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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X]Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the fiscal year ended December 31, 1994 or
[_]Transition Report Pursuant to Section 12 or 15(d) of the Securities Exchange
Act of 1934.
For the transition period from to .
----- ----
COMMISSION FILE NUMBER 0-15903
CALGON CARBON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 25-0530110
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
400 CALGON CARBON DRIVE 15205
PITTSBURGH, PENNSYLVANIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (412) 787-6700
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, par value $0.01 per share New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(TITLE OF CLASS)
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 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.
--------
As of March 3, 1995, there were outstanding 40,418,860 shares of Common Stock,
par value of $0.01 per share.
The aggregate market value of the voting stock held by non-affiliates as of
March 3, 1995 was $302,053,372.
The following documents have been incorporated by reference:
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FORM 10-K
DOCUMENT PART NUMBER
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Proxy Statement filed pursuant to Regulation 14A in connection with
registrant's Annual Meeting of Stockholders to be held on April 18,
1995............................................................... III
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INDEX
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PART I
Item 1. Business..................................................... 1
Item 2. Properties................................................... 5
Item 3. Legal Proceedings............................................ 6
Item 4. Submission of Matters to a Vote of Security Holders.......... 6
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters..................................................... 7
Item 6. Selected Financial Data...................................... 8
Item 7. Management's Discussion and Analysis......................... 9
Item 8. Financial Statements and Supplementary Data.................. 12
Item 9. Disagreements with Accountants............................... 26
PART III
Item 10. Directors and Executive Officers of the Registrant........... 26
Item 11. Executive Compensation....................................... 26
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 26
Item 13. Certain Relationships and Related Transactions............... 26
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K......................................................... 26
SIGNATURES................................................................ 28
</TABLE>
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PART I
ITEM 1. BUSINESS:
The Company:
The predecessor of the Company's activated carbon business was formed in
1942. From 1968 until April 1985 it was owned and operated by the previous
owner. In April 1985 the Company's predecessor business was purchased by its
management in a leveraged buyout. On June 9, 1987 the Company completed its
initial public offering of common stock. In May of 1988 the Company acquired
Degussa AG's activated carbon and charcoal business located in Germany. The
acquisition was accounted for as a purchase. The acquisition provided the
Company with two additional manufacturing facilities located in Germany and at
the time, the Company felt that this acquisition would strengthen its customer
base in Germany. In September of 1990, the Company purchased the operating
assets of TMPC, Inc. (Vara International) in order to strengthen the Company's
vapor phase equipment business. The Company continues to review its facilities.
During the fourth quarter of 1994, the Company decided to close one of the
aforementioned German plants due to high costs associated with its operations.
Products and Services:
Calgon Carbon is engaged in the production and marketing of activated carbons
and related services and systems throughout the world.
The Company's activities consist of four integrally related areas: (1)
activated carbons--the production and sale of a broad range of untreated,
impregnated or acid-washed carbons, in either powder, granular or pellet form;
(2) services--the provision of carbon reactivation, handling and transportation
services, as well as on-site purification, filtration and extraction services;
(3) systems--the design, assembly and sales of activated carbon purification,
filtration and extraction systems, as well as distillation systems; and (4)
charcoal--the production and sale of charcoal to consumer markets in Germany.
Markets:
The Company offers its activated carbon products, equipment and services to
the Industrial Process Market, and the Environmental Market and charcoal
products to the Consumer Market. The following table sets forth certain data
concerning the Company's total net sales by market for the past three years.
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PERCENTAGE OF TOTAL NET SALES
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1994 1993 1992
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Industrial Process Market:
Food...................................... 12% 12% 12%
Original equipment manufacturers.......... 9 16 18
Chemical and pharmaceutical............... 14 10 9
Other..................................... 10 10 10
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45 48 49
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Environmental Market:
Industrial................................ 27 26 25
Municipal................................. 21 19 19
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48 45 44
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Consumer Market:............................ 7 7 7
--------- --------- ---------
Total net sales........................... 100% 100% 100%
========= ========= =========
</TABLE>
Industrial Process Market:
The Industrial Process Market consists of customers that use the Company's
products either for purification of their own products in the manufacturing
process or direct incorporation into their own product. The Industrial Process
Market includes four significant sub-markets: the food market, the original
equipment manufacturers market, the chemical and pharmaceutical market and a
group of other sub-markets.
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Environmental Market:
The Environmental Market consists of customers that use the Company's
products to control air and water pollutants. The Environmental Market has two
sub-markets, the industrial market and the municipal market.
Consumer Market:
The Consumer Market consists of sales of charcoal (Grillis(Registration Mark)
and Der Sommer-Hit(Registration Mark)) for outdoor barbecue grilling. The
Company's grill charcoal is primarily sold through distributors principally in
Germany. This market is weather dependent, with the majority of the sales in the
spring and summer months.
Sales and Marketing:
The Company sells activated carbons, systems and services throughout the
world. In Europe, the Company also sells charcoal. To date, in areas outside of
the United States and Europe, the Company's primary activity has been the sale
of activated carbons. The Company sells its products and services principally
through its own direct sales force, and, to a lesser degree, through agents and
distributors.
The Company has a direct sales force in the United States in offices located
in Pittsburgh, Pennsylvania; Burlingame, California; Carlsbad, California;
Lisle, Illinois; Houston, Texas; and Bridgewater, New Jersey. The Company
conducts sales in Canada through a distributor under direction of its wholly
owned subsidiary which has a sales office in Toronto, Ontario. The Company also
maintains an office in Singapore to manage its agents in Malaysia, Thailand,
Indonesia, India and Singapore.
In Europe the Company has sales offices in Brussels, Belgium; Paris, France;
Manchester, England; Frankfurt, Germany; and Milan, Italy. The Company also has
a network of agents and distributors that conduct sales in certain countries in
Europe (including Eastern European countries), the Middle East, Africa, Latin
America, the Far East, Australia and New Zealand.
The following table sets forth certain data concerning total net sales to
customers in geographic areas in the past three years:
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PERCENTAGE OF TOTAL NET SALES
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1994 1993 1992
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United States................................. 56% 53% 53%
Europe........................................ 35 36 37
Other......................................... 9 11 10
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Total net sales........................... 100% 100% 100%
========= ========= =========
</TABLE>
Refer to Note 14 to the Consolidated Financial Statements for a discussion of
certain other financial information classified by major geographic areas in
which the Company operates.
Sales of the Company's products in Japan, South Korea, Taiwan and the
People's Republic of China are conducted exclusively by Calgon Far East Co.
Ltd., a joint venture in which the Company is a 50% participant. The joint
venture purchases the Company's products for resale in the four designated
countries. Sales to the joint venture have not been a significant portion of
the Company's total net sales.
The Company's products and services were purchased by approximately 4,100
active customers in 1994. Over the past three years, no single customer
accounted for more than 10% of the total sales of the Company in any year.
Competition:
The Company has three principal competitors with respect to the production
and sale of activated carbons: Norit, N.V., a Dutch company; CECA and Atochem,
USA, subsidiaries of Elf-Aquitaine, a French company; and Westvaco Corporation,
a United States company. Recently, Chinese producers of coal based activated
carbon and certain East Asian producers of coconut based activated carbon have
entered the market on a worldwide basis and sell principally through resellers.
Competition in activated carbons, systems and
2
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services is based both on price and performance. Other sources of competition
for the Company's activated carbon services and systems are purification,
filtration and extraction processes that do not employ activated carbons.
A number of other smaller competitors engage in the production and sale of
activated carbons in the United States and throughout the world. These
companies compete with the Company in the sale of specific types of activated
carbons, but do not generally compete with the Company in the worldwide
activated carbon business.
In the United States the Company competes with several small regional
companies for the sale of its reactivation services and equipment.
There are a number of competitors in the consumer charcoal market who are
located in the Eastern European countries, Spain, Portugal and South Africa.
These competitors offer inexpensive, low-quality products to the market.
Capital Expenditures:
In 1994, the Company invested $7.1 million for capital expenditures. The
Company's 1995 capital expenditure budget approximates $20.0 million and
includes equipment for adsorption service customers. The Company believes that
the funds generated from operations, supplemented as necessary with funds from
lines of credit and its cash reserves, will provide sufficient funds required
for such capital expenditures.
Raw Materials:
The principal raw material purchased by the Company is bituminous coal from
mines in the Appalachian Region and mines outside the United States, under
annual supply contracts. The Company purchases the coal used in its Belgian
production facility from a number of European and worldwide coal companies
under similar arrangements. The Company purchases beech wood for its German
operations through long-term contracts and on the open market, either as fresh
forest wood or as off-cuts from the furniture industry. Most of the wood is
sourced in Germany and the supply of wood is adequate. Wood char is also
purchased on the open market to supplement the supply of beech wood. The
Company also purchases, through long-term contracts, fly ash, a by-product of
the lumber industry, that is used to produce powdered carbon at the Blue Lake,
California plant.
The Company purchases significant amounts of natural gas from various
suppliers for use in its production facilities. In both the United States and
Europe, this natural gas is purchased pursuant to various contracts with
natural gas companies.
The only other raw material that is purchased by the Company in significant
quantities is coal tar pitch, which is used as a binder in the manufacturing
process. The Company purchases coal tar pitch from various suppliers in the
United States and Europe under annual supply contracts.
The Company does not presently anticipate any problems in obtaining adequate
supplies of any of its raw materials.
