<PAGE> 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10-K
(MARK ONE)
<TABLE>
<S> <C>
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
[FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
</TABLE>
------------------------
Commission file number 1-10756
CARLISLE PLASTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
04-2891825
(I.R.S. employer
identification no.)
------------------------
Commission file number 33-35966
POLY-TECH, INC.
(Exact name of registrant as specified in its charter)
Minnesota
(State or other jurisdiction of
incorporation or organization)
41-1503086
(I.R.S. Employer
identification no.)
------------------------
One Union Street, Boston, MA
(Address of principal executive offices)
02108
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (617) 557-2600
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
<S> <C>
CLASS A COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT*:
13.75% SENIOR NOTES DUE 1997
SENIOR VARIABLE RATE NOTES DUE 1994
SENIOR VARIABLE RATE NOTES DUE 1997
10.25% SENIOR NOTES DUE 1997
(TITLE OF CLASS)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of filing.
AS OF JANUARY 31, 1994 THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT WAS $55,887,024 BASED ON THE CLOSING MARKET
VALUE ON THAT DAY.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes / / No / /
AT JANUARY 31, 1994, 8,005,401 AND 9,618,694 SHARES OF CARLISLE PLASTICS, INC.
CLASS A COMMON STOCK AND CLASS B COMMON STOCK, RESPECTIVELY, WERE OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Company's Annual Meeting of Shareholders
to be held April 26, 1994 are incorporated by reference into Part III of this
Form 10-K, to the extent described in such Part III.
* The classes of securities set forth under the above heading have not been
registered under Section 12(g) of the Act. With respect to the securities,
this Form 10-K is filed pursuant to Section 15(d) of the Act, because
registration statements were filed under the Securities Act of 1933 relating
to such classes of securities. Poly-Tech, Inc. ("Poly-Tech"), as a guarantor
of the 13.75% Senior Notes Due 1997 (the "13.75% Notes"), Senior Variable Rate
Notes Due 1994 (the "1994 Notes"), Senior Variable Rate Notes Due 1997 (the
"1997 Notes") (together with the 1994 Notes, the "Variable Rate Notes") and
10.25% Senior Notes Due 1997 (the "10.25% Notes"), is a registrant under this
Form 10-K.
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<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Carlisle Plastics, Inc. (the "Company") is a global leader in the
production of consumer products made from plastics. The Company's products
include trash bags, garment hangers and sheeting used for home improvement,
construction and agriculture. The Company's trash bag products include private
label and institutional lines, as well as the Company's own national consumer
brands. Other Company products include plastic bottles, containers and
packaging.
The Company's film products (including trash bag, sheeting and industrial
film products) in 1993, 1992 and 1991 accounted for 65.4%, 67.7% and 69.6%,
respectively, of the Company's consolidated net sales. The Company's molded
products (including hangers, bottles and containers) in 1993, 1992 and 1991
accounted for 34.6%, 32.3% and 30.4%, respectively, of the Company's
consolidated net sales.
Poly-Tech, which is an additional registrant hereunder, is a wholly-owned
subsidiary of the Company.
HISTORY
The Company was incorporated in Delaware in 1985 and adopted its present
name in February, 1989. In 1989, the Company acquired 79% ownership in
Poly-Tech. In 1990, the Company, through Poly-Tech, purchased 100% of the
outstanding capital stock of American Western Corporation ("American Western").
In 1991, the Company completed an initial public offering (the "Class A
Stock Offering"). In conjunction with the Class A Stock Offering, the Company
converted all shares of the Company's outstanding common stock into shares of
Class B Common Stock; acquired the 21% minority interests in its directly owned
subsidiaries in exchange for shares of Class A Common Stock; and changed its tax
status from a "S" corporation to a "C" corporation.
In July 1991, the Company purchased a two-thirds interest in Rhino-X
Industries, Inc. ("Rhino-X"). Under a put and call arrangement signed in
conjunction with the acquisition of Rhino-X, the Company purchased the remaining
shares on January 1, 1994.
PRODUCTS
The Company supplies plastic trash bags to three major markets. For mass
merchandise and other retail stores, the Company provides Ruffies(R), a national
brand consumer trash bag. For grocery chains nationwide, the Company provides
private label consumer trash bags and food contact products, such as sandwich
bags and wrap, recloseable bags and freezer bags. For institutional customers,
such as food service distributors, janitorial supply houses, restaurants, hotels
and hospitals, the Company provides heavy-duty trash liners.
The Company's leading plastic sheeting product, Film-Gard(R), is sold to
consumers and professional contractors through do-it-yourself outlets, home
improvement centers and hardware stores. A wide range of Film-Gard(R) products
are sold for various uses, including painting, renovation/construction,
landscaping and agriculture. The Company's industrial packaging film is sold
directly to manufacturers for use as shrink wrap and for other packaging
requirements.
The Company sells molded plastic garment hangers to four markets. The first
is garment manufacturers who place their clothes on the Company's hangers before
shipping to retail outlets. Another is the stores themselves, who buy standard
Company hanger lines for retail display. For national retailers, the Company
creates and sells customized hanger designs. The Company also supplies consumer
plastic hangers directly to mass merchandise stores.
The Company manufactures a line of plastic bottles marketed to the dairy,
water, juice, food and industrial markets on the eastern coast of the United
States.
The Company operates in a competitive marketplace where success is
dependent upon price, service and quality. The Company has positioned itself as
a major supplier of innovative plastic products to large, rapidly growing
national customers at the highest levels of value, service and quality.
1
<PAGE> 3
In the consumer trash bag market, the Company competes primarily with two
highly advertised national brands, as well as other private and controlled label
products. The Company has historically concentrated on mass merchandisers as the
primary market for its branded trash bags, while the other major national brands
are marketed primarily through food retailers.
RAW MATERIALS
The primary raw materials used by the Company in the manufacture of its
products are various plastic resins, primarily polyethylene. Because plastic
resins are commodity products, the Company selects its suppliers primarily on
the basis of price. Consequently, the Company's sources for plastic resins tend
to vary from year to year. Shortages of plastic resins have been infrequent.
