- Net income (loss) ................................................... $ (85,429) $ 4,922 $ 29,192 ========== ========= ========= Basic earnings (loss) per share: Income (loss) from continuing operations ........................... $ (13.43) $ .78 $ 4.50 Net income (loss) .................................................. $ (13.43) $ .78 $ 4.34 Diluted earnings (loss) per share: Income (loss) from continuing operations ........................... $ (13.43) $ .77 $ 4.44 Net income (loss) .................................................. $ (13.43) $ .77 $ 4.28 Weighted average shares outstanding: Basic .............................................................. 6,363 6,338 6,734 Diluted ............................................................ 6,363 6,383 6,819
The accompanying notes are an integral part of the consolidated financial statements. 19 ALLTRISTA CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31, --------------------------- 2001 2000 ------------ ------------ ASSETS Current assets Cash and cash equivalents ............................................. $ 6,376 $ 3,303 Accounts receivable, net of reserve for doubtful accounts of $778 and $1,517........................................................... 13,986 32,250 Income taxes receivable ............................................... 16,252 -- Inventories, net ...................................................... 26,994 52,548 Deferred taxes on income .............................................. 4,832 4,621 Other current assets .................................................. 3,134 1,658 --------- --------- Total current assets ................................................ 71,574 94,380 --------- --------- Property, plant and equipment, at cost Land .................................................................. 782 1,998 Buildings ............................................................. 24,356 35,059 Machinery and equipment ............................................... 106,106 149,405 --------- --------- 131,244 186,462 Accumulated depreciation .............................................. (87,701) (97,410) --------- --------- 43,543 89,052 --------- --------- Goodwill, net of accumulated amortization of $6,628 and $16,192......... 15,487 114,138 Deferred taxes on income ............................................... 25,417 -- Other assets ........................................................... 5,282 11,169 --------- --------- Total assets ........................................................... $ 161,303 $ 308,739 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term debt and current portion of long-term debt ................. $ 28,500 $ 41,995 Accounts payable ...................................................... 14,197 17,842 Accrued salaries, wages and employee benefits ......................... 9,252 8,344 Other current liabilities ............................................. 11,590 3,224 --------- --------- Total current liabilities ........................................... 63,539 71,405 --------- --------- Noncurrent liabilities Long-term debt ........................................................ 56,375 95,065 Deferred taxes on income .............................................. -- 13,068 Other noncurrent liabilities .......................................... 6,260 9,957 --------- --------- Total noncurrent liabilities ........................................ 62,635 118,090 --------- --------- Minority interest in subsidiary ........................................ -- 1,023 --------- --------- Commitments and contingencies (Notes 11 & 12) .......................... Stockholders' equity: Common stock ($.01 par value), 50,000 shares authorized, 7,963 and 7,963 shares issued and 6,398 and 6,341 shares outstanding in 2001 and 2000, respectively ......................................... 64 40,017 Additional paid-in capital ............................................ 41,789 -- Retained earnings ..................................................... 32,724 118,153 Accumulated other comprehensive loss .................................. (1,862) (978) Less: treasury stock (1,565 and 1,622 shares, at cost) ................ (37,586) (38,971) --------- --------- Total stockholders' equity .......................................... 35,129 118,221 --------- --------- Total liabilities and stockholders' equity ............................. $ 161,303 $ 308,739 ========= =========
The accompanying notes are an integral part of the consolidated financial statements. 20 ALLTRISTA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED DECEMBER 31, ------------------------------------------ 2001 2000 1999 ------------- ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) ................................................... $ (85,429) $ 4,922 $ 29,192 Reconciliation of net income (loss) to net cash provided by operating activities: Depreciation ...................................................... 13,427 14,533 12,030 Amortization ...................................................... 5,370 6,778 5,667 Loss (gain) on divestitures of assets and product lines ........... 122,887 -- (19,678) Loss on disposal of fixed assets .................................. 402 338 152 Special charges (credits) and reorganization expenses ............. 680 (1,600) 2,314 Write-off of debt issuance and amendment costs .................... 1,507 -- -- Deferred taxes on income .......................................... (27,804) 3,892 (4,215) Deferred employee benefits ........................................ 378 (40) 1,297 Minority interest ................................................. 153 (259) -- Other, net ........................................................ 310 450 (459) Changes in working capital components, net of effects from acquisitions and divestitures: Accounts receivable ............................................... 4,351 6,678 1,760 Inventories ....................................................... 11,219 5,952 (7,023) Accounts payable .................................................. 794 (12,613) (1,086) Accrued salaries, wages and employee benefits ..................... 2,212 (2,589) 510 Other current assets and liabilities .............................. (10,600) (7,298) 1,863 --------- --------- ---------- Net cash provided by operating activities ........................ 39,857 19,144 22,324 --------- --------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from revolving credit borrowings ........................... 41,050 57,332 37,260 Payments on revolving credit borrowings ............................. (47,650) (41,940) (36,652) Proceeds from issuance of long-term debt ............................ -- -- 150,995 Payments on long-term debt .......................................... (45,585) (19,094) (37,076) Debt issue cost ..................................................... -- -- (2,262) Debt modification cost .............................................. (867) -- -- Proceeds from issuance of common stock .............................. 815 1,219 1,672 Purchase of treasury stock .......................................... -- (10,485) (3,146) --------- --------- ---------- Net cash provided (used) by financing activities ................... (52,237) (12,968) 110,791 --------- --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ................................................ (9,707) (13,637) (16,628) Insurance proceeds from property casualty ........................... 1,535 -- -- Proceeds from sale of property, plant and equipment ................. 70 105 1,658 Acquisitions of businesses, net of cash acquired .................... -- (6,930) (151,278) Proceeds from divestitures of assets and product lines .............. 21,001 220 29,305 Proceeds from the surrender of insurance contracts .................. 6,706 -- -- Proceeds from insurance contracts loaned to former officers ......... (4,059) -- -- Investments in insurance contracts .................................. -- -- (274) Other, net .......................................................... (93) (25) 42 --------- --------- ---------- Net cash provided (used) by investing activities .................. 15,453 (20,267) (137,175) --------- --------- ---------- NET INCREASE (DECREASE) IN CASH ...................................... 3,073 (14,091) (4,060) Cash and cash equivalents, beginning of year ......................... 3,303 17,394 21,454 --------- --------- ---------- CASH AND CASH EQUIVALENTS, END OF YEAR ............................... $ 6,376 $ 3,303 $ 17,394 ========= ========= ==========
The accompanying notes are an integral part of the consolidated financial statements. 21 ALLTRISTA CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS)
COMMON STOCK TREASURY STOCK ---------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT --------- ------------ ------------- ------------- Balance, December 31, 1998 .......... 7,967 $ 40,494 (1,203) $ (29,021) Net income .......................... -- -- -- -- Stock options exercised and stock plan purchases ..................... 139 2,497 -- -- Shares reissued from treasury ....... (141) (3,039) 141 3,039 Shares tendered for stock options and taxes .......................... -- -- (23) (611) Cumulative translation adjustment ......................... -- -- -- -- Purchase of common stock ............ -- -- (144) (3,146) ----- ---------- ------ ---------- Balance, December 31, 1999 .......... 7,965 39,952 (1,229) (29,739) Net income .......................... -- -- -- -- Stock options exercised and stock plan purchases ..................... 63 1,449 -- -- Shares reissued from treasury ....... (65) (1,384) 65 1,384 Shares tendered for stock options and taxes .......................... -- -- (6) (131) Cumulative translation adjustment ......................... -- -- -- -- Purchase of common stock ............ -- -- (452) (10,485) ----- ---------- -------- ---------- Balance, December 31, 2000 .......... 7,963 40,017 (1,622) (38,971) Net income (loss) ................... -- -- -- -- Stock options exercised and stock plan purchases ..................... 67 929 -- -- Shares reissued from treasury ....... (67) (1,515) 67 1,515 Shares tendered for stock options and taxes .......................... -- -- (10) (130) Stock option compensation ........... -- 2,422 -- -- Restatement of par value of common stock associated with reincorporation in Delaware ........ -- (41,789) -- -- Cumulative translation adjustment ......................... -- -- -- -- Translation adjustment recorded to net income due to liquidation of investment in foreign subsidiary ................. -- -- -- -- Interest rate swap unrealized loss ............................... -- -- -- -- Minimum pension liability ........... -- -- -- -- ----- ---------- -------- ---------- Balance, December 31, 2001 .......... 7,963 $ 64 (1,565) $ (37,586) ===== ========== ======== ========== ACCUMULATED OTHER COMPREHENSIVE LOSS ------------------------------------ ADDITIONAL CUMULATIVE INTEREST MINIMUM PAID-IN RETAINED TRANSLATION RATE PENSION CAPITAL EARNINGS ADJUSTMENT SWAP LIABILITY ------------ ------------ ------------- ---------- ---------- Balance, December 31, 1998 .......... $ -- $ 84,039 $ (619) $ -- $ -- Net income .......................... -- 29,192 -- -- -- Stock options exercised and stock plan purchases ..................... -- -- -- -- -- Shares reissued from treasury ....... -- -- -- -- -- Shares tendered for stock options and taxes .......................... -- -- -- -- -- Cumulative translation adjustment ......................... -- -- 200 -- -- Purchase of common stock ............ -- -- -- -- -- ------- ---------- ------ ------- ------- Balance, December 31, 1999 .......... -- 113,231 (419) -- -- Net income .......................... -- 4,922 -- -- -- Stock options exercised and stock plan purchases ..................... -- -- -- -- -- Shares reissued from treasury ....... -- -- -- -- -- Shares tendered for stock options and taxes .......................... -- -- -- -- -- Cumulative translation adjustment ......................... -- -- (559) -- -- Purchase of common stock ............ -- -- -- -- -- ------- ---------- ------ ------- ------- Balance, December 31, 2000 .......... -- 118,153 (978) -- -- Net income (loss) ................... -- (85,429) -- -- -- Stock options exercised and stock plan purchases ..................... -- -- -- -- -- Shares reissued from treasury ....... -- -- -- -- -- Shares tendered for stock options and taxes .......................... -- -- -- -- -- Stock option compensation ........... -- -- -- -- -- Restatement of par value of common stock associated with reincorporation in Delaware ........ 41,789 -- -- -- -- Cumulative translation adjustment ......................... -- -- (424) -- -- Translation adjustment recorded to net income due to liquidation of investment in foreign subsidiary ................. -- -- 461 -- -- Interest rate swap unrealized loss ............................... -- -- -- (524) -- Minimum pension liability ........... -- -- -- -- (397) ------- ---------- ------ ------- ------- Balance, December 31, 2001 .......... $41,789 $ 32,724 $ (941) $ (524) $ (397) ======= ========== ====== ======= =======
The accompanying notes are an integral part of the consolidated financial statements. 22 ALLTRISTA CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (THOUSANDS OF DOLLARS)