Research and Development:
The Company's research and development activities are conducted at a research
center near Pittsburgh, Pennsylvania, under the direction of an Executive
Director with a staff of 60 employees. A pilot plant located near Pittsburgh is
used for the production of experimental activated carbon products for testing
and applications development.
The principal goals of the Company's research program are maintaining the
Company as a technological leader in the production and utilization of granular
activated carbon, systems and services; developing new products and services;
and providing technical support to the manufacturing and marketing operations
of the Company.
3
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Results of the Company's new product research programs include: development
of a new product line of Centaur[Trademark] carbons; development of proprietary
specialty activated carbons in industrial and military respirators; commercial
introduction of two new solvent recovery carbons, Xtrusorb A754 and Xtrusorb
800, for acetone and toluene recovery; development of an improved potable water
carbon; and development of a new process to remove mercury from hydrocarbon
liquids.
Research and development expenses were $6.3 million, $6.5 million and $6.2
million in 1994, 1993, and 1992, respectively.
Patent and Trade Secrets:
The Company possesses a substantial body of technical knowledge and trade
secrets and owns 53 United States patents and 68 patents in other countries.
The technology embodied in these patents, trade secrets and technical knowledge
applies to all phases of the Company's business including production processes,
product formulations and application engineering. The Company considers this
body of technology important to the conduct of its business, although it
considers no individual item material to its business.
Regulatory Matters:
DOMESTIC. The Company is subject to extensive environmental laws and
regulations concerning emissions to the air, discharges to waterways and the
generation, handling, storage, transportation, treatment and disposal of waste
materials and is also subject to other federal and state laws regarding health
and safety matters. The Company believes it is presently in substantial
compliance with these laws and regulations. These laws and regulations are
constantly evolving and it is impossible to predict accurately the effect these
laws and regulations may have on the Company in the future.
The Environmental Protection Agency (EPA) has issued certain regulations
under the Resource Conservation and Recovery Act (RCRA) dealing with the
transportation, storage and treatment of hazardous waste that impact the
Company in its carbon reactivation services. Once activated carbon supplied to
a customer can no longer adsorb contaminating organic substances, it is
returned to the Company's facilities for reactivation and subsequent reuse. If
the substance(s) adsorbed by the spent carbon is considered hazardous, under
these EPA regulations the activated carbon used in the treatment process is
also considered hazardous. Therefore, a permit is required to transport the
hazardous carbon to the Company's facility for reactivation. The Company
possesses the necessary federal and state permits to transport hazardous waste.
Once at the Company's reactivation site, the hazardous spent activated carbon
is placed in temporary storage tanks. Under the EPA regulations, the Company is
required to have a hazardous waste storage permit. The Company has obtained
RCRA Part B permits to store hazardous waste at its Neville Island and
Catlettsburg facilities. The process of reactivating the spent activated
carbon, which destroys the hazardous organic substances, is subject to
permitting as a thermal treatment unit under RCRA. The Company does not accept
for reactivation carbons containing certain hazardous materials, including
PCBs, dioxins and radioactive materials.
Each of the Company's domestic production facilities has permits and licenses
regulating air emissions and water discharges. All of the Company's domestic
production facilities are controlled under permits issued by state and federal
air pollution control entities. The Company is presently in substantial
compliance with these permits. Continued compliance will require administrative
control and will be subject to any new or additional standards.
EUROPE. The Company is also subject to various environmental health and
safety laws and regulations at its facilities in Belgium, England and Germany.
These laws and regulations address substantially the same issues as those
applicable to the Company in the United States. The Company believes it is
presently in substantial compliance with these laws and regulations.
INDEMNIFICATION. The Company has a limited indemnification agreement with the
previous owner of the Company which will fund certain liabilities in certain
limited situations.
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Employee Relations:
As of December 31, 1994, the Company employed 1,267 persons on a full-time
basis, 697 of whom were salaried production, office, supervisory and sales
personnel. The 278 hourly personnel in the United States are represented by the
United Steelworkers of America. The current contracts with the United
Steelworkers of America expire on February 1, 1996 with respect to the
Pittsburgh facility and on June 6, 1996 with respect to the Catlettsburg
facility. On May 11, 1994, the National Labor Relations Board certified
Operating Engineers Local Union No. 3 as the collective bargaining
representative of the 12 salaried Blue Lake plant production and maintenance
employees. Collective bargaining negotiations on an initial contract are
currently ongoing. The 206 hourly personnel at the Brilon-Wald and Bodenfelde
plants in Germany are represented by the German Chemical Industry Union.
Agreements are reached every two years between the National Chemical Union and
the German Chemical Federation. The current agreement expires on June 1, 1995.
During the fourth quarter of 1994, the Company decided to close the Brilon-Wald
plant. This plant currently employs 149 persons. The 65 hourly personnel at the
Company's Belgian facility are represented by two national labor organizations
with contracts expiring on July 1, 1995. The Company has 21 hourly employees at
its United Kingdom facility.
ITEM 2. PROPERTIES:
The Company owns nine production facilities, two of which are located in
Pittsburgh, Pennsylvania; and one each in the following locations:
Catlettsburg, Kentucky; Pearlington, Mississippi; Blue Lake, California; Feluy,
Belgium; Grays, England; Brilon-Wald and Bodenfelde, Germany. The Company has
announced the shutdown of its Brilon-Wald plant in 1995.
The Catlettsburg, Kentucky plant is the Company's largest facility, with
plant operations occupying approximately 50 acres of a 226-acre site. This
plant produces granular activated carbons and powdered activated carbons, acid-
washes granular activated carbons and reactivates spent granular activated
carbons.
The Pittsburgh, Pennsylvania carbon production plant occupies a four-acre
site. Operations at the plant include the reactivation of spent granular
activated carbons, the impregnation of granular activated carbons, the grinding
of granular activated carbons into powdered activated carbons and the
production of pelletized carbon. The plant also has the capacity to produce
coal-based or coconut-based granular activated carbons.
The Pittsburgh, Pennsylvania equipment and assembly plant is located
approximately one mile from the carbon production plant and is situated within
a 16-acre site that includes 300,000 square feet under roof. The equipment and
assembly plant occupies 95,000 square feet under roof, with the remaining under
roof space occupied by a centralized warehouse for carbon inventory. The plant
assembles fully engineered equipment for purification, filtration and
extraction systems.
The Pearlington, Mississippi plant occupies a site of approximately 100
acres. The plant has one production line that produces granular activated
carbons and powdered carbons.
The Blue Lake, California plant, located near the city of Eureka, occupies
approximately two acres. The operations at the plant include reactivation of
spent granular activated carbons and manufacturing of powdered carbon.
The Feluy, Belgium plant occupies a site of approximately 21 acres located 30
miles south of Brussels, Belgium. It has one production line which manufactures
granular activated carbons. In addition, operations at the plant include the
reactivation of spent activated carbons used in the treatment of food products,
drinking water, industrial water and the grinding of granular activated carbons
into powdered activated carbons.
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The Brilon-Wald, Germany plant occupies a site of approximately 40 acres and
is situated in the North Rhine-Westphalia Region. Operations at the plant
include the manufacture of pellet, granular and powdered carbons, acid washing
and impregnation of activated carbon. During the fourth quarter of 1994, the
Company decided to close this plant.
The Bodenfelde, Germany plant occupies a site of approximately 40 acres and
is situated in the State of Lower Saxony. Operations at the plant include the
manufacture of charcoal for the consumer market. In addition, the plant
produces charcoal tar which is used by the Brilon-Wald plant for the production
of activated carbon. As a by-product, acetic acid of various grades is produced
and sold.
ITEM 3. LEGAL PROCEEDINGS:
There are no material pending legal proceedings to which the registrant or
any of its subsidiaries is a party or of which any of their property is the
subject, except proceedings which arise in the ordinary course of business. In
the opinion of management, any ultimate liability arising from pending
litigation will not have a material adverse effect on the consolidated
financial position, results of operations or cash flows of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
No matters were submitted to a vote of security holders during the fourth
quarter of 1994.