The Company uses in excess of 400 million pounds of plastic resins
annually. At this level, the Company is one of the largest purchasers of plastic
resin in the United States. Management believes that large volume purchases of
plastic resin result in lower unit raw material costs.
Natural gas and crude oil markets experience substantial cyclical price
fluctuations as well as other market disturbances, including shortages of
supply, the effect of OPEC policy and crises in the oil producing regions of the
world. The capacity, supply and demand for plastic resins and the petrochemical
intermediates from which they are produced are also subject to cyclical and
other market factors. Plastic resin prices may fluctuate as a result of these
factors.
The Company may not always be able to pass through increases in the cost of
its raw materials to its customers in the form of price increases. To the extent
that increases in the cost of plastic resin cannot be passed on to its
customers, such increases may have a detrimental impact on the profitability of
the Company due to decreases in its profit margins.
MAJOR CUSTOMERS
The Company has no customer that accounts for over 10% of its consolidated
net sales.
EMPLOYEES
As of December 31, 1993, the Company employed approximately 2,800 full-time
employees, of whom approximately 2,400 are engaged in manufacturing and
approximately 400 are engaged in administration and sales.
CYCLICALITY AND SEASONALITY OF PORTIONS OF BUSINESS
The trash bag and plastic bottle businesses, which account for
approximately 50% of 1993 consolidated net sales, have been stable during the
recent economic cycles. The hanger, construction film and industrial film
businesses, which are sensitive to economic conditions, gained market share in
the difficult market conditions of 1992 and 1993.
Historically, the Company's results have been affected, in part, by the
nature of its customers' purchasing trends for various seasonal and promotional
programs. The first quarter is typically the least profitable quarter, and the
third quarter is the strongest due to demands for hangers during the holiday
season, lawn and leaf bags in the fall and strong promotional activity by major
mass merchandisers.
ENVIRONMENTAL AND SAFETY MATTERS
The Company is currently not subject to any environmental proceedings.
During 1993, the Company did not make any material capital expenditures for
environmental control facilities, nor does it anticipate any in the near future.
Actions by federal, state and local governments concerning environmental
matters could result in laws or regulations that could increase the cost of
producing the products manufactured by the Company or otherwise adversely affect
the demand for its products.
At present, environmental laws and regulations do not have a material
adverse effect upon the demand for the Company's products. The Company is aware,
however, that certain local governments have adopted ordinances prohibiting or
restricting the use or disposal of certain plastic products that are among the
types of
2
<PAGE> 4
products produced by the Company. If such prohibitions or restrictions were
widely adopted, such regulatory and environmental measures could have a material
adverse effect upon the Company. In addition, a decline in consumer preferences
for plastic products due to environmental considerations could have a material
adverse effect upon the Company.
In addition, certain of the Company's operations are subject to federal,
state and local environmental laws and regulations that impose limitations on
the discharge of pollutants into the air and water and establish standards for
the treatment, storage and disposal of solid and hazardous wastes. While
historically the Company has not had to make significant capital expenditures
for environmental compliance, the Company cannot predict with any certainty its
future capital expenditures for environmental compliance because of continually
changing compliance standards and technology. The Company does not currently
have any insurance coverage for environmental liabilities and does not
anticipate obtaining such coverage in the future.
<TABLE>
ITEM 2. PROPERTIES
The Company utilizes approximately 618,700 square feet of leased space and
approximately 1,713,000 square feet of space owned by the Company.
The Company maintains its headquarters in Massachusetts. Such headquarters
consist of 5,700 square feet of office space leased from an affiliate.
The principal properties of the Company are as follows:
<CAPTION>
DESCRIPTION LEASED OWNED
LOCATION OF PROPERTY (SQ. FT.) (SQ. FT.)
-------- ----------- --------- ---------
<S> <C> <C> <C>
Phoenix, Arizona........................... Distribution Warehouse 115,000
Phoenix, Arizona........................... Divisional Office 33,000
San Francisco, California.................. Distribution Warehouse 11,000
Santa Ana, California...................... Distribution Warehouse 124,000
Auburndale, Florida........................ Manufacturing 54,000
Portland, Maine............................ Manufacturing 17,000
Jessup, Maryland........................... Manufacturing 60,000
Boston, Massachusetts...................... Corporate Offices 5,700
Tijuana, Mexico............................ Manufacturing 60,000
Fairmont, Minnesota........................ Manufacturing and 66,000
Distribution Warehouse
Minneapolis, Minnesota..................... Manufacturing, 189,000
Distribution Warehouse,
and Divisional Offices
Woodbridge, New Jersey..................... Sales and Marketing 12,000
Batavia, New York.......................... Manufacturing 20,000
Battleboro, North Carolina................. Manufacturing and 391,000
Distribution Warehouse 180,000
and Divisional Offices
Thomasville, North Carolina................ Manufacturing and 157,000
Distribution Warehouse
Berwick, Pennsylvania...................... Manufacturing 197,000
E. Greenville, Pennsylvania................ Manufacturing 20,000
Ringtown, Pennsylvania..................... Manufacturing and 205,000
Distribution Warehouse
Sioux Falls, South Dakota.................. Manufacturing and 221,000
Distribution Warehouse
Victoria, Texas............................ Manufacturing and 184,000
Distribution Warehouse
Webster, Texas............................. Distribution Warehouse 10,000
- ---------------
The Company also leases properties in Hong Kong.
</TABLE>
3
<PAGE> 5
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial statements of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
4
<PAGE> 6
PART II
<TABLE>
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's Class A Common Stock has been listed on the New York Stock
Exchange under the trading symbol "CPA" since May 1991. The Company's Class B
Common Stock has restrictions on transfer and ownership; accordingly, no trading
market will develop in the Class B Common Stock and the Class B Common Stock
will not be listed or traded on any exchange or in any market.
