<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
[ ] Transition Report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended: June 30, 1995
Commission File No. 0-10476
ROPAK CORPORATION
(Exact name of registrant as specified in its charter.)
Delaware 95-3206821
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
660 South State College Boulevard
Fullerton, California 92631
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(714) 870-9757
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 practical
date: Common Stock, $.01 par value - 4,602,312 shares as of
June 30, 1995.
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<PAGE> 2
PART I. FINANCIAL INFORMATION
ROPAK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended Three Months ended
June 30, June 30,
----------------- -----------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales................ $79,732 $60,959 $45,366 $35,910
Cost of sales............ 63,842 46,978 36,453 26,389
------- ------- ------- -------
Gross profit............. 15,890 13,981 8,913 9,521
Operating expenses....... 10,297 9,214 5,481 4,874
------- ------- ------- -------
Operating profit......... 5,593 4,767 3,432 4,647
------- ------- ------- -------
Other (income) expense:
Interest.............. 1,720 1,033 911 527
Other................. 182 184 91 91
------- ------- ------- -------
Total other expense... 1,902 1,217 1,002 618
------- ------- ------- -------
Income before
income taxes.......... 3,691 3,550 2,430 4,029
Provision for
income taxes.......... 1,587 1,526 1,045 1,732
------- ------- ------- -------
Net income............... $ 2,104 $ 2,024 $ 1,385 $ 2,297
======= ======= ======= =======
Net income per share:
Primary............... $ 0.44 $ 0.42 $ 0.29 $ 0.51
Fully diluted......... $ 0.41 $ 0.41 $ 0.27 $ 0.46
Average shares
outstanding:
Primary............... 4,569 4,359 4,641 4,359
Fully diluted......... 5,146 4,993 5,217 4,993
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 3
ROPAK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- ----------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents......... $ 1,345 $ 1,470
Accounts receivable, less
allowance for doubtful
accounts of $525 and $477,
respectively................... 28,039 21,178
Inventories:
Raw materials.................. 7,383 7,309
Finished goods................. 16,897 14,849
Refundable income tax............. 84 177
Other............................. 567 1,075
Deferred income tax benefits...... 382 382
--------- ---------
Total current assets................ 54,697 46,440
--------- ---------
Improvements and equipment.......... 87,113 81,600
Less accumulated depreciation....... 48,650 45,024
--------- ---------
Net fixed assets.................... 38,463 36,576
--------- ---------
Investments in joint ventures....... 683 568
Goodwill............................ 7,750 7,856
Other assets........................ 2,684 2,876
--------- ---------
TOTAL ASSETS........................ $ 104,277 $ 94,316
========= =========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 4
ROPAK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- ----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Short-term debt................... $ 3,976 $ 3,976
Accounts payable.................. 14,117 14,997
Income taxes payable.............. 1,169 --
Accrued liabilities............... 3,186 2,986
--------- ---------
Total current liabilities........... 22,448 21,959
Long-term debt less
current maturities............... 39,807 34,014
Deferred income taxes............... 3,501 3,501
Due to Parent Company (see Note 1).. 5,200 5,200
--------- ---------
Total liabilities................... $ 70,956 $ 64,674
--------- ---------
Shareholders' Equity:
Preferred stock, $.01 par value:
Authorized - 3,000,000 shares
none issued or outstanding
Common stock, $.01 par value:
Authorized - 10,000,000 shares;
issued and outstanding --
4,602,312 shares as of June
30, 1995 and 4,386,162 shares
as of December 31, 1994........... 46 44
Additional paid-in capital.......... 24,714 23,807
Treasury stock...................... (34) (176)
Retained earnings................... 9,127 7,218
Cumulative foreign currency
translation gain (loss)
as to foreign subsidiaries........ (532) (1,251)
--------- ---------
Shareholders' equity................ $ 33,321 $ 29,642
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY................ $ 104,277 $ 94,316
========= =========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
Note 1: LinPac Mouldings Ltd. acquired the $5,200 outstanding
preferred shares of Ropak Canada Inc., a wholly owned subsidiary,
on
October 14, 1994. LinPac subsequently completed a tender offer
on May
2, 1995 to achieve majority ownership of Ropak Corporation,
resulting in
the reclassification from a minority interest as at December 31,
1994.
