<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 March 31, 1996
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 5,186,630
- -------------------------------- --------------------------------
(Class) (Outstanding at May 7, 1996)
Page 1 of 10 total pages No exhibits are filed with this report.
1
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, June 30,
1996 1995
----------- ------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 5,079,000 375,000
Short-term investments 293,000 2,822,000
Accounts receivable and other current assets 10,709,000 10,310,000
Inventories 913,000 248,000
------------ ------------
Total Current Assets 16,994,000 13,755,000
------------ ------------
Long-Term Assets:
Investment in Energy Ventures, Inc. 51,885,000 35,077,000
Mortgage notes receivable 2,963,000 3,205,000
Rental properties, net 1,985,000 3,610,000
Fixed assets, net 78,406,000 71,104,000
Other assets 7,610,000 8,182,000
------------ ------------
Total Long-Term Assets 142,849,000 121,178,000
------------ ------------
$159,843,000 $134,933,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts payable $5,011,000 $2,774,000
Accrued liabilities 4,305,000 5,347,000
Short term debt 676,000 1,844,000
Current portion of long-term debt 1,758,000 1,679,000
------------ ------------
Total Current Liabilities 11,750,000 11,644,000
------------ ------------
Long-Term Liabilities:
Long-term debt 42,996,000 38,256,000
Deferred Federal and state income taxes 25,338,000 17,765,000
Other liabilities 1,207,000 1,266,000
------------ ------------
Total Long-Term Liabilities 69,541,000 57,287,000
------------ ------------
Total Liabilities 81,291,000 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
Less: Treasury Stock (211,000) --
Unrealized investment gain, net of tax 12,127,000 1,909,000
Retained earnings 49,418,000 46,875,000
------------ ------------
Total Shareholders' Equity 78,552,000 66,002,000
------------ ------------
$159,843,000 $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>
NINE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------------------- --------------------------------
1996 1995 1996 1995
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Product sales
Warehousing, rental and $ - $39,911,000 $ - $14,221,000
related services 59,004,000 53,933,000 19,416,000 17,356,000
----------- ----------- ----------- -----------
59,004,000 93,844,000 19,416,000 31,577,000
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of product sales - 34,066,000 - 12,175,000
Warehousing, rental and related
expenses 49,569,000 43,057,000 16,749,000 14,459,000
Selling, general and
administrative 5,519,000 8,386,000 1,857,000 2,936,000
----------- ----------- ----------- -----------
55,088,000 85,509,000 18,606,000 29,570,000
----------- ----------- ----------- -----------
Earnings from Operations 3,916,000 8,335,000 810,000 2,007,000
Other Income (Expense):
Interest income 403,000 746,000 132,000 234,000
Interest expense (2,309,000) (3,634,000) (777,000) (1,223,000)
Gain on sales of real estate 2,352,000 2,580,000 1,038,000 499,000
Other income (expenses), net (123,000) (361,000) (98,000) (92,000)
----------- ----------- ----------- -----------
323,000 (669,000) 295,000 (582,000)
----------- ----------- ----------- -----------
Earnings before income taxes
and minority interest 4,239,000 7,666,000 1,105,000 1,425,000
Income tax provision 1,696,000 2,915,000 445,000 512,000
----------- ----------- ----------- -----------
Net earnings before
minority interest 2,543,000 4,751,000 660,000 913,000
Minority interest - (465,000) - (172,000)
----------- ---------- ----------- ----------
Net Earnings $ 2,543,000 $4,286,000 $ 660,000 $ 741,000
=========== ========== =========== ===========
Net earnings per share $ 0.49 $ 0.81 $ 0.13 $ 0.14
=========== ========== =========== ===========
Average number of
shares outstanding 5,191,605 5,302,622 5,186,630 5,195,630
</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
----------------------------- TREASURY PAID-IN GAIN, RETAINED
SHARES AMOUNT STOCK CAPITAL NET OF TAX EARNINGS
---------- --------- ----------- ------------ ----------- ------------
<S> <C> <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 -- -- -- -- 10,218,000 --
Purchase of Treasury stock -- -- (211,000) --
Net earnings for the nine months
ended March 31, 1996 (unaudited) -- -- -- -- -- 2,543,000
-----------------------------------------------------------------------------------------
Balance, March 31, 1996 5,195,630 $5,196,000 $(211,000) $12,022,000 $12,127,000 $49,418,000
=========================================================================================
</TABLE>
4
See notes to consolidated financial statements.
