<PAGE>
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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 SEPTEMBER 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 November 13, 2000, there were 100 shares of the registrant's member
units outstanding.
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<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 September 30, 2000....... 3
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND
COMPREHENSIVE INCOME
For the three months and nine months ended
September 30, 1999 and 2000......................... 4
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER'S/
MEMBERS EQUITY...................................... 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1999 and
2000................................................ 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS.......................................... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS........................................ 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK................................................. 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................... 14
SIGNATURE................................................... 14
</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, SEPTEMBER 30,
1999 2000
------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,066 $ 567
Investment securities..................................... 5,484 124
Accounts receivable, net.................................. 99,154 95,882
Inventories............................................... 39,443 40,304
Other current assets...................................... 9,263 12,375
-------- --------
Total current assets.................................... 154,410 149,252
PROPERTY AND EQUIPMENT, Net................................. 283,830 298,182
INTANGIBLES AND OTHER ASSETS................................ 552,016 542,996
-------- --------
$990,256 $990,430
======== ========
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 50,318 $ 52,276
Accrued liabilities....................................... 58,077 33,027
Revolving credit facility................................. 17,500 34,500
Current portion of long-term debt......................... 16,052 21,483
-------- --------
Total current liabilities............................... 141,947 141,286
LONG-TERM DEBT.............................................. 554,011 539,473
OTHER LIABILITIES........................................... 37,227 33,014
MINORITY INTEREST........................................... 243 (420)
MEMBER'S EQUITY:
Member's equity........................................... 257,346 277,601
Foreign currency translation adjustment................... (518) (524)
-------- --------
Total member's equity................................... 256,828 277,077
-------- --------
$990,256 $990,430
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM THREE MONTHS
JAN. 1, 1999 ENDED NINE MONTHS
THREE MONTHS ENDED TO JULY 1, SEPT. 30, ENDED
SEPT. 30, 1999 SEPT. 30, 2000 1999 1999 SEPT. 30, 2000
(SUCCESSOR) (SUCCESSOR) (PREDECESSOR) (SUCCESSOR) (SUCCESSOR)
--------------- --------------- ------------- ------------ ---------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES...................... $197,878 $197,309 $87,099 $197,878 $575,610
COST OF SALES.................. 159,484 163,750 68,911 159,484 476,767
-------- -------- ------- -------- --------
GROSS PROFIT................... 38,394 33,559 18,188 38,394 98,843
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE....... 12,350 8,698 7,208 12,350 27,234
AMORTIZATION EXPENSE........... 3,443 3,549 1,491 3,443 10,538
RESTRUCTURING CHARGE
(REVERSAL)................... 1,541 -- -- 1,541 (2,238)
-------- -------- ------- -------- --------
OPERATING INCOME............... 21,060 21,312 9,489 21,060 63,309
INTEREST EXPENSE, Net.......... 13,278 15,140 4,484 13,278 42,834
-------- -------- ------- -------- --------
INCOME BEFORE INCOME TAXES..... 7,782 6,172 5,005 7,782 20,475
INCOME TAX EXPENSE............. -- -- 2,890 -- --
MINORITY INTEREST IN LOSS OF
SUBSIDIARY................... 62 464 250 62 662
-------- -------- ------- -------- --------
INCOME BEFORE EXTRAORDINARY
LOSS......................... 7,844 6,636 2,365 7,844 21,137
EXTRAORDINARY LOSS............. -- -- (1,171) -- --
-------- -------- ------- -------- --------
NET INCOME..................... 7,844 6,636 1,194 7,844 21,137
OTHER COMPREHENSIVE INCOME
(LOSS)--
Foreign currency translation
adjustment................. (11) (35) 72 (11) (6)
-------- -------- ------- -------- --------
COMPREHENSIVE INCOME........... $ 7,833 $ 6,601 $ 1,266 $ 7,833 $ 21,131
======== ======== ======= ======== ========
</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
MEMBER'S COMMON ACCUMULATED COMPREHENSIVE
EQUITY STOCK DEFICIT INCOME (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
SEPTEMBER 30, 2000 (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........................... 21,137 -- -- -- 21,137
Tax distributions to member.......... (882) -- -- -- (882)
Foreign currency translation
adjustment......................... -- -- -- (6) (6)
-------- ------- ------- ----- --------
BALANCE, SEPTEMBER 30, 2000............ $277,601 $ -- $ -- $(524) $277,077
======== ======= ======= ===== ========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM NINE MONTHS
JAN. 1, 1999 JULY 2, 1999 ENDED
TO JULY 1, TO SEPT. 30, SEPT. 30,
1999 1999 2000
------------- ------------- -----------
(PREDECESSOR) (SUCCESSOR) (SUCCESSOR)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 1,194 $ 7,844 $ 21,137
