<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
<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 JUNE 30, 2000
OR
<TABLE>
<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
COMMISSION FILE NUMBER: 333-88157
------------------------
CONSOLIDATED CONTAINER COMPANY LLC
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 75-2825338
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
5605 N. MACARTHUR BLVD. SUITE 360,
Irving, Texas, 75038
(Address of principal executive offices)
Telephone number (972) 518-9150
------------------------
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 twelve months, and (2) has been subject to such filing
requirements for the past 90 days: Yes /X/ No / /
As of August 10, 2000, there were 100 shares of the registrant's member
units outstanding.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC
INDEX
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS........ 3
CONDENSED CONSOLIDATED BALANCE SHEETS
At December 31, 1999 and June 30, 2000.................... 3
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND
COMPREHENSIVE INCOME
For the three months and six months ended July 1, 1999
and June 30, 2000....................................... 4
CONDENSED CONSOLIDATED STATEMENTS OF
SHAREHOLDER'S/MEMBER'S EQUITY........................... 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
For the six months ended July 1, 1999 and June 30,
2000.................................................... 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS...... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK............................................... 19
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................... 20
SIGNATURE................................................... 20
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
------------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,066 $ 286
Investment securities..................................... 5,484 126
Accounts receivable....................................... 105,301 107,228
Inventories............................................... 39,443 44,642
Other current assets...................................... 3,116 3,304
-------- --------
Total current assets.................................... 154,410 155,586
PROPERTY AND EQUIPMENT, Net................................. 283,830 294,539
INTANGIBLES AND OTHER ASSETS................................ 552,016 547,390
-------- --------
$990,256 $997,515
======== ========
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 50,318 $ 56,301
Accrued liabilities....................................... 58,077 44,049
Revolving credit facility................................. 17,500 27,500
Current portion of long-term debt......................... 16,052 19,740
-------- --------
Total current liabilities............................... 141,947 147,590
LONG-TERM DEBT.............................................. 554,011 545,506
OTHER LIABILITIES........................................... 37,227 33,312
MINORITY INTEREST........................................... 243 45
MEMBER'S EQUITY:
Member's equity........................................... 257,346 271,551
Foreign currency translation adjustment................... (518) (489)
-------- --------
Total member's equity................................... 256,828 271,062
-------- --------
$990,256 $997,515
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------ ------------------------------
JULY 1, 1999 JUNE 30, 2000 JULY 1, 1999 JUNE 30, 2000
------------- -------------- ------------- --------------
(PREDECESSOR) (SUCCESSOR) (PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C>
NET SALES................................... $47,020 $193,145 $85,423 $378,301
COST OF SALES............................... 35,652 158,525 67,235 313,017
------- -------- ------- --------
GROSS PROFIT................................ 11,368 34,620 18,188 65,284
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE................................... 3,462 8,942 6,936 18,536
AMORTIZATION EXPENSE........................ 864 3,495 1,763 6,989
RESTRUCTURING CHARGE REVERSAL............... -- (2,238) -- (2,238)
------- -------- ------- --------
OPERATING INCOME............................ 7,042 24,421 9,489 41,997
INTEREST EXPENSE, Net....................... 2,265 14,295 4,484 27,694
------- -------- ------- --------
INCOME BEFORE INCOME TAXES.................. 4,777 10,126 5,005 14,303
INCOME TAX EXPENSE.......................... 2,336 -- 2,890 --
MINORITY INTEREST IN LOSS OF SUBSIDIARY..... 102 108 250 198
------- -------- ------- --------
INCOME BEFORE EXTRAORDINARY LOSS............ 2,543 10,234 2,365 14,501
EXTRAORDINARY LOSS.......................... 1,171 -- 1,171 --