6
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS:
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Common Shares and Market Information
Common shares are traded on the New York Stock Exchange under the trading symbol
CCC. There were 1,306 registered shareholders at year end.
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Quarterly Common Stock Price Ranges and Dividends
1994 1993
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Fiscal Quarter High Low Dividend High Low Dividend
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<S> <C> <C> <C> <C> <C> <C>
First.................. 15 3/8 11 5/8 $.04 18 7/8 15 7/8 $.04
Second................. 13 7/8 12 3/8 $.04 17 1/2 11 1/8 $.04
Third.................. 13 5/8 11 0/0 $.04 12 7/8 10 1/2 $.04
Fourth................. 11 7/8 9 7/8 $.04 13 3/4 9 7/8 $.04
</TABLE>
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ITEM 6. SELECTED FINANCIAL DATA:
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<CAPTION>
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Nine-Year Summary
Selected Financial and Statistical Data
(Thousands except per share data)
Year Ended December 31
1994 1993 1992 1991 1990 1989 1988 1987(d). 1986(e)
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Income Statement Data:
Net sales $274,244 $269,424 $298,371 $308,373 $284,900 $253,390 $226,119 $170,706 $138,153
Income (loss) from
operations $(16,727) $ 33,015 $ 46,653 $ 61,258 $ 62,424 $ 56,683 $ 51,161 $ 39,188 $ 31,976
Interest expense $ 752 $ 984 $ 1,347 $ 1,040 $ 1,336 $ 3,515 $ 3,882 $ 7,223 $ 8,553
Net income (loss) (a)(c) $ (8,609) $ 19,153 $ 17,983 $ 38,102 $ 38,309 $ 35,205 $ 29,462 $ 16,955 $ 11,353
Percent of pretax income
(loss) to sales (6.8)% 11.4% 14.7% 19.7% 22.2% 21.9% 21.4% 19.2% 17.2%
Net income (loss) per
common share (a)(b)(c) $ (.21) $ .47 $ .44 $ .94 $ .94 $ .87 $ .74 $ .46 $ .29
Dividends declared per
common share $ .16 $ .16 $ .16 $ .16 $ .15 $ .11 $ .05 $ .03 --
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Balance Sheet Data (at
year end):
Working capital $ 83,279 $ 94,664 $ 74,659 $ 77,050 $ 82,145 $ 90,579 $ 71,259 $ 44,251 $ 26,744
Total assets $343,484 $337,329 $334,518 $335,964 $285,084 $233,738 $196,350 $153,299 $134,490
Long-term debt $ 6,401 $ 6,477 $ 6,797 $ 27,652 $ 11,215 $ 17,695 $ 26,951 $ 22,529 $ 58,711
Treasury stock, at cost $ 12,328 $ 1,615 -- -- -- -- -- -- --
Series A preferred stock
(redeemable) -- -- -- -- -- -- -- -- $ 7,500
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Other Selected Data (at
year end):
Return (loss) on average
shareholders' equity (4)% 8% 8% 18% 21% 25% 28% 29% 52%
Ratio of total debt and
redeemable preferred stock
to total capitalization 4% 4% 5% 11% 5% 12% 20% 25% 73%
Current ratio 226% 347% 266% 266% 275% 335% 301% 245% 191%
Tax rate (53.7)% 37.8% 34.9% 37.2% 37.4% 36.5% 39.2% 46.3% 52.1%
Treasury stock 1,006 154 -- -- -- -- -- -- --
Shares outstanding 40,419 40,949 40,904 40,749 40,637 40,507 40,070 39,632 21,651
Book value per outstanding
common share $ 5.62 $ 6.03 $ 5.84 $ 5.67 $ 4.92 $ 3.99 $ 3.00 $ 2.27 $ 1.33
Market value of common
stock $ 10.00 $ 13.00 $ 17.63 $ 21.38 $ 21.63 $ 22.00 $ 13.63 $ 8.63 --
Price earnings ratio
of stock prices -- 27.66 40.07 22.74 22.88 25.29 18.54 18.75 --
Capital expenditures $ 7,100 $ 15,100 $ 24,000 $ 70,600 $ 47,600 $ 24,300 $ 16,000 $ 4,400 $ 2,500
Number of registered
shareholders 1,306 1,470 1,503 1,410 966 770 500 400 --
Number of employees 1,267 1,320 1,480 1,513 1,499 1,329 1,298 775 737
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</TABLE>
(a) After extraordinary charges in 1990 and 1987 resulting from prepayment of
debt obligations of $1.24 million or $.03 per share net of tax, and $.68
million or $.02 per share, net of tax, respectively.
(b) Income per common share for 1987 and 1986 is based upon pro forma net
income of $17.71 million and $10.69 million, respectively.
(c) After a charge in 1992 of $10.65 million or $.26 per share resulting from
the cumulative effect of a change in accounting principle for income taxes.
(d) Year of initial public offering.
(e) First full year of operations.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS:
Management's Discussion and Analysis
Calgon Carbon Corporation
Overview
Industry
Weak customer demand coupled with competitive pressures among activated carbon
producers carried over from 1993 into the first half of 1994. Overall pricing of
activated carbon products continued to decline during this period.
During the first half, demand for activated carbon in the United States
stabilized. Through the remainder of the year the demand increased but generally
for lower priced products.
In Europe and other international markets, demand continued to weaken and
selling prices declined. Very little improvement was noted over the last half of
the year.
Environmental markets continue to reflect the similar problems that occurred
in 1993, including the re-engineering of processes to reduce waste and the delay
of major carbon fills in the municipal area, particularly in the United States.
The Company
The Company, although experiencing the recessionary pressures of the industry,
showed a slight increase in sales dollars. This increase principally occurred as
a result of a $2.4 million favorable effect from currency exchange and an
increase in the volume of sales of lower priced products. Sales volume in the
United States increased but overall pricing continued to be under pressure.
Volume in Europe and International sales also increased but prices showed an
overall decline.
As a result of the product mix and the aforementioned pricing of sales, gross
margin before depreciation as a percent of sales declined by nearly four
percentage points from 1993 to 1994. Although the Company recorded restructuring
charges in 1993 and 1992, the ongoing reduction from these actions was offset by
inflationary cost increases. As a result, selling, general and administrative
expenses increased by approximately 2% year to year.
After assessing the conditions of 1994 and the prior two years, the Company's
board of directors adopted certain strategic initiatives in October 1994. These
involved:
. Greater emphasis on expense and asset control.
. Increasing product gross margin rates via price increases and cost reductions.
. Reviewing existing facilities to ensure that unproductive or unnecessary
facilities are identified and appropriate actions taken.
. Future consideration of acquisitions of complementary businesses and
technologies.
. Continuation of the development and introduction of new products and services.
. Future consideration of establishing reactivation centers in emerging growth
markets.
Actions were taken on the first three initiatives starting in the fourth
quarter of 1994-see "Restructuring of Operations."
In the United States a price increase effective February 1, 1995 was
announced.
After assessing the cash requirements of the restructuring actions, the
Company's board of directors at a January 1995 meeting determined cash resources
were more than sufficient and declared a special one-time dividend of $.50 per
share payable to shareholders of record on February 1, 1995. In addition, the
regular quarterly dividend payable April 4, 1995 was increased from $.04 per
share to $.075 per share. These actions were taken to provide a greater return
to the shareholders.
Results of Operations
Consolidated net sales in 1994 increased by $4.8 million or 1.8% versus 1993.
This increase was primarily in the equipment area with the carbon and service
categories reporting minor increases. The overall net increase was the result of
increased volume in the United States and the positive effect of currency rate
changes in Europe of $2.4 million partially offset by the recession in Europe
and price decreases due to worldwide competitive pressures. On a market basis,
net sales to the environmental area increased by 8.6% while net sales in the
industrial category decreased by 4.3%. The environmental area increase was the
result of improved equipment sales by the Vara International unit. The
industrial area decrease can be attributed primarily to reductions in Europe in
the original equipment manufacturer area specifically related to the personnel
protection industry. Net sales in 1993 declined by $28.9 million or 9.7% versus
1992. This decrease was throughout the carbon, service and equipment areas. The
overall decrease was the net result of volume and price decreases due to the
worldwide recession and excess capacity in the carbon industry and to the effect
of unfavorable currency rate changes in Europe of $9.4 million. On a market
basis, net sales to the industrial process area decreased by
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12.4% while net sales in the environmental area declined by 6.2%. The industrial
process decline occurred primarily in the original equipment manufacture and
food areas due to significant non-repeat 1992 sales and product selection
shifts. The decrease in the environmental market also reflected the non-
repeating nature of significant 1992 municipal category sales.
Gross profit before depreciation as a percentage of net sales was 35.3%, 39.0%
and 40.8% for 1994, 1993 and 1992, respectively. The 1994 decline from 1993 and
the 1993 decline from 1992 were both primarily the combination of lower selling
prices and customer shifts to lower margin products.
Depreciation increased by $.9 million in 1994 versus 1993 and by $2.0 million
in 1993 over 1992. The 1994 increase resulted from continued routine capital
spending while the 1993 increase was principally the result of the full year's
depreciation rate used for the Pearl River, Mississippi plant in 1993 versus a
half year rate for 1992, its first year of operations.
Selling, general and administration expenses increased by $1.0 million in 1994
over 1993 after decreasing by $1.9 million in 1993 versus 1992. The 1994
increase was related to an increase in personnel related costs while the 1993
decrease was primarily related to reduced personnel costs resulting from the
year-end 1992 voluntary retirement incentive program in the United States, other
worldwide staff terminations, 1993 initiated cost control programs including the
absence of executive bonuses due to the Company's performance and reductions due
to currency rate changes. These decreases were partially offset by inflation.
Research and development expenses, as a percentage of sales, were 2.3%, 2.4%
and 2.1% in 1994, 1993 and 1992, respectively.
Interest income increased by $.5 million in 1994 over 1993 and by $.4 million
in 1993 versus 1992. The increases were due to increased investable cash.
Interest expense decreased in 1994 by $.2 million from 1993 and by $.4
million from 1992.
The effective tax rate for 1994 was a benefit of 53.7% compared to a tax rate
of 37.8% in 1993 and 34.9% in 1992. The 1994 rate was primarily the result of
the recognition of tax benefits relating to the restructuring charge and the
carryback to prior years of foreign tax credits for U.S. tax purposes. The 1993
increase was primarily the result of the United States passage of the "Omnibus
Budget Reconciliation Act of 1993" which was retroactive to January 1, 1993,
which not only affected the current year's tax provision, but also required the
remeasurement of the Company's deferred tax liability to revised tax rates. In
1992, the Company adopted the Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes." This resulted in an unfavorable
cumulative adjustment to first quarter 1992 net income of $10.7 million. (See
Note 11 to the Consolidated Financial Statements.)
