<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10-Q
<TABLE>
<C> <S>
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 26, 1999
OR
<TABLE>
<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 333-57099
------------------------
CCPC HOLDING COMPANY, INC.
(Registrant)
<TABLE>
<S> <C>
DELAWARE 16-1403318
(State of incorporation) (I.R.S. Employer Identification No.)
ONE PYREX PLACE, ELMIRA NEW YORK 14902
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: 607-377-8605
------------------------
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 and (2) has been subject to the filing
requirements for at least 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:
24,000,000 shares of CCPC Holding Company, Inc.'s, $0.01 Par Value, were
outstanding as of October 24, 1999.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Index to condensed consolidated financial statements of CCPC Holding
Company, Inc. filed as part of this report:
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Condensed Consolidated Statements of Operations for the
88 days ended September 26, 1999 and 92 days ended
September 30, 1998........................................ 2
Condensed Consolidated Statements of Operations for the
269 days ended September 26, 1999 and 273 days ended
September 30, 1998........................................ 2
Condensed Consolidated Balance Sheets at September 26, 1999
and December 31, 1998..................................... 3
Condensed Consolidated Statements of Cash Flows for the
269 days ended September 26, 1999 and 273 days ended
September 30, 1998........................................ 4
Condensed Consolidated Statement of Changes in Stockholders'
Equity for the 269 days ended September 26, 1999.......... 6
Notes to Condensed Consolidated Financial Statements........ 7
</TABLE>
1
<PAGE>
CCPC HOLDING COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE 88 FOR THE 92 FOR THE 269 FOR THE 273
DAYS ENDED DAYS ENDED DAYS ENDED DAYS ENDED
SEPTEMBER 26, SEPTEMBER 30, SEPTEMBER 26, SEPTEMBER 30,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES
Net sales............................... $ 116,787 $ 134,938 $ 338,564 $ 364,407
DEDUCTIONS
Cost of sales........................... 74,635 91,717 219,735 243,497
Selling, general and administrative
expenses.............................. 35,089 37,417 107,018 111,176
Provision for restructuring costs....... -- 2,980 76,200 2,980
Transaction related expenses............ -- 255 -- 28,866
Other, net.............................. (433) 270 (1,453) 816
---------- ---------- ---------- ----------
Operating income (loss)................... 7,496 2,299 (62,936) (22,928)
Interest expense.......................... 10,221 11,176 30,177 23,605
---------- ---------- ---------- ----------
Loss before taxes on income............... (2,725) (8,877) (93,113) (46,533)
Income tax expense........................ 1,095 402 718 2,120
---------- ---------- ---------- ----------
Loss before minority interest............. (3,820) (9,279) (93,831) (48,653)
Minority interest (expense) income in
subsidiary.............................. (37) 187 (145) 302
---------- ---------- ---------- ----------
Net loss.................................. (3,857) (9,092) (93,976) (48,351)
Preferred stock dividends................. (1,044) (927) (3,040) (1,827)
---------- ---------- ---------- ----------
NET LOSS APPLICABLE TO COMMON STOCK....... $ (4,901) $ (10,019) $ (97,016) $ (50,178)
========== ========== ========== ==========
BASIC AND DILUTED LOSS
PER COMMON SHARE........................ $ (0.20) $ (0.42) $ (4.04) $ (2.09)
========== ========== ========== ==========
Weighted average number of common shares
outstanding during the period........... 24,000,000 24,000,000 24,000,000 24,000,000
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
CCPC HOLDING COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 26, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 5,587 $ 9,057
Accounts receivable, net of allowances--
$5,884/1999; $11,172/1998............................... 69,618 62,511
Inventories, net.......................................... 141,368 132,035
Prepaid expenses and other current assets................. 13,371 7,412
Deferred taxes on income.................................. 8,214 8,181
--------- ---------
Total current assets.................................. 238,158 219,196
--------- ---------
PROPERTY AND EQUIPMENT, NET................................. 102,601 141,402
DEFERRED TAXES ON INCOME.................................... 40,848 40,867
GOODWILL, NET OF ACCUMULATED AMORTIZATION
$7,351/1999; $8,369/ 1998............................... 45,343 58,717
OTHER ASSETS................................................ 37,040 35,077
--------- ---------
TOTAL ASSETS.......................................... $ 463,990 $ 495,259
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long term debt......................... $ 2,434 $ 3,986
Accounts payable and accrued expenses..................... 89,314 100,338
Restructuring reserve..................................... 14,271 --
--------- ---------
Total current liabilities............................. 106,019 104,324
--------- ---------
LONG-TERM DEBT.............................................. 490,470 433,656
ACCRUED POSTRETIREMENT LIABILITY............................ 34,397 31,432
OTHER LIABILITIES........................................... 5,680 4,599
MINORITY INTEREST IN SUBSIDIARY COMPANY..................... 890 745
COMMITMENTS (NOTE 7)
STOCKHOLDERS' EQUITY
Preferred Stock--5,000,000 shares authorized; 1,200,000
shares issued............................................. 35,822 32,782
Common Stock--$0.01 par value/45,000,000 shares authorized;
24,000,000 shares issued.................................. 240 240
Contributed capital......................................... 453,655 453,655
Accumulated deficit......................................... (661,029) (564,013)
Cumulative translation adjustment........................... (2,154) (2,161)
--------- ---------
Total stockholders' deficit........................... (173,466) (79,497)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............ $ 463,990 $ 495,259
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
CCPC HOLDING COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE 269 FOR THE 273
DAYS ENDED DAYS ENDED
SEPTEMBER 26, SEPTEMBER 30,
1999 1998
------------- -------------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss.................................................. $(93,976) $ (48,351)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 21,041 26,671
Amortization of deferred financing fees................. 1,263 2,764
Minority interest in losses (earnings) of subsidiary.... 145 (302)
Loss on disposition of plant and equipment.............. 78 141
Deferred tax assets..................................... (14) 3,918
Provision for restructuring expenses, net of cash
paid.................................................. 69,871 --
Provision for postretirement benefits, net of cash
paid.................................................. 2,340 2,897
Changes in operating assets and liabilities:
Accounts receivable..................................... (7,107) 25
Inventories............................................. (13,690) (18,355)
Prepaid expenses and other current assets............... (5,959) (3,825)
Accounts payable and accrued expenses................... (11,024) 10,286
Other liabilities....................................... (2,097) 2,616
-------- ---------
NET CASH USED IN OPERATING ACTIVITIES................. (39,129) (21,515)
-------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Additions to property and equipment and other assets...... (19,603) (12,128)
-------- ---------
NET CASH USED IN INVESTING ACTIVITIES................. (19,603) (12,128)
-------- ---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Borrowings on revolving credit facility................... 58,800 87,506
Borrowings of long-term debt other than revolving credit
facility................................................ -- 400,000
Repayment of long-term debt other than revolving credit
facility................................................ (3,538) (1,806)
Interim financing......................................... -- 471,600
Repayment of interim financing............................ -- (471,600)
Dividend to Corning Incorporated.......................... -- (482,760)
Decrease in net amounts due to Corning Incorporated....... -- (87,142)
Shareholder capital contribution.......................... -- 103,324
Issuance of preferred stock............................... -- 30,000
Issuance of common stock.................................. -- 240
Deferred financing fees................................... -- (17,337)
-------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES............. 55,262 32,025
-------- ---------
Net decrease in cash and cash equivalents................... (3,470) (1,618)
Cash and cash equivalents at beginning of year.............. 9,057 4,345
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 5,587 $ 2,727
======== =========
</TABLE>
The accompanying notes are an integral part of these statements
4
<PAGE>
CCPC HOLDING COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE 269 FOR THE 273
DAYS ENDED DAYS ENDED
SEPTEMBER 26, SEPTEMBER 30,
1999 1998
------------- -------------
<S> <C> <C>
SUPPLEMENTAL DATA:
Income taxes (received) paid, net........................... $ (757) $ 1,024
Interest paid............................................... $ 22,275 $ 17,082
Non-cash activity:
Increase to deferred taxes resulting from the
Recapitalization........................................ $ -- $ 13,471
Adjustment to postretirement liability for amounts assumed
by Corning.............................................. $ -- $ 31,998
Adjustment to pension liability for amounts assumed by
Corning................................................. $ -- $ 17,669
Adjustment to accounts payable for liabilities retained by
Corning................................................. $ -- $ 7,913
Preferred stock dividends................................. $ 3,040 $ 1,827
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
CCPC HOLDING COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED TOTAL
OTHER STOCKHOLDERS'
PREFERRED COMMON CONTRIBUTED ACCUMULATED COMPREHENSIVE (DEFICIT)
STOCK STOCK CAPITAL DEFICIT INCOME EQUITY
--------- -------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998..... $32,782 $240 $453,655 $ (564,013) $ (2,161) $ (79,497)
Net Loss....................... (93,976) (93,976)
Foreign currency translation
adjustment, net of tax....... 7 7
Preferred stock dividends...... 3,040 (3,040)
Balance, September 26, 1999.... $35,822 $240 $453,655 $ (661,029) $ (2,154) $ (173,466)
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
CCPC HOLDING COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, UNLESS OTHERWISE INDICATED)
(1) NATURE OF OPERATIONS AND BASIS OF PRESENTATION
CCPC Holding Company, Inc. (CCPC or the Company) is a leading manufacturer
and marketer of housewares, including bakeware, dinnerware and rangetop
cookware. The Company believes that its brands, including
Corelle-Registered Trademark-, Corningware-Registered Trademark-,
Pyrex-Registered Trademark-, Revereware-Registered Trademark-, and
Visions-Registered Trademark-, constitute one of the broadest and best
recognized collection of brands in the U.S. housewares industry.
Pursuant to Regulation 15(d) of the Securities Act of 1934, CCPC is filing
herein its quarterly report on Form 10-Q which includes the third fiscal quarter
of the year ended December 31, 1999. The consolidated financial statements
reflect all adjustments which, in the opinion of management, are necessary for a
fair statement of the results of operations and financial position for the
interim periods presented. All such adjustments are of a normal recurring
nature. The consolidated financial statements have been compiled without audit
and are subject to such year-end adjustments as may be considered appropriate by
the registrant and should be read in conjunction with CCPC's Form 10-K for the
year ended December 31, 1998 which has been filed with the Securities and
Exchange Commission.
Subsequent to April 1, 1998, Corning Consumer Products Company changed its
name to CCPC Holding Company, Inc. The consolidated balance sheet at
September 26, 1999, the consolidated statements of operations for the 88 days
and 269 days ended September 26, 1999, and the consolidated statement of cash
flows for the 269 days ended September 26, 1999, reflect the Recapitalization
(see Note 2). The consolidated statement of operations for the nine months ended
September 30, 1998, and the consolidated statement of cash flows for the nine
months ended September 30, 1998, include the results of CCPC as a wholly-owned
subsidiary of Corning Incorporated (Corning) prior to the Recapitalization.
(2) RECAPITALIZATION
On March 2, 1998, Corning, CCPC, Borden, Inc., and CCPC Acquisition Corp.
entered into a Recapitalization Agreement.
On April 1, 1998, pursuant to the Recapitalization Agreement, CCPC
Acquisition Corp., the Company's parent, acquired 22,080,000, or 92%, of the
outstanding shares of common stock of CCPC from Corning for $110.4 million. CCPC
then borrowed $471.6 million and paid a cash dividend to Corning of $472.6
million. Corning retained 1,920,000, or 8%, of the outstanding shares of common
stock of CCPC. Also on April 1, 1998, CCPC issued and sold 1,200,000 shares of
junior preferred stock to CCPC Acquisition Corp. for $30.0 million. CCPC paid an
additional $10.2 million to Corning in July 1998 relating to certain provisions
of the Recapitalization Agreement.