<PAGE> 5
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
------------------------
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net earnings $2,543,000 $4,286,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 5,316,000 6,044,000
Gains on sales of assets (2,589,000) (2,694,000)
Deferred income tax expenses 983,000 71,000
Minority interest in consolidated income
of subsidiaries -- 465,000
Changes in assets and liabilities:
(Increase) in accounts receivable (757,000) (1,187,000)
(Increase) decrease in inventory (665,000) 1,720,000
Decrease in other assets 331,000 719,000
Increase in accounts payable
and accrued liabilities 1,149,000 141,000
---------- -----------
Net cash provided by operating activities 6,311,000 9,565,000
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 7,010,000 5,595,000
Decrease in mortgage notes receivable 242,000 148,000
Decrease in short-term investments 2,529,000 6,539,000
Capital expenditures (14,829,000) (9,194,000)
------------ -----------
Net cash (used in) provided by investing
activities (5,048,000) 3,088,000
CASH FLOW FROM FINANCING ACTIVITIES:
Net borrowings on long-term notes
and credit lines 3,652,000 1,370,000
Payments of notes and loans payable -- (6,227,000)
Stock repurchase (211,000) (3,805,000)
----------- -----------
Net cash provided by (used in) financing
activities 3,441,000 (8,662,000)
---------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,704,000 3,991,000
BEGINNING CASH AND CASH EQUIVALENTS, July 1 375,000 3,929,000
---------- -----------
ENDING CASH AND CASH EQUIVALENTS, March 31 $5,079,000 $7,920,000
========== ===========
Supplemental disclosures of cash flow information:
Interest paid $2,195,000 $3,620,000
Income taxes paid $1,737,000 $2,066,000
</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 March 31, 1996 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.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, 1995 MARCH 31, 1995
------------------- -----------------
<S> <C> <C>
Net Revenues $17,356 $53,933
Net Earnings $ 375 $ 3,270
Earnings per share $ 0.07 $ 0.62
</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 nine months ended March 31,
1996 were $19,416,000 versus $31,577,000 reported for the comparable period a
year ago. The decline in revenues is entirely attributable to the merger of
Prideco which had revenues of $14,221,000 in last year's comparable period.
Revenues of Refrigerated Warehousing and Logistics increased 12% to $19,416,000
in the third quarter of fiscal 1996 compared to $17,356,000 for the same period
last year. Revenue growth within this segment occurred due to increased
storage and handling volume at Wiscold, particularly at its largest facility in
Rochelle, Illinois, new capacity added at TLC's facilities in Zeeland, Michigan
and growth in logistic and international freight forwarding services.
Selling, general and administrative expenses are down $1,048,000 in the quarter
compared to the previous year, of which approximately $950,000 is attributable
to the deconsolidation of Prideco. For the first nine months of fiscal 1996,
$2,800,000 of the $2,866,000 decrease in SG&A expense is due to the absence of
Prideco.
Operating earnings for the quarter were $810,000 versus $2,007,000 generated in
the comparable period a year ago. The reduction in operating earnings is
primarily attributable to the absence of Prideco's operations which contributed
operating earnings of $1,068,000 in last year's third quarter, and to a lesser
extent, reduced margins in Refrigerated Warehousing and Logistics. Operating
margins of the Refrigerated Warehousing and Logistics segment were lower due to
higher unused capacity at certain warehouses, lower utilization of equipment,
and increased operating costs in the transportation segment.
Sales of 26 condominium homes were completed in the third quarter of fiscal
1996 which generated net earnings of $623,000 or $0.12 per share compared with
sales of 9 homes in the same period last year which contributed net earnings of
$299,000 or $0.06 per share. Sales this year tended to be lower-priced homes,
resulting in a lower gross profit. In addition, 16 homes were sold to a single
buyer in an "as is" condition, thereby avoiding refurbishment expenses.
Consolidated net earnings for the quarter were $660,000 or $0.13 per share
compared with $741,000 or $0.14 per share for the same period a year ago. Net
earnings were lower this period due to the absence of Prideco's operations
which contributed net earnings of $245,000 in last year's third quarter,
reduced margins in Refrigerated Warehousing and Logistics offset by increased
sales of condominium homes.
For the first nine months of fiscal 1996, Christiana Companies consolidated
revenues were $59,004,000 versus $93,844,000 for the comparable period last
year. The decline in revenues this period is due to the merger of Prideco
which had revenues of $39,911,000 in the first nine months of fiscal 1995.