Price range of Class A Common Stock:
<CAPTION>
1993 1992
------------ ------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter...................... $7 $5 3/8 $12 7/8 $9 1/4
Second Quarter..................... 6 5 10 5/8 5 1/8
Third Quarter...................... 7 5 5/8 5 1/4 3 3/8
Fourth Quarter..................... 8 1/4 5 1/4 5 7/8 3 3/8
</TABLE>
The Company estimates that it had 7,000 beneficial owners of the Class A
Common Stock at December 31, 1993. The Company's Class B Common Stock was held
by 8 record holders at December 31, 1993. Each share of Class A Common Stock is
entitled to one vote and each share of Class B Common Stock is entitled to
twenty votes. As of December 31, 1993, officers and directors of the Company
controlled 74.4% of the combined voting power of the two classes of stock.
The indentures for the Company's senior notes generally prohibit the
Company from paying dividends on its common stock (other than dividends on
non-convertible capital stock or certain other securities). See Notes to
Consolidated Financial Statements included herein.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
SELECTED HISTORICAL FINANCIAL DATA OF THE COMPANY:
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1993 1992 1991(A) 1990(A) 1989(A)
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales..................................... $360,895 $359,856 $343,637 $324,724 $211,600
Income (Loss) Before Extraordinary Item and
Change in Accounting Principle (b)(c)....... $ 5,832 $ (6,214) $ 5,393 $ 3,851 $ 6,645
Net Income (Loss) (b)(c)...................... $ 7,184 $ (6,303) $ 1,817 $ 3,851 $ 6,645
Pro Forma Net Income (d)...................... $ 4,505 $ 3,589 $ 4,901
Income (Loss) per Common Share:
Income (Loss) Before Extraordinary Item..... $ .33 $ (.35)
Net Income (Loss)........................... $ .41 $ (.36)
Pro Forma Income per Common Share (d):
Income Before Extraordinary Item............ $ .54 $ .33 $ .45
Net Income.................................. $ .30 $ .33 $ .45
Average Number of Common and Common Equivalent
Shares Outstanding (e)...................... 17,737 17,610 14,996 10,811 10,811
======== ======= ======== ======== ========
BALANCE SHEET DATA (End of Period):
Total Assets.................................. $325,848 $325,170 $304,596 $286,978 $159,062
Long-Term Debt (f)............................ $183,101 $198,994 $155,885 $202,447 $113,939
</TABLE>
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5
<PAGE> 7
(a) In April 1989, the Company acquired 79% of the stock of Poly-Tech. In March
1990, Poly-Tech acquired 100% of the stock of American Western. In May 1991,
the Company acquired the remaining 21% of Poly-Tech. In July 1991, the
Company acquired 66.6% of the stock of Rhino-X. Results are included from
the date of each respective purchase.
(b) In 1992, pretax income was reduced by $7.7 million for a new product
introduction and $4.3 million for a restructuring charge. In 1991, pretax
income was reduced by $3.4 million for a restructuring charge. In 1990,
pretax income was net of certain non-recurring costs aggregating
approximately $4.1 million, including $1.3 million settlement of a loan
guarantee, $0.7 million estimated loss on property, and $2.1 million of
costs associated with termination of the phantom stock plan, expenses
incurred in connection with the American Western acquisition and transition
of a manufacturing plant to Mexico. Net income was reduced $234, $89 and
$3,576 in 1993, 1992 and 1991, respectively, for extraordinary items related
to the early extinguishment of debt. Net income in 1993 was also increased
by $1,586 for the cumulative effect of an accounting principle change
relating to income taxes.
(c) In 1991, the provision for income taxes includes a $3.0 million
non-recurring deferred tax charge to recognize tax effects of timing
differences on conversion of the Company from a "S" corporation to a "C"
corporation.
(d) Pro forma net income includes a provision for income taxes as if the entire
Company had been a "C" corporation for the entire year.
(e) Share amounts in 1991, 1990 and 1989 have been retroactively adjusted to
reflect a 125.9-for-1 stock split in May 1991.
(f) Includes junior subordinated notes due to stockholders and affiliates in the
aggregate amount of $7.0 million in 1991, 1990 and 1989.
<TABLE>
SELECTED HISTORICAL FINANCIAL DATA OF POLY-TECH (A):
<CAPTION>
APRIL 7 JANUARY 1
YEAR ENDED DECEMBER 31, THROUGH THROUGH
----------------------------------------- DECEMBER 31, APRIL 6,
1993 1992 1991 1990(B) 1989 1989
---- ---- ---- -------- ------------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales................................. $200,100 $206,359 $213,217 $207,793 $ 76,881 $23,031
Income (Loss) Before Extraordinary Item
and Change in Accounting Principle
(c)..................................... $ (917) $ (6,945) $ 5,401 $ 4,451 $ 2,747 $ (296)
Net Income (Loss) (c) (d)................. $ (1,820) $ (6,959) $ 5,260 $ 4,451 $ 2,747 $ (296)
BALANCE SHEET DATA (End of Period):
Total Assets.............................. $176,306 $182,911 $192,571 $193,843 $ 80,628 $48,805
Long-Term Debt (e)........................ $ 640 $ 940 $ 24,551 $ 23,175 $ 4,500 $18,100
<FN>
- ---------------
(a) Since April 7, 1989, the financial data of Poly-Tech have been consolidated
with those of the Company.
(b) In March 1990, Poly-Tech acquired 100% of the stock of American Western.
Results are included from the date of purchase.
(c) In 1992, pretax income is reduced by $3.6 million for a restructuring
charge. In 1990, pretax income is reduced by $0.7 million for an estimated
loss on property.
(d) Net income was reduced $14 and $141 in 1992 and 1991, respectively, for
extraordinary items related to the early extinguishment of debt. In 1993,
net income was reduced $903 for the cumulative effect of an accounting
principle change relating to income taxes.
(e) Long-term debt does not include Intercompany Notes payable to Poly-Tech's
parent, Carlisle Plastics, Inc. For the periods ended December 31,
Intercompany Notes totalled $118,806, $118,806, $90,000, $90,000 and $35,000
for 1993, 1992, 1991, 1990 and 1989, respectively.