(3) RESTRUCTURING
In the first quarter of 1999 CCPC initiated a plan to restructure its
manufacturing and supply organization as part of a program designed to reduce
costs through the elimination of under-utilized capacity, unprofitable product
lines and increased utilization of the remaining facilities.
The restructuring includes the discontinuation of the commercial tableware
product line, which products were sold to restaurants and other institutions,
and closure of the related portion of CCPC's manufacturing facility in
Charleroi, Pennsylvania. In order to improve the utilization of the Charleroi
facility, CCPC has moved Corelle-Registered Trademark- cup production to its
Martinsburg, West Virginia facility and third party suppliers. In addition, CCPC
terminated its supply contract with Corning's Greenville, Ohio facility and
Pyrex-Registered Trademark- production was consolidated at the Charleroi
facility. Additionally, CCPC has discontinued
7
<PAGE>
CCPC HOLDING COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, UNLESS OTHERWISE INDICATED)
(3) RESTRUCTURING (CONTINUED)
manufacturing and distributing rangetop cookware at its facility in Clinton,
Illinois. Future supply of rangetop cookware will be sourced from third party
manufacturers.
The cash and non cash elements of the restructuring charge approximate $20.6
million and $55.6 million, respectively. Details of the restructuring charge are
as follows.
<TABLE>
<CAPTION>
APPLIED TO BEGINNING BALANCE AT
RESTRUCTURING BALANCE SHEET RESTRUCTURING CASH SEPTEMBER 26,
CHARGE ACCOUNTS ACCRUAL CHARGES 1999
------------- ------------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Disposal of assets................ $53,200 $53,200 $ -- $ -- $ --
Employee severance &
termination..................... 18,047 2,400 15,647 5,114 10,533
Other exit costs.................. 4,953 4,953 1,215 3,738
------- ------- ------- ------- -------
$76,200 $55,600 $20,600 $ 6,329 $14,271
======= ======= ======= ======= =======
</TABLE>
The tangible assets of the Clinton, Illinois facility and the commercial
tableware product line have been written off. All intangible asset carrying
values associated with the Clinton facility and the commercial tableware product
line have been eliminated. The tangible and intangible assets written off
totaled $40.9 million and $12.3 million, respectively. Management judgment is
involved in estimating the tangible assets fair value, accordingly, actual
results could vary significantly from such estimates. As part of the
restructuring initiative, approximately 600 employees are in the process of
being terminated. The termination results in a pension and post retirement
benefit charge of $2.4 million. CCPC expects the restructuring plan to be
completed early in 2000.
The commercial tableware product line generated net sales of $2.0 million
and $6.2 million in the third quarter and nine months ended September 30, 1998,
respectively, prior to its discontinuance. Year to date September 26, 1999
commercial tableware net sales totaled $2.0 million, the majority of which
occurred in the first quarter. Operating income for the product line was break
even in 1999 and 1998.
(4) INVENTORIES
Inventories shown on the accompanying balance sheets were comprised of the
following:
<TABLE>
<CAPTION>
SEPTEMBER 26, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Finished goods.............................................. $ 74,681 $ 68,869
Work in process............................................. 45,022 44,821
Raw materials............................................... 17,992 7,720
Supplies and packing materials.............................. 3,673 10,625
-------- --------
$141,368 $132,035
======== ========
</TABLE>
8
<PAGE>
CCPC HOLDING COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, UNLESS OTHERWISE INDICATED)
(5) RELATED PARTY TRANSACTIONS
The following transactions with related parties are included in the
consolidated statements of operations for the third quarter ended and year to
date September 26, 1999 and September 30, 1998:
<TABLE>
<CAPTION>
FOR THE 88 FOR THE 92 FOR THE 269 FOR THE 273
DAYS ENDED DAYS ENDED DAYS ENDED DAYS ENDED
SEPTEMBER 26, SEPTEMBER 30, SEPTEMBER 26, SEPTEMBER 30,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest expense from Corning............. -- -- -- $ 1,574
Interest expense to Borden, Inc.
and an affiliate of Borden, Inc......... -- -- -- 2,368
Centralized services...................... $2,386 3,094 $6,609 11,229
Management fees to Corning................ -- -- -- 437
Management fees to Borden................. 375 375 1,125 750
</TABLE>
Corning Inc. provided and continues to provide certain administrative and
operating support (reflected above as centralized services) including financial
services, information systems support, risk management, purchasing,
transportation, benefit plans administration, and engineering services. Prior to
the Recapitalization, CCPC was charged for this support using various allocation
bases including number of employees, related payroll costs, and direct efforts
expended. These costs, which are included in cost of sales and selling, general,
and administrative expenses, are currently charged to CCPC by Corning under a
transition service agreement using negotiated rates agreed upon by the
management of CCPC. Management believes that the methodology used to allocate
the costs is reasonable, but may not necessarily be indicative of the costs that
would have been incurred had these functions been performed by CCPC.
Prior to the Recapitalization, amounts due to and from Corning resulting
from intercompany transactions carried interest at a rate based on the 30-day
London Interbank Offered Rate (LIBOR) plus 3/8%.
CCPC paid Corning $437 in management fees in the first quarter of 1998. CCPC
currently pays Borden a management fee of $375 per quarter.
During the fourth quarter of 1999 the Company borrowed $71.5 million from
Borden to provide temporary financing of the acquisitions. (See Note 8).
(6) COMPREHENSIVE INCOME
As of January 1, 1998, CCPC implemented Financial Accounting Standard
No. 130, "Reporting Comprehensive Income." This pronouncement, which is solely a
financial statement presentation standard,
9
<PAGE>
CCPC HOLDING COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, UNLESS OTHERWISE INDICATED)
(6) COMPREHENSIVE INCOME (CONTINUED)
requires CCPC to disclose non-owner changes included in stockholders' equity but
not included in net earnings. Comprehensive income was computed as follows:
<TABLE>
<CAPTION>
FOR THE 88 FOR THE 92 FOR THE 269 FOR THE 273
DAYS ENDED DAYS ENDED DAYS ENDED DAYS ENDED
SEPTEMBER 26, SEPTEMBER 30, SEPTEMBER 26, SEPTEMBER 30,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net loss.................................. $(3,857) $(9,092) $(93,976) $(48,351)
Foreign currency translation
adjustments............................. (338) (218) 7 (629)
------- ------- -------- --------
Comprehensive income...................... $(4,195) $(9,310) $(93,969) $(48,980)
======= ======= ======== ========
</TABLE>
(7) COMMITMENTS
The Company is a defendant or plaintiff in various claims and lawsuits
arising in the normal course of business. The Company believes, based upon
information it currently possesses, and taking into account established reserves
for estimated liabilities and its insurance coverage, that the ultimate outcome
of the proceedings and actions is unlikely to have a material adverse effect on
the Company's financial position or results of operations.
(8) SUBSEQUENT EVENT
The Company completed the acquisition of General Housewares Corp. and EKCO
Group, Inc. in two separate transactions during the fourth quarter of 1999. The
acquisitions will be accounted for under the purchase method of accounting. The
results of operations of the acquired companies have not been included in the
quarter and year to date results of operations for CCPC. The transactions were
previously announced in the third quarter of 1999.
The General Housewares Corp. transaction, which closed on October 21, is
valued at approximately $159 million, including the repayment of debt and
transaction fees. The Company financed the acquisition through the issuance of
$50 million Junior Cumulative Preferred Stock (Junior Preferred Stock) to an
affiliate of the Company's parent and additional borrowings under the Company's
existing credit facilities. The Junior Preferred Stock consists of two million
shares with each share having a liquidation preference of $25.00. The Junior
Preferred Stock provides for the payment of cash dividends of $1.00 per share
per quarter if declared by the Company and certain financial ratios are
satisfied. (See Exhibit 3 to the Form 10-Q)
General Housewares Corp. manufactures and markets consumer durable goods
with principal lines of business consisting of kitchen and household tools,
precision cutting tools, kitchen cutlery and cookware. In addition, General
Housewares Corp. sells products through its chain of manufacturer's retail
outlet stores.
The EKCO Group, Inc. transaction, which closed on October 25, is valued at
approximately $254 million, including the Ekco Group, Inc. common stock, the
assumption of debt and transaction fees. The Company financed this acquisition
through the issuance of $150 million in common stock to the Company's parent and
a short term borrowing from an affiliate of the Company's parent.
10
<PAGE>
CCPC HOLDING COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, UNLESS OTHERWISE INDICATED)
(8) SUBSEQUENT EVENT (CONTINUED)
EKCO Group, Inc. is a manufacturer and marketer of branded consumer
products. EKCO Group Inc.'s products include household items such as bakeware,
kitchenware, pantryware, brooms, brushes and mops.
11
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, UNLESS OTHERWISE INDICATED)
RESULTS OF OPERATIONS
BACKGROUND
CCPC Holding Co. Inc. (CCPC or the Company) is a leading manufacturer and
marketer of oven/ bakeware, dinnerware and rangetop cookware. The Company has
strong positions in major channels of distribution for its products in North
America and has also achieved a significant presence in certain international
markets, primarily Asia, Australia and Latin America. In North America, CCPC
sells both on a wholesale basis to retailers, distributors, and other accounts
that resell the Company's products and on a retail basis through
Company-operated outlet stores. In the international market, CCPC has
established its presence through an international sales force along with
localized distribution and marketing capabilities.
Prior to April 1, 1998 CCPC operated as a wholly-owned subsidiary of Corning
Inc. (Corning). During this period, Corning provided CCPC with certain
process-oriented administrative services, such as benefits administration,
accounts payable, accounts receivable, treasury and tax services. Corning has
agreed pursuant to a transition services agreement to continue to provide such
services for up to two years at negotiated rates (expiring in April 2000)
calculated on the same basis as before April 1, 1998. CCPC is developing its
administrative infrastructure and is in the process of assuming those functions
previously performed by Corning or outsourcing them to third parties.
THIRD QUARTER SEPTEMBER 26, 1999 VERSUS THIRD QUARTER ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
FOR THE 88 FOR THE 92
DAYS ENDED DAYS ENDED
SEPTEMBER 26, SEPTEMBER 30,
1999 1998 CHANGE
-------------- -------------- ---------
<S> <C> <C> <C>
NET SALES
North America............................................ $100,507 $122,613 $ (22,106)
Asia..................................................... 10,251 5,298 4,953
Other International...................................... 6,029 7,027 (998)
-------- -------- ---------
Net Sales.............................................. $116,787 $134,938 $ (18,151)
======== ======== =========
OPERATING INCOME(1)
North America............................................ $ 3,897 $ 4,784 $ (887)
Asia..................................................... 2,847 (63) 2,910
Other International...................................... 752 813 (61)
Restructuring Expense.................................... -- (2,980) 2,980
Transaction Related Expense.............................. -- (255) 255
-------- -------- ---------
Operating Income....................................... $ 7,496 $ 2,299 $ 5,197
======== ======== =========
</TABLE>
- ------------------------
(1) All manufacturing variances and corporate overhead costs are included in
North America
12
<PAGE>
OVERVIEW
Net sales for the 88 days ended September, 26, 1999, declined by $18.2
million or 13.5% from the 92 days ended September 30, 1998. The shortfall was
principally due to shipping difficulties encountered during the July/August
start-up of the Company's enterprise-wide computer system, exiting the
commercial tableware business and a change in the period end date which reduced
the period by four days. Despite the difficulty in shipping, operating results,
excluding restructuring and transaction related expenses, increased by $2.0
million versus the third quarter of 1998 as a result of lower manufacturing and
administrative costs.
