SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ________________to _______________
Commission File Number 1-3846
CHRISTIANA COMPANIES, INC.
(Exact name of registrant as specified in its charter.)
Wisconsin 95-1928079
(State of Incorporation) (IRS Employer Identification No.)
700 N. Water Street, Suite 1200, Milwaukee, WI 53202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 291-9000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock $1.00 par value 5,149,330
(Class) (Outstanding at May 12, 1998)
Page 1 of 12 total pages No exhibits are filed with this report.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
March 31, June 30,
1998 1997
ASSETS:
Cash and cash equivalents $ 5,290,000 $ 2,888,000
Short-term investments - 4,611,000
Accounts receivable 8,169,000 7,649,000
Prepaids and other current assets 1,734,000 1,729,000
------------ -----------
Total Current Assets 15,193,000 16,877,000
------------ -----------
Long-Term Assets:
Investment in EVI, Inc. 47,268,000 41,257,000
Mortgage notes receivable 1,231,000 1,749,000
Fixed assets, net 72,301,000 75,604,000
Other long-term assets 6,771,000 6,869,000
------------ -----------
Total Long-Term Assets 127,571,000 125,479,000
------------ -----------
$142,764,000 $142,356,000
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts payable 4,081,000 3,526,000
Accrued liabilities 4,815,000 5,562,000
Short term debt 159,000 -
Current portion of long-term debt 1,245,000 3,531,000
------------ -----------
Total Current Liabilities 10,300,000 12,619,000
------------ -----------
Long-Term Liabilities
Long-term debt 31,167,000 36,149,000
Deferred federal and state income
taxes 23,518,000 20,289,000
Other liabilities 1,181,000 1,214,000
------------ -----------
Total Long-Term Liabilities 55,866,000 57,652,000
------------ -----------
Total Liabilities 66,166,000 70,271,000
------------ -----------
Shareholders' Equity:
Preferred Stock - -
Common stock, par value $1 per share;
Authorized 12,000,000 shares;
Issued 5,208,330 5,209,000 5,196,000
Additional paid-in capital 12,346,000 12,022,000
Less: Treasury stock, at cost (1,236,000) (1,236,000)
Retained earnings 60,279,000 56,103,000
------------ -----------
Total Shareholders' Equity 76,598,000 72,085,000
------------ -----------
$142,764,000 $142,356,000
============ ===========
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,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Warehousing and logistic services $68,579,000 $63,271,000 $21,865,000 $22,450,000
----------- ----------- ----------- -----------
Costs and Expenses:
Warehousing and logistic services 57,843,000 53,051,000 18,526,000 19,138,000
Selling, general and administrative 6,615,000 6,114,000 2,273,000 2,219,000
----------- ------------ ---------- -----------
64,458,000 59,165,000 20,799,000 21,357,000
----------- ------------ ---------- -----------
Earnings from Operations 4,121,000 4,106,000 1,066,000 1,093,000
Other Income (Expense):
Interest income 349,000 376,000 101,000 119,000
Interest expense (2,150,000) (2,437,000) (658,000) (770,000)
Gain (losses) on sales of
real estate - 279,000 - -
Equity in earnings of EVI, Inc. 6,011,000 8,855,000 2,564,000 1,219,000
Loss on disposal of assets (17,000) (1,281,000) (24,000) -
Other income (expenses), net (1,434,000) (336,000) (48,000) 10,000
------------ ----------- ----------- -----------
2,759,000 5,456,000 1,935,000 578,000
------------ ----------- ----------- -----------
Earnings before income taxes 6,880,000 9,562,000 3,001,000 1,671,000
Income tax provision 2,704,000 3,731,000 1,168,000 652,000
------------ ----------- ----------- -----------
Net earnings $ 4,176,000 $ 5,831,000 $ 1,833,000 $ 1,019,000
============ =========== =========== ===========
Basic earnings per share $0.81 $1.14 $0.36 $0.20
============ =========== =========== ===========
Diluted earnings per share $0.80 $1.13 $0.35 $0.20
============ =========== =========== ===========
Average number of shares outstanding 5,142,980 5,136,630 5,149,330 5,136,630
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
Additional
Common Stock Treasury Stock Paid-in Retained
Shares Amount Shares Amount Capital Earnings
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996 5,195,630 $5,196,000 (59,000) $(1,236,000) $12,022,000 $45,095,000
--------- ---------- --------- ------------ ----------- -----------
EVI stock issuance - - - - - 4,345,000
Net earnings - - - - - 6,663,000
--------- ---------- --------- ------------ ----------- -----------
Balance, June 30, 1997 5,195,630 $5,196,000 (59,000) $(1,236,000) $12,022,000 $56,103,000
Common shares issued 12,700 13,000 - - 324,000 -
Net earnings (Unaudited) - - - - - 4,176,000
--------- ---------- --------- ------------ ----------- -----------
Balance, March 31, 1998 5,208,330 $5,209,000 (59,000) $(1,236,000) $12,346,000 $60,279,000
========= ========== ========= ============ =========== ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
March 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $4,176,000 $ 5,831,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 4,951,000 5,432,000
Loss on sales of assets 17,000 1,002,000
Deferred income tax expenses 3,229,000 3,693,000
Equity in earnings of EVI, Inc. (6,011,000) (8,855,000)
Changes in assets and liabilities:
