<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, 1996
( ) 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, 1996
Common $.01 par value 6,964,705 shares
<PAGE> 2
Part I
CONTENTS
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<CAPTION>
PAGE NO.
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets-September 30, 1996 and June 30, 1996 3
Consolidated Statements of Income-Three Months Ended
September 30, 1996 and 1995
4
Consolidated Statements of Cash Flows-Three Months Ended
September 30, 1996 and 1995 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 30, 1996 JUNE 30, 1996
----------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,073,499 $ 1,059,166
Accounts receivable, less allowance of $243,000 in 1996
and 1995
7,436,661 8,863,444
Inventories 8,455,643 8,363,522
Prepaid expenses, taxes and other current assets 339,080 292,210
Deferred tax asset 736,787 695,666
----------------------------
Total current assets 18,041,670 19,274,008
Unexpended proceeds from construction loan 4,220,677 5,239,425
Properties and equipment at cost-net of accumulated
depreciation
18,358,895 19,377,239
Investment in jointly owned company 278,305 291,199
----------------------------
$40,899,547 $44,181,871
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,133,191 $ 6,864,889
Accrued expenses 2,455,109 2,801,882
Income taxes payable 760,522 831,950
Current portion of long-term debt 1,797,992 1,800,400
----------------------------
Total current liabilities 11,146,814 12,299,121
Long-term debt 14,134,654 16,165,229
Deferred income taxes 1,031,143 1,031,143
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, 6,964,705 shares issued and outstanding as of
September 30, 1996 and June 30, 1996 69,647 69,647
Capital in excess of par value 3,527,147 3,527,147
Retained earnings 10,990,142 11,089,584
----------------------------
Total stockholders' equity 14,586,936 14,686,378
----------------------------
$40,899,547 $44,181,871
============================
</TABLE>
See accompanying notes.
3
<PAGE> 4
Part I
PVC Container Corporation
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
1996 1995
---------------------------------
<S> <C> <C>
Net sales $ 13,130,765 $ 12,782,357
Cost and expenses:
Cost of goods sold (exclusive of depreciation and amortization expense
shown separately below) 10,654,455 10,507,923
Selling, general and administrative expenses 1,187,214 1,017,984
Depreciation and amortization 649,328 681,059
Equity in loss of jointly owned company 12,894
---------------------------------
12,503,891 12,206,966
---------------------------------
Income from operations 626,874 575,391
Other income (expense):
Interest expense (193,287) (217,282)
Other income 106,141 23,194
---------------------------------
(87,146) (194,088)
---------------------------------
Income before provision for income taxes 539,728 381,303
Provision for income taxes (221,288) (145,821)
---------------------------------
Net income $ 318,440 $ 235,482
=================================
Earnings per share $ .05 $ .03
=================================
Dividends per share $ .06 $ --
=================================
</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
1996 1995
----------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 318,440 $ 235,482
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 649,328 681,059
Equity in loss of jointly owned company 12,894
Gain on sale of building (90,950)
Deferred income taxes (41,121)
Changes in assets and liabilities:
Accounts receivable, net of allowances 1,426,783 433,276
Inventories (92,121) 130,214
Prepaid expenses, taxes and other current assets (46,870) (164,806)
Accounts payable and accrued expenses (1,078,471) (274,204)
Income taxes payable (71,428) 72,492
----------------------------------
Net cash provided by operating activities 986,484 1,113,513
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,174,160) (489,596)
Proceeds from plant and equipment 2,652,867
----------------------------------
Net cash used in investing activities 1,478,707 (489,596)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 1,200,000 (911,726)
Payments on indebtedness (3,232,976)
Dividend paid (417,882)
----------------------------------
Net cash used in financing activities (2,450,858) (911,726)
----------------------------------
Net increase (decrease) in cash 14,333 (287,809)
Cash at beginning of period 1,059,166 1,171,137
==================================
Cash at end of period $ 1,073,499 $ 883,328
==================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 204,581 $ 223,669
==================================
Income taxes paid $ 303,000 $ 77,000
==================================
</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
consolidated financial position as of September 30, 1996, and the
consolidated results of operations and cash flows for the three
month periods ended September 30, 1996 and 1995.
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 6,964,705 and 6,761,913 for the
three month periods ended September 30, 1996 and 1995, respectively.
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 Excluded from the consolidated statement of cash flows for the
three months ended September 30, 1996 was the effect of certain
noncash financing activities related to the $5.5 million South
Carolina EDA loan obtained by the Company in April 1996. Capital
expenditures in connection with this agreement totaled approximately
$1,019,000 for the three months ended September 30, 1996.
