<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1996 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to _______
Commission file number 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
incorporation or organization) Identification No.)
P. O. Box 717, Pittsburgh, PA 15230-0717
-----------------------------------------
(Address of principal executive offices)
(Zip Code)
(412) 787-6700
----------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ______
-----
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes_____ No ______
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1996
----------------------------- ----------------------------
Common Stock, $.01 par value 40,429,860 shares
<PAGE>
CALGON CARBON CORPORATION
SEC FORM 10-Q
QUARTER ENDED JUNE 30, 1996
I N D E X
---------
PART 1 - FINANCIAL INFORMATION
- ------ ---------------------
Item 1. Financial Statements
------ --------------------
Page
----
Introduction to the Financial Statements . . . . . . . 2
Consolidated Statement of Income and
Retained Earnings . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheet . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows . . . . . . . . . 5
Selected Notes to Financial Statements . . . . . . . . 6
Report of Independent Accountants on Review of
Unaudited Interim Financial Information. . . . . . . 7
Item 2. Management's Discussion and Analysis of Results
------ -----------------------------------------------
of Operations and Financial Condition . . . . . . . . . . . 8
-------------------------------------
PART II - OTHER INFORMATION
- ------- -----------------
Item 4. Submission of Matters to a Vote of Security Holders. . . 11
------ ---------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 11
------ --------------------------------
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
- ----------
- 1 -
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
- ------- --------------------
INTRODUCTION TO THE FINANCIAL STATEMENTS
----------------------------------------
The consolidated financial statements included herein have been prepared by
Calgon Carbon Corporation (the Company), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading when
read in conjunction with the Company's consolidated financial statements and the
notes included therein for the year ended December 31, 1995.
The financial information presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of
management,necessary for a fair statement of the results for the interim periods
presented. The results for interim periods are not necessarily indicative of
results to be expected for the year.
Price Waterhouse LLP has made a review based on procedures adopted by the
American Institute of Certified Public Accountants of the unaudited consolidated
financial statements included in this filing on Form 10-Q. As stated in its
report on page 7, Price Waterhouse LLP did not audit and, accordingly, does not
express an opinion on the unaudited consolidated financial statements. Price
Waterhouse LLP is not subject to the liability provisions of section 11 of the
Securities Act of 1933 for their report on the unaudited consolidated financial
statements because their report is not a "report" within the meaning of sections
7 and 11 of the Act.
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<PAGE>
CALGON CARBON CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
------------------------------------------------------
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -------------------
1996 1995 1996 1995
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Net sales...................................................................... $ 74,945 $ 75,968 $143,934 $144,777
-------- -------- -------- --------
Cost of products sold
(excluding depreciation)...................................................... 47,194 48,076 90,423 92,245
Depreciation................................................................... 4,743 4,632 9,601 9,154
Selling, general and
administrative expenses....................................................... 12,087 12,395 23,917 24,434
Research and development
expenses...................................................................... 1,653 1,456 3,124 2,780
-------- -------- -------- --------
65,677 66,559 127,065 128,613
-------- -------- -------- --------
Income from operations......................................................... 9,268 9,409 16,869 16,164
Interest income................................................................ 319 347 646 707
Interest expense............................................................... (154) (200) (328) (412)
Other income (expense)--net.................................................... 90 (438) (73) (1,078)
-------- -------- -------- --------
Income before income taxes..................................................... 9,523 9,118 17,114 15,381
Provision for income taxes..................................................... 3,438 3,067 6,247 5,411
-------- -------- -------- --------
Net income..................................................................... 6,085 6,051 10,867 9,970
Common stock dividends......................................................... (3,233) (3,031) (6,467) (26,272)
Retained earnings, beginning
of period..................................................................... 154,883 145,003 153,335 164,325
-------- -------- -------- --------
Retained earnings, end of
period........................................................................ $157,735 $148,023 $157,735 $148,023
======== ======== ======== ========
