-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HeAgAsF892dZ1ZgAoL7Mxsxclt4cU7LYBe9yBz4I3gbCUatdgj9EHAcMH3Ewb0uu V2kalT8GcRl5zhpEVkXXAw== 0000950137-99-004208.txt : 19991118 0000950137-99-004208.hdr.sgml : 19991118 ACCESSION NUMBER: 0000950137-99-004208 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991003 FILED AS OF DATE: 19991117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: US CAN CORP CENTRAL INDEX KEY: 0000895726 STANDARD INDUSTRIAL CLASSIFICATION: METAL CANS [3411] IRS NUMBER: 061094196 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13678 FILM NUMBER: 99759537 BUSINESS ADDRESS: STREET 1: 900 COMMERCE DR STREET 2: SUITE 302 CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7085712500 MAIL ADDRESS: STREET 1: 900 COMMERCE DRIVE CITY: OAK BROOK STATE: IL ZIP: 60521 10-Q 1 QUARTERLY REPORT 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 3, 1999 COMMISSION FILE NUMBER 0-21314 U.S. CAN CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) 06-1094196 (I.R.S. EMPLOYER IDENTIFICATION NO.) DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) 900 COMMERCE DRIVE OAK BROOK, ILLINOIS 60523 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) (630) 571-2500 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) 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 (the "Exchange Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of October 31, 1999, 13,447,171 shares of U.S. Can Corporation's common stock were outstanding. 2 U.S. CAN CORPORATION AND SUBSIDIARIES FORM 10-Q FOR THE QUARTERLY PERIOD ENDED OCTOBER 3, 1999 TABLE OF CONTENTS
PAGE ---- PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) U.S. Can Corporation and Subsidiaries Condensed Consolidated Statements of Operations for the Quarterly and Nine-Month Periods Ended October 3, 1999 and October 4, 1998 3 U.S. Can Corporation and Subsidiaries Condensed Consolidated Balance Sheets as of October 3, 1999 and December 31, 1998 4 U.S. Can Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows for the Nine-Months Ended October 3, 1999 and October 4, 1998 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk 19 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 19
3 U.S. CAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (000's omitted, except per share data)
QUARTERLY PERIOD ENDED NINE-MONTHS PERIOD ENDED ------------------------------- -------------------------------- OCTOBER 3, 1999 OCTOBER 4, 1998 OCTOBER 3, 1999 OCTOBER 4, 1998 ------------------------------- -------------------------------- NET SALES $ 178,123 $ 177,920 $ 549,812 $ 553,756 COST OF SALES 152,742 154,365 470,116 483,567 ------------------------------- -------------------------------- Gross income 25,381 23,555 79,696 70,189 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 8,133 7,785 25,001 24,274 SPECIAL CHARGES - 35,869 - 35,869 ------------------------------- -------------------------------- Operating income (loss) 17,248 (20,099) 54,695 10,046 INTEREST EXPENSE ON BORROWINGS 6,841 8,251 21,758 25,391 AMORTIZATION OF DEFERRED FINANCING COSTS 278 346 898 1,110 OTHER EXPENSES 432 450 1,296 1,317 ------------------------------- -------------------------------- Income (loss) before income taxes 9,697 (29,146) 30,743 (17,772) PROVISION (BENEFIT) FOR INCOME TAXES 3,691 (11,788) 12,048 (7,301) ------------------------------- -------------------------------- Income (loss) from continuing operations before discontinued operations and extraordinary item 6,006 (17,358) 18,695 (10,471) DISCONTINUED OPERATIONS, net of income taxes Net loss on sale of discontinued business - (8,528) - (8,528) EXTRAORDINARY ITEM, net of income taxes Net loss from early extinguishment of debt (488) - (1,296) - ------------------------------- -------------------------------- NET INCOME (LOSS) $ 5,518 $ (25,886) $ 17,399 $ (18,999) =============================== ================================ PER SHARE DATA: Basic: Income (loss) from continuing operations before discontinued operations and extraordinary item $ 0.45 $ (1.30) $ 1.40 $ (0.79) Discontinued operations - (0.64) (0.64) Extraordinary item (0.04) - (0.10) - ------------------------------- -------------------------------- Net income $ 0.41 $ (1.94) $ 1.30 $ (1.43) =============================== ================================ Weighted average shares outstanding (000's) 13,477 13,325 13,396 13,245 Diluted: Income (loss) from continuing operations before discontinued operations and extraordinary item $ 0.44 $ (1.30) $ 1.38 $ (0.79) Discontinued operations - (0.64) - (0.64) Extraordinary item (0.04) - (0.10) - ------------------------------- -------------------------------- Net income $ 0.40 $ (1.94) $ 1.28 $ (1.43) =============================== ================================ Weighted average shares outstanding (000's) 13,739 13,325 13,555 13,245
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements. 4 U.S. CAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (000'S omitted, except per share data)
OCTOBER 3, DECEMBER 31, ASSETS 1999 1998 ---------- ------------ CURRENT ASSETS: Cash and cash equivalents $ 32,153 $ 18,072 Accounts receivables, less allowances of $15,470 and $17,063 as of October 3, 1999 and December 31, 1998, respectively 77,743 63,742 Inventories 83,482 94,887 Prepaid expenses and other current assets 14,655 16,011 Prepaid income taxes 22,934 22,934 ---------- ------------ Total current assets 230,967 215,646 ---------- ------------ PROPERTY, PLANT AND EQUIPMENT: Land 5,770 5,862 Buildings 62,767 63,026 Machinery, equipment and construction in process 416,087 416,940 ---------- ------------ 484,624 485,828 Less -- Accumulated depreciation and amortization (226,273) (217,826) ---------- ------------ Total property, plant and equipment 258,351 268,002 ---------- ------------ INTANGIBLE ASSETS, less amortization of $11,779 and $11,853 as of October 3, 1999 and December 31, 1998, respectively 50,632 51,928 OTHER ASSETS 18,640 19,995 ---------- ------------ Total assets $ 558,590 $ 555,571 ========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 6,176 $ 6,731 Accounts payable 69,848 52,317 Accrued payroll, benefits and insurance 33,107 31,282 Restructuring reserves 19,122 25,674 Other current liabilities 32,848 23,530 ---------- ------------ Total current