Adjustments to reconcile net income to net cash provided
by operating activities:
Minority interest....................................... (250) (63) (663)
Depreciation and amortization........................... 7,173 12,759 35,824
Loss on early extinguishment of debt.................... 1,171 -- --
Currency translation.................................... -- (11) (6)
Changes in operating assets and liabilities............. (9,259) (10,764) (27,896)
--------- --------- --------
Net cash provided by operating activities................. 29 9,765 28,396
--------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (5,129) (8,495) (44,792)
Proceeds from disposal of assets.......................... 58 -- 3,526
Net change in investments................................. -- (344) 5,360
Tax distributions to member............................... -- -- (882)
Cash paid for acquisition, net of cash acquired........... -- 4,605 --
Other..................................................... 96 -- --
--------- --------- --------
Net cash used in investing activities..................... (4,975) (4,234) (36,788)
--------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from revolving line of credit................ -- -- 17,000
Issuance of member units, net of issuance costs........... -- 56,272 --
Borrowings under credit facility.......................... -- 412,500 --
Borrowings of senior subordinated notes................... -- 185,000 --
Repayment of PCI notes.................................... -- (136,700) --
Debt issuance costs....................................... -- (21,387) --
Payment of Suiza Packaging debt........................... -- (372,459) --
Principal payments on notes payable to banks.............. (89,856) -- --
Net payments on revolving line of credit.................. (23,500) -- --
Capital contributions..................................... 122,117 (122,117) --
Principal payments on long-term debt...................... (4,312) (612) (9,107)
--------- --------- --------
Net cash provided by (used in) financing activities....... 4,449 497 7,893
--------- --------- --------
NET CASH INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS... (497) 6,028 (499)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 5,408 4,911 1,066
--------- --------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 4,911 $ 10,939 $ 567
========= ========= ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest.................. $ 4,517 $ 11,900 $ 48,236
========= ========= ========
Cash paid during the period for income taxes.............. $ 506 $ -- $ --
========= ========= ========
NON-CASH TRANSACTION:
Issuance of Member units.................................. $ -- $ 145,328 $ --
========= ========= ========
</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 nine months ended September 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 PRONOUNCEMENTS
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 September 30,
2000:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Raw materials............................................ $21,031 $21,713
Parts and supplies....................................... 2,779 2,861
Finished goods........................................... 15,633 15,730
------- -------
$39,443 $40,304
======= =======
</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.
Reconciliation of the restructuring accruals for the nine 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..................... -- (310) (1,053)
Leases and other facility closing costs......... (125) (4,166) (1,939)
------- ------- -------
Balance at September 30, 2000................... $ 4,014 $ 2,369 $ 4,957
======= ======= =======
</TABLE>
Costs charged to the accrual, excluding the charge reversal, were cash
items.
8
<PAGE>
CONSOLIDATED CONTAINER COMPANY LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1999 and
September 30, 2000:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 2000
------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Senior subordinated notes................................ $185,000 $185,000
Senior credit facility-term loans........................ 380,075 372,575
Capital lease obligations................................ 4,988 3,381
-------- --------
570,063 560,956
Less current portion..................................... (16,052) (21,483)
-------- --------
$554,011 $539,473
======== ========
</TABLE>
The Senior Credit Facility was amended on April 25, 2000 which added a
revolving credit facility (the "tranche 2 Revolver") of $45,100,000. In the
third quarter the Company borrowed $7,000,000 under this revolving credit
facility.
The obligations under the Senior Credit Facility are secured and are
unconditionally and irrevocably guaranteed jointly and severally by Consolidated
Container Holdings and each of its direct and indirect domestic subsidiaries
other than the Company and Consolidated Container Capital and, in each case, are
subject to customary exceptions. Consolidated Container Holdings has no
independent assets or operations. The separate financial statements of each
guaranteeing subsidiary are not presented because the Company's management has
concluded that such financial statements are not material to investors, as
nonguarantor subsidiaries are considered inconsequential.
9
<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 SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1999
NET SALES. Net sales for the third quarter of 2000 were $197,309, a
decrease of $569 or 0.3%, compared to $197,878 for the same period of 1999.
