<PAGE>
UNITED STATES
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 September 30, 2000 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _______ to _______
Commission file number 1-15903
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 November 8, 2000
----------------------------- -------------------------------
Common Stock, $.01 par value 38,812,809 shares
<PAGE>
CALGON CARBON CORPORATION
SEC FORM 10-Q
QUARTER ENDED September 30, 2000
The Quarterly Report on Form 10-Q contains historical information and forward-
looking statements. Statements looking forward in time are included in this
Form 10-Q pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. They involve known and unknown risks and
uncertainties that may cause the Company's actual results in the future to
differ from performance suggested herein. A specific example of such
uncertainties include references to reductions in working capital. In the
context of forward-looking information provided in this Form 10-Q and in other
reports, please refer to the discussion of risk factors detailed in, as well as
the other information contained in the Company's filings with the Securities and
Exchange Commission.
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
Item 2. Management's Discussion and Analysis of Results
------ ------------------------------------------------
of Operations and Financial Condition . . . . .. . . . 9
-------------------------------------
PART II - OTHER INFORMATION
------- -----------------
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . 14
------ -----------------
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 14
------ --------------------------------
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
----------
- 1 -
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
------- --------------------
INTRODUCTION TO THE FINANCIAL STATEMENTS
----------------------------------------
The unaudited interim 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. Management of the Company believes that the disclosures are
adequate to make the information presented not misleading when read in
conjunction with the Company's audited consolidated financial statements and
the notes included therein for the year ended December 31, 1999.
In management's opinion, the unaudited interim consolidated financial
statements reflect all adjustments, which are of a normal and recurring nature,
which are necessary for a fair presentation, in all material respects, of
financial results for the interim periods presented. Operating results for the
first nine months of 2000 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2000.
- 2 -
<PAGE>
CALGON CARBON CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
------------------------------------------------------
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -------------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
-------- -------- -------- --------
Net sales......................... $ 64,275 $ 73,822 $202,349 $225,829
-------- -------- -------- --------
Cost of products sold
(excluding depreciation)........ 41,263 48,405 127,796 145,956
Depreciation and amortization..... 5,067 5,714 15,635 17,568
Selling, general and
administrative expenses......... 10,773 13,064 35,667 40,583
Research and development
expenses........................ 1,847 1,941 5,495 5,828
-------- -------- -------- --------
58,950 69,124 184,593 209,935
-------- -------- -------- --------
Income from operations............ 5,325 4,698 17,756 15,894
Interest income................... 2 31 98 65
Interest expense.................. (1,280) (1,324) (3,733) (3,703)
Other income (expense)--net....... (1,392) (324) (2,352) (992)
-------- -------- -------- --------
Income before income taxes
and minority interest........... 2,655 3,081 11,769 11,264
Provision for income taxes........ 956 1,113 4,246 4,066
-------- -------- -------- --------
Income before minority
interest........................ 1,699 1,968 7,523 7,198
Minority interest................. (134) (168) (244) (112)
-------- -------- -------- --------
Net income........................ 1,565 1,800 7,279 7,086
Common stock dividends............ (1,940) (3,104) (3,880) (9,306)
Re-issuance of treasury stock at
less than cost.................. (8) - (8) -
Retained earnings, beginning
of period....................... 142,710 162,995 138,936 163,911
-------- -------- -------- --------
Retained earnings, end of
period.......................... $142,327 $161,691 $142,327 $161,691
======== ======== ======== ========
Net income per common
share (basic and diluted)........ $ .04 $ .05 $ .19 $ .18
======== ======== ======== ========
Weighted average shares outstanding
Basic............................ 38,812,013 38,802,132 38,806,428 38,771,170
========== ========== ========== ==========
Diluted.......................... 38,937,897 38,837,883 38,875,115 38,782,808
========== ========== ========== ==========
</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>
September 30, December 31,
2000 1999
----------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................... $ 5,109 $ 4,194
Receivables, (net of allowance of $2,780 and
$3,843)...................................... 50,773 58,886