</TABLE>
6
<PAGE> 8
<TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain operating data for each of the three
years in the period ended December 31, 1993 as a percentage of net sales:
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net Sales......................................................... 100.0% 100.0% 100.0%
Gross Profit...................................................... 27.4% 26.8% 30.3%
Operating Expenses................................................ 17.9% 18.8% 18.4%
Goodwill and Other Amortization................................... .8% .7% .7%
New Product Introduction.......................................... -- 2.2% --
Restructuring..................................................... -- 1.2% 1.0%
----- ----- -----
Total Operating Expenses................................ 18.7% 22.9% 20.1%
Income from Operations............................................ 8.7% 3.9% 10.2%
Interest Expense.................................................. 6.3% 6.1% 6.6%
Interest and Other Income......................................... (.1)% (.1)% (.4)%
Income (Loss) Before
Extraordinary Item and Change in Accounting Principle 1.6% (1.7)% 1.6%
Net Income (Loss)................................................. 2.0% (1.8)% .5%
</TABLE>
1993 as Compared with 1992
Net sales were $360.9 million in 1993 compared to $359.9 million in 1992.
Unit volume for 1993 increased 4 percent from 1992.
Gross profit increased 2.6 percent to $98.9 million in 1993 from $96.4
million in 1992. Gross margin as a percent of sales increased to 27.4 percent in
1993 from 26.8 percent in 1992. The increase was largely due to improved margins
for the film products group due to lower costs.
Operating expenses decreased 18.1 percent in 1993 to $67.4 million from
$82.3 million in 1992. Operating expenses as a percent of sales decreased to
18.7 percent from 22.9 percent in 1992. Operating expenses in 1992 included $7.7
million associated with a new product introduction and $4.3 million of
restructuring charges. These restructuring charges were utilized for realignment
of production facilities, management reorganization, product re-engineering and
reduction of product offerings.
Interest expense, including amortization of deferred financing costs,
increased to $22.5 million in 1993 from $22.0 million in 1992 due to the
issuance of $90.0 million 10.25% Notes in June of 1992. Interest expense for
1993 was reduced $0.8 million as the result of interest rate swap agreements.
The Company recorded a tax provision of $3.5 million in 1993, reflecting an
effective tax rate of 37.2 percent, compared to a benefit of ($0.7) million in
1992 as a result of losses incurred.
Net income increased to $7.2 million in 1993 from a net loss of ($6.3)
million in 1992. Net income in 1993 and 1992 included an after-tax extraordinary
charge of $0.2 and $0.1 million, respectively, relating to the early
extinguishment of debt. Net income in 1993 also included a $1.6 million net
benefit from the adoption of Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes."
7
<PAGE> 9
1992 Compared with 1991
Net sales increased 4.7 percent in 1992 to $359.9 million from $343.6
million in 1991. Unit volume increased 18 percent from 1991, partially offset by
reductions in selling prices in the film products group.
Gross profit decreased 7.3 percent in 1992 to $96.4 million from $104.0
million in 1991. Gross margin as a percent of sales decreased to 26.8 percent in
1992 from 30.3 percent in 1991. The decrease in 1992 resulted from heavy
promotional activity by competitors in certain segments of the plastic trash bag
market.
Operating expenses increased 19.2 percent in 1992 to $82.3 million from
$69.1 million in 1991. Operating expenses as a percent of net sales increased to
22.9 percent in 1992 from 20.1 percent in 1991. Operating expenses for 1992
included $7.7 million associated with a new product introduction and $4.3
million charges as a result of a restructuring plan.
Interest expense, including amortization of deferred financing costs, was
$22.0 million in 1992 compared to $22.6 million in 1991. The decrease resulted
from repayment of long-term debt from the proceeds of the Class A Stock Offering
in May 1991 and lower interest rates in 1992. The decrease was partially offset
by the issuance of the 10.25% Notes in June of 1992.
Interest and other income was $0.5 million in 1992 compared to $1.5 million
in 1991. The 1991 amount included interest income from investment of the
proceeds from the Class A Stock Offering until they were used to repay Company
indebtedness.
The Company recorded a benefit of ($0.7) million in 1992 for income taxes,
compared to a provision of $8.3 million in 1991. The 1991 provision included
$3.0 million recorded for a non-recurring deferred tax charge to recognize the
tax effects of timing differences on conversion of the Company from a "S"
corporation to a "C" corporation.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations increased 47.7 percent to $19.5 million in
1993 from $13.2 million in 1992 primarily due to the increase in net income.
The Company's working capital of $54.3 million at December 31, 1993
decreased $7.6 million from December 31, 1992. This was primarily due to the
reclassification of the $10.0 million 1994 Notes and a $2.7 million stock
purchase obligation from long-term to current.
The Company's $10.0 million of 1994 Notes become due in March 1994. In
addition, the Company is actively pursuing refinancing alternatives for $68.5
million of the 13.75% Notes, which become callable at the option of the Company
at 103.93% of the outstanding principal amount in April 1994.
In September 1993, the Company received $2.0 million from the termination
of an interest rate swap agreement, which it had entered into in June 1993. This
gain has been deferred and is being amortized over the original term of the swap
agreement.
In September 1993, the Company entered into a new interest rate swap
agreement on a notional principal amount of $90.0 million, terminating in June
1997, matching the principal and due date of the Company's 10.25% Notes. Under
the agreement, the Company receives interest at a fixed rate and pays interest
at a floating rate, which is established in arrears at six month intervals. In
December 1993, the Company received $0.3 million from the first settlement
period of the swap agreement.
The net interest differential and amortization of the deferred gain of $0.8
million was recorded as a reduction of interest expense in 1993. The agreement
is collateralized by the Company's accounts receivable.
