<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, 1997
( ) 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
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(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
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (732) 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, 1997
- --------------------- ----------------------------------------
Common $.01 par value 7,004,705 shares
<PAGE> 2
Part I
CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets - September 30, 1997 and June 30, 1997 3
Consolidated Statements of Income - Three Months Ended
September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows - Three Months Ended
September 30, 1997 and 1996 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>
SEPTEMBER JUNE
30, 1997 30, 1997
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 241,927 $ 222,490
Accounts receivable, less allowance of $245,000
at September 30, 1997 and $243,000 at June 30, 1997 9,381,006 9,272,018
Inventories 9,838,407 9,407,146
Prepaid expenses, taxes and other current assets 452,994 538,593
Deferred income tax asset 946,517 946,517
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Total current assets 20,860,851 20,386,764
Unexpended proceeds from construction loan 3,746,085 4,244,334
Properties and equipment at cost - net of accumulated
depreciation 23,300,531 21,410,268
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$47,907,467 $46,041,366
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,720,819 $ 6,443,880
Accrued expenses 3,799,235 3,147,719
Income taxes payable 625,161 418,460
Current portion of long-term debt 1,867,035 1,866,648
----------- -----------
Total current liabilities 13,012,250 11,876,707
Long-term debt 16,595,334 16,337,169
Deferred income taxes 1,173,466 1,188,466
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, 7,004,705 shares issued and outstanding as of
September 30, 1997 and June 30, 1997 70,047 70,047
Capital in excess of par value 3,646,747 3,646,747
Retained earnings 13,409,623 12,922,230
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Total stockholders' equity 17,126,417 16,639,024
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$47,907,467 $46,041,366
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 4
Part I
PVC Container Corporation
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
1997 1996
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<S> <C> <C>
Net sales $ 15,313,084 $ 13,130,765
Cost and expenses:
Cost of goods sold (exclusive of depreciation and
amortization expense shown separately below) 12,018,251 10,654,455
Selling, general and administrative expenses 1,473,604 1,187,214
Depreciation and amortization 798,362 649,328
Equity in loss of jointly owned company 12,894
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14,290,217 12,503,891
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Income from operations 1,022,867 626,874
Other income (expense):
Interest expense (213,334) (193,287)
Other income 9,560 106,141
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(203,774) (87,146)
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Income before provision for income taxes 819,093 539,728
Provision for income taxes (331,700) (221,288)
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Net income $ 487,393 $ 318,440
============ ============
Earnings per share $ .07 $ .05
============ ============
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
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 487,393 $ 318,440
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 798,362 649,328
Equity in loss of jointly owned company 12,894
Gain on sale of building (90,950)
Deferred income taxes (15,000) (41,121)
Changes in assets and liabilities:
Accounts receivable, net of allowances (108,988) 1,426,783
Inventories (431,261) (92,121)
Prepaid expenses, taxes and other current assets 85,599 (46,870)
Accounts payable and accrued expenses 928,555 (1,078,471)
Income taxes payable 206,701 (71,428)
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Net cash provided by operating activities 1,951,361 986,484
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (2,190,476) (1,174,160)
Proceeds from sale of plant and equipment 2,652,867
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Net cash (used in) provided by investing activities (2,190,476) 1,478,707
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 600,000 1,200,000
Payments on indebtedness (341,448) (3,232,976)
Dividend paid (417,882)
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Net cash provided by (used in) financing activities 258,552 (2,450,858)
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Net increase in cash and cash equivalents 19,437 14,333
Cash and cash equivalents at beginning of period 222,490 1,059,166
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Cash and cash equivalents at end of period $ 241,927 $ 1,073,499
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 226,885 $ 204,581
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Income taxes paid $ 140,000 $ 303,000
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</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, 1997, and the
consolidated results of operations and cash flows for the three month
periods ended September 30, 1997 and 1996.
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 7,004,705 and 6,964,705 for the
three month periods ended September 30, 1997 and 1996, respectively.
Note 2 The accompanying financial statements include the accounts of PVC
Container Corporation and its wholly-owned subsidiaries, Novatec
Plastics Corporation, 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 statements of cash flows for the
three months ended September 30, 1997 and 1996 was the effect of
certain noncash financing activities related to the $3.5 million loan
from GE Capital obtained by the Company in April 1997 and the $5.5
million South Carolina EDA loan obtained by the Company in April
1996. Capital expenditures in connection with this agreement totaled
approximately $498,000 and $1,019,000 for the three months ended
September 30, 1997 and 1996, respectively.