Higher resin prices in the third quarter of 2000 compared to the same period in
1999 account for an increase in sales of approximately $14,000, while unit
volumes were lower than 1999 due primarily to the closure of one customer
location, the sale of another customer's business to a buyer who produces their
container needs internally and the non-renewal of one customer contract.
GROSS PROFIT. Gross profit for the third quarter of 2000 was $33,559, a
decrease of $4,835 or 12.6%, compared to $38,394 for the same period of 1999.
The decrease in gross profit is the result of lower unit volume for the reasons
discussed above and the effect of competitive pricing pressures, including the
impact of delays in passing resin price increases to certain customers.
SG&A. Selling, general and administrative (SG&A) expense for the third
quarter of 2000 was $8,698, a decrease of $3,652 or 29.6%, compared to $12,350
for the same period of 1999. The decrease was due to 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 third quarter of 2000
was $3,549, an increase of $106 or 3.1%, compared to $3,443 for the same period
of 1999. This increase is due to the additional goodwill created as a result of
the acquisition.
RESTRUCTURING CHARGE. As a result of the merger and integration of the
combined operations, the Company recorded a $1,541 restructuring charge in 1999
related to excess headquarter personnel.
OPERATING INCOME. Operating Income for the third quarter of 2000 was
$21,312, an increase of $252 or 1.2%, compared to $21,060 for the same period of
1999. This increase is the result of the factors discussed above.
INTEREST EXPENSE, NET. Interest expense for the third quarter of 2000 was
$15,140, an increase of $1,862 or 14.0%, compared to $13,278 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.
10
<PAGE>
NET INCOME. Net income for third quarter of 2000 was $6,636, compared to
$7,844 for the same period of 1999. The decrease is the result of the factors
discussed above.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1999
NET SALES. Net sales for the first nine months of 2000 were $575,610, an
increase of $290,633 or 102.0%, compared to $284,977 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 nine months of 2000 compared to the same period in 1999
and stronger unit volume in the water category in the first quarter of 2000
compared to 1999. Higher resin prices accounted for approximately $22,500 of the
increase in sales. These increases were offset by the closure of one customer
location, the sale of another customer's business to a buyer who produces their
container needs internally and the non-renewal of one customer contract.
GROSS PROFIT. Gross profit for the first nine months of 2000 was $98,843,
an increase of $42,261 or 74.7%, compared to $56,582 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 the effect of competitive pricing
pressures.
SG&A. SG&A expense for the first nine months of 2000 was $27,234, an
increase of $7,676 or 39.3%, compared to $19,558 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 nine months of
2000 was $10,538, an increase of $5,604 or 113.6%, compared to $4,934 for the
same period of 1999. This increase is due to the additional goodwill created as
a result of the acquisition.
RESTRUCTURING CHARGE AND (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 first nine months of 2000 was
$63,309, an increase of $32,760 or 107.2%, compared to $30,549 for the same
period of 1999. This increase is the result of the factors discussed above.
INTEREST EXPENSE, NET. Interest expense for the first nine months of 2000
was $42,834 an increase of $25,072 or 141.2%, compared to $17,762 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 in 2000. For the first six months of 1999, the
Predecessor Company was a taxable entity.
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 first nine months of 2000 was $21,137, compared
to $9,038 for the same period of 1999. The increase is the result of the factors
discussed above.
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
11
<PAGE>
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 nine months of 2000 the Company borrowed $17.0 million under
its revolving credit facilities and had outstanding borrowings of $34.5 million
under the revolving credit facilities at September 30, 2000. The Company had
available to it unused borrowing capacity of $100.6 million as of September 30,
2000. The revolving credit facilities contain certain restrictive covenants. As
of September 30, 2000 the Company was in compliance with all covenants.
The Company had capital expenditures of approximately $44.8 million in the
first nine months of 2000, of which approximately $9.3 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 nine months ended September 30, 2000
including working capital changes were approximately $28.4 million which,
together with additional borrowings of $17.0 million under the credit facility,
$3.5 million proceeds from disposal of assets, and $5.4 million reduction in
temporary investments, were utilized for $44.8 million of capital expenditures
and $9.1 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 $882 to
its sole member, Consolidated Container Holdings LLC during the first nine
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.
12
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company's market risk during the
nine months ended September 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.
13
<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
N/A
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 13th day of November, 2000.
14
