<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 December 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.
<TABLE>
<CAPTION>
Class Outstanding at December 31, 1995
- --------------------- --------------------------------
<S> <C>
Common $.01 par value 6,761,913 shares
</TABLE>
<PAGE> 2
Part I
CONTENTS
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C>
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets - December 31, 1995 and June 30, 1995 3
Consolidated Statements of Income - Three Months Ended
December 31, 1995 and 1994 and Six Months Ended December 31,
1995 and 1994 4
Consolidated Statements of Cash Flows - Six Months Ended
December 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>
DECEMBER JUNE
31, 1995 30, 1995
---------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 769,184 $ 1,171,137
Accounts receivable - net of allowances 6,666,185 8,205,733
Inventories 7,130,323 6,435,008
Prepaid expenses, taxes and other current assets 355,461 325,892
Deferred tax asset 467,403 467,403
---------------------------------
Total current assets 15,388,556 16,605,173
Properties and equipment at cost - net of accumulated
depreciation 17,522,069 17,553,217
Investment in jointly owned company 195,972
---------------------------------
$33,106,597 $34,158,390
=================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,080,230 $ 5,633,003
Accrued expenses 2,036,434 2,321,238
Income taxes payable 390,328 340,491
Current portion of long-term debt 1,760,741 2,360,465
---------------------------------
Total current liabilities 9,267,733 10,655,197
Long-term debt 9,857,143 10,290,732
Deferred income taxes 1,088,457 1,078,457
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
December 31, 1995 and June 30, 1995 67,619 67,619
Capital in excess of par value 2,971,497 2,971,497
Retained earnings 9,854,148 9,094,888
---------------------------------
Total stockholders' equity 12,893,264 12,134,004
---------------------------------
$33,106,597 $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 SIX MONTHS ENDED
DECEMBER 31 DECEMBER 31
------------------------------------------------------------------------
1995 1994 1995 1994
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 12,360,960 $ 11,999,769 $ 25,143,317 $ 24,235,610
Cost and expenses:
Cost of goods sold (exclusive of
depreciation and amortization
expense shown separately below) 9,521,771 9,921,429 20,029,337 19,962,742
Selling, general and administrative
expenses 1,091,986 953,229 2,109,970 1,810,568
Depreciation and amortization 694,464 667,259 1,375,880 1,319,909
Equity in loss of jointly owned
company 27,581 27,581
------------------------------------------------------------------------
11,335,802 11,541,917 23,542,768 23,093,219
------------------------------------------------------------------------
Income from operations 1,025,158 457,852 1,600,549 1,142,391
Other income (expense):
Interest expense (204,545) (236,912) (421,827) (447,530)
Other income 22,500 19,770 45,694 40,606
------------------------------------------------------------------------
(182,045) (217,142) (376,133) (406,924)
------------------------------------------------------------------------
Income before provision for
income taxes 843,113 240,710 1,224,416 735,467
Provision for income taxes (319,335) (92,434) (465,156) (277,368)
------------------------------------------------------------------------
Net income $ 523,778 $ 148,276 $ 759,260 $ 458,099
========================================================================
Earnings per share $ .08 $ .02 $ .11 $ .07
========================================================================
</TABLE>
See accompanying notes.
4
<PAGE> 5
Part I
PVC Container Corporation
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31
1995 1994
------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 759,260 $ 458,099
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,375,880 1,319,909
Equity in loss of jointly owned company 27,581
Deferred income taxes 10,000 (36,979)
Changes in assets and liabilities:
Accounts receivable - net of allowances 1,539,548 261,651
Inventories (695,315) (1,567,825)
Prepaid expenses and other current assets (29,569) (64,240)
Accounts payable and accrued expenses (837,577) 632,865
Income taxes payable 49,837 39,397
------------------------------------
Net cash provided by operating activities 2,199,645 1,042,877
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,344,732) (2,320,942)
Investment in jointly owned company (223,553)
------------------------------------
Net cash used in investing activities (1,568,285) (2,320,942)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long-term debt (1,578,313) (838,947)
Proceeds from long-term debt 545,000 2,225,916
------------------------------------
Net cash (used in) provided by financing activities (1,033,313) 1,386,969
------------------------------------
Net (decrease) increase in cash and cash equivalents (401,953) 108,904
Cash and cash equivalents at beginning of period 1,171,137 517,681
------------------------------------
Cash and cash equivalents at end of period $ 769,184 $ 626,585
====================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 421,951 $ 394,480
====================================
Income taxes paid $ 405,319 $ 274,950
====================================
</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
December 31, 1995, and the results of operations and cash flows for the
six month periods ended December 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 6,761,913 in the second quarter of 1995 and
1994, and 6,761,913 for the six month periods ended December 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>
DECEMBER JUNE
31, 1995 30, 1995
----------------------
<S> <C> <C>
Raw materials $1,949,634 $2,089,192
Finished goods and supplies 4,513,491 3,761,231
----------------------
Total LIFO inventories 6,463,125 5,850,423
Molds for resale in production 325,483 232,901
Supplies 341,715 351,684
----------------------
$7,130,323 $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 December 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 December 31, 1995, increased by 3.0% to
$12,361,000 compared to $12,000,000 for the three month period ended December
31, 1994, and decreased by 3.4%, compared to $12,782,000 for the three month
period ended September 30, 1995. For the six months ended December 31, 1995,
sales increased by 3.7% to $25,143,000 compared to $24,236,000 for the six month
period ended December 31, 1994. Although revenues for the quarter and six month
period were ahead of last year in most areas, sales growth was slightly offset
by some market weakness and loss of some "non-barrier" container business at a
large midwest Airopak customer. It is anticipated that future customer sales
from existing and new stock molds will be able to replace the lost Airopak sales
during the next six months. The small decline in sales during quarter ended
December 31, 1995 versus quarter ended September 30, 1995 was due to year end
seasonality.