Inventories................................... 41,003 44,368
Other current assets.......................... 8,786 9,032
-------- --------
Total current assets........................ 105,671 116,480
Property, plant and equipment, net............. 151,029 161,752
Intangibles.................................... 74,815 76,620
Other assets................................... 8,874 7,288
-------- --------
Total assets................................ $340,389 $362,140
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt due within one year............ $ 3,686 $ 4,604
Accounts payable and accrued liabilities...... 24,673 30,495
Restructuring reserve......................... 5,974 19,244
Payroll and benefits payable.................. 8,169 8,617
Accrued income taxes.......................... 3,976 2,396
-------- --------
Total current liabilities................... 46,478 65,356
Long-term debt................................. 68,443 76,120
Deferred income taxes.......................... 30,682 26,650
Other liabilities.............................. 11,176 11,020
-------- --------
Total liabilities........................... 156,779 179,146
-------- --------
Minority interest.............................. 1,959 1,878
-------- --------
Commitments and contingencies.................. - -
-------- --------
Shareholders' equity:
Common shares, $.01 par value, 100,000,000
shares authorized, 41,589,067 and
41,582,632 shares issued..................... 416 416
Additional paid-in capital.................... 63,431 63,371
Retained earnings............................. 142,327 138,936
Accumulated other comprehensive income........ 2,551 5,508
-------- --------
208,725 208,231
Treasury stock, at cost, 2,776,258 and
2,780,500 shares............................. (27,074) (27,115)
-------- --------
Total shareholders' equity.................. 181,651 181,116
-------- --------
Total liabilities and
shareholders' equity....................... $340,389 $362,140
======== ========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
- 4 -
<PAGE>
CALGON CARBON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities
------------------------------------
Net income.................................... $ 7,279 $ 7,086
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization............... 15,635 17,568
Employee benefit plan provisions............ 926 1,767
Changes in assets and liabilities - net of
effects from purchase of businesses and
exchange:
(Increase) decrease in receivables........ 6,102 (4,748)
Decrease in inventories.................. 1,417 4,663
Decrease in other current assets......... 76 317
(Decrease) in restructuring reserve....... (12,811) (2,470)
(Decrease) in accounts payable
and accruals............................ (1,157) (4,912)
Increase in long-term deferred
income taxes (net)...................... 4,064 2,399
Other items--net............................ 93 (46)
-------- --------
Net cash provided by
operating activities.................... 21,624 21,624
-------- --------
Cash flows from investing activities
------------------------------------
Purchase of businesses...................... - (791)
Property, plant and equipment expenditures.. (6,665) (7,213)
Proceeds from disposals of equipment........ 139 920
-------- --------
Net cash (used in) investing activities.... (6,526) (7,084)
-------- --------
Cash flows from financing activities
------------------------------------
Net (repayments) borrowings................. (7,754) (1,470)
Treasury stock purchases.................... - (129)
Common stock dividends...................... (5,820) (9,307)
Other....................................... (8) -
-------- --------
Net cash (used in) financing activities.... (13,582) (10,906)
-------- --------
Effect of exchange rate changes on cash....... (601) (1,124)
-------- --------
Increase in cash and cash equivalents......... 915 2,510
Cash and cash equivalents, beginning
of period................................... 4,194 1,325
-------- --------
Cash and cash equivalents, end of period...... $ 5,109 $ 3,835
======== ========
</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. Reclassifications: Certain reclassifications have been made to the 1999
financial statements to conform to the 2000 presentation.
<TABLE>
<CAPTION>
2. Inventories:
September 30, 2000 December 31, 1999
------------------ -----------------
<S> <C> <C>
Raw materials $ 9,322 $ 9,453
Finished goods 31,681 34,915
-------- -------
$ 41,003 $ 44,368
======== ========
<CAPTION>
3. Supplemental Cash Flow Information:
Nine Months Ended September 30,
-------------------------------
2000 1999
----------- --------
<S> <C> <C>
Cash paid during the period for:
Interest $ 3,758 $ 3,994
Income taxes, (net of refunds) $ (1,022) $ 978
======== =======
Bank debt:
Borrowings $ 6,466 $ 6,057
Repayments (14,220) (7,527)
-------- -------
Net repayments of bank debt $ (7,754) $(1,470)
======== =======
</TABLE>
4. A common stock dividend was declared during the quarter ended September 30,
2000 for $.05 per common share. A common stock dividend was declared during the
quarter ended September 30, 1999 for $.08 per common share. A common stock
dividend in the amount of $.05 per common share was declared on October 17,
2000.
