-----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, RlCcLq67l7s6JqgxTUwNphyS3ESNd7QS7gE3QulzPQQdKSR9L/PvTqR1bpSIY0UT QoZ3R8i7smCjE7hxhpZU7g== 0000950129-00-002309.txt : 20000512 0000950129-00-002309.hdr.sgml : 20000512 ACCESSION NUMBER: 0000950129-00-002309 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER CORP OF AMERICA CENTRAL INDEX KEY: 0000944649 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 061420850 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-91702 FILM NUMBER: 625809 BUSINESS ADDRESS: STREET 1: 700 LOUISIANA ST STREET 2: STE 4200 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7132253831 MAIL ADDRESS: STREET 1: 700 LOUISIANA ST STREET 2: SUITE 4200 CITY: HOUSTON STATE: TX ZIP: 77002 FORMER COMPANY: FORMER CONFORMED NAME: PIONEER AMERICAS INC /TX DATE OF NAME CHANGE: 19990317 FORMER COMPANY: FORMER CONFORMED NAME: PIONEER AMERICAS ACQUISITION CORP DATE OF NAME CHANGE: 19950428 10-Q 1 PIONEER CORPORATION OF AMERICA - DATED 3/31/2000 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM_________TO__________ COMMISSION FILE NUMBER 33-98828 PIONEER CORPORATION OF AMERICA (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 06-1420850 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
700 LOUISIANA STREET, SUITE 4300, HOUSTON, TEXAS 77002 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (713) 570-3200 (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 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 [ ] On April 30, 2000, there were outstanding 1,000 shares of the Registrant's Common Stock, $.01 par value. All of such shares are owned by Pioneer Companies, Inc. The Registrant meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q, and is therefore filing this form with the reduced disclosure format permitted by General Instruction (H)(2) of Form 10-Q. 2 PIONEER CORPORATION OF AMERICA TABLE OF CONTENTS PART I--FINANCIAL INFORMATION
Page ---- Item 1. Consolidated Financial Statements Consolidated Balance Sheets--March 31, 2000 and December 31, 1999 3 Consolidated Statements of Operations--Three Months Ended March 31, 2000 and 1999 4 Consolidated Statements of Cash Flows--Three Months Ended March 31, 2000 and 1999 5 Notes to Consolidated Financial Statements 6
PART II--OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9
Certain statements in this Form 10-Q regarding future expectations of the Company's business and the Company's results of operations may be regarded as "forward looking statements" within the meaning of the Securities Litigation Reform Act. Such statements are subject to various risks, including the Company's high financial leverage, the cyclical nature of the markets for many of the Company's products and raw materials and other risks. Actual outcomes may vary materially. 2 3 PART I --FINANCIAL INFORMATION PIONEER CORPORATION OF AMERICA CONSOLIDATED BALANCE SHEETS (UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
MARCH 31, DECEMBER 31, 2000 1999 ------------------ ------------------- ASSETS Current assets: Cash and cash equivalents $ 6,003 $ 2,903 Accounts receivable, net of allowance for doubtful accounts of $1,521 at March 31, 2000 and $1,592 at December 31, 1999 47,965 50,063 Inventories 24,492 23,130 Prepaid expenses 5,108 5,730 -------- -------- Total current assets 83,568 81,826 Property, plant and equipment: Land 10,622 10,622 Buildings and improvements 60,821 61,014 Machinery and equipment 332,993 333,094 Construction in progress 21,161 19,435 -------- -------- 425,597 424,165 Less: accumulated depreciation (110,940) (103,096) -------- -------- 314,657 321,069 Due from affiliates 15,567 15,231 Other assets, net of accumulated amortization of $10,567 at March 31, 2000 and $9,206 at December 31, 1999 71,869 66,965 Excess cost over fair value of net assets acquired, net of accumulated amortization 190,180 192,464 -------- -------- of $34,382 at March 31, 2000 and $32,095 at December 31, 1999 Total assets $675,841 $677,555 ======== ======== LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY IN ASSETS) Current liabilities: Accounts payable $ 25,929 $ 28,796 Accrued liabilities 35,383 30,716 Current portion of long-term debt 2,609 2,609 -------- -------- Total current liabilities 63,921 62,121 Long-term debt, less current portion 588,210 583,260 Accrued pension and other employee benefits 15,482 15,091 Other long-term liabilities 16,577 16,140 Commitments and contingencies (Note 4) Stockholder's equity: Common stock, $.01 par value, 1,000 shares authorized, issued and outstanding 1 1 Additional paid-in capital 65,483 65,483 Retained deficit (73,833) (64,541) -------- -------- Total stockholder's equity (deficiency in assets) (8,349) 943 Total liabilities and stockholder's equity (deficiency in assets) $675,841 $677,555 ======== ========
See notes to consolidated financial statements. 3 4 PIONEER CORPORATION OF AMERICA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, ---------------------- 2000 1999 -------- -------- Revenues $ 81,687 $ 68,039 Cost of sales 70,717 53,750 Gross profit 10,970 14,289 Selling, general and administrative expenses 10,828 9,408 Unusual charges 872 1,017 ------- -------- Operating income (730) 3,864 Interest expense, net (13,102) (11,917) Other income, net 128 11 Loss before taxes (13,704) (8,042) Income tax benefit (4,412) (2,331) Net loss $ (9,292) $ (5,711) ======== ======== Net loss per share $ (9,292) $ (5,711) ======== ======== Weighted average number of common shares outstanding 1 1 ======== ========