Net income per common share.................................................... $.15 $.15 $.27 $.25
======== ======== ======== ========
Weighted average shares
outstanding...................................................................40,418,860 40,418,860 40,418,860 40,418,860
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
- 3 -
<PAGE>
CALGON CARBON CORPORATION
CONSOLIDATED BALANCE SHEET
--------------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $ 33,510 $ 40,089
Receivables................................. 55,179 55,779
Inventories................................. 38,693 43,643
Other current assets........................ 12,803 8,518
-------- --------
Total current assets...................... 140,185 148,029
Property, plant and equipment, net........... 173,277 175,952
Other assets................................. 23,890 14,020
-------- --------
Total assets.............................. $337,352 $338,001
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt due within one year.......... $ 3,826 $ 8,514
Accounts payable and accrued liabilities.... 24,149 28,252
Restructuring reserve....................... 8,949 11,616
Payroll and benefits payable................ 11,506 13,546
Accrued income taxes........................ 593 1,517
-------- --------
Total current liabilities................. 49,023 63,445
Long-term debt............................... 15,737 5,608
Deferred income taxes........................ 43,845 41,959
Other liabilities............................ 8,241 8,802
-------- --------
Total liabilities......................... 116,846 119,814
-------- --------
Shareholders' equity:
Common shares, $.01 par value, 100,000,000
shares authorized, 41,424,960
shares issued.............................. 414 414
Additional paid-in capital.................. 61,986 61,986
Retained earnings........................... 157,735 153,335
Cumulative translation adjustments.......... 12,699 14,780
-------- --------
232,834 230,515
Treasury stock, at cost, 1,006,100 shares... (12,328) (12,328)
-------- --------
Total shareholders' equity................ 220,506 218,187
-------- --------
Total liabilities and
shareholders' equity..................... $337,352 $338,001
======== ========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
- 4 -
<PAGE>
CALGON CARBON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
Increase (decrease) in Cash and Cash Equivalents
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------
1996 1995
------- --------
<S> <C> <C>
Cash flows from operating activities
- ------------------------------------
Net income........................................ $10,867 $ 9,970
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization................... 9,692 9,220
Employee benefit plan provisions................ 266 386
Changes in assets and liabilities - net of
exchange:
(Increase) decrease in receivables............ 1,292 (997)
(Increase) decrease in inventories............ 4,866 (6,692)
(Increase) in other current assets............ (3,615) (1,553)
(Decrease) in restructuring reserve........... (2,055) (3,673)
Increase (decrease) in accounts payable
and accruals................................. (7,306) 3,505
Increase in long-term deferred
income taxes (net)........................... 5,215 5,230
Other items--net................................ (1,080) (921)
------- --------
Net cash provided by
operating activities.......................... 18,142 14,475
------- --------
Cash flows from investing activities
- ------------------------------------
Purchase of businesses.......................... (18,544) -
Property, plant and equipment expenditures...... (5,562) (4,777)
Proceeds from disposals of equipment............ 209 172
------- --------
Net cash (used in) investing activities....... (23,897) (4,605)
------- --------
Cash flows from financing activities
- ------------------------------------
Net proceeds from borrowings.................... 6,005 1,673
Common stock dividends.......................... (6,467) (26,272)
------- --------
Net cash (used in)
financing activities......................... (462) (24,599)
------- --------
Effect of exchange rate changes on cash........... (362) 197
------- --------
(Decrease) in cash and cash equivalents........... (6,579) (14,532)
Cash and cash equivalents, beginning
of period........................................ 40,089 45,376
------ ------
Cash and cash equivalents, end of period.......... $33,510 $30,844
======= =======
</TABLE>
The accompanying notes are an integral part
of these financial statements.
- 5 -
<PAGE>
CALGON CARBON CORPORATION
SELECTED NOTES TO FINANCIAL STATEMENTS
--------------------------------------
(Dollars in Thousands)
(Unaudited)
1. Inventories:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
---------------- -----------------
<S> <C> <C>
Raw materials $ 11,034 $ 13,960
Finished goods 27,659 29,683
-------- --------
$ 38,693 $ 43,643
======== ========
2. Supplemental Cash Flow Information:
Six Months Ended June 30,
------------------------------
1996 1995
-------- --------
Cash paid during the period for:
Interest $ 338 $ 512
Income taxes (refunds) net $ 2,730 $ (31)
-------- --------
Bank debt:
Borrowings $ 18,908 $ 21,611
Repayments (12,903) (19,938)
-------- --------
Net proceeds from borrowings $ 6,005 $ 1,673
======== ========
</TABLE>
3. Common stock dividends declared during the six months ended June 30, 1996
were $.16 per common share. Common stock dividends declared during the six
months ended June 30, 1995 were $.65 per common share. This consisted of a
special dividend of $.50 per common share and normal dividends of $.15 per
common share.