The Company does not believe that inflation has had a significant effect on
its business during the periods discussed.
Restructuring of Operations
In each of the past three years, income from operations has declined in absolute
dollars and as a percentage of net sales. The decline can be attributed
principally to lower gross margins before depreciation reflecting lower average
selling prices and a less favorable mix of products. In assessing what could be
done to halt this decline and to stabilize net income, the Company looked at the
efficiency of its facilities, the type of products produced and the magnitude of
selling, general and administrative and research and development expenses. It
was projected that market conditions could improve for certain products. Based
on this, the Company's initial thrust involved the reduction of certain plant
period costs and operating expenses and the writeoff of certain non-productive
assets.
In 1992 a charge of $5.2 million was taken for a partial restructuring of
operations at the Brilon-Wald, Germany activated carbon plant, a voluntary
retirement incentive program in the United States and termination costs at
several locations. A $4.7 million cash outlay for employee separations was paid
out in 1992 and 1993 from internally generated funds.
In 1993 a charge of $1.7 million was taken for a second voluntary retirement
incentive program and other staff terminations on a worldwide basis. This cash
outlay for employee separations was paid out in 1993 and 1994 from internally
generated funds.
After idling certain producing units at several facilities due to lack of
demand, it was determined in 1994 that additional restructuring of the Company's
operations was necessary. Based upon the continuing review of facilities and
products and the strategic initiatives developed in 1994, the Company committed
in the fourth quarter of 1994 to a plan to close its Brilon-Wald plant due to
the high costs associated with the plant's operation. The Company also made the
decision to dispose of certain assets and terminate employees at other
locations. The details of this $41.8 million restructuring charge are outlined
in Note 2 to the Consolidated Financial Statements.
10
<PAGE>
The Company is not withdrawing from the German activated carbon market and
currently plans to supply its German customers with products from Belgium, the
United Kingdom and the U.S. The closing of the Brilon-Wald plant is not expected
to materially affect consolidated sales, and the profitability of its German
operations is expected to improve. Furthermore, the Company anticipates
increased utilization of its other manufacturing facilities. Management is not
able to estimate the effects of closing the Brilon-Wald plant on its cost
structure and consolidated profitability until such time as the closure is
completed and the German market has responded to this change. Depreciation
expense related to the Brilon-Wald facility was approximately $.6 million per
year.
The reduction in 1995 depreciation and amortization from the 1994 writeoff of
other worldwide assets is projected to approximate $1.4 million.
Cash outlays to cover restructuring costs are projected to be paid out from
internally generated funds as follows:
<TABLE>
<CAPTION>
1995 1996
------------------ ------------------ Grand
(Millions) 1994 1st Half 2nd Half 1st Half 2nd Half Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Employee separations $ .5 $8.6 $1.0 $ .4 $-- $10.5
Demolition, disposition
and environmental costs $ -- $1.2 $5.2 $4.0 $1.1 $11.5
</TABLE>
Working Capital and Liquidity
Net cash flows from operating activities totaled $43.6 million in 1994, $41.1
million in 1993 and $45.4 million in 1992. The Company expects to be a net
generator of cash, providing sufficient funding on an annual basis for debt
service, working capital, payment of dividends, stock repurchase and a
maintenance level of capital expenditures, short of any major capital
expansions.
The Company has two United States credit facilities in the amounts of $10
million each, expiring as of April 30, 1995 and May 30, 1995 and a German
credit facility in the amount of $12.9 million (deutsche mark 20 million) with
a duration of "until further notice." Based upon its present financial position
and history of operations, it is contemplated that these credit facilities,
coupled with cash flow from operations, will provide sufficient liquidity to
cover its debt service and any reasonable foreseeable working capital, capital
expenditure, stock repurchase and dividend requirements.
In July of 1993, the board of directors authorized the purchase of up to two
million shares, or approximately 5% of the Company's common stock. Purchases
will be made from time to time at prices that management considers appropriate,
and the repurchased shares will be held as treasury stock. During that year, the
Company began to purchase these shares. Since that authorization, 1,006,100
shares were purchased at a cost of $12.3 million. During 1994, 852,500 shares
were purchased at a cost of $10.7 million.
It is the current intention of the Company to declare and pay quarterly cash
dividends on its common stock. The Company has paid cash dividends since the
third quarter of 1987, the quarter succeeding the one in which the Company went
public. The declaration and payment of dividends is at the discretion of the
Board of Directors of the Company. The declaration and payment of future
dividends and the amounts thereof will be dependent upon the Company's results
of operations, financial condition, cash requirements for its business, future
prospects and other factors deemed relevant by the Board of Directors.
During January of 1995, the board of directors announced the payment of a one-
time special dividend of $.50 per share. This payment required a cash outlay of
approximately $20.2 million. At the same meeting, an increase to the regular
dividend from $.04 to $.075 was also approved. This represents an increase of
87.5%.
Capital Expenditures and Investments
Capital expenditures were $7.1 million in 1994, $15.1 million in 1993 and $24.0
million in 1992. The major portion of the 1994 expenditure amount was related to
improvements at the Bodenfelde, Germany plant ($1.8 million) and domestic
service customer capital ($1.4 million). Major expenditures in 1993 were made
for production improvements at the Blue Lake, California plant ($3.2 million), a
specific new product production capability at the Neville Island, Pennsylvania
plant ($1.8 million) and costs associated with domestic service customer capital
($2.7 million). The 1992 expenditure amount included costs associated with the
construction of the Pearl River prime carbon production facility. Capital
expenditures for the year of 1995 are projected to be approximately $20.0
million.
11
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
Index to Consolidated Financial Statements and Supplementary Data:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Financial Statements:
Report of Independent Accountants..................................... 13
Consolidated Statement of Income...................................... 14
Consolidated Balance Sheet............................................ 15
Consolidated Statement of Cash Flows.................................. 16
Consolidated Statement of Shareholders' Equity........................ 17
Notes to the Consolidated Financial Statements........................ 18
Supplementary Data:
Quarterly Financial Data--Unaudited................................... 25
</TABLE>
12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Calgon Carbon Corporation:
In our opinion, the consolidated financial statements listed in the index on
page 12 present fairly, in all material respects, the financial position of
Calgon Carbon Corporation (the Company) and its subsidiaries at December 31,
1994 and 1993, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994, in conformity
with generally accepted accounting principles. 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 of these statements in accordance with generally accepted
auditing standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 11 to the consolidated financial statements, in 1992 the
Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes."
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
February 10, 1995, except as to
Note 7, which is as of
March 1, 1995
13
<PAGE>
Consolidated Statement of Income
Calgon Carbon Corporation
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Year Ended December 31
(Dollars in thousands except per share data) 1994 1993 1992
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $274,244 $269,424 $298,371
----------------------------------------------------------------------------------------
Cost of products sold (excluding depreciation) 177,370 164,482 176,734
Depreciation 19,027 18,157 16,139
Selling, general and administrative expenses 46,522 45,526 47,443
Research and development expenses 6,291 6,511 6,205
Restructuring charges 41,761 1,733 5,197
----------------------------------------------------------------------------------------
290,971 236,409 251,718
----------------------------------------------------------------------------------------
Income (loss) from operations (16,727) 33,015 46,653
Interest income 1,079 584 224
Interest expense (752) (984) (1,347)
Other (expense)--net (2,186) (1,824) (1,538)
----------------------------------------------------------------------------------------
Income (loss) before income taxes and cumulative
effect of a change in accounting principle (18,586) 30,791 43,992
Provision (benefit) for income taxes (9,977) 11,638 15,355
----------------------------------------------------------------------------------------
Income (loss) before cumulative effect of a
change in accounting principle (8,609) 19,153 28,637
Cumulative effect of a change in
accounting principle for income taxes -- -- (10,654)
----------------------------------------------------------------------------------------
Net Income (Loss) $ (8,609) $ 19,153 $ 17,983
----------------------------------------------------------------------------------------
Income (loss) per common share before
cumulative effect of a change in
accounting principle $ (.21) $ .47 $ .70
Cumulative effect of a change in
accounting principle for income taxes -- -- (.26)
----------------------------------------------------------------------------------------
Net income (loss) per common share $ (.21) $ .47 $ .44
----------------------------------------------------------------------------------------
Weighted average shares, in thousands 40,637 40,999 40,847
----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
14
<PAGE>
Consolidated Balance Sheet
Calgon Carbon Corporation
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
December 31
(Dollars in thousands) 1994 1993
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 45,376 $ 21,792
Receivables 50,855 48,898
Inventories 41,672 47,653
Other current assets 11,225 14,596
---------------------------------------------------------------------------------------------------
Total current assets 149,128 132,939
Property, plant and equipment, net 179,148 196,491
Other assets 15,208 7,899
---------------------------------------------------------------------------------------------------
Total assets $343,484 $337,329
---------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Long-term debt due within one year $ 3,273 $ 2,516