------- -------- ------- --------
NET INCOME.................................. 1,372 10,234 1,194 14,501
OTHER COMPREHENSIVE INCOME (LOSS)--
Foreign currency translation adjustment... 16 (161) 72 29
------- -------- ------- --------
COMPREHENSIVE INCOME........................ $ 1,388 $ 10,073 $ 1,266 $ 14,530
======= ======== ======= ========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS'/MEMBER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
OTHER
COMPREHENSIVE
MEMBER'S COMMON ACCUMULATED INCOME
EQUITY STOCK DEFICIT (LOSS) TOTAL
-------- -------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C>
PERIOD FROM JANUARY 1, 1999 THROUGH JULY 1,
1999 (PREDECESSOR)
BALANCE, JANUARY 1, 1999..................... $ -- $55,293 $(3,507) $(540) $ 51,246
Net income................................. -- -- 1,194 -- 1,194
Foreign currency translation adjustment.... -- -- -- 72 72
-------- ------- ------- ----- --------
BALANCE, JULY 1, 1999........................ $ -- $55,293 $(2,313) $(468) $ 52,512
======== ======= ======= ===== ========
PERIOD FROM JULY 2, 1999 THROUGH DECEMBER 31,
1999 (SUCCESSOR)
NEW CAPITALIZATION, JULY 2, 1999............. $256,439 $ -- $ -- $(468) $255,971
Net income................................. 907 -- -- -- 907
Foreign currency translation adjustment.... -- -- -- (50) (50)
-------- ------- ------- ----- --------
BALANCE, DECEMBER 31, 1999................... $257,346 $ -- $ -- $(518) $256,828
Net income................................. 14,501 -- -- -- 14,501
Tax distributions to member................ (296) -- -- -- (296)
Foreign currency translation adjustment.... -- -- -- 29 29
-------- ------- ------- ----- --------
BALANCE, JUNE 30, 2000....................... $271,551 $ -- $ -- $(489) $271,062
======== ======= ======= ===== ========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------
JULY 1, 1999 JUNE 30, 2000
------------- -------------
(PREDECESSOR) (SUCCESSOR)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 1,194 $ 14,501
Adjustments to reconcile net income to net cash provided
by operating activities:
Minority interest....................................... (250) (198)
Depreciation and amortization........................... 7,173 24,561
Loss on early extinguishment of debt.................... 1,171 --
Changes in operating assets and liabilities............. (9,259) (21,624)
--------- --------
Net cash provided by operating activities................. $ 29 $ 17,240
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (5,129) (28,265)
Net change in investments................................. -- 5,358
Other..................................................... 154 --
--------- --------
Net cash used in investing activities..................... (4,975) (22,907)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from revolving line of credit................ -- 10,000
Principal payments on notes payable to banks.............. (113,356) --
Capital contributions..................................... 122,117 --
Tax distributions to member............................... -- (296)
Principal payments on long-term debt...................... (4,312) (4,817)
--------- --------
Net cash provided by financing activities................. 4,449 4,887
--------- --------
NET CASH DECREASE IN CASH AND CASH EQUIVALENTS.............. (497) (780)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 5,408 1,066
--------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 4,911 $ 286
========= ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest.................. $ 4,517 $ 30,818
========= ========
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Consolidated Container Company LLC ("the Company") have been prepared in
accordance with Rule 10-01 of Regulation S-X for interim financial statements
required to be filed with the Securities and Exchange Commission and therefore
do not include all information and footnotes required by generally accepted
accounting principles for complete annual financial statements. However, in the
opinion of management, all adjustments (consisting only of usual recurring
adjustments considered necessary for a fair presentation) are reflected in the
accompanying unaudited condensed consolidated financial statements. The
condensed consolidated balance sheet as of December 31, 1999 is derived from
audited financial statements. The condensed consolidated financial statements
and notes thereto should be read in conjunction with the audited consolidated
financial statements and notes thereto contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999. Results of operations for the
three months and six months ended June 30, 2000 are not necessarily indicative
of the results to be expected for the full year ending December 31, 2000.