YEAR ENDED DECEMBER 31, -------------------------------------- 2001 2000 1999 ------------- --------- ---------- Net income (loss) .......................................... $ (85,429) $4,922 $29,192 Foreign currency translation: Translation adjustment during period ...................... (424) (559) 200 Translation adjustment recorded to net income due to liquidation of investment in foreign subsidiary ......... 461 -- -- Interest rate swap unrealized gain (loss): Transition adjustment ..................................... 45 -- -- Change during period ...................................... (569) -- -- Minimum pension liability .................................. (397) -- -- --------- ------ ------- Comprehensive income (loss) ................................ $ (86,313) $4,363 $29,392 ========= ====== =======
The accompanying notes are an integral part of the consolidated financial statements. 23 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These consolidated financial statements have been prepared in accordance with generally accepted accounting principles. The consolidated financial statements include the accounts of Alltrista Corporation and its subsidiaries (the "Company"). All significant intercompany transactions and balances have been eliminated upon consolidation. Certain reclassifications have been made in the Company's financial statements of prior years to conform to the current year presentation. These reclassifications have no impact on previously reported net income. The businesses comprising the Company have interests in consumer and materials based products. See Business Segment Information (Note 4). Use of Estimates Preparation of the consolidated financial statements requires estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. Actual results could differ from those estimates. Revenue Recognition Revenue from the sale of products is primarily recognized at the time product is shipped to customers. The Company allows customers to return defective or damaged products as well as certain other products for credit, replacement, or exchange. Revenue is recognized as the net amount to be received after deducting estimated amounts for product returns, discounts, and allowances. The Company provides credit, in the normal course of business, to its customers. The Company also maintains an allowance for doubtful customer accounts and charges actual losses when incurred to this allowance. Freight Costs Freight costs on goods shipped to customers are included in Cost of Sales. Cash and Cash Equivalents Cash equivalents include financial investments with a maturity of three months or less when purchased. Inventories Inventories are stated at the lower of cost, determined on the first-in, first-out method, or market. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Maintenance and repair costs are charged to expense as incurred, and expenditures that extend the useful lives of the assets are capitalized. The Company reviews property, plant and equipment for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable through future undiscounted cash flows, excluding interest cost. Depreciation Depreciation is provided on the straight-line method in amounts sufficient to amortize the cost of the assets over their estimated useful lives (buildings -- 30 to 50 years; machinery and equipment -- 5 to 15 years). Goodwill Goodwill represents the excess of the purchase prices of acquired businesses over the estimated fair values of the net assets acquired. Goodwill is amortized on a straight-line basis over periods not to exceed 24 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 20 years. The Company evaluates these assets for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable through future undiscounted cash flows, excluding interest costs. If facts and circumstances suggest that a subsidiary's net assets are impaired, the Company assesses the fair value of the underlying business and reduces goodwill to an amount that results in the book value of the operation approximating fair value. Taxes on Income Deferred taxes are provided for differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. The Company established a valuation allowance against a portion of the net tax benefit associated with all carryforwards and temporary differences at December 31, 2001, as it is more likely than not that these will not be fully utilized in the available carryforward period. Fair Value and Credit Risk of Financial Instruments The carrying values of cash and cash equivalents, accounts receivable, notes payable, accounts payable and accrued liabilities approximate their fair market value due to the short-term maturities of these instruments. The fair market value of long-term debt was estimated using rates currently available to the Company for debt with similar terms and maturities. The Company enters into interest rate swaps to manage interest rate exposures. The Company designates the interest rate swaps as hedges of underlying debt. Interest expense is adjusted to include the payment made or received under the swap agreements. The fair market value of the swap agreements was estimated based on the current market value of similar instruments. Financial instruments that potentially subject the Company to credit risk consist primarily of trade receivables and interest-bearing investments. Trade receivable credit risk is limited due to the diversity of the Company's customers and the Company's ongoing credit review procedures. Collateral for trade receivables is generally not required. The Company places its interest-bearing cash equivalents with major financial institutions and limits the amount of credit exposure to any one financial institution. Stock Options The Company accounts for the issuance of stock options under the provisions of Accounting Principles Board No. 25, "Accounting for Stock Issued to Employees." Generally for the Company's stock option plans, no compensation cost is recognized in the consolidated statement of income because the exercise price of the Company's stock options equals the market price of the underlying stock on the date of grant. Under the Company's 2001 Stock Option Plan, however, the Company did recognize a one-time charge of compensation cost because of stockholder approval of the plan subsequent to the grant date (see Note 10). 2. ACQUISITIONS AND DIVESTITURES Effective November 26, 2001, the Company sold the assets of its Triangle, TriEnda and Synergy World plastic thermoforming operations to Wilbert, Inc. for $21 million in cash, a $1.85 million noninterest-bearing one-year note as well as the assumption of certain identified liabilities. The Company recorded a pre-tax loss of $121.1 million in 2001 related to the sale. The amount of goodwill included in the loss on the sale was $82.0 million. The proceeds from the sale were used to pay down the Company's term debt. As a result of the sale, the Company also recovered in January 2002 approximately $15.7 million of federal income taxes paid in 1999 and 2000 by utilizing the carryback of a tax net operating loss generated in 2001. $15 million of the proceeds related to this recovery of income taxes was also used to pay down the Company's term debt. The tax net operating loss not utilized during the allowable carryback period will be available to offset taxable income in future periods. (See Note 19.) 25 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The combined net sales of the thermoformed business sold included in the Company's historical results were $63.8 million in 2001 (through the date of sale), $100.3 million in 2000 and $70.7 million in 1999. Operating earnings (losses) associated with this business were $(12.0) million in 2001, $(8.4) million in 2000 and $2.8 million in 1999. Effective November 1, 2001, the Company sold its majority interest in Microlin, LLC for $1,000 in cash plus contingent consideration based upon future performance through December 31, 2012 and the cancellation of future funding requirements. The Company recorded a pre-tax loss of $1.4 million in 2001 related to the sale. On June 1, 2000, the Company acquired the net assets of Synergy World, a St. Louis, Missouri-based designer and marketer of portable restrooms sold to equipment rental companies, waste services companies and diversified sanitation firms, for $6.9 million in cash plus acquisition costs. The transaction was accounted for as a purchase with the purchase price allocated to the assets purchased and liabilities assumed based on their estimated fair values as of the date of acquisition. These assets were sold effective November 26, 2001. On December 21, 1999, the Company acquired a 51 percent equity interest in Microlin, LLC ("Microlin"), a developer of proprietary battery technology. The initial cash outlay for this investment was $1.5 million, with an agreement to fund working capital needs over the next several years. This investment was sold effective November 1, 2001. Effective May 24, 1999, the Company sold its plastic packaging product line, which produced coextruded high-barrier plastic sheet and containers for the food processing industry, for $28.7 million in cash. This transaction resulted in a gain of $19.7 million. Proceeds from the sale were used for debt repayment. The Company's sales from this product line were $13.0 million in 1999. Effective April 25, 1999, the Company acquired the net assets of Triangle Plastics, Inc. and its TriEnda subsidiary ("Triangle Plastics"), a manufacturer of heavy gauge industrial thermoformed parts for original equipment manufacturers in the heavy trucking, agricultural, portable toilet, recreational and construction markets, and producer of plastic thermoformed products for material handling applications, for $148.0 million in cash plus acquisition costs. The transaction was accounted for as a purchase with the purchase price allocated to the assets purchased and liabilities assumed based on their estimated fair values as of the date of acquisition. These assets were sold effective November 26, 2001. 3. PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma financial information presents a summary of consolidated results of the Company as if the sale of the assets of the Triangle, TriEnda and Synergy World plastic thermoforming operations (as described in Note 2 above) had occurred at the beginning of each period presented. The pro forma financial information also reflects the sale of the Company's interest in Microlin, LLC that became effective November 1, 2001. The pro forma information assumes the proceeds from the sale of thermoformed assets and recovery of income taxes were received at the beginning of each period, and assumes a 35.0% effective income tax rate for all periods.
2001 2000 (thousands of dollars, except per share data) ------------- ------------- Net sales ...................................................... $ 241,679 $ 257,995 Earnings before interest, taxes and minority interest .......... 20,530 26,676 Net income ..................................................... 7,260 11,251 Diluted earnings per share ..................................... $ 1.14 $ 1.76
The Company's pro forma net income adjusted to reflect the elimination of all special charges and reorganization expenses, all losses on divestitures of assets, and the write-off of debt issuance and amendment costs would have been $12.0 million, or $1.88 per share, for 2001 and $11.4 million, or $1.78 per share, for 2000. 26 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 4. BUSINESS SEGMENT INFORMATION Following the sale of the Triangle, TriEnda and Synergy World plastic thermoforming assets and the third quarter 2001 appointment of new executive management, the Company reorganized its business into two segments, consumer products and materials based. Subsequent to the issuance of the Company's December 31, 2001 consolidated financial statements, the Company has revised its business segment information to report four business segments. Prior periods have been reclassified to conform to the current segment definitions. The consumer products group consists of one segment and markets a line of home food preservation products under the Ball(R), Kerr(R) and Bernardin(R) brands. The domestic consumable products sold in this segment primarily include home canning jars, metal closures and accessories, which are distributed through a wide variety of retail outlets. The materials based group consists of the metals, injection molded plastics and other segments. The metals segment is the largest producer of zinc strip in the United States. The injection molded plastics segment manufactures injection molded plastic products used in medical, pharmaceutical and consumer products. The other segment includes the manufacturing of non-injection molded plastic parts and other immaterial business activities. Until November, 26, 2001, the other segment included the Triangle, TriEnda and Synergy World plastic thermoforming assets (see Note 2) which produced industrial thermoformed plastic parts for manufactured housing, recreational vehicles, heavy trucking, agriculture equipment, portable restrooms, recreational and construction products. Until November 1, 2001, the other segment also included Microlin, LLC (see Note 2).
