<PAGE>
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 period ended JUNE 30, 1997
----------------------
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: 1-6690
------
CONTINENTAL CAN COMPANY, INC.
------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 11-2228114
-------------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
301 Merritt 7 Corporate Park, Norwalk, CT 06856
- --------------------------------------------------------------------
(Address of principal executive offices) Zip Code
(203) 750-5900
- ----------------------------------------------
(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.
X YES NO
----- -----
The number of shares outstanding of the registrant's Common Stock ($.25 par
value) as of August 11, 1997 is 3,214,755.
<PAGE>
FORM 10-Q
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996 and June
30, 1996.
Consolidated Statements of Earnings for the Three Months Ended June 30, 1997 and
1996
Consolidated Statements of Earnings for the Six Months Ended June 30, 1997 and
1996
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997 and
1996
Notes to Consolidated Financial Statements
2
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND 1996 AND DECEMBER 31, 1996
(UNAUDITED)
(In thousands)
JUNE 30, DEC. 31, JUNE 30,
1997 1996 1996
---------- --------- ----------
ASSETS:
- -------
Current Assets:
Cash and cash equivalents $ 11,950 $ 15,020 $ 6,800
Investment securities 17,434 1,210 -
Accounts Receivable:
Trade accounts 78,411 74,677 96,476
Other 7,881 7,217 13,160
Less allowance for doubtful accounts (4,368) (4,378) (5,720)
--------- --------- ---------
Accounts receivable, net 81,924 77,516 103,916
Inventories 92,329 82,911 108,487
Prepaid expenses and other current
assets 6,340 5,938 6,530
--------- --------- ---------
TOTAL CURRENT ASSETS 209,977 182,595 225,733
--------- --------- ---------
Property, plant and equipment, at cost:
Land, building and improvements 46,678 49,788 50,775
Manufacturing machinery and equipment 202,415 216,760 273,114
Furniture, fixtures and equipment 8,649 9,434 9,757
Construction in progress 13,570 8,644 25,257
--------- --------- ---------
271,312 284,626 358,903
Less accumulated depreciation and
amortization 129,581 132,850 160,041
--------- --------- ---------
Net property, plant and equipment 141,731 151,776 198,862
Goodwill, net of accumulated 29,537 31,130 13,758
amortization
Other assets, net of accumulated
amortization 24,266 25,531 22,969
--------- --------- ---------
TOTAL ASSETS $405,511 $391,032 $461,322
========= ========= =========
See accompanying notes to consolidated financial
statements.
3
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
JUNE 30, 1997 AND 1996 AND DECEMBER 31, 1996
(UNAUDITED)
(In thousands except share data)
JUNE 30, DEC. 31, JUNE 30,
1997 1996 1996
----------- ---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
- ------------------------------------
Current Liabilities:
Short term borrowings $ 24,682 $ 8,633 $ 60,715
Accounts payable - trade 50,054 44,619 62,294
Accrued liabilities:
Employee compensation and benefits 16,901 18,421 19,585
Other accrued expenses 17,943 13,536 19,121
Current installments of long term
debt and
obligations under capital leases 10,260 5,080 26,367
Income taxes payable 750 1,710 1,778
Other current liabilities 13,336 12,299 9,843
----------- ---------- ----------
TOTAL CURRENT LIABILITIES 133,926 103,848 199,703
Long term debt, excluding current 147,687 156,373 112,475
installments
Obligations under capital leases,
excluding
current installments 13,227 14,377 15,657
Deferred income taxes 3,832 3,641 3,705
Other liabilities 28,496 32,179 29,236
----------- ---------- ----------
TOTAL LIABILITIES 327,168 310,418 360,776
Minority interest 12,698 11,990 27,315
STOCKHOLDERS' EQUITY:
- --------------------
Capital stock:
First preferred stock, cumulative $25
par value.
Authorized 250,000 shares; no - - -
shares issued.
Second preferred stock, 4%
non-cumulative,
$100 par value. Authorized 1,535
shares;
no shares issued. - - -
Common stock, $.25 par value.