On July 2, 1999, the plastic packaging assets formerly held by Franklin
Plastics, Inc., a subsidiary of Suiza Foods Corporation ("Franklin Plastics"),
and former plastic packaging companies, Reid Plastics, Inc. and its subsidiaries
("Reid Plastics") and Plastic Containers, Inc. and its subsidiaries ("Plastic
Containers") were contributed and merged into the Company. The transactions were
accounted for under the purchase method of accounting with Reid Plastics being
considered the accounting acquiror. Accordingly, financial information prior to
July 2, 1999 pertains to Reid Plastics only and is referred to as the
Predecessor period and financial information subsequent to July 2, 1999 is
referred to as the Successor period and includes consolidated operations.
The Company is wholly owned by Consolidated Container Holdings LLC, a
Delaware limited liability company ("Consolidated Container Holdings").
Consolidated Container Holdings is 30.4% owned by Reid Plastics Holdings, Inc.
and 20.4% owned by Vestar Packaging LLC, each of which are controlled by Vestar
Capital Partners III, L.P. and its affiliates, and 48.9% owned by a subsidiary
of Suiza Foods Corporation.
Certain amounts in the 1999 financial statements have been reclassified to
conform to the 2000 presentation.
2. NEW ACCOUNTING PRONOUNCEMENT
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements",
("SAB No. 101"), which summarizes the application of generally accepted
accounting principles to revenue recognition in financial statements and which
is effective for fiscal year end 2000 financial statements. The Company has not
yet determined the impact SAB No. 101 will have on its consolidated financial
position or results of operations.
7
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. INVENTORIES
Inventories consist of the following at December 31, 1999 and June 30, 2000:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
------------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Raw materials.......................................... $21,031 $23,334
Parts and supplies..................................... 2,779 2,568
Finished goods......................................... 15,633 18,740
------- -------
$39,443 $44,642
======= =======
</TABLE>
4. RESTRUCTURING ACCRUALS
In connection with the 1999 merger, the Company developed a restructuring
plan to pursue opportunities for cost reduction and operating synergies through
the consolidation of administrative and manufacturing functions and facilities.
Through purchase accounting, the Company recorded a restructuring accrual of
$4,616,000, which includes $1,914,000 for severance and other personnel-related
costs and $2,702,000 for facility closing costs in connection with the closing
of certain manufacturing facilities. In the third quarter of 1999, the Company
recognized a restructuring charge of $1,541,000 for severance and other
personnel-related costs relative to the closing of the Reid Plastics corporate
administrative and accounting office in California and the consolidation of
those operations with other existing functions. In the fourth quarter of 1999,
the Company recognized a restructuring charge of $7,225,000 in connection with
plans to close certain manufacturing facilities. Of this charge, $611,000
represents severance and other personnel-related costs and $6,614,000 represents
remaining commitments under noncancellable operating leases and other facility
closing costs.
In 1997, the Company recorded a restructuring charge representing a
provision for loss on closed facilities subject to operating leases, related to
the closure of a manufacturing facility, warehouses and an administrative
facility. In the three month period ended June 30, 2000, the Company recognized
a restructuring charge reversal of $2,238,000 in connection with a sublease
arrangement related to the manufacturing facility.
Reconciliation of the restructuring accruals for the 6 months ended were as
follows:
<TABLE>
<CAPTION>
PURCHASE
1997 ACCOUNTING 1999
RESTRUCTURING RESTRUCTURING RESTRUCTURING
CHARGES ACCRUALS CHARGES
------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at December 31, 1999............ $ 6,377 $ 6,845 $7,949
Charge reversal for sublease
arrangement........................... (2,238) -- --
Severance and related costs............. -- (159) (813)
Leases and other facility closing
costs................................. (117) (2,024) (661)
------- ------- ------
Balance at June 30, 2000................ $ 4,022 $ 4,662 $6,475
======= ======= ======
</TABLE>
Costs charged to the accrual were cash items.
8
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
Consolidated Container Capital, Inc. ("Capital") is a wholly owned finance
subsidiary of the Company and serves as a co-issuer of the senior subordinated
notes. Capital has only nominal assets, does not conduct any operations and was
formed solely to act as co-issuer of the notes.