<TABLE>
<CAPTION>
FOR THE 88 FOR THE 92
DAYS ENDED DAYS ENDED
SEPTEMBER 26, % OF NET SEPTEMBER 30, % OF NET
1999 SALES 1998 SALES
------------- -------- ------------- --------
<S> <C> <C> <C> <C>
Net sales.......................................... $116,787 100.0% $134,938 100.0%
Cost of sales...................................... 74,635 63.9 91,717 68.0
-------- ----- -------- -----
Gross profit....................................... 42,152 36.1 43,221 32.0
Selling, general and administrative................ 35,089 30.0 37,417 27.7
Provisions for restructuring Expense -- 0.0 2,980 2.2
Transactions related expenses...................... -- 0.0 255 0.2
Other, net......................................... (433) (0.4) 270 0.2
-------- ----- -------- -----
Operating income................................... 7,496 6.4 2,299 1.7
Interest expense................................... 10,221 8.8 11,176 8.3
-------- ----- -------- -----
Loss before taxes on income........................ (2,725) (2.3) (8,877) (6.6)
Income tax expense................................. 1,095 (0.9) 402 (0.3)
-------- ----- -------- -----
Loss before minority interest...................... (3,820) (3.3) (9,279) (6.9)
Minority interest in subsidiary.................... (37) 0.0 187 0.1%
-------- ----- -------- -----
Net loss........................................... (3,857) (3.3) (9,092) (6.7)
======== ===== ======== =====
EBITDA, excluding restructuring and transaction
related expenses................................. $ 12,993 11.1% $ 14,217 10.5%
======== ===== ======== =====
</TABLE>
SALES
Net sales for the 88 days ended September 26, 1999, declined $18.2 million
or 13.5% from the 92 days ended September 30, 1998.
In July 1999 the Company implemented an enterprise-wide computer system. The
Company experienced difficulties implementing the computer system at its
Greencastle, Pennsylvania assembly and distribution center. As a result
significant inefficiencies were experienced and the volume of shipments was
substantially curtailed in July and to a lesser degree in August. The shipment
shortfall impacted all channels of business. Management has addressed the
shipping issues and believes that it has re-established shipping capabilities to
pre-implementation levels.
Sales in Asia continued to rebound from 1998's depressed levels, despite the
shipment shortages described above, and increased by $5.0 million or 93.5% over
the corresponding period of the prior year. The significant improvement resulted
primarily from the recovery of the Asian economies. The successful introduction
of new Corelle-Registered Trademark- patterns and new distribution channels for
CorningWare-Registered Trademark- also contributed to the increased sales.
The increase in Asian sales was more than offset by period over period
declines in North America, a decline in other international markets and a
shorter reporting period (88 days in 1999 versus 92 in 1998). The computer
system issues encountered in July and August curtailed North American sales.
Despite a substantial order book the Company was unable to ship orders to
customers and as a result turns were lost
13
<PAGE>
at the retail level. Additionally shipping capacity was prioritized in favor of
third party customers rather than Company operated factory stores. As a result
the Company operated factory stores experienced severe out of stocks and factory
store sales for the third quarter were $8.2 million or 19% below the same period
in 1998. The Company's decision earlier in the year to exit the commercial
tableware business resulted in a year over year sales loss of $2.0 million in
the third quarter of 1999.
Finally coincident with the start up of the new enterprise wide computer
system the Company converted to a 52 week calendar. As a result the third
quarter closed on September 26 in 1999 versus September 30 in 1998. The Company
will continue to close the fiscal year on December 31. As such, this change
should have no impact on 1999 full year financial results, although it reduced
third quarter net sales by an estimated $5 million.
GROSS PROFIT
Gross profit as a percentage of net sales was $36.1% in 1999, compared to
the 1998 gross profit percentage of 32.0%. The improvement was due to a number
of factors. In the third quarter of 1998, CCPC implemented an inventory
reduction program which included planned reductions in production at CCPC's
manufacturing facilities. The reduced production levels resulted in higher cost
of sales due to the allocation of fixed costs over a smaller base of production
in the third quarter of 1998. In 1999 the Company did not repeat this exercise
and as a result experienced an improvement in gross margin. Additionally the
Company generated a further improvement in gross margin through efficiencies and
cost reductions in its manufacturing facilities, achieved through the
manufacturing rationalization announced in the first quarter of 1999. Offsetting
these gains were incremental costs incurred in the third quarter of 1999 to
re-establish CCPC's ability to ship orders at pre implementation levels.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $35.1 million for the
third quarter of 1999 compared to $37.4 million for the third quarter of 1998.
The net decrease in selling, general and administrative expenses is a result of
the separation from Corning. CCPC now operates as an independent Company versus
a wholly-owned subsidiary of Corning and is in the process of transitioning
certain administrative functions from Corning. As an independent Company CCPC is
able to perform many of the administrative tasks previously performed by Corning
at a significantly lower cost. These savings were partially offset by an
increase in expenses to support new products and the growth of existing
products.
Selling, general and administrative expenses increased as a percentage of
net sales to 30.0% in 1999 from 27.7% in 1998 due to fixed costs being spread
over a lower sales base.
RESTRUCTURING
The $3.0 million in 1998 restructuring expenses is attributable to the
reorganization of certain administrative and distribution operations in Asia.
TRANSACTIONS RELATED EXPENSES
Transactions related expenses of $0.3 million recorded in 1998 were
associated with the Recapitalization (see Note 2 of Notes to Condensed
Consolidated Financial Statements).
OTHER, NET
Other operating income increased $0.7 million in 1999 as a result of an
increase in the amount of royalty income in 1999 compared to 1998. During 1998
the Company licensed certain of its trademarks for use in conjunction with
several household items which were outside the Company's strategic product
portfolio. Income from this activity commenced in 1999.
14
<PAGE>
OPERATING INCOME
As a result of the factors discussed above, operating income increased by
$5.2 million to income of $7.5 million in 1999. Excluding the restructuring and
transaction related expenses, operating income improved by $2.0 million over
1998.
NET INTEREST EXPENSE
Interest expense decreased $1.0 million to $10.2 million from $11.2 million
in 1998. The decrease is attributable to higher debt levels in the third quarter
of 1998 as the Company incurred substantial indebtedness associated with the
Recapitalization.
INCOME TAX EXPENSE
The $1.1 million income tax provision in 1999 is as a result of income
generated by certain international operations.
EBITDA (EARNINGS BEFORE NET INTEREST EXPENSE, INCOME TAXES, DEPRECIATION AND
AMORTIZATION, RESTRUCTURING EXPENSES, TRANSACTIONS RELATED EXPENSES AND
MINORITY INTEREST)
EBITDA for the quarter ended September 26, 1999 decreased by $1.2 million or
8.6% compared to the same period of the prior year. EBITDA as a percentage of
net sales increased to 11.1% in 1999 from 10.5% in 1998. The cost savings
realized in selling, general and administrative expenses as a result of the
separation from Corning and the manufacturing rationalization offset the
shipping issues described above on a percentage basis.
YEAR TO DATE SEPTEMBER 26, 1999 VERSUS YEAR TO DATE SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
FOR THE 269 FOR THE 273
DAYS ENDED DAYS ENDED
SEPTEMBER 26, SEPTEMBER 30,
1999 1998 CHANGE
------------- ------------- --------
<S> <C> <C> <C>
NET SALES
North America............................................ $284,689 $320,934 $(36,245)
Asia..................................................... 32,739 18,574 14,165
Other International...................................... 21,136 24,899 (3,763)
-------- -------- --------
Net Sales.............................................. $338,564 $364,407 $(25,843)
======== ======== ========
OPERATING INCOME(1)
North America............................................ $ 3,126 $ 4,734 $ (1,608)
Asia..................................................... 8,248 247 8,001
Other International...................................... 1,890 3,937 (2,047)
Restructuring............................................ (76,200) (2,980) (73,220)
Transaction Related Expense.............................. -- (28,866) 28,866
-------- -------- --------
Operating Income....................................... $(62,936) $(22,928) $(40,008)
======== ======== ========
</TABLE>
- ------------------------
(1) All manufacturing variances and corporate overhead costs are included in
North America
OVERVIEW
Net sales for the 269 day period ended September 26, 1999, declined by $25.8
million or 7.1% from the 273 day period ended September 30, 1998. The shortfall
was principally due to shipping difficulties encountered during the July/August
start-up of the Company's enterprise-wide computer system, exiting the
commercial tableware business, first half shortfalls at the Company-operated
factory stores and a
15
<PAGE>
change in the period end date which reduced the period by four days. Despite the
shortfalls in shipments operating results, excluding restructuring and
transaction related expenses, increased by $4.3 million versus the first three
quarters of 1998 as a result of lower manufacturing and administrative costs.
<TABLE>
<CAPTION>
FOR THE 269 FOR THE 273
DAYS ENDED DAYS ENDED
SEPTEMBER 26, % OF NET SEPTEMBER 30, % OF NET
1999 SALES 1998 SALES
------------- -------- ------------- --------
<S> <C> <C> <C> <C>
Net sales.......................................... $338,564 100.0% $364,407 100.0%
Cost of sales...................................... 219,735 64.9 243,497 66.8
-------- ----- -------- -----
Gross profit....................................... 118,829 35.1 120,910 33.2
Selling, general and administrative................ 107,018 31.6 111,176 30.5
Provisions for restructuring expense............... 76,200 22.5 2,980 0.8
Transactions related expenses...................... -- 0.0 28,866 7.9
Other, net......................................... (1,453) (0.4) 816 0.2
-------- ----- -------- -----
Operating loss..................................... (62,936) (18.6) (22,928) (6.3)
Interest expense................................... 30,177 8.9 23,605 6.5
-------- ----- -------- -----
Loss before taxes on income........................ (93,113) (27.5) (46,533) (12.8)
Income tax expense................................. 718 (0.2) 2,120 (0.6)
-------- ----- -------- -----
Loss before min. int............................... (93,831) (27.7) (48,653) (13.4)
Minority interest in subsidiary.................... (145) 0.0% 302 0.1
-------- ----- -------- -----
Net loss......................................... $(93,976) (27.8) $(48,351) (13.3)
======== ===== ======== =====
EBITDA, excluding restructuring and
transactions related expenses.................... $ 34,304 10.1% $ 35,590 9.8%
======== ===== ======== =====
</TABLE>
SALES
Net sales for the 269 day period ended September 26, 1999, declined $25.8
million or 7.1% from the 273 day period ended September 30, 1998.
In July 1999 the Company implemented an enterprise-wide computer system. The
Company experienced difficulty in implementing the computer system at its
Greencastle, Pennsylvania assembly and distribution center. As a result
significant inefficiencies were experienced and the volume of shipments was
substantially curtailed in July and to a lesser degree in August. The shipment
shortfall impacted all channels of business. Management has addressed the
shipping issues and believes that it has re-established shipping capabilities to
pre-implementation levels.
Sales in Asia continued to rebound from 1998's depressed levels, despite the
shipment shortages described above, and increased by $14.2 million or 76.3% over
the corresponding period of the prior year. The significant improvement resulted
primarily from the recovery of the Asian economies. The successful introduction
of new Corelle-Registered Trademark- patterns and new distribution channels for
CorningWare-Registered Trademark- also contributed to the increased sales.
The increase in Asian sales was more than offset by period over period
declines in North America, $36.2 million, a decline in other international
markets of $3.8 million, sales shortfalls in the Company-operated factory stores
and a shorter reporting period (269 days in 1999 versus 273 in 1998). The
computer system issues encountered in July and August dramatically curtailed
North American sales. Despite a substantial order book the Company was unable to
ship orders to customers and as a result inventory turns were lost at the retail
level. Additionally shipping capacity was prioritized in favor of third party
customers, rather that Company operated factory stores. As a result the
Company-operated factory stores experienced severe out of stocks and factory
store sales for the period were significantly below the same period in 1998.
16
<PAGE>
The Company's decision earlier in the year to exit the commercial tableware
business resulted in a year over year sales loss of $4.2 million through the
third quarter of 1999.
Company-operated factory store sales for the period ended September 26,
1999, were approximately $13 million lower than the comparative period in 1998.