4. Restructuring Reserve:
The Company recorded restructuring charges in 1994 and 1993. (Details of
such charges are shown in the "Restructuring Charges" note to the 1995
financial statements in the annual report). Activity and adjustments to the
Restructuring Reserve for the period January 1 through June 30, 1996 are as
follows:
<TABLE>
<CAPTION>
Currency
Balance Translation Balance
Jan. 1, 1996 Payments Adjustments June 30, 1996
------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
Employee separations $ 1,900 $( 734) $ (90) $1,076
Demolition, disposition,
site protection and environ-
mental costs 9,716 ( 1,321) (522) 7,873
------- -------- ----- ------
Total $11,616 $( 2,055) $(612) $8,949
======= ======== ===== ======
</TABLE>
- 6 -
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of
Calgon Carbon Corporation
We have reviewed the consolidated balance sheet of Calgon Carbon Corporation
and its subsidiaries as of June 30, 1996 and the related consolidated
statements of income and retained earnings and of cash flows for the three-
month and six-month periods ended June 30, 1996 and 1995. This financial
information is the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying interim financial information for it to be
in conformity with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1995, and the
related consolidated statements of income, shareholders' equity and cash
flows for the year then ended (not presented herein), and in our report dated
February 13, 1996, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the accompanying consolidated balance
sheet information as of December 31, 1995 is fairly stated in all material
respects in relation to the consolidated balance sheet from which it has been
derived.
PRICE WATERHOUSE LLP
Pittsburgh, PA
August 9, 1996
- 7 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
------ --------------------------------------------------
Operations and Financial Condition
----------------------------------
This discussion should be read in connection with the information
contained in the Consolidated Financial Statements and Selected Notes to
Financial Statements.
Results of Operations
---------------------
Consolidated net sales for the three months ended June 30, 1996
decreased by $1.0 million or 1.3% and consolidated net sales for the six-
month period then ended decreased by $.8 million or .6%. Net sales to the
industrial process markets of $33.9 million and $67.9 million for the three
and six month periods ended June 30, 1996 were below the comparable 1995
periods by $2.2 million or 6.1% and $2.8 million or 3.9%. The decreases for
both periods were primarily caused by declines in the European chemical
category due to the cessation of production at the Brilon-Wald, Germany
plant, which was closed in 1995, and to declines in the United States
cigarette and Asia-Pacific energy areas. Net sales to the environmental
markets for the three and six-month periods ended June 30, 1996 were $31.9
million and $63.0 million, respectively, representing increases of $.2
million or .7% and $1.2 million or 1.9% over comparable 1995 periods. The
increases for both the quarter and six months resulted from improvements in
the United States municipal category combined with revenues from the recently
acquired perox-pure/TM/ business operations of Vulcan Peroxidation Systems
Inc. These increases were partially offset by decreases in the European
municipal category. The consumer area reported sales for the quarter of $9.1
million, which resulted in an increase of $1.0 million or 11.9%, and $13.0
million for the six months ended June 30, 1996 resulting in an increase of
$.7 million or 6.1%. Both increases were due to improved barbecuing weather
conditions in Germany. The strengthening of the U.S. dollar relative to the
European currencies reduced sales revenues by $2.1 million in the quarter.
Gross profit, before depreciation, as a percentage of net sales for the three
and six-month periods ended June 30, 1996 were 37.0% and 37.2%, respectively.
These rates compare to 36.7% and 36.3% for the comparable 1995 periods,
respectively. Both periods experienced slight increases due to the net
effect of improved pricing partially offset by higher natural gas costs and
higher-than-normal manufacturing costs for coconut-based products.
Depreciation expense for the three months ended June 30, 1996 and for the
six-month period then ended increased by $.1 million and $.4 million versus
the three and six months ended June 30, 1995, respectively, due to normal,
ongoing capital spending.
Selling, general and administrative and research and development expenses for
the three and six months ended June 30, 1996 were $13.7 million and $27.0
million, respectively, and were slightly reduced from 1995.
- 8 -
<PAGE>
Other income (expense) -- net for the three and six months ended June 30,
1996 were favorable versus the comparable periods ended June 30, 1995 by $.5
million and $1.0 million due primarily to net foreign exchange transaction
gains in 1996 versus losses in 1995.
The effective tax rates for the three and six months ended June 30, 1996 were
36.1% and 36.5%, respectively. These rates represented increases versus the
three and six-month periods ended June 30, 1995 of 2.5% and 1.3%,
respectively, due primarily to increases in foreign taxes in excess of the
United States statutory rate.
Financial Condition
-------------------
Working Capital and Liquidity
-----------------------------
Historically, the Company has been a net generator of cash, providing
sufficient funds on an annual basis for its debt service, working capital,
capital expenditures and dividend requirements. The Company expects to
continue to generate significant cash from operations in the future. During
the quarter ended June 30, 1996, the Company obtained a Canadian dollar term
loan from a Canadian bank in the amount of $10.3 million, which is payable in
July 2001. This borrowing was used to finance the Canadian acquisition,
which is discussed later in this report. The Company also has two United
States credit facilities of $10 million each, expiring in April 1997 and May
1997 and a German credit facility in the amount of $16.4 million with a
duration of "until further notice". Based upon its present financial
position and history of operations, it is believed that these credit
facilities and cash flow from operations will provide sufficient liquidity to
cover debt service and future working capital, capital expenditure and
dividend requirements.
