<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 September 30, 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 September 30, 1995
Common $.01 par value 6,761,913 shares
<PAGE> 2
Part I
CONTENTS
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C>
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets - September 30, 1995 and June 30, 1995 3
Consolidated Statements of Income - Three Months Ended
September 30, 1995 and 1994 4
Consolidated Statements of Cash Flows - Three Months Ended
September 30, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition and
Results of Operations 7-8
PART II. OTHER INFORMATION 9
</TABLE>
<PAGE> 3
Part I
PVC Container Corporation
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER JUNE
30, 1995 30, 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 883,328 $ 1,171,137
Accounts receivable - net of allowances 7,772,457 8,205,733
Inventories 6,304,794 6,435,008
Prepaid expenses, taxes and other current assets 490,698 325,892
Deferred tax asset 467,403 467,403
----------- -----------
Total current assets 15,918,680 16,605,173
Properties and equipment at cost - net of accumulated
depreciation 17,361,754 17,553,217
----------- -----------
$33,280,434 $34,158,390
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,666,915 $ 5,633,003
Accrued expenses 2,013,122 2,321,238
Income taxes payable 412,983 340,491
Current portion of long-term debt 1,812,965 2,360,465
----------- -----------
Total current liabilities 9,905,985 10,655,197
Long-term debt 9,926,506 10,290,732
Deferred income taxes 1,078,457 1,078,457
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, 6,761,913 shares issued and outstanding as of
September 30, 1995 and June 30, 1995 67,619 67,619
Capital in excess of par value 2,971,497 2,971,497
Retained earnings 9,330,370 9,094,888
----------- -----------
Total stockholders' equity 12,369,486 12,134,004
----------- -----------
$33,280,434 $34,158,390
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 4
Part I
PVC Container Corporation
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
1995 1994
------------ ------------
<S> <C> <C>
Net sales $ 12,782,357 $ 12,235,841
Cost and expenses:
Cost of goods sold (exclusive of depreciation and
amortization expense shown separately below) 10,507,923 10,041,313
Selling, general and administrative expenses 1,017,984 857,339
Depreciation and amortization 681,059 652,650
------------ ------------
12,206,966 11,551,302
------------ ------------
Income from operations 575,391 684,539
Other income (expense):
Interest expense (217,282) (210,618)
Other income 23,194 20,836
------------ ------------
(194,088) (189,782)
------------ ------------
Income before provision for income taxes 381,303 494,757
Provision for income taxes (145,821) (184,934)
Net income $ 235,482 $ 309,823
============ ============
Earnings per share $ .03 $ .05
============ ============
Dividends per share $ - $ -
============ ============
</TABLE>
See accompanying notes.
4
<PAGE> 5
Part I
PVC Container Corporation
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 235,482 $ 309,823
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 681,059 652,650
Deferred income taxes
Changes in assets and liabilities:
Accounts receivable, net of allowances 433,276 (894,120)
Inventories 130,214 (757,096)
Prepaid expenses, taxes and other current assets (164,806) (130,997)
Accounts payable and accrued expenses (274,204) 1,607,460
Income taxes payable 72,492 196,934
----------- -----------
Net cash provided by operating activities 1,113,513 984,654
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (489,596) (1,999,184)
----------- -----------
Net cash used in investing activities (489,596) (1,999,184)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt (911,726) 1,132,394
----------- -----------
Net cash (used in) provided by financing activities (911,726) 1,132,394
----------- -----------
Net (decrease) increase in cash (287,809) 117,864
Cash at beginning of period 1,171,137 517,681
----------- -----------
Cash at end of period $ 883,328 $ 635,545
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 223,669 $ 168,000
=========== ===========
Income taxes paid $ 77,000 $ 17,000
=========== ===========
</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 September 30, 1995, and the results of
operations and cash flows for the three month periods ended September
30, 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 6,761,913 for the three month
periods ended September 30, 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>
SEPTEMBER JUNE
30, 1995 30, 1995
---------- ----------
<S> <C> <C>
Raw materials $2,106,156 $2,089,192
Finished goods and supplies 3,658,138 3,761,231
---------- ----------
Total LIFO inventories 5,764,294 5,850,423
Molds for resale in production 159,982 232,901
Supplies 380,518 351,684
---------- ----------
$6,304,794 $6,435,008
========== ==========
</TABLE>
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 September 30, 1994 includes the results of
operations of Airopak from the date of acquisition.
6
<PAGE> 7
PART I
PVC CONTAINER CORPORATION
Management's Discussion and Analysis of Financial Condition
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Net sales for the three month period ended September 30, 1995, were
$12,782,000 as compared to $12,236,000 for the three month period ended
September 30, 1994, representing approximately a 4.5% increase. The increase in
the Company's bottle sales were offset by weaker than expected demand for PVC
compounds.