5. Comprehensive income (loss):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- -----------------
2000 1999 2000 1999
------- ------- ------- --------
<S> <C> <C> <C> <C>
Net income $ 1,565 $1,800 $ 7,279 $ 7,086
Other comprehensive income
(loss), net of tax provision
(benefit) of ($872), $679,
($1,592) and ($1,386)
respectively (1,620) 1,261 (2,957) (2,574)
------- ------ ------- -------
Comprehensive income (loss) $ (55) $3,061 $ 4,322 $ 4,512
======= ====== ======= =======
</TABLE>
The only matter contributing to the other comprehensive income (loss) was the
foreign currency translation adjustment.
- 6 -
<PAGE>
6. Segment Information:
Prior to January 1, 2000, the Company had two reportable segments: Activated
Carbon and Engineered Systems. Each of these segments produced, designed and
marketed products and services specifically developed for the purification,
separation and concentration of liquids and gases and both sold to the same
markets.
The Company, as a result of a new strategy to transform the Company from a
product to a service and solutions provider, has changed the structure of its
internal organization in a manner that causes the composition of its
reportable segments to change. As a result, the Company has four reportable
segments: Activated Carbon, Service, Engineered Solutions and Consumer
Health. These reportable segments are comprised of strategic business units
which offer different products and services. The Company evaluates segment
performance based primarily on economic profit (as defined by the Company)
and operating income.
The Activated Carbon segment manufactures granular activated carbon for use
in applications to remove organic compounds from liquids, gases, water and
air. The Service segment consists of reactivation of spent carbon and the
leasing, monitoring and maintenance of mobile carbon adsorption equipment.
The Engineered Solutions segment provides solutions to customer's air and
water process problems through the design, fabrication and operation of
systems that utilize a combination of the Company's enabling technologies:
carbon adsorption, ultraviolet light and advanced ion exchange separation.
The Consumer Health segment brings the Company's industrial purification
technologies directly to the consumer in the form of products and services.
The Company has restated the segment information for the three and nine
months ended September 30, 1999, to conform to the 2000 presentation.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2000 1999 2000 1999
------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales
Activated Carbon $ 31,746 $ 38,895 $ 95,390 $109,075
Service 20,662 22,050 67,157 72,835
Engineered Solutions 7,972 8,290 22,574 27,783
Consumer Health 3,895 4,587 17,228 16,136
------- -------- -------- --------
$ 64,275 $ 73,822 $202,349 $225,829
======== ======== ======== ========
Income (loss) from operations
before depreciation and
amortization
Activated Carbon $ 6,894 $ 7,496 $ 19,825 $ 17,210
Service 4,117 4,323 15,492 17,595
Engineered Solutions 482 (991) (1,552) (1,254)
Consumer Health (1,101) (416) (374) (89)
------- -------- -------- --------
10,392 10,412 33,391 33,462
Depreciation and amortization
Activated Carbon 2,406 3,054 7,502 9,038
Service 1,951 1,428 5,125 4,545
Engineered Solutions 452 971 2,160 3,152
Consumer Health 258 261 848 833
------- -------- -------- --------
5,067 5,714 15,635 17,568
Income from operations after
depreciation and amortization $ 5,325 $ 4,698 $ 17,756 $ 15,894
======= ======== ======== ========
</TABLE>
- 7 -
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Reconciling items
Interest income 2 31 98 65
Interest expense (1,280) (1,324) (3,733) (3,703)
Other expense - net (1,392) (324) (2,352) (992)
-------- -------- ------- --------
Consolidated income before
income taxes and
minority interest $ 2,655 $ 3,081 $11,769 $ 11,264
======== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------ -----------------
<S> <C> <C>
Total Assets
Activated Carbon $153,882 $162,736
Service 90,257 89,064
Engineered Solutions 79,830 90,672
Consumer Health 16,420 19,668
-------- --------
$340,389 $362,140
======== ========
</TABLE>
- 8 -
<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 quarter ended September 30, 2000 decreased
by $9.5 million or 12.9% while sales for the year-to-date period then ended were
down by $23.5 million or 10.4% versus the similar 1999 periods. (An analysis of
sales by segment can be found in Note 6 of Selected Notes to Financial
Statements.) Net sales for the activated carbon segment decreased by $7.1
million or 18.4% and $13.7 million or 12.5% for the quarter and year-to-date
periods ended September 30, 2000 respectively, versus the quarter and year-to-
date periods ended September 30, 1999. Both the quarter and year-to-date
results included a combination of net losses due to foreign currency translation
associated with the strengthening of the U.S. dollar versus the Belgian franc
and German deutche mark, partially offset by its weakening compared to the
Japanese yen, and losses associated with exiting of unprofitable business areas.