The shortfall was the result of inventory out of stocks in the third quarter of
1999 caused by the start-up of CCPC's enterprise wide computer system, closure
of several clearance stores due to shortage of close out products and lost sales
days due to inclement weather in the first quarter of 1999. In the first quarter
of 1999 CCPC closed a number of clearance centers as part of a plan to improve
overall operating results. Additionally, the implementation of the Company's
1998 inventory reduction program has resulted in lower close-out sales at the
outlet stores.
Finally coincident with the start up of the new enterprise-wide computer
system the Company converted to a 52 week calendar. As a result the third
quarter closed on September 26 in 1999 versus September 30 in 1998. The Company
will continue to close the year on December 31. As such, this change should have
no impact on 1999 full year financial results, although it reduced year to date
net sales by an estimated $5 million.
GROSS PROFIT
Gross profit as a percentage of net sales was 35.1% in 1999, compared to the
1998 gross profit percentage of 33.2%. The improvement was due to a number of
factors. In the third quarter of 1998, CCPC implemented an inventory reduction
program which included planned reductions in production at CCPC's manufacturing
facilities. The reduced production levels resulted in higher cost of sales due
to the allocation of fixed costs over a smaller base of production in the third
quarter of 1998. In 1999 the Company did not repeat this exercise and as a
result experienced an improvement in gross margin. Additionally the Company
generated a further improvement in gross margin through efficiencies and cost
reductions in its manufacturing facilities, achieved through the manufacturing
rationalization announced in the first quarter of 1999. Offsetting these gains
were incremental costs incurred in the third quarter of 1999 to re-establish the
Company's ability to ship orders at pre systems implementation levels.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased $4.2 million in 1999
compared to 1998. The net decrease in selling, general and administrative
expenses is a result of the separation from Corning. CCPC now operates as an
independent Company versus a wholly-owned subsidiary of Corning and is in the
process of transitioning certain administrative functions from Corning Inc. As
an independent company the Company is able to perform many of the administrative
tasks previously performed by Corning at a significantly lower cost. These
savings were partially offset by an increase in advertising expenses to support
new products and the growth of existing products.
Selling, general and administrative expenses increased as a percentage of
net sales to 31.6% in 1999 from 30.5% in 1998 due to fixed costs being spread
over a lower sales base.
RESTRUCTURING
In the first quarter of 1999 the Company recorded a $76.2 million charge
relating to the restructuring of CCPC's manufacturing and supply organization
designed to reduce costs through the elimination of under-utilized capacity,
unprofitable product lines and increased utilization of the remaining facilities
(see Note 3 to the Condensed Consolidated Financial Statements). Management
believes that the changes covered by this plan will improve the Company's
competitive position by reducing manufacturing and distribution costs and by
opening up diverse sources of supply both in the United States and
internationally.
17
<PAGE>
TRANSACTIONS RELATED EXPENSES
Transactions related expenses of $28.9 million recorded in 1998 were
associated with the Recapitalization (see Note 2 of Notes to Consolidated
Financial Statements).
OTHER, NET
Other operating income increased $2.3 million in 1999 as a result of an
increase in the amount of royalty income in 1999 versus 1998. During 1998 the
Company licensed certain of its trademarks for use in conjunction with several
household items which were outside the Company's strategic product portfolio.
Income from this activity commenced in 1999.
OPERATING LOSS
As a result of the factors discussed above, operating loss increased by
$40.0 million to a loss of $62.9 million in 1999 from a loss of $22.9 million in
1998. Excluding the impact of the restructuring and transactions related
expenses operating income increased by $4.3 million to $13.2 million in 1999
from $8.9 million in 1998.
NET INTEREST EXPENSE
Interest expense increased $6.6 million to $30.2 million from $23.6 million
in 1998. The increase is attributable to higher debt levels related to the
Recapitalization, which occurred on April 1, 1998. The debt associated with the
Recapitalization was not drawn until the second quarter of 1998.
INCOME TAX EXPENSE
The $0.7 million income tax provision in 1999 is as a result of income
generated by certain international operations.
EBITDA (EARNINGS BEFORE NET INTEREST EXPENSE, INCOME TAXES, DEPRECIATION AND
AMORTIZATION, RESTRUCTURING EXPENSES, TRANSACTIONS RELATED EXPENSES AND
MINORITY INTEREST)
EBITDA for the period ended September 26, 1999 was $1.3 million lower than
the same period of the prior year. EBITDA as a percentage of net sales increased
to 10.1% in 1999 from 9.8% in 1998. The cost savings realized in selling,
general and administrative expenses as a result of the separation from Corning
and the manufacturing rationalization offset the shipping issues described above
on a percentage basis.
LIQUIDITY AND CAPITAL RESOURCES
RECAPITALIZATION
On March 2, 1998, Corning, Borden, the Company and CCPC Acquisition entered
into the Recapitalization Agreement, pursuant to which on April 1, 1998 CCPC
Acquisition acquired 92.0% of the outstanding shares of Common Stock of the
Company from Corning for $110.4 million. The stock acquisition was financed by
an equity investment in CCPC Acquisition by BW Holdings, an affiliate of KKR and
the parent Company of Borden and CCPC Acquisition. Pursuant to the
Recapitalization Agreement, on the closing date prior to the consummation of the
stock acquisition, CCPC paid a cash dividend to Corning of $472.6 million. On
July 10, 1998, post-closing adjustments to the cash dividend were agreed upon by
CCPC and Corning, and CCPC distributed $10.2 million to Corning. As a result of
the Recapitalization, Corning continues to hold 8.0% of the outstanding shares
of common stock.
18
<PAGE>
FINANCING ARRANGEMENTS
CCPC incurred substantial indebtedness as a result of the Recapitalization.
On April 1, 1998, CCPC entered into an interim financing agreement with Borden
and BW Holdings, an affiliate of Borden, providing $471.6 million in financing
at 9.5% maturing December 31, 1998. The interim financing was repaid in May 1998
with the proceeds of borrowings under senior credit facilities from a syndicate
of banks and other financial institutions and the issuance of senior
subordinated notes in a private placement. On October 23, 1998, CCPC exchanged
the privately placed senior subordinated notes for 9 5/8% Series B Senior
Subordinated Notes due 2008 (the "Notes") which have been registered under the
Securities Act.
The senior credit facilities provide term loans of $200.0 million and a
revolving credit facility of up to $275.0 million of which $198.0 million and
$88.2 million respectively, were outstanding at September 26, 1999. The senior
credit facilities provide for nominal annual amortization of the term loans and
final maturity in 2006. The senior credit facilities contain provisions under
which interest rates on the term loans and the revolving credit loans are
adjusted in increments based on the rate of consolidated total debt to adjusted
cash flow. At September 26, 1999, the term loan rate was at 7.56% and the
weighted average interest rate for the revolving credit facility was 7.39%. The
commitments for revolving credit loans expire in 2005. CCPC expects that its
working capital needs and other requirements will require it to obtain
replacement revolving credit facilities at that time. The 9 5/8% Series B Senior
Subordinated Notes carry a principal amount of $200.0 million and mature in
2008. The Notes are subordinate and junior in right of payment to all existing
and future senior indebtedness of CCPC, including all indebtedness under the
senior credit facilities.
The Company is in the process of syndicating an additional term tranche in
an aggregate principal amount ranging from $100 million to $125 million. The
proceeds of which will be used to refinance indebtedness incurred in connection
with the acquisitions of the General Housewares Corp. and EKCO Group Inc.
The obligations of the Company under the Notes and the indenture relating to
the Notes have not been guaranteed by subsidiaries of the Company. The credit
facilities contain numerous financial and operating covenants that will limit
the discretion of the Company's management with respect to certain business
matters. These covenants place significant restrictions on, among other things,
the ability of the Company to incur additional indebtedness, pay dividends and
other distributions, prepay subordinated indebtedness, enter into sale and
leaseback transactions, create liens or other encumbrances, make capital
expenditures, make certain investments or acquisitions, engage in certain
transactions with affiliates, sell or otherwise dispose of assets and merge or
consolidate with other entities and otherwise restrict corporate activities. The
credit facilities also require the Company to meet certain financial ratios and
tests. The credit facilities and the indenture contain customary events of
default.
The credit facilities contain numerous financial and operating covenants. In
addition, the credit facilities also require the Company to meet certain
financial ratios and tests including a ratio of debt to EBITDA and EBITDA to
cash interest expense (where EBITDA represents adjusted cash flow as described
more fully in the credit facilities). CCPC was in compliance with its covenants
at September 26, 1999.
In connection with the acquisition of EKCO Group, Inc. the Company assumed
$3.4 million aggregate principal amount of EKCO Group, Inc. 9 1/4% Senior Notes
due 2006. With the exception of the asset sale covenant, each of the principal
covenants in the indenture relating to the EKCO senior notes is no longer in
effect.
CASH FLOWS
In 1999, CCPC's operating activities used cash of $39.1 million compared to
$21.5 million during the same period in 1998. Cash saved as a result of the
Company's inventory reduction program in 1999, was
19
<PAGE>
more than offset by the deferral of certain 1998 payments until the first
quarter of 1999 as a result of tightened cash management initiatives taken late
in 1998. Investing activities used cash of $19.6 million in 1999 compared to
$12.1 million in 1998 due primarily to the costs associated with the
implementation of a comprehensive enterprise-wide resource management system.
Net cash generated in financing operations totaled $55.3 million for 1999
compared to $32.0 million for the same period in 1998 as a result of borrowings
needed to fund working capital.
CCPC currently believes that cash flow from operating activities, together
with borrowings available under the revolving credit facility, will be
sufficient to fund CCPC's currently anticipated working capital requirements,
capital expenditures, interest payments and scheduled principal payments. Any
future acquisitions, joint ventures or other similar transactions will likely
require additional capital and there can be no assurance that any such capital
will be available to the Company on acceptable terms or at all.
RESTRUCTURING
In the first quarter of 1999 the Company initiated a plan to restructure its
manufacturing and supply organization to reduce costs through the elimination of
under-utilized capacity, unprofitable product lines and increased utilization of
the remaining facilities. Management believes that the changes will improve the
Company's ability to compete by opening up diverse sources of supply both in the
United States and internationally.
The restructuring includes the discontinuation of the commercial tableware
product line and closure of the related portion of the Company's manufacturing
facility in Charleroi, Pennsylvania. In order to improve the utilization of the
Charleroi facility the Company moved Corelle-Registered Trademark- cup
production to its Martinsburg, West Virginia facility and to third party
suppliers. The Company terminated its supply contract with Corning's Greenville,
Ohio facility and Pyrex-Registered Trademark- production was consolidated at the
Charleroi facility. Additionally, the Company discontinued manufacturing and
distributing rangetop cookware and closed its manufacturing and distribution
center in Clinton, Illinois. Future supply will be sourced from third party
manufacturers.
The cash and non-cash elements of the restructuring charge approximate
$20.6 million and $55.6 million, respectively. The Company has spent
$6.3 million in cash on the program to date. The remaining cash charges will
primarily be incurred in the fourth quarter of 1999 and the first quarter of
2000.
SUBSEQUENT EVENT
In two separate transactions during the fourth quarter of 1999 the Company
completed the acquisition of General Housewares Corp. and EKCO Group, Inc. The
transactions were previously announced in the third quarter of 1999.
The General Housewares Corp. transaction, which closed on October 21, is
valued at approximately $159 million, including a price of $28.75 per share of
General Housewares common stock, the repayment of debt and transaction fees. The
Company financed the acquisition through the issuance of $50 million in Junior
Preferred Stock to an affiliate of the Company's parent and additional
borrowings under the Company's existing credit facilities. The Junior Preferred
Stock consists of two million shares with each share having a liquidation
preference of $25.00. The Junior Preferred Stock provides for the payment of
cash dividends of $1.00 per share per quarter if declared by the Company and
certain financial ratios are satisfied.
