SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 1-3846
CHRISTIANA COMPANIES, INC.
(Exact name of registrant as specified in its charter)
A Wisconsin Corporation 95-1928079
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
777 East Wisconsin Avenue, Suite 3380, Milwaukee, Wisconsin 53202
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (414) 291-9000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock - $1.00 par Value New York Stock Exchange
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 by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value (based on September 19, 1997 closing price) of
voting stock less stock owned by all executive officers and directors as a
group: $70,970,625
Number of Shares of Common Stock Outstanding
at September 19, 1997: 5,136,630
Documents incorporated by reference:
Registrant's definitive Proxy Statement for its 1997 annual meeting of
shareholders to be held on December 3, 1997, is incorporated by
reference in Part III.
The Exhibit Index is located on page 36.
<PAGE>
PART 1
Item 1. Business
At June 30, 1997, Christiana Companies, Inc. ("Christiana" of "the
Company") is engaged in providing public refrigerated and non-refrigerated
warehousing and logistic services and owning 3,897,462 shares of EVI, Inc.
common stock representing 8.5% ownership of the then outstanding shares.
REFRIGERATED WAREHOUSING AND LOGISTICS
Operations in this line of business have been conducted through two
wholly owned subsidiaries, Wiscold, Inc. and Total Logistic Control, Inc.
On June 30, 1997, the operations and corporate structures of Wiscold, Inc.
and Total Logistic Control, Inc. were merged forming Total Logistic
Control, LLC.
On September 1, 1992, Christiana acquired the assets of Wiscold,
Inc., a Wisconsin corporation, formed in 1915, which was engaged in
providing public refrigerated warehousing services, vegetable processing
and individual quick freeze (IQF) services, automated vegetable poly bag
and bulk packaging services, and transportation services into and out of
its facilities.
On January 4, 1994, Christiana acquired The TLC Group, Inc., a
Zeeland, Michigan-based firm engaged in providing fully integrated third
party logistic services, including warehouse, distribution and
transportation services in both refrigerated and non-refrigerated
facilities.
Total Logistic Control, LLC ("TLC") provides full service public
and contract warehousing and logistic services in all ranges of
refrigerated and ambient temperatures. TLC's refrigerated warehousing
operations include temperature sensitive storage services, blast freezing,
individual quick freeze (IQF) services, vegetable blanching and
processing, and automated poly bag and bulk packaging services. TLC's
transportation and distribution services include full service truckload,
less-than-truckload and pooled consolidation in both temperature
controlled and dry freight equipment, dedicated fleet services and
specialized store-door delivery formats. Transportation and logistic
services are provided utilizing company-owned equipment as well as through
carrier management services utilizing third party common and contract
carriers. Integrated logistic services generally combine transportation,
warehousing and information services to manage the distribution channel
for a customer's products from the point of manufacturer to the point of
consumption. TLC also provides a full range of international freight
management services, fully computerized inventory management, kitting,
repackaging and just-in-time production supply services.
TLC's customers consist primarily of national, regional and local
firms engaged in food processing, consumer product manufacturing,
wholesale distribution and retailing. During fiscal 1997, TLC's top 10
customers accounted for approximately 47% of total revenues. TLC serves
approximately 1,250 customers.
Total Logistic Control is the nation's seventh largest provider of
public refrigerated warehouse services. All of TLC's refrigerated
facilities with the exception of a downtown Milwaukee facility are modern
and efficient single story buildings at dock height elevation and fully
insulated. The downtown Milwaukee facility, known as Wisconsin Logistic
Center, is a 10 story building originally constructed in the early 1900s.
TLC's refrigerated distribution centers are:
- Rochelle Logistic Center, located in Rochelle, Illinois,
is TLC's newest and largest refrigerated facility,
initially constructed in 1986. Currently this facility
is comprised of 14,100,000 cubic feet of capacity after
undergoing four capacity expansions in 1988, 1990, 1993
and 1996. All space is capable of temperatures of -20
degrees F to ambient. Rochelle Logistic Center is
strategically located at the intersection of two main line
East-West railroads, the Burlington Northern and the Chicago
Northwestern, and the cross roads of two interstate
highways, I-39 and I-88.
- Beaver Dam Logistic Center, located in Beaver Dam,
Wisconsin, was originally constructed in 1975. Since
1975 this facility has undergone three freezer additions,
the most recent in 1991, and today is comprised of
7,200,000 cubic feet of freezer storage space. Beaver
Dam Logistic Center serves distribution related customers
as well as vegetable and cranberry processors. This
facility's unique capabilities involve value added
services for vegetable processors including IQF,
blanching, slicing, dicing and food service and retail
poly bag packaging operations. Beaver Dam Logistic
Center's IQF tunnels have the capacity to freeze 30,000
pounds of product per hour.
- Milwaukee Logistic Center, located in Wauwatosa,
Wisconsin, was originally constructed in 1954. There
have been six expansions of this facility and today the
Milwaukee Logistic Center facility comprises 4,300,000
cubic feet of which 3,754,000 cubic feet is freezer
capacity and 546,000 cubic feet is cooler space. This
facility has multi-temperature refrigerated storage
ranging from -20 degrees F to +40 degrees F and daily
blast freezing capacity of 750,000 pounds. This location
has a 7-car private rail siding. An additional 3 million
cubic feet of company owned refrigerated and processing space
adjacent to the Milwaukee Logistic Center facility is
leased on a long term basis to a third party retail
grocery company.
- Wisconsin Logistic Center is located in Milwaukee,
Wisconsin. Constructed in the early 1900s, it has
1,000,000 cubic feet of storage capacity comprised of
900,000 cubic feet of freezer space and 100,000 cubic
feet of cooler space.
- Holland Logistic Center, located in Holland, Michigan,
has undergone a number of expansions over the years, with
a major reconstruction in 1983 after a fire destroyed
approximately 50 percent of the facility. Today, this
refrigerated facility comprises 2,100,000 cubic feet of
storage capacity of which 1,300,000 cubic feet is freezer
capacity, 400,000 cubic feet is cooler capacity and
400,000 cubic feet is convertible capacity between
freezer and cooler. Holland Logistic Center services
both distribution customers as well as blueberry growers
in the West Michigan area. This location is situated on
a CSX rail spur with two refrigerated rail docks. This
facility is held under a lease which expires December 31,
2000.
- Kalamazoo Logistic Center, is located in Kalamazoo,
Michigan, has two distribution centers. Facility #1 is a
3,300,000 cubic foot facility with 1,100,000 cubic feet
of freezer capacity, 400,000 cubic feet of cooler
capacity and 1,800,000 cubic feet of dry storage
capacity. This location services a number of
distribution customers in the Midwest and is
strategically located at the I-94 and US 31 crossroads in
Michigan, equal distance between Chicago and Detroit.
Facility #2 is located adjacent to Facility #1 and is
comprised of 2,800,000 cubic feet of capacity. This
facility contains 1,500,000 cubic feet of cooler capacity
and 1,300,000 cubic feet of freezer capacity. Two large
distribution customers utilize 75% of this space. These
facilities are held under long term leases.
- Also located at the Kalamazoo Logistic Center is a
company owned 10,000 square foot transportation equipment
maintenance center. Approximately 50% of TLC's fleet of
over-the-road transportation units is domiciled in
Kalamazoo, Michigan.
In addition to the refrigerated distribution centers described
above, TLC operates a national network of owned and leased dry (non-
refrigerated) distribution centers comprising approximately 0.9 million
square feet of storage capacity. Dry distribution centers are located in
Zeeland (2) and Kalamazoo, Michigan; Munster, Indiana; South Brunswick,
New Jersey and Bayamon, Puerto Rico.
Competition in integrated logistic services is on both a national
and local basis with a predominant emphasis on transportation services.
At present, there are no direct competitors providing the full scope
warehousing and transportation services across the full range of
temperatures in TLC's market. However, each of TLC's individual business
segments is highly fragmented with many local, regional and national
competitors, especially in the transportation and dry warehousing
industries. TLC's competitive edge is its ability to provide fully
integrated logistic services designed to its customers' distribution needs
and utilizing its network of strategically located refrigerated and dry
distribution centers. TLC's revenues and earnings can be affected by
changes in competitive pricing, particularly at the local level, harvest
yields of certain vegetable and fruit crops grown in the Upper Midwest,
and general economic conditions.
TLC holds a trademark on its name and logo. No other trademarks,
patents, licenses, franchises or concessions are considered material to
its business.
Expenditures for research and development and compliance with
environmental regulation have not been, and are not anticipated to be,
significant.
EVI, INC.