liabilities 161,101 139,534 ---------- ------------ SENIOR DEBT 38,739 45,617 SUBORDINATED DEBT 236,629 264,325 ---------- ------------ Total long-term debt 275,368 309,942 ---------- ------------ OTHER LONG-TERM LIABILITIES Deferred income taxes 8,742 5,595 Other long-term liabilities 46,170 50,323 ---------- ------------ Total other long-term liabilities 54,912 55,918 ---------- ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued or outstanding - - Common stock, $0.01 par value; 50,000,000 shares authorized, 13,403,496 and 13,278,223 shares issued as of October 3, 1999 and December 31, 1998, respectively 135 133 Paid -in-capital 112,652 109,839 Unearned restricted stock (379) (829) Treasury common stock, at cost; 115,460 and 90,011 shares at October 3, 1999 and December 31, 1998, respectively (1,938) (1,728) Currency translation adjustment (4,865) (1,443) Accumulated deficit (38,396) (55,795) ---------- ------------ Total stockholders' equity 67,209 50,177 ---------- ------------ Total liabilities and stockholders' equity $ 558,590 $ 555,571 ========== ============
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these balance sheets 5 U.S. CAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (000s omitted)
NINE-MONTH PERIOD ENDED CASH FLOWS FROM OPERATING ACTIVITIES: OCTOBER 3, 1999 OCTOBER 4, 1998 --------------- --------------- Net income $ 17,399 $ (18,999) Adjustments to reconcile net income to net cash provided by operating activities -- Depreciation and amortization 25,419 29,354 Special charges - 35,869 Extraordinary loss on extinguishment of debt 1,296 - Deferred income taxes 2,240 (236) Change in operating assets and liabilities Accounts receivable (16,835) (16,214) Inventories 5,847 (334) Accounts payable 12,383 (983) Accrued payrolls and benefits, insurance and other 9,712 16,841 Postretirement benefits 1,217 1,204 Other, net 128 4,091 --------------- --------------- Net cash provided by operating activities 58,806 50,593 --------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (19,713) (12,336) Proceeds on sale of business 4,500 - Change in restricted cash - 29 Proceeds from sale of property 556 215 Investment in Formametal S.A. (1,644) - --------------- --------------- Net cash used in investing activities (16,301) (12,092) --------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock and exercise of stock options 1,959 782 Net borrowings under the revolving line of credit and changes in cash overdrafts 6,217 (24,411) Repurchase of 10 1/8% notes (27,696) - Payments of other long-term debt, including capital lease obligations (8,695) (8,621) Payments of debt refinancing costs - (134) Purchase of treasury stock, net (210) (1,585) --------------- --------------- Net cash used in financing activities (28,425) (33,969) --------------- --------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 1 (2,020) --------------- --------------- DECREASE IN CASH AND CASH EQUIVALENTS 14,081 2,512 CASH AND CASH EQUIVALENTS, beginning of year 18,072 6,773 --------------- --------------- CASH AND CASH EQUIVALENTS, end of period $ 32,153 $ 9,285 =============== ===============
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements. 6 U.S. CAN CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 3, 1999 (UNAUDITED) (1) PRINCIPLES OF REPORTING The condensed consolidated financial statements include the accounts of U.S. Can Corporation (the "Corporation"), its wholly owned subsidiary, United States Can Company ("U.S. Can") and U.S. Can's subsidiaries, all of which are foreign companies. All significant intercompany balances and transactions have been eliminated. The consolidated group including the Corporation is hereinafter referred to as the Company. These financial statements have been prepared in accordance with generally accepted accounting principles for interim reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements, in the opinion of management, include normal recurring adjustments necessary for a fair presentation. Operating results for any interim period are not necessarily indicative of results that may be expected for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission; however, management believes that the disclosures contained herein are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the previously filed financial statements and footnotes included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 1998. Generally, quarterly accounting periods are based upon two four-week periods and one five-week period. Management believes that this technique provides a more consistent view of accounting data resulting in greater comparability than the calendar month basis would provide. (2) SPECIAL CHARGES AND DISCONTINUED OPERATIONS 1997 SPECIAL CHARGES In 1998, the Company closed its Racine, Wisconsin aerosol assembly plant, the Sparrows Point litho center in Baltimore, Maryland, and the California Specialty plant in Vernalis, California. Costs associated with these actions were recorded and provided for as part of 1997 restructuring charges. In addition, the 1997 restructuring provision included a write-down to estimated proceeds for the sale of the Orlando, Florida machine engineering center ("OMEC"). The sale of OMEC was completed on January 29, 1999 for $4.5 million in cash. DISCONTINUED OPERATIONS On November 9, 1998, the Company sold its commercial Metal Services business. Final net cash proceeds were approximately $28 million including final working capital adjustments. Revenues from sales to third parties from these operations were $94.3 million in the period ending November 8, 1998 (excluding intra-company sales and ongoing third-party sales from the closed Midwest Litho facility, which were transferred to other Metal Services facilities). 1998 SPECIAL CHARGES In the third quarter of 1998, the Company established a pre-tax restructuring provision of $35.9 million for additional plant closings, implementation of a national lithography strategy, an incremental provision for the anticipated loss on the sale of OMEC mentioned previously and a reassessment of 1997 special charges. There have been no significant changes to the estimated costs or timing of the Company's restructuring estimates. Cash costs for restructuring activities in the first nine months of 1999 were $6.5 million. The Company anticipates spending another $1.5 million of such costs in 1999 and $7.6 million in cash costs in the year 2000 and beyond. The remainder of the restructuring provision primarily consists of non-cash items associated with the write-off of assets. 