The EKCO Group Inc. transaction, which closed on October 25, is valued at
approximately $254 million, including the acquisition of EKCO Group, Inc. common
stock, the assumption of $3.4 million in 9 1/4 series B senior notes due in 2006
and transaction fees. The Company financed this acquisition through the issuance
of $150 million in common stock from the Company's parent and a $71.5 million
short term borrowing from an affiliate of the Company's parent.
20
<PAGE>
IMPACT OF THE YEAR 2000 ISSUE
OVERVIEW
The Year 2000 issue is the result of computer programs written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities. If not addressed, the Year 2000
issue could have a material adverse impact on the business operations and
financial results of the Company.
To address this issue, the Company's Year 2000 Program is a risk-based plan
divided into three phases that are being executed by both internal and external
resources. These phases are: Phase I--an inventory of all systems, assigning a
business priority for each system and performing a preliminary assessment of
Year 2000 susceptibility; Phase II--completion of a detailed Year 2000
susceptibility analysis and development of remediation plans and contingency
plans; and Phase III--implementation of the remediation plans and, if necessary,
contingency plan(s) and completing final system testing.
The Year 2000 efforts are divided into three areas that include,
(1) systems being replaced by new enterprise-wide system implementations;
(2) systems that will not be replaced by the new enterprise-wide system
implementations, including non-information technology systems such as plant
process controls; and (3) external suppliers and customers. A discussion of each
area of activity relative to the three phased approach follows.
ENTERPRISE-WIDE SYSTEMS
As of September 26, 1999, the Company substantially completed all of the
implementation of the enterprise-wide resource management system. The
enterprise-wide system versions are represented to be Year 2000 compliant by the
vendor. Due to the relative complexity and importance of the existing business
and accounting systems to ongoing operations, the new enterprise-wide system
implementations will address the significant majority of the Company's internal
Year 2000 risk associated with our business and accounting systems.
OTHER SYSTEMS
As of September 26, 1999, the Company completed substantially all of the
needed remediation and testing work for these other systems.
SUPPLIERS AND CUSTOMERS
The Company has essentially completed the final phase of the plan to assess
and address the risks related to third party suppliers and customers. As a
result of initial inquiries, supplier and customer responses have been received.
These responses have been evaluated and appropriate procedures performed to
determine the extent to which CCPC may be vulnerable to the failure of third
parties to resolve their own Year 2000 issues. Efforts related to suppliers and
customers, including development of contingency plans where appropriate were
refined by September 26, 1999. Although the Company systems do not rely
significantly on the systems of other companies, the Company cannot provide
assurance that the failure of third parties to address the Year 2000 issue will
not have an adverse impact on business operations and results.
21
<PAGE>
BUSINESS CONTINUATION TEAMS
To optimize and integrate contingency planning, business continuation teams
have been formed at major operational locations to perform cross-functional risk
assessment and develop appropriate, concerted contingency plans commensurate
with perceived probability of failure and adverse financial impact. These
activities are essentially complete.
COSTS
Significant investments in enterprise-wide information systems have been
made since 1996 that will total approximately $20.0 million by December 31,
1999, of which $17.6 million was spent as of September 26, 1999. The cost to
make the remaining systems Year 2000 compliant is estimated to be $0.6 million.
As of September 26, 1999 approximately $0.5 million was spent on these efforts.
RISKS
Due to the general uncertainty inherent in the Year 2000 problem, including
the uncertainty associated with suppliers and customers, the potential effect of
the Year 2000 issue on the financial results and condition of CCPC has not been
measured. CCPC intends its Year 2000 Program, as described above, to be
completed on a timely basis so as to significantly reduce the level of
uncertainty and the impact on business operations and financial results.
Contingency plans have been and will continue to be developed and implemented to
mitigate Year 2000 risks and the effect of Year 2000 issues. These contingency
plans generally include remediation of existing business systems in the event
the enterprise-wide implementations are delayed. To date, some of these
contingency plans have been implemented to reduce the risk of potential delays
in enterprise-wide system implementations.
Readers are cautioned that forward-looking statements contained in the Year
2000 Update should be read in conjunction with the disclosure under the heading:
"Forward-Looking and Cautionary Statements".
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. The factors discussed below,
among others, could cause actual results to differ materially from those
contained in forward-looking statements made in this report, including without
limitation, in "Management's Discussion and Analysis of Financial Condition and
Results of Operations," in the Company's related press releases and in oral
statements made by authorized officers of the Company. When used in this report,
any press release or oral statement, the words "looking forward," "estimate,"
"project," "anticipate," "expect," "intend," "believe" and similar expressions
are intended to identify a forward-looking statement. Forward-looking statements
are not guarantees of future performance and are subject to risks, uncertainties
and other factors (many of which are beyond the Company's control) that could
cause actual results to differ materially from future results expressed or
implied by such forward-looking statements. The forward-looking statements
regarding such matters are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions and expected future developments, as well as other factors it
believes are appropriate in the circumstances. Whether actual results and
developments will conform with the Company's expectations and predictions,
however, is subject to a number of risks and uncertainties, in addition to the
risk factors discussed above, including: failure by the Company or one or more
of its significant vendors or customers to fix a Year 2000 problem, integration
of the Company's acquisitions of General Housewares Corp. and EKCO Group, Inc.,
failure to resolve system implementation issues, a global economic slowdown in
any one, or all, of the Company's sales categories; loss of sales as the Company
streamlines and focuses on strategic accounts; unpredictable difficulties or
delays in the development of new product programs; increased difficulties in
obtaining a consistent supply of basic raw materials such as
22
<PAGE>
sand, soda ash, steel or copper and energy inputs such as electrical power or
natural gas at stable pricing levels; development by the Company of an adequate
administrative infrastructure; technological shifts away from the Company's
technologies and core competencies; unforeseen interruptions to the Company's
business with its largest customers resulting from, but not limited to,
financial instabilities or inventory excesses; the effects of extreme changes in
monetary and fiscal policies in the United States and abroad, including extreme
currency fluctuations and unforeseen inflationary pressures such as those
recently experienced by certain Asian economies; drastic and unforeseen price
pressures on the Company's products or significant cost increases that cannot be
recovered through price increases or productivity improvements; significant
changes in interest rates or in the availability of financing for the Company or
certain of its customers; loss of any material intellectual property rights; any
difficulties in obtaining or retaining the management or other human resource
competencies that the Company needs to achieve its business objectives; and
other factors, many of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this Form 10-Q are
qualified by these cautionary statements, and there can be no assurance that the
actual results or developments anticipated by the Company will be realized or,
even if substantially realized, that they will have the expected consequences to
or effects on the Company and its subsidiaries or their business or operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
CCPC has market risk in the areas of foreign currency and fixed interest
rate debt.
Currency exchange fluctuations could significantly affect CCPC's foreign
sales and earnings. The increased strength of the U.S. dollar has, in 1999, and
may in future periods, increase the effective price of the Company's products
sold in U.S. dollars with the result of materially adversely affecting sales.
CCPC's costs are predominantly denominated in U.S. dollars. Thus, with respect
to sales conducted in foreign currencies, increased strength of the U.S. dollar
decreases CCPC's reported revenues and margins in respect of such sales to the
extent CCPC is unable or determines not to increase local currency prices.
During the third quarter of 1999 the Company executed an interest rate swap
on $15.0 million notional amount of its $198.0 million senior credit facility.
The swap fixes the interest rate to be paid by the Company at 6.295%. The swap
expires in 2003. At September 26, 1999 the notional amount of the swap exceeded
its fair value by $0.1 million.
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PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no pending legal proceedings which are material in relation to the
consolidated financial statements of CCPC.
CCPC has been engaged in, and will continue to be engaged in, the defense of
product liability claims related to its products, particularly its bakeware and
cookware product lines. The Company maintains product liability coverage,
subject to certain deductibles and maximum coverage levels that the Company
believes is adequate and in accordance with industry standards.
In addition to product liability claims, from time to time the Company is
involved in various legal actions in the ordinary course of business. The
Company is not currently involved in any legal actions, which, in the belief of
management, could have a material adverse impact on the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit
See the Exhibit Index
(b) REPORTS ON FORM 8-K
On November 4, 1999, the registrant filed a report on Form 8-K as of October
21, 1999 to report under "Item 2. Acquisition or Disposition of Assets"
reporting the completion of the acquisitions of General Housewares Corp. and
EKCO Group, Inc.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
CCPC HOLDING COMPANY, INC.
(Registrant)
November 10, 1999 Peter F. Campanella
Date President and Chief Executive Officer
November 10, 1999 Anthony P. Deasey
Date Senior Vice President--Finance and Chief Financial Officer
</TABLE>
25
<PAGE>
CCPC HOLDING COMPANY, INC.
EXHIBIT INDEX
This exhibit is numbered in accordance with Exhibit Table I of Item 601 of
Regulation S-K
<TABLE>
<CAPTION>
PAGE NUMBER
IN MANUALLY
EXHIBIT # DESCRIPTION SIGNED ORIGINAL
- --------------------- ------------------------------------------------------------ ---------------
<C> <S> <C>
3 Amended and Restated Certificate of Incorporation of CCPC
Holding Company, Inc.
4 Form of 9 1/4% Senior Note due 2006 (incorporated herein by
reference to Exhibit 4.2 (b) to EKCO Group, Inc. Form 10-K
for the year ended December 31, 1995.
27 Financial Data Schedule
</TABLE>
26
<PAGE>
EXHIBIT 3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CCPC HOLDING COMPANY, INC.
CCPC Holding Company, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "CORPORATION"), hereby certifies as follows:
I. The name of the Corporation is "CCPC Holding Company, Inc.," which was
amended from "Corning Consumer Products Company" pursuant to a Certificate of
Amendment of Certificate of Incorporation filed with the Secretary of the State
of Delaware, which was amended from "Corning Vitro Corporation" pursuant to a
Certificate of Amendment of Certificate of Incorporation filed with the
Secretary of the State of Delaware. The original Certificate of Incorporation of
the Corporation was filed with the Secretary of State of the State of Delaware
on September 19, 1991.
II. The text of the Certificate of Incorporation as amended heretofore is
hereby further amended and restated to read as herein set forth in full:
FIRST: The name of the Corporation is:
CCPC Holding Company, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to design, manufacture, construct,
use, buy, sell, lease, hire and deal in and with glass, glass ceramic, metal,
plastic and other consumer housewares, cookware, beverage ware and service ware
products and other articles and property of all kinds, to render service of all
kinds and generally to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
FOURTH: (A) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 80,000,000 shares, of which
75,000,000 shares shall be Common Stock, par value one cent ($.01) per share,
and 5,000,000 shares shall be Preferred Stock, par value one cent ($.01) per
share.
(B) At the close of business on March 31, 1998, and without any further
action on the part of the Corporation or its stockholders, each share of the
Corporation's Common Stock then issued shall automatically be subdivided,
changed and converted into 24,000 fully paid and nonassessable shares of Common
Stock.
(C) The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors of the Corporation is authorized to fix by
resolution or resolutions the designation of each series of Preferred Stock and
the powers, designations, preferences and relative participating, optional or
other rights, if any, or the qualifications, limitations or restrictions
thereof, including, without limiting the generality of the foregoing, such
provisions as may be desired concerning voting, redemption, dividends,
dissolution or the distribution of assets, conversion or exchange, and such
other subjects or matters as may be fixed by resolution or resolutions of the
Board of Directors under the General Corporation Law of the State of Delaware.
Unless otherwise provided in such resolution or resolutions, shares of Preferred
Stock of any series which shall be issued and thereafter acquired by the
Corporation through purchase, redemption, exchange, conversion or otherwise
shall return to the status of authorized but unissued Preferred Stock.