The accompanying summary consolidating condensed financial statements are
presented because the notes are guaranteed by the Company's wholly owned
domestic subsidiaries ("Guarantor Subsidiaries"). The Guarantor Subsidiaries
have fully and unconditionally guaranteed the notes on a joint and several
basis. Separate financial statements and other disclosures concerning the
Guarantor Subsidiaries and Capital are not presented because management has
determined that such information is not material to investors. There are no
significant restrictions on the Company's ability to obtain funds from the
Guarantor Subsidiaries by dividend or loan.
Consolidating Condensed Balance Sheet as of December 31, 1999 (Successor):
<TABLE>
<CAPTION>
CONSOLIDATED
CONTAINER CONSOLIDATED
COMPANY CONTAINER
GUARANTOR NONGUARANTOR COMPANY
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Total current assets................. $147,925 $ 9,642 $(3,157) $154,410
Property and equipment............... 282,055 2,415 (640) 283,830
Intangibles and other assets......... 551,330 (2,620) 3,306 552,016
Investment in nonguarantor
subsidiaries....................... 5,627 -- (5,627) --
-------- ------- ------- --------
$986,937 $ 9,437 $(6,118) $990,256
======== ======= ======= ========
CURRENT LIABILITIES:
Accounts payable................... $ 47,887 $ 3,370 $ (939) $ 50,318
Other current liabilities.......... 57,432 440 205 58,077
Revolving credit facility.......... 17,500 -- -- 17,500
Current portion of long-term
debt............................. 16,052 -- -- 16,052
-------- ------- ------- --------
Total current liabilities...... 138,871 3,810 (734) 141,947
Long-term debt....................... 554,011 -- -- 554,011
Other liabilities.................... 37,227 -- -- 37,227
Minority interest.................... -- 243 243
Total member's equity................ 256,828 5,627 (5,627) 256,828
-------- ------- ------- --------
$986,937 $ 9,437 $(6,118) $990,256
======== ======= ======= ========
</TABLE>
9
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
Consolidating Condensed Balance Sheet as of June 30, 2000 (Successor):
<TABLE>
<CAPTION>
CONSOLIDATED
CONTAINER CONSOLIDATED
COMPANY CONTAINER
GUARANTOR NONGUARANTOR COMPANY
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Total current assets................. $149,586 $10,438 $(4,438) $155,586
Property and equipment............... 293,021 2,158 (640) 294,539
Intangibles and other assets......... 544,651 (1,405) 4,144 547,390
Investment in nonguarantor
subsidiaries....................... 5,691 -- (5,691) --
-------- ------- ------- --------
$992,949 $11,191 $(6,625) $997,515
======== ======= ======= ========
CURRENT LIABILITIES:
Accounts payable................... $ 51,796 $ 5,125 $ (620) $ 56,301
Other current liabilities.......... 44,033 375 (359) 44,049
Revolving credit facility.......... 27,500 -- -- 27,500
Current portion of long-term
debt............................. 19,740 -- -- 19,740
-------- ------- ------- --------
Total current liabilities...... 143,069 5,500 (979) 147,590
Long-term debt....................... 545,506 -- -- 545,506
Other liabilities.................... 33,312 -- -- 33,312
Minority interest.................... -- -- 45 45
Total member's equity................ 271,062 5,691 (5,691) 271,062
-------- ------- ------- --------
$992,949 $11,191 $(6,625) $997,515
======== ======= ======= ========
</TABLE>
10
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
Three months ended July 1, 1999 Consolidating Statement of Operations
(Predecessor):
<TABLE>
<CAPTION>
REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales........................... $ 41,115 $ 6,457 $ (552) $ 47,020
Cost of sales....................... 30,177 6,246 (771) 35,652
-------- ------- ------- --------
Gross profit........................ 10,938 211 219 11,368
Selling, general and
administrative.................... 3,390 46 26 3,462
Amortization expense................ 864 864
Interest expense, net............... 2,186 (17) 96 2,265
Equity in earnings of nonguarantor
subsidiaries...................... (182) -- 182 --
-------- ------- ------- --------
Income before taxes................. 4,680 182 (85) 4,777