Sales to the service segment in the third quarter of 2000 decreased from the
third quarter of 1999 by $1.4 million or 6.3% and decreased from the year-to-
date period ended September 30, 1999 by $5.7 million or 7.8%. Reductions for
both periods included losses associated with foreign currency translation in
Europe, as stated previously, the non-repeat of large equipment sales that
occurred in 1999 and the decision by some customers to extend the time between
carbon reactivation. The year-to-date decline also was the result of the non-
repeat of emergency related sales of temporary systems that occurred in 1999.
Revenues associated with the engineered solutions segment declined by $0.3
million or 3.8% for the third quarter of 2000 versus the third quarter of 1999
and by $5.2 million or 18.7% for the year-to-date period ended September 30,
2000 versus the year-to-date period ended September 30, 1999. Both decreases
were due to reduced volume of projects. Sales to the consumer health segment
decreased by $0.7 million or 15.1% for the quarter ended September 30, 2000
versus the similar 1999 quarter and increased by $1.1 million or 6.8% for the
year-to-date period in 2000 compared to the year-to-date period in 1999. The
decrease for the quarter was primarily due to decreased demand for charcoal and
carbon cloth products. The year-to-date increase was the result of strong
charcoal sales partially offset by the adverse effect of foreign currency
translation. The total sales decrease for all segments due to the effect of
currency translation was $1.9 million for the quarter and $5.8 million for the
year-to-date period.
Gross profit, before depreciation, as a percentage of net sales was 35.8% for
the quarter ended September 30, 2000. This compares to 34.4% for the quarter
ended September 30, 1999. For the year-to-date period, gross profit, before
depreciation, as a percentage of net sales was 36.8% in 2000 versus 35.4% in the
1999 period. This 1.4 percentage point improvement for both the quarter and
year-to-date was primarily the result of the implementation of cost reduction
programs at the Company's North American manufacturing facilities, cost
reductions associated with the May shut-down of the European activated carbon
producing facility and a minor effect from price increases. This result also
reflects the exiting of unprofitable business areas.
- 9 -
<PAGE>
The depreciation and amortization decreases of $.6 million during the quarter
ended September 30, 2000 versus the quarter ended September 30, 1999 and $1.9
million for the year-to-date period ended September 30, 2000 compared to the
year-to-date period ended September 30, 1999 were related to fourth quarter 1999
asset write-offs that were primarily included in the restructuring charge.
Combined, selling, general and administrative expenses and research and
development expenses in the 2000 quarter period were below the 1999 quarter
period by $2.4 million. This result was the net effect of cost reduction
actions taken in the fourth quarter of 1999 and first half of 2000. These
reductions were offset by costs associated with the establishment of the
Pittsburgh, Pennsylvania and Feluy, Belgium centers of excellence and increased
costs related to promotions for the Company's Consumer products. This
category's results for the year-to-date periods then ended reflected a $5.2
million reduction due to the aforementioned circumstances.