Christiana owns 3,897,462 shares of EVI, Inc. ("EVI") representing
at June 30, 1997 an approximate 8.5% ownership interest. The Company's
holdings in EVI resulted from the June 30, 1995 merger of Prideco, a
former majority owned subsidiary of the Company, with a subsidiary of EVI
and a $13.2 million cash investment to purchase additional EVI shares in
connection with the merger transaction. The Company accounts for its
investment in EVI using the equity method.
EVI, a New York Stock Exchange listed firm, is an international
manufacturer and supplier of oilfield equipment used in the exploration
and production of oil and gas. EVI operates through two business
segments: tubular products segment and production equipment segment. The
tubular products segment manufactures drill pipe and a full line of
premium tubulars and accessories used in the exploration and production of
oil and gas. EVI's drill pipe and premium tubulars are used primarily in
connection with the initial stages of the exploration and development of
oil and gas reserves, in particular, natural gas. EVI's production
equipment segment manufactures artificial lift and production equipment
used primarily to assist and enhance the production of oil from existing
and older wells.
The principal customers of EVI include both domestic and
international oil and natural gas companies, drilling contractors and
distributors of oilfield supplies. Because EVI's tubular products are
designed primarily for drilling and production in deep wells and harsh
environments, they are generally used in connection with the exploration
and production of natural gas and international exploration. Accordingly,
sales of these products are sensitive to fluctuations in the price outlook
for natural gas and related levels of exploration activity. EVI competes
with a large number of companies, some of which have greater resources and
more extensive and diversified operations.
At EVI's annual shareholders meeting on May 6, 1997, the
shareholders approved a two-for-one split of the company's common stock,
$1.00 par value (the "common stock"), through a stock dividend and a
related amendment to the Company's Restated Certificate of Incorporation
that increased the number of authorized shares of the company's common
stock from 40 million shares to 80 million shares. The record date for
the two-for-one split was May 12, 1997. All EVI share amounts included
herein have been adjusted for this split.
EMPLOYEES
The following table shows the number of fulltime Christiana and
Total Logistic Control employees at the dates indicated.
Fulltime Employees at August 31,
1995 1996 1997
Christiana 23 14 10
Total Logistic Control 666 681 736
---- ---- ----
TOTAL 689 695 746
The decrease in Christiana employees from 14 in 1996 to 10 in 1997
is due to the completion of condominium refurbishment and sales activities
in fiscal 1997. At August 31, 1997, Total Logistic Control had 55 more
employees than at the same date a year ago due primarily to the expansion
at Rochelle Logistic Center and growth in transportation related logistic
services.
Item 2. Properties
Refrigerated Warehousing Facilities
At June 30, 1997, Total Logistic Control operated seven public
refrigerated warehouse facilities located in Wisconsin (3), Michigan (3),
and Illinois (1). Other than Wisconsin Logistic Center, located in
downtown Milwaukee, TLC's refrigerated facilities are large single-story
buildings constructed at dock height with full insulation and vapor
barrier protection. Refrigeration is provided by screw-type compressors
in ammonia-based cooling systems. The facilities are strategically
located and well served by rail and truck.
TLC's refrigerated warehouse facilities are described in the
following table:
Total Storage
Space
(cubic feet in
Location millions) Type of Facility
Rochelle, Illinois 14.1 Distribution
Beaver Dam, Wisconsin 7.2 Production/Distribution
Wauwatosa, Wisconsin 4.3 Distribution
Holland, Michigan * 2.1 Distribution /Production
Kalamazoo, Michigan *
Building # 1** 3.3 Distribution
Building #2 2.8 Distribution
Milwaukee, Wisconsin 1.0 Distribution
----
TOTAL 34.8
====
* Leased facility.
** Includes 1.8 million cubic feet of dry storage capacity.
At both the Rochelle and Beaver Dam Logistic Centers the Company
owns substantial additional acreage available for expansion.
At June 30, 1997, Total Logistic Control operated 7 public non-
refrigerated or dry warehouse distribution facilities located in Michigan
(3), Indiana, New Jersey and Puerto Rico. Zeeland Distribution Center
II, located in Zeeland, Michigan is a company owned facility. All other
dry facilities are held under leases. Lease terms generally match
underlying contracts with major customers served at each facility. These
facilities are single story block or metal construction buildings. All
dry facilities are constructed at dock height and are approved as food
grade storage facilities.
TLC's dry warehouse facilities are described on the following
table:
Total
Storage
Space
(sq ft. in Type of
Facility Location thousands) Facility
Zeeland Distr. Center I* Zeeland, MI 202 Public
Zeeland Distr. Center II Zeeland, MI 220 Public
Michigan Distr. Ctr. I* Kalamazoo, MI 88 Public
Central Distr. Center * Munster, IN 125 Public
East Coast Distr. Center I* So. Brunswick, NJ 200 Public
Puerto Rico Warehouse* Bayamon, PR 30 Contract
-----
TOTAL 865
-----
* Leased facility.
TLC owns and operates a 10,000 square foot truck maintenance
facility located at the Kalamazoo Logistic Center. This facility is used
for the maintenance of TLC transportation equipment.
Item 3. Legal Proceedings.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Part II
Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters.
The common stock of the Company is listed on the New York Stock
Exchange. The table below sets forth the reported high and low sales
prices as reported by the New York Stock Exchange for Christiana Companies
common stock for quarters ended March 31, 1994 through September 19, 1997.
<TABLE>
<CAPTION>
1997 1996 1995 1994
Quarter Ended Low High Low High Low High Low High
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31 26 1/2 33 3/4 22 1/4 24 3/4 30 1/8 31 3/4 25 1/2 27 5/8
June 30 31 1/2 39 7/8 20 1/8 24 1/4 25 1/8 30 24 5/8 34 5/8
September 30* 37 5/8 42 5/8 20 5/8 22 3/4 24 3/4 27 1/2 29 1/2 34 1/2
December 31 23 1/2 25 3/4 22 28 1/4 30 34 1/4
* Ten weeks ended September 19, 1977.
</TABLE>
At September 19, 1997, there were approximately 920 shareholders of
record. There have been no dividends paid since 1981, and based on the
Company's strategic business plan of reinvesting cash flow and
acquisitions, none are anticipated in the foreseeable future.
Item 6. Selected Financial Data.
Selected Financial Data is provided under the caption "Five Year
Financial Information" is included on page 33.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following table reflects the components of the Company's net
earnings for each of the past three fiscal years:
<TABLE>
<CAPTION>
Contribution to Net Earnings
Fiscal Year Ended June 30 1997 1996 1995
Per Per Per
(In thousands, except for per share $ Share $ Share $ Share
data)
<S> <C> <C> <C> <C> <C> <C>
Christiana, including Corporate $ (719) $ (.14) $ 971 $0.19 $1,528 $0.29
Refrigerated Warehousing and
Logistics 1,011 .20 1,536 0.29 2,563 0.49
EVI, Inc. * 6,371 1.24 1,096 0.21 __ __
Prideco, net of Minority Interest __ __ __ __ 971 0.18
------- ------- ------- ------- ------- -------
Net Earnings $6,663 $1.30 $3,603 $0.69 $5,062 $0.96
======= ======= ======= ======= ======= =======
* Net of deferred taxes.
</TABLE>
Fiscal Year Ended June 30, 1997
The Company's consolidated revenues for fiscal 1997 were $84,208,000
compared to $77,170,000 reported for fiscal 1996, an increase of 9.1%.
Revenue growth was primarily attributable to increased volume in
transportation and refrigerated warehousing services. The most
significant improvement was in transportation revenues which increased
20.6% over the previous year. During fiscal 1997 Total Logistic Control
secured a large multi-year contract to provide logistic services to a
major frozen food producer. This contract, as well as certain management
changes, enabled the Company to significantly improve the operating
performance in transportation related logistic services during fiscal
1997. Refrigerated warehousing services revenues increased 14.7% over
last year's level due primarily to increased utilization of the expanded
capacity at the Rochelle Logistic Center and higher utilization at all the
Michigan based refrigerated facilities during fiscal 1997.
Revenue growth combined with aggressive cost management resulted in a
1% increase in gross margin. During fiscal 1997, TLC closed two dry
public warehouses which were leased facilities, Atlanta, GA and Sparks,
NV. The closure of these facilities resulted from the Company's inability
to secure longer term value-added logistic services contracts in line with
the Company's strategic focus on dry warehousing operations. Warehousing
and Logistic expenses were negatively impacted by $358,000 of charges
related to warehouse closures and corporate restructuring. Selling,
General and Administrative expenses increased $1,125,000 or 14.9% due
mainly to increased marketing and sales activities. Earnings from
operations increased $358,000 or 8.5%, to $4,579,000 in fiscal 1997 from
$4,221,000 in fiscal 1996.