(thousands of dollars) 2001 2000 1999 ------------- ------------ ------------- NET SALES: Consumer products group .................................... $ 120,644 $ 120,381 $ 133,074 ------------- ------------ ------------- Metals ................................................... 45,525 58,773 60,927 Injection molded plastics ................................ 44,825 48,732 43,021 Other (1) ................................................ 95,087 130,542 121,636 ------------- ------------ ------------- Materials based group ...................................... 185,437 238,047 225,584 ------------- ------------ ------------- Intercompany ............................................... (1,103) (1,072) (627) ------------- ------------ ------------- Total net sales ......................................... $ 304,978 $ 357,356 $ 358,031 ============= ============ ============= OPERATING EARNINGS (LOSS): Consumer products group .................................... $ 13,291 $ 10,362 $ 17,091 ------------- ------------ ------------- Metals ................................................... 7,075 11,636 10,694 Injection molded plastics ................................ 928 2,765 3,774 Other (1) ................................................ (6,202) (4,473) 6,999 ------------- ------------ ------------- Materials based group ...................................... 1,801 9,928 21,467 ------------- ------------ ------------- Intercompany ............................................... 13 39 (69) Unallocated corporate expenses ............................. (6,146) (1,347) (7) Gain (loss) on divestitures of assets and product lines (1) .................................... (122,887) - 19,678 ------------- ------------ ------------- Earnings (loss) before interest, taxes and minority interest .................................... (113,928) 18,982 58,160 Interest expense, net ........................................ (11,791) (11,917) (8,395) ------------- ------------ ------------- Income (loss) before taxes and minority interest ............. $ (125,719) $ 7,065 $ 49,765 ============= ============ ============= ASSETS EMPLOYED IN OPERATIONS: Consumer products group .................................... $ 51,301 $ 60,713 $ 71,625 ------------- ------------ ------------- Metals ................................................... 15,096 21,091 22,091 Injection molded plastics ................................ 28,715 27,072 24,511 Other (1) ................................................ 11,341 183,793 186,017 ------------- ------------ ------------- Materials based group ...................................... 55,152 231,956 232,619 ------------- ------------ ------------- Total assets employed in operations ..................... 106,453 292,669 304,244 Corporate (2) .............................................. 54,850 16,070 34,507 ------------- ------------ ------------- Total assets ............................................ $ 161,303 $ 308,739 $ 338,751 ============= ============ =============
27 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(thousands of dollars) 2001 2000 1999 ------------- ------------ ------------- CAPITAL EXPENDITURES: Consumer products group .................................... $ 633 $ 1,314 $ 5,477 ------------- ------------ ------------- Metals ..................................................... 530 2,195 4,123 Injection molded plastics .................................. 4,141 5,722 3,278 Other (1) .................................................. 4,396 4,119 3,492 ------------- ------------ ------------- Materials based group ...................................... 9,067 12,036 10,893 ------------- ------------ ------------- Corporate .................................................. 7 287 258 ------------- ------------ ------------- Total capital expenditures .............................. $ 9,707 $ 13,637 $ 16,628 ============= ============ ============= DEPRECIATION AND AMORTIZATION: Consumer products group .................................... $ 3,202 $ 3,264 $ 2,505 ------------- ------------ ------------- Metals ................................................... 2,448 2,446 2,056 Injection molded plastics ................................ 3,298 3,018 3,217 Other (1) ................................................ 9,649 12,349 9,099 ------------- ------------ ------------- Materials based group ...................................... 15,395 17,813 14,372 ------------- ------------ ------------- Corporate .................................................. 200 234 820 ------------- ------------ ------------- Total depreciation and amortization ..................... $ 18,797 $ 21,311 $ 17,697 ============= ============ =============
(1) Effective November 26, 2001, the Company sold the assets of its Triangle, TriEnda and Synergy World plastic thermoforming operations, which were purchased on April 25, 1999. Effective May 24, 1999, the Company sold its plastic packaging product line. (2) Corporate assets primarily include cash and cash equivalents, amounts relating to and corporate facilities and equipment. The Company's major customers are located within the United States and Canada. Net sales of the Company's products in Canada, including home food preservation products, coinage and thermoformed plastic parts were $26.8 million, $35.3 million and $35.7 million in 2001, 2000 and 1999, respectively. Long-lived assets located outside the United States and net sales outside of the United States and Canada are not material. 5. INVENTORIES Inventories were comprised of the following at December 31:
2001 2000 (thousands of dollars) --------- ---------- Raw materials and supplies .......... $ 5,563 $14,311 Work in process ..................... 4,746 10,253 Finished goods ...................... 16,685 27,984 ------- ------- Total inventories ................ $26,994 $52,548 ======= =======
6. DEBT AND INTEREST In November 2001, the Company entered into an agreement with its lenders to amend certain provisions of its term loan and revolving credit facilities. The amendment reduced the revolving credit facility from $50 million to $40 million, shortened the facility termination date by one year, accelerated the required principal payments to conform with the shortened term of the facility, modified certain financial covenants, and required that the proceeds from the sale of the thermoforming assets and $15 million from the recovery of income taxes associated with the net operating loss carryback be used to prepay term debt. In December 2001, the Company applied the $21.0 million of proceeds from the sale of the thermoformed assets to the outstanding term loan balance. In January 2002, the Company applied $15.0 million of proceeds from the income tax refund related to the thermoformed sale to further pay down the term loan. 28 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The term loan, as amended and reflecting the payments mentioned above, requires quarterly payments of principal of $3.1 million through the first quarter of 2003, with quarterly payments of $11.2 million for the remainder of the term (through March 31, 2004). Interest on the term loan is based upon fixed increments over the adjusted London Interbank Offered Rate or the agent bank's alternate borrowing rate as defined in the agreement. The Company's weighted average interest rate on the term loan outstanding borrowings at December 31, 2001 was 4.3%, exclusive of the effects of the interest rate swap (see below). As of December 31, 2001 and 2000, the outstanding balances of the term loan were $75.5 million and $120.0 million, respectively. Because the interest rates applicable to the term loan are based on floating rates identified by reference to market rates, the fair market value of the long-term debt as of December 31, 2001 and 2000 approximates its carrying value. Interest on borrowings under the revolving credit facility are based upon fixed increments over the adjusted London Interbank Offered Rate or the agent bank's alternate borrowing rate as defined in the agreement. The agreement also requires the payment of commitment fees on the unused balance. As of December 31, 2001, $9.4 million of borrowings were outstanding under this agreement with a weighted average interest rate of 4.7%. As of December 31, 2000, $16 million of borrowings were outstanding with a weighted average interest rate of 8.1%. In February 2001, the Company entered into an agreement with its lenders to amend certain provisions of its term loan and revolving credit facilities. The amendment reduced the revolving credit facility to $50 million, provided for the Company's accounts receivable and inventory to be pledged as collateral, and modified certain financial covenants. The Company financed the 1999 acquisition of Triangle Plastics with a $250 million credit facility consisting of a six-year $150 million term loan and a $100 million revolving credit facility with all borrowings scheduled to mature on March 31, 2005. The agreement contains certain guarantees and financial covenants including minimum net worth requirements, minimum fixed charge coverage ratios and maximum financial leverage ratios. As part of the financing in 1999, the Company paid off $25.7 million of existing debt. The Company incurred a $1.7 million pretax ($1.0 million after-tax) prepayment charge in connection with the payoff. The charge is reported as an extraordinary loss on the Consolidated Statement of Operations. In May 1999, the Company entered into a three-year interest rate swap with an initial notional value of $90 million. The swap effectively fixed the interest rate on approximately 60% of the Company's term debt at a maximum rate of 7.98% for the three-year period. Adjusted for the application of proceeds from the sale of thermoformed assets and from the related income tax refund, the swap now covers 100% of the Company's term debt. The fair market value of the swap as of December 31, 2001 and 2000 was approximately $(524,000) and $45,000, respectively. As of December 31, 2001, maturities on long-term debt over the next five years, were $19.1 million in 2002, $43.5 million in 2003, $12.9 million in 2004, and none for 2005 and 2006. Maturities on long-term debt over the next five years, as adjusted to reflect the application of the $15 million of proceeds from the income tax refund as mentioned above, are $27.4 million in 2002, $36.8 million in 2003, $11.2 million in 2004, and none for 2005 and 2006. Interest paid on the Company's borrowings during the years ended December 31, 2001, 2000 and 1999 was $9.5 million, $11.4 million and $8.3 million, respectively. 29 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 7. SPECIAL CHARGES (CREDITS) AND REORGANIZATION EXPENSES The Company incurred net special charges (credits) and reorganization expenses of $5.0 million, $0.4 million and $2.3 million for 2001, 2000 and 1999, respectively. These amounts are comprised of the following (in millions):
2001 2000 1999 --------- --------- --------- Costs to evaluate strategic options ............................ $ 1.4 $ 0.6 $ -- Discharge of deferred compensation obligations ................. (4.1) -- -- Separation costs for former officers ........................... 2.6 -- -- Stock option compensation ...................................... 2.4 -- -- Corporate restructuring costs .................................. 2.3 -- -- Costs to exit facilities ....................................... 0.8 -- 2.3 Reduction of long-term performance-based compensation .......... -- (1.6) -- Litigation charges ............................................. -- 1.4 -- Items related to divested thermoforming operations ............. (0.4) -- -- ------ ------ ----- $ 5.0 $ 0.4 $ 2.3 ====== ====== =====