Income tax expense.................. 2,336 -- -- 2,336
Minority interest in subsidiaries... -- -- 102 102
Extraordinary loss.................. 1,171 -- -- 1,171
-------- ------- ------- --------
Net income.......................... $ 1,173 $ 182 $ 17 $ 1,372
======== ======= ======= ========
</TABLE>
11
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Three months ended June 30, 2000 Consolidating Statement of Operations
(Successor):
<TABLE>
<CAPTION>
CONSOLIDATED
CONTAINER CONSOLIDATED
COMPANY CONTAINER
GUARANTOR NONGUARANTOR COMPANY
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales............................ $187,094 $8,936 $(2,885) $193,145
Cost of sales........................ 152,438 8,972 (2,885) 158,525
-------- ------ ------- --------
Gross profit......................... 34,656 (36) -- 34,620
Selling, general and
administrative..................... 8,862 80 -- 8,942
Amortization expense................. 3,495 -- -- 3,495
Restructuring charge reversal........ (2,238) (2,238)
Interest expense, net................ 14,258 37 -- 14,295
Equity in loss of nonguarantor
subsidiaries....................... 153 -- (153) --
-------- ------ ------- --------
Income before minority interest...... 10,126 (153) 153 10,126
Minority interest in subsidiaries.... -- -- 108 108
-------- ------ ------- --------
Net income........................... $ 10,126 $ (153) $ 261 $ 10,234
======== ====== ======= ========
</TABLE>
12
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
Six months ended July 1, 1999 Consolidating Statement of Operations
(Predecessor):
<TABLE>
<CAPTION>
REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales........................... $75,580 $11,334 $(1,491) $85,423
Cost of sales....................... 58,769 11,110 (2,644) 67,235
------- ------- ------- -------
Gross profit........................ 16,811 224 1,153 18,188
Selling, general and
administrative.................... 6,835 75 26 6,936
Amortization expense................ 1,763 -- -- 1,763
Interest expense, net............... 4,406 (18) 96 4,484
Equity in earnings of nonguarantor
subsidiaries...................... (167) -- 167 --
------- ------- ------- -------
Income before taxes................. 3,974 167 864 5,005
Income tax expense.................. 2,890 -- -- 2,890
Minority interest in subsidiaries... -- -- 250 250
Extraordinary item.................. 1,171 -- -- 1,171
------- ------- ------- -------
Net income.......................... $ (87) $ 167 $ 1,114 $ 1,194
======= ======= ======= =======
</TABLE>
13
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
Six months ended June 30, 2000 Consolidating Statement of Operations
(Successor):
<TABLE>
<CAPTION>
CONSOLIDATED
CONTAINER CONSOLIDATED
COMPANY CONTAINER
GUARANTOR NONGUARANTOR COMPANY
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales............................ $366,805 $16,094 $(4,598) $378,301
Cost of sales........................ 301,786 15,829 (4,598) 313,017
-------- ------- ------- --------
Gross profit......................... 65,019 265 -- 65,284
Selling, general and
administrative..................... 18,383 153 -- 18,536
Amortization expense................. 6,989 -- -- 6,989
Restructuring charge reversal........ (2,238) -- -- (2,238)
Interest expense, net................ 27,669 25 -- 27,694
Equity in earnings of nonguarantor
subsidiaries....................... (87) -- 87 --
-------- ------- ------- --------
Income before minority interest...... 14,303 87 (87) 14,303
Minority interest in subsidiaries.... -- -- 198 198
-------- ------- ------- --------
Net income........................... $ 14,303 $ 87 $ 111 $ 14,501
======== ======= ======= ========
</TABLE>
14
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
Six months ended July 1, 1999 Consolidating Condensed Statement of Cash
Flows (Predecessor):
<TABLE>
<CAPTION>
REID PLASTICS
EXCLUDING
NONGUARANTOR NONGUARANTOR REID PLASTICS
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities.............. $ (416) $1,120 $(675) $ 29
--------- ------ ----- ---------
Cash flows from investing
activities:
Capital expenditures.............. (4,805) (324) -- (5,129)
