<PAGE> 1
Part I
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995
(1) 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 0-30067
PVC CONTAINER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-2616435
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
401 Industrial Way West, Eatontown, New Jersey 07724
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (908) 542-0060
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-- --
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Class Outstanding at March 31, 1995
Common $.01 par value 6,761,813 shares
<PAGE> 2
<TABLE>
<CAPTION>
Part I
CONTENTS
PAGE
NO.
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets - March 31, 1995 and June 30, 1994 3
Consolidated Statements of Income - Three Months Ended March 31,
1995 and 1994 and Nine Months Ended March 31, 1995 and 1994 4
Consolidated Statements of Cash Flows - Nine Months Ended March 31,
1995 and 1994 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition and
Results of Operations 8-9
PART II. OTHER INFORMATION 10
</TABLE>
<PAGE> 3
Part I
PVC Container Corporation
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION> MARCH JUNE
31, 1995 30, 1994
----------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 804,198 $ 517,681
Accounts receivable - net of allowances 8,925,391 7,252,500
Inventories 6,875,553 6,094,269
Prepaid expenses and other current assets 271,282 192,433
Deferred tax assets 774,949 659,481
-----------------------------
Total current assets 17,651,373 14,716,364
Properties and equipment at cost - net of accumulated
depreciation
17,867,848 17,442,885
-----------------------------
$ 35,519,221 $32,159,249
=============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,221,539 $ 6,867,429
Accrued expenses 2,130,624 1,630,637
Income taxes payable 649,486 181,518
Current portion of long-term debt 2,011,365 1,405,067
-----------------------------
Total current liabilities 12,013,014 10,084,651
Long-term debt 10,530,591 10,057,972
Deferred income taxes 1,215,191 1,155,191
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $1.00, authorized 1,000,000
shares, none issued
Common stock, par value $.01, authorized 10,000,000
shares, 6,761,813 shares issued and outstanding as of
March 31, 1995 and June 30, 1994, respectively 67,618 67,618
Capital in excess of par value 2,971,498 2,971,498
Retained earnings 8,721,309 7,822,319
-----------------------------
Total stockholders' equity 11,760,425 10,861,435
-----------------------------
$ 35,519,221 $32,159,249
=============================
</TABLE>
See accompanying notes.
<PAGE> 4
PART I
PVC CONTAINER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31 MARCH 31
--------------------------------------------------------
1995 1994 1995 1994
--------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $15,425,420 $9,856,238 $39,661,030 $26,582,840
Cost and expenses:
Cost of goods sold (exclusive of
depreciation and amortization
expense shown separately
below) 12,150,011 7,978,939 32,112,753 21,641,197
Selling, general and
administrative expenses 1,095,964 732,871 2,906,532 2,130,003
Depreciation and amortization 683,198 606,752 2,003,107 1,764,971
--------------------------------------------------------
13,929,173 9,318,562 37,022,392 25,536,171
--------------------------------------------------------
Income from operations 1,496,247 537,676 2,638,638 1,046,669
Other income (expense):
Interest expense (215,714) (173,196) (663,244) (469,036)
Other income 33,035 23,832 73,642 89,678
--------------------------------------------------------
(182,679) (149,364) (589,602) (379,358)
--------------------------------------------------------
Income before provision for
income taxes 1,313,568 388,312 2,049,036 667,311
Provision for income taxes (534,582) (153,417) (811,950) (274,074)
--------------------------------------------------------
Net income $ 778,986 $ 234,895 $ 1,237,086 $ 393,237
========================================================
Earnings per share $.11 $.03 $.18 $.06
========================================================
Dividends per share $.05 - $.05 $.05
========================================================
</TABLE>
See accompanying notes.
4
<PAGE> 5
PART I
PVC CONTAINER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31
1995 1994
--------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,237,086 $ 393,237
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 2,003,107 1,764,971
Deferred income taxes (55,468) (56,500)
Changes in assets and liabilities:
Accounts receivable - net of allowances (1,672,891) 101,820
Inventories (781,284) 1,535,429
Prepaid expenses and other current assets (78,849) 9,741
Accounts payable and accrued expenses 854,097 (2,548,785)
Income taxes payable 467,968 61,217
--------------------------
Net cash provided by operating activities 1,973,766 1,261,130
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (2,428,070) (2,039,898)
--------------------------
Net cash used in investing activities (2,428,070) (2,039,898)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long-term debt (1,157,320) (1,062,028)
Proceeds from long-term debt 2,236,237 1,800,000
Cash dividends (338,096) (338,141)
Common stock issued 150,000
--------------------------
Net cash provided by financing activities 740,821 549,831
--------------------------
Net increase (decrease) in cash and cash equivalents 286,517 (228,937)
Cash and cash equivalents at beginning of period 517,681 650,911
--------------------------
Cash and cash equivalents at end of period $ 804,198 $ 421,974
==========================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 613,251 $ 461,000
==========================
Income taxes paid $ 472,800 $ 269,000
==========================
</TABLE>
See accompanying notes.