<PAGE> 5
ROPAK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended
June 30,
--------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flow from operating activities:
Net income (loss)................... $ 2,104 $ 2,024
Depreciation and amortization....... 3,654 3,619
Gain on disposal of equipment....... (31) (58)
Gain on disposal of investments..... (96) 0
Increase in current assets.......... (8,382) (4,441)
Increase (decrease) in
current liabilities.............. 391 1,660
Decrease in other assets............ 188 (39)
-------- --------
(2,172) 2,765
-------- --------
Cash flow from investing activities:
Acquisition of improvements
and equipment...................... (5,104) (4,360)
Proceeds from sale of equipment..... 35 63
Proceeds from sale of investments... 158 0
Investments in marketable securities 0 (5,098)
-------- --------
(4,911) (9,395)
-------- --------
Cash flow from financing activities:
Issuance of long-term debt.......... 5,989 7,537
Repayment of capital lease.......... (196) (206)
Exercise of stock options........... 1,112 0
Payment of preferred stock dividend. (98) (213)
Purchase of treasury stock.......... (34) 0
Redemption of stock warrants........ (203) 0
-------- --------
6,570 7,118
-------- --------
Effect of foreign currency
exchange rate changes............. 388 (488)
-------- --------
Net increase (decrease) in cash....... $ (125) $ 0
Cash at beginning of year............. 1,470 0
-------- --------
Cash at end of period................. $ 1,345 $ 0
======== ========
Supplemental disclosures
of cash flow information:
Cash paid during the period for:
Interest.......................... $ 1,277 $ 922
Income taxes...................... $ 525 $ 1,689
======== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 6
During the six month period ending June 30, 1995 the Company
accrued $97 for preferred stock dividends.
ROPAK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR SIX MONTHS ENDED JUNE 30, 1995
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
(Unaudited)
<TABLE>
<CAPTION>
Foreign
Common Stock Additional
Currency
----------------- Paid-in Treasury
Retained Translation Total
Shares Amount Capital Stock
Earnings Gain (loss) Equity
--------- ------ ------- --------
-------- ----------- ---------
<S> <C> <C> <C> <C> <C>
<C> <C>
Balance at
December 31,
1994............ 4,386,162 $44 $23,807 $(176)
$7,218 $(1,251) $29,642
Redemption
of stock
warrants........ -- -- (203) --
-- -- (203)
Options
exercised....... -- 2 1,110 --
-- -- 1,112
Dividend on
preferred
shares.......... -- -- -- --
(195) -- (195)
Repurchase of
common stock.... -- -- -- (34)
-- -- (34)
Liquidation of
common stock
held by
subsidiary...... 216,150 -- -- 176
-- -- 176
Net income...... -- -- -- --
2,104 -- 2,104
Foreign
currency --
translation
gain............ -- -- -- --
-- 719 719
--------- ------ ------- --------
-------- ----------- --------
Balance at
June 30, 1995... 4,602,312 $46 $24,714 $(34)
$9,127 $(532) $33,321
========= ====== ======= ========
======== =========== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 7
ROPAK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
1. The accompanying unaudited condensed consolidated
financial statements have been prepared by the Company pursuant
to the rules of the Securities and Exchange Commission ("SEC")
and, in the opinion of the Company, include all adjustments
necessary for a fair presentation of financial position, results
of operations and cash flows. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such SEC rules. Reference
is made to Note 1 of the Notes to Consolidated Financial
Statements contained in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 for a summary of
significant policies utilized by the Company. It is suggested
that these financial statements be read in conjunction with the
audited financial statements and notes thereto included in the
Company's latest annual report.
2. The condensed consolidated statements of operations for
the six months and three months ended June 30, 1995 and June 30,
1994 are not necessarily indicative of the results to be expected
for the full year.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Net sales of Ropak Corporation (the "Company" or "Ropak")
increased by 30.8% to $79,732,000 for the six-month period ended
June 30, 1995 compared to $60,959,000 for the similar period
ended June 30, 1994. Net sales increased 26.3% to $45,366,000
for the second quarter ended June 30, 1995, up from $35,910,000
for the quarter ended June 30, 1994 and up from $34,366,000 for
the prior quarter ended March 31, 1995.
Net sales growth is partially masked by the fluctuating
effect of raw material resin prices on the ultimate selling
prices of Ropak's products. Growth in pounds of resin sold in
finished product amounted to an increase of 4.8% for the
six-month period ended June 30, 1995 compared to the six-month
period ended June 30, 1994. During the quarter ended June 30,
1995 compared to the quarter ended June 30, 1994, pounds of resin
sold in finished product increased by 1.9%.
<PAGE> 8
The 32% increase in revenue recorded for the quarter ended
June 30, 1995 over the immediately preceding quarter ended March
31, 1995 is due to seasonal demand for Ropak products in both the
fishing and agricultural markets and is consistent with past
experience.
Gross profit expressed as a percentage of sales for the
six-month period ended June 30, 1995 of 19.9% is down from 22.9%
recorded for the six-month period ended June 30, 1994. Gross
margin for the second quarter ended June 30, 1995 of 19.6% was
also down from 26.5% for the similar quarter ended June 30, 1994
and down from the 20.3% reported for the preceding quarter ended
March 31, 1995.
