<PAGE> 1
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 October 2, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
- ---
For the transition period from to
Commission file number 333-28157
TEKNI-PLEX, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3286312
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
201 Industrial Parkway (908) 722-4800
Somerville, New Jersey 08876 (Registrant's telephone number)
(Address of principal executive office)
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 / /
<PAGE> 2
TEKNI-PLEX, INC.
Page #
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet as of October 2, 1998
and July 3, 1998..................................................3
Consolidated Statement of Earnings for the three months
ended October 2, 1998 and September 26, 1997......................4
Consolidated Statement of Cash Flows for the three months
ended October 2, 1998 and September 26, 1997......................5
Notes to Consolidated Financial Statements........................6-12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS........................13-15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......15
PART II. OTHER INFORMATION
Item 1. Legal proceedings...............................................16
Item 2. Changes in securities...........................................16
Item 3. Defaults upon senior securities.................................16
Item 4. Submission of matters to a vote of securities holders...........16
Item 5. Other information...............................................16
Item 6. Exhibits and reports on Form 8-K................................16
<PAGE> 3
TEKNI-PLEX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
OCTOBER 2, 1998 July 3, 1998
(UNAUDITED)
--------------- ------------
<S> <C> <C>
ASSETS
Current:
Cash $ 36,460 $ 29,363
Accounts receivable, net of allowance for
doubtful accounts of $1,344 and $1,326 respectively 57,704 88,778
Inventories 68,418 57,929
Deferred taxes 5,565 5,565
Prepaid and other current assets 13,614 9,642
--------- ---------
Total current assets 181,761 191,277
--------- ---------
Property, plant and equipment, net 126,149 128,234
Intangible assets, net of accumulated amortization
of $18,938 and $15,030 respectively 189,073 193,849
Deferred charges, net of accumulated amortization
of $2,261 and $1,768 respectively 22,212 22,791
Deferred income taxes 7,065 7,065
Other assets 3,595 3,616
--------- ---------
$ 529,855 $ 546,832
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt $ 5,305 $ 5,147
Line of credit 279 307
Accounts payable - trade 28,760 32,986
Accrued payroll and benefits 13,170 12,074
Accrued interest 1,944 8,884
Accrued liabilities - other 36,442 44,539
Income taxes payable 1,659 2,443
--------- ---------
Total current liabilities 87,559 106,380
--------- ---------
Long-term debt 395,138 396,451
Other liabilities 5,369 5,328
--------- ---------
Total liabilities 488,066 508,159
--------- ---------
Stockholder's equity:
Common stock -- --
Additional paid-in capital 41,075 41,075
Cumulative currency translation adjustment 1,576 5
Retained earnings (862) (2,407)
--------- ---------
Total stockholder's equity 41,789 38,673
--------- ---------
$ 529,855 $ 546,832
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
TEKNI-PLEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
-----------------------------
OCTOBER 2, September 26,
1998 1997
---------- -------------
<S> <C> <C>
Net sales $ 108,069 $ 37,791
Cost of goods sold 80,978 27,857
--------- ---------
Gross profit 27,091 9,934
Operating expenses:
Selling, general and administrative 13,960 4,048
--------- ---------
Operating profit 13,131 5,886
Other income (expenses) (375) (72)
Interest expense (9,607) (2,109)
--------- ---------
Earnings before income taxes 3,149 3,705
Provision for income taxes 1,606 1,400
--------- ---------
NET INCOME $ 1,543 $ 2,305
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
TEKNI-PLEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
OCTOBER 2, 1998 September 26, 1997
--------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,543 $ 2,305
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 7,899 2,423
Deferred income taxes -- (170)
Changes in operating assets and liabilities:
Accounts receivable 31,074 (1,489)
Inventories (10,489) 304
Prepaid expenses and other current assets (3,972) 619
Income taxes (776) --
Accounts payable (4,226) 1,102
Accrued interest (6,940) 2,151
Accrued expenses and other liabilities (6,960) (3,910)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,153 3,335
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,849) (1,221)
Acquisition costs 435 (2,292)
Deposits and other assets 922 2,240
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (492) (1,273)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments/borrowings of long-term debt (1,163) (201)
Repayments/borrowings under line of credit 28 --
Foreign currency translation 1,571 --
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 436 (201)
-------- --------
NET INCREASE IN CASH 7,097 1,861
CASH, BEGINNING OF PERIOD 29,363 11,095
-------- --------
CASH, END OF PERIOD $ 36,460 $ 12,956
-------- --------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest $ 15,983 $ --
-------- --------
Income taxes 433 529
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 1 - GENERAL
Tekni-Plex is a global, diversified manufacturer of packaging, products, and
materials for the healthcare, consumer, and food packaging industries. The
Company has built a leadership position in its core markets, and focuses on
vertically integrated production of highly specialized products. The Company's
operations are aligned under four primary business groups: Healthcare Packaging,
Products, and Materials; Consumer Packaging and Products; Food Packaging; and
Specialty Resins and Compounds.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. For further information please refer to the
audited financial statements and footnotes thereto included in the Company's
Annual Report on Form 10-K for the year ended July 3, 1998.