(D) 1. DESIGNATION OF JUNIOR CUMULATIVE PAY-IN-KIND PREFERRED STOCK. The
designation of a series of preferred stock shall be "Junior Cumulative
Pay-In-Kind Preferred Stock" (the "JUNIOR PREFERRED STOCK") consisting of
2,000,000 shares. The par value of the Junior Preferred Stock shall be $0.01 per
share. The original liquidation preference of the Junior Preferred Stock shall
be $25 per share ("ORIGINAL LIQUIDATION
<PAGE>
PREFERENCE"), which value does not represent a determination by the Board of
Directors for the purposes of the Corporation's capital accounts.
2. RANK. The Junior Preferred Stock shall, with respect to dividend rights
and rights on liquidation, winding up and dissolution, rank senior to the Common
Stock of the Corporation. (All equity securities of the Corporation to which the
Junior Preferred Stock ranks senior, including the Common Stock, are
collectively referred to herein as the "JUNIOR SECURITIES", all equity
securities of the Corporation with which the Junior Preferred Stock ranks on a
parity are collectively referred to herein as the "PARITY SECURITIES" and all
equity securities of the Corporation (other than convertible debt securities) to
which the Junior Preferred Stock ranks junior, whether with respect to dividends
or upon liquidation, dissolution, winding up or otherwise, are collectively
referred to herein as the "SENIOR SECURITIES".) The Junior Preferred Stock shall
be subject to the creation of Junior Securities, Parity Securities and Senior
Securities.
3. DIVIDENDS.
(i) The holders of the shares of Junior Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, out
of funds legally available for the payment of dividends, cumulative
dividends at the rate of $0.75 per share per calendar quarter. Such
dividends shall be payable in quarterly payments on March 31, June 30,
September 30 and December 31 of each year commencing with June 30, 1998
(each of such dates being a "DIVIDEND PAYMENT DATE"), in preference to
dividends on the Junior Securities. Such dividends shall be paid to the
holders of record at the close of business on the March 15, June 15,
September 15 or December 15, as the case may be, immediately preceding the
relevant dividend payment date (each of such dates being a "DIVIDEND PAYMENT
RECORD DATE"). Each dividend shall accrue (whether or not declared) from the
previous dividend payment date (or, with respect to the first dividend, from
the date of initial issuance of the Junior Preferred Stock). Dividends
payable for any partial dividend period shall be pro rated on the basis of a
360-day year consisting of twelve 30-day months (four 90-day quarters) and
the actual number of days elapsed in the period for which payable.
Dividend payments made with respect to the Junior Preferred Stock may be
made (a) by issuing fully paid and nonassessable shares (or fractional
shares as hereinafter described) of Junior Preferred Stock with an aggregate
Original Liquidation Preference equal to the aggregate amount of dividends
being made, (b) in cash or (c) in any combination thereof.
Dividends on the Junior Preferred Stock shall be fully cumulative, and
from and after any Dividend Payment Date on which any dividend that has been
accrued through such date has not been declared or paid in full or any
payment date set for a redemption on which such redemption has not been paid
in full, the amount of such unpaid dividends or unpaid redemption payment
(the "ARREARAGE") shall accrue dividends at a rate of 12% per annum. Such
dividends in respect of any Arrearage shall accrue on a daily basis, whether
or not declared, until the Arrearage is paid, shall be calculated as of such
successive Dividend Payment Date and shall constitute additional Arrearage
from and after any Dividend Payment Date to the extent not paid on such
Dividend Payment Date. References herein to dividends that have accrued with
respect to the Junior Preferred Stock shall include the amount of any
Arrearage together with dividends accrued on such Arrearage pursuant to the
immediately preceding two sentences.
"LIQUIDATION PREFERENCE" means the Original Liquidation Preference, plus
an amount in cash equal to all accrued and unpaid dividends (including
Arrearage), whether or not declared (including an amount equal to a prorated
dividend from the last Dividend Payment Date or the date of initial
issuance, whichever is later, to the date such Liquidation Preference is
being determined). The Liquidation Preference of a share of Junior Preferred
Stock will increase on a daily basis as dividends accrue on such share,
whether or not declared, and will decrease only to the extent such dividends
are actually paid in cash or additional shares of Junior Preferred Stock are
actually issued, all as provided in this paragraph 3. The issuance of such
shares of Junior Preferred Stock (plus the amount of cash
2
<PAGE>
dividends, if any, paid together therewith) shall constitute full payment of
such dividend. In no event shall an election by the Board of Directors to
pay dividends, in full or in part, in cash on any Dividend Payment Date
preclude the Board of Directors from electing either such alternative in
respect of all or any portion of any subsequent dividend.
(ii) All dividends and distributions paid with respect to shares of the
Junior Preferred Stock pursuant to Paragraph 3(i) shall be paid PRO RATA to
the holders entitled thereto. If the Board of Directors elects on any
Dividend Payment Date to pay any dividend partially in shares of Junior
Preferred Stock, the proportion of such cash and shares of Junior Preferred
Stock shall be the same for each outstanding share of Junior Preferred
Stock.
(iii) Each fractional share of Junior Preferred Stock outstanding shall
be entitled to a ratably proportionate amount of dividends accruing with
respect to each outstanding share of Junior Preferred Stock pursuant to
paragraph (i) hereof, and all such dividends with respect to such
outstanding fractional shares shall be fully cumulative and shall accrue
(whether or not declared), and shall be payable in the same manner and at
such times as provided for in paragraph 3(i) hereof, with respect to
dividends on each outstanding share of Junior Preferred Stock.
(iv) No full dividends shall be declared by the Board of Directors or
paid or set apart for payment by the Corporation on any Parity Securities,
nor shall the Corporation make any distribution in respect of any Parity
Securities, either directly or indirectly, and whether in cash, obligations
or shares of the Corporation or other property, for any period unless full
cumulative dividends have been or contemporaneously are declared and paid or
declared and a sum set apart sufficient for such payment on the Junior
Preferred Stock for all dividend payment periods terminating on or prior to
the date of payment, or setting apart for payment, of such full dividends on
or distributions in respect of such Parity Securities. If any dividends are
not paid in full, as aforesaid, upon the shares of the Junior Preferred
Stock and any other Parity Securities, all dividends or distributions
declared upon shares of the Junior Preferred Stock and any other Parity
Securities shall be declared PRO RATA so that the amount of dividends or
distributions declared per share of the Junior Preferred Stock and such
Parity Securities shall in all cases bear to each other the same ratio that
accrued dividends per share on the Junior Preferred Stock and such Parity
Securities bear to each other. Any dividend not paid pursuant to paragraph
3(i) hereof or this paragraph 3(iv) shall be fully cumulative and shall
accrue (whether or not declared) as set forth in paragraph 3(i) hereof.
(v) (a) Holders of shares of the Junior Preferred Stock shall be
entitled to receive the dividends provided for in paragraph 3(i) hereof in
preference to and in priority over any dividends upon any of the Junior
Securities.
(b) So long as any shares of the Junior Preferred Stock are outstanding,
the Board of Directors shall not declare, and the Corporation shall not pay
or set apart for payment any dividend on any of the Junior Securities or
make any payment on account of, or set apart for payment money for a sinking
or other similar fund for, the repurchase, redemption or other retirement
of, any of the Junior Securities or Parity Securities or any warrants,
rights or options exercisable for or convertible into any of the Junior
Securities or Parity Securities (other than the repurchase, redemption or
other retirement of debentures or other debt securities that are convertible
or exchangeable into any of the Junior Securities or Parity Securities), or
make any distribution in respect of the Junior Securities, either directly
or indirectly, and whether in cash, obligations or shares of the Corporation
or other property (other than distributions or dividends in Junior
Securities to the holders of Junior Securities), and shall not permit any
corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any of the Junior Securities or Parity
Securities or any warrants, rights, calls or options exercisable for or
convertible into any of the Junior Securities or Parity Securities (other
than the repurchase, redemption or other retirement of debentures or other
debt securities that are convertible or exchangeable into any of the Junior
Securities or Parity Securities)
3
<PAGE>
unless prior to or concurrently with such declaration, payment, setting
apart for payment, repurchase, redemption or other retirement or
distribution, as the case may be, all accrued and unpaid dividends on shares
of the Junior Preferred Stock not paid on the dates provided for in
paragraph 3(i) hereof (including accrued dividends not paid by reason of the
terms and conditions of paragraph 3(i) or paragraph 3(iv) hereof) shall have
been or are paid in full and fully in cash or in fully paid and
nonassessable shares (or fractional shares) of Junior Preferred Stock;
PROVIDED that, this paragraph shall not prohibit the Corporation from
repurchasing any Junior Securities or any warrants, rights or options
exercisable for or convertible into Junior Securities from any employee of
the Corporation or its subsidiaries pursuant to the terms of any agreements
with such employee.
(c) Subject to the foregoing provisions of this paragraph 3, the Board
of Directors may declare and the Corporation may pay or set apart for
payment dividends and other distributions on any of the Junior Securities or
Parity Securities, and may repurchase, redeem or otherwise retire any of the
Junior Securities or Parity Securities or any warrants, rights or options
exercisable for or convertible into any of the Junior Securities or Parity
Securities, and the holders of the shares of the Junior Preferred Stock
shall not be entitled to share therein.
4. PAYMENT ON LIQUIDATION.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
shares of Junior Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders an amount in cash equal to the Liquidation Preference for each
share outstanding, before any payment shall be made or any assets
distributed to the holders of any of the Junior Securities. If the assets of
the Corporation are not sufficient to pay in full the liquidation payments
payable to the holders of outstanding shares of the Junior Preferred Stock
and any Parity Securities, then the holders of all such shares shall share
ratably in such distribution of assets in accordance with the amount which
would be payable on such distribution if the amounts to which the holders of
outstanding shares of Junior Preferred Stock and the holders of outstanding
shares of such Parity Securities are entitled were paid in full. Except as
provided in this paragraph 4(i), holders of Junior Preferred Stock shall not
be entitled to any distribution in the event of liquidation, dissolution or
winding up of the affairs of the Corporation.
(ii) For the purposes of this paragraph 4, neither the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Corporation nor the consolidation or merger of the
Corporation with or into one or more other corporations nor the
consolidation or merger of one or more corporations with or into the
Corporation shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up.
5. REDEMPTION.
(i) OPTIONAL REDEMPTION. At any time and from time to time, the
Corporation shall have the right, at its sole option and election, to redeem
any or all of the outstanding shares of Junior Preferred Stock, in whole or
in part. The redemption price shall be paid in cash out of funds legally
available therefor and will be in an amount per share (the "REDEMPTION
PRICE") equal to the Liquidation Preference.
(ii) NOTICE AND REDEMPTION PROCEDURES. Notice of the redemption of
shares of Junior Preferred Stock pursuant to paragraph 5(i) hereof shall be
sent to the holders of record of the shares of Junior Preferred Stock to be
redeemed by first class mail, postage prepaid, at such holder's address as
it appears on the transfer books of the Corporation not more than 60 nor
fewer than 30 days prior to the redemption date; PROVIDED that any failure
to give such notice to any holder, or any defect in such notice, shall not
affect the validity of the proceedings for the redemption of any shares of
Junior
4
<PAGE>
Preferred Stock held by any other holder. On or after the date fixed for
redemption stated in such notice, each holder of the shares called for
redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the Redemption Price. From and after the date
of any redemption of any shares effected by the Corporation pursuant to this
paragraph 5, all dividends on such shares shall cease to accrue and all
rights of the holders thereof as holders of such shares shall cease and
terminate.
(iii) PUT EVENT. Any holder of record of shares of Junior Preferred
Stock, in accordance with the procedures set forth in paragraph
5(iv) hereof and subject to the provisions set forth in paragraph
5(v) hereof, may require the Corporation to redeem any or all of the shares
of Junior Preferred Stock held by such holder at the Redemption Price
therefor, upon the occurrence of any of the following events (each a "PUT
EVENT"):
(a) The Corporation becomes aware of (by way of a report or any other
filing pursuant to Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), proxy, vote, written notice or otherwise) the
acquisition by any "Person" or "Group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), other than the permitted holders of
the Junior Preferred Stock as described in paragraph 7, in a single
transaction or in a related series of transactions, by way of merger,
consolidation or other business combination or purchase of "beneficial
ownership" (as defined in Rule 13(d)-3 under the Exchange Act) of 50% or
more of the total voting power entitled to vote in the election of directors
of the Corporation; or
(b) the sale, lease, transfer or other disposition of all or
substantially all of the consolidated assets of the Corporation and its
subsidiaries to any Person or Group, other than the permitted holders of the
Junior Preferred Stock as described in paragraph 7.