Reductions in gross margin percentages reflect a general
slowing of economic activity during the second quarter ended June
30, 1995 and the impact of higher priced resin included in both
Ropak's finished product costs and higher unit selling prices.
Resin cost per pound during the quarter ended June 30, 1995 was
54% higher than the same quarter a year ago. Indications from
the Company's resin supply sources are that supply is abundant
and prices have already started to decline, which has prompted
competitors to offer lower selling prices in anticipation of
gaining market share, creating a further negative influence on
margins.
Operating expenses as a percentage of net sales for the
six-month period ended June 30, 1995 and 1994 were 12.9% and
15.1%, respectively. For the second quarter ended June 30, 1995
and 1994 and the immediately preceding quarter ended March 31,
1995, operating expenses expressed as a percentage of sales were
12.1%, 13.6% and 14.0%, respectively. Operating expenses were
$10,297,000 for the six-month period ended June 30, 1995, up from
$9,214,000 for the six-month period ended June 30, 1994. For the
quarters ended June 30, 1995, June 30, 1994 and the immediately
preceding quarter ended March 31, 1995, operating expenses were
$5,481,000, $4,874,000 and $4,816,000, respectively.
The increase in operating expenses reflect higher level of
costs required to support the higher sales volumes being
generated and anticipated in the Materials Handling Division and
to a lesser degree in container divisions.
Operating profits for the six-month period ended June 30,
1995 were $5,593,000, up from $4,767,000 for the six-month period
ended June 30, 1994. Operating profits for the quarter ended
June 30, 1995 and June 30, 1994 were $3,432,000 and $4,647,000.
For the preceding quarter ended March 31, 1995 an operating
profit of $1,977,000 was recorded.
<PAGE> 9
Interest expense for the six-month period ended June 30,
1995 amounted to $1,720,000, up from $1,033,000 for the same
six-month period of 1994. Interest expense for the quarters
ended June 30, 1995, June 30, 1994 and March 31, 1995 were
$911,000, $527,000 and $809,000, respectively.
Interest expense has increased during the six-month period
ended June 30, 1995 compared to the six-month period ended June
30, 1994 due mainly to the increase in short term variable
interest rates charged by lending institutions and increased debt
to finance higher working capital levels as a result of higher
raw material costs included in inventories and accounts
receivable. In addition, the threat of a raw materials resin
supply shortage in the later part of 1994 and early months of
1995 prompted Ropak to increase its inventories to substantial
levels in early 1995.
Net profit, after provision for income taxes, for the
six-month period ended June 30, 1995 was $2,104,000 up from
$2,024,000 for the six-month period ended June 30, 1994. Net
profits for the quarters ended June 30, 1995, June 30, 1994 and
March 31, 1995 were $1,385,000, $2,297,000 arid $719,000,
respectively.
The 1995 second quarter earnings are lower than a year ago
1994 second quarter earnings due to several contributing factors.
It is estimated that market resistance to higher pricing and
Ropak's unsuccessful attempts to pass on resin cost increases has
eroded the Company's margins by approximately three percentage
points. Competitive pricing has been severe and Ropak's
reluctance to lose market share has reduced margins. A
devaluation of inventories on June 1, 1995 due to a resin price
reduction accounts for the remainder of the gross margin erosion.
Liquidity and Capital Resources
As at June 30, 1995, Ropak's working capital was
$32,249,000, an increase of $7,768,000 over $24,481,000 reported
at December 31, 1994, and an increase of $2,063,000 from
$30,186,000 reported at March 31, 1995.
The increase in working capital from December 31, 1994 to
June 30, 1995 of $7,768,000 is primarily attributable to the
following factors. Accounts receivable increased during the
quarter by approximately $6,900,000 due to increased sales
activity and inventories increased by approximately $2,100,000 to
accommodate a plant relocation and agriculture harvests that
require long lead times to build product for immediate delivery.
Current liabilities increased by approximately $500,000, again
the consequence of increased business activity.
<PAGE> 10
In January 1995 the Company amended its bank credit facility
to provide for a $24,500,000 revolving line of credit and a
$9,500,000 term loan together with a special revolving loan
commitment of $5,500,000. The combined maximum credit allowed is
not to exceed $35,000,000. The special revolving loan is
available to finance up to 70% of new capital expenditures and is
repayable in twenty equal quarterly installments amortized on the
principal loan balance outstanding on December 31, 1994. The
revolving loan matures on July 1, 1996. The total line of credit
bears interest at the bank's reference rate and may be fixed at
any time at LIBOR plus 1.75%. The credit facility requires the
Company to observe certain restrictive covenants, among which are
a minimum tangible net worth plus subordinated debt, restrictions
on certain additional indebtedness and requirements to maintain
certain financial ratios.
