<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, 1996
--------------------
(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
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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, 1996
--------------------- -----------------------------
Common $.01 par value 6,964,705 shares
<PAGE> 2
Part I
CONTENTS
PAGE NO.
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PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets - March 31, 1996 and
June 30, 1995 3
Consolidated Statements of Income - Three Months Ended
March 31, 1996 and 1995 and Nine Months Ended
March 31, 1996 and 1995 4
Consolidated Statements of Cash Flows - Nine Months Ended
March 31, 1996 and 1995 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
<PAGE> 3
Part I
PVC Container Corporation
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
MARCH JUNE
31, 1996 30, 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 619,095 $ 1,171,137
Accounts receivable - net of allowances 9,209,629 8,205,733
Inventories 6,993,093 6,435,008
Prepaid expenses and other current assets 343,648 325,892
Deferred tax assets 532,324 467,403
----------- -----------
Total current assets 17,697,789 16,605,173
Properties and equipment at cost - net of accumulated
depreciation 17,958,587 17,553,217
Investment in jointly owned company 301,288
----------- -----------
$35,957,664 $34,158,390
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,859,078 $ 5,633,003
Accrued expenses 2,439,326 2,321,238
Income taxes payable 862,325 340,491
Current portion of long-term debt 1,714,501 2,360,465
----------- -----------
Total current liabilities 10,875,230 10,655,197
Long-term debt 10,027,529 10,290,732
Deferred income taxes 1,088,457 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,
6,964,705 and 6,761,913 shares issued and outstanding as of
March 31, 1996 and June 30, 1995, respectively 69,646 67,618
Capital in excess of par value 3,527,148 2,971,498
Retained earnings 10,369,654 9,094,888
----------- -----------
Total stockholders' equity 13,966,448 12,134,004
----------- -----------
$35,957,664 $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 MARCH 31 NINE MONTHS ENDED
MARCH 31
-----------------------------------------------------------------
1996 1995 1996 1995
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $15,904,534 $15,425,420 $41,047,851 $39,661,030
Cost and expenses:
Cost of goods sold (exclusive of
depreciation and amortization
expense shown separately below) 11,985,734 12,150,011 32,015,071 32,112,753
Selling, general and administrative
expenses 1,195,997 1,095,964 3,305,967 2,906,532
Depreciation and amortization 710,475 683,198 2,086,355 2,003,107
Equity in loss of jointly owned
company 56,056 83,637
----------- ----------- ----------- -----------
13,948,262 13,929,173 37,491,030 37,022,392
----------- ----------- ----------- -----------
Income from operations 1,956,272 1,496,247 3,556,821 2,638,638
Other income (expense):
Interest expense (189,512) (215,714) (611,339) (663,244)
Other income 54,699 33,035 100,393 73,642
----------- ----------- ----------- -----------
(134,813) (182,679) (510,946) (589,602)
----------- ----------- ----------- -----------
Income before provision for
income taxes 1,821,459 1,313,568 3,045,875 2,049,036
Provision for income taxes (748,079) (534,582) (1,213,235) (811,950)
----------- ----------- ----------- -----------
Net income $ 1,073,380 $ 778,986 $ 1,832,640 $ 1,237,086
=========== =========== =========== ===========
Earnings per share $.16 $.11 $.27 $.18
=========== =========== =========== ===========
Cash dividends per share $.05 $.05
=========== =========== =========== ===========
Stock dividends per share $.08 $.08
=========== =========== =========== ===========
</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
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,832,640 $ 1,237,086
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 2,086,355 2,003,107
Equity in loss of jointly owned company 83,637
Deferred income taxes (54,921) (55,468)
Changes in assets and liabilities:
Accounts receivable - net of allowances (1,003,896) (1,672,891)
Inventories (558,085) (781,284)
Prepaid expenses and other current assets (17,756) (78,849)
Accounts payable and accrued expenses 344,163 854,097
Income taxes payable 521,834 467,968
----------- -----------
Net cash provided by operating activities 3,233,971 1,973,766
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (2,491,725) (2,428,070)
Investment in jointly owned company (384,925)
----------- -----------
Net cash used in investing activities (2,876,650) (2,428,070)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long-term debt (1,984,167) (1,157,320)
Proceeds from long-term debt 1,075,000 2,236,237
Cash dividends (196) (338,096)
----------- -----------
Net cash (used in) provided by financing activities (909,363) 740,821
----------- -----------
Net (decrease) increase in cash and cash equivalents (552,042) 286,517
Cash and cash equivalents at beginning of period 1,171,137 517,681
----------- -----------
Cash and cash equivalents at end of period $ 619,095 $ 804,198
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 612,700 $ 613,251
=========== ===========
Income taxes paid $ 691,401 $ 472,800
=========== ===========
</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, 1996, and the results of
operations and cash flows for the nine month periods ended March 31,
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 6,839,909 and 6,761,913 in the
third quarter of 1996 and 1995, and 6,787,723 and 6,761,913 for the
nine month periods ended March 31, 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 Inventories consist of:
<TABLE>
<CAPTION>
MARCH JUNE
31, 1996 30, 1995
-------- --------
<S> <C> <C>
Raw materials $1,961,894 $2,089,192
Finished goods and supplies 4,574,410 3,761,231
---------- ----------
Total LIFO inventories 6,536,304 5,850,423
Molds for resale in production 79,246 232,901
Supplies 377,543 351,684
---------- ----------
$6,993,093 $6,435,008
========== ==========
</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, 1996 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, 1996, increased by 3.1% to
$15,905,000 compared to $15,425,000 for the three month period ended March 31,
1995, and increased by 28.7%, compared to $12,361,000 for the three month period
ended December 31, 1995. For the nine months ended March 31, 1996, sales
increased by 3.5% to $41,048,000 compared to $39,661,000 for the nine month
period ended March 31, 1995. 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.