Loss on disposal of assets of $765,000 was primarily related to a
$1,085,000 charge incurred in the disposal of special freezing equipment
in connection with securing a long term contract for vegetable processing,
IQF freezing, and warehouse services with a major customer of the Beaver
Dam Logistic Center. In addition, in fiscal 1997 gains on the sales of
real estate totaled $271,000 which included the final sales of the 366
condominium home project in San Diego. In fiscal 1996, gains on sales of
real estate were $2,818,000.
Equity in earnings of EVI, Inc. contributed $10,479,000 to pretax
earnings for the fiscal year ended June 30, 1997. Included in this amount
is $5,715,000 attributable to a one-time gain reported on the sale of
Mallard Drilling, an EVI subsidiary. Equity in earnings of EVI, net of
deferred taxes, contributed net earnings of $6,371,000, of which
$3,475,000 was related to the sale of Mallard Drilling.
Consolidated net earnings for fiscal 1997 were $6,663,000 or $1.30 per
share, up 85% from last year's level of $3,603,000 or $.69 per share. The
principal factors impacting net earnings in fiscal 1997 was the growth in
equity earnings in EVI and improved operating performance at TLC.
Fiscal Year Ended June 30, 1996
The Company's consolidated revenues for fiscal 1996 were $77,170,000
compared to $126,881,000 reported for fiscal 1995. Consolidated revenues
in fiscal 1996 all of which were derived from the Refrigerated Warehousing
and Logistics segment were lower due entirely to the June 30, 1995 merger
of Prideco. Prior to the merger, Prideco's operations were included in
Christiana's financial statements. In fiscal 1995, Prideco contributed
$55,239,000, or 43.5% of the Company's consolidated revenues. In fiscal
1996, revenues of Christiana's operating business, Total Logistic Control,
grew 8% to $77,170,000 compared to revenues of $71,642,000 for the
previous year. The gain is primarily attributable to increased warehouse
capacity and integrated logistic services.
Selling, general and administrative expenses were lower by $4,208,000
compared to the previous year, of which approximately $3,800,000 was
attributable to the deconsolidation of Prideco.
Operating income for fiscal 1996 was $4,221,000 compared to
$10,324,000 in fiscal 1995. The prior year included $4,225,000 from
Prideco. Excluding Prideco and before non-recurring expenses of $310,000
associated with consolidating the operations of Wiscold and The TLC Group,
operating income for fiscal 1996 was down $1,568,000 from the prior year
to $4,531,000. The decline was the result primarily of lower vegetable
processing and freezing volumes, increased labor expenses associated with
the startup of high volume distribution accounts and high operating costs
in transportation stemming from less than optimal utilization of equipment
due to lower demand, high maintenance expense and price pressures related
to general market conditions. In addition, during the year Total Logistic
Control incurred expenses associated with the construction and initial
occupancy of two new distribution centers without the benefit of
concurrent revenues.
Interest income in fiscal 1996 was $531,000, down from $942,000 the
prior year due primarily to the use of $13,291,000 of cash to purchase
additional EVI, Inc. common stock in connection with the Prideco merger on
June 30, 1995.
The decline in interest expense of $1,746,000 in fiscal 1996 compared
to the previous year is mainly related to the deconsolidation of Prideco
which had $1,577,000 of interest expense in fiscal 1995.
The Company's effective tax rate in fiscal 1996 increased to 40% from
37% primarily because of the absence of tax exempt interest and increased
state taxes due to year to year changes in the relative state components
of the Company's earnings.
Consolidated net earnings for fiscal 1996 were $3,603,000 or $.69 per
share, down $1,459,000 from net earnings in fiscal 1995 of $5,062,000 or
$.96 per share. Before the effects of the consolidation charges, net
income was $3,789,000 or $.73 per share, a decline of 25% compared to
fiscal 1995. Equity in earnings of EVI, Inc. totaled $1,096,000 after
providing for deferred taxes. In fiscal 1995, Prideco's operations
contributed net earnings of $971,000. Real estate sales in fiscal 1996
totaled 71 condominium homes contributing net earnings of $1,712,000
compared to sales of 48 homes last year which generated earnings of
$1,850,000. In fiscal 1996, 30 homes were sold to a single buyer in an
as-is condition without the Company incurring refurbishment expense. At
June 30, 1996, Christiana had 12 condominium homes available for sale.
Financial Condition, Liquidity and Capital Resources
Cash equivalents and short-term investments totaled $7,499,000 at June
30, 1997 compared to $4,478,000 at June 30, 1996. The Company's working
capital at June 30, 1997 was $4,258,000 compared to $2,489,000 at June 30,
1996.
Operating activities in fiscal 1997 provided cash of $9,183,000
derived primarily from net earnings, depreciation and amortization.
Capital expenditures in fiscal 1997 totaled $3,488,000, the major
components of which were: $688,000 for the completion of the refrigerated
distribution and logistic center in Rochelle, Illinois and $369,000 for
transportation related equipment. The balance of the expenditures were
incurred for equipment and facility improvements within the refrigerated
warehousing facilities.
Financing activities in fiscal 1997 resulted in the use of $6,982,000
to reduce long term debt by $5,628,000 and repay $1,354,000 of short-term
borrowings.
The Company's balance sheet at June 30, 1997, reflects $41,257,000 as
its carrying value for 3,897,462 shares of EVI common stock. At June 30,
1997 these shares had a market value of $163,693,000 or $42.00 per share.
EVI has not paid dividends on its common stock since 1984 and it is
anticipated, for the foreseeable future, that its earnings will be
retained for the development of its business.
At June 30, 1997, the Company had in place a $15 million unsecured
line of credit for general corporate purposes. Borrowings under this line
of credit bear interest on a floating rate of LIBOR plus 125 basis points
or prime at the Company's option. At June 30, 1997, there were no
borrowings under this facility. There were no borrowings under this
facility during fiscal 1997.
Through March 31, 1998, Total Logistic Control, LLC has a loan
commitment of $40,000,000 under an amended revolving credit agreement. At
June 30, 1997, $31,248,000 was outstanding. After April 1, 1998, that
loan commitment reduces to $35,000,000 which is available beyond fiscal
1998. In addition, at June 30, 1997 Total Logistic Control, LLC has a
bank line of credit which permits borrowings up to $5,000,000.
The Company's current sources of capital include: cash generated from
operations, sale of existing mortgage portfolio, borrowings under its
revolving credit agreement and line of credit and the use of its
marketable EVI shares. The Company believes that current reserves of cash
and short-term investments, access to existing credit facilities and
internally generated cash from operations are sufficient to finance the
projected cash requirements of its current operations.
The Company continues to evaluate new acquisitions in areas strategic
to existing operations as well as new lines of business. Future
acquisitions may be funded through cash flow from operations, liquidation
of mortgage notes receivable, liquidation of EVI stock, borrowings under
its existing line of credit and other facilities, and equity issuance if
desirable.
As of June 30, 1997, the Company had no material capital commitments.
Item 8. Financial Statement and Supplementary Data.
See Index to Financial Information on page 14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None
Part III
Item 10. Directors and Executive Officers of Registrant.
The material in Section III of the 1997 Proxy Statement is
incorporated herein by reference.
Item 11. Executive Compensation.
The material in Section IV of the 1997 Proxy Statement is incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The material in Section II and III of the 1997 Proxy Statement is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The material in Section IV of the 1997 Proxy Statement is incorporated
herein by reference.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.
Financial Statement and Schedules:
See Index on page 14.
Exhibits:
See Index on page 36.
Reports on Form 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirement of Section 13 of 15(d) 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.
Date: September 19, 1997 By: /s/ Sheldon B. Lubar
Sheldon B. Lubar, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934
this 10-K report has been signed below on September 19, 1997 by the
following persons on behalf of the Registrant and in the capacity
indicated.
Signature
/s/ Sheldon B. Lubar Chairman, Chief Executive Officer and
Sheldon B. Lubar a Director
/s/ Gary R. Sarner Chairman, Total Logistic Control, LLC
Gary R. Sarner and a Director
/s/ William T. Donovan President, Chief Financial Officer and
William T. Donovan a Director
/s/ Raymond F. Logan Former Vice President- Real Estate and
Raymond F. Logan a Director
/s/ John R. Patterson President, Chief Executive Officer
John R. Patterson Total Logistic Control, LLC and a Director
/s/ Betty J. White Treasurer, Controller and Assistant
Betty J. White Secretary
/s/ Nicholas F. Brady Director
Nicholas F. Brady
/s/ David J. Lubar Director
David J. Lubar
/s/ Albert O. Nicholas Director
Albert O. Nicholas
<PAGE>
CHRISTIANA COMPANIES, INC.
