<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 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 001-14171
C2, INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter.)
Wisconsin 39-1915787
(State of Incorporation) (IRS Employer Identification No.)
700 N. Water Street, Suite 1200, Milwaukee, Wisconsin 53202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 291-9000
--------------
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock $1.00 par value 5,081,864
---------------------------- --------------------------------
(Class) (Outstanding at August 9, 2000.)
Page 1 of 13 total pages No exhibits are filed with this report.
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
C2, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
JUNE 30, DECEMBER 31,
2000 1999
-------------- ---------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 3,344,000 $ 4,953,000
Accounts receivable, net 18,660,000 18,016,000
Inventories 6,801,000 6,428,000
Prepaids and other 2,302,000 1,821,000
-------------- ---------------
Total Current Assets 31,107,000 31,218,000
-------------- ---------------
Long-Term Assets:
Fixed assets, net 76,622,000 73,495,000
Goodwill 16,307,000 17,102,000
Other assets 1,878,000 1,812,000
-------------- ---------------
Total Long-Term Assets 94,807,000 92,409,000
-------------- ---------------
$ 125,914,000 $ 123,627,000
============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Current portion of long-term debt $ 500,000 $ 500,000
Short term debt 4,510,000 2,770,000
Accounts payable 9,573,000 8,764,000
Accrued liabilities 9,334,000 10,349,000
-------------- ---------------
Total Current Liabilities 23,917,000 22,383,000
-------------- ---------------
Long-Term Liabilities:
Long-term debt 66,493,000 66,373,000
Other liabilities 1,151,000 1,059,000
-------------- ---------------
Total Long-Term Liabilities 67,644,000 67,432,000
-------------- ---------------
Total Liabilities 91,561,000 89,815,000
-------------- ---------------
Minority Shareholders' Interests 7,665,000 7,742,000
Shareholders' Equity:
Preferred stock, par value $.01 per share, -- --
10,000,000 shares authorized, none issued or outstanding
Common stock, par value $.01 per share;
50,000,000 shares authorized, 5,081,864 issued and
outstanding 52,000 52,000
Additional paid-in capital 20,372,000 20,358,000
Treasury stock, at cost (578,000) --
Retained earnings 6,842,000 5,660,000
-------------- ---------------
Total Shareholders' Equity 26,688,000 26,070,000
-------------- ---------------
$ 125,914,000 $ 123,627,000
================================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
C2, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- -----------------------------
2000 1999 2000 1999
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Revenues:
Logistics revenues $ 28,304,000 $ 24,389,000 $ 61,987,000 $ 48,136,000
Product sales 14,789,000 10,618,000 26,859,000 12,746,000
----------------------------- -----------------------------
43,093,000 35,007,000 88,846,000 60,882,000
----------------------------- -----------------------------
Costs and Expenses:
Logistics expenses 23,540,000 19,404,000 52,508,000 38,477,000
Cost of product sales 10,451,000 7,616,000 18,706,000 9,361,000
Depreciation and amortization 2,065,000 1,938,000 4,105,000 3,688,000
Selling, general and administrative 3,861,000 3,549,000 7,526,000 5,874,000
----------------------------- -----------------------------
39,917,000 32,507,000 82,845,000 57,400,000
----------------------------- -----------------------------
Earnings from Operations 3,176,000 2,500,000 6,001,000 3,482,000
Other Income (Expense):
Interest expense, net (1,492,000) (1,266,000) (2,868,000) (2,092,000)
Merger-related expense -- -- -- (343,000)
Other income (expense), net 2,000 (29,000) -- (21,000)
----------------------------- -----------------------------
(1,490,000) (1,295,000) (2,868,000) (2,456,000)
----------------------------- -----------------------------
Earnings before Income Taxes and
Minority Interest 1,686,000 1,205,000 3,133,000 1,026,000
Income tax provision 667,000 443,000 1,255,000 432,000
----------------------------- -----------------------------
Net Earnings before Minority Interest 1,019,000 762,000 1,878,000 594,000
Minority Interest 383,000 322,000 696,000 332,000
----------------------------- -----------------------------
Net Earnings $ 636,000 $ 440,000 $ 1,182,000 $ 262,000
============================= =============================
Basic Earnings per Share $ 0.13 $ 0.08 $ 0.23 $ 0.05
============================= =============================
Diluted Net Earnings per Share $ 0.12 $ 0.08 $ 0.23 $ 0.05
============================= =============================
Weighted average number of shares
Outstanding 5,180,148 5,202,664 5,130,487 5,202,664
Diluted number of shares outstanding 5,196,132 5,321,169 5,222,587 5,318,741
</TABLE>
See notes to consolidated financial statements.
