SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
Amendment No. 1 to 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
o 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. [X] Yes
[_] No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
5,186,630
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Quarterly Report on Form
10-Q for the quarter ended March 31, 1996, as set forth herein:
Part I Item 1. Financial Statements. As discussed at Note 2, the
Consolidated Financial Statements of Christiana Companies, Inc. have been
amended to reflect the adjustment required to change the method of
accounting for the investment in Energy Ventures, Inc. ("EVI") from the
cost method to the equity method.
Part I Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. This section has been amended as a
result of the matter described above in Item 1.
Part II Item 6. Exhibits and Reports on Form 8-K. The list of exhibits
has been amended to file a financial data schedule reflecting the change
in accounting discussed above.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
Restated
March 31, June 30,
1996 1995
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. 23,100,000 21,886,000
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 114,064,000 107,987,000
----------- -----------
$131,058,000 $121,742,000
=========== ===========
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 13,290,000 11,866,000
Other liabilities 1,207,000 1,266,000
----------- -----------
Total Long-Term Liabilities 57,493,000 51,388,000
----------- -----------
Total Liabilities 69,243,000 63,032,000
----------- -----------
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) -
Retained earnings 44,808,000 41,492,000
----------- -----------
Total Shareholders' Equity 61,815,000 58,710,000
----------- -----------
$131,058,000 $121,742,000
=========== ===========
See notes to consolidated financial statements.
<PAGE>
<TABLE>
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Nine Months Ended Three Months Ended
March 31, March 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Product sales $ - $39,911,000 $ - $14,221,000
Warehousing, rental and 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
Equity in earnings of EVI 1,214,000 - 405,000 -
Other income (expenses), net (123,000) (361,000) (98,000) (92,000)
----------- ----------- ----------- -----------
1,537,000 (669,000) 700,000 (582,000)
----------- ----------- ----------- -----------
Earnings before income taxesand minority
interest 5,453,000 7,666,000 1,510,000 1,425,000
Income tax provision 2,137,000 2,915,000 592,000 512,000
---------- ---------- ----------- ----------
Net earnings before minority interest 3,316,000 4,751,000 918,000 913,000
Minority interest - (465,000) - (172,000)
---------- ---------- --------- ----------
Net Earnings $ 3,316,000 $ 4,286,000 $ 918,000 $ 741,000
========== ========== ========= ==========
Net earnings per share $0.64 $0.81 $0.18 $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.
<PAGE>
<TABLE>
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
Unrealized
Additional Investment
Common Stock Treasury Paid-in Gain,
Shares Amount Stock Capital Net of Tax
<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) -
Net Earnings for the Year - - - - 5,062,000
----------- --------- --------- ---------- ----------
Balance, June 30, 1995 5,195,630 $5,196,000 - $12,022,000 $41,492,000
Purchase of Treasury stock - - (211,000) -
Net earnings for the nine
months ended March 31,
1996 (unaudited) - - - - 3,316,000
----------- --------- --------- ---------- ----------
Balance, March 31, 1996 5,195,630 $5,196,000 $(211,000) $12,022,000 $44,808,000
=========== ========= ========= ========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
Nine Months Ended
March 31,
1996 1995
CASH FLOW FROM OPERATING ACTIVITIES:
Net earnings $ 3,316,000 $ 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
Income of unconsolidated affiliate,
net (773,000) -
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
See notes to consolidated financial statements.
<PAGE>
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 - RESTATEMENT
The Company has restated its previously issued March 31, 1996 financial
statements reflect the adjustments required to account for the Company's
investment in Energy Ventures, Inc. ("EVI") under the equity method of
accounting instead of the cost method, as was previously reported.
The restated March 31, 1996 Balance Sheet no longer reports the Investment
in EVI as an available for sale security. Accordingly, the originally
reported "Unrealized Investment Gain, Net of Tax" of $12,127,000 and the
related deferred tax components have been removed from the restated March
31, 1996 Balance Sheet.
The impact of the restatement is as follows:
Nine Months
Quarter Ended Ended
March 31, 1996 March 31, 1996
Earnings Before Income Taxes
and Minority Interest
As previously reported $1,105,000 $4,239,000
As restated $1,510,000 $5,453,000
Net Earnings
As previously reported $ 660,000 $2,543,000
As restated $ 918,000 $3,316,000
Earnings Per Share
As previously reported $0.13 $0.49
As restated $0.18 $0.64
At March 31,
Shareholders' Equity 1996
As previously reported $78,552,000
As restated $61,815,000
NOTE 3 - 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 being accounted for under the equity method of
accounting.
The following summarizes the unaudited consolidated pro forma operating
results of the Company as if the merger of Prideco, Inc. and the
acquisition of EVI shares had occurred as of July 1, 1994 the beginning
of the periods.
Three Months Ended Nine Months Ended
March 31, 1995 March 31, 1995
Net Revenues $17,356 $53,933
Net Earnings $ 467 $ 3,594
Earnings per share $ 0.09 $ 0.68
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.
NOTE 4 - ENERGY VENTURES, INC. SUMMARY FINANCIAL INFORMATION (UNAUDITED)
EVI's fiscal year ends December 31. Summary financial information for
EVI, which is accounted for under the equity method in the Company's
financial statements, is as follows:
THREE MONTHS NINE MONTHS ENDED
ENDED
(In Thousands) 3/31/96 3/31/96
Revenues $110,042 $309,222
Gross Profit 26,502 76,196
Income before Income Taxes 6,686 17,704
Net Income 4,347 12,274
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.
For the quarter ended March 31, 1996, the Company recognized earnings from
EVI of $405,000 attributable to its 10.6% weighted average ownership
interest.
Consolidated net earnings for the quarter were $918,000 or $0.18 per share
compared with $741,000 or $0.14 per share for the same period a year ago.
Net earnings increased this period due to increased sales of condominium
units, lower interest expense and earnings contributed by EVI, offset by
reduced margins in Refrigerated Warehousing and Logistics.
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.
For the nine months ended March 31, 1996, the Company recognized earnings
from EVI of $1,214,000.
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.
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.
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
No reports on Form 8-K were filed for the quarter covered by
this report.
<PAGE>
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: 7/15/96
/s/ Sheldon B. Lubar
Sheldon B. Lubar
Chairman and
Chief Executive Officer
Date: 7/15/96
/s/ William T. Donovan
William T. Donovan
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF CHRISTIANA COMPANIES, INC. AS OF AND
FOR THE QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<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> 131,058,000
<CURRENT-LIABILITIES> 11,750,000
<BONDS> 44,754,000
0
0
<COMMON> 17,007,000
<OTHER-SE> 44,808,000
<TOTAL-LIABILITY-AND-EQUITY> 131,058,000
<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> 5,543,000
<INCOME-TAX> 2,137,000
<INCOME-CONTINUING> 3,316,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,316,000
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
</TABLE>