During 2001, certain participants in the Company's deferred compensation plans agreed to forego balances in those plans in exchange for loans from the Company in the same amounts. The loans, which were completed during 2001, bear interest at the applicable federal rate and require the individuals to secure a life insurance policy having the death benefit equivalent to the amount of the loan payable to the Company. All accrued interest and principal on the loans are payable upon the death of the participant and their spouse. The Company recognized $4.1 million of pre-tax income during 2001 related to the discharge of the deferred compensation obligations. On September 25, 2001, the Company announced the departure from the Company of Thomas B. Clark, Chairman, President and Chief Executive Officer, and Kevin D. Bower, Senior Vice President and Chief Financial Officer. The Board announced the appointment of Martin E. Franklin as Chairman and Chief Executive Officer and Ian G.H. Ashken as Vice Chairman, Chief Financial Officer and Secretary. Separation costs associated with this management reorganization were approximately $2.6 million. During September 2001, options were granted to participants under the Company's 2001 Stock Option Plan. Because the options granted under this new plan were still subject to stockholder approval at the time of grant, the options resulted in a one-time charge of $2.4 million which was recorded in the fourth quarter of 2001 (see Note 10) following stockholder approval of the 2001 Stock Option Plan on December 18, 2001. During the fourth quarter of 2001, the Company incurred corporate restructuring costs in the amount of $2.3 million. These include costs related to the transitioning of the corporate office function from Indianapolis, Indiana to Rye, New York and Muncie, Indiana, costs to reincorporate in Delaware and to hold a special meeting of stockholders, and other costs including professional fees. Of this amount, $1.8 million remained unpaid as of December 31, 2001. In August 2001, the Company announced that it would be consolidating its home canning metal closure production from its Bernardin Ltd. Toronto, Ontario facility into its Muncie, Indiana manufacturing operation. The total cost to exit the Toronto facility was $0.8 million and includes a $0.3 million loss on the sale and disposal of equipment, and $0.5 million of employee severance costs. Of the $0.5 million accrued liability established for severance costs, approximately $0.4 million had been expended through December 31, 2001. The Company will continue to distribute its products in Canada through Bernardin, Ltd. During 2001, items recognized related to the divested thermoforming operations included a pre-tax gain of $1.0 million in connection with an insurance recovery associated with a property casualty. Also in 30 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) August 2001, the Company announced that it had vacated its former Triangle Plastics facility in Independence, Iowa and integrated personnel and capabilities into its other operating and distribution facilities in the area. The total cost to exit this Iowa facility was $0.6 million and includes $0.4 million in future lease obligations and an additional $0.2 million of costs related to the leased facility. During 2000, the Company recorded a pre-tax gain of $1.6 million related to a reduction in long-term performance-based compensation. Also during 2000, the Company reached settlements in legal disputes incurring $1.4 million in net settlement and legal expenses. During 1999, the Company incurred $2.3 million in costs associated with the exit of a plastic thermoforming facility. 8. TAXES ON INCOME The components of the provision for income taxes attributable to continuing operations were as follows for the years ended December 31:
2001 2000 1999 (thousands of dollars) -------------- ----------- ---------- Current income tax expense (benefit): U.S. federal ................................... $ (13,978) $ (166) $ 19,233 Foreign ....................................... 1,163 462 960 State and local ............................... (500) (59) 2,880 ---------- ------- -------- Total ....................................... (13,315) 237 23,073 ---------- ------- -------- Deferred income tax expense (benefit): U.S. federal .................................. (33,707) 1,135 (3,635) State, local and other ........................ (4,962) 187 (580) ---------- ------- -------- Total ....................................... (38,669) 1,322 (4,215) ---------- ------- -------- Income tax benefit applied to goodwill ......... 11,541 843 600 ---------- ------- -------- Total income tax provision (benefit) ........... $ (40,443) $ 2,402 $ 19,458 ========== ======= ========
Foreign pre-tax income was $0.9 million, $2.5 million and $1.0 million in 2001, 2000 and 1999, respectively. Deferred tax liabilities (assets) are comprised of the following at December 31:
2001 2000 (thousands of dollars) -------------- ---------- Property, equipment and intangibles .......... $ 9,430 $ 17,559 Other ........................................ 2,314 346 ---------- -------- Gross deferred tax liabilities .............. 11,744 17,905 ---------- -------- Net operating loss ........................... (39,909) -- Accounts receivable allowances ............... (388) (580) Inventory valuation .......................... (1,730) (1,312) Compensation and benefits .................... (4,010) (5,352) Other ........................................ (1,351) (2,214) ---------- -------- Gross deferred tax assets ................... (47,388) (9,458) ---------- -------- Valuation allowance .......................... 5,395 -- ---------- -------- Net deferred tax liability (asset) ........... $ (30,249) $ 8,447 ========== ========
31 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Approximately $103 million of net operating loss carryforwards remain at December 31, 2001. Their use is limited to future taxable income of the Company. The carryforwards expire in 2021. The Company established a valuation allowance against a portion of the net tax benefit associated with all carryforwards and temporary differences at December 31, 2001, as it is more likely than not that these will not be fully utilized in the available carryforward period. (See Note 19.) The difference between the federal statutory income tax rate and the Company's effective income tax rate as a percentage of income from continuing operations is reconciled as follows:
2001 2000 1999 ---------- ---------- ---------- Federal statutory tax rate ................. 35.0% 35.0% 35.0% Increase (decrease) in rates resulting from: State and local taxes, net ................ 3.3 1.0 3.0 Foreign ................................... ( .9) (2.2) 1.2 Valuation allowance ....................... (4.3) -- -- Other ..................................... (0.9) .2 ( .1) ---- ---- ---- Effective income tax rate .................. 32.2% 34.0% 39.1% ==== ==== ====
In 1999, the income tax expense or benefit from discontinued operations differed from an expense or benefit calculated using the federal statutory tax rate primarily due to state income taxes and the amortization of intangible assets. Total income tax payments made by the Company during the years ended December 31, 2001, 2000 and 1999 were $1.0 million, $1.7 million and $23.2 million, respectively. 9. RETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS The Company has multiple defined contribution retirement plans that qualify under section 401(k) of the Internal Revenue Code. The Company's contributions to these retirement plans were $1.5 million, $1.5 million and $1.9 million, respectively, in the years ended December 31, 2001, 2000 and 1999. The Company also maintains a defined benefit pension plan for certain of its hourly employees. The components of net periodic pension expense for the years ended December 31, 2001, 2000 and 1999 are as follows:
2001 2000 1999 (thousands of dollars) ----------- ----------- ----------- Service cost of benefits earned during the period .......... $ 273 $ 280 $ 291 Interest cost on projected benefit obligation .............. 907 853 807 Investment loss (gain) on plan assets ...................... 1,793 (1,648) (1,670) Net amortization and deferral .............................. (2,942) 630 802 -------- -------- -------- Net periodic pension expense ............................... $ 31 $ 115 $ 230 ======== ======== ========
32 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The following table is a reconciliation of the benefit obligation and the fair value of plan assets as of December 31, 2001 and 2000:
2001 2000 (thousands of dollars) ------------ ------------- Change in benefit obligation: Benefit obligation at beginning of year ................ $ 12,304 $11,541 Service cost ........................................... 273 280 Interest cost .......................................... 907 853 Amendments ............................................. 232 -- Actuarial gain ......................................... (113) (58) Benefits paid .......................................... (386) (312) -------- -------- Benefit obligation at end of year ...................... 13,217 12,304 -------- -------- Change in plan assets: Fair value of plan assets at beginning of year ......... 13,320 12,087 Actual return on plan assets ........................... (1,793) 1,648 Benefits paid .......................................... (445) (415) -------- -------- Fair value of plan assets at end of year ............... 11,082 13,320 -------- -------- Funded status .......................................... (2,135) 1,016 Unrecognized net transitional asset .................... -- (1) Unrecognized prior service cost ........................ 882 745 Unrecognized net loss (gain) ........................... 884 (2,098) Additional minimum liability ........................... (1,279) -- -------- --------- Accrued benefit cost ................................... $ (1,648) $ (338) ======== =========
The actuarial assumptions used to compute the funded status of the plan for 2001 and 2000 include a discount rate of 7.50% and an expected long-term rate of return on assets of 9.0%. In accordance with the provisions of SFAS 87, "Employer's Accounting for Pensions," the Company recorded an additional minimum liability of $1.3 million at December 31, 2001, representing the excess of the unfunded accumulated benefit obligation over the accrued pension cost. The additional minimum liability has been offset by an intangible asset to the extent of previously unrecognized prior service cost, with the remainder of $0.4 million recorded as a component of accumulated other comprehensive loss. The Company also provides certain postretirement medical and life insurance benefits for a portion of its non-union employees. The components of net periodic postretirement benefit expense for the years ended December 31, 2001, 2000 and 1999 are as follows:
2001 2000 1999 (thousands of dollars) -------- -------- ------- Service cost of benefits earned ........... $ 62 $ 60 $ 67 Interest cost on liability ................ 112 105 105 Net amortization and deferral ............. (15) (14) 2 ----- ----- ---- Net postretirement benefit cost .......... $ 159 $ 151 $174 ===== ===== ====
