<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ______________ to _______________
Commission File Number 1-3846
CHRISTIANA COMPANIES, INC.
(Exact name of registrant as specified in its charter.)
Wisconsin 95-1928079
(State of Incorporation) (IRS Employer Identification No.)
777 East Wisconsin Avenue, Suite 3380, Milwaukee, Wisconsin 53202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 291-9000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X__ No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock $1.00 par value 5,195,630
(Class) (Outstanding at November 10, 1995.)
Page 1 of 9 total pages No exhibits are filed with this report.
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Audited)
September 30, June 30,
1995 1995
------------- ------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 194,000 $ 375,000
Short-term investments 4,115,000 2,822,000
Accounts receivable 10,808,000 10,310,000
Inventories 547,000 248,000
------------ -----------
Total Current Assets 15,664,000 13,755,000
------------ ------------
Long-Term Assets:
Investment in Energy Ventures, Inc. 45,308,000 35,077,000
Mortgage notes receivable 3,340,000 3,205,000
Rental properties, net 3,114,000 3,610,000
Fixed assets, net 70,615,000 71,104,000
Other assets 7,983,000 8,182,000
------------ ------------
Total Long-Term Assets 130,360,000 121,178,000
------------ ------------
$146,024,000 $134,933,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts payable $ 4,230,000 $ 2,774,000
Accrued liabilities 4,999,000 5,347,000
Short term debt 706,000 1,844,000
Current portion of long-term debt 2,631,000 1,679,000
------------ ------------
Total Current Liabilities 12,566,000 11,644,000
------------ ------------
Long-Term Liabilities:
Long-term debt 36,339,000 38,256,000
Deferred federal and state income taxes 22,290,000 17,765,000
Other liabilities 1,214,000 1,266,000
------------ ------------
Total Long-Term Liabilities 59,843,000 57,287,000
------------ ------------
Total Liabilities 72,409,000 68,931,000
------------ ------------
Shareholders' Equity:
Preferred stock -- --
Common stock, par value $1 per share;
authorized 12,000,000 shares;
issued 5,195,630 5,196,000 5,196,000
Additional paid-in capital 12,022,000 12,022,000
Unrealized investment gain, net of tax 8,128,000 1,909,000
Retained earnings 48,269,000 46,875,000
------------ ------------
Total Shareholders' Equity 73,615,000 66,002,000
------------ ------------
$146,024,000 $134,933,000
============ ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------------------
1995 1994
------------- ------------
<S> <C> <C>
Revenues:
Product sales $ -- $12,900,000
Warehousing, rental and related services 19,937,000 19,169,000
----------- -----------
19,937,000 32,069,000
----------- -----------
Costs and Expenses:
Cost of product sales -- 10,956,000
Warehousing, rental and related expenses 16,083,000 14,497,000
Selling, general and administrative 1,801,000 2,643,000
----------- -----------
17,884,000 28,096,000
----------- -----------
Earnings from Operations 2,053,000 3,973,000
Other Income (Expense):
Interest income 128,000 293,000
Interest expense (773,000) (1,114,000)
Gain on sales of real estate 840,000 1,437,000
Other income (expense), net 42,000 (198,000)
----------- -------------
237,000 418,000
----------- -------------
Earnings before income taxes
and minority interest 2,290,000 4,391,000
Income tax provision 896,000 1,710,000
----------- -------------
Net earnings before minority interest 1,394,000 2,681,000
Minority interest -- (166,000)
----------- ------------
Net Earnings $ 1,394,000 $ 2,515,000
=========== =============
Net earnings per share $ 0.27 $ 0.46
=========== ============
Average number of shares outstanding 5,195,630 5,440,899
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unrealized
Common Stock Additional Investment
-------------------------- Paid-in Gain, Retained
Shares Amount Capital Net of Tax Earnings
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1994 5,440,899 $5,441,000 $18,217,000 -- $36,430,000
Repurchase of Stock (245,269) (245,000) (6,195,000) -- --
Change in unrealized
appreciation on EVI,
net of tax -- -- -- 1,909,000 --
Net Earnings for the Year -- -- -- -- 10,445,000
--------- ---------- ----------- ---------- -----------
Balance, June 30, 1995 5,195,630 $5,196,000 $12,022,000 $1,909,000 $46,875,000
Change in unrealized
appreciation on EVI,
net of tax -- -- -- 6,219,000 --
Net earnings for the -- -- -- -- 1,394,000
three months ended
September 30, 1995
(unaudited)
--------- ---------- ----------- ---------- -----------
Balance, September 30, 1995 5,195,630 $5,196,000 $12,022,000 $8,128,000 $48,269,000
========= ========== =========== ========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
----------------------------
1995 1994