(Increase) in accounts receivable (520,000) (637,000)
Decrease in other assets 6,000 580,000
(Decrease) in accounts payable
and accrued liabilities (192,000) (713,000)
------------ ------------
Net cash provided by operating activities 5,656,000 6,333,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 308,000 2,242,000
Decrease in mortgage notes receivable 518,000 1,477,000
(Increase) decrease in short-term
investments, net 4,611,000 (5,621,000)
Capital expenditures (1,919,000) (2,306,000)
------------ ------------
Net cash provided by (used in) investing
activities 3,518,000 (4,208,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on
long-term notes and credit lines 159,000 (1,684,000)
Payments of notes and loans payable (7,268,000) (3,447,000)
Issuance of common stock 337,000 -
------------ ------------
Net cash (used in) financing activities (6,772,000) (5,131,000)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,402,000 (3,006,000)
BEGINNING CASH AND CASH EQUIVALENTS, July 1 2,888,000 3,728,000
------------ ------------
ENDING CASH AND CASH EQUIVALENTS, March 31 $ 5,290,000 $ 722,000
============ ============
Supplemental disclosures of cash flow information:
Interest paid $ 2,150,000 $ 2,398,000
Income taxes paid $ 395,000 $ 381,000
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 1997 Annual Report.
NOTE 2 - ENERGY VENTURES, INC. STOCK ISSUANCE
The Company accounts for its investment in EVI under the equity method of
accounting. In July 1996, the Company's share of the underlying net
assets of EVI increased $7,146,000 as a result of a public offering of
EVI's common stock. This was recorded as an increase of $4,345,000 in
retained earnings, and a $2,801,000 increase in deferred income taxes.
NOTE 3 MERGER AGREEMENT
The Company and EVI, Inc. executed a definitive merger agreement, dated
December 12, 1997, under which EVI will acquire all the outstanding common
shares of the Company. The terms of the merger provide that each
Christiana common share will be converted into approximately .74193 shares
of EVI common stock, cash in the approximate amount of $3.60, depending on
the balance of certain assets and liabilities at the time of closing and a
contingent cash payment of approximately $1.92 after five years, subject
to the incurrance of any indemnity claims by EVI during this period.
The merger transaction is subject to the approval of shareholders of both
EVI and the Company as well as customary regulatory approvals. Completion
of the merger is expected in July 1998.
NOTE 4 ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted Statement of Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income." This
statement established standards for reporting and display of comprehensive
income and its components. Components of comprehensive income are net
income and all other non-owner changes in equity. Because the Company has
no comprehensive income components other than net income, comprehensive
income and net income are identical for all periods presented.
Effective January 1, 1998, the Company adopted Statement of Position
("SOP") No. 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use." The Company's accounting for costs of
computer software developed or obtained for internal use is consistent
with the guidance established in the SOP. As a result, adoption of this
statement did not have a material impact on the Company's financial
position or results of operations.
Effective January 1, 1998, the Company adopted SOP 98-5, "Reporting on the
Costs of Start-up Activities." This SOP provides guidance on the
financial reporting of start-up costs and organization costs. It requires
costs of start-up activities and organization costs to be expensed as
incurred. Adoption of this statement did not have a material impact on
the Company's financial position or results of operations.
NOTE 5 EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31, Nine Months Ended March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic earnings per share:
Net income available to common shareholders $1,833,000 $1,019,000 $4,176,000 $5,831,000
========== ========== ========== ==========
Average shares of common stock
outstanding 5,149,330 5,136,630 5,142,980 5,136,630
Basic earnings per share $ 0.36 $ 0.20 $ 0.81 $ 1.14
========== ========== ========== ==========
Diluted earnings per share:
Average shares of common stock
outstanding 5,149,330 5,136,630 5,142,980 5,136,630
Incremental common shares applicable to
common stock options 57,434 32,356 68,854 8,402
---------- --------- ---------- ---------
Average common shares assuming full
dilution 5,206,764 5,168,986 5,211,834 5,145,032
Diluted earnings per share $ 0.35 $ 0.20 $ 0.80 $ 1.13
========== ========= ========== =========
</TABLE>
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operations
Christiana Companies consolidated revenues for the three months ended
March 31, 1998 were $21,865,000 versus $22,450,000 reported for the
comparable period a year ago, a decrease of 2.6%. The decrease in
revenues was primarily attributable to reduced dry warehousing operations
due to the closure of two facilities in fiscal 1997. Revenues from both
refrigerated warehousing and logistic operations increased year to year
due to improved utilization of the company's warehouses and transportation
equipment.