7 The Company continuously evaluates the composition of its various manufacturing facilities in light of current and expected market conditions and demand. While no formal plans currently exist to further consolidate plant operations, such actions may be deemed appropriate in the future. (3) ACQUISITIONS In March 1998, the Company acquired a 36.5% interest in Formametal S.A. ("Formametal"), an aerosol can manufacturer in Argentina, for $4.6 million, payable over a 15-month period. In connection with this investment, the Company provided a guaranty, in an amount not to exceed $2.0 million, to secure the repayment of certain indebtedness of Formametal. In 1999, the Company loaned Formametal $1.0 million for capital expenditures with all principal and interest payable in January 2004. In addition, the Company received a three-year option to convert this loan into additional shares of Formametal, which, if exercised, would take the Company's interest in Formametal up to 39.8%. In addition, the Company loaned Formametal an additional $0.4 million in the third quarter of 1999, for working capital investment purposes. (4) INVENTORIES All domestic inventories, except machine parts, are stated at cost determined by the last-in, first-out ("LIFO") cost method, not in excess of market. Inventories of approximately $19.9 million at December 31, 1998, and $19.5 million at October 3, 1999, at the European subsidiaries and machine shop inventory are stated at cost determined by the first-in, first-out ("FIFO") cost method, not in excess of market. FIFO cost of LIFO inventories approximated their LIFO value at December 31, 1998 and at October 3, 1999. Inventories reported in the accompanying balance sheets were classified as follows (000's omitted): OCTOBER 3, DECEMBER 31, 1999 1998 --------- ----------- Raw materials $ 18,885 $ 21,171 Work in process 37,761 42,146 Finished goods 26,836 26,848 Machine shop inventory -- 4,722 -------- -------- $ 83,482 $ 94,887 ======== ======== (5) DEBT OBLIGATIONS The primary debt obligations of the Company at October 3, 1999 and December 31, 1998 consisted of the following (000's omitted): OCTOBER 3, DECEMBER 31, 1999 1998 --------- ---------- Senior Debt Capital lease obligations $ 10,995 $ 15,511 Secured term loan 24,401 25,128 Industrial revenue bonds 7,500 7,500 Mortgages and other 2,019 4,209 --------- -------- 44,915 52,348 Less--Current maturities (6,176) (6,731) --------- -------- Total senior debt 38,739 45,617 Senior subordinated 10 1/8% notes 236,629 264,325 --------- -------- Total long-term debt $ 275,368 $309,942 ========= ======== In 1997, U.S. Can entered into an Amended and Restated Credit Agreement with a group of banks (the "Credit Agreement"), originally providing a $110 million revolving credit facility, which was reduced to $80 million in 1998 and to $50 million in April, 1999 because of the Company's reduced needs. Obligations under the Credit Agreement were secured by U.S. Can's domestic accounts receivable and inventories, however, this collateral was released in May, 1999 because of the improved credit profile of the Company. Funds available under the Credit Agreement may be used for general corporate purposes (including working capital needs and permitted acquisitions). As of December 31, 1998 and October 3, 1999, U.S. Can had no borrowings outstanding under the Credit Agreement, $12.3 million and $11.6 million, respectively, in letters of credit had been issued pursuant thereto, and $67.7 million and $38.4 million, respectively, of unused credit remained available. The weighted average interest rate of the loans outstanding was 9.90% and 9.83%, respectively. 8 In October 1996, the Corporation issued $275 million principal amount of 10 1/8% Senior Subordinated Notes due 2006 in a private placement. These notes were exchanged in March 1997 for similar notes which are publicly registered. These exchange notes (the "10 1/8% Notes") are unsecured and are subordinated to all other senior debt of the Corporation and its subsidiaries. The 10 1/8% Notes are fully and unconditionally guaranteed on an unsecured senior subordinated basis by U.S. Can. On or after October 15, 2001, the Corporation may, at its option, redeem all or some of the 10 1/8% Notes at declining redemption premiums which begin at approximately 105.1% in 2001. Upon a change of control of the Corporation, as defined, the Noteholders could require that the Corporation repurchase all or some of the 10 1/8% Notes at a 101% premium. As part of the Company's focus on debt reduction, it repurchased through the open market, and subsequently retired, $10.7 million and an additional $27.7 million of the outstanding 10 1/8% Notes through December 31, 1998 and October 3, 1999, respectively. As a result of the early redemption, there was an extraordinary charge in 1999 of $1.3 million, net of taxes of $0.8 million, which represents the redemption premiums related to the retirement of the 10 1/8% Notes and related deferred financing costs. Under the Credit Agreement, the Company can elect to repurchase up to $40.0 million of the outstanding 10 1/8% Notes. As of July 1999, the Company had purchased the maximum amount of notes allowed under the Credit Agreement. The Credit Agreement and certain of the Company's other debt agreements contain various financial and other restrictive covenants, as well as cross-default provisions. The financial covenants include, but are not limited to, limitations on annual capital expenditures and certain required ratios of borrowings to earnings before interest, taxes, depreciation and amortization ("EBITDA"), senior debt to EBITDA and interest coverage. In conjunction with the release of the collateral, certain covenants under the Credit Agreement were tightened moderately. The covenants also restrict the Company's ability to distribute dividends, to incur additional indebtedness, to dispose of assets and to consummate investments, acquisitions, mergers and affiliated