FINANCIAL INFORMATION
FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED JUNE 30, 1997
<PAGE>
CHRISTIANA COMPANIES, INC.
Index to financial information
Page No.
Consolidated Statements of Earnings for the years
ended June 30, 1997, 1996, and 1995 . . . . . . . . . . . . . . 15
Consolidated Balance Sheets as of June 30, 1997 and June 30, 1996 16
Consolidated Statements of Shareholders' Equity for the
years ended June 30, 1997, 1996 and 1995 . . . . . . . . . . . 17
Consolidated Statements of Cash Flows for the years
ended June 30, 1997, 1996 and 1995 . . . . . . . . . . . . . . 18
Report of Independent Public Accountants . . . . . . . . . . . . 19
Notes to Consolidated Financial Statements . . . . . . . . . . . 20
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 33
<PAGE>
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
For the Year Ended June 30
1997 1996 1995
Revenues:
Product Sales $ - $ - $55,239,000
Warehousing and Logistic
Services 84,208,000 77,170,000 71,642,000
---------- ---------- -----------
84,208,000 77,170,000 126,881,000
---------- ---------- -----------
Costs and Expenses:
Cost of Product Sales - - 47,134,000
Warehousing and Logistic
Expenses 70,973,000 65,418,000 57,684,000
Selling, General &
Administrative Expenses 8,656,000 7,531,000 11,739,000
---------- ---------- -----------
79,629,000 72,949,000 116,557,000
---------- ---------- -----------
Earnings From Operations 4,579,000 4,221,000 10,324,000
---------- ---------- ----------
Other Income (Expense):
Interest Income 516,000 531,000 942,000
Interest Expense (3,166,000) (3,096,000) (4,842,000)
Gain (Loss) on Disposal of
Assets (765,000) 2,818,000 3,083,000
Equity in Earnings of EVI,
Inc. 10,479,000 1,745,000 -
Other (Expense), Net (674,000) (208,000) (367,000)
---------- ---------- -----------
6,390,000 1,790,000 (1,184,000)
---------- ---------- -----------
Earnings Before Income Taxes
and Minority Interest 10,969,000 6,011,000 9,140,000
Income Tax Provision 4,306,000 2,408,000 3,394,000
---------- ---------- -----------
Net Earnings Before Minority
Interest 6,663,000 3,603,000 5,746,000
Minority Interest - - (684,000)
---------- ---------- -----------
Net Earnings $ 6,663,000 $ 3,603,000 $ 5,062,000
========== ========== ==========
Earnings Per Share $1.30 $0.69 $0.96
===== ===== =====
Weighted Average Number of
Shares Outstanding 5,136,630 5,186,679 5,275,947
See notes to consolidated financial statements.
<PAGE>
CHRISTIANA COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
As of June 30
1997 1996
ASSETS
Current Assets:
Cash and Cash Equivalents $2,888,000 $3,728,000
Short-Term Investments 4,611,000 750,000
Accounts Receivable, Net 7,649,000 8,294,000
Inventories, Prepaids and Other
Assets 1,729,000 1,732,000
---------- ----------
Total Current Assets 16,877,000 14,504,000
---------- ----------
Long-Term Assets:
Investment in EVI, Inc. 41,257,000 23,631,000
Mortgage Notes Receivable 1,749,000 3,314,000
Rental Properties, Net --- 867,000
Fixed Assets, Net 75,604,000 81,283,000
Goodwill 5,592,000 5,749,000
Other Assets 1,277,000 1,670,000
----------- -----------
Total Long-Term Assets 125,479,000 116,514,000
----------- -----------
TOTAL ASSETS $142,356,000 $131,018,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 3,526,000 $ 5,294,000
Accrued Liabilities 5,562,000 4,072,000
Short-Term Debt --- 1,354,000
Current Portion of Long-Term Debt 3,531,000 1,295,000
---------- ----------
Total Current Liabilities 12,619,000 12,015,000
---------- ----------
Long-Term Liabilities:
Long-Term Debt 36,149,000 44,013,000
Deferred Income Taxes 20,289,000 12,674,000
Other Liabilities 1,214,000 1,239,000
---------- ----------
Total Long-Term Liabilities 57,652,000 57,926,000
---------- ----------
Total Liabilities 70,271,000 69,941,000
---------- ----------
Shareholders' Equity:
Preferred Stock - -
Common Stock 5,196,000 5,196,000
Additional Paid-In capital 12,022,000 12,022,000
Treasury Stock, at Cost (1,236,000) (1,236,000)
Retained Earnings 56,103,000 45,095,000
----------- -----------
Total Shareholders' Equity 72,085,000 61,077,000
----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $142,356,000 $131,018,000
=========== ===========
See notes to consolidated financial statements.
<PAGE>
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (1) (2)
<TABLE>
<CAPTION>
Additional
Common Stock Treasury Stock Paid-in Retained
Shares Amount Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1994 5,440,899 $5,441,000 - $ - $18,217,000 $36,430,000 $60,088,000
Repurchase of Stock (245,269) (245,000) - - (6,195,000) - (6,440,000)
Net Earnings - - - - - 5,062,000 5,062,000
--------- --------- --------- ---------- ---------- ---------- ----------
Balance, June 30, 1995 5,195,630 $5,196,000 - $ - $12,022,000 $41,492,000 $58,710,000
Purchase of Treasury
Stock - - (59,000) (1,236,000) - - (1,236,000)
Net Earnings - - - - - 3,603,000 3,603,000
--------- --------- --------- ---------- ---------- ---------- ----------
Balance, June 30, 1996 5,195,630 $5,196,000 (59,000) $(1,236,000) $12,022,000 $45,095,000 $61,077,000
EVI Stock Issuance - - - - - 4,345,000 4,345,000
Net Earnings - - - - - 6,663,000 6,663,000
--------- --------- --------- ---------- ---------- ---------- ----------
Balance, June 30, 1997 5,195,630 $5,196,000 (59,000) $(1,236,000) $12,022,000 $56,103,000 $72,085,000
========= ========= ========= ========== ========== ========== ==========
(1) Preferred stock: $10 par value, 1,000,000 shares authorized, none issued.
(2) Common stock: $1 par value, 12,000,000 shares authorized.
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended June 30
1997 1996 1995
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Earnings $ 6,663,000 $ 3,603,000 $ 5,062,000
Adjustments to Reconcile Net
Earnings to Net Cash Provided
By Operating Activities:
Depreciation and Amortization 7,155,000 7,159,000 8,207,000
(Gain) Loss on Disposal of
Assets 765,000 (3,024,000) (3,213,000)
Deferred Income Tax (Benefit)
Provision 4,813,000 (1,084,000) 1,462,000
Minority Interest - - 684,000
Equity in Earnings of EVI,
Inc. (10,479,000) (1,745,000) -
Changes in Assets and
Liabilities:
(Increase) Decrease in
Accounts Receivable 645,000 (34,000) (2,240,000)
(Increase) Decrease in
Inventories (166,000) (191,000) 2,566,000
(Increase) Decrease in
Prepaids and Other Assets (303,000) 788,000 (485,000)
Increase in Accounts Payable
and Accrued Liabilities 90,000 3,091,000 396,000
--------- --------- ----------
Net Cash Provided By Operating
Activities 9,183,000 8,563,000 12,439,000
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from (Purchase of)
Short-Term Investments, Net (3,861,000) 2,072,000 11,742,000
Capital Expenditures (3,488,000) (19,715,000) (10,931,000)
Business Acquisitions, Net of
Cash Acquired - - (13,291,000)
(Increase) Decrease in
Mortgage Notes Receivable 1,565,000 (109,000) 356,000
Decrease in Cash due to
Merger of Prideco - - (533,000)
Proceeds from Sales of Assets 2,743,000 8,894,000 6,954,000
--------- --------- ----------
Net Cash Used In Investing
Activities (3,041,000) (8,858,000) (5,703,000)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings (Payments) on Line
of Credit, Net (1,354,000) (489,000) 501,000
Stock Repurchase - (1,236,000) (3,805,000)
Proceeds from Notes Payable - 9,011,000 4,125,000
Payments of Notes and
Mortgages Payable (5,628,000) (3,638,000) (11,111,000)
---------- ---------- -----------
Net Cash Provided By (Used In)
Financing Activities (6,982,000) 3,648,000 (10,290,000)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (840,000) 3,353,000 (3,554,000)
BEGINNING CASH AND CASH
EQUIVALENTS, JULY 1 3,728,000 375,000 3,929,000
---------- ---------- ----------
ENDING CASH AND CASH
EQUIVALENTS, JUNE 30 $ 2,888,000 $ 3,728,000 $ 375,000
========== ========== ==========
Supplemental Disclosures of
Cash Flow Information:
Interest Paid $ 3,190,000 $ 3,228,000 $ 4,612,000
Income Taxes Paid $ 1,396,000 $ 2,579,000 $ 2,950,000
See notes to consolidated financial statements.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF CHRISTIANA COMPANIES, INC.:
We have audited the accompanying consolidated balance sheets of
Christiana Companies, Inc. (a Wisconsin corporation) as of June 30, 1997
and 1996, and the related consolidated statements of earnings,
shareholders' equity and cash flows for each of the years in the three
year period ended June 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Christiana Companies, Inc. as of June 30, 1997 and 1996, and
the results of its consolidated operations and its cash flows for each of
the three years in the period ended June 30, 1997, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
August 1, 1997
<PAGE>
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Three years ended June 30, 1997)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of Business: At June 30, 1997, Christiana is engaged in
providing public refrigerated and dry (non-refrigerated) warehousing and
logistic services; and owning 3,897,462 shares of EVI, Inc. common stock
which represents an 8.5% ownership interest at that date.