Net change in investments......... 58 -- -- 58
Other assets...................... 96 -- -- 96
--------- ------ ----- ---------
Net cash used in investing
activities.................. (4,651) (324) -- (4,975)
--------- ------ ----- ---------
Cash flows from financing
activities:
Principal payments on notes
payable
to banks........................ (113,356) -- -- (113,356)
Payments on other notes payable
and capital leases.............. (4,312) (4,312)
Capital Contributions............. 122,117 -- -- 122,117
--------- ------ ----- ---------
Net cash provided by financing
activities.................. 4,449 -- -- 4,449
--------- ------ ----- ---------
Net increase (decrease) in cash and
cash equivalents.................. (618) 796 (675) (497)
Cash and cash equivalents, beginning
of period......................... 2,660 2,073 675 5,408
--------- ------ ----- ---------
Cash and cash equivalents, end of
period............................ $ 2,042 $2,869 $ -- $ 4,911
========= ====== ===== =========
</TABLE>
15
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. SUBSIDIARY SUMMARY CONSOLIDATING CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
Six months ended June 30, 2000 Consolidating Condensed Statement of Cash
Flows (Successor):
<TABLE>
<CAPTION>
CONSOLIDATED
CONTAINER
COMPANY CONSOLIDATED
EXCLUDING CONTAINER
NONGUARANTOR NONGUARANTOR COMPANY
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities.............. $ 17,997 $ (757) $ -- $ 17,240
-------- ------ ---- --------
Cash flows from investing
activities:
Capital expenditures.............. (28,195) (70) -- (28,265)
Net change in investments......... 5,358 -- -- 5,358
-------- ------ ---- --------
Net cash used in investing
activities.................. (22,837) (70) -- (22,907)
-------- ------ ---- --------
Cash flows from financing
activities:
Net proceeds from revolving line
of credit....................... 10,000 -- -- 10,000
Principal payments on notes
payable to banks................ (4,817) -- -- (4,817)
Tax distributions to member....... (296) -- -- (296)
-------- ------ ---- --------
Net cash provided by financing
activities.................. 4,887 -- -- 4,887
-------- ------ ---- --------
Net increase (decrease) in cash and
cash equivalents.................. 47 (827) -- (780)
Cash and cash equivalents, beginning
of period......................... (642) 1,708 -- 1,066
-------- ------ ---- --------
Cash and cash equivalents, end of
period............................ $ (595) $ 881 $ -- $ 286
======== ====== ==== ========
</TABLE>
16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
In connection with its formation on July 2, 1999, Consolidated Container
Company LLC (the "Company") was created as a limited liability company to own,
directly or through its subsidiaries, all of the plastic packaging assets of
Reid Plastics, Inc. ("Reid Plastics"), Franklin Plastics, Inc ("Franklin") and
Plastic Containers, Inc ("PCI"). The transactions were accounted for under the
purchase method of accounting with Reid Plastics being considered the accounting
acquiror. Accordingly, financial information prior to July 2, 1999 pertains to
Reid Plastics only and is referred to as the Predecessor period and financial
information subsequent to July 2, 1999 is referred to as the Successor period
and includes consolidated operations.
RESULTS OF OPERATIONS
(Dollars in Thousands)
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JULY 1, 1999
NET SALES. Net sales for the second quarter of 2000 were $193,145, an
increase of $146,125 or 310.8%, compared to $47,020 for the same period of 1999.
Approximately $143,000 of the increase is attributable to the inclusion of
Franklin and PCI in 2000. Higher resin prices in the second quarter of 2000
compared to the same period in 1999, which are passed through to customers in
the form of higher unit prices, account for an increase in sales of
approximately $4,500, while unit volume in the second quarter of 2000 was
slightly lower than 1999 for the predecessor company.
GROSS PROFIT. Gross profit for the second quarter of 2000 was $34,620, an
increase of $23,252 or 204.5%, compared to $11,368 for the same period of 1999.