Operating earnings for the quarter were $1,066,000 versus $1,093,000
generated in the comparable period a year ago. The 2.5% decrease in
operating earnings is primarily attributable to added expenses in the
sales department and reduced gross margin in Dry Warehousing operations.
For the third quarter ended March 31, 1998, Equity in Earnings from EVI
totaled $2,564,000 attributable to an 8.52% weighted average ownership
interest compared to $1,219,000 in the previous year, a 110% increase.
The Company's consolidated net earnings for the quarter were $1,833,000 or
$0.36 per share ($0.35 diluted) compared with $1,019,000 or $0.20 per
share ($0.20 diluted) for the same period a year ago. Net earnings were
higher this period due primarily to the increase in Equity in Earnings of
EVI.
For the first nine months of fiscal 1998, consolidated revenues were
$68,579,000 versus $63,271,000 for the comparable period last year, an
increase of $5,308,000 or 8.4%. Volume increases in Transportation and
Refrigerated Warehousing operations were the principal factors
contributing to the increase.
Consolidated net earnings for the nine months ended March 31, 1998 were
$4,176,000 or $0.81 per share ($0.80 diluted) versus $5,831,000 or $1.14
per share ($1.13 diluted) reported for the comparable period last year.
For the nine months ended March 31, 1998, the Company recognized Equity in
Earnings from Energy Ventures of $6,011,000 compared to $8,855,000 in the
previous year. Prior year results included $5,715,000 attributable to the
gain reported by EVI on the sale of Mallard Bay Drilling. Net earnings
attributable to the Company's warehousing and logistic operations were
$1,588,000 for the nine months ended March 31, 1998 compared to $766,000
for the same period last year.
Financial Condition
Cash equivalents and short-term investments as of March 31, 1998 totaled
$5,290,000 compared to $7,499,000 at June 30, 1997, a decrease of
$2,209,000. Christiana's working capital at March 31, 1998 was $4,893,000
compared to $4,258,000 at June 30, 1997.
Cash provided by operating activities of $5,656,000 was attributable
primarily to net earnings and depreciation, offset by Equity in Earnings
of EVI. Cash provided by investment activities of $3,518,000 resulted
from a decrease in short-term investments of $4,611,000, capital
expenditures of $1,919,000 primarily attributable to warehousing and
logistics operations, proceeds from asset sales of $308,000, and the
payment of mortgage notes receivable in the amount of $518,000.
In the nine month period ended March 31, 1998, funded debt all of which is
attributable to Total Logistic Control was reduced by $7,268,000, which
was generated by internal cash flow from its operations. In addition, the
exercise of stock options resulted in cash flow of $337,000.
Christiana's balance sheet at March 31, 1998 reflects $47,268,000 as its
carrying value for 3,897,462 shares of EVI common stock. At March 31,
1998, these shares had a market value of $180,501,209 or $35.05 per
Christiana share.
At March 31, 1998, the Company has no commitments for any material capital
projects.
PART II - OTHER INFORMATION
Item 1. Not applicable.
Item 2. Not applicable.
Item 3. Not applicable.
Item 4. See Item 4 of Form 10-Q for quarter ended 9/30/97.
Item 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K
None
<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: May 12, 1998 /s/ Sheldon B. Lubar
Sheldon B. Lubar
Chairman and
Chief Executive Officer
Date May 12, 1998 /s/ William T. Donovan
William T. Donovan
President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,290,000
<SECURITIES> 0
<RECEIVABLES> 485,000
<ALLOWANCES> 316,000
<INVENTORY> 757,000
<CURRENT-ASSETS> 15,193,000
<PP&E> 102,154,000
<DEPRECIATION> 29,853,000
<TOTAL-ASSETS> 142,764,000
<CURRENT-LIABILITIES> 10,300,000
<BONDS> 31,167,000
0
0
<COMMON> 5,209,000
<OTHER-SE> 71,389,000
<TOTAL-LIABILITY-AND-EQUITY> 142,764,000
<SALES> 0
<TOTAL-REVENUES> 21,865,000
<CGS> 0
<TOTAL-COSTS> 18,526,000
<OTHER-EXPENSES> 2,273,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 658,000
<INCOME-PRETAX> 3,001,000
<INCOME-TAX> 1,168,000
<INCOME-CONTINUING> 1,833,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,833,000
<EPS-PRIMARY> .36
<EPS-DILUTED> .35
</TABLE>