Cost of goods sold for the three months ended December 31, 1995 was $9,522,000
or 77.0% of net sales as compared to $9,921,000 or 82.7% of net sales for the
three months ended December 31, 1994. The decrease in cost of goods sold
reflects a decrease in polymer 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 six months, which have resulted
in the Company improving its margin back to more historical levels.
Selling, General and Administrative expenses ("SG&A") increased by $139,000 for
the three month period and by $299,000 for the six month period ended December
31, 1995 compared to the same periods a year ago. For the quarter ended December
31, 1995, SG&A expenses were $1,092,000 or 8.8% of net sales, as compared to
$953,000 or 7.9% of net sales for the quarter ended December 31, 1994. For the
six months ended December 31, 1995, SG&A expenses were $2,110,000 or 8.4% of net
sales, as compared to $1,811,000 or 7.5% of net sales for the six months period
ended December 31, 1994. SG&A expenses are higher, reflecting the acquisition of
Airopak, as well as increased marketing and administrative costs incurred to
support anticipated sales growth across the Company's products.
Income from Operations increased $567,000 during the three month period ended
December 31, 1995 as compared to the same period a year ago, and increased
$450,000 as compared to the three month period ended September 30, 1995. For the
three months ended December 31, 1995, Income from Operations were $1,025,000 or
8.3% of net sales, as compared to $458,000 or 3.8% of net sales for the three
months ended December 31, 1994 and $575,000 or 4.5% of net sales compared to the
three month period ended September 30, 1995. Income from operations for the six
month period ended December 31, 1995 increased by 40.1% to $1,601,000 or 6.4% of
net sales as compared to $1,142,000 or 4.7% of net sales for the six month
period ended December 31, 1994. The significant increases in operating income
represent improved margins resulting from lower raw material costs across all of
the Company's product lines.
Net income for the quarter ended December 31, 1995 increased 253% to $524,000 or
$.08 per share as compared to $148,000 or $.02 per share for the three months
ended December 31, 1994. For the six months ended December 31, 1995, net income
increased 66% to
8
<PAGE> 9
$759,000 or $.11 per share as compared to $458,000 or $.07 per share for the six
month period ended December 31, 1994.
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 position and working capital improved and remained
adequate for the six month period ended December 31, 1995. Net working capital
as at December 31, 1995 increased $171,000 to $6,121,000 compared to $5,950,000
as at June 30, 1995. The current ratio of assets to liabilities was 1.66 as at
December 31, 1995 compared to 1.56 as at June 30, 1995.
During the six month period ended December 31, 1995, the Company generated cash
from operations of $2,200,000 and received $545,000 in proceeds from long-term
debt, which was utilized to acquire $1,345,000 in capital assets, reduce long
term debt by $1,578,000, which included the payment of $500,000 to Air Products
and Chemicals Company of the final installment for the Company's recent
acquisition of the Airopak Corporation, as well as a $224,000 investment in the
Edge Craft USA joint venture. On February 20, 1995, the Company and Edge Craft,
Ltd. formed a joint venture known as Edge Craft, U.S.A., Inc. The joint venture,
headquartered in Eatontown, New Jersey will manufacture and sell adhesive-backed
edgetrim which is slit and rolled from sheets of polyvinyl chloride for use by
manufacturers of furniture, cabinets and other wood products.
Inventories as at December 31, 1995 increased by $695,000 compared to the
inventory as at as at June 30, 1995 reflecting primarily higher finished goods
inventory. The higher level of inventory is required to support additional
business activity of the Airopak subsidiary, as well as in anticipation of
higher sales activity across the Company's entire product line, expected during
the next several months.
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 December 31, 1995, the Company has unused sources of liquidity
consisting of cash and cash equivalents of $769,000 and available unused credit
under a revolving credit facility of $2,455,000.
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 six months ended December 31, 1995.
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: 1/31/96
10
<PAGE> 11
EXHIBIT INDEX
Exhibit No. Description Page No.
- ---------- ------------ -------
EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 769,184
<SECURITIES> 0
<RECEIVABLES> 6,908,877
<ALLOWANCES> 242,692
<INVENTORY> 7,130,323
<CURRENT-ASSETS> 15,388,556
<PP&E> 35,839,521
<DEPRECIATION> 18,317,452
<TOTAL-ASSETS> 33,106,597
<CURRENT-LIABILITIES> 9,267,733
<BONDS> 10,945,600
0
0
<COMMON> 67,619
<OTHER-SE> 12,825,645
<TOTAL-LIABILITY-AND-EQUITY> 33,106,597
<SALES> 25,143,317
<TOTAL-REVENUES> 25,189,011
<CGS> 20,029,337
<TOTAL-COSTS> 23,542,768
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 421,827
<INCOME-PRETAX> 1,224,416
<INCOME-TAX> 465,156
<INCOME-CONTINUING> 759,260
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 759,260
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