The inclusion of Franklin and PCI in 2000 accounted for approximately $25,250 of
gross profit. The remaining decrease in gross profit is the result of lower unit
volume for the predecessor company and delays in passing through resin increases
as incurred, due to both contractual provisions and prevailing market
conditions.
SG&A. Selling, general and administrative (SG&A) expense for the second
quarter of 2000 was $8,942, an increase of $5,480 or 158.3%, compared to $3,462
for the same period of 1999. The increase was due to the inclusion of Franklin
and PCI in 2000, offset by a reduction in SG&A related to the closure of the
Reid Plastics corporate office in Diamond Bar, California during the fourth
quarter of 1999. As a result of the closing, certain administrative, accounting,
and information services functions were consolidated with other existing
operations.
AMORTIZATION EXPENSE. Amortization expense for the second quarter of 2000
was $3,495, an increase of $2,631 or 304.5%, compared to $864 for the same
period of 1999. This increase is due to the additional goodwill created as a
result of the acquisition.
RESTRUCTURING CHARGE REVERSAL. The Company recognized a restructuring
charge reversal of $2,238 during the second quarter of 2000. This amount
represents a reduction in the remaining lease obligation of a closed
manufacturing facility as a result of a sublease arrangement related to the
facility.
OPERATING INCOME. Operating Income for the second quarter of 2000 was
$24,421, an increase of $17,379 or 246.8%, compared to $7,042 for the same
period of 1999. This increase is the result of the factors discussed above.
INTEREST EXPENSE, NET. Interest expense for the second quarter of 2000 was
$14,295, an increase of $12,030 or 531.3%, compared to $2,265 for the same
period of 1999. This increase results primarily from the additional debt
incurred in connection with the 1999 merger.
17
<PAGE>
INCOME TAXES. As a limited liability company, the Company is not subject to
corporate income taxes.Income tax expense for the second quarter of 1999 was
$2,336.
EXTRAORDINARY LOSS. In the second quarter of 1999 the Company incurred an
extraordinary loss of $1,171 in connection with the early extinguishment of
long-term debt. The loss was comprised of the write-off of $1,952 of unamortized
debt issuance costs, reduced by a tax benefit of $781.
NET INCOME. Net income for second quarter of 2000 was $10,234, compared to
$1,372 for the same period of 1999. The increase is the result of the factors
discussed above.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JULY 1, 1999
NET SALES. Net sales for the first six months of 2000 were $378,301, an
increase of $292,878 or 342.9%, compared to $85,423 for the same period of 1999.
Approximately $282,000 of the increase is attributable to the inclusion of
Franklin and PCI in 2000. The remaining increase was the result of higher resin
prices during the first six months of 2000 compared to the same period in 1999,
which are passed through to customers in the form of higher unit prices, and
stronger unit volume in the water category in the first quarter of 2000 compared
to 1999. Higher resin prices accounted for approximately $8,500 of the increase
in sales.
GROSS PROFIT. Gross profit for the first six months of 2000 was $65,284, an
increase of $47,096 or 258.9%, compared to $18,188 for the same period of 1999.
The inclusion of Franklin and PCI in 2000 accounted for approximately $48,000 of
gross profit. The remaining decrease in gross profit is the result of slightly
higher unit volume offset by delays in passing through resin increases as
incurred, due to both contractual provisions and prevailing market conditions.
SG&A. SG&A expense for the first six months of 2000 was $18,536, an
increase of $11,600 or 167.2%, compared to $6,936 for the same period of 1999.
The increase was due to the inclusion of Franklin and PCI in 2000, offset by a
reduction in SG&A related to the closure of the Reid Plastics corporate office
during the fourth quarter of 1999.
AMORTIZATION EXPENSE. Amortization expense for the first six months of 2000
was $6,989, an increase of $5,226 or 296.4%, compared to $1,763 for the same
period of 1999. This increase is due to the additional goodwill created as a
result of the acquisition.
RESTRUCTURING CHARGE REVERSAL. The Company recognized a restructuring
charge reversal of $2,238 during the first six months of 2000. This amount
represents a reduction in the remaining lease obligation of a closed
manufacturing facility as a result of a sublease arrangement related to the
facility.