Accounts payable and accrued liabilities 28,623 23,941
Restructuring reserve 22,761 794
Payroll and benefits payable 10,691 8,893
Accrued income taxes 501 2,131
---------------------------------------------------------------------------------------------------
Total current liabilities 65,849 38,275
Long-term debt 6,401 6,477
Deferred income taxes 34,341 35,718
Other liabilities 9,746 9,793
---------------------------------------------------------------------------------------------------
Total liabilities 116,337 90,263
---------------------------------------------------------------------------------------------------
Shareholders' equity:
Common shares, $.01 par value, 100,000,000 shares authorized,
41,424,960 and 41,102,360 shares issued 414 411
Additional paid-in capital 61,986 61,339
Retained earnings 164,325 179,427
Cumulative translation adjustments 12,750 7,504
---------------------------------------------------------------------------------------------------
239,475 248,681
Treasury stock, at cost, 1,006,100 and 153,600 shares (12,328) (1,615)
---------------------------------------------------------------------------------------------------
Total shareholders' equity 227,147 247,066
---------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $343,484 $337,329
---------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
15
<PAGE>
Consolidated Statement of Cash FLows
Increase (Decrease) in Cash and Cash Equivalents
Calgon Carbon Corporation
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Year Ended December 31
(Dollars in thousands) 1994 1993 1992
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $ (8,609) $ 19,153 $ 17,983
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Non-cash restructuring charges and asset write downs 19,210 -- --
Cumulative effect of a change in accounting
principle for income taxes -- -- 10,654
Depreciation and amortization 19,555 18,676 16,649
Employee benefit plan provisions 695 1,373 733
Changes in assets and liabilities-net of restructuring:
(Increase) decrease in receivables (1,957) 2,897 6,777
(Increase) decrease in inventories 1,855 (4,304) (5,755)
Decrease in other current assets 1,239 1,770 2,749
Increase in restructuring reserve 21,967 -- --
Increase (decrease) in accounts payable and accruals 4,850 (2,894) (7,607)
Increase (decrease) in long-term deferred income
taxes (net) (14,838) 3,124 4,622
Other items-net (405) 1,275 (1,396)
-----------------------------------------------------------------------------------------------
Net cash provided by operating activities 43,562 41,070 45,409
-----------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Property, plant and equipment expenditures (7,113) (15,114) (24,046)
Proceeds from disposals of equipment 1,357 1,082 1,266
-----------------------------------------------------------------------------------------------
Net cash (used in) investing activities (5,756) (14,032) (22,780)
-----------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Net proceeds from (repayments of) borrowings 598 (3,771) (13,424)
Treasury stock purchases (10,713) (1,615) --
Common stock dividends (6,493) (6,561) (6,538)
Other 225 138 109
-----------------------------------------------------------------------------------------------
Net cash (used in) financing activities (16,383) (11,809) (19,853)
-----------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 2,161 (1,662) (2,796)
-----------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 23,584 13,567 (20)
Cash and cash equivalents, beginning of period 21,792 8,225 8,245
-----------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 45,376 $ 21,792 $ 8,225
-----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
16
<PAGE>
Consolidated Statement of Shareholders' Equity
Calgon Carbon Corporation
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Common Additional Cumulative Treasury Stock
Shares Common Paid-in Retained Translation Sub- ----------------
(Dollars in thousands) Issued Shares Capital Earnings Adjustments Total Shares Amount Total
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 40,748,960 $ 407 $ 60,655 $155,390 $14,459 $230,911 -- $ -- $230,911
1992
----
Net income -- -- -- 17,983 -- 17,983 -- -- 17,983
Employee stock plans 154,800 2 107 -- -- 109 -- -- 109
Common stock dividends
Cash ($.16 per share) -- -- -- (6,538) -- (6,538) -- -- (6,538)
Translation adjustments -- -- -- -- (3,649) (3,649) -- -- (3,649)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1992 40,903,760 409 60,762 166,835 10,810 238,816 -- -- 238,816
------------------------------------------------------------------------------------------------------------------------------------
1993
----
Net income -- -- -- 19,153 -- 19,153 -- -- 19,153
Employee stock plans 198,600 2 577 -- -- 579 -- -- 579
Common stock dividends
Cash ($.16 per share -- -- -- (6,561) -- (6,561) -- -- (6,561)
Translation adjustments -- -- -- -- (3,306) (3,306) -- -- (3,306)
Treasury stock purchased -- -- -- -- -- -- 153,600 (1,615) (1,615)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 41,102,360 411 61,339 179,427 7,504 248,681 153,600 (1,615) 247,066
------------------------------------------------------------------------------------------------------------------------------------
1994
----
Net (loss) -- -- -- (8,609) -- (8,609) -- -- (8,609)
Employee stock plans 322,600 3 647 -- -- 650 -- -- 650
Common stock dividends
Cash ($.16 per share) -- -- -- (6,493) -- (6,493) -- -- (6,493)
Translation adjustments -- -- -- -- 5,246 5,246 -- -- 5,246
Treasury stock purchased -- -- -- -- -- -- 852,500 (10,713) (10,713)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 41,424,960 $ 414 $ 61,986 $164,325 $12,750 $239,475 1,006,100 $(12,328) $227,147
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
17
<PAGE>
Notes to the Consolidated Financial Statements
Calgon Carbon Corporation
--------------------------------------------------------------------------------
1. Statement of Accounting Policies
Operations
The Company's operations are conducted in one business segment, the production
and marketing of activated carbons and related products and services.
Principles of Consolidation
The consolidated financial statements include the accounts of Calgon Carbon
Corporation and its wholly-owned subsidiaries, Chemviron Carbon GmbH, Calgon
Carbon Canada, Inc., Chemviron Carbon Ltd., Calgon Carbon Investments Inc. and
the Company's foreign sales corporation. A portion of the Company's
international operations in Europe are owned directly by the Company and are
operated as branches. The Company's 50% investment in Calgon Far East Co., Ltd.
is accounted for by the equity method. Intercompany accounts and transactions
have been eliminated.
Foreign Currency Translation
Substantially all assets and liabilities of the Company's international
operations are translated at year-end exchange rates; income and expenses are
translated at average exchange rates prevailing during the year. Translation
adjustments are accumulated in a separate component of shareholders' equity,
net of tax effects. Transaction gains and losses are included in income.
Revenue Recognition
Revenue and related costs are recognized when goods are shipped or services are
rendered to customers.
Inventories
Inventories are carried at the lower of cost or market. Inventory costs are
determined using the last in, first out (LIFO) method except at Chemviron
Carbon GmbH and Calgon Carbon Canada, Inc., where cost is determined by the
first in, first out (FIFO) method.
Property, Plant and Equipment
Property, plant and equipment expenditures are recorded at cost. Repair and
maintenance costs are expensed as incurred. Depreciation for financial
statement purposes is computed on the straight-line method over the estimated
remaining service lives of the assets, which are from twenty to thirty years
for buildings and land improvements, fifteen years for machinery and equipment
and seven years for vehicles.
Income Taxes
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." (See Note 11 to
the Consolidated Financial Statements.)
Pensions
Substantially all U.S. employees of the Company are covered by one of three
non-contributory defined benefit pension plans. It is the Company's policy to
annually fund net pension cost accrued to these plans, subject to minimum and
maximum amounts specified by regulations. In Europe, employees are also covered
by various defined benefit pension plans or government sponsored defined
contribution plans. The Company funds these plans according to local laws and
practices.
Statement of Cash Flows
For the purpose of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
--------------------------------------------------------------------------------
2. Restructuring Charges
The Company has initiated various activities to restructure its worldwide
operations in order to reduce its cost structure, control expenses and eliminate
unproductive or unnecessary facilities.
In the fourth quarter of 1994 the Company recorded a charge of $41,761,000
from a restructuring of operations. Included in the charge were costs totaling
$10,592,000 relating to the separation of employees, writeoffs of inventories
and other assets, closing of an office and the writeoff of patents in the
United States and Canada and in Europe, other than in Germany. At the December
1994 Board of Directors meeting the Company committed to a plan to close the
Brilon-Wald, Germany plant. A charge of $31,169,000 was made to cover legally
required employee termination costs, asset write-offs, and the demolition,
disposition, site protection and environmental costs involved with this plant.
In accordance with the Company's plan, the Brilon-Wald plant is to be closed
and employees separated as soon as practical in 1995 and the demolition of the
plant is planned to be completed by early 1996. With the exception of the
writedowns of assets, these restructuring charges will result in cash outlays.
A charge of $1,733,000 was taken in the fourth quarter of 1993, consisting of
worldwide personnel costs associated with the voluntary incentive retirement
program and other staff terminations. These restructuring charges resulted in
cash outlays.
18
<PAGE>
The first and fourth quarters of 1992 included charges of $690,000 and
$4,507,000 respectively for the restructuring of operations at the Brilon-Wald,
Germany activated carbon plant, for a voluntary incentive retirement program in
the United States and for termination costs at several locations. With the
exception of the writedowns of assets, these restructuring charges resulted in
cash outlays.
The following table sets forth the Company's restructuring charges for each of
the three years in the period ended December 31, 1994:
<TABLE>
<CAPTION>
Year Ended December 31
(Thousands) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Employee separations $10,480 $1,733 $4,658
Property, plant and equipment writeoffs 10,363 -- 450
Patent writeoffs 3,710 -- --
Inventory writedowns 5,711 -- 89
Demolition, disposition, site protection
and environmental costs--Brilon-Wald 11,497 -- --
--------------------------------------------------------------------------------
Total $41,761 $1,733 $5,197
================================================================================
</TABLE>
The reserve balance for employee separations at December 31, 1994, 1993 and
1992 was $10,311,000, $275,000 and $3,426,000, respectively. The reserve
balance for demolition, disposition and environmental costs totaled $11,497,000
at December 31, 1994.