Net sales were approximately 11% lower in the first quarter of fiscal
1996 as compared to net sales in the fourth quarter of fiscal 1995 of
$14,225,000. The reduction in revenues reflected a greater than normal seasonal
decline in bottle and PVC compound sales volume due in part to the customary
decline in industry demand, resulting from many customer plant shutdowns during
the summer months.
Cost of goods sold for the three months ended September 30, 1995 was
$10,508,000 or 82.2% of net sales as compared to $10,041,000 or 82.1% of net
sales for the three months ended September 30, 1994. The marginal increase in
cost of goods sold primarily reflects the increased expenses associated with the
higher level of sales. During the quarter ended September 30, 1995, the cost of
raw materials stabilized and began to decline, reflecting lower prices incurred
for PVC resin and high density polyethylene resins, major ingredients in the
Company's products.
Depreciation expense increased slightly to a level of $681,000 for the
three months ended September 30, 1995 as compared to $653,000 for the three
month period ended September 30, 1994. This increase was attributable to new
capital employed at the Company's wholly owned subsidiary, Airopak Corporation.
Selling, general and administrative expenses ("SG&A") increased
$161,000 in the first quarter of fiscal 1996 compared to the same period in the
prior year. For the quarter ended September 30, 1995, SG&A expenses were
$1,018,000 or 8.0% of net sales, as compared to $857,000 or 7.0% of net sales
for the quarter ended September 30, 1994. SG&A expenses are higher, reflecting
the added SG&A expenses associated with the Airopak acquisition as well as the
overall increased marketing efforts associated with the Company's desire to grow
sales. Lower sales volume due to seasonality discussed above further exacerbated
the higher SG&A percentages. SG&A expenses should return to the 7% range as
higher sales levels are achieved.
7
<PAGE> 8
PART I
PVC CONTAINER CORPORATION
Management's Discussion and Analysis of Financial Condition
Income from operations decreased $109,000 during the three month period
ended September 30, 1995, as compared to the same period a year ago. For the
three month period ended September 30, 1995, income from operations was
$575,000, or 4.5% of net sales, as compared to $685,000 or 5.6% of net sales for
the three month period ended September 30, 1994. Lower operating income was
primarily the result of lower sales of PVC compounds for the quarter as well as
a 1% increase in SG&A expenses as a percentage of net sales. Additionally,
operating income was also adversely effected by the lower operating utilization
in the Company's manufacturing plants.
Net income for the quarter ended September 30, 1995 was $235,000, or
$.03 per share as compared to $310,000, or $.05 per share for the quarter ended
September 30, 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity position and working capital marginally
improved and remained adequate for the three month period ended September 30,
1995. Net working capital as at September 30, 1995 increased $63,000 to
$6,013,000 compared to $5,950,000 as at June 30, 1995. The current ratio of
assets to liabilities increased from 1.56 to 1.61 at September 30, 1995
primarily related to a reduction in the current portion of long term debt.
During the three month period ended September 30, 1995, the Company
generated cash from operations of $1,114,000 which was utilized to acquire
$490,000 in capital assets, and to reduce long term indebtedness by $912,000,
which included the payment of $500,000 to Air Products and Chemicals Company for
the purchase of inventory for the recently acquired, wholly owned subsidiary,
Airopak Corporation.
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 September 30, 1995, the Company had unused sources of
liquidity consisting of cash and cash equivalents of $883,000 and the
availability of the unused credit under a revolving credit facility of
$3,000,000.
8
<PAGE> 9
Part II
PVC Container Corporation
Other Information
Item 6 - Exhibits and Reports on Form 8-K:
(b) Reports on Form 8-K - There were no reports on Form 8-K filed
for the three months ended September 30, 1995.
EX-27 Financial Data Schedule
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/ Phillip Friedman
---------------------------
Phillip Friedman, President and
Principal Financial Officer
Date:
9
<PAGE> 10
EXHIBIT INDEX
-------------
Exhibit No. Description Page No.
- ---------- ----------- -------
EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 883,328
<SECURITIES> 0
<RECEIVABLES> 8,015,149
<ALLOWANCES> 242,692
<INVENTORY> 6,304,794
<CURRENT-ASSETS> 15,918,680
<PP&E> 34,984,679
<DEPRECIATION> 17,622,925
<TOTAL-ASSETS> 33,280,434
<CURRENT-LIABILITIES> 9,905,985
<BONDS> 11,004,963
<COMMON> 67,619
0
0
<OTHER-SE> 12,301,867
<TOTAL-LIABILITY-AND-EQUITY> 33,280,434
<SALES> 12,782,357
<TOTAL-REVENUES> 12,782,357
<CGS> 10,507,984
<TOTAL-COSTS> 12,206,966
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 217,282
<INCOME-PRETAX> 381,303
<INCOME-TAX> 145,821
<INCOME-CONTINUING> 235,482
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 235,482
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