Authorized 20,000,000
shares; Outstanding 3,207,638
shares in 1997,
3,201,035 shares in December 1996
and 3,196,368 shares in June 1996. 802 800 800
----------- ---------- ----------
802 800 800
Additional paid-in capital 44,095 43,997 43,945
Retained earnings 24,793 21.182 26,482
----------- ---------- ----------
69,690 65,979 71,227
Cumulative foreign currency translation
adjustment (4,045) 2,645 2,004
----------- ---------- ----------
TOTAL STOCKHOLDERS' EQUITY 65,645 68,624 73,231
----------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $405,511 $391,032 $461,322
=========== ========== ==========
See accompanying notes to consolidated financial
statements.
4
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(In thousands, except per share data)
1997 1996
------------- ----------
Sales $ 138,462 $ 141,263
Cost of sales 114,837 119,738
------------- ----------
Gross profit 23,625 21,525
Selling, general and administrative
expenses 14,523 16,463
------------- ----------
OPERATING INCOME 9,102 5,062
Other income (expense):
Interest expense, net (4,100) (5,144)
Foreign currency exchange gain 42 155
Other - net (35) 19
NET OTHER EXPENSE (4,093) (4,970)
Income before provision for income taxes
and minority interest 5,009 92
Provision for income taxes 1,413 232
------------- ----------
Income (loss) before minority interest 3,596 (140)
Minority interest 1,066 (321)
------------- ----------
NET INCOME $ 2,530 $ 181
============= ==========
NET EARNINGS PER COMMON SHARE $ 0.75 $ 0.06
============= ==========
See accompanying notes to consolidated financial
statements.
5
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(In thousands, except per share data)
1997 1996
------------ ----------
Sales $ 261,072 $ 272,645
Cost of sales 217,599 232,259
------------ ----------
Gross profit 43,473 40,386
Selling, general and administrative
expenses 28,599 32,085
------------ ----------
OPERATING INCOME 14,874 8,301
Other income (expense):
Interest expense, net (8,115) (9,821)
Foreign currency exchange gain 70 222
Other - net (1) 33
------------ ----------
NET OTHER EXPENSE (8,046) (9,566)
------------ ----------
Income (loss) before provision for
income taxes
and minority interest 6,828 (1,265)
Provision for income taxes 1,886 95
------------ ----------
Income (loss) before minority interest 4,942 (1,360)
Minority interest 1,322 (1,100)
------------ ----------
NET INCOME (LOSS) $ 3,610 $ (260)
============ ==========
NET EARNINGS (LOSS) PER COMMON SHARE $ 1.08 $ (0.08)
============ ==========
See accompanying notes to consolidated financial
statements.
6
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(In thousands)
1997 1996
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 3,609 $ (260)
Depreciation and amortization 10,560 17,226
Minority interest 1,332 (1,100)
Other adjustments (14,924) (14,827)
----------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 577 1,039
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,886) (20,510)
Other (16,114) (273)
----------- ----------
NET CASH USED IN INVESTING ACTIVITIES (22,000) (20,783)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from long term debt 769 3,165
Net proceeds from short term borrowings 16,641 14,492
Other 1,860 78
----------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 19,270 17,735
Effect of exchange rate changes on cash (917) (116)
----------- ----------
Decrease in cash and cash equivalents (3,070) (2,125)
Cash and cash equivalents at beginning of period 15,020 8,925
----------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,950 $ 6,800
=========== ==========
See accompanying notes to consolidated financial
statements.
7
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(1) Accounting Policies and Other Matters
(a) Basis of Presentation
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's 1996 Annual Report to Stockholders.
(b) Adjustments
The results for the interim period reported herein have not been
audited; however, in the opinion of management, all adjustments
necessary for a fair presentation of the interim period statements have
been made.
(c) Earnings Per Common Share
Earnings per common share is based on the weighted average number of
common and common equivalent shares outstanding. Common equivalent
shares include dilutive stock options (using the treasury stock method)
exercisable under the Company's option plans. Weighted average shares
outstanding in the second quarter of 1997 and 1996 were 3,359,120 and
3,283,646, respectively and for the first six months of 1997 and 1996
were 3,356,773 and 3,284,837, respectively.