Principles of Consolidation: The consolidated financial statements
include the accounts of Christiana Companies, Inc., ("Christiana") and its
majority-owned subsidiaries (together with Christiana referred to as the
"Company"). All material intercompany transactions have been eliminated.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Short-Term Investments: As of June 30, 1997 and 1996, short-term
investments are classified as "available for sale" and include U.S.
Treasury securities and commercial paper maturing in less than one year.
These investments are carried at market, which approximates cost.
Accounts Receivable: Accounts receivable are presented net of a
reserve for bad debts of $233,000 and $253,000 at June 30, 1997 and 1996,
respectively. The provision for bad debts was $123,000 and $227,000 for
the years ended June 30, 1997 and 1996, respectively. Deductions from the
reserve were $143,000 and $94,000 for the years ended June 30, 1997 and
1996, respectively.
Investment in EVI, Inc.: At June 30, 1997, the Company owned
3,897,462 shares of EVI, Inc. (NYSE:EVI) which represented 8.5% of the
then outstanding common stock. Based on the facts and circumstances
associated with the Investment in EVI, Inc., including the Company's Board
of Directors representation, and in accordance with the Accounting
Principles Board Opinion No. 18 the Company accounts for this investment
under the equity method of accounting. At June 30, 1997, these shares had
a market value of $163,693,000.
Mortgage Notes Receivable: At June 30, 1997, mortgage notes
receivable, derived from condominium sales, totaled $1,749,000 and accrue
interest at rates ranging from 6.875% to 9.000%.
The principal balance of mortgage notes receivable matures as
follows:
Year Ended June 30
1998 $ 17,000 2001 $ 16,000
1999 407,000 2002 63,000
2000 22,000 Thereafter 1,224,000
During the years ended June 30, 1997 and 1996, mortgage notes
receivable of $1,882,000 and $286,000, respectively, were sold or prepaid.
Fixed Assets: Fixed assets are carried at cost less accumulated
depreciation, which is computed using both straight-line and accelerated
methods for financial reporting purposes. The cost of major renewals and
improvements are capitalized; repair and maintenance costs are expensed. A
summary of the cost of fixed assets and the estimated useful lives for
financial reporting purposes is as follows:
At June 30, Estimated
1997 1996 Useful Lives
Rental Properties $ - $1,029,000 20-40 years
Less: Accumulated
Depreciation - (162,000)
---------- ---------
$ - $ 867,000
========== =========
Fixed Assets:
Land $ 3,380,000 $3,416,000 -
Machinery and Equipment 53,171,000 54,314,000 5-7 years
Buildings and Improvements 41,534,000 41,394,000 30-32 years
Construction-In-Progress 451,000 12,000 -
Less: Accumulated
Depreciation (22,932,000) (17,853,000)
---------- ----------
$ 75,604,000 $81,283,000
========== ==========
Goodwill: Goodwill is amortized on a straight-line basis over 40
years ($157,000 in 1997 and $157,000 in 1996). The accumulated
amortization at June 30, 1997 and 1996 was $566,000 and $409,000,
respectively. The Company continually evaluates whether events and
circumstances have occurred that indicate the remaining estimated useful
life may warrant revision or that the remaining balance of goodwill may
not be recoverable.
Other Assets: Other Assets primarily represent deferred charges and
cash surrender value of officer's life insurance.
Income Taxes: Deferred income taxes are provided on the temporary
differences in the carrying values of assets and liabilities for financial
reporting and income tax purposes.
Earnings Per Share: Earnings per share is computed on the basis of
the weighted average number of common shares outstanding. The Company has
stock options which are considered common stock equivalents for purposes
of computing earnings per share. The impact of these common stock
equivalents is not material.
Cash and Cash Equivalents: The Company considers all highly liquid
investments with original maturities of less than ninety days to be cash
equivalents.
Reclassifications: Certain reclassifications have been made in the
1996 statements to conform with 1997 presentation.
Derivatives: Derivative financial instruments have been used by the
Company to manage its interest rate exposure on certain debt instruments.
Amounts to be received or paid under interest rate swap agreements are
recognized as interest income or expense in the periods in which they
accrue. If interest rate swap agreements are terminated due to the
underlying debt being extinguished, any resulting gain or loss is
recognized as interest income or expense at the time of termination.
B. ACQUISITIONS:
On June 30, 1995, Prideco, Inc. ("Prideco"), a majority-owned
subsidiary of the Company, merged with Grant Acquisition Company, a
wholly-owned subsidiary of EVI, Inc. In the merger, the Company's shares
of Prideco were converted into 2,071,716 shares of Common Stock, $1.00 par
value, of EVI. Prideco's results of operations are included in the
Company's Consolidated Statement of Earnings through June 30, 1995, the
date of the merger. Concurrent with the merger, the Company acquired an
additional 1,825,746 shares of EVI, Inc. common stock directly from EVI
and the minority shareholders of Prideco for an aggregate cash price of
$13,291,000.
On January 4, 1994, the Company acquired, by way of merger, The TLC
Group, Inc., a Zeeland, Michigan-based firm which provides fully
integrated logistic services including refrigerated and dry warehousing,
transportation and information services. The purchase price consisted of
approximately $5,630,000 in cash, the issuance of 234,269 shares of
Christiana common stock, an 8% subordinated note in the amount of
$1,764,000 and the assumption of its liabilities. As part of this
acquisition, the assets of The TLC Group were revalued to their fair
market value with the excess of purchase price over fair value amounting
to $5,991,000 being recorded as goodwill. This acquisition was accounted
for as a purchase and accordingly, the results of TLC's operations are
included in the consolidated financial statements of the Company since the
date of acquisition.
During fiscal 1995, the Company repurchased the 234,269 shares issued
in the TLC acquisition for $3,805,000 and a three year note in the amount
of $2,286,000.
The following summarizes the unaudited consolidated pro forma
operating results of the Company as if the merger of Prideco and the
acquisition of EVI shares had occurred at the beginning of fiscal year
1995.
Year Ended June 30
1995
Revenues $71,642,000
Net Earnings 4,173,000
Earnings Per Share $0.79
Pro forma results are not necessarily indicative of results that
would have occurred had the purchase been made at the beginning of the
respective period, or of results which may occur in the future.
C. INDEBTEDNESS:
The following is a summary of consolidated indebtedness:
At June 30,
1997 1996
Christiana Corporate
Notes Payable $ 2,286,000 $ 2,286,000
Line of Credit - -
Total Logistic Control, LLC
Revolving Credit Agreement 31,248,000 35,248,000
Line of Credit - 1,354,000
Notes Payable, Equipment Related 4,382,000 6,010,000
Subordinated Note 1,764,000 1,764,000
---------- ----------
Subtotal 39,680,000 46,662,000
Less: Current Portion of Long-Term Debt (3,531,000) (1,295,000)
Short-Term Debt - (1,354,000)
---------- ----------
Long-Term Debt $36,149,000 $44,013,000
========== ==========
Christiana has a $15,000,000 unsecured line of credit, renewable
annually. Borrowings under this line bear interest at either the London
Interbank Offered Rate ("LIBOR") plus 125 basis points, or prime at the
Company's option. No compensating balances are required under the terms
of this credit facility.
Notes payable attributable to Christiana Corporate are amounts due as
a result of repurchased common stock. The notes payable are unsecured and
bear interest at the rate of 7%.