See notes to consolidated financial statements. 4 5 PIONEER CORPORATION OF AMERICA CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, ---------------------- 2000 1999 -------- -------- Operating activities: Net loss $ (9,292) $ (5,711) Adjustments to reconcile net loss to net cash from operating activities: Depreciation and amortization 12,387 12,886 Net change in deferred taxes (4,590) (2,331) Reduction in post-retirement medical expense -- (12,530) Loss on disposal of assets 872 1,057 Foreign exchange loss (gain) 25 (260) Net effect of changes in operating assets and liabilities 2,195 (388) ------- -------- Net cash flows from operating activities 1,597 (7,277) ------- -------- Investing activities: Capital expenditures (3,802) (7,270) Proceeds received from disposals of assets 529 1,143 ------- --------- Net cash flows from investing activities (3,273) (6,127) ------- --------- Financing activities: Net proceeds under revolving credit arrangements 5,538 -- Payments on long-term debt (589) (665) ------- -------- Net cash flows from financing activities 4,949 (665) ------- -------- Effect of exchange rate on cash (173) 111 ------- -------- Net change in cash 3,100 (13,958) Cash at beginning of period 2,903 50,593 ------- -------- Cash at end of period $ 6,003 $ 36,635 ======= ========
See notes to consolidated financial statements. 5 6 PIONEER CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND BASIS OF PRESENTATION The consolidated balance sheet at March 31, 2000 and the consolidated statements of operations and cash flows for the periods presented are unaudited and reflect all adjustments, consisting of normal recurring items, which management considers necessary for a fair presentation. Operating results for the first three months of 2000 are not necessarily indicative of results to be expected for the year ending December 31, 2000. The consolidated financial statements include the accounts of Pioneer Corporation of America ("Pioneer") and its consolidated subsidiaries (collectively referred to as the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. All dollar amounts in the tabulations in the notes to the financial statements are stated in thousands of dollars unless otherwise indicated. Certain amounts have been reclassified in prior years to conform to the current year presentation. The consolidated balance sheet at December 31, 1999 is derived from the December 31, 1999 audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles, since certain information and disclosures normally included in the notes to the financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission. The accompanying unaudited financial statements should be read in conjunction with the financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 1999. 2. SUPPLEMENTAL CASH FLOW INFORMATION Net effects of changes in operating assets and liabilities are as follows:
THREE MONTHS ENDED MARCH 31, ------------------------- 2000 1999 ------------------------- Accounts receivable $ 2,052 $ 5,754 Due from affiliates (446) (1,086) Inventories (1,405) (1,800) Prepaid expenses 510 (52) Other assets 825 (28) Accounts payable (2,526) (4,076) Accrued liabilities 4,562 814 Other long-term liabilities (1,377) 86 ------- ------- Net change in operating assets and liabilities $ 2,195 $ (388) ======= =======
Following are supplemental disclosures of cash flow information:
THREE MONTHS ENDED MARCH 31, ------------------------ 2000 1999 ------- ------ Cash payments for: Interest $ 4,862 $ 3,479 Income taxes $ 59 $ 351
3. INVENTORIES Inventories consist of the following:
MARCH 31, DECEMBER 31, 2000 1999 ----------- ------------- Raw materials, supplies and parts $ 15,086 $ 16,822 Finished goods and work-in-process 7,056 5,350 Inventories under exchange agreements 2,350 958 -------- -------- $ 24,492 $ 23,130 ======== ========
6 7 4. COMMITMENTS AND CONTINGENCIES The Company and its operations are subject to extensive United States and Canadian federal, state, provincial and local laws, regulations, rules and ordinances relating to pollution, the protection of the environment and the release or disposal of regulated materials. The operation of any chemical manufacturing plant and the distribution of chemical products entail certain obligations under current environmental laws. Present or future laws may affect the Company's capital and operating costs relating to compliance, may impose cleanup requirements with respect to site contamination resulting from past, present or future spills and releases and may affect the markets for the Company's products. The Company believes that its operations are currently in general compliance with environmental laws and regulations, the violation of which could result in a material adverse effect on the Company's business, properties or results of operations on a consolidated basis. There can be no assurance, however, that material costs will not be incurred as a result of instances of noncompliance or new regulatory requirements. The Company relies on indemnification from the previous owners in connection with certain environmental liabilities at its chlor-alkali plants and other facilities. There can be no assurance, however, that such indemnification agreements will be adequate to protect the Company from environmental liabilities at these sites or that such third parties will perform their obligations under the respective indemnification arrangements, in which case the Company would be required to incur significant expenses for environmental liabilities, which would have a material adverse effect on the Company. The Company is subject to various legal proceedings and potential claims arising in the ordinary course of its business. In the opinion of management, the Company has adequate legal defenses and/or insurance coverage with respect to these matters and management does not believe that they will materially affect the Company's operations or financial position. 