transactions. The Company was in compliance with all required ratios and covenants as of October 3, 1999. (6) SUPPLEMENTAL CASH FLOW INFORMATION The Company paid interest on borrowings of approximately $18.0 million and $14.3 million for the nine-month periods ended October 4, 1998 and October 3, 1999, respectively. The Company paid approximately $1.0 million and $0.8 million of income taxes for the nine-month periods ended October 4, 1998 October 3, 1999, respectively. During the nine-month periods ended October 4, 1998 and October 3, 1999, the Company issued stock valued at approximately $0.7 million and $0.9 million, respectively, into certain of its employee benefit plans. (7) NEW ACCOUNTING PRONOUNCEMENTS SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," was issued in June 1998 and will be adopted by the Company in 2001. This new pronouncement establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that the Company recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Management of the Company does not believe this pronouncement will have a material impact upon current reporting or results. (8) SEGMENTATION The Company has established three segments by which management monitors and evaluates business performance, customer base and market share. These segments (Aerosol, Paint, Plastic & General Line and Custom & Specialty) have separate management teams and distinct product lines. The Aerosol segment has two units: United States and International. The segment produces steel aerosol containers for personal care, household, automotive, paint and industrial products. Paint, Plastic & General Line principally produces round cans for paint and coatings, oblong cans for items such as lighter fluid and turpentine, and plastic containers for industrial and consumer products. Custom & Specialty produces a wide array of functional and decorative tins, containers and other products. 9 The following is a summary of revenues from external customers and income (loss) from operations for the periods ended October 3, 1999 and October 4, 1998, respectively (000's omitted):
THREE MONTHS ENDED NINE MONTHS ENDED OCTOBER 3, OCTOBER 4, OCTOBER 3, OCTOBER 4, 1999 1998 1999 1998 --------- --------- --------- --------- REVENUES FROM EXTERNAL CUSTOMERS: Aerosol $119,787 $117,010 $372,742 $364,389 Paint, Plastic, & General Line 41,135 40,805 127,209 131,704 Custom & Specialty 17,201 20,105 49,861 57,663 -------- -------- -------- -------- Total revenues $178,123 $177,920 $549,812 $553,756 ======== ======== ======== ======== INCOME (LOSS) FROM OPERATIONS: Aerosol $ 20,976 $ 20,496 $ 66,735 $ 60,071 Paint, Plastic, & General Line 4,190 3,010 14,380 13,123 Custom & Specialty 3,016 4,064 7,070 8,857 Corporate and eliminations (10,934) (47,669) (33,490) (72,005) -------- -------- -------- -------- Total income (loss) from operations $ 17,248 $(20,099) $ 54,695 $ 10,046 ======== ========= ======== ========
(9) COMPREHENSIVE NET INCOME The components of comprehensive income for the three months and nine months ended October 3, 1999 and October 4, 1998 are as follows (000's omitted):
THREE MONTHS ENDED NINE MONTHS ENDED OCTOBER 3, OCTOBER 4, OCTOBER 3, OCTOBER 4, 1999 1998 1999 1998 --------- --------- --------- --------- Net Income $ 5,518 $(25,886) $17,399 $(18,999) Foreign Currency Translation Adjustment 3,111 2,350 (3,422) 2,001 ------- -------- ------- -------- Comprehensive Income $ 8,629 $(23,536) $13,977 $(16,998) ======= ======== ======= ========
(10) SUBSIDIARY GUARANTOR INFORMATION The 10 1/8% Notes are guaranteed on a full, unconditional, unsecured, senior subordinated, joint and several basis by each of the Corporation's Subsidiary Guarantors. As of and through October 3, 1999, U.S. Can, wholly owned by the Corporation, was the only Subsidiary Guarantor. Separate financial statements of U.S. Can are not presented because management of the Company has determined that they are not material to investors. The following condensed consolidating financial data illustrates the composition of the Corporation (the "Parent"), U.S. Can (the "Subsidiary Guarantor"), and the other subsidiaries (the "Non-Guarantor Subsidiaries"), as of December 31, 1998 and October 3, 1999, and for the nine-month periods ended October 4, 1998 and October 3, 1999. Investments in subsidiaries are accounted for by the Parent and the Subsidiary Guarantor under the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are, therefore, reflected in their parent's investment accounts and earnings. 10 U.S. CAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS Nine-Month Period Ended October 3, 1999 (Unaudited) (000's omitted)
UNITED STATES U.S. CAN CAN COMPANY USC EUROPE (NON- U.S. CAN CORPORATION (SUBSIDIARY GUARANTOR CORPORATION (PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CORSOLIDATED ----------- ------------- --------------- ------------ ------------ NET SALES $ - $424,465 $ 125,347 $ - $ 549,812 COST OF SALES - 361,358 108,758 - 470,116 ------- -------- ---------- ----------- --------- Gross income - 63,107 16,589 - 79,696 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - 18,148 6,853 - 25,001 ------- -------- ---------- ----------- --------- Operating income - 44,959 9,736 - 54,695 INTEREST EXPENSE ON BORROWINGS - 19,250 2,508 - 21,758 AMORTIZATION OF DEFERRED FINANCING COSTS - 898 - - 898 OTHER EXPENSES - 1,296 - - 1,296 EQUITY EARNINGS (LOSS) FROM SUBSIDIARY 17,399 4,772 - (22,171) - PROVISION FOR INCOME TAXES - 9,592 2,456 - 12,048 EXTRAORDINARY ITEM - LOSS ON THE EARLY EXTINGUISHMENT OF DEBT, net of income tax - (1,296) - - (1,296) ------- -------- ---------- ----------- --------- NET INCOME (LOSS) $17,399 $ 17,399 $ 4,772 $ (22,171) $ 17,399 ======= ======== ========== =========== =========
11 U.S. CAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS Nine-Month Period Ended October 4, 1998 (Unaudited) (000's omitted)