Net cash provided by operating activities was $18.1 million for the six-month
period ended June 30, 1996. This represented an increase of $3.7 million
from the six-month period ended June 30, 1995. This increase was the result
of increased net income and reduced accounts receivable and inventory in the
current period, partially offset by a decrease in accounts payable and
accruals in the current period.
Restructuring of Operations
---------------------------
The Company continued to execute its plan to dismantle the Brilon-Wald
plant in Germany and to pay liabilities recognized as of December 31, 1994.
The plant was closed and employees were separated in 1995. The demolition of
the plant and cash outlays from internally generated funds are expected to be
completed substantially in 1996. Evaluations of demolition, disposition,
site protection and environmental costs continue and the existing reserves
are believed to be adequate.
Capital Expenditures and Investments
------------------------------------
Capital expenditures for property, plant and equipment totaled $5.6
million for the six months ended June 30, 1996 compared to expenditures of
$4.8 million for the same period in 1995. The major portion of the
1996 expenditures was for
- 9 -
<PAGE>
continuing improvements to a production line at the Big Sandy, Kentucky plant
($1.1 million) and domestic service customer capital ($1.9 million). Capital
expenditures for the year 1996 are currently projected to be approximately
$15 million.
On February 20, 1996, the Company completed the acquisition of the perox-
pure/TM/ business operations of Vulcan Peroxidation Systems Inc. The
purchase price was $7.6 million. On June 3, 1996, the Company purchased all
the outstanding common stock of Solarchem Enterprises Inc. of Markham,
Ontario. The purchase price was $10.9 million. Because these transactions
were not material to the consolidated financial position or results of
operations of the Company, no pro-forma information has been included in this
report.
- 10 -
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
------- ---------------------------------------------------
The annual meeting of stockholders was held April 23, 1996. In connection
with the meeting, proxies were solicited pursuant to the Securities Exchange
Act. The following are the voting results on proposals considered and voted
upon at the meeting, all of which were described in the proxy statement.
1. All nominees for director listed in the proxy statement were elected.
<TABLE>
<CAPTION>
Votes For Votes Withheld
---------- --------------
<S> <C> <C>
Nick H. Prater 35,920,333 234,660
Seth E. Schofield 35,999,527 155,466
Harry H. Weil 35,646,204 508,789
Robert L. Yohe 36,011,533 143,460
</TABLE>
The following directors continued in office after the meeting:
Class of 1997
-------------
Colin Bailey
Ronald R. Tisch
Roger H. Zanitsch
Class of 1998
-------------
Robert W. Cruickshank
Arthur L. Goeschel
Thomas A. McConomy
2. Price Waterhouse LLP was elected as the independent accountants for
1996. (For - 36,081,630; Against - 33,127; Abstained - 40,236).
Item 6. Exhibits and Reports on Form 8-K
------- --------------------------------
(a) Exhibits
15 Letter from Price Waterhouse LLP regarding
unaudited interim financial information.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter
ended June 30, 1996.
- 11 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CALGON CARBON CORPORATION
-------------------------
(REGISTRANT)
Date: August 9, 1996 By /s/R. Scott Keefer
--------------------------------
R. Scott Keefer
Sr. Vice President-Finance,
Chief Financial Officer
- 12 -
<PAGE>
Exhibit No. 15
August 9, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Ladies and Gentlemen:
We are aware that Calgon Carbon Corporation has included our report dated
August 9, 1996 (issued pursuant to the provisions of Statement on Auditing
Standards No. 71) in the Prospectuses constituting part of its Registration
Statements on Forms S-8 (No. 33-34019 and No. 333-01019). We are also aware
of our responsibilities under the Securities Act of 1933.
Yours very truly,
Price Waterhouse LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 33,510
<SECURITIES> 0
<RECEIVABLES> 55,179
<ALLOWANCES> 0
<INVENTORY> 38,693
<CURRENT-ASSETS> 140,185
<PP&E> 301,591
<DEPRECIATION> 128,314
<TOTAL-ASSETS> 337,352
<CURRENT-LIABILITIES> 49,023
<BONDS> 0
0
0
<COMMON> 50,072
<OTHER-SE> 170,434
<TOTAL-LIABILITY-AND-EQUITY> 337,352
<SALES> 143,934
<TOTAL-REVENUES> 143,934
<CGS> 90,423
<TOTAL-COSTS> 127,065
<OTHER-EXPENSES> 73
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 328
<INCOME-PRETAX> 17,114
<INCOME-TAX> 6,247
<INCOME-CONTINUING> 10,867
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,867
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