NOTE 2 - INVENTORIES
Inventories as of October 2, 1998 and July 3, 1998 are summarized as follows:
<TABLE>
<CAPTION>
OCTOBER 2, 1998 July 3, 1998
--------------- ------------
<S> <C> <C>
Raw materials $27,551 $24,427
Work-in-process 5,261 5,136
Finished goods 35,606 28,366
------- -------
$68,418 $57,929
------- -------
</TABLE>
6
<PAGE> 7
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 3 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
Three months ended
OCTOBER 2, July 3,
1998 1998
---------- -------
<S> <C> <C>
Senior Subordinated Notes issued March 3, 1998 at 9
- -1/4% due March 1, 2008 $200,000 $200,000
Senior Subordinated Notes issued April 4, 1997 at
11 -1/4% due April 1, 2007 75,000 75,000
Senior Debt:
Revolving line of credit -- --
Term notes 113,425 114,213
PS&T term notes at 11 -1/4%, Senior Secured Notes
due December 1, 2003 1,550 1,550
Loan Promissory Note collateralized by a building
in Newark, NJ 181 211
7% Subordinated Notes issued in connection with an
acquisition by PureTec, due July 1, 2005 194 662
Foreign Term Loans payable in Belgium Francs 1,348 1,265
Foreign Term Loans payable in Italian Lira 2,037 2,032
Foreign Term Loans and capitalized lease
obligations, payable in British Pounds 6,178 6,055
Foreign Line of Credit payable in British Pounds 427 492
PurePlast Line of Credit payable in Canadian
Dollars 279 307
PurePlast Term Loan payable in Canadian Dollars 52 67
Other, primarily equipment financing 51 51
-------- --------
400,722 401,905
Less: Current maturities 5,584 5,454
-------- --------
$395,138 $396,451
-------- --------
</TABLE>
7
<PAGE> 8
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 4 - CONTINGENCIES
(a) In January 1993 and 1994, the Company's Belgian subsidiary received
income tax assessments aggregating approximately $2,032 (75,247 Belgian
Francs) for the disallowance of certain foreign tax credits and
investment losses claimed for the years ended July 31, 1990 and 1991.
Additionally, in January 1995, the subsidiary received an income tax
assessment of approximately $866 (32,083 Belgian francs) for the year
ended July 31, 1992. By Belgian law, these assessments are capped at the
values above and do not continue to accrue additional penalties or
interest. Although the future outcome of these matters is uncertain, the
Company believes that its tax position was appropriate and that the
assessments are without merit. Therefore, the Company has appealed the
assessments. Based on advice of legal counsel in Belgium, the Company
believes that the assessment appeals will be accepted by the tax
authorities in Belgium, although there can be no assurance whether or
when such appeals will be accepted.
(b) The Company is a party to various other legal proceedings arising in
the normal conduct of business. Management believes that the final
outcome of these proceedings will not have a material adverse effect on
the Company's financial position.
8
<PAGE> 9
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 5 - SEGMENT INFORMATION
The Company operates in four industry segments: healthcare packaging, products,
and materials; consumer packaging and products; food packaging; and specialty
resins and compounds. The healthcare packaging, products, and materials segment
principally produces pharmaceutical packaging, medical tubing and medical device
materials. The consumer packaging and products segment principally produces
precision tubing and gaskets, and garden and irrigation hose products. The food
packaging segment produces foamed polystyrene packaging products for the
poultry, meat and egg industries. The specialty resins and compounds segment
produces specialty PVC resins. The healthcare packaging, products, and materials
and consumer packaging and products segments have operations in the United
States, Europe and Canada. Prior to 1998, the Company operated principally in
the food packaging segment.