UNITED STATES U.S. CAN CAN COMPANY USC EUROPE (NON- U.S. CAN CORPORATION (SUBSIDIARY GUARANTOR CORPORATION (PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CORSOLIDATED ----------- ------------- --------------- ------------ ------------ NET SALES $ - $ 464,227 $ 89,529 $ - $553,756 COST OF SALES - 403,308 80,259 - 483,567 -------- ---------- ------------- ----------- -------- Gross income - 60,919 9,270 - 70,189 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - 21,062 3,212 - 24,274 SPECIAL CHARGES - 35,869 - - 35,869 -------- ---------- ------------- ----------- -------- Operating income - 3,988 6,058 - 10,046 INTEREST EXPENSE ON BORROWINGS - 23,428 1,963 - 25,391 AMORTIZATION OF DEFERRED FINANCING COSTS - 1,110 - - 1,110 OTHER EXPENSES - 1,317 - - 1,317 EQUITY EARNINGS (LOSS) FROM SUBSIDIARY (18,999) 2,990 - 16,009 - PROVISION (BEBEFIT) FOR INCOME TAXES - (8,406) 1,105 - (7,301) NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of income tax - (8,528) - (8,528) -------- ---------- ------------- ----------- -------- NET INCOME (LOSS) $(18,999) $ (18,999) $ 2,990 $ 16,009 $(18,999) ======== ========== ============= =========== ========
12 U.S. CAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATING BALANCE SHEET As of October 3, 1999 (Unaudited) (000s omitted)
UNITED STATES U.S. CAN CAN COMPANY USC EUROPE U.S. CAN CORPORATION (SUBSIDIARY (NON-GUARANTOR CORPORATION (PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CONSOLIDATED ----------- ------------- -------------- ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ - $ 19,725 $ 12,428 $ - $ 32,153 Accounts receivable - 51,089 26,654 - 77,743 Inventories - 63,999 19,483 - 83,482 Prepaid expenses and other assets 33,672 3,917 - 37,589 ---------- ----------- -------------- ----------- ----------- Total current assets - 168,485 62,482 - 230,967 NET PROPERTY, PLANT AND EQUIPMENT - 191,749 66,602 - 258,351 INTANGIBLE ASSETS - 50,632 - - 50,632 OTHER ASSETS 236,629 11,905 6,735 (236,629) 18,640 INVESTMENT IN SUBSIDIARIES 43,962 59,846 - (103,808) - ---------- ----------- -------------- ----------- ----------- Total assets $ 280,591 $ 482,617 $ 135,819 $ (340,437) $ 558,590 ========== =========== ============== =========== =========== CURRENT LIABILITIES Current maturities of long-term debt $ - $ 3,422 $ 2,754 $ - $ 6,176 Accounts payable - 52,335 17,513 - 69,848 Other current liabilities - 73,083 11,994 - 85,077 ---------- ----------- -------------- ----------- ----------- Total current liabilities - 128,840 32,261 - 161,101 SENIOR DEBT - 15,093 23,646 - 38,739 SUBORDINATED DEBT 236,629 236,629 - (236,629) 236,629 OTHER LONG-TERM LIABILITIES - 50,590 4,322 - 54,912 INTERCOMPANY ADVANCES (23,247) 7,503 15,744 - - STOCKHOLDERS' EQUITY 67,209 43,962 59,846 (103,808) 67,209 ---------- ----------- -------------- ----------- ----------- Total liabilities and stockholders' equity $ 280,591 $ 482,617 $ 135,819 $ (340,437) $ 558,590 ========== =========== ============== =========== ===========
13 U.S. CAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATING BALANCE SHEET As of December 31, 1998 (Unaudited) (000s omitted)
UNITED STATES U.S. CAN CAN COMPANY USC EUROPE U.S. CAN CORPORATION (SUBSIDIARY (NON-GUARANTOR CORPORATION (PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CONSOLIDATED ----------- ------------- -------------- ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ - $ 9,408 $ 8,664 $ - $ 18,072 Accounts receivable - 41,461 22,281 - 63,742 Inventories - 74,965 19,922 - 94,887 Prepaid expenses and other assets 35,856 3,089 - 38,945 ---------- ----------- -------------- ----------- ----------- Total current assets - 161,690 53,956 - 215,646 NET PROPERTY, PLANT AND EQUIPMENT - 197,677 70,325 - 268,002 INTANGIBLE ASSETS - 51,928 - - 51,928 OTHER ASSETS 270,587 6,847 6,886 (264,325) 19,995 INVESTMENT IN SUBSIDIARIES 40,383 53,144 - (93,527) - ---------- ----------- -------------- ----------- ----------- Total assets $ 310,970 $ 471,286 $ 131,167 $ (357,852) $ 555,571 ========== =========== ============== =========== =========== CURRENT LIABILITIES Current maturities of long-term debt $ - $ 3,922 $ 2,809 $ - $ 6,731 Accounts payable - 37,089 15,228 - 52,317 Other current liabilities - 67,735 12,751 - 80,486 ---------- ----------- -------------- ----------- ----------- Total current liabilities - 108,746 30,788 - 139,534 SENIOR DEBT 19,134 26,483 - 45,617 SUBORDINATED DEBT 264,325 264,325 - (264,325) 264,325 OTHER LONG-TERM LIABILITIES - 51,656 4,262 - 55,918 INTERCOMPANY ADVANCES (3,532) (12,958) 16,490 - - STOCKHOLDERS' EQUITY 50,177 40,383 53,144 (93,527) 50,177 ---------- ----------- -------------- ----------- ----------- Total liabilities and stockholders' equity $ 310,970 $ 471,286 $ 131,167 $ (357,852) $ 555,571 ========== =========== ============== =========== ===========
14 U.S. CAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS NINE-MONTH PERIOD ENDED OCTOBER 3, 1999 (Unaudited) (000s omitted)
UNITED STATES U.S. CAN CAN COMPANY USC EUROPE U.S. CAN CORPORATION (SUBSIDIARY (NON-GUARANTOR CORPORATION (PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CONSOLIDATED ----------- ------------- -------------- ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES $ - $ 52,165 $ 6,641 $ - $ 58,806 ---------- ----------- -------------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures - (16,691) (3,022) - (19,713) Proceeds on the sale of business - 4,500 - - 4,500 Proceeds on the sale of property - 556 - - 556 Investment in Formamental S.A. - - (1,644) - (1,644) ---------- ----------- -------------- ----------- ----------- Net cash used in investing activities - (11,635) (4,666) - (16,301) ---------- ----------- -------------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Change in intercompany advances (1,749) (3,993) 5,742 - - Issuance of common stock and exercise of stock options 1,959 - - - 1,959 Net borrowings under the revolving line of credit and changes in cash overdrafts - 6,014 203 - 6,217 Repurchase of 10 1/8% notes (27,696) - - (27,696) Payments of other long-term debt, including capital lease obligations - (4,539) (4,156) - (8,695) Purchase of treasury stock, net (210) - - - (210) ---------- ----------- -------------- ----------- ----------- Net cash (used in) provided by financing activities - (30,214) 1,789 - (28,425) ---------- ----------- -------------- ----------- ----------- EFFECT OF EXCHANGE RATE CHANGES ON CASH - - 1 - 1 ---------- ----------- -------------- ----------- ----------- DECREASE IN CASH AND CASH EQUIVALENTS - 10,316 3,765 - 14,081 ---------- ----------- -------------- ----------- ----------- CASH AND CASH EQUIVALENTS, beginning of year - 9,408 8,664 - 18,072 ---------- ----------- -------------- ----------- ----------- CASH AND CASH EQUIVALENTS, end of period - 19,724 12,429 - 32,153 ========== =========== ============== =========== ===========