(2) Inventories
Inventories consist principally of packaging materials. The components of
inventory were as follows: (000's omitted)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1997 1996 1996
---------- ---------- ---------
In thousands
<S> <C> <C> <C>
Raw materials & supplies $35,912 $40,785 $ 44,246
Work in process 9,476 6,627 11,646
Finished goods 51,188 39,746 54,620
---------- ---------- ---------
$96,576 $87,158 $110,512
LIFO reserve (4,247) (4,247) (2,025)
---------- ---------- ---------
$92,329 $82,911 $108,487
========== ========== =========
</TABLE>
8
<PAGE>
(3) Property, Plant and Equipment
Effective January 1, 1997, the Company revised its estimates of the useful
lives of certain machinery and equipment. These changes were made to better
reflect the estimated periods during which these assets will remain in
service. For the quarter and six months ended June 30, 1997, the change had
the effect of decreasing depreciation expense by $1,246,000 and $2,520,000,
respectively. After adjusting for an assumed tax rate of 35% and minority
interest, this change increased net income by $457,000 ($0.14 per share) for
the second quarter and $1,158,560 ($0.35 per share) for the first six months
of 1997.
(4) Restructuring charges
During the second quarter of 1996, the Company's subsidiary, PCI, recorded a
charge of $1,100,000 in connection with a plan to consolidate certain
manufacturing operations. The charge is included in selling, general and
administrative expense and reflects primarily severance costs from workforce
reductions, write-down of excess equipment and non-cancellable lease
obligations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Net sales during the second quarter of 1997 decreased 2% to $138,462,000,
as compared to $141,263,000 in the second quarter of 1996. Net sales in the
first six months of 1997 decreased approximately 4% to $261,072 ,000 from
$272,645,000 in the same prior year period. Sales were negatively impacted by
the effect of foreign currency translation rate differences which reduced
reported sales by the Company's European operations by approximately $13.8
million in the first six months of 1997 and $7.4 million in the second quarter
of 1997 versus the same periods in 1996. Sales were positively impacted by
resin price increase pass-throughs which increased sales by $11.6 million in the
first six months of 1997 and $6.3 million in the second quarter of 1997, as
compared to the same prior year periods. The deconsolidation of Onena resulted
in a sales reduction of approximately $5.7 million and $11.2 million in the
second quarter and first six months of 1997 compared to the same periods in
1996.
Gross profit was higher in each period of 1997 than the same prior year
period and gross profit as a percentage of sales increased to 16.7% from 14.8%
in the first six months of 1997, compared to 1996. Gross profit as a percentage
of sales increased to 17.1% in the second quarter of 1997, from 15.2% in the
second quarter of 1996. These changes primarily reflect the benefits of the
restructuring implemented in prior years and current and past cost reductions.
In addition, in January 1997 the Company revised its estimates of the useful
lives of certain machinery and equipment to better reflect the estimated periods
during which these assets will be in service. The change had the effect of
reducing depreciation expense by $1,246,000 and $2,520,000 in the second quarter
and first six months of 1997 as compared to the same prior year periods.
Selling, general and administrative expense as a percentage of sales
decreased to 11.0% in the first six months of 1997 from 11.8% in the same prior
year period. Selling, general and administrative expense as a percentage of
sales decreased to 10.5% in the second quarter of 1997 from 11.8% in the second
quarter of 1996. In addition, in the second quarter of 1996, a $1.1 million
restructuring charge for a plant closing at PCI is included in selling, general
and administrative expense. Because of these various factors, operating income
amounted to $9,102,000 and $14,874,000 in the second quarter and first six
months of 1997, respectively, as compared to and $5,062,000 and $8,301,000 in
the second quarter and first six months of 1996, respectively.
9
<PAGE>
Net interest expense decreased to $4,100,000 in the second quarter of 1997
from $5,144,000 in 1996. Net interest expense decreased to $8,115,000 in the
first six months of 1997 as compared to $9,821,000 in the same period of 1996.
The reductions reflect an increase in interest-bearing assets, lower debt levels
and lower interest rates in 1997 compared to 1996.
Provision for income taxes amounted to $1,413,000 and $1,886,000 in the
second quarter and first six months of 1997, respectively, as compared to
$232,000 and $95,000 in the second quarter and first six months of 1996.
Minority interest during each period reflects the interests of other
shareholders in some of the Company's subsidiaries. During the second quarter
of 1997 an outstanding convertible bond at Ferembal, S.A. (Ferembal) was
converted into equity reducing the Company's ownership of Ferembal to 64% from
85%.
Net income amounted to $2,530,000 ($0.75 per share) in the second quarter
of 1997 and $3,610,000 ($1.08 per share) in the first six months of 1997. Net
income amounted to $181,000 ($.06 per share) in the second quarter of 1996 and
net loss amounted to $260,000 ($.08 per share) in the first six months of 1996.