Other income (expense) net increased $1.1 million for the comparable quarter of
2000 versus 1999 mainly due to foreign exchange losses related to the settlement
of affiliate transactions at unfavorable exchange rates. The same reasoning
applies to the year-to-date increase of $1.4 million.
Interest expenses for the quarter and year-to-date periods ended September 30,
2000 and September 30, 1999 remained relatively constant. This was the net
effect of a reduced debt level and increased interest rates on variable rate
debt.
The effective tax rate for the quarter and year-to-date periods ended September
30, 2000 was 36% versus similar effective tax rates for the comparable periods
in 1999.
Financial Condition
-------------------
Working Capital and Liquidity
-----------------------------
Cash flows from operating activities were $21.6 million for the year-to-date
periods ended September 30, 2000 and 1999. The Company's concentrated efforts
on reducing working capital were offset by the $12.8 million in payments related
largely to the restructuring in the fourth quarter of 1999.
Common stock dividends paid during the quarter ended September 30, 2000
represent $.05 per common share while the payment in the comparable 1999 period
represented $.08 per common share.
A stock repurchase program was approved by the Board of Directors on October 17,
2000 that will allow the Company to repurchase up to 500,000 shares of common
stock.
Total debt at September 30, 2000 was $72.1 million, a decrease, including
exchange, of $8.6 million from December 31, 1999.
The Company expects that cash from operating activities plus cash balances and
available external financing will be sufficient to meet its future cash
requirements.
- 10 -
<PAGE>
The Company has a $113.4 million credit facility consisting of an $86.8 million
five-year revolving credit facility expiring in May 2004 and a $26.6 million
364-day revolving credit facility renewed in May 2000, which expires in May
2001. Included in this facility is a letter of credit subfacility which may not
exceed $30.0 million. At September 30, 2000 there was $3.6 million outstanding
under the 364-day revolving credit agreement.
Restructuring of Operations
---------------------------
The Company currently has two separate restructuring plans requiring
continued cash outlays still in progress as of the period ended September 30,
2000. The latter of the two initiatives was undertaken during the fourth
quarter of 1999 while the former commenced in the third quarter of 1998. The
details of both restructuring plans are outlined below.
During the fourth quarter of 1999, the Company adopted a strategy aimed at
lowering costs to serve the activated carbon markets, investing to grow its
service and solutions businesses and repositioning its proven technologies to
bring more value to consumers. In order to achieve these goals, the Company has
been reorganized as a globally integrated business with emphasis on becoming a
service business. As part of this strategy, three activated carbon production
lines have been shut down and dismantled. One of these lines was at the Feluy,
Belgium location, another was at Neville Island, Pennsylvania and the third was
at the Company's Big Sandy, Kentucky facility. Associated with cessation of
activated carbon production activity at the Feluy plant, office activity has
been moved from Brussels, Belgium to the plant. This has resulted in the
formation of a center of excellence at Feluy for the growth of the service
business. Operations at several other locations have been consolidated to gain
global productivity and centralized processes to promote corporate-wide sharing
of technical, operational and financial information. Included in this
consolidation was the transfer of production and administration activities from
Markham, Ontario, Canada and Lakeland, Florida to Pittsburgh, Pennsylvania to
form a center of excellence for engineered solutions. All of the aforementioned
strategy-related actions have been completed. With the exception of asset write-
offs, these restructuring charges require cash outlays. The implementation was
begun in December 1999 and is expected to be completed before the end of the
fourth quarter of 2000 with minor contractual cash outlays being deferred
through the second quarter of 2006. The number of employee separations from this
restructuring is expected to be at least 150. These separations have occurred
primarily at the locations impacted by the strategy and were spread between
plant personnel and administrative positions. Additional hires will result in a
net staff reduction of at least 130 positions. Separations through September 30,
2000 were 147.