Note 4 Inventories consist of:
<TABLE>
<CAPTION>
SEPTEMBER JUNE
30, 1996 30, 1996
-------------------------------
<S> <C> <C>
Raw materials $2,739,420 $3,299,353
Finished goods and supplies 5,249,700 4,656,053
-------------------------------
Total LIFO inventories 7,989,120 7,955,406
Molds for resale in production 159,335 109,465
Supplies 307,188 298,651
-------------------------------
$8,455,643 $8,363,522
===============================
</TABLE>
6
<PAGE> 7
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 month period ended September 30, 1996 were $13,131,000
as compared to $12,782,00 for the three months period ended September 30, 1995,
representing approximately a 2.7% increase. The increase in the Company's PVC
compound sales were offset by weaker than expected demand for plastic bottles.
Net sales were approximately 23% lower in the first quarter of fiscal 1997 as
compared to net sales in the fourth quarter of fiscal 1996 of $16,168,000. This
reduction in revenue 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 plan shutdowns during the summer months.
Cost of goods sold for the three months ended September 30, 1996 was $10,654,000
or 81.1% of net sales as compared to $10,508,000 or 82.2% of net sales for the
three months ended September 30, 1995. The decrease in cost of goods relates
primarily to the ability to pass through the increases in the cost of PVC resin
and high density polyethylene, major ingredients in the Company's products along
with improved manufacturing efficiencies which resulted in a lower percentage of
cost of goods sold as a percentage of sales and higher operating margins
compared to the three months ended September 30, 1995.
Selling, General and Administrative expenses (SG&A") increased by $169,000 in
the first quarter of fiscal 1997 compared to the same period in the prior year.
For the quarter ended September 30, 1996, SG&A expenses were $1,187,000 or 9.0%
of net sales, as compared to $1,018,000 or 8.0% of net sales for the quarter
ended September 30, 1995. SG&A expenses are higher associated with aggressive
marketing efforts to develop our entry into the PET market as well as the
overall increase in marketing efforts to continue the Company's desire to grow
its existing sales base. Lower sales volume due to seasonality mentioned above
further amplified the higher SG&A percentage. SG&A expenses should return to the
8.0% range as higher sales levels are achieved.
Depreciation expense decreased slightly to a level of $649,000 for the three
months ended September 30, 1996 as compared to $681,000 for the three month
period ended September 30, 1995. This decrease is attributed to older capital
equipment reaching its fully depreciable life.
Income from Operations increased $52,000 during the three month period ended
September 30, 1996 as compared to the same period a year ago. For the three
month period ended September 30, 1996, Income from Operations was $627,000 or
4.8% of net sales, as compared to $575,00 or 4.5% of net sales for the three
month period ended September 30, 1995. Higher operating income was primarily the
result of maintaining our overall margins with the pass through of higher PVC
resin and compound costs, sales mix and higher operating capacity utilization
during the three months period ended September 30, 1996, as compared to the
three month period ended September 30, 1995.
Net income for the quarter ended September 30, 1996 increased 35% to $318,440 or
$.05 per share as compared to $235,000 or $.03 per share for the quarter ended
September 30, 1995.
7
<PAGE> 8
Part I
PVC CONTAINER CORPORATION
Management's Discussion and Analysis of Financial Condition and Results of
Operations
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity and working capital marginally decreased, however,
remained adequate for the three month period ended September 30, 1996. Net
working capital as at September 30, 1996 decreased $80,000 to $6,895,000
compared to $6,975,000 as at June 30, 1996. The current ratio of assets to
liabilities increased from 1.57 to 1.62 at September 30, 1996, primarily related
to a reduction in accounts payable and accrued expenses payable.
During the three month period ended September 30, 1996, the Company generated
cash from operations of $986,000 and received $1,183,000 from its sale on July
16, 1996 of its warehouse located at 435 Industrial Way West, proceeds from long
term debt and equipment financing in the amounts of $1,200,000 and $1,470,000
respectively. These funds were used to acquire $1,174,000 in capital assets,
reduce long term debt by $3,233,000 and on September 20, 1996, the Company paid
a $.06 cash dividend in the amount of $418,000 to all shareholders of record of
September 13, 1996.
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, 1996, the Company had unused sources of liquidity
consisting of cash and cash equivalents of $1,073,000 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, 1996.
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: November 14, 1996
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,073,499
<SECURITIES> 0
<RECEIVABLES> 7,624,690
<ALLOWANCES> 0
<INVENTORY> 8,455,643
<CURRENT-ASSETS> 18,041,670
<PP&E> 38,647,476
<DEPRECIATION> 20,288,581
<TOTAL-ASSETS> 40,899,547
<CURRENT-LIABILITIES> 11,146,814
<BONDS> 15,165,797
69,647
0
<COMMON> 0
<OTHER-SE> 14,517,289
<TOTAL-LIABILITY-AND-EQUITY> 40,899,547
<SALES> 13,130,765
<TOTAL-REVENUES> 13,130,765
<CGS> 10,654,455
<TOTAL-COSTS> 12,503,891
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 193,287
<INCOME-PRETAX> 539,728
<INCOME-TAX> 221,288
<INCOME-CONTINUING> 318,440
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 318,440
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