Refrigerated Warehousing and Logistics revenue increased 9% when compared to
$53,933,000 for the same period a year ago due to growth at TLC in warehousing,
logistic and international services. Wiscold's revenues were in line year to
year, but due to a poor vegetable harvest in the first quarter of fiscal 1996
vegetable freezing services this year were reduced resulting in lower operating
margins. For the nine month period ended March 31, 1996, Refrigerated
Warehousing and Logistics contributed $1,638,000 or $0.31 per share versus
$2,299,000 or $0.43 per share in the comparable period last year.
For the nine months ended March 31, 1996, sales of 50 homes were completed
which generated net earnings of $1,410,000 or $0.27 per share compared to sales
of 39 homes in the same period last year which contributed net earnings of
$1,548,000 or $0.29 per share. Net earnings per unit were lower in fiscal 1996
due primarily to the bulk sale of 16 homes and higher refurbishment expenses
due to sales of older units.
7
<PAGE> 8
Financial Condition
Cash equivalents and short term investments totaled $5,372,000 as of March 31,
1996 compared with $3,197,000 at June 30, 1995, an increase of $2,175,000.
Cash provided by operating activities of $6,311,000 was primarily attributable
to net earnings, depreciation, and higher deferred taxes. Cash used in
investing activities of $5,048,000 resulted from capital expenditures of
$14,829,000 offset by a decrease of $2,529,000 in short term investments and
asset sales, which included real estate of $5,594,000 and transportation
equipment of $1,416,000. Capital expenditures in the period of $14.8 million
were comprised primarily of costs incurred to date in the construction of two
warehouse facilities ($8.9 million), new transportation equipment ($4.2
million) and real estate refurbishments ($1.7 million).
Working capital at March 31, 1996 totaled $5,244,000 reflecting an increase of
$3,133,000 from June 30, 1995 due primarily to cash flow generated by real
estate sales.
On March 31, 1996, Christiana held for investment 1,948,731 shares of EVI which
represented a 10.5% ownership interest. On March 31, 1996 EVI's share price
was $26.625 giving Christiana's holdings a market value of $51,885,000.
Unrealized appreciation of this investment, before tax, increased $2,680,000 in
the third quarter to $19,980,000 as of March 31, 1996. At quarter end,
unrealized investment gain, net of tax totaled $12,127,000.
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
early in the fourth quarter of fiscal 1996. At March 31, 1996, $7.8 million
had been expended.
The TLC Group is expanding its newest dry distribution center in Zeeland,
Michigan by 106,000 sq. ft. When completed during the fourth 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, of which $1.2 million was spent through March 31, 1996.
The construction of these facilities is expected to be funded by internal cash
flow and subsidiary issued term debt.
New Accounting Standard
In 1995, the Financial Accounting Standards Board issued FASB Statement No.
123, "Accounting for Stock-Based Compensation," which establishes financial
accounting and reporting standards for stock-based employee compensation. The
Company plans to adopt only the pro forma disclosure requirements of this
statement, and to continue to apply the accounting provisions of Opinion 25 to
stock-based employee compensation arrangements, as is allowed by the Statement.
This disclosure will be effective with the June 30, 1997 financial statements.
8
<PAGE> 9
PART II - OTHER INFORMATION
Item 1. Not applicable.
- -------
Item 2. Not applicable.
- -------
Item 3. Not applicable.
- -------
Item 4. See Item 4 of Form 10-Q for quarter ended 9/30/95.
- -------
Item 5. Not applicable.
- -------
Item 6. Exhibits and Reports on Form 8-K
- -------
None
9
<PAGE> 10
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: May 7, 1996
/s/ Sheldon B. Lubar
-------------------------------
Sheldon B. Lubar
Chairman and
Chief Executive Officer
Date: May 7, 1996
/s/ William T. Donovan
-------------------------------
William T. Donovan
Executive Vice President and
Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000020104
<NAME> CHRISTIANA COMPANIES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 5,079,000
<SECURITIES> 293,000
<RECEIVABLES> 9,143,000
<ALLOWANCES> 126,000
<INVENTORY> 913,000
<CURRENT-ASSETS> 16,994,000
<PP&E> 100,207,000
<DEPRECIATION> 19,816,000
<TOTAL-ASSETS> 159,843,000
<CURRENT-LIABILITIES> 11,750,000
<BONDS> 44,754,000
0
0
<COMMON> 5,196,000
<OTHER-SE> 12,022,000
<TOTAL-LIABILITY-AND-EQUITY> 159,843,000
<SALES> 0
<TOTAL-REVENUES> 59,004,000
<CGS> 0
<TOTAL-COSTS> 49,569,000
<OTHER-EXPENSES> 5,519,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,309,000
<INCOME-PRETAX> 4,239,000
<INCOME-TAX> 1,696,000
<INCOME-CONTINUING> 2,543,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,543,000
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