Total Logistic Control, LLC has a revolving credit agreement that
provides for borrowings at June 30, 1997 up to $40,000,000. Borrowings
under this agreement mature on March 31, 2001 and bear interest, payable
monthly at either LIBOR plus 125 basis points, or a floating rate at the
bank's prime rate (6.7% at June 30, 1997) and are unsecured. At June 30,
1996 Wiscold's borrowings under the original revolving credit were priced
at LIBOR plus 175 basis points or prime (7.10% at June 30, 1996) and were
secured by Wiscold's assets. The revolving credit agreement requires,
among other things, that defined levels of net worth and debt service
coverage be maintained and restricts certain activities including
limitation on new indebtedness and the disposition of assets. No
compensating balances are required under the terms of this credit
facility.
On September 15, 1992, Wiscold entered into an interest rate swap
agreement with three commercial banks which expires on December 15, 1997.
As of June 30, 1997, $12,650,000 of outstanding Wiscold debt was subject
to the swap agreement. The agreement effectively fixes the interest rate
payable by Wiscold on this portion of the debt at 5.3% plus an interest
rate spread determined by Wiscold's leverage ratio. As of June 30, 1997,
the effective rate of this outstanding debt was 6.55%.
Under the swap agreement, the Company is exposed to credit risk only
in the event of nonperformance by the commercial banks, which is not
anticipated.
Total Logistic Control, LLC has a bank line of credit which permits
borrowings up to $5,000,000. Borrowings bear interest at either LIBOR
plus 200 basis points, or the bank's prime rate, at TLC's option (7.69%
and 7.48% at June 30, 1997 and 1996, respectively), and are secured by
certain accounts receivable. Notes payable relate to specific equipment
purchases, primarily transportation and material handling equipment and a
new distribution facility, and are secured by specified assets. These
notes bear interest on both fixed and floating terms ranging from 6.375%
to 9.37%. No compensating balances are required under the terms of these
credit arrangements. TLC's subordinated note bears interest at 8% and was
incurred in the redemption of a former shareholder's ownership coincident
with the sale to Christiana. This obligation is guaranteed by Christiana.
Future maturities of consolidated indebtedness are as follows:
Year Ended
June 30 Total
1998 $ 3,531,000
1999 4,078,000
2000 5,193,000
2001 25,150,000
2002 1,728,000
Thereafter -
The weighted average interest rate paid on short term borrowings, all
of which was attributable to TLC, was 7.46% and 8.21% for fiscal 1997 and
1996, respectively. The carrying value of the Company's debt approximates
fair value.
D. INCOME TAXES:
The Income Tax Provision consists of the following:
Year Ended June 30
1997 1996 1995
Current
Federal $(442,000) $3,029,000 $1,866,000
State (65,000) 463,000 66,000
Deferred 4,813,000 (1,084,000) 1,462,000
--------- --------- ----------
$4,306,000 $2,408,000 $3,394,000
========= ========= ==========
The components of Deferred Income Taxes are:
At June 30
1997 1996
Deferred Tax Assets:
Alternative Minimum Tax $ - $1,255,000
Other 1,612,000 1,431,000
--------- ---------
Total Deferred Tax Asset $1,612,000 $ 2,686,000
--------- ---------
Deferred Tax Liabilities:
Condemnation Proceeds $4,513,000 $ 5,259,000
Tax Over Book Depreciation 7,816,000 7,311,000
Equity in Earnings of EVI, Inc. 4,767,000 649,000
EVI, Inc. Stock Issuance 2,787,000 -
Installment Sale 407,000 676,000
Other 860,000 1,083,000
---------- ----------
Total Deferred Tax Liability 21,150,000 14,978,000
---------- ----------
Net Deferred Tax Liability $19,538,000 $12,292,000
========== ==========
A reconciliation of the statutory Federal income tax rate to the
Company's effective tax rate follows:
Year Ended June
1997 1996 1995
Statutory Federal Income Tax Rate 35% 34% 34%
Increase (Reduction) in Taxes
Resulting From:
State Income Tax, Net 5 5 3
Municipal Bond Interest -- -- (1)
Other, Net (1) 1 1
--- --- ---
39% 40% 37%
=== === ===
E. EMPLOYEE BENEFIT PLANS:
The Company has 295,000 shares of its common stock reserved for
issuance under a stock option plan, which permits the granting of options
as well as appreciation rights and awards. During fiscal 1997, options
for a total of 40,000 shares were granted at exercise prices of $21.50 and
$22.25. During fiscal 1996, options for a total of 100,000 shares were
granted at an exercise price of $24.25 per share. At June 30, 1997 and
1996, 36.0% and 23.5%, respectively, of total options granted were
exercisable. The remaining options are exercisable over the next seven
years.
Changes in stock options outstanding are summarized as follows:
Number of Exercise Price
Options Per Option
Balance, June 30, 1994 151,250 26.000 - 34.375
Options Granted 5,000 28.8125
Options Canceled 5,000 27.125
--------- ----------------
Balance, June 30, 1995 151,250 26.000 - 34.375
Options Granted 100,000 24.250
Options Canceled 7,500 27.125 - 34.375
-------- ---------------
Balance, June 30, 1996 243,750 24.250 - 34.375
Options Granted 40,000 21.500 - 22.250
-------- ---------------
Balance, June 30, 1997 283,750 21.500 - 34.375
======== ===============
Pro forma information regarding net income and earnings per share is
required by Statement of Financial Accounting Standards No. 123 and has
been determined as if the Company had accounted for its stock options
under the fair value method as provided there-in. The fair value of each
option grant is estimated on the date of the grant using an option pricing
model with the following weighted-average assumptions used for options
issued in fiscal 1997 and 1996, respectively: risk-free interest rate of
6.5%; expected remaining lives of 6 and 5 years; expected volatility of
25% and 20%; and no expected dividends.
For purposes of pro forma disclosures, the estimated fair value of
the options is amortized to expense over the options' vesting period. Set
forth below is a summary of the Company's net income and earnings per
share as reported and pro forma as if the fair value based method of
accounting defined in SFAS No. 123 had been applied. The pro forma
information is not meant to be representative of the effects on reported
net income for future years, because as provided by SFAS No. 123, only the
effects of awards granted after July 1, 1996 are considered in the pro
forma calculation.
June 30, 1997 June 30, 1996
As Reported Pro Forma As Reported Pro Forma
Net Earnings $6,663,000 $6,282,000 $3,603,000 $3,330,000
Earnings Per Share $1.30 $1.22 $.69 $.65
The Company has 401(k) plans covering substantially all of its
employees. The costs under these plans have not been material. The Company
does not provide post employment medical or life insurance benefits.
F. COMMITMENTS:
Total Logistic Control, LLC has operating leases for warehousing and
office facilities. Rental expense under these leases was $7,213,000,
$5,479,000 and $5,100,000 in fiscal 1997, 1996 and 1995, respectively.
At June 30, 1997, future minimum lease payments under these operating
leases are as follows:
Year Ended June 30
1998 $ 5,800,773
1999 4,513,455
2000 3,982,490
2001 2,993,435
2002 2,274,180
Thereafter 11,976,486
G. ACCOUNTING STANDARDS:
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share". This
statement establishes standards for computing and presenting earnings per
share (EPS). This statement simplifies the standards for computing
earnings per share previously found in APB Opinion No. 15, Earnings per
Share. The Company is required to adopt this statement for financial
statements issued for the years ending after June 30, 1998; earlier
application is not permitted. Pro forma disclosure of EPS computed in
accordance with SFAS No. 128 is as follows:
Fiscal Year Ended June 30
1997 1996 1995
Earnings Per Share As Reported $1.30 $0.69 $0.96
Pro Forma:
Basic Earnings Per Common
Share $1.30 $0.69 $0.96
Diluted Earnings Per Common
Share $1.29 $0.69 $0.96
H. MARKET SEGMENT INFORMATION
The Company was engaged in primarily two distinct lines of business,
namely, the manufacture of industrial products and the operation of
warehousing, logistic services and rental properties. On June 30, 1995,
the Company's manufacturing segment, Prideco, was merged with a unit of
EVI, Inc.