The Company is subject to interest rate risk during the term of the swap
agreement. A sufficient increase in market interest rates during the term of the
agreement could result in the Company having a net payment obligation under the
agreement. Further, the Company is subject to credit risk exposure from
nonperformance by the counterparty during periods when such party has a net
payment obligation to the Company.
8
<PAGE> 10
The Company expects its cash on hand and funds from operations will be
sufficient to cover future operating cash requirements. Approximately $179.7
million of the Company's outstanding indebtedness matures in 1997. Management
believes that the Company will have the funds necessary to meet all of its
financing requirements and obligations, based upon the Company's ability to
generate funds from operations and obtain additional credit facilities.
The Company plans to use cash generated from operations and other sources
to retire long-term indebtedness. The Company expects to fund its 1994 capital
expenditures from cash from operations approximately equal to its 1994
depreciation expense.
TAX LAW CHANGE
The Omnibus Budget Reconciliation Act of 1993 (the "Act") was signed into
law on August 10, 1993. Under SFAS No. 109, the effect of changes in tax law or
rates is reported as a component of income tax expense from continuing
operations in the period of enactment. The Act has not significantly changed the
income tax consequences for the Company.
ACCOUNTING PRONOUNCEMENTS
In May 1993, the Financial Accounting Standards Board issued SFAS No. 114,
"Accounting for Impairment of a Loan," and SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The Company has evaluated the
effects of these standards and believes that they will not affect the Company's
financial condition or operating results.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 14 beginning on page 11.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
9
<PAGE> 11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth in the Company's 1994 Proxy Statement under the
caption "Election of Directors" is incorporated herein by reference. Each of the
executive officers of the Company is also a director of the Company; thus, the
required information regarding executive officers of the Company is included in
the 1994 Proxy Statement. Information in response to this Item with respect to
Poly-Tech is set forth in Appendix A under the caption "Directors and Executive
Officers," which is included in this Form 10-K starting on page 43, following
the Consolidated Financial Statements and Consolidated Financial Statement
Schedules.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the 1994 Proxy Statement under the caption
"Executive Compensation" (except for the information under the subheadings
"Compensation Committee Report on Executive Compensation" and "Stock
Performance") is incorporated herein by reference and also as it relates to the
directors and officers with respect to Poly-Tech (as described in Appendix A
under the caption "Executive Compensation").
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the 1994 Proxy Statement under the caption
"Security Ownership of Principal Shareholders and Management" is incorporated
herein by reference. Information in response to this Item with respect to
Poly-Tech is set forth in Appendix A under the caption "Security Ownership of
Certain Beneficial Owners and Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth in the 1994 Proxy Statement under the caption
"Certain Transactions" is incorporated herein by reference.
10
<PAGE> 12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Consolidated Financial Statements
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
Independent Auditors' Report
Consolidated Balance Sheets at December 31, 1993 and 1992
Consolidated Statements of Operations for the years ended December
31, 1993, 1992
and 1991
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1993,
1992 and 1991
Consolidated Statements of Cash Flows for the years ended December
31, 1993, 1992
and 1991
Notes to Consolidated Financial Statements
2. Consolidated Financial Statement Schedules of Carlisle Plastics,
Inc. required to be filed by Item 8 and Paragraph (d) of this Item
14
Schedule III -- Condensed Financial Information of Registrant
Schedule V -- Property, Plant and Equipment
Schedule VI -- Accumulated Depreciation and Amortization of
Property, Plant and
Equipment
Schedule VIII -- Valuation and Qualifying Accounts
Schedule X -- Supplementary Income Statement Information
Such schedules and reports are at pages 36 through 42 of this
report.
All other schedules for Carlisle Plastics, Inc. and Subsidiaries and
all schedules for Poly-Tech, Inc. have been omitted because they are
inapplicable, not required, or the information is included elsewhere
in the consolidated financial statements or notes thereto.
3. The Exhibits are listed in the Index of Exhibits required by Item
601 of Regulation S-K at Item (c) below.
(b) No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
(c) The Index to Exhibits and required Exhibits are included following the
Consolidated Financial Statement Schedules beginning at page 44 of this
report.
(d) The Index to Consolidated Financial Statements and Consolidated
Financial Statement Schedules are included following the signatures
beginning at page 14 of this report.
11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CARLISLE PLASTICS, INC.
Dated: February 18, 1994
By /s/ WILLIAM H. BINNIE
-----------------------------------
William H. Binnie
Chairman of The Board
and Chief Executive Officer
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WILLIAM H. BINNIE Chairman of the Board and February 18, 1994
- --------------------------------------------- Chief Executive Officer
William H. Binnie (principal executive
officer)
/s/ RAJIV P. BHATT Chief Financial Officer, February 18, 1994
- --------------------------------------------- Secretary and Director
Rajiv P. Bhatt (principal financial and
accounting officer)
/s/ CLIFFORD A. DEUPREE Director February 18, 1994
- ---------------------------------------------
Clifford A. Deupree
/s/ YEHOCHAI SCHNEIDER Director February 18, 1994
- ---------------------------------------------
Yechochai Schneider
/s/ CLARENCE M. SCHWERIN III Director February 18, 1994
- ---------------------------------------------
Clarence M. Schwerin III
/s/ SAMUEL H. SMITH, JR. Director February 18, 1994
- ---------------------------------------------
Samuel H. Smith, Jr.
/s/ DAVID E. WILBUR, JR. Director February 18, 1994
- ---------------------------------------------
David E. Wilbur, Jr.
/s/ GRANT M. WILSON Director February 18, 1994
- ---------------------------------------------
Grant M. Wilson
</TABLE>
12
<PAGE> 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
POLY-TECH, INC.