33 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The status of the Company's unfunded postretirement benefit obligation at December 31, 2001 and 2000 follows:
2001 2000 (thousands of dollars) --------- ------------ Change in benefit obligation: Benefit obligation at beginning of year ......... $1,553 $1,446 Service cost .................................... 62 60 Interest cost ................................... 112 105 Actuarial loss (gain) ........................... 109 (9) Benefits paid ................................... (61) (49) ------ ------- Benefit obligation at end of year ............... 1,775 1,553 Unrecognized prior service cost ................. (46) (49) Unrecognized net gain ........................... 339 443 ------ ------- Accrued benefit cost ............................ $2,068 $1,947 ====== =======
The assumed discount rate used to measure the benefit obligation was 7.00% and 7.50% as of December 31, 2001 and 2000, respectively. Increases in health care costs would not materially impact the benefit obligation or the annual service and interest costs recognized as benefits under the medical plan consist of a defined dollar monthly subsidy toward the retiree's purchase of medical insurance for the majority of employees covered. Through December 31, 2001, the Company had a deferred compensation plan that permitted eligible employees to defer a specified portion of their compensation. The deferred compensation earned rates of return as specified in the plan. As of December 31, 2001 and 2000, the Company had accrued $2.2 million and $6.4 million, respectively, for its obligations under this plan. Interest expense on this obligation was $0.2 million, $0.3 million and $0.7 million in 2001, 2000 and 1999, respectively. Effective January 1, 2002 the deferred compensation plan has been terminated. Participants may elect to keep their existing balances in the plan, and if so those balances will earn a rate of return equal to the federal funds overnight repurchase rate. To effectively fund the deferred compensation obligation, the Company had purchased variable rate life insurance contracts. These insurance contracts were surrendered in June 2001 and therefore the obligation at December 31, 2001 is unfunded. The cash surrender value of the contracts included in Other Assets at December 31, 2000 was $6.6 million. During 2001, certain participants in the Company's deferred compensation plans agreed to forego balances in those plans in exchange for loans from the Company in the same amounts. The loans, which were completed during 2001, bear interest at the applicable federal rate and require the individuals to secure a life insurance policy having the death benefit equivalent to the amount of the loan payable to the Company. All accrued interest and principal on the loans are payable upon the death of the participant and their spouse. The Company recognized $4.1 million of pre-tax income during 2001 related to the discharge of the deferred compensation obligations. These amounts are included in Special Charges (Credits) and Reorganization Expenses on the Consolidated Statement of Operations. 10. STOCK PLANS The Company maintains the 1998 Long-Term Equity Incentive Plan that allows for grants of stock options, restricted stock, stock equivalent units, stock appreciation rights and other stock-related forms of incentive compensation. As of December 31, 2001, there were 383,490 shares available for grant under this long-term equity incentive plan. 34 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Effective September 24, 2001, the Company established the 2001 Stock Option Plan for the purpose of granting options for the purchase of common shares to the Company's executive officers and independent directors. Options vest to, and are exercisable by, participants on the earlier of 1) the date the Company's closing stock price equals or exceeds $17 per share or 2) the seventh anniversary of the grant date. During September, 570,000 options were granted to participants under this new plan. Because the options granted under this new plan were still subject to stockholder approval at the time of grant, the options resulted in a one-time charge of $2.4 million which was recorded in the fourth quarter of 2001. The charge represents the difference between the exercise price of the options of $10.95 (the fair value at the date of grant) and the fair value of the Company's stock at the time of stockholder approval on December 18, 2001 which was $15.20. This charge is included in Special Charges (Credits) and Reorganization Expenses on the Consolidated Statement of Operations. As of December 31, 2001, there were 80,000 shares available for grant under the 2001 Stock Option Plan. The Company also maintains the 1993 Stock Option Plan and the 1993 and 1996 Stock Option Plans for Nonemployee Directors whereby stock options are granted to key employees and non-employee directors. As of December 31, 2001, there were 222,042 shares available for grant under these stock option plans. New stock option issuances are generally made under the 1998 and 2001 plans. A summary of stock option activity for the years ended December 31, 2001 and 2000 is as follows:
2001 2000 ---------------------------------------------- ---------------------------------------------- WEIGHTED WEIGHTED AVG. AVG. SHARES OPTION PRICE PRICE RANGE SHARES OPTION PRICE PRICE RANGE ------------ -------------- ------------------ ------------ -------------- ------------------ Outstanding at beginning of year .............................. 306,170 $ 18.27 $ 10.89-$27.94 276,110 $ 18.81 $ 10.89-$27.94 New options granted ................ 666,000 11.06 10.95-15.09 80,750 16.54 12.50-23.75 Exercised .......................... (15,355) 10.89 10.89-10.89 (20,890) 12.38 10.89-19.63 Canceled ........................... (33,843) 19.62 13.00-27.94 (29,800) 23.53 19.63-27.94 ------- -------- ---------------- ------- -------- ---------------- Outstanding at end of year ......... 922,972 13.14 10.95-27.94 306,170 18.27 10.89-27.94 Exercisable at end of year ......... 242,543 $ 18.37 $ 12.50-$27.94 213,650 $ 18.70 $ 10.89-$27.94
Significant option groups outstanding at December 31, 2001 and related weighted average price and life information follows:
OPTIONS WEIGHTED AVERAGE OPTIONS WEIGHTED AVERAGE WEIGHTED AVERAGE EXERCISE PRICE OUTSTANDING EXERISE PRICE EXERCISABLE EXERCISE PRICE REMAINING LIFE (YEARS) ---------------------- ------------- ------------------ ------------- ------------------ ----------------------- $22.25-$27.94......... 52,576 $ 23.95 43,893 $ 23.70 4.36 18.75-21.50 .......... 108,894 20.89 106,148 20.92 3.65 10.95-15.09 .......... 761,502 11.29 92,502 12.91 8.69
Had compensation cost for the Company's stock option plans been determined based on the fair value at the grant dates for awards under those plans, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated. 35 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2001 2000 1999 (thousands of dollars, except per share amounts) ------------- ----------- ------------ Net income (loss) As reported ..................................... $ (85,429) $ 4,922 $ 29,192 Pro forma ....................................... (85,724) 4,624 28,899 Basic earnings (loss) per share As reported ..................................... $ (13.43) $ 0.78 $ 4.34 Pro forma ....................................... (13.47) 0.73 4.29 Diluted earnings (loss) per share As reported ..................................... $ (13.43) $ 0.77 $ 4.28 Pro forma ....................................... (13.47) 0.72 4.24
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2001, 2000 and 1999, respectively: no dividend yield for all years, expected volatility of 37, 36 and 25 percent, risk-free interest rates of 4.8, 5.1 and 5.4 percent and expected lives of 7.5 years for all periods. The average fair value of each option granted in 2001, 2000 and 1999 was $5.77, $8.26 and $8.62, respectively. The Company also grants restricted stock to key employees. The company granted 500, 3,250 and 6,950 shares in 2001, 2000 and 1999, respectively. The Company also maintains an employee stock purchase plan whereby the Company matches 20% of each participating employee's monthly payroll deduction, up to $500. The Company thereby contributed $59,000, $144,000 and $166,000 to the plan in 2001, 2000 and 1999, respectively. 11. LEASE COMMITMENTS The Company has commitments under operating leases, certain of which extend through 2008. These commitments total $2.7 million in 2002, $2.6 million in 2003, $2.3 million in 2004, $1.6 million in 2005, $0.6 million in 2006 and $0.4 million in total for all later years. Total lease expense was $4.8 million in 2001, $4.1 million in 2000 and $3.5 million in 1999. 12. CONTINGENCIES 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. Based on currently available information, the Company does not believe that the 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. It is possible, that as additional information becomes available, the impact on the Company of an adverse determination could have a different effect. 13. NEW ACCOUNTING PRONOUNCEMENTS The Company adopted Statement of Financial Accounting Standard 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities, on January 1, 2001. The statement requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Hedge ineffectiveness, the amount by which the change in the value of a hedge does not exactly offset the change in the value of the hedged item, will be immediately recognized in earnings. The adoption of SFAS 133 on January 1, 2001 did not have a material impact on the Company's results of operations or financial position. 36 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) In July 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill (and intangible assets deemed to have indefinite lives) will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. During 2002, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets, but does not anticipate a material impact on its results of operations or financial position. In June 2001, the FASB issued Statement of Financial Accounting Standard No. 143 (SFAS 143), Accounting for Asset Retirement Obligations, effective for fiscal years beginning after June 15, 2002. This standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. SFAS 143 is effective for the Company beginning with the first quarter of 2003, and its adoption is not expected to have a material impact on the Company's results of operations or financial position. In August 2001, the FASB issued Statement of Financial Accounting Standard No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets, effective for fiscal years beginning after December 15, 2001. This standard supercedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and provides a single accounting model for long-lived assets to be disposed of. The new standard also supersedes the provisions of APB Opinion 30 with regard to reporting the effects of a disposal of a segment of a business and requires expected future operating losses from discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are incurred. SFAS 144 is effective for the Company beginning with the first quarter of 2002, and its adoption is not expected to have a material impact on the Company's results of operations or financial position. 