3
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C2, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN TREASURY RETAINED MEMBER'S
SHARES AMOUNT CAPITAL STOCK EARNINGS EQUITY TOTAL
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 -- $ -- $ -- $ -- $ -- $ 35,457,000 $ 35,457,000
Distribution to Christiana
Companies, Inc. -- -- -- -- -- (13,312,000) (13,312,000)
Sale of common stock 5,202,664 52,000 20,358,000 -- -- -- 20,410,000
Adjustments related to the acquisition
of Total Logistic Control -- -- -- -- 4,405,000 (22,145,000) (17,740,000)
Net earnings -- -- -- -- 1,255,000 -- 1,255,000
---------------------------------------------------------------------------------------
Balance, December 31, 1999 5,202,664 52,000 20,358,000 -- 5,660,000 -- 26,070,000
Purchase of treasury stock (124,200) -- -- (578,000) -- -- (578,000)
Exercise of stock options 3,400 -- 14,000 -- -- -- 14,000
Net earnings for the six months ended
June 30, 2000 -- -- -- -- 1,182,000 -- 1,182,000
---------------------------------------------------------------------------------------
Balance, June 30, 2000 (unaudited) 5,081,864 $52,000 $20,372,000 $(578,000) $6,842,000 -- $ 26,688,000
=======================================================================================
</TABLE>
See notes to consolidated financial statements.
4
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C2, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------------
2000 1999
---------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,182,000 $ 262,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 4,106,000 3,688,000
(Gain) loss on sale of fixed assets (42,000) (21,000)
Minority interest 695,000 332,000
Changes in assets and liabilities:
(Increase) in accounts receivable (644,000) (2,859,000)
(Increase) in other assets (767,000) (314,000)
Increase (decrease) in accounts payable and accrued liabilities (206,000) 1,157,000
---------------- ---------------
Net cash provided by operating activities 4,324,000 2,245,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (7,332,000) (4,948,000)
Proceeds from sale of assets 355,000 34,000
Businesses acquired, net of cash received -- (13,089,000)
---------------- ---------------
Net cash (used in) investing activities (6,977,000) (18,003,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of stock 14,000 20,410,000
Purchase treasury stock (578,000) --
Net (payments) borrowings on credit lines 1,740,000 (2,006,000)
Net borrowings on notes and loans payable 120,000 15,482,000
Distribution to minority shareholders (252,000) (44,000)
Distributions to Christiana Companies, Inc. -- (13,312,000)
---------------- ---------------
Net cash provided by financing activities 1,044,000 20,530,000
NET INCREASE (DECREASE) IN CASH AND CASH (1,609,000) 4,772,000
EQUIVALENTS
BEGINNING CASH AND CASH EQUIVALENTS, January 1 4,953,000 9,000
---------------- ---------------
ENDING CASH AND CASH EQUIVALENTS, June 30 $ 3,344,000 $ 4,781,000
================ ===============
Supplemental disclosures of cash flow information:
Interest paid $ 2,572,000 $ 2,077,000
Income taxes paid $ 2,245,000 $ 410,000
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
C2, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- BASIS OF PRESENTATION
The condensed financial statements included herein have been prepared by the
Company without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. 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 such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's 1999 Annual Report on
Form 10-K.