The number of planned employee separations were 233, 23 and 81 for the years
ended December 31, 1994, 1993 and 1992, respectively, for a total of 337.
Actual employee separations in 1992 and 1993 years were the same as shown
above. For the 1994 year, there were 21 employees actually terminated with
benefits totaling $456,000.
_______________________________________________________________________________
3. Inventories
<TABLE>
<CAPTION>
December 31
(Thousands) 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $ 7,119 $ 8,758
Finished goods 34,553 38,895
--------------------------------------------------------------------------------
Total $41,672 $47,653
================================================================================
</TABLE>
Approximately 59% and 62% of total inventories at December 31, 1994 and 1993,
respectively, are valued using the LIFO method. The LIFO carrying value of
inventories exceeded the related current cost by $2,848,000 and $2,463,000 at
December 31, 1994 and 1993, respectively.
--------------------------------------------------------------------------------
4. Property, Plant and Equipment
<TABLE>
<CAPTION>
December 31
(Thousands) 1994 1993
-------------------------------------------------------------------------------
<S> <C> <C>
Land and improvements $ 12,694 $ 13,586
Buildings 20,792 20,474
Machinery and equipment 237,616 241,575
Furniture and vehicles 8,335 7,667
-------------------------------------------------------------------------------
$ 279,437 $ 283,302
Less accumulated depreciation (100,289) (86,811)
-------------------------------------------------------------------------------
Net $ 179,148 $ 196,491
===============================================================================
</TABLE>
--------------------------------------------------------------------------------
5. Long-Term Debt
<TABLE>
<CAPTION>
December 31
(Thousands) 1994 1993
-------------------------------------------------------------------------------
<S> <C> <C>
Pollution control debt
Ashland, Kentucky bonds $ 5,100 $ 5,100
German pollution control loans 894 987
German wastewater control loans 648 601
German credit facility 3,032 2,305
-------------------------------------------------------------------------------
Total $ 9,674 $ 8,993
Less current maturities of long-term debt (3,273) (2,516)
-------------------------------------------------------------------------------
Net $ 6,401 $ 6,477
===============================================================================
</TABLE>
19
<PAGE>
Pollution Control Debt
The City of Ashland, Kentucky Floating Rate Pollution Control Revenue bonds
bear interest at a defined floating rate and are due October 1, 2006. During
the year ended December 31, 1994, the Company paid interest on these bonds at
an average rate of 3.5%. These pollution control bonds are secured by certain
pollution control projects located at the Company's Big Sandy, Kentucky plant.
The German pollution control loans consist of three loans, due March 31, 1997,
1998 and 2000 and have fixed interest rates of 5.0%, 6.5% and 6.0%,
respectively.
The German wastewater control loans consist of four loans. Three loans are due
February 28, 2016 and one loan is due February 28, 2017. All four loans have a
fixed interest rate of 1.5%.
United States Credit Facilities
The Company's two credit facilities totaling $20 million expire in April and
May of 1995. The Company pays annual facility fees of one-eighth percent on the
unused portion of each credit line. The facilities provide for interest rates
based upon prime rates with other interest options available. As of December
31, 1994, no amounts were outstanding related to these credit facilities.
German Credit Facility
Chemviron Carbon GmbH has a bank credit facility which provides for borrowing
up to $12,912,000. The facility has no set maturity date and is made available
on an until further notice basis. No commitment fee is required on unborrowed
funds. The facility bears interest at the German bank rate with other interest
options available. As of December 31, 1994, the weighted average interest rate
was 8.6% on loans outstanding.
Restrictive Covenants
The United States credit facilities' covenants impose financial restrictions on
the Company, including maintaining certain ratios of total liabilities to
tangible net worth and operating income to interest expense. At December 31,
1994 the Company was in compliance with all financial covenants relating to the
credit facilities in the United States.
The German credit facility has no covenants.
Maturities of Debt
The Company is obligated to make principal payments on debt outstanding at
December 31, 1994 of $3,273,000 in 1995, $240,000 in 1996, $220,000 in 1997,
$165,000 in 1998 and $126,000 in 1999.
--------------------------------------------------------------------------------
6. Lease Commitments
The Company has entered into leases covering principally office, research and
warehouse space, office equipment and vehicles.
Future minimum rental payments required under all operating leases that have
remaining noncancelable lease terms in excess of one year are $5,810,000 in
1995, $4,729,000 in 1996, $3,906,000 in 1997, $3,510,000 in 1998, $3,563,000 in
1999 and $20,555,000 thereafter.
Total rental expenses on all operating leases were $6,489,000, $4,996,000 and
$5,075,000 for the years ended December 31, 1994, 1993 and 1992, respectively.
--------------------------------------------------------------------------------
7. Shareholders' Equity
On March 1, 1995, a voting trust covering 11,898,508 shares of Class A stock
outstanding at December 31, 1994 was terminated. These class A shares were
automatically converted to common stock on a share-for-share basis effective
this date.
On July 13, 1993, the Board of Directors authorized the Company to purchase up
to two million shares, or approximately 5% of its common stock. Purchases will
be made from time to time at prices management considers appropriate and the
repurchased shares will be held as treasury stock. As of December 31, 1994, the
Company had purchased 1,006,100 shares of its common stock at an aggregate cost
of $12,328,000.
The Board of Directors adopted a Stockholder Rights Plan in January 1995
designed to (1) guard against coercive and abusive tactics that might be used
in an attempt to gain control of the Company without paying all stockholders a
fair price for their shares or (2) the accumulation of a substantial block of
stock without Board approval. The Rights Plan will not prevent takeovers, but
is designed to encourage anyone attempting to acquire the Company to first
negotiate with the Board. The Plan awards one Right for each outstanding share
of common stock held by stockholders of record on February 14, 1995, and
thereafter. Each right entitles the holder to purchase from the Company one
one-hundredth of a share of Calgon Carbon common stock at a purchase price of
$50 per share. The Rights will be exercisable only if a person or group
acquires beneficial ownership of 20% or more of the Company's outstanding
common stock. If one of those events occurs, each stockholder (with the
exception of the person or group who owns 20% or more of the outstanding stock)
can exchange the right for shares with a market value equal to the then-current
exercise price or three shares, whichever has the greater value.
20
<PAGE>
--------------------------------------------------------------------------------
8. 1985 Stock Option Plan
The Company has an Employee Stock Option Plan for officers and other key
employees of the Company. Stock options may be "nonstatutory," with a purchase
price not less than 80% of fair market value on the date of the grant, or
"incentive" with a purchase price of not less than 100% of the fair market
value on that date. Stock appreciation rights may be granted at date of option
grant or at any later date during the term of the option.
There were 4,138,640 shares available for issuance under the Plan. In 1985,
2,096,000 options were granted and were exercised in 1985 and 1986. "Incentive"
stock options granted since 1986 become exercisable two years after the date of
grant in five equal annual installments and are no longer exercisable after the
expiration of ten years from the date of grant. Transactions for 1994, 1993 and
1992 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding January 1 396,600 604,600 761,300
Granted 49,120 -- 12,500
Exercised 322,600 198,600 154,800
Cancelled 61,120 9,400 14,400
Options outstanding at December 31 62,000 396,600 604,600
Option price range at December 31 $ 17.13 $ .70 $ .70
to to to
$ 23.13 $ 23.13 $ 23.13
Options exercisable at December 31 28,700 167,300 176,200
--------------------------------------------------------------------------------
Options available for grant at December 31 1,063,040 1,051,040 1,041,640
================================================================================
</TABLE>
--------------------------------------------------------------------------------
9. Employee Growth Sharing Plan
Under the Plan, an employee growth sharing plan pool is calculated as a
percentage of the increase in year-to-year pre-tax income plan pool which will
be distributed to full time employees not eligible to receive a cash bonus under
any other incentive plan of the Company. This plan pool may be adjusted by the
Board of Directors at its sole discretion in any plan year in order to reflect
any material events that would impact the calculation in either a positive or
negative manner. There was no pool for distribution for the years ending
December 31, 1994, 1993 and 1992.
--------------------------------------------------------------------------------
10. Pensions
The Company has a number of non-contributory defined benefit pension plans for
its U.S. employees which provide benefits based upon the greater of a fixed rate
per month or a percentage of average compensation. Prior service and
compensation of employees formerly covered by pension plans of the previous
owners of the Company's operations are considered in the determination of
benefits payable under Company plans. By agreement with previous owners,
benefits payable under Company plans are reduced by the benefit amounts
attributable to the previous owners which are computed utilizing a 2.5%
compensation increase assumption.
Domestic plan assets are invested primarily in commingled equity and
government security trust funds administered by a bank. Prior service cost for
all plans is amortized on a straight-line basis over the remaining average
service period of employees expected to receive benefits under the plans. For
U.S. plans, net pension costs, amounts recognized in the balance sheet and
significant assumptions are as follows:
<TABLE>
<CAPTION>
Year Ended December 31
(Thousands) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 1,505 $ 1,615 $1,641
Interest cost on projected benefit obligation 1,739 1,898 1,661
Net amortization 223 290 288
--------------------------------------------------------------------------------
3,467 3,803 3,590
--------------------------------------------------------------------------------
Return on plan assets:
Actual loss (return) 186 (1,090) (363)
Amount deferred (1,504) 22 (406)
--------------------------------------------------------------------------------
Recognized return on plan assets (1,318) (1,068) (769)
--------------------------------------------------------------------------------
Net pension cost for the period $ 2,149 $ 2,735 $2,821
================================================================================
Discount rate 7.50% 8.25% 8.25%
Long-term rate of return on assets 8.50% 8.50% 7.50%
--------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
In addition to the above pension cost for the year ended December 31, 1993,
the Company recognized $197,000 for pension curtailment and settlement losses
associated with the voluntary retirement incentive program.