Financial information concerning the Company's business segments and the
geographic areas in which it operated for the three months ended October 2, 1998
is as follows:
<TABLE>
<S> <C>
Net Sales:
Healthcare Packaging, Products, and Materials:
Domestic $ 30,135
Foreign 2,131
Consumer Packaging and Products:
Domestic 24,051
Foreign 8,397
Food packaging 23,732
Specialty Resins and Compounds 19,623
Corporate & eliminations --
--------
Total Net Sales $108,069
--------
</TABLE>
<TABLE>
<S> <C>
Operating Income:
Healthcare Packaging, Products, and Materials:
Domestic $ 6,150
Foreign 55
Consumer Packaging and Products:
Domestic 4,532
Foreign 2,428
Food packaging 4,042
Specialty Resins and Compounds 2,575
Corporate & eliminations (6,651)
--------
Total Operating Income $ 13,131
--------
</TABLE>
9
<PAGE> 10
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
<TABLE>
<S> <C>
Depreciation and Amortization:
Healthcare Packaging, Products, and Materials:
Domestic $1,284
Foreign 126
Consumer Packaging and Products:
Domestic 1,656
Foreign 378
Food packaging 2,772
Specialty Resins and Compounds 1,335
Corporate & eliminations 348
------
Total Depreciation and Amortization $7,899
------
</TABLE>
<TABLE>
<S> <C>
Capital Expenditures:
Healthcare Packaging, Products, and Materials:
Domestic $ 509
Foreign 64
Consumer Packaging and Products:
Domestic 394
Foreign 203
Food packaging 590
Specialty Resins and Compounds 71
Corporate & eliminations 18
--------
Total Capital Expenditures $ 1,849
--------
</TABLE>
<TABLE>
<S> <C>
Identifiable Assets:
Healthcare Packaging, Products, and Materials:
Domestic $ 64,077
Foreign 14,591
Consumer Packaging and Products:
Domestic 163,163
Foreign 43,011
Food packaging 134,554
Specialty Resins and Compounds 90,863
Corporate & eliminations 19,596
--------
Total Identifiable Assets $529,855
--------
</TABLE>
10
<PAGE> 11
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 6 - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Consolidated Statement of Earnings
(Unaudited)
For the three months ended October 2, 1998
<TABLE>
<CAPTION>
Non-
Total Issuer Guarantors Guarantors
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 108,069 $ 36,026 $ 61,515 $ 10,528
Cost of goods sold 80,978 27,149 46,682 7,147
--------- --------- --------- ---------
Gross profit 27,091 8,877 14,833 3,381
Operating expenses
Selling, General and administrative 13,960 6,467 6,595 898
--------- --------- --------- ---------
Operating profit 13,131 2,410 8,238 2,483
Other income (expenses) (375) (80) 325 (620)
Interest expense (9,607) (9,509) (52) (46)
--------- --------- --------- ---------
Earnings before income taxes 3,149 (7,179) 8,511 1,817
Provision for income taxes 1,606 (3,590) 4,446 750
--------- --------- --------- ---------
Net income $ 1,543 $ (3,589) $ 4,065 $ 1,067
========= ========= ========= =========
</TABLE>
11
<PAGE> 12
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Condensed Consolidated Balance Sheet
(Unaudited)
October 2, 1998
<TABLE>
<CAPTION>
Non-
Total Eliminations Issuer Guarantors Guarantors
--------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Current assets $ 181,761 $(118,223) $ 165,613 $ 95,794 $ 38,577
Property, plant and equipment, net 126,149 -- 40,370 68,974 16,805
Intangible assets 189,073 -- 28,891 158,704 1,478
Investment in subsidiaries -- (333,498) 333,498 -- --
Deferred charges 22,212 -- 21,715 -- 497
Other assets 10,660 -- 18,962 (8,547) 245
--------- --------- --------- --------- ---------
Total assets $ 529,855 $(451,721) $ 609,049 $ 314,925 $ 57,602
========= ========= ========= ========= =========
Current liabilities $ 87,559 $(107,276) $ 36,988 $ 145,187 $ 12,660
Long-tern debt 395,138 -- 385,276 1,743 8,119
Other long-term liabilities 5,369 (7,547) 141,294 (145,428) 17,050
--------- --------- --------- --------- ---------
Total liabilities 488,066 (114,823) 563,558 1,502 37,829
--------- --------- --------- --------- ---------
Additional paid-in capital 41,075 (312,408) 41,095 296,747 15,641
Retained earnings (862) (24,490) 4,396 16,676 2,556
Cumulative currency translation adjustment 1,576 -- -- -- 1,576
--------- --------- --------- --------- ---------
Total equity 41,789 (336,898) 45,491 313,423 19,773
--------- --------- --------- --------- ---------
Total liabilities and equity $ 529,855 $(451,721) $ 609,049 $ 314,925 $ 57,602
========= ========= ========= ========= =========
</TABLE>
12
<PAGE> 13
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FIRST QUARTER OF FISCAL 1999 COMPARED WITH THE FIRST QUARTER OF FISCAL 1998
Net Sales increased to $108.1 million for the three months ended October 2, 1998
from $37.8 million for the three months ended September 26, 1997. This
represents an increase of $70.3 million or 186.0%. The increased sales are
primarily attributed to the acquisition of PureTec in March 1998.