Cost of goods sold for the three months ended March 31,1996 was $11,986,000 or
75.4% of net sales as compared to $12,150,000 or 78.8% of net sales for the
three months ended March 31, 1995. The decrease in cost of goods relates
primarily to a decrease 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 decline during the past nine months ended March 31, 1996,
which have resulted in a lower percentage of cost of goods sold as a percent of
sales and higher operating margins compared to the nine months ended March 31,
1995.
Selling, General and Administrative expenses ("SG&A") increased by $100,000 in
the third quarter of fiscal 1996 compared to the same period a year ago. For the
quarter ended March 31, 1996, SG&A expenses were $1,196,000 or 7.5% of net
sales, as compared to $1,096,000 or 7.1% of net sales for the quarter ended
March 31, 1995. SG&A expenses are higher, reflecting a continuing emphasis to
grow the Company's business.
Income from Operations increased $460,000 during the three month period ended
March 31, 1996 as compared to the same period a year ago, and increased $931,000
as compared to the three month period ended December 31, 1995. For the three
months ended March 31, 1996, income from operations were $1,956,000 or 12.3% of
net sales, as compared to $1,496,000 or 9.7% of net sales for the three months
ended March 31, 1995 and $1,025,000 or 8.3% of net sales compared to the three
month period ended December 31, 1995. Income from operations for the nine month
period ended March 31, 1996 increased by 34.8% to $3,557,000 or 8.7% of net
sales as compared to $2,639,000 or 6.7% of net sales for the nine month period
ended March 31, 1995. The significant increases in operating income and
profitability result from improved margins resulting from lower raw material
costs across all of the Company's product lines, and higher operating
utilization rates at all of the Company's manufacturing plants.
Net income for the quarter ended March 31, 1996 increased 37.8% to a record
$1,073,000 or $.16 per share as compared to $779,000 or $.11 per share for the
three months ended March 31, 1995. For the nine months ended March 31, 1996, net
income increased 48.2% to a record $1,833,000 or $.27 per share as compared to
$1,237,000 or $.18 per share for the nine month period ended March 31, 1996
8
<PAGE> 9
Part I
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity position and working capital remained adequate for the
nine month period ended March 31, 1996. Net working capital as at March 31, 1996
increased $873,000 to $6,823,000 compared to $5,950,000 as at June 30, 1995. The
current ratio of assets to liabilities was 1.63 as at March 31, 1996 compared to
1.56 as at June 30, 1995.
During the nine month period ended March 31, 1996, the Company generated cash
from operations of $3,234,000 and received $1,075,000 in proceeds from long-term
debt, which was utilized to acquire $2,492,000 in capital assets, reduce long
term debt by approximately $1,984,000 and to make an investment in the Edgecraft
USA joint venture of $385,000. Inventories as at March 31, 1996 increased by
$558,000 compared to the inventory as at June 30, 1995. The increase in
inventories over the past nine months is the result of a readjustment in
finished goods plastic bottle inventory needed to support several additional
major projects that came to fruition during the past nine months. Inventory
turn-over is expected to improve over the next several months.
On February 26, 1996 the Company paid a 3% stock dividend to all shareholders of
record of February 9, 1996. The number of shares issued and outstanding as at
February 26, 1996 increased from 6,761,913 to 6,964,705 shares of common stock.
The stock dividend resulted in reducing retained earnings by $558,000 and
increasing capital in excess of par value by $556,000 and common stock, par
value by $2000.
On April 9, 1996, the Company secured $5.5 million of South Carolina
Jobs-Economic Development Authority Economic Development Revenue Bonds. These
funds will be used to finance the construction of a new plastic bottle facility
to be located in Walterboro, South Carolina. It is anticipated that the project
should start-up during October 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 March 31, 1996, the company has unused sources of liquidity
consisting of cash and cash equivalents of $619,000 and available unused credit
under a revolving credit facility of $1,925,000.
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 - There were no reports on Form 8-K filed for
the nine months ended March 31, 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: 5/6/96
10
<PAGE> 11
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 619,095
<SECURITIES> 0
<RECEIVABLES> 9,452,321
<ALLOWANCES> 242,692
<INVENTORY> 6,993,093
<CURRENT-ASSETS> 17,697,789
<PP&E> 36,986,577
<DEPRECIATION> 19,027,990
<TOTAL-ASSETS> 35,957,664
<CURRENT-LIABILITIES> 10,875,230
<BONDS> 11,115,986
69,646
0
<COMMON> 0
<OTHER-SE> 13,896,802
<TOTAL-LIABILITY-AND-EQUITY> 35,957,664
<SALES> 41,047,851
<TOTAL-REVENUES> 41,148,244
<CGS> 32,015,071
<TOTAL-COSTS> 37,491,030
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 611,339
<INCOME-PRETAX> 3,045,875
<INCOME-TAX> 1,213,235
<INCOME-CONTINUING> 1,832,640
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,832,640
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