<TABLE>
<CAPTION>
December 31
(Thousands) 1994 1993
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligation
Vested benefits $ (9,205) $ (8,738)
Nonvested benefits (2,284) (2,541)
------------------------------------------------------------------------------------------------------
Accumulated benefit obligations $(11,489) $(11,279)
======================================================================================================
Projected benefit obligation $(21,408) $(23,553)
Plan assets at fair value 15,339 14,297
------------------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets $ (6,069) $ (9,256)
Unrecognized net (gain) loss from past experience different from assumed (1,067) 1,319
Prior service cost not yet recognized in net periodic pension cost 3,126 3,789
-------------------------------------------------------------------------------------------------------
Pension liability included in the balance sheet $ (4,010) $ (4,148)
=======================================================================================================
Discount rate 8.25% 7.50%
Rate of increase in compensation levels 1.40--4.50% 1.40--4.50%
-------------------------------------------------------------------------------------------------------
</TABLE>
There are several defined benefit plans covering certain employees of
Chemviron Carbon GmbH for which the obligations are accrued but not funded in
accordance with local practice. Benefits under these plans are generally based
on a percentage of average compensation.
The European employees in the branches and United Kingdom subsidiary
participate in certain contributory defined benefit pension plans which
guarantee a pension over the state pension level. These plans are funded by
employee contributions calculated as a percentage of their compensation with the
balance of the plan funding provided by Company contributions. Funds are managed
by an insurance company under a deposit administration contract. Benefits under
these plans are generally based upon a percentage of final earnings subject to
an upper earnings limit.
For European plans, net pension costs, amounts recognized in the balance sheet
and significant assumptions are as follows:
<TABLE>
<CAPTION>
Year Ended December 31
(Thousands) 1994 1993 1992
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 608 $ 620 $ 627
Interest cost on projected benefit obligation 799 769 717
Net amortization 68 72 77
-----------------------------------------------------------------------------------------------------
1,475 1,461 1,421
-----------------------------------------------------------------------------------------------------
Return on plan assets:
Actual (return) (249) (221) (31)
Amount deferred 18 (13) (153)
-----------------------------------------------------------------------------------------------------
Recognized return on plan assets (231) (234) (184)
-----------------------------------------------------------------------------------------------------
Net pension cost for the period $ 1,244 $ 1,227 $ 1,237
=====================================================================================================
Discount rate 7.0--8.0% 8.0--9.0% 8.0--9.0%
Long-term rate of return on assets 8.0--9.0% 7.0--8.0% 8.0--9.0%
-----------------------------------------------------------------------------------------------------
<CAPTION>
December 31
(Thousands) 1994 1993
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligation
Vested benefits $ (6,760) $ (5,758)
Nonvested benefits (536) (431)
-----------------------------------------------------------------------------------------------------
Accumulated benefit obligations $ (7,296) $ (6,189)
=====================================================================================================
Projected benefit obligation $ (11,544) $ (9,854)
Plan assets at fair value 3,554 2,742
-----------------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets $ (7,990) $ (7,112)
Unrecognized net (gain) loss from past experience different from assumed (331) 404
Unrecognized net transition obligation, net of amortization 979 940
-----------------------------------------------------------------------------------------------------
Pension liability included in the balance sheet $ (7,342) $ (5,768)
=====================================================================================================
Discount rate 7.5--9.0% 7.0--8.0%
Rate of increase in compensation levels 4.5--7.0% 4.0--6.0%
-----------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
-------------------------------------------------------------------------------
11. Provision for Income Taxes
In 1992, the Company adopted SFAS No. 109 which requires an asset and liability
approach in accounting for income taxes. Under this method, deferred income
taxes are provided to reflect the future tax consequences of carryforwards and
differences between the tax bases of assets and liabilities and their financial
bases at each year-end. The unfavorable cumulative effect of the change in
accounting principle determined as of January 1, 1992 totaled $10,654,000 ($.26
per share).
The components of the provision (benefit) for income taxes were as follows:
<TABLE>
<CAPTION>
Year Ended December 31
(Thousands) 1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 1,937 $ 2,703 $ 9,232
State and local 172 564 1,470
Foreign 1,994 2,983 2,698
-----------------------------------------------------------------------------
4,103 6,250 13,400
-----------------------------------------------------------------------------
Deferred
Federal (795) 3,981 1,675
State and local (194) 969 543
Foreign (13,091) 438 (263)
-----------------------------------------------------------------------------
(14,080) 5,388 1,955
-----------------------------------------------------------------------------
Provision (benefit) for income taxes $ (9,977) $11,638 $15,355
==============================================================================
</TABLE>
Income (loss) before income taxes for 1994, 1993 and 1992 includes
($28,879,000), $7,531,000 and $9,145,000, respectively, generated by operations
outside the United States.
The difference between the U.S. federal statutory tax rate and the Company's
effective income tax rate is as follows:
<TABLE>
<CAPTION>
Year Ended December 31
1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal statutory rate (35.0)% 35.0% 34.0%
State income taxes, net of federal income tax benefit (.1) 3.2 3.0
Foreign tax credit carryback (9.3) -- --
Higher tax (benefit) rate on foreign income (loss) (8.9) .5 (1.8)
Other--net (.4) (.9) (.3)
--------------------------------------------------------------------------------
Effective income tax rate (53.7)% 37.8% 34.9%
================================================================================
</TABLE>
Operating loss carryforwards of $33,686,000 in foreign jurisdictions at
December 31, 1994 have no expiration dates.
The Company's U.S. income tax returns have been examined by the Internal
Revenue Service through 1991. Management believes that adequate provisions for
taxes have been made through December 31, 1994.
The components of deferred taxes are comprised of the following:
<TABLE>
<CAPTION>
Year Ended December 31
(Thousands) 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Foreign tax loss carryforwards $14,032 $ 2,676
U.S. federal benefits on foreign income 3,095 2,696
Accruals 1,980 920
Intangibles 1,619 --
Pensions 1,239 1,411
Organization costs 690 694
Other 662 405
--------------------------------------------------------------------------------
Total deferred tax assets $23,317 $ 8,802
================================================================================
Deferred tax liabilities
Property, plant and equipment $36,738 $35,769
Cumulative translation adjustment 7,723 4,975
Inventories 503 1,556
Other 1,042 582
--------------------------------------------------------------------------------
Total deferred tax liabilities $46,006 $42,882
================================================================================
</TABLE>
23
<PAGE>
--------------------------------------------------------------------------------
12. Other Information
Repair and maintenance expenses were $19,693,000, $20,008,000 and $21,584,000
for the years ended December 31, 1994, 1993 and 1992, respectively.
Other (expense)--net includes net foreign currency transaction losses of
($548,000), ($486,000) and ($806,000) for the years ended December 31, 1994,
1993 and 1992, respectively. Also included are taxes other than on income of
$1,335,000, $1,049,000 and $706,000 for the years ended December 31, 1994, 1993
and 1992, respectively.
Deferred taxes included in the translation adjustments for 1994, 1993 and 1992
were $2,824,000, ($1,528,000) and ($1,880,000), respectively.
--------------------------------------------------------------------------------
13. Supplemental Cash Flow Information
<TABLE>
<CAPTION>
(Thousands) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for
Interest (net of $91 capitalized in 1992) $ 430 $ 994 $ 1,351
Income taxes (net of refunds) $ 4,007 $ 4,305 $ 14,915
--------------------------------------------------------------------------------
Bank debt
Borrowings $ 19,891 $ 28,118 $ 214,438
Repayments (19,293) (31,889) (227,862)
--------------------------------------------------------------------------------
Net proceeds from (repayment of) borrowings $ 598 $ (3,771) $ (13,424)
================================================================================
</TABLE>
--------------------------------------------------------------------------------
14. Geographic Information
Net sales by the Company's operations in certain geographic areas, transfers
between geographic areas and income from operations for 1994, 1993 and 1992 and
identifiable assets, at the end of each year, classified by major geographic
areas in which the Company operates, were as follows:
<TABLE>
<CAPTION>
(Thousands) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers
U.S. $168,480 $165,919 $178,434
Europe 99,783 97,002 112,861
Canada 5,981 6,503 7,076
--------------------------------------------------------------------------------
$274,244 $269,424 $298,371
================================================================================
Transfers between areas
U.S. $ 11,001 $ 12,613 $ 11,653
Europe 5,152 11,544 7,952
Canada -- -- --
--------------------------------------------------------------------------------
$ 16,153 $ 24,157 $ 19,605
================================================================================
Income (loss) from operations
U.S. $ 11,236 $ 25,599 $ 37,554
Europe (28,865) 5,808 8,135
Canada 1,814 2,450 2,558
Eliminations (912) (842) (1,594)
-------------------------------------------------------------------------------
$(16,727) $ 33,015 $ 46,653
===============================================================================
Identifiable assets, end of year
U. S. $233,655 $230,618 $225,284
Europe 108,959 105,791 108,359
Canada 1,645 1,820 1,935
Eliminatio ns (775) (900) (1,060)
-------------------------------------------------------------------------------
$343,484 $337,329 $334,518
===============================================================================
</TABLE>
Transfers between geographic areas are at prices in excess of cost and the
resultant income is assigned to the geographic area of manufacture. Interarea
income remaining in inventories is eliminated in consolidation.