Dated: February 18, 1994
By
/s/WILLIAM H. BINNIE
------------------------------------
William H. Binnie
Chairman of The
Board
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WILLIAM H. BINNIE Chairman of the Board February 18, 1994
- ----------------------------------------------- (principal executive
William H. Binnie officer)
/s/ RAJIV P. BHATT Vice President, Secretary February 18, 1994
- ----------------------------------------------- and Chief Financial Officer
Rajiv P. Bhatt (principal financial and
accounting officer)
</TABLE>
13
<PAGE> 15
<TABLE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
<CAPTION>
PAGE
REFERENCE IN
REPORT ON
FORM 10-K
------------
<S> <C>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
Independent Auditors' Report 15
Consolidated Balance Sheets at December 31, 1993 and 1992 16
Consolidated Statements of Operations for the years ended December 31, 1993, 1992
and 1991 17
Consolidated Statements of Stockholders' Equity for the years ended December 31,
1993, 1992 and 1991 18
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1992
and 1991 19
Notes to Consolidated Financial Statements 20-35
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
Consolidated Financial Statement Schedules:
Schedule III Condensed Financial Information of Registrant 36-38
Schedule V Property, Plant and Equipment 39
Schedule VI Accumulated Depreciation and Amortization of Property, Plant
and Equipment 40
Schedule VIII Valuation and Qualifying Accounts 41
Schedule X Supplementary Income Statement Information 42
</TABLE>
14
<PAGE> 16
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Carlisle Plastics, Inc.
Boston, Massachusetts
We have audited the accompanying consolidated balance sheets of Carlisle
Plastics, Inc. and subsidiaries as of December 31, 1993 and 1992, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1993. Our
audits also included the consolidated financial statement schedules listed at
Item 14(a)2. These financial statements and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to express
an opinion on the financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Carlisle Plastics, Inc. and
subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
As discussed in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for income taxes to conform with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," during the year ended December 31, 1993.
DELOITTE & TOUCHE
Boston, Massachusetts
February 9, 1994
15
<PAGE> 17
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................. $ 19,745 $ 17,750
Receivables -- net of allowances of $3,025 in 1993 and $2,600 in
1992............................................................... 46,770 47,075
Inventories........................................................... 43,032 41,100
Other current assets.................................................. 5,750 7,361
--------- ---------
Total current assets............................................. 115,297 113,286
--------- ---------
Property, plant and equipment -- net.................................... 135,755 133,938
Goodwill -- net of accumulated amortization of $10,352 in 1993 and
$8,221 in 1992........................................................ 67,729 70,535
Other assets -- net..................................................... 7,067 7,411
--------- ---------
TOTAL ASSETS............................................................ $ 325,848 $ 325,170
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt..................................... $ 11,209 $ 1,090
Accounts payable...................................................... 34,109 33,977
Accrued interest...................................................... 2,916 3,254
Accrued promotional allowances........................................ 1,909 4,075
Stock purchase obligation............................................. 2,721 --
Other accrued liabilities............................................. 8,176 9,038
--------- ---------
Total current liabilities........................................ 61,040 51,434
--------- ---------
Long-term debt -- net of current portion................................ 183,101 198,994
Stock purchase obligation............................................... -- 2,438
Deferred income taxes................................................... 10,816 10,125
Other non-current liabilities........................................... 1,625 --
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock -- par value $.01; no shares issued or outstanding
Class A common stock -- par value $.01; 8,000,401 and 7,556,524 issued
and outstanding in 1993 and 1992, respectively..................... 80 76
Class B common stock -- par value $.01; 9,618,694 and 10,053,694
issued and outstanding in 1993 and 1992, respectively.............. 96 100
Additional paid-in capital............................................ 67,904 67,861
Retained earnings (deficit)........................................... 1,186 (5,858)
--------- ---------
Total stockholders' equity....................................... 69,266 62,179
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.............................. $ 325,848 $ 325,170
========= =========
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 18
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net sales.................................................. $360,895 $359,856 $343,637
Cost of goods sold......................................... 261,987 263,474 239,675
-------- -------- --------
Gross profit............................................... 98,908 96,382 103,962
Operating expenses......................................... 64,467 67,736 63,064
Goodwill and other amortization............................ 2,970 2,512 2,579
New product introduction................................... -- 7,743 --
Restructuring.............................................. -- 4,320 3,431
-------- -------- --------
Operating income........................................... 31,471 14,071 34,888
Interest expense........................................... 22,549 21,957 22,648
Interest and other income.................................. (369) (451) (1,498)
Other...................................................... -- (533) 21
-------- -------- --------
Income (loss) before provision for income taxes,
extraordinary item and cumulative effect of change in
accounting principle..................................... 9,291 (6,902) 13,717
Provision for income taxes (benefit)....................... 3,459 (688) 8,324
-------- -------- --------
Income (loss) before extraordinary item and cumulative
effect of change in accounting principle................. 5,832 (6,214) 5,393
Extraordinary item -- early retirement of debt (net of
taxes of $138 in 1993, $52 in 1992 and $2,056 in 1991)... (234) (89) (3,576)
Cumulative effect of change in accounting principle
relating to income taxes................................. 1,586 -- --
-------- -------- --------
Net income (loss).......................................... $ 7,184 $ (6,303) $ 1,817
======== ======== ========
Income (loss) per common share:
Before extraordinary item and change in accounting
principle............................................. $ .33 $ (.35)
Extraordinary item....................................... (.01) (.01)
Change in accounting principle........................... .09 --
-------- --------
Net income (loss)........................................ $ .41 $ (.36)
======== ========
Average number of common and common equivalent shares
outstanding.............................................. 17,737 17,610 14,996
======== ======== ========
PRO FORMA INFORMATION
Income taxes............................................... $ 5,636
========
Net income................................................. $ 4,505
========
Income (loss) per common share:
Before extraordinary item................................ $ .54