(iv) PUT EVENT NOTICE AND REDEMPTION PROCEDURES. Notice of any Put
Event shall be sent to the holders of record of the outstanding shares of
Junior Preferred Stock not more than 30 days following such Put Event, which
notice shall describe the transaction or transactions constituting such Put
Event and set forth each holder's right to require the Corporation to redeem
any or all shares of Junior Preferred Stock held by such holder out of funds
legally available therefor, the redemption date (which date shall be not
more than 60, nor less than 30, days from the date of such notice) and the
reasonable procedures to be followed by such holders in exercising such
redemption right. Any failure by the Corporation to give the notice
prescribed by the preceding sentence, or any defects in such notice, shall
not prejudice the rights of any holder of shares of Junior Preferred Stock
to cause the Corporation to redeem any such shares held by such holder. In
the event a holder of shares of Junior Preferred Stock shall elect to
require the Corporation to redeem any or all such shares of Junior Preferred
Stock pursuant to paragraph 5(iii) hereof, such holder shall deliver within
20 days of the mailing of the Corporation's notice described in this
paragraph 5(iv), or, if no notice is given, at any time following the last
day the Corporation was required to give notice of the Put Event in
accordance with this paragraph 5(iv) (in which case the date of redemption
shall be the date which is the later of (x) 60 days following the last day
the Corporation was required to give notice in accordance with this
paragraph 5(iv) and (y) ten days following the delivery of such election by
such holder), a written notice, in the form specified by the Corporation (if
the Corporation did in fact give the notice required by this paragraph
5(iv)), to the Corporation so stating, and specifying the number of shares
to be redeemed pursuant to paragraph 5(iii) hereof; PROVIDED, HOWEVER, that
such holders may deliver a notice of an election to redeem at any time
within 80 days following the occurrence of a Put Event (and such holders
shall not be required to wait for the Corporation's notice provided for in
this paragraph 5(iv) or for the expiration of the time allowed for the
Corporation's notice hereunder), in which case the redemption date shall be
90 days after the date of the Put Event. The Corporation shall redeem the
number of shares so specified on the date fixed for redemption.
5
<PAGE>
(v) LIMITATION ON PAYMENT OF REDEMPTION PRICE. Notwithstanding
anything to the contrary in paragraph 5, the Corporation shall not be
required to pay the Redemption Price for any shares of Junior Preferred
Stock which are required to be redeemed pursuant to paragraphs 5(iii) and
(iv) in respect of a Put Event (i) to the extent and so long as such payment
would constitute a default or event of default under the Corporation's
senior credit facilities and (ii) until the prior payment of all amounts due
pursuant to any actually exercised right to require the redemption or
repurchase by the Corporation of, or the prior payment of all amounts due
pursuant to or the waiver of any right to accelerate the payments under, any
Senior Securities, debt securities or indebtedness for borrowed money of the
Corporation arising as a result of such Put Event.
6. VOTING RIGHTS. The holders of record of shares of Junior Preferred
Stock shall not be entitled to any voting rights, except as otherwise provided
by law.
7. TRANSFERABILITY. The shares of the Junior Preferred Stock may not be
sold, transferred, assigned, pledged or otherwise disposed of to any Person or
Group other than (i) BW Holdings L.L.C., (ii) any Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, BW Holdings L.L.C. and (iii) any partner, member or
stockholder of any Person described in the preceding clauses (i) and (ii).
8. REACQUIRED SHARES. Shares of Junior Preferred Stock that have been
issued and reacquired in any manner, including shares reacquired by purchase or
redemption, shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) have the status of authorized and unissued shares of
preferred stock undesignated as to class and series and may be redesignated and
reissued as part of any series of any class of preferred stock other than the
Junior Preferred Stock.
9. MUTILATED OR MISSING CERTIFICATES. If any of the Junior Preferred Stock
certificates shall be mutilated, lost, stolen or destroyed, the Corporation
shall issue, in exchange and substitution for and upon cancellation of the
mutilated certificate, or in lieu of and substitution for the certificate lost,
stolen or destroyed, a new certificate of like tenor and representing an
equivalent amount of shares of Junior Preferred Stock, but only upon receipt of
evidence of such loss, theft or destruction of such certificate and indemnity,
if requested.
10. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of
the Junior Preferred Stock set forth in this Amended and Restated Certificate of
Incorporation (as amended from time to time) is invalid, unlawful or incapable
of being enforced by reason of any rule or law or public policy, all other
rights, preferences and limitations set forth in such Amended and Restated
Certificate of Incorporation, as amended, which can be given effect without the
invalid, unlawful or unenforceable right, preference or limitation shall,
nevertheless remain in full force and effect, and no right, preference or
limitation herein set forth shall be deemed dependent upon any other such right,
preference or limitation unless so expressed herein.
11. NOTICES. All notices and other communications required or permitted to
be given to the Corporation under this section (D) of ARTICLE FOURTH shall be
made by courier to the Corporation at its principal executive offices at the
following address:
Corning Consumer Products Company
E-Building
Houghton Park
Corning, New York 14831
Telecopy: (607) 974-2215
Attention: Secretary
Minor imperfections in any such notice shall not affect the validity thereof.
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<PAGE>
12. LIMITATIONS. Except as may otherwise be required by law, the shares of
Junior Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth in this Amended and Restated Certificate of Incorporation of the
Corporation.
(E) 1. DESIGNATION OF SERIES B JUNIOR CUMULATIVE PREFERRED STOCK. The
designation of a series of preferred stock shall be "Series B Junior Cumulative
Preferred Stock" (the "SERIES B PREFERRED STOCK") consisting of 2,500,000
shares. The par value of the Series B Preferred Stock shall be $0.01 per share.
The original liquidation preference of the Series B Preferred Stock shall be $25
per share ("ORIGINAL LIQUIDATION PREFERENCE"), which value does not represent a
determination by the Board of Directors for the purposes of the Corporation's
capital accounts.
2. RANK. The Series B Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank senior to the
Common Stock of the Corporation and on a parity with the Junior Preferred Stock.
(All equity securities of the Corporation to which the Series B Preferred Stock
ranks senior, including the Common Stock, are collectively referred to herein as
the "JUNIOR SECURITIES", all equity securities of the Corporation with which the
Series B Preferred Stock ranks on a parity are collectively referred to herein
as the "PARITY SECURITIES" and all equity securities of the Corporation (other
than convertible debt securities) to which the Series B Preferred Stock ranks
junior, whether with respect to dividends or upon liquidation, dissolution,
winding up or otherwise, are collectively referred to herein as the "SENIOR
SECURITIES".) The Series B Preferred Stock shall be subject to the creation of
Junior Securities, Parity Securities and Senior Securities.
3. DIVIDENDS.
(i) Shares of Series B Preferred Stock shall accumulate dividends at the
rate of $1.00 per share per calendar quarter, which dividends, if declared,
shall be paid in cash. If declared, such dividends shall be payable in
quarterly payments on March 31, June 30, September 30 and December 31 of
each year commencing with December 31, 1999 (each of such dates, regardless
of whether any dividends have been paid or declared and set aside for
payment on such date, a "DIVIDEND PAYMENT DATE"), in preference to dividends
on the Junior Securities. Such dividends shall be paid to the holders of
record at the close of business on the March 15, June 15, September 15 or
December 15, as the case may be, immediately preceding the relevant dividend
payment date (each of such dates being a "DIVIDEND PAYMENT RECORD DATE").
Dividends shall begin to accumulate on outstanding Series B Preferred Stock
from the date of issuance and shall be deemed to accumulate from day to day
whether or not earned or declared until paid. Dividends shall accumulate on
the basis of a 360-day year consisting of twelve 30-day months (four 90-day
quarters) and the actual number of days elapsed in the period for which
payable. The Corporation shall not pay dividends on the outstanding
Series B Preferred Stock unless the Interest Coverage Ratio (as defined
below) for the Corporation's last fiscal year ending prior to the Dividend
Payment Date is greater than 2.75 and such dividend payment is not in
contravention of the Corporation's then existing indentures, credit
facilities or other contracts or instruments. For purposes of this
paragraph, "Interest Coverage Ratio" means, for a given fiscal year and in
accordance with United States Generally Accepted Accounting Principles, the
ratio of (a) the Corporation's earnings before interest, tax, depreciation
and amortization expenses to (b) the Corporation's interest expense.
Dividends on the Series B Preferred Stock shall be fully cumulative, and
from and after any Dividend Payment Date on which any dividend that has
accumulated or been deemed to have accumulated through such date has not
been paid in full or any payment date set for a redemption on which such
redemption payment has not been paid in full, additional dividends shall
accumulate in respect of the amount of such unpaid dividends or unpaid
redemption payment (the "ARREARAGE") at a rate of 16% per annum. Such
additional dividends in respect of any Arrearage shall be deemed to
accumulate from day to day, whether or not earned or declared, until the
Arrearage is paid, shall be calculated as of such successive Dividend
Payment Date and shall constitute additional Arrearage
7
<PAGE>
from and after any Dividend Payment Date to the extent not paid on such
Dividend Payment Date. References herein to dividends that have accumulated
or that have been deemed to have accumulated with respect to the Series B
Preferred Stock shall include the amount, if any, of any Arrearage together
with any dividends accumulated or deemed to have accumulated on such
Arrearage pursuant to the immediately preceding two sentences. Additional
dividends in respect of any Arrearage may be declared and paid at any time,
in whole or in part, without reference to any Dividend Payment Date, to
holders of record on such record date as may be fixed by the Board of
Directors (which record date shall be no less than 10 days prior to the
corresponding payment date). Dividends in respect of any Arrearage shall be
paid in cash.
"LIQUIDATION PREFERENCE" means the Original Liquidation Preference, plus
an amount in cash equal to all dividends accumulated or deemed to have
accumulated thereon (including Arrearage), whether or not declared
(including an amount equal to a prorated dividend from the last Dividend
Payment Date or the date of initial issuance, whichever is later, to the
date such Liquidation Preference is being determined). The Liquidation
Preference of a share of Series B Preferred Stock will increase on a daily
basis as dividends accumulate or are deemed to accumulate on such share,
whether or not declared, and will decrease only to the extent such dividends
are actually paid in cash as provided in this paragraph 3.
(ii) All dividends and distributions paid with respect to shares of the
Series B Preferred Stock pursuant to paragraph 3(i) shall be paid PRO RATA
to the holders entitled thereto. Dividends that are declared and paid in an
amount less than the full amount of dividends accumulated on the Series B
Preferred Stock (and on any Arrearage) shall be applied first to the
earliest dividend which has not theretofore been paid.
(iii) Each fractional share of Series B Preferred Stock outstanding shall
be entitled to a ratably proportionate amount of dividends accumulating with
respect to each outstanding share of Series B Preferred Stock pursuant to
paragraph (i) hereof, and all such dividends with respect to such
outstanding fractional shares shall be fully cumulative and shall accumulate
(whether or not earned or declared), and shall be payable in the same manner
and at such times as provided for in paragraph 3(i) hereof, with respect to
dividends on each outstanding share of Series B Preferred Stock.