FINANCIAL CONDITION
- -------------------
CAPITAL REQUIREMENTS
The Company acquired $2.6 million and $5.9 million of capital assets during
the second quarter and first six months of 1997, respectively, consisting
primarily of packaging equipment. These assets were acquired for cash. Similar
types of assets are expected to be acquired for the remainder of 1997 and total
annual capital expenditures are expected to amount to approximately $22 million.
In April 1997 the holder of $1.8 million principal amount of convertible
bonds in Ferembal converted such bonds into stock representing 25% of the equity
of Ferembal. As a result of the conversion the Company's ownership interest in
Ferembal was reduced to 64%.
The Company intends to actively pursue acquisition possibilities in 1997.
It is presently the Company's intention to finance any acquisitions by
leveraging the assets of the business to be acquired, with existing cash,
through bank borrowings or, possibly, through the issuance of stock.
LIQUIDITY
The Company's liquidity position declined slightly during the first six
months of 1997. Working capital decreased to approximately $76.1 million, and
the current ratio amounted to 1.59 at June 30, 1997 compared to 1.76 at December
31, 1996.
For the six months ended June 30, 1997, net cash provided by operating
activities amounted to $577,000. Operating activities also funded a large
increase in inventories. The Company's inventories and accounts receivable
increase in the second and third quarters of each year primarily as a result of
the seasonality of Ferembal's business which peaks at these periods because of
the harvest of vegetable crops for canning. Net cash used in investing
activities amounted to $22 million during the first six months of 1997 including
$5.9 million for capital expenditures. Most of the cash used for investments,
which consist primarily of short-term interest-bearing assets, was generated by
PCI. Most of the cash generated by short-term borrowings was used by Ferembal
for inventory and receivables. The Company expects that, as Ferembal collects
receivables and reduces its seasonally high inventories relating to vegetable
canning, these short term borrowings will be repaid.
10
<PAGE>
At June 30, 1997, the Company had an available credit line under a
Revolving Credit Agreement of $1 million. In addition, the Company's
consolidated subsidiaries had available approximately $75 million in credit
lines and bank overdraft facilities at June 30, 1997. However, the Company's
ability to draw upon these lines for other than its subsidiaries' needs is
restricted.
The Company expects that cash from operations and its existing banking
facilities will be sufficient to meet its operating needs for the remainder of
1997.
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
At the annual meeting of stockholders on May 21, 1997, of the 3,109,827 shares
(97%) represented at the meeting, 2,469,536 votes were cast in favor of the
election as directors of each of Messrs. D. Bainton, K. Bainton, R. Bainton,
Benson, DiGiovanna, Greeven, O'Neill, Serrell, Utting, Yazgi and J.L. Zapata.
Votes withheld were 640,291for each person.
In addition, a proposal to amend the Certificate of Incorporation to classify
the Board of Directors into three classes, each class consisting of
approximately one-third of the total number of authorized directors and being
elected every third year for a third year term was approved. Votes in favor of
the proposal numbered 1,694,438; votes against were 771,318; and, votes
abstaining were 3,733.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits Required
<TABLE>
<S> <C>
(3) Articles of Incorporation as amended............................................... Page 13
(10) Employment Agreement with Donald J. Bainton as Amended May 21, 1997................ Page 17
(11) Statement re computation of per share earnings....................... See Note 1(c) on Page 8
(27) Financial Data Schedule............................................................ Page 19
</TABLE>
All other items for which provision is made in the applicable regulations
of the Securities and Exchange omission have been omitted as they are not
required under the related instructions or they are inapplicable.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended June 30,
1997.
11
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONTINENTAL CAN COMPANY, INC.
(REGISTRANT)
By: /s/ Abdo Yazgi
--------------
Principal Financial Officer
and on behalf of registrant
DATED: AUGUST 11, 1997
12
<PAGE>
EXHIBIT 3
CERTIFICATE OF INCORPORATION
OF
CONTINENTAL CAN COMPANY, INC.
(FORMERLY VIATECH, INC.)