Year Ended June 30
1997 1996 1995
REVENUES
Industrial Products $ - $ - $ 55,239,000
Warehousing and Logistic
Services 84,208,000 77,170,000 71,642,000
---------- ---------- -----------
Total $ 84,208,000 $ 77,170,000 $126,881,000
========== ========== ===========
EARNINGS FROM OPERATIONS
Industrial Products $ - $ - $ 4,226,000
Warehousing and Logistic
Services 6,473,000 5,580,000 7,533,000
Corporate Expenses (1,894,000) (1,359,000) (1,435,000)
---------- ---------- -----------
Total $ 4,579,000 $ 4,221,000 $ 10,324,000
========== ========== ===========
ASSETS
Industrial Products $ - $ - $ -
Warehousing and Logistic
Services 91,355,000 98,370,000 91,992,000
Corporate 51,001,000 32,648,000 29,750,000
----------- ----------- -----------
Total $142,356,000 $131,018,000 $121,742,000
=========== =========== ===========
CAPITAL EXPENDITURES
Industrial Products $ - $ - $ 682,000
Warehousing and Logistic
Services 3,488,000 19,715,000 10,249,000
--------- ---------- ----------
Total $3,488,000 $19,715,000 $10,931,000
========= ========== ==========
DEPRECIATION AND
AMORTIZATION
Industrial Products $ - $ - $ 1,256,000
Warehousing and Logistic
Services 7,148,000 7,144,000 6,885,000
Corporate 7,000 15,000 66,000
--------- --------- ---------
Total $ 7,155,000 $ 7,159,000 $ 8,207,000
========= ========= =========
There were no intersegment sales. Corporate assets consist primarily
of cash equivalents, short-term investments, marketable securities and
residential real estate.
I. EVI, INC. SUMMARY FINANCIAL INFORMATION:
The following represents summarized financial information for EVI,
Inc. The Company's investment is accounted for under the equity method.
EVI's fiscal year ends on December 31, 1996. For more information
regarding EVI's financial condition and operations, reference is made to
the EVI's Form 10-K filed with the Securities and Exchange Commission.
Summarized Balance Sheets
At December 31,
1996 1995
(In Thousands)
Current Assets $558,681 $249,574
Noncurrent Assets 294,162 241,486
------- -------
Total Assets $852,843 $491,060
======= =======
Current Liabilities $233,126 $ 97,116
Noncurrent Liabilities 165,633 165,878
Stockholders' Equity 454,084 228,066
------- -------
$852,843 $491,060
======= =======
Summarized Income Statements
For Year Ended December 31,
1996 1995 1994
(In Thousands)
Revenues $ 478,020 $ 351,587 $ 248,537
Expenses (431,733) (319,147) (229,068)
Other Expenses, Net (14,741) (16,049) (13,021)
-------- -------- --------
Income Before Taxes 31,546 16,391 6,448
Taxes (7,041) (5,080) (1,806)
-------- -------- --------
Income from Continuing
Operations 24,505 11,311 4,642
Discontinued Operations, Net of
Taxes 74,392 - -
-------- -------- --------
Income before Extraordinary
Item 98,897 11,311 4,642
Extraordinary Item (731) - (3,784)
-------- -------- --------
Net Income $ 98,166 $ 11,311 $ 858
======== ======== ========
During fiscal 1997, EVI issued additional stock in a public offering.
The Company's share of the gain was $4,345,000 and is reflected as an
increase in retained earnings in the consolidated statement of
Shareholders' Equity.
Included in the Company's retained earnings if $11,812,000 related to
its' investment in EVI.
J. PARENT COMPANY ONLY STATEMENTS
Following are the Parent Company only Condensed Balance Sheet,
Statement of Operations and Statement of Cash Flows:
Parent Company Only Statements
Condensed Balance Sheet
As of June 30, 1997 and 1996
At June 30,
1997 1996
ASSETS:
Current Assets:
Cash Equivalents and Short-Term
Investments $ 7,276,000 $ 4,444,000
Accounts Receivable and Other
Current Assets 1,576,000 1,309,000
Long-Term Assets:
Investment in EVI, Inc. 41,257,000 23,631,000
Investments in and Advances to
Subsidiaries 33,551,000 34,071,000
Fixed Assets, Net 10,848,000 11,330,000
Other Assets 1,039,000 1,035,000
---------- ----------
TOTAL ASSETS $95,547,000 $75,820,000
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued
Liabilities $ 5,525,000 $ 1,884,000
Long-Term Liabilities:
Deferred Income Taxes 17,083,000 9,711,000
Other Liabilities 854,000 3,148,000
---------- ----------
Total Liabilities 23,462,000 14,743,000
---------- ----------
Total Shareholders' Equity 72,085,000 61,077,000
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $95,547,000 $75,820,000
========== ==========
<PAGE>
CHRISTIANA COMPANIES, INC.
Parent Company Only Statements
Condensed Statement of Operations
For the Years Ended June 30, 1997, 1996 and 1995
Fiscal Year Ended June 30,
1997 1996 1995
Revenues:
Warehousing and Logistic
Services $14,628,000 $11,432,000 $10,943,000
---------- ---------- ----------
14,628,000 11,432,000 10,943,000
---------- ---------- ----------
Costs and Expenses:
Warehousing and Logistic
Services 8,554,000 7,692,000 6,682,000
Selling, General and
Administrative Expenses 1,815,000 1,504,000 1,582,000
---------- ---------- ----------
10,369,000 9,196,000 8,264,000
---------- ---------- ----------
Earnings From Operations 4,259,000 2,236,000 2,679,000
Other Income (Expense):
Interest Income (Expense),
Net 174,000 (426,000) 2,000
Equity in Earnings of EVI,
Inc. 10,479,000 1,745,000 -
Other (Expense), Net (3,975,000) (3,129,000) (2,683,000)
---------- ---------- ----------
Total Other Income
(Expense) 6,678,000 (1,810,000) (2,681,000)
---------- ---------- ----------
Earnings Before Income Taxes 10,937,000 426,000 (2,000)
Income Tax Provision (Benefit) 4,287,000 167,000 (648,000)
---------- ---------- ----------
Net Earnings (Loss) Before
Equity in Undistributed
Net Earnings of Subsidiaries 6,650,000 259,000 646,000
Equity in Undistributed Net
Earnings of Subsidiaries 13,000 3,344,000 4,416,000
----------- ---------- ----------
Net Earnings $ 6,663,000 $ 3,603,000 $ 5,062,000
=========== ========== ==========
<PAGE>
CHRISTIANA COMPANIES, INC.
Parent Company Only Statements
Statement of Cash Flows
For the Years Ended June 30, 1997, 1996 and 1995
Fiscal Year Ended June 30,
1997 1996 1995
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Earnings $ 6,663,000 $ 3,603,000 $ 5,062,000
Adjustments to Reconcile
Net Earnings to Net Cash
Provided By (Used In)
Operating Activities:
Equity in Earnings of
EVI, Inc. (10,479,000) (1,745,000) -
Equity in Undistributed
Net Income of
Subsidiaries (13,000) (3,344,000) (4,416,000)
Depreciation and
Amortization 979,000 859,000 828,000
Deferred Income Tax
Provision 4,571,000 997,000 1,348,000
Net Changes in Assets and
Liabilities 1,076,000 (410,000) 1,868,000
--------- ----------- -----------
Net Cash Provided By (Used
In) Operating Activities 2,797,000 (40,000) 4,690,000
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from (Purchase of)
Short-Term Investments (3,861,000) 2,072,000 11,742,000
Capital Expenditures (512,000) (793,000) (143,000)
Investment In Subsidiaries 546,000 3,691,000 (2,546,000)
Investment In EVI, Inc. - - (13,291,000)
--------- ---------- ----------
Net Cash Provided By (Used
In) Investing Activities (3,827,000) 4,970,000 (4,238,000)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Stock Repurchase/Purchase
of Treasury Stock - (1,236,000) (3,805,000)
---------- ---------- ----------
Net Cash Used In Financing
Activities - (1,236,000) (3,805,000)
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (1,030,000) 3,694,000 (3,353,000)
BEGINNING CASH AND CASH
EQUIVALENTS, JULY 1 3,695,000 1,000 3,354,000
--------- --------- ----------
ENDING CASH AND CASH
EQUIVALENTS, JUNE 30 $ 2,665,000 $ 3,695,000 $ 1,000
========= ========= ==========
<PAGE>
<TABLE>
CHRISTIANA COMPANIES, INC.
QUARTERLY FINANCIAL INFORMATION
(unaudited)
<CAPTION>
Quarter Ended
September December March June Total
Fiscal 1997
<S> <C> <C> <C> <C> <C>
Revenues $20,480,000 $20,342,000 $22,450,000 $20,936,000 $84,208,000
Earnings From Operations 1,489,000 1,525,000 1,093,000 472,000 4,579,000
Earnings Before Taxes 1,767,000 6,126,000 * 1,671,000 1,405,000 10,969,000
Net Earnings 1,083,000 3,730,000 1,019,000 831,000 6,663,000
Earnings Per Share $0.21 $0.73 $0.20 $0.16 $1.30
* Includes $5,715,000 of gain on the sale of Mallard Drilling, an EVI subsidiary.