In the opinion of management, the aforementioned statements reflect all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for the interim periods. Results for the three
and six months ended June 30, 2000, are not necessarily indicative of results
that may be expected for the year ending December 31, 2000.
NOTE 2 -- ACQUISITION OF REFRIGERATED WAREHOUSE
On January 5, 2000, Total Logistic Control, LLC completed the acquisition of a
deep-frozen and refrigerated warehouse facility in Paw Paw, Michigan for
$4,250,000. This purchase was funded by increased borrowings under TLC's
existing revolving credit facility. The acquisition of this facility, which is
comprised of 2,500,000 cu.ft. of warehouse capacity, brings the TLC network to
13 logistic centers with 36.3 million cu.ft. of refrigerated capacity.
NOTE 3 -- EARNINGS PER SHARE
The following is a reconciliation of basic and diluted earnings per share for
the quarters and six months ended June 30, 2000 and 1999. The calculations are
based on the common shares outstanding since the offering and assume that such
shares were issued and outstanding for each of the periods ended June 30, 2000
and 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- ----------------------------
2000 1999 2000 1999
------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Basic Earnings per Share:
Net earnings available to common shareholders $ 636,000 $ 440,000 $ 1,182,000 $ 262,000
Average shares of common stock outstanding 5,080,148 5,202,664 5,130,487 5,202,664
------------------------------- -----------------------------
Basic earnings per share $ 0.13 $ 0.08 $ 0.23 $ 0.05
=============================== =============================
Diluted Earnings per Share:
Average shares of common stock outstanding 5,080,148 5,202,664 5,130,487 5,202,664
Incremental common shares applicable to
common stock options 115,984 118,505 92,100 116,077
------------------------------- -----------------------------
Average common shares assuming full dilution 5,196,132 5,321,169 5,222,587 5,318,741
------------------------------- -----------------------------
Diluted earnings per share $ 0.12 $ 0.08 $ 0.23 $ 0.05
=============================== =============================
</TABLE>
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NOTE 4 -- SEGMENT INFORMATION
TLC divides it operations into two primary segments - warehousing services and
logistic services. These segments are determined based upon the primary service
lines provided to customers by TLC. However, TLC provides multiple services from
both segments to many customers.
As of June 30, 2000, TLC's warehousing segments operated in thirteen logistic
centers consisting of eight refrigerated and five non-refrigerated. These
logistic centers offer storage, order selection, product fulfillment, assembly
and repackaging services in addition to inventory management services. In
addition, TLC's refrigerated warehousing operations offer temperature sensitive
storage, blast freezing and individual quick freeze (IQF) and packaging
services.
TLC's logistic segment offers transportation and logistics management services
in addition to international transportation and food service distribution
services. These services are provided using both company owned equipment and
carrier management services utilizing third party owned equipment.
Zero Zone manufactures frozen and refrigerated glass door reach-in display cases
referred to as Product Sales and are used primarily by grocery, convenience and
drug store chains for retail merchandising of food, beverage and floral
products.
Financial information by business segment is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------- ----------------------------------
Revenues: 2000 1999 2000 1999
---------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Warehousing Services $ 13,131,000 $ 10,470,000 $ 26,411,000 $ 21,751,000
Logistic Services 15,172,000 13,919,000 35,576,000 26,385,000
Product Sales 14,790,000 10,618,000 26,859,000 12,746,000
---------------------------------- ----------------------------------
$ 43,093,000 $ 35,007,000 $ 88,846,000 $ 60,882,000
================================== ==================================
Operating Earnings:
Warehousing Services $ 2,271,000 $ 1,612,000 $ 3,744,000 $ 3,494,000
Logistic Services 1,252,000 1,514,000 2,919,000 2,996,000
Product Sales 1,856,000 1,086,000 3,494,000 1,011,000
Corporate (2,203,000) (1,712,000) (4,156,000) (4,019,000)
---------------------------------- ----------------------------------
$ 3,176,000 $ 2,500,000 $ 6,001,000 $ 3,482,000
================================== ==================================
</TABLE>
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General Business
C2, Inc. ("C2 or the Company") was formed in connection with the separation of
Christiana Companies, Inc.'s ("Christiana") warehousing and logistics business
from its holding of common stock of Weatherford International Inc.