Extraordinary item....................................... (.24)
--------
Net income............................................... $ .30
========
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 19
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
--------------------- PAID-IN EARNINGS
CLASS A CLASS B CAPITAL (DEFICIT) TOTAL
------- ------- ---------- --------- -----
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1991................. $ -- $ 1,024 $ -- $ 3,221 $ 4,245
125.9-for-1 stock split.................. -- (916) 916 -- --
Initial public offering.................. 68 -- 67,836 -- 67,904
Acquisition of minority interest......... -- -- 544 -- 544
Class B shares converted to Class A
shares................................. 6 (6) -- -- --
Distributions to stockholders............ -- -- (1,565) (4,672) (6,237)
Issuance of stock options................ -- -- 165 -- 165
Foreign currency translation
adjustment............................. -- -- -- 10 10
Net income............................... -- -- -- 1,817 1,817
----- ------- -------- -------- -------
Balance, December 31, 1991............... 74 102 67,896 376 68,448
Class B shares converted to Class A
shares................................. 2 (2) -- -- --
Foreign currency translation
adjustment............................. -- -- -- 69 69
Other.................................... -- -- (35) -- (35)
Net loss................................. -- -- -- (6,303) (6,303)
----- ------- -------- -------- -------
Balance, December 31, 1992............... 76 100 67,861 (5,858) 62,179
Class B shares converted to Class A
shares................................. 4 (4) -- -- --
Exercise of stock options................ -- -- 43 -- 43
Foreign currency translation
adjustment............................. -- -- -- (140) (140)
Net income............................... -- -- -- 7,184 7,184
----- ------- -------- -------- -------
Balance, December 31, 1993............... $ 80 $ 96 $ 67,904 $ 1,186 $69,266
===== ======= ======== ======== =======
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 20
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................................... $ 7,184 $ (6,303) $ 1,817
Adjustments to reconcile net income (loss) to net cash
flows from operating activities:
Depreciation and amortization............................ 19,402 15,562 13,767
Deferred income taxes.................................... 1,263 (121) 2,804
Bad debt expense......................................... 969 1,399 1,161
Write-off of deferred financing costs.................... 122 69 3,272
Change in accounting principle........................... (1,586) -- --
Other.................................................... (140) 69 175
Changes in assets and liabilities, net of effects of
business acquisition:
Receivables........................................... (664) (1,371) (3,596)
Inventories........................................... (1,932) 4,926 (8,844)
Other current assets.................................. 1,513 2,703 (347)
Accounts payable...................................... 132 (2,736) (6,190)
Other accrued liabilities............................. (5,064) (1,356) (10,179)
Other assets.......................................... (1,705) 362 (1,277)
-------- -------- --------
Total adjustments.......................................... 12,310 19,506 (9,254)
-------- -------- --------
Net cash provided by (used for) operating activities....... 19,494 13,203 (7,437)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment -- net........ (15,274) (27,889) (26,682)
Sale of assets of trucking subsidiary...................... 1,500 -- --
Business acquisition....................................... -- -- (5,000)
-------- -------- --------
Net cash used for investing activities..................... (13,774) (27,889) (31,682)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Initial public offering.................................... -- -- 67,904
Issuance of long-term debt................................. 467 94,290 5,000
Repayments of long-term debt............................... (6,241) (34,370) (86,025)
Repayments of notes to stockholders and affiliates......... -- (7,046) --
Borrowings under line of credit............................ -- 9,629 24,248
Repayments under line of credit............................ -- (31,014) (2,863)
Interest rate contract settlement.......................... 2,000 -- --
Distributions and dividends................................ -- -- (1,744)
Deferred financing costs................................... (277) (2,833) (176)
Other...................................................... 326 665 --
-------- -------- --------
Net cash (used for) provided by financing activities....... (3,725) 29,321 6,344
-------- -------- --------
CASH AND CASH EQUIVALENTS:
Net increase (decrease).................................... 1,995 14,635 (32,775)
Balance, beginning of year................................. 17,750 3,115 35,890
-------- -------- --------
Balance, end of year....................................... $ 19,745 $ 17,750 $ 3,115
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 21
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. BUSINESS ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The principal business of Carlisle Plastics, Inc. (the "Company") is the
manufacture, sale and distribution of plastic products.
In May 1991, the Company completed an initial public offering (the "Class A
Stock Offering") of 6,750,000 shares of Class A Common Stock (a newly authorized
series). In conjunction with the Class A Stock Offering, the Company converted
all shares of the Company's outstanding common stock into 10,810,846 shares of
Class B Common Stock; the Company acquired the minority interests in its
directly owned subsidiaries in exchange for shares of Class A Common Stock; and
the Company changed its tax status from a "S" corporation to a "C" corporation.
The Company used proceeds from the Class A Stock Offering to retire
indebtedness.
BASIS OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts
of Poly-Tech, Inc. ("Poly-Tech"), American Western Corporation ("American
Western"), Rhino-X Industries, Inc. ("Rhino-X"), A&E Products (Far East) Ltd.
("Far East") and Plasticos Bajacal, S. A. De C. V. ("Plasticos"). Significant
intercompany transactions have been eliminated in consolidation.
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year's presentation.
CASH EQUIVALENTS
Cash equivalents include highly liquid investments with a maturity of three
months or less when purchased. The recorded amount of cash equivalents
approximates fair market value.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is principally
determined using the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is computed
on a straight-line basis over the estimated lives of the assets ranging from two
to fifty years. Amortization of property acquired under capitalized leases and
leasehold improvements is computed on a straight-line basis over the shorter of
the estimated useful lives of the assets or the remaining term of the lease.
GOODWILL
Goodwill arising from excess purchase cost over net assets acquired is
amortized on the straight-line method principally over forty years. Accumulated
amortization aggregated $10,352 and $8,221 for the years ended December 31, 1993
and 1992, respectively.
DEFERRED FINANCING COSTS
Included in other assets at December 31, 1993 and 1992 are $9,570 and
$9,415, respectively, of deferred financing costs which are being amortized
using the interest method over the term of the related debt. Accumulated
amortization aggregated $5,355 and $3,990 at December 31, 1993 and 1992,
respectively.
20
<PAGE> 22
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
REVENUE RECOGNITION
Revenues are generally recognized in the ordinary course when products are
shipped and customers are invoiced.