<CAPTION>
Fiscal 1996
<S> <C> <C> <C> <C> <C>
Revenues $19,937,000 $19,651,000 $19,416,000 $18,166,000 $77,170,000
Earnings From Operations 2,053,000 1,053,000 810,000 305,000 4,221,000
Earnings Before Taxes 2,694,000 1,249,000 1,510,000 558,000 6,011,000
Net Earnings 1,638,000 760,000 918,000 287,000 3,603,000
Earnings Per Share $0.32 $0.14 $0.18 $0.05 $0.69
<CAPTION>
FIVE YEAR FINANCIAL INFORMATION
Year Ended June 30
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Revenues:
Product Sales $ - $ - $ 55,239,000 $46,428,000 $29,299,000
Warehousing and Logistics
Logistic Services 84,208,000 77,170,000 71,642,000 43,725,000 17,464,000
---------- ---------- ----------- ---------- ----------
84,208,000 77,170,000 126,881,000 90,153,000 46,763,000
Net Earnings 6,663,000 3,603,000 5,062,000 3,121,000 2,941,000
Earnings Per Share $1.30 $0.69 $0.96 $0.59 $0.57
Total Assets 142,356,000 131,018,000 121,742,000 147,565,000 122,832,000
Long-Term Liabilities 57,652,000 57,926,000 51,388,000 67,154,000 61,585,000
Shareholders' Equity 72,085,000 61,077,000 58,710,000 60,088,000 51,461,000
</TABLE>
<PAGE>
CHRISTIANA COMPANIES, INC.
CORPORATE INFORMATION
DIRECTORS
Sheldon B. Lubar, Chairman and Chief Raymond F. Logan, Vice
Executive Officer President - Real
Estate
Nicholas F. Brady, Chairman of Darby David J. Lubar, President,
Advisors, Inc. Lubar & Co., Incorporated
William T. Donovan, President and Albert O. Nicholas, President
Chief Financial Officer of Nicholas Company, Inc.
John R. Patterson, President and Gary R. Sarner, Chairman,
Chief Executive Officer, Total Total Logistic Control, LLC
Logistic Control, LLC
OFFICERS
Sheldon B. Lubar, Chairman and Chief Betty J. White, Treasurer,
Executive Officer Controller and Assistant
Secretary
William T. Donovan, President and
Chief Financial Officer David E. Beckwith, Secretary
TRANSFER AGENT AND REGISTRAR EXCHANGE LISTING
Firstar Trust Company Christiana Companies, Inc.
P.O. Box 2077 common stock is listed on the
Milwaukee, Wisconsin 53201 New York Stock Exchange (Symbol
CST).
ANNUAL MEETING CORPORATE HEADQUARTERS
Christiana Companies, Inc. Annual
Meeting of shareholders will be held 777 East Wisconsin Avenue
at 9:00 a.m. on December 3, 1997 at Suite 3380
the Galleria Conference Room, Firstar Milwaukee, WI 53202
Center, 777 East Wisconsin Avenue, Telephone: (414) 291-9000
Milwaukee, Wisconsin. Proxy material Facsimile: (414) 291-9061
will be mailed to shareholders of
record at November 3, 1997.
<PAGE>
CHRISTIANA COMPANIES, INC.
EXHIBITS
FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED JUNE 30, 1997
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Brief Description of Exhibit
3A Registrant's Articles of Incorporation as
modified by Articles of Merger. Incorporated by
reference to Exhibit 19 of Registrant's Form 10-
Q for the quarter ended September 30, 1992.
3B Registrant's current bylaws. Incorporated by
reference to Exhibit 19A of Registrant's Form
10-Q for the quarter ended September 30, 1992.
9 Voting Trust Agreement dated December 29, 1992
among Sheldon B. Lubar, as voting trustee, et
al. Incorporated by reference to Exhibit 9 of
Registrant's Form 10-K for the year ended June
30, 1993.
10A The Wiscold Asset Purchase Agreement, dated
August 12, 1992, by and among The Christiana
Companies, Inc., Tierrasanta, Inc., WI
Acquisition Corp., Wiscold, Inc. and the equity
holders of Wiscold, Inc. Incorporated by
reference to Exhibit 2.1 of Registrant's Form 8-
K dated September 15, 1992.
10B The Wiscold Amendment No. 1 to Asset Purchase
Agreement, dated August 18, 1992, by and among
Christiana Companies, Inc., Tierrasanta, Inc.,
WI Acquisition Corp., Wisconsin Refrigerated
Services, Inc., Wiscold, Inc. and the equity
holders of Wiscold, Inc. Incorporated by
reference to Exhibit 2.2 of Registrant's Form 8-
K dated September 15, 1992.
10C The Wiscold Revolving Credit Agreement, dated as
of March 21, 1996, by Firstar Bank Milwaukee,
N.A., Harris Trust and Savings Bank, Bank One,
Milwaukee, NA, as the Banks and Firstar Bank
Milwaukee, N.A. as Agent for the Banks to
Wiscold, Inc. Incorporated by reference to
Exhibit 10C to Registrant's Form 10-K for the
year ended June 30, 1996.
10D Registrant's 1985 Stock Option Plan, as amended
to date. Incorporated by reference to Exhibit
10B to Registrant's Form 10-Q for quarter ended
December 31, 1992.
10E The TLC Group Agreement and Plan of
Reorganization dated as of November 24, 1994 by
and among Christiana Companies, Inc., TLC
Acquisition Corp., TLC Group, Inc. and certain
equity holders of TLC Group, Inc. Incorporated
by reference to Exhibit 2.1 of Registrant's Form
8-K dated January 18, 1994.
10F The Prideco, Inc. Agreement and Plan of Merger
dated May 22, 1995 by and among Prideco, Inc.,
the equity holders of Prideco, Inc., Energy
Ventures, Inc. and Grant Acquisition Company and
Amendment No. 1 thereto. Incorporated by
reference to Exhibits 2.1 and 2.2 of
Registrant's Form 8-K dated July 17, 1995.
10G Employment Agreement dated September 1, 1992
between Registrant and Gary R. Sarner.
Incorporated by reference to Exhibit 10G of
Registrant's Form 10-K for the year ended June
30, 1996.
10H Stock Option Agreement dated February 26, 1996
between Registrant and John R. Patterson.
Incorporated by reference to Exhibit 10H of
Registrant's Form 10-K for the year ended June
30, 1996.
10I Registrant's 1995 Stock Option Plan.
Incorporated by reference to Registrant's Proxy
Statement dated September 28, 1995.
19 Letter Agreement dated August 24, 1993 between
Registrant and Raymond F. Logan. Incorporated
by reference to Exhibit 19 of Registrant's Form
10-K for the year ended June 30, 1993.
21 Registrant's Subsidiaries.
27 Financial Data Schedule.
CHRISTIANA COMPANIES, INC.
EXHIBIT 21 - SUBSIDIARIES
This exhibit sets forth all of Registrant's corporate subsidiaries at June
30, 1997 and the state of incorporation of each. All subsidiaries doing
business do so under their own corporate name, and all are included in the
Consolidated Financial Statement. All subsidiaries are directly or
indirectly 100% owned by Registrant.
Jurisdiction of
Name Incorporation
Christiana Community Builders California
CST Financial, Inc. Delaware
Martinique Holdings, Inc. California
Total Logistic Control, LLC Delaware
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CHRISTIANA COMPANIES, INC. AS OF AND FOR THE
YEAR ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 2,888,000
<SECURITIES> 4,611,000
<RECEIVABLES> 7,882,000
<ALLOWANCES> 233,000
<INVENTORY> 326,000
<CURRENT-ASSETS> 16,877,000
<PP&E> 98,536,000
<DEPRECIATION> 22,932,000
<TOTAL-ASSETS> 142,356,000
<CURRENT-LIABILITIES> 12,619,000
<BONDS> 36,149,000
0
0
<COMMON> 5,196,000
<OTHER-SE> 66,889,000
<TOTAL-LIABILITY-AND-EQUITY> 142,356,000
<SALES> 0
<TOTAL-REVENUES> 84,208,000
<CGS> 0
<TOTAL-COSTS> 79,629,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 123,000
<INTEREST-EXPENSE> 765,000
<INCOME-PRETAX> 10,969,000
<INCOME-TAX> 4,306,000
<INCOME-CONTINUING> 6,663,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,663,000
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.30
</TABLE>