14. DERIVATIVE FINANCIAL INSTRUMENTS The Company's derivative activities are initiated within the guidelines of documented corporate risk-management policies and do not create additional risk because gains and losses on derivative contracts offset losses and gains on the assets, liabilities and transactions being hedged. As derivative contracts are initiated, the Company designates the instruments individually as either a fair value hedge or a cash flow hedge. Management reviews the correlation and effectiveness of its derivatives on a periodic basis. The Company uses interest rate swaps to manage a portion of its exposure to short-term interest rate variations with respect to the London Interbank Offered Rate on its term debt obligations. The Company has designated the interest rate swaps as cash flow hedges. Gains and losses related to the effective portion of the interest rate swaps are reported as a component of other comprehensive income and reclassified into earnings in the same period the hedged transaction affects earnings. Because the terms of the swaps exactly match the terms of the underlying debt, the swaps are perfectly effective. The interest rate swap agreements expire in March 2002. 15. RELATED PARTY TRANSACTIONS On May 7, 2001, the Company entered into a letter of intent (the "Letter") with Marlin Partners II, LP (Marlin), Catterton Partners, L.P. and Alpha Private Equity Group (collectively, the "Other Investors") for the acquisition by Marlin and the Other Investors of all of the issued and outstanding common stock of the Company. At the time, Marlin was a related party due to its ownership of approximately 10 percent of the issued and outstanding common stock of the Company. Mr. Martin Franklin and Mr. Ian Ashken, the Company's current Chairman and CEO, and Vice Chairman and CFO, 37 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) respectively, were the managing partners of Marlin. According to the terms of the Letter, Marlin was reimbursed approximately $480,000 of expenses related to the contemplated transaction. On June 24, 2001, Messrs. Franklin and Ashken became Directors of the Company and on September 24, 2001, Messrs. Franklin and Ashken became executive officers of the Company. 16. EARNINGS PER SHARE 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. Due to the net loss for 2001, the effect of the potential exercise of stock options was not considered in the diluted earnings per share calculation for that year since it would be antidilutive. A computation of earnings per share is as follows for the years ended December 31:
2001 2000 1999 (thousands, except per share amounts) -------------- ----------- ---------- Income (loss) from continuing operations ......................... $ (85,429) $ 4,922 $ 30,307 Discontinued operations .......................................... -- -- (87) Extraordinary loss from early extinguishment of debt ............. -- -- (1,028) ---------- ------- -------- Net income (loss) ................................................ $ (85,429) $ 4,922 $ 29,192 ========== ======= ======== Weighted average shares outstanding .............................. 6,363 6,338 6,734 Additional shares assuming conversion of stock options ........... -- 45 85 ---------- ------- -------- Weighted average shares outstanding assuming conversion .......... 6,363 6,383 6,819 ========== ======= ======== Basic earnings (loss) per share: Income (loss) from continuing operations ......................... $ (13.43) $ .78 $ 4.50 Discontinued operations .......................................... -- -- ( .01) Extraordinary loss from early extinguishment of debt ............. -- -- ( .15) ---------- ------- -------- Net income (loss) ................................................ $ (13.43) $ .78 $ 4.34 ========== ======= ======== Diluted earnings (loss) per share -- assuming conversion: Income (loss) from continuing operations ......................... $ (13.43) $ .77 $ 4.44 Discontinued operations .......................................... -- -- ( .01) Extraordinary loss from early extinguishment of debt ............. -- -- ( .15) ---------- ------- -------- Net income (loss) ................................................ $ (13.43) $ .77 $ 4.28 ========== ======= ========
17. QUARTERLY STOCK PRICES (UNAUDITED) Quarterly sales prices for the Company's common stock, as reported on the composite tape, were as follows:
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER ----------- ----------- ----------- ----------- 2001 ---- High ......... $ 15.13 $ 16.15 $ 13.03 $ 16.05 Low .......... $ 12.30 $ 11.64 $ 10.70 $ 11.30 ------- ------- ------- ------- 2000 ---- High ......... $ 25.00 $ 25.50 $ 23.50 $ 20.94 Low .......... $ 21.00 $ 20.00 $ 20.75 $ 10.00 ------- ------- ------- -------
38 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 18. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) Summarized quarterly results of operations for 2001, 2000 and 1999 were as follows:
FIRST SECOND QUARTER QUARTER (thousands of dollars, except per share amounts) --------------- --------------- 2001 ---- Net sales ........................................ $ 69,027 $ 90,598 -------- ---------- Gross profit ..................................... 14,935 24,677 -------- ---------- Net income (loss) from continuing operations ...................................... (238)(1) 5,111(2) -------- ------------ Net income (loss) ................................ (238) 5,111 -------- ------------ Basic earnings (loss) per share: Income (loss) from continuing operations .................................... $ (.04) $ .80 -------- ------------ Net income (loss) ............................... $ (.04) $ .80 -------- ------------ Diluted earnings (loss) per share: Income (loss) from continuing operations .................................... $ (.04) $ .80 -------- ------------ Net income (loss) ............................... $ (.04) $ .80 -------- ------------ 2000 ---- Net sales ........................................ $ 84,455 $ 114,998 -------- ------------ Gross profit ..................................... 18,808 30,824 -------- ------------ Net income (loss) from continuing operations ...................................... 444 6,210(5) -------- ------------ Net income (loss) ................................ 444 6,210 -------- ------------ Basic earnings (loss) per share: Income (loss) from continuing operations .................................... $ .07 $ .99 -------- ------------ Net income (loss) ............................... $ .07 $ .99 -------- ------------ Diluted earnings (loss) per share: Income (loss) from continuing operations .................................... $ .07 $ .98 -------- ------------ Net income (loss) ............................... $ .07 $ .98 -------- ------------ 1999 ---- Net sales ........................................ $ 53,411 $ 113,653 -------- ------------ Gross profit ..................................... 12,318 33,678 -------- ------------ Net income from continuing operations............. 1,963 20,364(8) -------- ------------ Net income (loss) ................................ 2,099 19,336 -------- ------------ Basic earnings (loss) per share: Income from continuing operations ............... $ .29 $ 3.03 -------- ------------ Net income (loss) ............................... $ .31 $ 2.88 -------- ------------ Diluted earnings (loss) per share: Income from continuing operations ............... $ .29 $ 2.99 -------- ------------ Net income (loss) ............................... $ .31 $ 2.84 -------- ------------ THIRD FOURTH QUARTER QUARTER TOTAL (thousands of dollars, except per share amounts) ------------------ ----------------- ------------- 2001 ---- Net sales ........................................ $ 90,477 $ 54,876 $ 304,978 ----------- ---------- --------- Gross profit ..................................... 22,178 9,512 71,302 ----------- ---------- --------- Net income (loss) from continuing operations ...................................... (83,032)(3) (7,270)(4) (85,429) ----------- ---------- --------- Net income (loss) ................................ (83,032) (7,270) (85,429) ----------- ---------- --------- Basic earnings (loss) per share: Income (loss) from continuing operations .................................... $ (13.04) $ (1.14) $ (13.43) ----------- ---------- ---------- Net income (loss) ............................... $ (13.04) $ (1.14) $ (13.43) ----------- ---------- ---------- Diluted earnings (loss) per share: Income (loss) from continuing operations .................................... $ (13.04) $ (1.14) $ (13.43) ----------- ---------- ---------- Net income (loss) ............................... $ (13.04) $ (1.14) $ (13.43) ----------- ---------- ---------- 2000 ---- Net sales ........................................ $ 97,096 $ 60,807 $ 357,356 ----------- ---------- ---------- Gross profit ..................................... 23,123 9,030 81,785 ----------- ---------- ---------- Net income (loss) from continuing operations ...................................... 1,641(6) (3,373)(7) 4,922 ------------- ---------- ---------- Net income (loss) ................................ 1,641 (3,373) 4,922 ------------- ---------- ---------- Basic earnings (loss) per share: Income (loss) from continuing operations .................................... $ .26 $ (.53) $ .78 ------------- ---------- ---------- Net income (loss) ............................... $ .26 $ (.53) $ .78 ------------- ---------- ---------- Diluted earnings (loss) per share: Income (loss) from continuing operations .................................... $ .26 $ (.53) $ .77 ------------- ---------- ---------- Net income (loss) ............................... $ .26 $ (.53) $ .77 ------------- ---------- ---------- 1999 ---- Net sales ........................................ $ 112,768 $ 78,199 $ 358,031 ------------- ---------- ---------- Gross profit ..................................... 33,817 20,910 100,723 ------------- ---------- ---------- Net income from continuing operations............. 7,813 167(9) 30,307 ------------- ------------ ---------- Net income (loss) ................................ 7,813 (56) 29,192 ------------- ------------ ---------- Basic earnings (loss) per share: Income from continuing operations ............... $ 1.16 $ .02 $ 4.50 ------------- ------------ ---------- Net income (loss) ............................... $ 1.16 $ (.01) $ 4.34 ------------- ------------ ---------- Diluted earnings (loss) per share: Income from continuing operations ............... $ 1.14 $ .02 $ 4.44 ------------- ------------ ---------- Net income (loss) ............................... $ 1.14 $ (.01) $ 4.28 ------------- ------------ ----------