Capital additions to plant and equipment amounted to
$2,613,000 for the second quarter and $5,104,000 for the
six-months ended June 30, 1995. This compares to $3,199,000 and
$4,360,000 for the second quarter and six months ended June 30,
1994, respectively. It is expected that capital expenditures
will amount to approximately $10,000,000 in 1995.
Management believes that sufficient capacity exists within
the credit available under its banking and other credit
arrangements and internally generated funds from operations to
meet the Company's capital requirements.
The Company believes it is in compliance with air, water and
solid waste discharge regulations applicable to its business and
properties, and is not aware of any material expenditures
required for compliance with environmental regulations. Ropak
has no material unfunded commitments for post retirement
benefits. The Company is not a party to any material legal
proceedings.
Effect of FASB Statements
In December 1990, the Financial Accounting Standards Board
("FASB") issued Statement No. 106 "Employer's Accounting for
Postretirement Benefits Other Than Pensions". The Statement has
not have a material effect upon the Company's financial
statements.
In February 1992, the FASB issued Statement No. 109
"Accounting for Income Taxes". The Company adopted Statement No.
109 effective January 1, 1993. This statement supersedes FASB
No. 96 "Accounting for Income Taxes" which was adopted by the
Company in 1987. The adoption of FASB 109 has had no material
effect upon the Company's financial statements.
<PAGE> 11
PART II -- OTHER INFORMATION
ITEMS 1, 2 AND 3 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The 1995 annual meeting of Ropak's stockholders was held on
May 16, 1995. The only matter voted on at the annual meeting was
the election of two Class II directors to Ropak's Board of
Directors, as described in the Company's proxy statement dated
March 27, 1995 (definitive copies of which were filed with the
Securities and Exchange Commission). The results of voting on
matters presented to the meeting were as follows: Incumbent
directors Nigel V. Roe, Robert E. Roper and David A. Williams
were reelected as directors of the Company, each to serve for a
term of three years as directors in Class II until the annual
meeting of stockholders in 1998.
ITEM 5. OTHER INFORMATION
On May 3, 1995, LINPAC Mouldings Ltd. of Birmingham, England
announced that based on a preliminary count by its depositary,
1,968,969 shares of Ropak Corporation common stock had been
tendered to LINPAC pursuant to LINPAC's tender offer to purchase
all of the outstanding common stock of Ropak Corporation at
$11.00 per share. The offer expired at midnight on May 2, 1995.
LINPAC stated it has accepted for purchase all validly tendered
shares. Upon purchase of all shares tendered pursuant to its
tender offer, LINPAC will beneficially own approximately 96.8%
of the outstanding shares of Ropak's common stock.
On June 21, 1995, the Company filed with the Securities and
Exchange Commission a Form 15 Certification and Notice of
Termination of Registration under Section 12(g) of the Securities
Exchange Act of 1934 as provided by Rule 12g-4(a)(1)(i) of that
Act. As a result of that filing, Ropak's obligations to file
reports under the Securities Exchange Act of 1934 are expected to
terminate on approximately September 19, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits are filed as a part
of this Report:
Exhibit No. Description
----------- -----------------
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed
during the quarter ended June 30, 1995.
<PAGE> 12
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.
Date: August 5, 1995 ROPAK CORPORATION
(Registrant)
By: /s/ William H. Roper
---------------------
William H. Roper,
Chief Executive Officer
By: /s/ Ronald W. Cameron
----------------------
Ronald W. Cameron,
Chief Financial Officer
EXHIBIT INDEX
-------------
Exhibit
No. Description
------ ------------
27 Financial Data Schedule
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from Ropak
Corporation's Condensed Consolidated Statements of Operations and
Condensed Consolidated Balance Sheets and is qualified in its
entirety by reference to such financial Statements.
</LEGEND>
<CIK> 0000043514
<NAME> ROPAK CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<PERIOD-TYPE> 6-MOS
<CASH> 1,345
<SECURITIES> 0
<RECEIVABLES> 28,564
<ALLOWANCES> 525
<INVENTORY> 24,280
<CURRENT-ASSETS> 54,697
<PP&E> 87,114
<DEPRECIATION> 48,650
<TOTAL-ASSETS> 104,277
<CURRENT-LIABILITIES> 22,448
<BONDS> 39,807
0
0
<COMMON> 46
<OTHER-SE> 33,275
<TOTAL-LIABILITY-AND-EQUITY> 104,277
<SALES> 79,732
<TOTAL-REVENUES> 79,732
<CGS> 63,842
<TOTAL-COSTS> 63,842
<OTHER-EXPENSES> 10,297
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,720
<INCOME-PRETAX> 3,691
<INCOME-TAX> 1,587
<INCOME-CONTINUING> 2,104
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,104
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.41
</TABLE>