FIRST: The name of the corporation is Continental Can Company, Inc. (as amended
10/20/92)
SECOND: The address of the corporation's registered office in the State of
Delaware is 100 West 10th Street, City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of capital stock which the corporation shall
have authority to issue is 20,251,535, divided into (a) 250,000 shares, of the
par value of $25 each, of a class designated First Cumulative Preferred Stock,
(b) 1,535 shares, of the par value of $100 each, of a class designated 4% Non-
cumulative Second Preferred Stock, and (c) 20,000,000 shares of the par value of
$.25 each, of a class designated Common Stock.
A statement of the voting power, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, in respect of the different classes of
stock of the corporation, the fixing of which by the certificate of
incorporation is desired, and the express grant of such authority as it is
desired to grant to the board of directors to fix by resolution or resolutions
any thereof in connection with the creation of one or more series of the First
Cumulative Preferred Stock are as follows:
Division A. First Cumulative Preferred Stock
(1) The First Cumulative Preferred Stock may be issued from time to time in one
or more series and with such designation for each such series as shall be stated
in the resolution or resolutions providing for the issue of each such series
adopted by the board of directors. The board of directors in any such resolution
or resolutions is authorized to fix, within the aggregate number of 250,000
shares of such First Cumulative Preferred Stock, the number of shares included
within each series and to establish the voting powers, designations, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions, of each such series, subject to the
limitations set forth in the immediately succeeding paragraphs (2), (3) and (4).
The shares of First Cumulative Preferred Stock of any one or more series may, by
the resolution or resolutions of the board of directors establishing such
series, be made convertible, at the option of the holder of record, upon such
terms and conditions as the board shall determine, into shares of such class of
stock of the corporation, or series within a class, as may be selected by the
board of directors, except a class having rights or preferences as to dividends
or distribution of assets upon liquidation, dissolution or winding up which are
prior or superior in rank to those of the shares of stock being converted.
(2) No dividend shall be declared or paid on the 4% Non-cumulative Second
Preferred Stock or the Common Stock, nor shall any other distribution on such 4%
Non-cumulative Second Preferred Stock or Common Stock be made by way of
purchase, redemption or otherwise, unless there shall have been paid, or
declared and set aside for payment, all dividends on any series of First
Cumulative Preferred Stock for any
13
<PAGE>
past quarterly, semi-annual or other payment period established by the
resolution or resolutions of the board of directors creating such series,
together with all past sinking fund installments on the First Cumulative
Preferred Stock, if any.
(3) In the event of any liquidation, dissolution or winding up of the
corporation, the assets shall first be distributed to the holders of record of
the First Cumulative Preferred Stock until such holders have received a sum
equal to the par value thereof, plus dividends accrued to the date of
distribution. No series of any First Cumulative Preferred Stock shall be
entitled to receive any premium in case of any liquidation, dissolution or
winding up of the corporation.
(4) If the stated dividends and amounts payable on liquidation, dissolution or
winding up on all series of First Cumulative Preferred Stock are not paid in
full, the shares of all series of the First Cumulative Preferred Stock shall
share ratably in the payment of dividends including accumulations, if any, in
accordance with the sums which would be payable on such shares if all dividends
were declared and paid in full, and in any distribution of assets other than by
way of dividends in accordance with the sums which would be payable on such
distribution if all sums payable were discharged in full.
Division B. 4% Non-cumulative Second Preferred Stock
(1) Subject to the preferential rights of the First Cumulative Preferred Stock,
the holders of record of shares of the 4% Non-cumulative Second Preferred Stock
shall be entitled to receive, when and as declared by the board of directors out
of funds legally available therefor, cash dividends at the rate of 4% of the par
value thereof, and no more, in each calendar year (including the calendar year
of issuance), and if not so paid in the full amount of 4% in any calendar year,
no dividends may be paid on the Common Stock in such calendar year. Such
dividend right of the 4% Non-cumulative Second Preferred Stock shall be Non-
cumulative; that is to say, if the dividend or any part thereof, whether or not
declared, is not paid on the 4% Non-cumulative Second Preferred Stock in the
calendar year to which it pertains, such dividend or unpaid portion thereof may
not be paid thereafter, regardless of whether the corporation shall have or
shall have had earnings and profits available for the purpose.
(2) In the event of any liquidation, dissolution or winding up of the
corporation, the assets shall, after satisfaction of the preferential rights of
the First Cumulative Preferred Stock, be distributed to the holders of record of
the 4% Non-cumulative Second Preferred Stock until such holders have received a
sum equal to the par value thereof, plus an amount equal to the full dividend on
the 4% Non-cumulative Second Preferred Stock for the year in which the first
distribution is made (unless previously paid), whether or not declared, together
with the amount of any dividend theretofore declared and not paid.