15 U.S. CAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS NINE-MONTH PERIOD ENDED OCTOBER 4, 1998 (Unaudited) (000s omitted)
UNITED STATES U.S. CAN CAN COMPANY USC EUROPE U.S. CAN CORPORATION (SUBSIDIARY (NON-GUARANTOR CORPORATION (PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CONSOLIDATED ----------- ------------- -------------- ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES $ - $ 49,934 $ 659 $ - $ 50,593 ---------- ----------- ------------ ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures - (9,038) (3,298) - (12,336) Proceeds on the sale of property - 215 - - 215 Changes in restricted cash - 29 - - 29 ---------- ----------- ------------ ----------- ----------- Net cash used in investing activities - (8,794) (3,298) - (12,092) ---------- ----------- ------------ ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Change in intercompany advances 803 (6,694) 5,891 - - Issuance of common stock and exercise of stock options 782 - - - 782 Net borrowings under the revolving line of credit and changes in cash overdrafts - (24,197) (214) - (24,411) Payments of other long-term debt, including capital lease - obligations - (7,465) (1,156) - (8,621) Payments of debt refinancing costs - (134) - - (134) Purchase of treasury stock, net (1,585) - - - (1,585) ---------- ----------- ------------ ----------- ----------- Net cash (used in) provided by financing activities - (38,490) 4,521 - (33,969) ---------- ----------- ------------ ----------- ----------- EFFECT OF EXCHANGE RATE CHANGES ON CASH - - (2,020) - (2,020) ---------- ----------- ------------ ----------- ----------- DECREASE IN CASH AND CASH EQUIVALENTS - 2,650 (138) - 2,512 CASH AND CASH EQUIVALENTS, beginning of year - 415 6,358 - 6,773 ---------- ----------- ------------ ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ - $ 3,065 $ 6,220 $ - $ 9,285 ========== =========== ============ =========== ===========
16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following narrative discusses the results of operations, liquidity and capital resources for the Company on a consolidated basis. This section should be read in conjunction with the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein. RESULTS OF OPERATIONS On November 9, 1998, U.S. Can sold substantially all of the assets of its commercial Metal Services business and, accordingly, the Metal Services business was shown as a discontinued operation. 1998 revenues of the Metal Services business up to the point of the sale were $94.3 million. The Company also sold its machine engineering center in Orlando, Florida ("OMEC") on January 29, 1999. Revenues from this location were $8.2 million in 1998. In addition, as of November 1999, the Company continues to actively work towards the sale of its Metal Closure business which operates out of the Glen Dale, West Virginia facility. In 1998, third quarter and nine-month period revenues from this operation were $5.9 million and $ 14.3 million, respectively. Comparable revenues from this facility in the third quarter and the nine-month period ended October 3, 1999 were $4.0 million and $ 12.4 million, respectively. QUARTERLY PERIOD ENDED OCTOBER 3, 1999 VERSUS QUARTERLY PERIOD ENDED OCTOBER 4, 1998 Net Sales Net sales for the quarter ended October 3, 1999, totaled $178.1 million, a 0.1% increase versus the corresponding period in 1998. A slight increase in unit volumes, both in the U.S. and Europe, contributed to the sales increase. Along business segment lines, Aerosol net sales in the third quarter of 1999 were $119.8 million. This represented a 2.4% increase primarily due to the ramp-up of the Wales facility and increased U.S. demand. The Paint, Plastic and General Line segment had a 1.0% increase in net sales. The Custom & Specialty segment sales of $17.2 million were down 14.4% versus the third quarter of 1998. The decline in Custom & Specialty sales is due to a combination of market demand and productivity issues currently being addressed by management. Gross Income Gross income of $25.4 million for the third quarter of 1999 was up $1.8 million, or 7.8%, versus the third quarter of 1998. Gross margin increased to 14.2% of net sales for the period from 13.2% in the comparable period last year. The primary factors influencing the increase were the operating benefits being realized from the 1997 and the 1998 restructuring programs, productivity improvements in the Paint and General line segment, and increased production from the Wales operation. Along segment lines, Aerosol gross income increased from $20.5 to $21.0, or 2.4%, aided by slightly higher sales volume, the Welsh operation improvements, and the effects of consolidating manufacturing operations. Paint, Plastic and General Line gross income increased 39.2% versus the third quarter of 1998 primarily due to productivity improvements in paint and general line. Custom & Specialty gross income decreased 25.8% for the third quarter of 1999, due to the volume softness and productivity issues. Certain expenses are not allocated to specific business segments including special charges, corporate engineering costs and other miscellaneous charges. Operating Income Operating income in the third quarter of 1999 was $17.2 million versus a $(20.1) million loss in the third quarter of 1998. Operating margin increased to 9.7% of net sales. Higher gross margins in 1999 favorably impacted operating income. In 1998, the Company recorded a $35.9 million special charge, resulting in the 1998 operating loss. Refer to Note (2) to the Condensed Consolidated Financial Statements for further discussion on the special charge. Operating margin before the special charge for the period ended October 4, 1998 was 8.9% of net sales. Selling, general, and administrative expenses as a percentage of net sales were relatively flat compared to the same period a year ago. Interest and Other Expenses 17 Interest expense in the third quarter of 1999 was down 17.1%, or $1.4 million, versus the third quarter of 1998. Tighter controls on working capital and capital expenditures, coupled