-------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net earnings $1,394,000 $2,515,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 1,936,000 1,977,000
Gains on sales of real estate (1,030,000) (1,433,000)
Deferred income tax expenses 513,000 (418,000)
Minority interest in consolidated income of
subsidiaries -- 166,000
Changes in assets and liabilities:
(Increase) in accounts receivable (784,000) (4,103,000)
(Increase) decrease in inventory (299,000) 81,000
Decrease in other assets 69,000 122,000
Increase in accounts payable
and accrued liabilities 1,108,000 2,120,000
----------- -----------
Net cash provided by operating activities 2,907,000 1,027,000
CASH FLOW FROM INVESTING ACTIVITIES:
(Increase) decrease in short-term investments (1,293,000) 1,180,000
Capital expenditures (1,830,000) (3,823,000)
Proceeds from sale of assets 2,273,000 2,777,000
(Increase) in mortgages receivable (135,000) (365,000)
----------- -----------
Net cash (used in) investing activities (985,000) (231,000)
CASH FLOW FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on credit lines (1,139,000) 3,870,000
Net payments of notes and loans payable (964,000) (2,727,000)
----------- -------------
Net cash provided by (used in) financing activities (2,103,000) 1,143,000
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (181,000) 1,939,000
BEGINNING CASH AND CASH EQUIVALENTS, July 1 375,000 3,929,000
----------- ----------
ENDING CASH AND CASH EQUIVALENTS, September 30 $ 194,000 $5,868,000
=========== ==========
Supplemental disclosures of cash flow information:
Interest paid 738,000 1,107,000
Income taxes paid -- --
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
The accompanying unaudited financial statements reflect all adjustments which
are, in the opinion of management, necessary to fairly present the results for
the interim periods presented and should be read in conjunction with the
Company's 1995 Annual Report.
NOTE 2 - PRO FORMA OPERATING RESULTS
On June 30, 1995, Prideco, Inc. ("Prideco"), a majority-owned subsidiary of the
Company, merged with Grant Acquisition Company, a wholly-owned subsidiary of
Energy Ventures, Inc. ("EVI"). In the merger, the Company's shares of Prideco
were converted into 1,035,858 shares of Common Stock, $1.00 par value, of EVI.
EVI's common stock is listed and traded on the New York Stock Exchange
(NYSE:EVI). Accordingly, the individual accounts of Prideco have been
eliminated from the Company's June 30, 1995 Balance Sheet which reflects the
effect of the merger. Prideco's results of operations are included in the
Company's Consolidated Statement of Earnings through June 30, 1995, the date of
the merger. Concurrently with the merger, the Company acquired an additional
912,873 shares of EVI common stock directly from EVI and the minority
shareholders of Prideco for an aggregate cash price of $13,291,000.
The investment in EVI is classified as "available for sale". Investment
securities classified as available for sale at September 30, 1995 are carried
at fair value with fair value adjustments, net of their related income tax
effects, reported as a component of shareholders' equity.
The following summarizes the unaudited consolidated pro forma operating results
of the Company as if the merger of Prideco, Inc. had occurred as of July 1,
1994 the beginning of the periods.
(In thousands except per share data.)
<TABLE>
<CAPTION>
Three Months Ended
September 30, 1994
------------------
<S> <C>
Net Revenues $19,169
Net Earnings $ 2,146
Earnings per share $ 0.39
</TABLE>
Pro forma results are not necessarily indicative of results that would have
occurred had the merger been made at July 1, 1994, or of results which may
occur in the future.
6
<PAGE> 7
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operations
Christiana Companies consolidated revenues for the three months ended September
30, 1995 were $19,397,000 versus $32,069,000 reported for the comparable period
a year ago. Revenues were lower this period due to the completed merger of
Prideco with a unit of Energy Ventures, Inc. (NYSE:EVI) on June 30, 1995.
Revenues attributable to Warehousing, Rental and Logistic services increased 4%
to $19,937,000 in the first quarter fiscal 1996 compared with $19,169,000 for
the same period last year. Revenue growth this quarter within this segment
occurred at The TLC Group aided by increased warehousing capacity and marketing
efforts directed at building dedicated transportation volume. Revenues at
Wiscold were lower by 4% due to reduced vegetable freezing volume resulting
from poor regional growing conditions this season.
Operating earnings for the quarter were $2,053,000 versus $3,973,000 generated
in the comparable period a year ago. The reduction in operating earnings is
primarily attributable to the absence of Prideco's operations this quarter and
to a lesser extent reduced vegetable freezing volume at Wiscold.