OPERATING INCOME. Operating Income for the first six months of 2000 was
$41,997, an increase of $32,508 or 342.6%, compared to $9,489 for the same
period of 1999. This increase is the result of the factors discussed above.
INTEREST EXPENSE, NET. Interest expense for the first six months of 2000
was $27,694, an increase of $23,210 or 517.6%, compared to $4,484 for the same
period of 1999. This increase results primarily from the additional debt
incurred in connection with the acquisition.
INCOME TAXES. As a limited liability company, the Company is not subject to
corporate income taxes. Income tax expense for the first six months of 1999 was
$2,890.
NET INCOME. Net income for first six months of 2000 was $14,501, compared
to $1,194 for the same period of 1999. The increase is the result of the factors
discussed above.
18
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal uses of cash are for capital expenditures, working
capital and debt service. Funds for these purposes are primarily generated from
operations and borrowing under the Company's Senior Credit Facilities. The
Senior Credit Facility was amended April 25, 2000 to add a Tranche 2 Revolving
Loan Commitment of $45.1 million. During the first six months of 2000 the
Company borrowed $10.0 million under its revolving credit facilities and had
outstanding borrowings of $27.5 million under the revolving credit facilities at
June 30, 2000. The Company had available to it unused borrowing capacity of
$107.6 million as of June 30, 2000. The revolving credit facilities contain
certain restrictive covenants. As of June 30, 2000 the Company was in compliance
with all covenants.
The Company had capital expenditures of approximately $28.3 million in the
first six months of 2000, of which approximately $6.3 million was for
maintenance and replacement and the remainder was for business growth and cost
reduction initiatives. Substantially all of the expenditures were for packaging
equipment for the manufacture of plastic containers or related support
equipment.
Cash flows from operations for the six months ended June 30, 2000 including
working capital changes was approximately $17.2 million which, together with
additional borrowings of $10.0 million under the credit facility and $5.4
million reduction in temporary investments, was utilized for $28.3 million of
capital expenditures and $4.8 million of debt service.
The Company is required to make tax distributions to holders of member units
for reimbursement of tax obligations. The Company made distributions of $296 to
its sole member, Consolidated Container Holdings LLC during the first six months
of 2000.
Management believes that future funds generated by operations and borrowings
available under its revolving credit facility will be sufficient to meet working
capital and capital expenditure requirements.
CAUTIONARY STATEMENT
Certain statements and information in this Quarterly Report constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be indicated by
phrases such as "believes," "anticipates," "expects," "intends," "foresees,"
"projects," "forecasts" or words of similar meaning or import. Such statements
are subject to certain risks, uncertainties, or assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those set forth in
applicable forward-looking statements. Among the key factors that may have a
direct bearing on the Company's results and financial condition are (i) risks
associated with intense competition in the Company's industry, (ii) the impact
of governmental regulations, and (iii) risks associated with volatility in the
costs of raw goods. Any forward-looking statements made or incorporated by
reference herein speak only as of the date of this Quarterly Report. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any such statements, to reflect any change in its
expectations with regard thereto or any change in events, conditions, or
circumstances on which any such statement is based. Additional information
concerning these and other risk factors is contained in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999, a copy of which
may be obtained from the Company upon request.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company's market risk during the
six months ended June 30, 2000. For additional information, refer to Item 7A of
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
19
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
(27) Financial Data Schedule
(B) REPORTS ON FORM 8-K
The Company filed a report on Form 8-K dated May 12, 2000 reporting the
formation of a new subsidiary and related supplemental indenture and assumption
agreements that were entered into.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
<TABLE>
<S> <C> <C>
CONSOLIDATED CONTAINER COMPANY LLC
By: /s/ TIMOTHY W. BRASHER
-----------------------------------------
Timothy W. Brasher
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER (CHIEF ACCOUNTING OFFICER AND DULY
AUTHORIZED OFFICER)
</TABLE>
Dated this 10th day of August, 2000.
20