Cost of Goods Sold increased to $81.0 million for the three months ended October
2, 1998 from $27.9 million for the three months ended September 26, 1997,
primarily due to the acquisition of PureTec. Expressed as a percentage of net
sales, cost of goods sold increased to 74.9% for the three months ended October
2, 1998 from 73.7% for the three months ended September 26, 1997. The increase
in cost of goods sold as a percentage of net sales was due primarily to the
different sales mix associated with the purchase of PureTec.
Gross Profit as a result, increased to $27.1 million or 25.1% of net sales for
the three months ended October 2, 1998, from $9.9 million or 26.3% of net sales
for the three months ended September 26, 1997.
Selling, general and administrative expenses increased to $14.0 million or 12.9%
of net sales for the three months ended October 2, 1998 from $4.0 million or
10.7% of net sales for the three months ended September 26, 1997. Selling,
general and administrative expenses increased as a percentage of net sales due
primarily to the acquisition of PureTec, as well as increased administrative
costs and higher selling expenses associated with the global expansion of the
Company's healthcare packaging products.
Operating profit increased to $13.1 million or 12.2% of net sales for the three
months ended October 2, 1998, from $5.9 million or 15.6% for the three months
ended September 26, 1997, due primarily to the different sales mix associated
with the purchase of PureTec as stated above.
Interest expense increased to $9.6 million or 8.9% of net sales for the three
months ended October 2, 1998, from $2.1 million or 5.6% of net sales for the
same period in the prior year. This is due to the issuance of bonds and notes to
acquire PureTec.
Provision for income taxes increased to $1.6 million or 1.5% of net sales for
the three months ended October 2, 1998, from $1.4 million or 3.7% for the same
period in the prior year. The Company's effective tax rate was 51% for the three
months ended October 2, 1998 compared to 38% for the same period in the prior
year. The increase in effective tax rate between periods is due primarily to
non-deductible amortization and the depletion of tax carryover losses and
credits from prior acquisitions.
Net income decreased to $1.5 million or 1.4% of net sales for the three months
ended October 2, 1998, from $2.3 million or 6.1% of net sales for the same
period in the prior year, due primarily to the impact of acquiring PureTec, as
discussed above.
13
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended October 2, 1998, net cash provided by operating
activities was $7.2 million compared to $3.3 million for the same period in the
prior year. This was due primarily to the acquisition of PureTec.
Working capital at October 2, 1998 was $94.2 million compared to $84.9 million
at July 3, 1998. The increase in working capital was due primarily to the
decrease in accounts payable, accrued expenses, and increased inventory,
partially offset by normal seasonal decreases in accounts receivable.
As of October 2, 1998 and July 3, 1998, there was no outstanding balance under
the $90 million revolving credit line of the Existing Credit Facility.
The Company's capital expenditures for the three months ended October 2, 1998
and September 26, 1997 were $1.8 million, and $1.2 million respectively.
Management expects that annual capital expenditures will increase from
historical levels during the next few years as the Company makes improvements in
the recently acquired operations.
Apart from acquisitions, the Company's principal uses of cash for the next
several years will be debt service, capital expenditures and working capital
requirements. Management believes that cash generated from operations plus funds
from the credit facility will be sufficient to meet the Company's expected debt
service requirements, planned capital expenditures, and operating needs.
However, there can be no assurance that sufficient funds will be available from
operations or borrowings under the credit facility to meet the Company's cash
needs to the extent management anticipates. The credit facility will provide the
Company with the increased flexibility to make capital expenditures and
acquisitions that management believes will provide an attractive return on
investment. To the extent the Company pursues future acquisitions, the Company
may be required to obtain additional financing. There can be no assurance that
it will be able to obtain such financing in amounts and on terms acceptable to
it.
YEAR 2000 ISSUES
Definition: "Year 2000 issues" refer to possible events resulting directly or
indirectly from the inability of digital computer equipment or software to
accurately and without interruption handle dates both before and after January
1, 2000 and to process the year 2000 as a leap year.
Assessment: Tekni-Plex is currently evaluating the potential impact and
remediation costs of Year 2000 issues. Although this assessment is not yet
complete, the Company believes that, due to the nature of its manufacturing
processes and procedures, the Year 2000 issues will not have a material impact
on its business.