24
<PAGE>
--------------------------------------------------------------------------------
Quarterly Financial Data-Unaudited
(Thousands except per share data)
<TABLE>
<CAPTION>
1994 1993
----------------------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
------------------------------------------------------------------------------------------------------------------------------------
Net sales $62,503 $69,156 $69,354 $ 73,231 $63,732 $72,689 $65,967 $67,036
Gross profit $21,094 $26,414 $23,533 $ 25,833 $25,785 $27,594 $25,086 $26,477
Net income (loss) $ 2,344 $ 5,222 $ 3,715 $(19,890) $ 5,166 $ 5,724 $ 4,118 $ 4,145
=============================================== ===============================================
------------------------------------------------------------------------------------------------------------------------------------
Common Stock Data:
Net income (loss)
per common share $ .06 $ .13 $ .09 $ (.49) $ .13 $ .14 $ .10 $ .10
=============================================== ===============================================
Average common shares
outstanding 40,989 40,765 40,394 40,409 40,964 41,027 41,037 40,967
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS:
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
Information concerning the directors and executive officers of the
Corporation required by this item is incorporated by reference to the material
appearing under the heading "Election of Directors" in the Company's Proxy
Statement for the 1995 Annual Meeting of its Stockholders.
ITEM 11. EXECUTIVE COMPENSATION:
Information required by this item is incorporated by reference to the
material appearing under the heading "Executive Compensation" in the Company's
Proxy Statement for the 1995 Annual Meeting of its Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
Information required by this item is incorporated by reference to the
material appearing under the heading "Security Ownership of Certain Beneficial
Owners and Management" in the Company's Proxy Statement for the 1995 Annual
Meeting of its Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
Information required by this item is incorporated by reference to the
material appearing under the heading "Election of Directors" in the Company's
Proxy Statement for the 1995 Annual Meeting of its Stockholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:
A. Financial Statements
Financial statements filed as part of this report are listed in the index
to Consolidated Financial Statements and Supplementary Data on page 12.
C.Exhibits
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
3.1 Amended Certificate of Incorporation............................ (e)
3.2 By-laws of the Registrant....................................... (a)
4.0 Rights Agreement................................................ (h)
9.1 Voting Trust Agreement.......................................... (b)
9.2 Voting Trust Certificate of Amendment........................... (c)
10.1* Calgon Carbon Corporation Stock Option Plan, as Amended......... (f)
10.3* Officers Incentive Plan of Calgon Carbon Corporation, as
Amended......................................................... (g)
21.0 Subsidiaries of the Company..................................... (d)
23.0 Consent of Independent Accountants.............................. (30)
</TABLE>
Note: The Registrant hereby undertakes to furnish, upon request of the
Commission, copies of all instruments defining the rights of holders of long-
term debt of the Registrant and its consolidated subsidiaries. The total amount
of securities authorized thereunder does not exceed 10% of the total assets of
the Registrant and its subsidiaries on a consolidated basis.
26
<PAGE>
(a) Incorporated herein by reference to Exhibit 3.2 to the Company's
registration statement on Form S-1 (File No. 33-13443) effective June 2,
1987.
(b) Incorporated herein by reference to Exhibit 9.1 to the Company's
registration statement on Form S-1 (File No. 33-13443) effective June 2,
1987.
(c) Incorporated herein by reference to Exhibit 9.2 to the Company's report on
Form 10-K filed for the fiscal year ended December 31, 1987.
(d) Incorporated herein by reference to Exhibit 21.0 to the Company's report on
Form 10-K filed for the fiscal year ended December 31, 1988.
(e) Incorporated herein by reference to Exhibit 3.1 to the Company's report on
Form 10-K filed for the fiscal year ended December 31, 1990.
(f) Incorporated herein by reference to Exhibit 10.1 to the Company's report on
Form 10-K filed for the fiscal year ended December 31, 1990.
(g) Incorporated herein by reference to Exhibit 10.3 to material appearing
under the heading of "Executive Compensation" in the Company's Proxy
Statement for the 1995 Annual Meeting of its Stockholders.
(h) Incorporated herein by reference to Exhibit 4.0 to the Company's report on
Form 8-A dated February 6, 1995.
* Executive compensation plans.
D. Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the year ended
December 31, 1994.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 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.
Calgon Carbon Corporation
March 14, 1955 /s/ COLIN BAILEY
----------------- By_______________________________________
(Date) COLIN BAILEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ COLIN BAILEY President, Chief Executive March 14, 1995
------------------------- Officer, Director
COLIN BAILEY
/s/ C. P. SHANNON Senior Vice President, March 14, 1995
------------------------- Chief Financial and
C. P. SHANNON Accounting Officer
/s/ RONALD R. TISCH Executive Vice President March 14, 1995
-------------------------
RONALD R. TISCH
/s/ THOMAS A. McCONOMY Director, Chairman of the March 14, 1995
------------------------- Board
THOMAS A. MCCONOMY
/s/ ROBERT W. CRUICKSHANK Director March 14, 1995
-------------------------
ROBERT W. CRUICKSHANK
/s/ WILLIAM J. GILLIAM Director March 14, 1995
-------------------------
WILLIAM J. GILLIAM
/s/ ARTHUR L. GOESCHEL Director March 14, 1995
-------------------------
ARTHUR L. GOESCHEL
/s/ NICK H. PRATER Director March 14, 1995
-------------------------
NICK H. PRATER
/s/ HARRY H. WEIL Director March 14, 1995
-------------------------
HARRY H. WEIL
/s/ ROGER H. ZANITSCH Director March 14, 1995
-------------------------
ROGER H. ZANITSCH
28
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT METHOD OF PAGE
NO. DESCRIPTION FILING NUMBER
------- ------------ --------- ----------
<C> <S> <C> <C>
3.1 Amended Certificate of Incorporation....... (e)
3.2 By-laws of the Registrant.................. (a)
4.0 Rights Agreement........................... (h)
9.1 Voting Trust Agreement..................... (b)
9.2 Voting Trust Certificate of Amendment...... (c)
10.1* Calgon Carbon Corporation Stock Option (f)
Plan, as Amended...........................
10.3* Officers Incentive Plan of Calgon Carbon (g)
Corporation, as Amended....................
21.0 Subsidiaries of the Company................ (d)
23.0 Consent of Independent Accountants......... Filed herewith
</TABLE>
--------
Note: The Registrant hereby undertakes to furnish, upon request of the
Commission, copies of all instruments defining the rights of holders of long-
term debt of the Registrant and its consolidated subsidiaries. The total amount
of securities authorized thereunder does not exceed 10% of the total assets of
the Registrant and its subsidiaries on a consolidated basis.
(a) Incorporated herein by reference to Exhibit 3.2 to the Company's
registration statement on Form S-1 (File No. 33-13443) effective June 2,
1987.
(b) Incorporated herein by reference to Exhibit 9.1 to the Company's
registration statement on Form S-1 (File No. 33-13443) effective June 2,
1987.
(c) Incorporated herein by reference to Exhibit 9.2 to the Company's report on
Form 10-K filed for the fiscal year ended December 31, 1987.
(d) Incorporated herein by reference to Exhibit 21.0 to the Company's report on
Form 10-K filed for the fiscal year ended December 31, 1988.
(e) Incorporated herein by reference to Exhibit 3.1 to the Company's report on
Form 10-K filed for the fiscal year ended December 31, 1990.
(f) Incorporated herein by reference to Exhibit 10.1 to the Company's report on
Form 10-K filed for the fiscal year ended December 31, 1990.
(g) Incorporated herein by reference to Exhibit 10.3 to the material appearing
under the heading of "Executive Compensation" in the Company's Proxy
Statement for the 1995 Annual Meeting of its Stockholders.
(h) Incorporated herein by reference to Exhibit 4.0 to the Company's report on
Form 8-A dated February 6, 1995.
* Executive compensation plans.
29
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (No. 33-34019) of
Calgon Carbon Corporation of our report dated February 10, 1995, except as to
Note 7, which is as of March 1, 1995, appearing on page 13 of this annual
report on Form 10-K.
PRICE WATERHOUSE LLP
600 Grant Street
Pittsburgh, Pennsylvania 15219-2793
March 23, 1995
30
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 45,376
<SECURITIES> 0
<RECEIVABLES> 50,855
<ALLOWANCES> 0
<INVENTORY> 41,672
<CURRENT-ASSETS> 149,128
<PP&E> 279,437
<DEPRECIATION> 100,289
<TOTAL-ASSETS> 343,484
<CURRENT-LIABILITIES> 65,849
<BONDS> 0
<COMMON> 50,072
0
0
<OTHER-SE> 177,075
<TOTAL-LIABILITY-AND-EQUITY> 343,484
<SALES> 274,244
<TOTAL-REVENUES> 274,244
<CGS> 177,370
<TOTAL-COSTS> 290,971
<OTHER-EXPENSES> 2,186
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 752
<INCOME-PRETAX> (18,586)
<INCOME-TAX> (9,977)
<INCOME-CONTINUING> (8,609)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,609)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