(3) Subject to the preferential rights of the First Cumulative Preferred Stock,
the 4% Non-cumulative Second Preferred Stock may be redeemed as a whole at any
time or in part from time to time at the option of the corporation upon 15 days'
notice in writing to the holders of record of the shares to be redeemed. The
redemption price shall be $102.50 per share, plus an amount equal to the full
dividend on the 4% Non-cumulative Second Preferred Stock for the year in which
redemption occurs (unless previously paid), whether or not declared. No 4% Non-
cumulative Second Preferred Stock may be redeemed unless at the redemption date
the full dividend on all shares of 4% Non-cumulative Second Preferred Stock for
the current calendar year shall have been declared and paid. From and after the
date fixed for redemption unless the corporation shall default of the redemption
price, the shares of 4% Non-cumulative Second Preferred Stock shall cease to be
outstanding for any purpose, and the holders shall have no right with respect
thereto except to receive payment of the redemption price. If less than all
shares of the 4% Non-cumulative Second Preferred Stock are being redeemed, the
shares to be redeemed shall be selected pro rata or by lot as the board of
directors may determine.
14
<PAGE>
(4) The holders of the 4% Non-cumulative Second Preferred Stock shall be
entitled to one vote for each share of 4% Non-cumulative Second Preferred Stock
standing in the name of such holders on the record of stockholders and, except
as to matters which under applicable law require the vote of the 4% Non-
cumulative Second Preferred Stock as a class, shall vote with the holders of
Common Stock as a single class.
Division C. Common Stock
(1) Subject to the preferential rights of the First Cumulative Preferred Stock
and the 4% Non-cumulative Second Preferred Stock to receive dividends, the
holders of record of the Common Stock shall be entitled to receive dividends
when and as declared by the board of directors out of funds legally available
therefor.
(2) After satisfaction of the preferential rights of the First Cumulative
Preferred Stock and the 4% Non-cumulative Second Preferred Stock, the remaining
assets of the corporation shall be distributed equally per share to the holders
of the Common Stock.
(3) The holders of the Common Stock shall be entitled to one vote for each
share of Common Stock standing in the name of such holders on the record of
stockholders. (as amended 5/23/88)
FIFTH: The name and mailing address of the incorporator is as follows:
Name Address
- ---- -------
Edward F. Clark, Jr. 2 Wall Street
New York, New York 10005
SIXTH: The board of directors may make, alter or repeal the by-laws of the
corporation, subject only to such limitations, if any, as may from time to time
be imposed by the by-laws.
The election of directors need not be by written ballot, except as may otherwise
be provided in the by-laws.
SEVENTH: The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in the manner now
or hereafter provided by law, and all rights conferred herein on stockholders,
directors and officers are subject to this reserved power.
EIGHTH: A member of the Board of Directors of the Corporation shall have no
personal liability to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, other than liability (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware Code, (iv) for any transaction from
which the director derived an improper personal benefit, or (v) for any act or
omission occurring prior to the date when this provision becomes effective.
(added 6/10/86)
NINTH: The Company's Board of Directors shall be divided into three classes
designated as Class A, Class B, and Class C, respectively. Directors shall be
initially designated as Class A, Class B and Class C directors at the 1997
Annual Meeting of Stockholders. At the first annual meeting of the stockholders
following the 1997 Annual Meeting, the term of office of the Class A directors
shall expire and Class A directors shall be elected for a full term of three
years. At the second annual meeting of the stockholders following the 1997
Annual Meeting, the term of office of the Class B directors shall expire and
Class B directors shall be elected for a full term of three years. At the third
annual meeting of the stockholders
15
<PAGE>
following the 1997 Annual Meeting, the term of office of the Class C directors
shall expire and Class C directors shall be elected for a full term of three
years. At each succeeding annual meeting of stockholders, directors shall be
elected for a full term of three years to succeed the directors of the class
whose terms expire at such annual meeting.