Manufacturing Infrastructure: The Company's basic operations involve certain
plastics converting processes. These processes involve primarily plastic
extrusion and compounding equipment of various forms. For the most part, this
equipment is controlled either manually or by means of mechanical and analog
devices. For equipment that does include microprocessors, the applications being
controlled are mechanical and not date-sensitive, and can be controlled manually
if necessary. In its investigations thus far, the Company has identified no
significant manufacturing processes that would be disabled by a total loss of
digital computer components.
Support Systems: The Company's assessment does indicate that there may be
support systems, such as accounting systems, that may be affected by the Year
2000 issues. The Company believes that it has identified most of the major
computers, software applications, and other equipment utilized by such support
systems that must be
14
<PAGE> 15
modified, upgraded, or replaced to minimize the possibility of any disruption of
business. The Company has commenced the process of modifying, upgrading, and
replacing major systems that may be adversely affected, and expects to complete
this process before the occurrence of any significant disruption of business.
However, to a large extent, this includes replacing systems of acquired
businesses, which was previously planned as part of the Company's normal
integration strategy. Therefore, additional costs that will be incurred solely
due to Year 2000 issues are not expected to be significant. In addition, the
Company does routine data backup of critical systems during the normal course of
business. This backup provides the ability to recover data in the event of a
catastrophic computer failure. It is the Company's belief that its customers and
suppliers, for the most part, have similar data safeguards in place.
Suppliers: The Company is in the process of contacting its suppliers to identify
any potential disruption in the supply of raw materials. The Company expects to
resolve any significant Year 2000 issues before the occurrence of any business
disruptions, although the Company has limited or no control over the actions of
these suppliers. However, the Company believes that the supply of basic
chemicals and other raw materials used in its vertically integrated
manufacturing processes is unlikely to be significantly disrupted. In addition,
the Company, in the normal course of business, maintains adequate inventories of
such raw materials to protect against short-term delivery interruptions.
Customers: Tekni-Plex is committed to providing uninterrupted service to its
customers. In a few cases, the Company has direct interfaces with the computer
systems of its customers, primarily for "vendor managed inventory" applications.
The Company expects to resolve any significant Year 2000 issues with such
customers before the occurrence of any business disruptions, although the
Company has limited or no control over the actions of these customers. The
Company expects to maintain adequate finished goods inventories to protect
customers against the possibility of temporary computer interface interruptions,
if any.
Conclusion: Tekni-Plex expects to find and adequately prepare for all
significant internal Year 2000 issues that could adversely affect its business
operations. The Company does not anticipate that the cost of resolving such
problems will be material to its financial results. However, the Company does
not believe that it is possible to identify, with complete certainty, all
potential Year 2000 issues that may in some way affect the Company, its
suppliers, or its customers. The Company expects that any disputes arising as
the result of such unidentified Year 2000 issues will be resolved in the normal
course of business.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
15
<PAGE> 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is party to certain litigation in the ordinary course of
business, none of which the Company believes is likely to have a
material adverse effect on its consolidated financial position or
results of operations.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Securities holders
Not applicable
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27
(b) Reports on Form 8-K
None
16
<PAGE> 17
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.
TEKNI-PLEX, INC.
November 10, 1998
By: /s/ F. Patrick Smith
----------------------------------------------
F. Patrick Smith
Chairman of the Board and
Chief Executive Officer
By: /s/ Kenneth W.R. Baker
----------------------------------------------
Kenneth W. R. Baker
President and Chief Operating Officer
and Principal Accounting and Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TEKNI-PLEX,
INC. STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED OCTOBER 2, 1998 AND
BALANCE SHEET AS OF OCTOBER 2, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-02-1999
<PERIOD-START> JUL-04-1998
<PERIOD-END> OCT-02-1998
<CASH> 36,460
<SECURITIES> 0
<RECEIVABLES> 59,048
<ALLOWANCES> 1,344
<INVENTORY> 68,418
<CURRENT-ASSETS> 181,761
<PP&E> 148,914
<DEPRECIATION> 22,765
<TOTAL-ASSETS> 529,855
<CURRENT-LIABILITIES> 87,559
<BONDS> 275,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 529,855
<SALES> 108,069
<TOTAL-REVENUES> 108,069
<CGS> 80,978
<TOTAL-COSTS> 80,978
<OTHER-EXPENSES> 13,960
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,607
<INCOME-PRETAX> 3,149
<INCOME-TAX> 1,606
<INCOME-CONTINUING> 1,543
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,543
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