39 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED) ---------- (1) Includes $1.3 million of income (net of tax) related to the discharge of deferred compensation obligations. (2) Includes $1.5 million of income (net of tax) related to the discharge of deferred compensation obligations, a $0.7 million gain (net of tax) related to an insurance recovery associated with a property casualty and $0.9 million of costs (net of tax) associated with the Company's evaluation of its strategic options. (3) Includes an $81.2 million loss (net of tax) related to the sale of thermoforming assets, $1.8 million of separation costs (net of tax) related to the management reorganization and $0.9 million of costs (net of tax) associated with the exit of facilities. (4) Includes $1.5 million of costs (net of tax) associated with corporate restructuring, a $1.6 million charge (net of tax) for stock option compensation, $1.0 million of costs (net of tax) associated with the write-off of debt issuance and amendment costs, an additional $0.9 million loss (net of tax) related to the sale of thermoforming assets and a $0.9 million loss (net of tax) related to the sale of the Company's interest in Microlin, LLC. (5) Includes $1.1 million of income (net of tax) associated with the reduction in long-term performance-based compensation. (6) Includes $1.5 million of costs (net of tax) related to litigation. (7) Includes $0.6 million of income (net of tax) related to litigation. (8) Includes a $12.2 million gain (net of tax) on the sale of the Company's plastic packaging product line. (9) Includes $1.4 million of costs (net of tax) associated with the exit of a plastics thermoforming facility. Note: Earnings per share calculations for each quarter are based on the weighted average number of shares outstanding for each period, and the sum of the quarterly amounts may not necessarily equal the annual earnings per share amounts. NOTE 19. SUBSEQUENT EVENT On March 9, 2002, The Job Creation and Workers Assistance Act of 2002 was enacted which provides, in part, for the carryback of 2001 net operating losses for five years instead of the previous two year period. As a result, the company filed for an additional refund of $22.8 million, of which $22.2 million was received on March 22, 2002. At December 31, 2001, the federal net operating losses were recorded as a deferred tax asset with a valuation allowance of $11.7 million. This valuation allowance will be reversed in the first quarter of 2002 resulting in a deferred tax benefit. On January 24, 2002, Martin E. Franklin, Chairman and Chief Executive Officer, and Ian G.H. Ashken, Vice Chairman, Chief Financial Officer and Secretary, received loans from the Company in the amounts of $3.3 million and $1.6 million, respectively. The purpose of these loans, which are due on January 23, 2007, is to exercise non-qualified stock options granted under the Company's 2001 Stock Option Plan. On March 27, 2002, the Company entered into a definitive asset purchase agreement to acquire the business of Tilia International, Inc., a developer and distributor of home food preservation products, for $145.0 million cash and $15.0 million in seller debt financing. In addition, the agreement includes an earn-out provision with a total potential payment in cash or Alltrista common stock of up to $25.0 million payable in three years, provided that certain earnings performance targets are met. The acquisition, which is expected to more than double the Company's consumer products revenue, is consistent with the Company's strategic focus on food preservation products and niche branded kitchen consumables. The purchase price allocation has not been completed, but it is anticipated that goodwill in the amount of approximately $100.9 million will be recorded which will not be subject to amortization. It is also anticipated that amortizable intangible assets amounting to approximately $5.0 million will be recorded. 40 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE No disclosure required under Item 9. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding executive officers is included in Part I of this Form 10-K as permitted by General Instruction G (3). Information regarding directors required by Item 10 appearing under the caption "Director Nominees and Continuing Directors" of the Company's proxy statement for the 2002 Annual Meeting of Stockholders is incorporated herein by reference. The proxy statement is expected to be filed with the Commission on or about April 15, 2002. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 appearing under the caption "Executive Compensation" of the Company's proxy statement for the 2002 Annual Meeting of Stockholders is incorporated herein by reference. The proxy statement is expected to be filed with the Commission on or about April 15, 2002. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by Item 12 appearing under the captions "Voting Securities and Principal Stockholders" and "Security Ownership by Management and Directors" of the Company's proxy statement for the 2002 Annual Meeting of Stockholders is incorporated herein by reference. The proxy statement is expected to be filed with the Commission on or about April 15, 2002. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by Item 13 appearing under the caption "Certain Relationships and Related Transactions" of the Company's proxy statement for the 2002 Annual Meeting of Stockholders is incorporated herein by reference. The proxy statement is expected to be filed with the Commission on or about April 15, 2002. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT: (1) FINANCIAL STATEMENTS
LOCATION IN 10-K --------- Consolidated statements of operations -- Years ended December 31, 2001, 2000 and 1999 Item 8 Consolidated balance sheets -- December 31, 2001 and 2000 ............................ Item 8 Consolidated statements of cash flows -- Years ended December 31, 2001 2000 and 1999 . Item 8 Consolidated statements of changes in stockholders' equity -- Years ended December 31, 2001, 2000 and 1999 ................................................................. Item 8 Consolidated statements of comprehensive income -- Years ended December 31, 2001, 2000 and 1999 ............................................................................ Item 8 Notes to consolidated financial statements ........................................... Item 8 Report of independent auditors ....................................................... Item 8
41 (2) FINANCIAL STATEMENT SCHEDULE: See Schedule II of this Form 10-K. (3) EXHIBITS: Copies of exhibits incorporated by reference can be obtained from the SEC and are located in SEC File No. 0-21052.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT -------------- ----------------------------------------------------------------------------------------------------------- 2.1 Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda Corporation, Quoin Corporation, Alltrista Corporation and Wilbert, Inc., dated October 15, 2001 (filed as Exhibit 10.7 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed November 14, 2001). 2.2 Amendment to Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda Corporation, Quoin Corporation, Alltrista Corporation and Wilbert, Inc., dated November 29, 2001 (filed as Exhibit 10-2 to the Company's Report on Form 8-K, Filing No. 0-21052, and incorporated herein by reference, filed December 14, 2001). 2.3 Agreement and Plan of Merger between Alltrista Corporation and Alltrista Reincorporation MergerSub, Inc. (filed as Exhibit A to the Company's Definitive Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 26, 2001). *3.1 Restated Certificate of Incorporation. 3.2 Bylaws of Alltrista Corporation (filed as Exhibit C to the Company's Definitive Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 26, 2001). 4.1 Form of Rights Agreement (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 12, 1999). 4.2 Amendment to Rights Agreement, dated as of July 19, 2001, between the Company and EquiServe Trust Company, N.A. as successor in interest to The First Chicago Trust Company of New York as Rights Agent (filed as Exhibit 4.1 to the Company's Form 8-K, Filing No. 0-21052, and incorporated herein by reference, filed August 21, 2001). 4.3 Amendment to Rights Agreement, dated as of December 14, 2001, between the Company and EquiServe Trust Company, N.A. as successor in interest to the First Chicago Trust Company of New York as Rights Agent (filed as Exhibit 1 to the Company's Form 8-A/A, Filing No. 0-21052, and incorporated herein by reference, filed January 9, 2002). #10.1 Form of Alltrista Corporation 1993 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.2 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). #10.2 Form of Alltrista Corporation 1993 Stock Option Plan (filed as Exhibit 10.3 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). #10.3 Form of Alltrista Corporation 1996 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 1997). #10.4 Form of Alltrista Corporation 1993 Restricted Stock Plan (filed as Exhibit 10.4 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993. 10.5 Form of Change of Control Agreement (filed as Exhibit 10.6 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and is incorporated herein by reference, filed March 29, 1999). 10.6 Form of Amendment to Change of Control Agreement, effective June 21, 2001 (filed as Exhibit 10.16 to the Company's Report on Form 10-Q, Filing No. 0-21052, and is incorporated herein by reference, filed August 10, 2001).
42
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT --------------- --------------------------------------------------------------------------------------------------------- *10.7 List of Alltrista Corporation officers party to Exhibit 10.5 and Exhibit 10.6. 10.8 Form of Distribution Agreement between Ball Corporation and Alltrista Corporation (filed as Exhibit 10.7 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.9 Form of Tax Sharing and Indemnification Agreement between Ball Corporation and Alltrista Corporation (filed as Exhibit 10.10 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.10 Form of Indemnification Agreement (filed as Exhibit 10.13 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.11 List of Directors and Executive Officers party to Exhibit 10.10 (filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 31, 1996). #10.12 Alltrista Corporation 1998 Long Term Equity Incentive Plan as amended and restated as of November 8, 2001 (filed as Annex A to the Company's Preliminary Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 13, 2001). #10.13 Alltrista Corporation 2001 Stock Option Plan effective September 24, 2001 (filed as Annex B to the Company's Preliminary Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 13, 2001). #10.14 Form of Alltrista Corporation 1999 Economic Value Added and Growth Incentive Compensation Plan for Key Members of Management (filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 30, 2000). #10.15 Amendment to the Alltrista Corporation Economic Value Added and Growth Incentive Compensation Plan for Key Members of Management (filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.16 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on February 1, 2001 (filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.17 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees, effective June 21, 2001 (filed as Exhibit 10.3 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.18 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on February 1, 2001 (filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.19 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan, effective June 21, 2001 (filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.20 Alltrista Corporation 1997 Deferred Compensation Plan for Directors as Amended on February 1, 2001 (filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.21 Amendment to the Alltrista Corporation 1997 Deferred Compensation Plan for Directors, effective June 21, 2001 (filed as Exhibit 10.4 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.22 Alltrista Corporation Excess Savings and Retirement Plan as Amended on February 1, 2001(filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.23 Amendment to the Alltrista Corporation Excess Savings and Retirement Plan, effective June 21, 2001 (filed as Exhibit 10.5 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001).