Notwithstanding the foregoing provisions of this Article 9, each director shall
serve until his or her successor is duly elected and qualified or until his
earlier death, resignation, or removal. No decrease in the number of directors
constituting the board of directors shall shorten the term of any incumbent
director. Vacancies on the board may be filled by the remaining directors for
the remainder of the full class term. (added 5/27/97)
16
<PAGE>
EXHIBIT 10
AMENDED EMPLOYMENT AGREEMENT made as of the 21st day of May, 1997 by and
between Donald J. Bainton (hereafter referred to as "EMPLOYEE") and Continental
Can Company, Inc. (hereafter referred to as "EMPLOYER") amending the agreement
dated July 23, 1989.
The parties hereto mutually agree as follows:
FIRST: EMPLOYEE shall be employed as Chairman and Chief Executive Officer of
EMPLOYER.
SECOND: EMPLOYEE shall be paid a salary to be determined by the Personnel
Committee of EMPLOYER'S Board of Directors, but not less than $420,000 per
annum.
THIRD: The expiration date of the non-qualified stock option to purchase
40,000 shares of the EMPLOYER'S Common Stock awarded in 1983 shall be November
15, 1998.
FOURTH: All shares of stock previously issued to EMPLOYEE in lieu of cash
compensation (except those shares which had previously been released from
forfeiture) shall remain subject to forfeiture until May 17, 2006, or such
earlier date as the Personnel Committee of EMPLOYER'S Board of Directors shall,
in the future, determine.
FIFTH: In the event that any person or associated group of persons acquires
or obtains the right to acquire beneficial ownership of shares of stock of
EMPLOYER that have 25% or more of the voting power of the outstanding shares of
stock of EMPLOYER (hereafter referred to as a CHANGE IN CONTROL), EMPLOYEE shall
have the option to deem his employment terminated.
SIXTH: EMPLOYEE may exercise the option set forth in Paragraph FIFTH by
giving written notice to EMPLOYER within five years after the public
announcement of a CHANGE IN CONTROL.
SEVENTH: Within one month after a termination of EMPLOYEE'S employment
following a CHANGE IN CONTROL, whether or not the result of the exercise of an
option pursuant to Paragraph SIXTH, EMPLOYEE shall receive from EMPLOYER a lump
sum equal to three times EMPLOYEE'S average annual total compensation during the
five years preceding the termination.
EIGHTH: EMPLOYEE shall continue to receive the same medical and life
insurance coverage EMPLOYEE received from EMPLOYER under the plans maintained by
EMPLOYER for all employees as in effect at the time of a termination of
EMPLOYEE'S employment following a CHANGE IN CONTROL, whether or not the result
of EMPLOYEE'S exercise of an option pursuant to Paragraph SIXTH until his death.
During the period she receives a payment pursuant to Paragraph TENTH EMPLOYEE'S
surviving spouse, if any, shall receive medical insurance coverage under the
plan maintained by EMPLOYER.
NINTH: In the event of EMPLOYEE'S death prior to the termination of this
Agreement, provided EMPLOYEE is then employed by EMPLOYER, EMPLOYEE'S surviving
spouse, if any, shall be paid during her life, an annual amount equal to one-
half of EMPLOYEE'S annual salary at the time of his death.
TENTH: This Agreement will terminate on May 17, 2006.
ELEVENTH: Any disputes arising under this Agreement shall be resolved by
arbitration in the City of Stamford, State of Connecticut, under the laws of the
State of Connecticut, pursuant to the rules of the American Arbitration
Association.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Agreement.
/s/ Donald J. Bainton CONTINENTAL CAN COMPANY, INC.
----------------------------------
Donald J. Bainton
By: /s/ Abdo Yazgi
-----------------------------------
Abdo Yazgi, Executive Vice President
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 11,950
<SECURITIES> 17,434
<RECEIVABLES> 86,292
<ALLOWANCES> 4,368
<INVENTORY> 92,329
<CURRENT-ASSETS> 209,977
<PP&E> 271,312
<DEPRECIATION> 129,581
<TOTAL-ASSETS> 405,511
<CURRENT-LIABILITIES> 133,926
<BONDS> 125,000
<COMMON> 802
0
0
<OTHER-SE> 64,843
<TOTAL-LIABILITY-AND-EQUITY> 405,511
<SALES> 261,072
<TOTAL-REVENUES> 261,072
<CGS> 217,599
<TOTAL-COSTS> 246,198
<OTHER-EXPENSES> 8,046
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,115
<INCOME-PRETAX> 6,828
<INCOME-TAX> 1,886
<INCOME-CONTINUING> 3,610
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,610
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.08
</TABLE>