Sales of 14 condominium homes were completed in the first quarter of fiscal
1996 which generated a pretax gain of $840,000 compared with sales of 20 homes
in the same period last year which contributed pretax earnings of $1,437,000.
Consolidated net earnings for the quarter were $1,394,000 or $0.27 per share
compared with $2,515,000 or $0.46 per share for the same period a year ago.
Net earnings were lower this period due to six fewer home sales, reduced
vegetable freezing volume, the absence of Prideco's operations due to its
merger and reduced interest income resulting from the use of $13.3 million of
interest earning short-term investments to fund the purchase of 912,873 shares
of Energy Ventures, Inc. in connection with the Prideco transaction.
Financial Condition
Cash equivalents and short term investments totaled $4,309,000 as of September
30, 1995 compared with $3,197,000 at June 30, 1995, an increase of $1,112,000.
Cash provided by operating activities of $2,907,000 was attributable primarily
to net earnings, depreciation, amortization and deferred taxes. Cash used in
investing activities of $985,000 resulted from capital expenditures of
$1,830,000 primarily attributable to warehousing and logistics operations and
an increase of $1,293,000 in short term investments offset by proceeds from
asset sales, primarily real estate, of $2,273,000 in this year's first fiscal
quarter.
On September 30, 1995, Christiana held for investment 1,948,731 shares of EVI
which represented approximately a 10.5% ownership interest. On September 30,
1995 EVI's share price was $23.25 giving Christiana's holdings a market value
of $45,308,000. Unrealized appreciation of this investment, before tax,
increased $10,231,000 in the quarter to $13,449,000 as of September 30, 1995.
At quarter end, unrealized investment gain, net of tax totaled $8,128,000.
Christiana's operating units have capital commitments to construct new
distribution oriented warehousing capacity. Wiscold is constructing a new 3.5
million cubic foot refrigerated distribution center in Rochelle, Illinois with
an expected cost of $11.5 million. The new facility is being built on company
owned property at the site of its existing 10.6 million cubic foot refrigerated
distribution center. This facility is expected to be completed and operational
in the fourth quarter of fiscal 1996.
The TLC Group is expanding its newest dry distribution center in Zeeland,
Michigan by 106,000 sq. ft. When completed during the third quarter of fiscal
1996, this facility will total 220,000 sq. ft. of dry distribution capacity.
Construction costs of this expansion are expected to be $2.3 million.
The construction of these facilities is expected to be funded primarily by
subsidiary issued term debt.
7
<PAGE> 8
PART II - OTHER INFORMATION
Item 1. Not applicable.
Item 2. Not applicable.
Item 3. Not applicable.
Item 4. Registrant's annual meeting of shareholders was held October 31,
1995. All nominees to the Board of Directors were re-elected:
Nicholas F. Brady, Paul A. Cameron, William T. Donovan, Raymond
F. Logan, David J. Lubar, Sheldon B. Lubar, Albert O. Nicholas
and Gary R. Sarner.
At the Registrant's annual meeting the shareholders approved the
1995 Stock Option Plan. Incorporated by reference to the 1995
Proxy Statement.
Item 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K
None
8
<PAGE> 9
SIGNATURES:
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHRISTIANA COMPANIES, INC.
(Registrant)
Date: November 10, 1995
/s/ Sheldon B. Lubar
----------------------------
Sheldon B. Lubar
Chairman and
Chief Executive Officer
Date: November 10, 1995
/s/ William T. Donovan
----------------------------
William T. Donovan
Executive Vice President and
Chief Financial Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 194,000
<SECURITIES> 4,115,000
<RECEIVABLES> 8,997,000
<ALLOWANCES> 141,812
<INVENTORY> 547,000
<CURRENT-ASSETS> 15,664,000
<PP&E> 92,390,000
<DEPRECIATION> 18,661,000
<TOTAL-ASSETS> 146,024,000
<CURRENT-LIABILITIES> 12,566,000
<BONDS> 38,970,000
<COMMON> 5,196,000
0
0
<OTHER-SE> 68,419,000
<TOTAL-LIABILITY-AND-EQUITY> 146,024,000
<SALES> 0
<TOTAL-REVENUES> 19,937,000
<CGS> 0
<TOTAL-COSTS> 16,083,000
<OTHER-EXPENSES> 1,801,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 773,000
<INCOME-PRETAX> 2,290,000
<INCOME-TAX> 896,000
<INCOME-CONTINUING> 1,394,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,394,000
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