5. PCI CHEMICALS CANADA INC. Pioneer is a holding company with no operating assets or operations. A subsidiary of Pioneer, PCI Chemicals Canada Inc. ("PCI Canada"), has outstanding $175.0 million of 9 1/4% Senior Secured Notes, due October 15, 2007. These notes are fully and unconditionally guaranteed on a joint and several basis by Pioneer and Pioneer's other direct and indirect wholly-owned subsidiaries. Together, PCI Canada and the subsidiary note guarantors comprise all of the direct and indirect subsidiaries of Pioneer. Summarized financial information of PCI Canada and the guarantors of these notes are as follows:
PCI NOTE CONSOLIDATED PCI NOTE CONSOLIDATED CANADA GUARANTORS COMPANY CANADA GUARANTORS COMPANY ------------- ------------- ------------- ------------- ------------- -------------- AS OF MARCH 31, 2000 AS OF DECEMBER 31, 1999 ----------------------------------------------- ----------------------------------------------- Current assets $ 19,463 $ 64,105 $ 83,568 $ 22,073 $ 59,753 $ 81,826 Non-current assets 158,986 433,287 592,273 160,415 435,314 595,729 Current liabilities 26,112 37,809 63,921 23,961 38,160 62,121 Non-current liabilities 189,878 430,391 620,269 184,565 429,926 614,491 FOR THE THREE MONTHS ENDED MARCH 31, 2000 FOR THE THREE MONTHS ENDED MARCH 31, 1999 ----------------------------------------------- ----------------------------------------------- Revenues $ 31,892 $ 49,795 $ 81,687 $ 26,406 $ 41,633 $ 68,039 Gross profit 5,232 5,738 10,970 4,212 10,077 14,289 Net loss (1,742) (7,550) (9,292) (1,709) (4,002) (5,711)
Separate financial statements of PCI Canada and the guarantors of the PCI Canada notes are not included as management believes that separate financial statements of these entities are not material to investors. 7 8 6. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999 Revenues. Revenues increased by $13.6 million, or approximately 20%, to $81.7 million for the three months ended March 31, 2000, as compared to the three months ended March 31, 1999. The increase in revenues was primarily attributable to higher electrochemical unit ("ECU") prices and greater volume. Cost of Sales. Cost of sales increased $17.0 million, or approximately 32%, for the three months ended March 31, 2000, as compared to the same period in 1999. $10.9 million of this increase was due to the absence of the gain on modification of the Company's retiree health care benefits during the first quarter of 1999. The remaining increase in cost of sales was principally due to greater volume and higher power costs. Gross Profit. Gross profit margin decreased to 13% in 2000 from 21% in 1999 primarily as a result of the cost of sales increase discussed above, partially offset by the ECU pricing increase. Unusual Charges. Unusual charges for the three months ended March 31, 2000 included a $0.9 million loss related to the Company's alum coagulant business in Antioch, California. Unusual charges in 1999 were primarily a loss of $1.0 million resulting from the sale of the Company's iron chlorides business in the first quarter of 1999. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $1.4 million, or approximately 15%, for the three months ended March 31, 2000. This increase was due to the absence of the gain on modification of the Company's retiree health care benefits discussed above of $1.6 million. Without this item, such expense would have experienced a slight decrease. Interest Expense, Net. Interest expense increased in 2000 as a result of interest incurred on revolving credit balances and higher variable interest rates in 2000 as compared to 1999. Net Loss. Due to the factors described above, net loss for the three months ended March 31, 2000 was $9.3 million, compared to a net loss of $5.7 million for the same period in 1999. 8 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial Data Schedule. (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarter ended March 31, 2000. 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 hereunto duly authorized. PIONEER AMERICAS, INC. May 10, 2000 By: /s/ Philip J. Ablove ------------------------------ Philip J. Ablove Executive Vice President and Chief Financial Officer 9 10 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------ ----------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 6,003 0 49,486 1,521 24,492 83,568 425,597 110,940 675,841 63,921 588,210 0 0 1 (8,350) 675,841 81,687 81,687 70,717 70,717 10,828 0 13,102 (13,704) (4,412) (9,292) 0 0 0 (9,292) (9,292) (9,292)
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