5
<PAGE> 6
PART I
PVC CONTAINER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 In the opinion of the Company, the accompanying consolidated
financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the
financial position as of March 31, 1995, and the results of
operations and cash flows for the nine month periods ended March 31,
1995 and 1994.
While the Company believes that the disclosures presented are
adequate to make the information not misleading, it is suggested
that these condensed financial statements be read in conjunction
with the financial statements and the notes included in the
Company's latest annual report on Form 10-K.
Earnings per share are based on the average number of common shares
outstanding during each period, assuming exercise of all stock
options having exercise prices less than the average market price of
the common stock using the treasury stock method. Common stock and
common stock equivalents amounted to 6,761,813 in the third quarter
of 1995 and 1994, and 6,761,813 for the nine month periods ended
March 31, 1995 and 1994.
Note 2 The accompanying financial statements include the accounts of PVC
Container Corporation and its wholly-owned subsidiaries, Novatec
Plastics & Chemicals Co., Inc., Airopak Corporation ("Airopak") and
PVC Container International Sales Corporation, a foreign sales
company incorporated in the U.S. Virgin Islands on March 1, 1993.
All intercompany accounts have been eliminated.
Note 3 Inventories consist of:
<TABLE>
<CAPTION>
MARCH JUNE
31, 1995 30, 1994
-------------------------
<S> <C> <C>
Raw materials $2,460,866 $2,871,471
Finished goods and supplies 3,800,680 2,862,697
-------------------------
Total LIFO inventories 6,261,546 5,734,168
Molds for resale in production 290,036 224,657
Supplies 323,971 135,444
-------------------------
$6,875,553 $6,094,269
=========================
</TABLE>
6
<PAGE> 7
Part I
PVC Container Corporation
Notes to Consolidated Financial Statements (continued)
Note 4 On August 4, 1994 the Company acquired from Air Products and
Chemicals Inc., its recently incorporated wholly-owned subsidiary
known as Airopak Corporation for $1.57 million. The consolidated
statement of income at March 31, 1995 includes the results of
operations of Airopak from the date of acquisition.
7
<PAGE> 8
Part I
PVC CONTAINER CORPORATION
Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
Net sales for the three months ended March 31,1995, increased by 56.5% to
$15,425,420 compared to $9,856,238 for the three month period ended March 31,
1994, and increased by 28.5%, compared to $11,999,769 for the three month
period ended December 31, 1994. For the nine months ended March 31, 1995,
sales increased by 49.2% to $39,661,030 compared to $26,582,840 for the nine
month period ended March 31, 1994. The increase in revenue in the past three
month period was due to a general improvement and demand for plastic bottles
and compounds throughout the Company's lines of business, in addition to the
added sales from the Company's newly acquired, wholly owned subsidiary, Airopak
Corporation, ("Airopak").
Cost of goods sold for the three months ended March 31,1995 was $12,150,011 or
78.8% of net sales as compared to $7,978,939 or 81.0% of net sales for the
three months ended March 31,1994, representing an increase of $4,171,072 or
52.3%. The increase in cost of goods sold corresponds with the aforementioned
change in sales levels, as well as an increase in raw material costs incurred
by the Company. The cost of PVC resin and high density polyethylene, major
ingredients in the Company's products, continued to advance during the past
nine months ended March 31, 1995. This was offset, however, by improved
operating efficiencies, and overall higher plant throughput which resulted in
improved allocation of fixed costs across the Company's product lines.
Selling, General and Administrative expenses ("SG&A") increased by $363,093 in
the third quarter of fiscal 1995 compared to the same period a year ago. For
the quarter ended March 31, 1995, SG&A expenses were $1,095,964 or 7.1% of net
sales, as compared to $732,871 or 7.4% of net sales for the quarter ended March
31, 1994. SG&A expenses are higher, reflecting the aforementioned acquisition
of Airopak.
Interest expenses increased $42,518 in the third fiscal quarter of 1995 to
$215,714. For the nine month period ended March 31, 1995, interest expense
increased $194,208 to $663,244. The increase in interest expense is due to the
additional debt incurred with respect to the acquisition of Airopak and
expansion at our Novatec facility.