Note 4 Inventories consist of:
<TABLE>
<CAPTION>
SEPTEMBER JUNE
30, 1997 30, 1997
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<S> <C> <C>
Raw materials $3,361,442 $3,227,543
Finished goods and supplies 5,636,528 5,546,262
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Total LIFO inventories 8,997,970 8,773,805
Molds for resale in production 406,865 278,800
Supplies 433,572 354,541
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$9,838,407 $9,407,146
========== ==========
</TABLE>
6
<PAGE> 7
Part I
PVC Container Corporation
Notes to Consolidated Financial Statements
Note 5 In February 1997, the Financial Accounting Standards Board issued
FASB Statement No. 128 Earnings Per Share, effective for periods
ending after December 15, 1997. The Company will adopt the Statement
in its quarterly report for the quarter ended December 31, 1997.
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 month period ended September 30, 1997 were $15,313,000
as compared to $13,131,000 for the three month period ended September 30, 1996,
representing approximately a 16.6% increase. The increase in revenue during the
current three month period was due to a general improvement and demand for
plastic bottles and compounds throughout the company's lines of business.
Net sales were approximately 10.7% lower in the first quarter of fiscal 1998 as
compared to net sales in the fourth quarter of fiscal 1997 of $16,950,000. This
reduction in revenue reflects the 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, 1997 was $12,018,000
or 78.5% of net sales as compared to $10,654,000 or 81.1% of net sales for the
three months ended September 30, 1996. The improvement in cost of goods sold
relates primarily to increased manufacturing efficiencies and lower plastic
resin prices. These factors resulted in higher operating margins compared to the
three months ended September 30, 1996.
Selling, General and Administrative expenses (SG&A") increased by $286,000 in
the first quarter of fiscal 1998 compared to the same period in the prior year.
For the quarter ended September 30, 1997, SG&A expenses were $1,473,000 or 9.6%
of net sales, as compared to $1,187,000 or 9.0% of net sales for the quarter
ended September 30, 1996. SG&A expenses increased due to added marketing efforts
to develop our entry into the PET market and some increase in staff necessary to
support the Company's desire to grow its business.
Depreciation expense increased to a level of $798,000 for the three months ended
September 30, 1997 as compared to $649,000 for the three month period ended
September 30, 1996. This increase is attributed to a new plant expansion at our
Walterboro, SC. and Paris, IL manufacturing facilities along with new capital
equipment employed for the manufacture of PET bottles.
Income from Operations increased $396,000 during the three month period ended
September 30, 1997 as compared to the same period a year ago. For the three
month period ended September 30, 1997, Income from Operations was $1,023,000 or
6.7% of net sales, as compared to $627,000 or 4.8% of net sales for the three
month period ended September 30, 1996. Higher operating income was primarily the
result of improved operations margins and higher operating capacity utilization
during the three month period
8
<PAGE> 9
Part I
PVC CONTAINER CORPORATION
Management's Discussion and Analysis of Financial Condition and Results of
Operations
ended September 30, 1997 as compared to the three month period ended September
30, 1996. Net income for the quarter ended September 30, 1997 increased 53% to
$487,000 or $.07 per share as compared to $319,000 or $.05 per share for the
quarter ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity and working capital marginally decreased, however,
remained adequate for the three month period ended September 30, 1997. Net
working capital as at September 30, 1997 decreased $647,000 to $7,863,000
compared to $8,510,000 as of June 30, 1997. The current ratio of assets to
liabilities decreased from 1.72 to 1.61 at September 30, 1997, primarily
attributed to the increase in accounts payable and accrued expenses.
During the three month period ended September 30, 1997, the Company generated
cash from operations of $1,951,000 and received proceeds from long term debt in
the amount of $600,000. These funds were used to acquire $2,190,000 in capital
assets and reduce long term debt by $341,000.
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, 1997, the Company had unused sources of liquidity
consisting of cash and cash equivalents of $242,000 and the availability of the
unused credit under a revolving credit facility of $4,400,000.
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 three months ended September 30, 1997.
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 10, 1997
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 241,927
<SECURITIES> 0
<RECEIVABLES> 9,626,006
<ALLOWANCES> 245,000
<INVENTORY> 9,838,407
<CURRENT-ASSETS> 20,860,851
<PP&E> 46,416,378
<DEPRECIATION> 23,115,847
<TOTAL-ASSETS> 47,907,467
<CURRENT-LIABILITIES> 13,012,250
<BONDS> 17,768,800
0
0
<COMMON> 70,047
<OTHER-SE> 17,056,370
<TOTAL-LIABILITY-AND-EQUITY> 47,907,467
<SALES> 15,313,084
<TOTAL-REVENUES> 15,322,644
<CGS> 12,018,251
<TOTAL-COSTS> 14,290,217
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 213,334
<INCOME-PRETAX> 819,093
<INCOME-TAX> 331,700
<INCOME-CONTINUING> 487,393
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 487,393
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