with strong operating cash flows, have resulted in long-term debt reductions of $61.2 million since the third quarter of last year and $35.1 million since year-end 1998. Income from Continuing Operations Third quarter income from continuing operations was $6.0 million ($ 0.44 diluted earnings per share) up $23.4 million versus the same period last year. Income from continuing operations before the special charge for the period ended October 4, 1998 was $4.1 million or $0.30 per diluted share. Positive gross margin impact, a decrease in interest expense and the $35.9 million special charge taken in the third quarter of 1998 are the primary drivers of this increase. Extraordinary Item In third quarter of 1999, the Company recorded a $0.5 million extraordinary charge (net of related income taxes of $0.3 million) relating to the early redemption premium on $3.9 million of its 10 1/8% subordinated notes and the write-off of deferred financing costs. Net Income Third quarter net income of $5.5 million ($0.40 diluted earnings per share) and $6.0 million ($0.44 diluted earnings per share) before the extraordinary item. 1998 third quarter net loss was $ (25.9) million or $(1.94) diluted earnings per share including a loss of $(2.69) per diluted share associated with the special charge and a loss of $(0.64) per diluted share for discontinued operations. The special charge taken in 1998, the sale of the discontinued Metal Services business and a positive gross margin impact are all components of the overall growth in 1999. NINE-MONTH PERIOD ENDED OCTOBER 3, 1999 VERSUS NINE-MONTH PERIOD ENDED OCTOBER 4, 1998 Net Sales Net sales for the nine-month period ended October 3, 1999, totaled $549.8 million, a 0.7% decrease versus the corresponding period in 1998. Severe heat across the continental United States in the last half of July negatively impacted demand from some of the Company's customers. Along business segment lines, Aerosol net sales in the first three quarters of 1999 were $372.7 million, 2.3% ahead of the same period last year. Stronger U.S. volumes and increased production in Wales enhanced year-to-date sales comparisons. Consistent with expectations, the Paint, Plastic and General Line segment had a slight decrease of 3.4% in net sales due to reduced customer requirements during the year. In the Custom & Specialty segment, sales were down 13.5% due principally to significant liquidation of excess holiday products in early 1998 and reduced productivity in 1999. Gross Income Gross income of $79.7 million for the nine month period in 1999 was up $9.5 million, or 13.5%, versus the corresponding period in 1998. Gross margin of 14.5% for the first three quarters of 1999 compares favorably to the 12.7% reported in the first three quarters of 1998. Improved margins reflect productivity improvements in some segments and benefits derived from restructuring programs. Aerosol gross income increased 11.0%, which is due to higher sales volume, the Welsh operation ramp-up, and the effects of consolidating manufacturing operations (as part of the restructuring plans). Paint, Plastic and General Line gross income increased 9.6% versus the first nine months of 1998 due to productivity improvements in paint and general line. Custom & Specialty gross income declined 20.1% for the nine-month period of 1999, due largely to lower sales levels and productivity declines. Certain expenses are not allocated to specific business segments including special charges, corporate engineering costs and other miscellaneous charges. Operating Income Operating income reported for the first nine months of 1999 was $54.7 million versus $10.0 million in the first nine months of 1998. Operating margin increased to 9.9% of net sales for the period from 1.8% in the comparable period last year. 1998 operating 18 income includes the $35.9 million special charge for restructuring programs. Operating margin before the special charge for the period ended October 4, 1998 was 8.3% of net sales. 1999 operating margins reflect higher gross margins, attributable in part to the restructuring actions taken as well as overhead reduction programs and productivity improvements. Selling, general, and administrative expenses as a percentage of net sales were relatively unchanged compared to the same period one year ago. Interest and Other Expenses Interest expense in the first three quarters of 1999 was down 14.3%, or $3.6 million, versus the first nine months of 1998, as a result of long-term debt reduction. Tighter controls on working capital and capital expenditures, coupled with strong operating cash flows, provided the sources for debt repayment. Income from Continuing Operations Income from continuing operations for the first nine months of 1999 was $18.7 million ($1.38 diluted earnings per share), up $29.2 million versus the same period last year. Income from continuing operations before the special charge for the nine months ended October 4, 1998 was $11.0 million or $0.82 per diluted share. The benefits realized from the restructuring charges taken in 1998, positive gross margin impact and a decrease in interest expense are the primary components of the growth. Extraordinary Item In 1999, the Company recorded a $1.3 million extraordinary charge (net of related income taxes of $0.8 million) relating to the early redemption premium and deferred financing costs on $27.7 million of its 10 1/8% subordinated notes. Net Income Net income was $17.4 million ($1.28 diluted earning per share) or $18.7 million ($1.38 diluted earnings per share) before the extraordinary item. The net loss for the nine months ended October 4, 1998 was $ (19.0) million or $ (1.43) diluted earnings per share, which included a loss of $(2.71) per diluted share associated with the special charge and a loss of $(0.64) per diluted share related to discontinued operations. The benefits realized from the restructuring charges taken in 1998, positive gross margin impact and a decrease in interest expense are the primary components of the growth. LIQUIDITY AND CAPITAL RESOURCES During the first nine months of 1999, the Company met its liquidity needs through internally generated cash flow. Principal liquidity needs included operations, debt amortization, capital expenditures and