Income from Operation increased $958,571 during the three month period ended
March 31, 1995 as compared to the same period a year ago, and increased
$1,038,395 as compared to the three month period ended December 31, 1994. For
the three months ended March 31, 1995, income from operations were $1,496,247
or 9.7% of net sales, as compared to $537,676 or 5.5% of net sales for the
three months ended March 31, 1994 and $457,852 or 3.8% of net sales compared to
the three month period ended December 31, 1994. Income from operations for the
nine month period ended March 31, 1995 increased by 152.1% to $2,638,638 or
6.7% of net sales as compared to $1,046,669 or 3.9% of net sales for the nine
month period ended March 31, 1994. The significant increases in operating
income represent higher sales volume, and improved margins resulting from
increased throughput across all of the Company's product lines, in addition to
income derived from Airopak.
Net income for the quarter ended March 31, 1995 increased 231.6% to $778,896 or
$.11 per share as compared to $234,895 or $.03 per share for the three months
ended March 31, 1994. For the nine months ended March 31, 1995, net income
increased 214.6% to $1,237,086 or $.18 per share as compared to $393,237 or
$.06 per share for the nine month period ended March 31, 1994.
8
<PAGE> 9
Part I
PVC Container Corporation
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity position and working capital remained adequate for the
nine month period ended March 31, 1995. Net working capital as at March 31,
1995 increased $1,006,646 to $5,638,359 compared to $4,631,713 as at June 30,
1994. The current ratio of assets to liabilities was 1.47 as at March 31,
1995 compared to 1.46 as at June 30, 1994.
During the nine month period ended March 31, 1995, the Company generated cash
from operations of $1,973,766 and received $2,236,237 in proceeds from
long-term debt, which was utilized to acquire $2,428,070 in capital assets,
reduce long term debt by approximately $1,157,320. and pay a cash dividend of
approximately $338,000 ($.05 per share). Inventories as at March 31, 1995
decreased by $786,541 compared to the inventory as at December 31, 1994, and
increased $781,284 compared to the inventory level as at June 30, 1994. The
decrease in inventories over the past three months resulted from primarily a
reduction in raw material inventory, which increased at the beginning of the
fiscal year, in order to offset rapidly rising raw material costs.
Inventories of finished goods was approximately $938,000 higher at March 31,
1995 as compared to June 30, 1994, reflecting the higher level of business
activity as well as the Airopak acquisition.
On August 4,1994, the Company acquired from Air Products and Chemicals Inc.
through its recently incorporated wholly-owned subsidiary Airopak Corporation
("Airopak"), the assets of a specialty plastic container business. The purchase
price of the assets was $1.57 million, of which $950,000 was for equipment and
$620,000 was for inventory. The company has borrowed $950,000 to cover the
purchase of the equipment, and has entered into a one year letter of credit
with Air Products for $500,000 for the purchase of inventory, with the balance
of the funds required for the acquisition coming from cash flow.
The Company's short term liquidity and short term capital resources are
adequate for timely payment to trade and other creditors. The Company's
sources of credit are sufficient to meet its working capital and capital needs
in the foreseeable future. At March 31, 1995, the company has unused sources of
liquidity consisting of cash and cash equivalents of $804,198 and available
unused credit under a revolving credit facility of $2,200,000.
9
<PAGE> 10
Part II
PVC Container Corporation
Other Information
Item 6 - Exhibits and Reports on Form 8-K:
(b) Reports on Form 8-K - A report on Form 8-K was filed with the
Securities and Exchange Commission on August 8, 1994 reporting on
the acquisition by the Registrant, effective August 4, 1994, of
the assets of the Specialty Container business of Air Products and
Chemicals Inc. and to which report on Form 8-K was annexed as an
exhibit the Asset Purchase Agreement between Airopak Corporation
(a subsidiary of the Registrant) and Air Products and Chemicals
Inc.
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.
PVC CONTAINER CORPORATION
By /s/ Philip Friedman
_______________________________
Phillip Friedman, President and
Principal Financial Officer
Date: May 4, 1995
10
<PAGE> 11
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 804,198
<SECURITIES> 0
<RECEIVABLES> 9,168,083
<ALLOWANCES> 242,692
<INVENTORY> 6,875,553
<CURRENT-ASSETS> 17,651,373
<PP&E> 34,099,025
<DEPRECIATION> 16,231,177
<TOTAL-ASSETS> 35,519,221
<CURRENT-LIABILITIES> 12,013,014
<BONDS> 11,745,782
<COMMON> 67,618
0
0
<OTHER-SE> 11,692,807
<TOTAL-LIABILITY-AND-EQUITY> 35,519,221
<SALES> 39,661,030
<TOTAL-REVENUES> 39,734,672
<CGS> 32,112,753
<TOTAL-COSTS> 37,022,392
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 663,244
<INCOME-PRETAX> 2,049,036
<INCOME-TAX> 811,950
<INCOME-CONTINUING> 1,237,086
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,237,086
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