("Weatherford"). This separation was accomplished through the purchase by C2 of
66.7% of Christiana's operating unit, Total Logistic Control, LLC (TLC") and the
subsequent merger of a subsidiary of Weatherford with and into Christiana, whose
assets then consisted of 33.3% of Total Logistic Control, LLC and 4,386,762
shares of Weatherford common stock. These transactions were completed on
February 8, 1999 and on that date, Christiana ceased trading of its common
stock.
C2, Inc. completed an offering of 5,202,664 shares of its common stock to the
former shareholders of Christiana on March 4, 1999. The shares were priced at
$4.00 per share and were fully subscribed. Total proceeds to the Company were
$20,410,000, net of offerings costs of $400,000.
On March 12, 1999, C2 purchased 70.6 percent of the common stock of Zero Zone,
Inc., ("Zero Zone") a Wisconsin-based manufacturer of frozen and refrigerated
display cases in connection with a $19,500,000 recapitalization plan.
The Company is comprised of two operating companies, TLC and Zero Zone. TLC,
based in Zeeland, Michigan, is a national provider of integrated third party
logistic services which include refrigerated and dry warehousing, logistic
management services, transportation, fulfillment services for e-commerce
applications, international freight forwarding, food distribution and packaging
services. Operations are conducted through a network of 13 logistic centers with
36.3 cubic feet of refrigerated capacity and more than 1 million square feet of
dry warehouse space. TLC operates its own fleet of 233 refrigerated
transportation units.
Zero Zone, based in North Prairie, Wisconsin, manufactures refrigerated and
freezer display cases used in grocery, convenience and drug store chains for
retail merchandising of food, beverage and floral products.
The consolidated financial statements of C2, Inc. presented herein reflect the
results of operations of TLC for the full six month periods ended June 30, 2000
and 1999; those of C2 for the full six month period ended June 30, 2000 and for
the period February 8 to June 30, 1999; and those of Zero Zone for the full six
month period ended June 30, 2000 and the period March 12 - June 30, 1999.
Results of Operations
Consolidated revenues for the quarter ended June 30, 2000 increased 23.1% to
$43,093,000 compared to $35,007,000 reported for the same period last year.
Revenue growth was attributable to higher volume at both TLC and Zero Zone.
Revenues attributable to TLC increased 16% to $28,304,000 for the period
compared to $24,389,000 reported for the second quarter of fiscal 1999 driven by
increased capacity utilization in warehousing and logistics operations and
higher volume from existing and new customers in logistic management services.
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<PAGE> 9
Zero Zone contributed revenues of $14,789,000 for the three months ended June
30, 2000 compared to $10,618,000 for last year's comparable period, an increase
of $4,171,000 or 39.3%. The increase was the result of higher demand from
existing accounts as well as new customers.
Consolidated earnings from operations for the quarter were $3,176,000,
representing growth of 27% compared to $2,500,000 for the same period last year.
Operating earnings contributed by TLC for the quarter were $1,613,000 compared
to $1,634,000. The slight reduction in operating earnings was the result of
higher fuel costs. At Zero Zone, operating earnings increased $770,000, or
65.6%, over the same period in 1999, reflecting record sales and increased
operating capacity.
Net interest expense in the quarter ended June 30, 2000 was $1,492,000 compared
to $1,266,000. The increase is attributable to both higher interest rates and
increased borrowings related to the acquisition of a refrigerated warehouse
during the first quarter and increased working capital at Zero Zone.