the Company's minority investment in Formametal (see Note (3) to the Condensed Consolidated Financial Statements). Cash flow from operations was $58.8 million in the first nine months of 1999, compared to $50.6 million in the first nine months of 1998. Cash outflows in the first nine months of 1999 included $6.5 million of payments related to restructuring costs. As of October 3, 1999, U.S. Can had no borrowings outstanding under the Credit Agreement, $11.6 million in letters of credit had been issued pursuant thereto, and $38.4 million of unused credit remained available thereunder. In April 1999, the revolver was reduced from $80 million to $50 million due to the Company's reduced borrowing needs. As of October 3, 1999, U.S. Can was in compliance with the Credit Agreement and its other long-term debt agreements. (See Note (5) to the Condensed Consolidated Financial Statements for a description of the Credit Agreement.) The Company expects total capital expenditures in 1999 to be approximately $30 to $33 million and has spent $19.7 million in the first nine months of the year. The 1999 expenditures include plans to install two new state-of-the-art lithography presses in the fourth quarter. The Company's capital investments have historically yielded reduced operating costs and improved the Company's profit margins, and management believes that the strategic deployment of capital will enable the Company to improve its overall profitability by leveraging the economies of scale inherent in the manufacture of containers. Management believes that cash flow from operations, amounts available under its credit facilities and proceeds from sales of assets should provide sufficient funds for the Company's short-term and long-term capital expenditure and debt amortization requirements, and other cash needs in the ordinary course of business. The Company believes it will be able to refinance the Revolving Credit Facility on or prior to maturity. The Company believes future strategic acquisition opportunities are important to its growth and should 19 they arise, the Company would expect to finance them though some combination of cash, stock and/or debt financing. YEAR 2000 Management has reviewed, evaluated and assessed the implication of the Year 2000 issue and believes that it will not pose significant operational problems for the Company. The Company divided its Year 2000 issues into four major categories, namely, corporate information technology, embedded technology in its manufacturing operations, supporting customers' and suppliers' capabilities. The Company's corporate information systems are near completion relative to the Year 2000 compliance issues and the Company does not expect any disruption in its activities. The majority of embedded technology in the manufacturing operations had been made Year 2000 compliant as of the end of the second quarter. Those systems that are not yet corrected have been identified and are in the process of being resolved, and contingency plans are being finalized. The Company has met with numerous customers and believes it has satisfied their concerns about the Company's Year 2000 readiness. Many key suppliers have been visited or surveyed and there seems to be a general state of readiness. Appropriate contingency plans are being made if the Company believes there may be a Year 2000 risk at a specific supplier. If Year 2000 issues are not identified, or assessment, remediation and testing are not effected in a timely manner, it is possible that the Year 2000 issue will materially and adversely impact the Company's results of operations. It is also possible that there will be an adverse impact on its relationships with customers, vendors, or others. Any failure to become Year 2000 compliant by banks, vendors, customers, and governmental agencies may also have an impact on the results of the Company to the extent they relate to the Company's ongoing operations and business requirements. FORWARD LOOKING STATEMENT Certain statements in this filing constitute "forward-looking statements" within the meaning of the Federal securities laws. Such statements involve known or unknown risks and uncertainties which may cause the Company's actual results, performance or achievements to be materially different than future results, performance or achievements expressed or implied in this filing. By way of example and not limitation and in no particular order, known risks and uncertainty include the timing of, and net proceeds realized from, divestitures; the timing and cost of plant closures; the level of cost reduction achieved through restructuring; the success of new technology; changes in market conditions or product demand; loss of important customers; changes in raw material costs; the effect Year 2000 may have on computer systems; and currency fluctuation. In light of these and other risks and uncertainties, the inclusion of a forward-looking statement in this filing should not be regarded as a representation by the Company that any future results, performance or achievement will be attained. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Management does not believe the Company's exposure to market risk has significantly changed since year-end 1998 and believes that such risks are immaterial. PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits INCORPORATION EXHIBIT BY REFERENCE NUMBER DESCRIPTION OF DOCUMENT (IF APPLICABLE) - ------- ------------------------------------------------------------------ 27.1 Financial Data Schedule (EDGAR version only) (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter. 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized and this report has been signed by the undersigned, in his capacity as the principal financial officer of the registrant. U.S. CAN CORPORATION Date: November 17, 1999 By: /s/ John L. Workman ----------------------------- John L. Workman Executive Vice President and Chief Financial Officer EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1999 JAN-01-1999 OCT-04-1999 $32,153 0 $77,743 15,470 83,482 230,967 484,624 (226,273) 558,590 161,101 0 0 0 135 67,074 558,590 549,812 549,812 470,116 470,116 2,194 422 21,758 30,743 12,048 18,695 0 (1,296) 0 17,399 1.30 1.28
-----END PRIVACY-ENHANCED MESSAGE-----