43
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ----------------- -------------------------------------------------------------------------------------------------------- +10.24 Agreement to Forego Compensation between Kevin D. Bower and Alltrista Corporation, effective March 31, 2001 (filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 15, 2001). +10.25 Agreement to Forego Compensation between Jerry T. McDowell and Alltrista Corporation, effective May 25, 2001 (filed as Exhibit 10.6 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.26 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective March 31, 2001 (filed as Exhibit 10.1 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 15, 2001). +10.27 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.7 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.28 Loan Agreement between Thomas B. Clark and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.8 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.29 Promissory Note between Alltrista Corporation, and Thomas B. and Karen A. Clark, effective May 31, 2001 (filed as Exhibit 10.9 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.30 Loan Agreement between Kevin D. Bower and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.10 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.31 Promissory Note between Alltrista Corporation, and Kevin D. and Maureen C. Bower, effective May 31, 2001 (filed as Exhibit 10.11 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.32 Loan Agreement between Jerry T. McDowell and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.12 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.33 Promissory Note between Alltrista Corporation, and Jerry T. and Gayleen M. McDowell, effective May 31, 2001 (filed as Exhibit 10.13 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). *+10.34 Employment Agreement between the Company and Martin E. Franklin, effective January 1, 2002. *+10.35 Employment Agreement between the Company and Ian G.H. Ashken, effective January 1, 2002. *+10.36 Employment Agreement between the Company and J. David Tolbert, effective January 1, 2002. *+10.37 Promissory Note, dated January 24, 2002, by Martin E. Franklin in favor of Alltrista Corporation. *+10.38 Promissory Note, dated January 24, 2002, by Ian G.H. Ashken in favor of Alltrista Corporation. *10.39 Alltrista Corporation 2002 Executive Loan Program. *21.1 Subsidiaries of Alltrista Corporation. *23.1 Consent of Independent Auditors. *99.1 Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
---------- * Filed herewith + This Exhibit represents a management contract. # This Exhibit represents a compensatory plan. (B) REPORTS ON FORM 8-K In a Form 8-K (Commission File Number 0-21052) filed October 17, 2001, the Company filed two press releases dated October 15, 2001. The Company's first release announced that it had signed a 44 definitive agreement with Wilbert, Inc. to sell its Triangle, TriEnda and Synergy World plastic thermoforming businesses. The Company's second release announced the Company's decision to close its Indianapolis headquarters, the Company's intent to renegotiate its current financing arrangements, the Company's withdrawal of its previously announced earnings guidance for 2001 and the Company's termination of its agreement with Bear Stearns & Co., Inc. to pursue a review of the Company's strategic options. In a Form 8-K (Commission File Number 0-21052) filed December 14, 2001, the Company filed a press release issued December 3, 2001 announcing that it had completed the sale of substantially all of the assets of its Triangle, TriEnda and Synergy World plastic thermoforming operations to Wilbert, Inc. The report also included pro forma financial information related to the sale. In a Form 8-K (Commission File Number 0-21052) filed January 9, 2002, the Company disclosed that on December 18, 2001, at a special meeting of stockholders, the following proposals were approved: (i) to reincorporate the Registrant in the State of Delaware; (ii) to increase the number of the Registrant's shares of common stock authorized for issuance; (iii) to include a provision in the certificate of incorporation of the Registrant following the reincorporation eliminating liability for directors other than as required by Delaware law; (iv) to amend and restate the Registrant's 1998 Long-Term Equity Incentive Plan to increase the number of shares of common stock that may be issued thereunder by 350,000 shares and to eliminate the annual automatic share increase currently provided for in said plan; and (v) to adopt the Registrant's 2001 Stock Option Plan. 45 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 By: /s/ Martin E. Franklin --------------------------------- Martin E. Franklin Chairman and Chief Executive Officer October 16, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated below. (1) Principal Executive Officer: /s/ Martin E. Franklin Chairman and Chief Executive Officer --------------------------------- October 16, 2002 Martin E. Franklin (2) Principal Financial Accounting Officer: /s/ Ian G.H. Ashken Vice Chairman, Chief Financial Officer and --------------------------------- Company Secretary Ian G.H. Ashken October 16, 2002 (3) Board of Directors: /s/ Martin E. Franklin Chairman, President and Chief Executive Officer --------------------------------- October 16, 2002 Martin E. Franklin /s/ Ian G.H. Ashken Vice Chairman, Chief Financial Officer and --------------------------------- Company Secretary Ian G.H. Ashken October 16, 2002 /s/ Douglas W. Heumme Director --------------------------------- October 16, 2002 Douglas W. Huemme /s/ Richard L. Molen Director --------------------------------- October 16, 2002 Richard L. Molen Director --------------------------------- October , 2002 Lynda Watkins Popwell Director --------------------------------- October , 2002 Irwin D. Simon Director --------------------------------- October , 2002 David L. Swift /s/ Robert L. Wood Director --------------------------------- October 16, 2002 Robert L. Wood
46 CERTIFICATIONS I, Martin E. Franklin, certify that: 1. I have reviewed this annual report on Form 10-K of Jarden Corporation; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; and 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report. Date: October 16, 2002 /s/ Martin E. Franklin --------------------------- Martin E. Franklin Chief Executive Officer I, Ian G.H. Ashken, certify that: 1. I have reviewed this annual report on Form 10-K of Jarden Corporation; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; and 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report. Date: October 16, 2002 /s/ Ian G.H. Ashken --------------------------- Ian G.H. Ashken Chief Financial Officer SCHEDULE II ALLTRISTA CORPORATION VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (THOUSANDS OF DOLLARS)
BALANCE AT CHARGES TO BALANCE AT BEGINNING COSTS AND DEDUCTIONS END OF OF PERIOD EXPENSE FROM RESERVES OTHER (1) (2) PERIOD ------------ ------------ --------------- --------------- ------------- Reserves against laccounts receivable: 2001 .............................. $ (1,517) $ (1,589) $ 1,933 $ 395 $ (778) 2000 .............................. $ (1,735) $ (746) $ 964 $ -- $ (1,517) 1999 .............................. $ (1,081) $ (578) $ 48 $ (124) $ (1,735)
---------- (1) Effective November 26, 2001, the Company sold the assets of its Triangle, TriEnda and Synergy World thermoforming operations. (2) Effective April 25, 1999, the Company acquired the net assets of Triangle Plastics, Inc. and its TriEnda subsidiary. 47 ALLTRISTA CORPORATION ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001 Copies of exhibits incorporated by reference can be obtained from the SEC and are located in SEC File No. 0-21052.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT --------------- ----------------------------------------------------------------------------------------------------------- 2.1 Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda Corporation, Quoin Corporation, Alltrista Corporation and Wilbert, Inc., dated October 15, 2001 (filed as Exhibit 10.7 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed November 14, 2001). 2.2 Amendment to Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda Corporation, Quoin Corporation, Alltrista Corporation and Wilbert, Inc., dated November 29, 2001 (filed as Exhibit 10-2 to the Company's Report on Form 8-K, Filing No. 0-21052, and incorporated herein by reference, filed December 14, 2001). 2.3 Agreement and Plan of Merger between Alltrista Corporation and Alltrista Reincorporation MergerSub, Inc. (filed as Exhibit A to the Company's Definitive Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 26, 2001). *3.1 Restated Certificate of Incorporation. 3.2 Bylaws of Alltrista Corporation (filed as Exhibit C to the Company's Definitive Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 26, 2001). 4.1 Form of Rights Agreement (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 12, 1999). 4.2 Amendment to Rights Agreement, dated as of July 19, 2001, between the Company and EquiServe Trust Company, N.A. as successor in interest to The First Chicago Trust Company of New York as Rights Agent (filed as Exhibit 4.1 to the Company's Form 8-K, Filing No. 0-21052, and incorporated herein by reference, filed August 21, 2001). 4.3 Amendment to Rights Agreement, dated as of December 14, 2001, between the Company and EquiServe Trust Company, N.A. as successor in interest to the First Chicago Trust Company of New York as Rights Agent (filed as Exhibit 1 to the Company's Form 8-A/A, Filing No. 0-21052, and incorporated herein by reference, filed January 9, 2002). #10.1 Form of Alltrista Corporation 1993 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.2 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). #10.2 Form of Alltrista Corporation 1993 Stock Option Plan (filed as Exhibit 10.3 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). #10.3 Form of Alltrista Corporation 1996 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 1997). #10.4 Form of Alltrista Corporation 1993 Restricted Stock Plan (filed as Exhibit 10.4 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993. 10.5 Form of Change of Control Agreement (filed as Exhibit 10.6 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and is incorporated herein by reference, filed March 29, 1999). 10.6 Form of Amendment to Change of Control Agreement, effective June 21, 2001 (filed as Exhibit 10.16 to the Company's Report on Form 10-Q, Filing No. 0-21052, and is incorporated herein by reference, filed August 10, 2001). *10.7 List of Alltrista Corporation officers party to Exhibit 10.5 and Exhibit 10.6.
48
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ----------- --------------------------------------------------------------------------------------------------------- 10.8 Form of Distribution Agreement between Ball Corporation and Alltrista Corporation (filed as Exhibit 10.7 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.9 Form of Tax Sharing and Indemnification Agreement between Ball Corporation and Alltrista Corporation (filed as Exhibit 10.10 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.10 Form of Indemnification Agreement (filed as Exhibit 10.13 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.11 List of Directors and Executive Officers party to Exhibit 10.10 (filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 31, 1996). #10.12 Alltrista Corporation 1998 Long Term Equity Incentive Plan as amended and restated as of November 8, 2001 (filed as Annex A to the Company's Preliminary Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 13, 2001). #10.13 Alltrista Corporation 2001 Stock Option Plan effective September 24, 2001 (filed as Annex B to the Company's Preliminary Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 13, 2001). #10.14 Form of Alltrista Corporation 1999 Economic Value Added and Growth Incentive Compensation Plan for Key Members of Management (filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 30, 2000). #10.15 Amendment to the Alltrista Corporation Economic Value Added and Growth Incentive Compensation Plan for Key Members of Management (filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.16 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on February 1, 2001 (filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.17 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees, effective June 21, 2001 (filed as Exhibit 10.3 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.18 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on February 1, 2001 (filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.19 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan, effective June 21, 2001 (filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.20 Alltrista Corporation 1997 Deferred Compensation Plan for Directors as Amended on February 1, 2001 (filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.21 Amendment to the Alltrista Corporation 1997 Deferred Compensation Plan for Directors, effective June 21, 2001 (filed as Exhibit 10.4 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.22 Alltrista Corporation Excess Savings and Retirement Plan as Amended on February 1, 2001(filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.23 Amendment to the Alltrista Corporation Excess Savings and Retirement Plan, effective June 21, 2001 (filed as Exhibit 10.5 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001).
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EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ----------------- -------------------------------------------------------------------------------------------------------- +10.24 Agreement to Forego Compensation between Kevin D. Bower and Alltrista Corporation, effective March 31, 2001 (filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 15, 2001). +10.25 Agreement to Forego Compensation between Jerry T. McDowell and Alltrista Corporation, effective May 25, 2001 (filed as Exhibit 10.6 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.26 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective March 31, 2001 (filed as Exhibit 10.1 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 15, 2001). +10.27 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.7 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.28 Loan Agreement between Thomas B. Clark and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.8 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.29 Promissory Note between Alltrista Corporation, and Thomas B. and Karen A. Clark, effective May 31, 2001 (filed as Exhibit 10.9 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.30 Loan Agreement between Kevin D. Bower and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.10 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.31 Promissory Note between Alltrista Corporation, and Kevin D. and Maureen C. Bower, effective May 31, 2001 (filed as Exhibit 10.11 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.32 Loan Agreement between Jerry T. McDowell and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.12 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.33 Promissory Note between Alltrista Corporation, and Jerry T. and Gayleen M. McDowell, effective May 31, 2001 (filed as Exhibit 10.13 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). *+10.34 Employment Agreement between the Company and Martin E. Franklin, effective January 1, 2002. *+10.35 Employment Agreement between the Company and Ian G.H. Ashken, effective January 1, 2002. *+10.36 Employment Agreement between the Company and J. David Tolbert, effective January 1, 2002. *+10.37 Promissory Note, dated January 24, 2002, by Martin E. Franklin in favor of Alltrista Corporation. *+10.38 Promissory Note, dated January 24, 2002, by Ian G.H. Ashken in favor of Alltrista Corporation. *10.39 Alltrista Corporation 2002 Executive Loan Program. *21.1 Subsidiaries of Alltrista Corporation. *23.1 Consent of Independent Auditors. *99.1 Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
---------- * Filed herewith + This Exhibit represents a management contract. # This Exhibit represents a compensatory plan. Copies of exhibits incorporated by reference can be obtained from the SEC and are located in SEC File No. 0-21052. 50