Net earnings for the quarter ended June 30, 2000 increased 44.5% to $636,000, or
$0.13 per share ($0.12 per share diluted), compared to $440,000, or $0.08 per
share (basic and diluted), reported for the prior year's second quarter. Basic
earnings per share increased 62.5% year to year aided in part by the Company's
market purchase of 124,200 common shares completed in the first quarter.
For the six months ended June 30, 2000, revenues were $88,846,000 compared to
$60,882,000 in the same period last year, representing an increase of 45.9%.
Revenues attributable to TLC for the period were $61,987,000, an increase of
28.8% over last year's level of $48,136,000. For the period, Zero Zone's sales
totaled $26,859,000. Growth in new retail store construction, refurbishment of
existing stores, and a full six month period this year were principal factors in
the Company's year to year growth.
Earnings from operations for the six months were $6,001,000 compared to
$3,482,000 for the comparable period in 1999, or an increase of 72.3%. Operating
earnings contributed by TLC for the period increased 8.8% to $3,055,000 compared
to $2,808,000 recorded in the same period last year. Selling, general and
administrative expenses at TLC decreased approximately $613,000 period to period
largely due to infrastructure investment in information systems in the previous
year. Earnings from operations contributed by Zero Zone in the first six months
of 2000 totaled $3,671,000 reflecting a significant increase over the previous
year's earnings from operations which was attributable to a 3 1/2 month period.
Net interest expense in the first six months of 2000 was $2,868,000 compared to
$2,092,000 for the same period last year. Interest expense increased primarily
due to a full six month period of increased debt in fiscal 2000 compared to the
same period last year and the acquisition of a refrigerated warehouse facility
which was funded by an increase in TLC's revolving credit facility. In last
year's period TLC increased its outstanding debt by $10 million on February 8,
1999 in connection with the merger transaction between Christiana and
Weatherford. Additionally, on March 12, 1999 the Company acquired 70.6% of Zero
Zone, Inc. which increased debt outstanding. Interest expense increased year
over year to a lesser extent due to higher interest rates on variable rate
borrowings at both TLC and Zero Zone.
For the first six months of fiscal 2000, C2, Inc. reported net earnings of
$1,182,000, or $0.23 per share (basic and diluted) compared to $262,000, or
$0.05 per share (basic and diluted), reported for the same period a year ago. In
last year's period, the operations of Zero Zone were included
9
<PAGE> 10
for a 3 1/2 month period due to its acquisition on March 12, 1999 and the
Company incurred one time merger and acquisition related charges of $349,000, or
$0.07 per share.
Liquidity and Capital Resources
The Company's ongoing liquidity requirements arise primarily from its need to
service debt, fund working capital, service lease commitments, maintain and
improve warehouse, transportation and manufacturing facilities and equipment,
and make other investments. The company is active in the acquisition, leasing or
new construction of warehouse facilities, particularly refrigerated facilities.
Additionally, the Company is active in seeking acquisitions that will
strategically build Zero Zone's business. Historically, bank financing, leasing
and internally generated cash have provided funding for these activities. To the
extend that acquisitions or new facility development exceed historical funding
sources, the Company may consider issuing equity securities in an underwritten
stock offering, a rights offering or in private placement transactions.
Currently, the Company has significant subsidiary level lending relationships
with three major commercial banks. At June 30, 2000, the Company's operating
subsidiaries had outstanding debt of $71,503,000, all of which is borrowed under
various facilities with these banks.
TLC entered into a $70 million credit agreement, dated November 2, 1998. This
credit facility is secured by liens or security interests on substantially all
of the assets of TLC and mortgages on its real estate. This five year revolving
credit facility, by its terms, steps down on November 3 each year beginning in
1999 through November 2, 2003 by $1.25 million in 1999, $4.4 million in 2000,
$5.0 million in 2001, $6.0 million in 2002, and a final maturity of $53.35
million is due on November 2, 2003. Additional credit available to TLC at June
30, 2000 was $15.15 million. The interest rate on borrowings under this credit
agreement are LIBOR or prime rate based, at TLC's option, and vary pursuant to a
pricing grid based on the ratio of TLC's funded debt to EBITDA, as defined in
the credit agreement. At June 30, 2000 TLC had $53.6 million in outstanding
borrowings under this facility with an average interest rate of LIBOR plus 155
or 8.09%.