In the third quarter of 1998, the Company initiated a worldwide plan to reduce
costs and realign the organizational structure. The implementation was begun in
September 1998 and is essentially completed. Contractual cash outlays for
employee severance were made in the third quarter of 2000 and others will
continue during the balance of the year. With the exception of the asset write-
offs, these restructuring charges required cash outlays. The number of planned
employee separations from this restructuring was 131. All separations have been
completed and were in line with the plan.
- 11 -
<PAGE>
The restructuring reserve activity for the nine months ended September 30, 2000
was:
<TABLE>
<CAPTION>
Balance Balance
($000) 1-1-00 Payments Exchange 9-30-00
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1999 Plan
---------
Employee severance and
termination benefit costs $ 13,062 $(10,584) $ - $ 2,478
Other costs 4,882 (1,763) (459) 2,660
-------- -------- ------ --------
17,944 (12,347) (459) 5,138
-------- -------- ------ --------
1998 Plan
---------
Employee severance and
termination benefit costs 1,091 (380) - 711
Other costs 209 (84) - 125
-------- -------- ------ --------
1,300 (464) - 836
-------- -------- ------ --------
$ 19,244 $(12,811) $ (459) $ 5,974
======== ======== ====== ========
</TABLE>
Management believes the reserve balances are adequate.
- 12 -
<PAGE>
Capital Expenditures and Investments
------------------------------------
Capital expenditures for property, plant and equipment totaled $6.7 million
for the nine-month period ended September 30, 2000 compared to expenditures of
$7.2 million for the same period in 1999. The decrease was primarily due to
non-recurring expenditures associated with the recently implemented business
information system. Total capital expenditures are currently expected to be
approximately $10.4 million for the year ending December 31, 2000.
The purchase of business expenditures for the period ended September 30, 1999
represent the continuation of previously accrued cash expenditures for Advanced
Separation Technologies' (a 1996 acquisition) project failures for projects
completed before the acquisition.
Year 2000 Information Management
--------------------------------
The Company encountered no unusual problems during the rollover to the Year
2000. To date, no Year 2000-related problems have been encountered with third
parties. Until all processes and systems are run in production for the first
time after the rollover and through the year, there is the potential for date-
related problems. The Company plans to continue monitoring its processes and
systems to ensure dates and date-related information continue to be processed
correctly.
New Accounting Pronouncements
-----------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". In June 2000, the FASB issued
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an amendment of FASB Statement No. 133", which amends certain
provisions of SFAS No. 133 to clarify four areas causing difficulties in
implementation. These new standards require recognition of all derivatives as
either assets or liabilities at fair value. They may result in additional
volatility in both current period earnings and other comprehensive income as a
result of recording recognized and unrecognized gains and losses resulting from
changes in the fair value of derivative instruments. At adoption, this new
standard requires a comprehensive review of all outstanding derivative
instruments to determine whether or not their use meets the hedge accounting
criteria. It is possible that there will be derivative instruments employed in
our businesses that do not meet all of the designated hedge criteria and they
will be reflected in income on a mark-to-market basis. We have appointed a
team to implement SFAS No. 133 on a global basis for the Company. This team has
been implementing a SFAS No. 133 compliant risk management policy, globally
educating both financial and non-financial personnel, reviewing contracts for
potential effect and addressing other SFAS No. 133 related issues. Based upon
the strategies currently used by the Company and the level of activity related
to forward exchange contracts and commodity-based derivative instruments in
recent periods, the Company does not anticipate the effect of adoption to have a
material impact on either financial position or results of operations. The
effective date of SFAS No. 133 was amended by SFAS No. 137. The Company plans
to adopt the standard effective January 1, 2001, as required.
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<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
------ -----------------
There were no significant legal proceedings for the quarter ended
September 30, 2000. Refer to the June 30, 2000 10-Q for significant
proceedings occurring during the quarter then ended.
Item 6. Exhibits and Reports on Form 8-K
------ --------------------------------
(c) Exhibits
None
(d) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended September
30, 2000.
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<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: November 13, 2000 By /s/ William E. Cann
---------------------------------
William E. Cann
Senior Vice President,
Chief Financial Officer
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