(iv) No full dividends shall be declared by the Board of Directors or
paid or set apart for payment by the Corporation on any Parity Securities
other than the Junior Cumulative Pay-Kind Preferred Stock, nor shall the
Corporation make any distribution in respect of any Parity Securities other
than the Junior Cumulative Pay-Kind Preferred Stock, either directly or
indirectly, and whether in cash, obligations or shares of the Corporation or
other property, for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum set apart
sufficient for such payment on the Series B Preferred Stock for all dividend
payment periods terminating on or prior to the date of payment, or setting
apart for payment, of such full dividends on or distributions in respect of
such Parity Securities. If any dividends are not paid in full, as aforesaid,
upon the shares of the Series B Preferred Stock and any other Parity
Securities other than the Junior Cumulative Pay-Kind Preferred Stock, all
dividends or distributions declared upon shares of the Series B Preferred
Stock and any other Parity Securities other than the Junior Cumulative
Pay-Kind Preferred Stock shall be declared PRO RATA so that the amount of
dividends or distributions declared per share of the Series B Preferred
Stock and such Parity Securities shall in all cases bear to each other the
same ratio that accrued dividends per share on the Series B Preferred Stock
and such Parity Securities bear to each other. Any dividend not paid
pursuant to paragraph 3(i) hereof or this paragraph 3(iv) shall be fully
cumulative and shall accumulate (whether or not declared) as set forth in
paragraph 3(i) hereof.
8
<PAGE>
(v) (a) Holders of shares of the Series B Preferred Stock shall be
entitled to receive the dividends provided for in paragraph 3(i) hereof in
preference to and in priority over any dividends upon any of the Junior
Securities.
(b) So long as any shares of the Series B Preferred Stock are
outstanding, the Board of Directors shall not declare, and the Corporation
shall not pay or set apart for payment any dividend on any of the Junior
Securities or make any payment on account of, or set apart for payment money
for a sinking or other similar fund for, the repurchase, redemption or other
retirement of, any of the Junior Securities or Parity Securities or any
warrants, rights or options exercisable for or convertible into any of the
Junior Securities or Parity Securities (other than the repurchase,
redemption or other retirement of debentures or other debt securities that
are convertible or exchangeable into any of the Junior Securities or Parity
Securities), or make any distribution in respect of the Junior Securities,
either directly or indirectly, and whether in cash, obligations or shares of
the Corporation or other property (other than distributions or dividends in
Junior Securities to the holders of Junior Securities), and shall not permit
any corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any of the Junior Securities or Parity
Securities or any warrants, rights, calls or options exercisable for or
convertible into any of the Junior Securities or Parity Securities (other
than the repurchase, redemption or other retirement of debentures or other
debt securities that are convertible or exchangeable into any of the Junior
Securities or Parity Securities) unless prior to or concurrently with such
declaration, payment, setting apart for payment, repurchase, redemption or
other retirement or distribution, as the case may be, all accumulated and
unpaid dividends on shares of the Series B Preferred Stock not paid on the
dates provided for in paragraph 3(i) hereof (including accumulated dividends
not paid by reason of the terms and conditions of paragraph 3(i) or
paragraph 3(iv) hereof) shall have been or are paid in full and fully in
cash; PROVIDED that, this paragraph shall not prohibit the Corporation from
repurchasing any Junior Securities or any warrants, rights or options
exercisable for or convertible into Junior Securities from any employee of
the Corporation or its subsidiaries pursuant to the terms of any agreements
with such employee.
(c) Subject to the foregoing provisions of this paragraph 3, the Board
of Directors may declare and the Corporation may pay or set apart for
payment dividends and other distributions on any of the Junior Securities or
Parity Securities, and may repurchase, redeem or otherwise retire any of the
Junior Securities or Parity Securities or any warrants, rights or options
exercisable for or convertible into any of the Junior Securities or Parity
Securities, and the holders of the shares of the Series B Preferred Stock
shall not be entitled to share therein.
4. PAYMENT ON LIQUIDATION.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
shares of Series B Preferred Stock then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders an amount in cash equal to the Liquidation Preference for each
share outstanding, before any payment shall be made or any assets
distributed to the holders of any of the Junior Securities. If the assets of
the Corporation are not sufficient to pay in full the liquidation payments
payable to the holders of outstanding shares of the Series B Preferred Stock
and any Parity Securities, then the holders of all such shares shall share
ratably in such distribution of assets in accordance with the amount which
would be payable on such distribution if the amounts to which the holders of
outstanding shares of Series B Preferred Stock and the holders of
outstanding shares of such Parity Securities are entitled were paid in full.
Except as provided in this paragraph 4(i), holders of Series B Preferred
Stock shall not be entitled to any distribution in the event of liquidation,
dissolution or winding up of the affairs of the Corporation.
(ii) For the purposes of this paragraph 4, neither the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
9
<PAGE>
property or assets of the Corporation nor the consolidation or merger of the
Corporation with or into one or more other corporations nor the
consolidation or merger of one or more corporations with or into the
Corporation shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up.
5. REDEMPTION.
(i) OPTIONAL REDEMPTION. If all of the 9 *% Senior Subordinated Notes
due 2008 and 9 *% Series B Senior Subordinated Notes due 2008 have been
repaid in full, at any time and from time to time, the Corporation shall
have the right, at its sole option and election, to redeem any or all of the
outstanding shares of Series B Preferred Stock, in whole or in part. The
redemption price shall be paid in cash out of funds legally available
therefor and will be in an amount per share (the "REDEMPTION PRICE") equal
to the Liquidation Preference.
(ii) NOTICE AND REDEMPTION PROCEDURES. Notice of the redemption of
shares of Series B Preferred Stock pursuant to paragraph 5(i) hereof shall
be sent to the holders of record of the shares of Series B Preferred Stock
to be redeemed by first class mail, postage prepaid, at such holder's
address as it appears on the transfer books of the Corporation not more than
60 nor fewer than 30 days prior to the redemption date; PROVIDED that any
failure to give such notice to any holder, or any defect in such notice,
shall not affect the validity of the proceedings for the redemption of any
shares of Series B Preferred Stock held by any other holder. On or after the
date fixed for redemption stated in such notice, each holder of the shares
called for redemption shall surrender the certificate evidencing such shares
to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the Redemption Price. From and
after the date of any redemption of any shares effected by the Corporation
pursuant to this paragraph 5, all dividends on such shares shall cease to
accumulate and all rights of the holders thereof as holders of such shares
shall cease and terminate.
6. VOTING RIGHTS. The holders of record of shares of Series B Preferred
Stock shall not be entitled to any voting rights, except as otherwise provided
by law.
7. TRANSFERABILITY. The shares of the Series B Preferred Stock may not be
sold, transferred, assigned, pledged or otherwise disposed of to any Person or
Group other than (i) BW Holdings L.L.C., (ii) any Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, BW Holdings L.L.C. and (iii) any partner, member or
stockholder of any Person described in the preceding clauses (i) and (ii).
8. REACQUIRED SHARES. Shares of Series B Preferred Stock that have been
issued and reacquired in any manner, including shares reacquired by purchase or
redemption, shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) have the status of authorized and unissued shares of
preferred stock undesignated as to class and series and may be redesignated and
reissued as part of any series of any class of preferred stock other than the
Series B Preferred Stock.
9. MUTILATED OR MISSING CERTIFICATES. If any of the Series B Preferred
Stock certificates shall be mutilated, lost, stolen or destroyed, the
Corporation shall issue, in exchange and substitution for and upon cancellation
of the mutilated certificate, or in lieu of and substitution for the certificate
lost, stolen or destroyed, a new certificate of like tenor and representing an
equivalent amount of shares of Series B Preferred Stock, but only upon receipt
of evidence of such loss, theft or destruction of such certificate and
indemnity, if requested.
10. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of
the Series B Preferred Stock set forth in this Amended and Restated Certificate
of Incorporation (as amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule or law or public policy, all
other rights, preferences and limitations set forth in such Amended and Restated
Certificate of Incorporation, as amended, which can be given effect without the
invalid, unlawful or unenforceable right, preference or limitation shall,
nevertheless remain in full force and effect, and no right, preference or
limitation herein
10
<PAGE>
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
11. NOTICES. All notices and other communications required or permitted to
be given to the Corporation under this section (E) of ARTICLE FOURTH shall be
made by courier to the Corporation at its principal executive offices at the
following address:
CCPC Holding Company, Inc.
E-Building
Houghton Park
Corning, New York 14831
Telecopy: (607) 974-2215
Attention: Secretary
Minor imperfections in any such notice shall not affect the validity thereof.
12. LIMITATIONS. Except as may otherwise be required by law, the shares of
Series B Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth in this Amended and Restated Certificate of Incorporation of the
Corporation.
FIFTH: The name and mailing address of the incorporator is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
- ---- ---------------
<S> <C>
M. Ann Gosnell Houghton Park
Corning, New York 14831
</TABLE>
SIXTH: Elections of directors need not be by written ballot except and to
the extent provided in the By-Laws of the Corporation.
SEVENTH: If (A) any two or more stockholders or subscribers to stock of the
Corporation shall enter into any agreement abridging, limiting or restricting
the rights of any one or more of them to sell, assign, transfer, mortgage,
pledge or hypothecate any or all of the stock of the Corporation held by any one
or more of them and if a copy of said agreement shall be filed with the
Corporation, or if (B) the incorporator or the stockholders entitled to vote
shall adopt any by-law provision abridging, limiting or restricting the
aforesaid rights of any stockholders, then and in either of such events, all
certificates for shares of stock subject to such abridgements, limitations or
restrictions shall have a reference thereto endorsed thereon by an officer of
the Corporation and such stock shall not thereafter be transferred on the books
of the Corporation except in accordance with the terms and provisions of such
agreement or bylaw, as the case may be.
EIGHTH: (A) A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (1) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (2) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (3) under Section 174 of the Delaware General Corporation Law,
or (4) for any transaction from which the director derived any improper personal
benefit.
(B) The Corporation may indemnify, to the full extent permitted by
applicable law, any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or officer of the Corporation, or is or was serving
at the request of the Corporation, as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise.
(C) Any indemnification under Section (B) of this ARTICLE EIGHTH (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director or
officer is proper in the circumstances because he has met any applicable
11
<PAGE>
standard of conduct. Such determination may be made (1) by resolution of the
Board of Directors adopted in the manner provided in the By-Laws of the
Corporation, or (2) if a quorum consisting of directors who were not parties to
such action, suit or proceeding is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
NINTH: Any action required or permitted to be taken at any annual or special
meeting of stockholders of the Corporation may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted.
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation
which restates, integrates and amends the provisions of the Certificate of
Incorporation of the Corporation, having been duly adopted in accordance with
the provisions of Sections 228, 242 and 245 of the General Corporation Law of
the State of Delaware, has been executed by its duly authorized officer and has
been affixed hereunto with the corporate seal this 1(st) day of November, 1999.
CCPC Holding Company, Inc.
By: /s/ Raymond J. Kulla
- --------------------------------------------------------------------------------
Name: RAYMOND J. KULLA
Title: Vice President, General
Counsel and Secretary
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 26, 2999, AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE NINE MONTHS SEPTEMBER 26, 1999, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-26-1999
<CASH> 5,587
<SECURITIES> 0
<RECEIVABLES> 75,502
<ALLOWANCES> 5,884
<INVENTORY> 141,368
<CURRENT-ASSETS> 238,158
<PP&E> 321,158
<DEPRECIATION> 218,557
<TOTAL-ASSETS> 463,990
<CURRENT-LIABILITIES> 106,019
<BONDS> 490,470
0
35,822
<COMMON> 240
<OTHER-SE> (209,528)
<TOTAL-LIABILITY-AND-EQUITY> 463,990
<SALES> 338,564
<TOTAL-REVENUES> 338,564
<CGS> 219,735
<TOTAL-COSTS> 219,735
<OTHER-EXPENSES> 181,765
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,177
<INCOME-PRETAX> (93,113)
<INCOME-TAX> 718
<INCOME-CONTINUING> (93,976)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (93,976)
<EPS-BASIC> (4.04)
<EPS-DILUTED> (4.04)
</TABLE>