Zero Zone completed a financing package August 31, 1999 with a major commercial
bank. The package contains two bond issues and a demand line of credit. The
first is a tax free Industrial Revenue Bond issue for $3,420,000 that was issued
through the State of Wisconsin for the company's building addition. The bond has
a 20 year life with no annual amortization and has a seven day variable interest
rate. The second issue is a taxable Industrial Revenue Bond for $6,000,000
issued through a bank. This bond also has a 20 year maturity schedule with
annual principal repayments of $500,000. The effective life of this bond is 12
years. The interest rate on the second bond is also a seven day variable
interest rate. Both bonds are secured by Letters of Credit issued by a major
commercial bank. Interest rate on the line is based on LIBOR plus an amount that
varies according to a pricing grid determined by the ratio of funded debt to
EBITDA.
Zero Zone has unsecured senior subordinated indebtedness in the amount of
$2,350,000 to former and existing shareholders. The interest rate is 8%.
Zero Zone also has $3,000,000 of unsecured junior subordinated indebtedness to
existing shareholders. Payments of $1,000,000 per year begin December 31, 2002.
The interest rate is 8.5% of which 3.4% is paid in cash and 5.1% is
payment-in-kind.
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<PAGE> 11
As of June 30, 2000 the Company had cash and cash equivalents on hand of
$3,344,000 compared to $4,953,000 at December 31, 1999.
Cash flows provided by operations for six months ended June 30, 2000, totaled
$4,324,000 compared to $2,245,000 in the previous period. The increase in cash
flows from operating activities is primarily attributable to the increase in
earnings.
Cash flows used in investing activities in the period totaled $6,977,000
compared to $18,003,000 for the same period last year. In the six months ended
June 30, 2000, the use of cash was primarily the result of the acquisition of a
refrigerated warehouse and capital expenditures. In the previous year, the
significant use of cash was primarily due to the acquisition of 66.7% of TLC for
$10,667,000 and the acquisition of 70.6% of Zero Zone for $3,000,000, net of
cash acquired of $578,000.
Cash flows from financing activities totaled $1,044,000 compared to $20,530,000
for the same period last year, which included net proceeds of $20,410,000 from
the Company's initial public offering of its common stock and increased
borrowings under notes payable and credit lines was $1,740,000 related primarily
to the acquisition of a refrigerated warehouse. The Company purchased 124,200
shares of C2 common stock at $4.654 per share for a total of $578,000.
Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements and other statements
that are not historical facts. Actual results may differ materially from
management's expectations. The forward-looking statements involve risks and
uncertainties, including but not limited to:
- Demand for warehousing, transportation, logistics services and
refrigerated display cases may be adversely affected by increases in
interest rates, adverse economic conditions, increased energy costs,
weather or market conditions which adversely affect vegetable and fruit
crop yields, loss of a material customer or other factors.
- Growth in volume of services or products may be adversely affected by
an inability to identify and hire qualified employees.
- The Company's profitability may be adversely affected by increases in
interest rates because a significant portion of the Company's debt
bears interest at variable interest rates.
Additional information about risks and uncertainties discussed above as well as
additional material risks in the Company's business may be found in the
Company's annual report on Form 10K for the year 1999 and other filings made by
the Company from time to time with the Securities and Exchange Commission.
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PART II - OTHER INFORMATION
Item 1. Not applicable.
Item 2. Not applicable.
Item 3. Not applicable.
Item 4. Not applicable. .
Item 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K
None
12
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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.
C2, Inc.
(Registrant)
Date: /s/ William T. Donovan
------------------- --------------------------------------------
William T. Donovan
President and Chief Financial Officer
Date: /s/ Betty J. White
------------------- --------------------------------------------
Betty J. White
Treasurer and Controller
13