In 1992, the Company entered into a bartering agreement, whereby it
exchanged inventory for advertising credits. The credits were valued at the
$1,600 cost basis of the inventory exchanged. The difference between fair value
of the advertising credits and the cost basis of the inventory is recognized as
income when the credits are used. During 1993, credits of $981 were used; as a
result, income of $760 and advertising expense of $1,741 were recognized. During
1992, no credits were used and no income was recognized.
INCOME TAXES
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," effective January 1, 1993, and recorded
the cumulative effect of this change, which increased net income by $1,586. This
statement requires recognition of deferred assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the differences between the financial
statements and the tax basis of assets and liabilities using enacted tax rates.
Previously, the Company accounted for income taxes under the provisions of SFAS
No. 96, "Accounting for Income Taxes."
Prior to the Class A Stock Offering, the Company was treated as a "S"
corporation, although certain of its subsidiaries were "C" corporations. As a
"S" corporation, the Company was generally not liable for federal and certain
state income taxes where the "S" corporation status was recognized. Accordingly,
such income taxes relating to earnings were the obligation of the Company's
stockholders and, therefore, were not recorded in the accompanying consolidated
financial statements. In conjunction with the Class A Stock Offering, the
Company unified its tax status to a "C" corporation. Pro forma income taxes and
net income for 1991 reflect the effect on such amounts as if the Company had
been a "C" corporation for the entire period.
INCOME PER COMMON SHARE
Income per common share is computed on the basis of the weighted average
number of common shares (retroactively adjusted to reflect a 125.9-for-1 stock
split in May 1991) and common equivalent shares, consisting of the dilutive
effect of stock options outstanding during each year. Pro forma income reflects
the effect on income taxes in 1991 as if the Company had been a "C" corporation
for the entire period.
ACCOUNTING PRONOUNCEMENTS
In May 1993, the Financial Accounting Standards Board issued SFAS No. 114,
"Accounting for Impairment of a Loan," and SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The Company has evaluated the
effects of these standards and believes that they will not affect the Company's
financial condition or operating results.
<TABLE>
2. INVENTORIES
Inventories consist of the following at December 31:
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Raw materials................................................. $ 13,909 $ 13,638
Finished goods................................................ 29,123 27,462
-------- --------
Total......................................................... $ 43,032 $ 41,100
======== ========
</TABLE>
21
<PAGE> 23
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following at December 31:
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Land, buildings and improvements.............................. $ 38,721 $ 34,254
Fixtures, machinery and equipment............................. 158,055 129,489
Property under capital leases................................. 3,142 3,108
-------- --------
Total......................................................... 199,918 166,851
Less accumulated depreciation and amortization................ (68,606) (48,644)
Construction-in-process....................................... 4,443 15,731
-------- --------
Property, plant and equipment--net............................ $135,755 $133,938
======== ========
</TABLE>
Accumulated depreciation and amortization includes $1,745 and $1,689 at
December 31, 1993 and 1992, respectively, relating to assets acquired under
capital leases.
<TABLE>
4. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Senior notes, interest at 13.75%, due 1997.................... $ 68,525 $ 73,525
Senior variable rate notes, interest at LIBOR plus 300 basis
points (6 1/2% at December 31, 1993), due 1994.............. 10,000 10,000
Senior variable rate notes, interest at LIBOR plus 400 basis
points (7 1/2% at December 31, 1993), due 1997.............. 19,100 19,100
Senior notes, interest at 10.25%, due 1997.................... 90,000 90,000
Capital expenditure loans, interest at 8.09% to 9.16% at
December 31, 1993, due in installments from 1994 to 1998.... 3,844 4,227
Industrial revenue refunding bonds, interest at 3.2% to 5.7%
at December 31, 1993, due in installments from 1994 to
1999........................................................ 865 1,160
Capital lease obligations at implicit interest rates ranging
from 8.5% to 15%, due in installments from 1994 to 1999..... 1,952 1,959
Other......................................................... 24 113
-------- --------
Subtotal...................................................... 194,310 200,084
Less current portion.......................................... 11,209 1,090
-------- --------
Total......................................................... $183,101 $198,994
======== ========
</TABLE>
In April 1989, the Company, in connection with the acquisition of
Poly-Tech, issued $100,000 Senior Notes (the "13.75% Notes"). The 13.75% Notes
may be redeemed at the option of the Company after April 1, 1994, in whole at
any time or in part from time to time, on not less than 30 nor more than 60 days
notice to the noteholders, at the following redemption prices (expressed as
percentages of principal amount), plus accrued interest (if any) to the date of
redemption. Redemption prices are 103.93%, 101.96% and 100.00% if redeemed
during the 12-month period commencing April 1, 1994, 1995 and 1996,
respectively. The fair value of the $68,525 principal of the 13.75% Notes at
December 31, 1993 is estimated to be $72,506, based on the quoted market price
for this issuance.
In March 1990, the Company, in connection with the long-term financing of
Poly-Tech's acquisition of American Western, issued $60,000 Senior Variable Rate
Notes due 1997 (the "1997 Notes") and $10,000 Senior Variable Rate Notes due
1994 (the "1994 Notes"), (together, the "Variable Rate Notes"). The Variable
Rate Notes may be redeemed at the option of the Company, in whole at any time or
in part from time to time, on not less than 30 nor more than 60 days notice to
the noteholders, at par plus accrued interest.
22
<PAGE> 24
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Market price is not readily available; however, management believes that the
carrying value of the Variable Rate Notes approximates fair value for these
obligations.
In June 1992, the Company issued $90,000 Senior Notes (the "10.25% Notes").
The 10.25% Notes may be redeemed at the option of the Company after June 14,
1995, in whole at any time or in part from time to time, on not less than 30 nor
more than 60 days notice to the noteholders, at the following redemption prices
(expressed as percentages of principal amount), plus accrued interest (if any)
to the date of redemption. Redemption prices are 102.56% if redeemed during the
12-month period commencing June 15, 1995 and 100% thereafter. The fair value of
the 10.25% Notes is estimated to be $96,039, based on the quoted market price
for this issuance.
The Company retired $5,000, $1,800, and $24,675 of its 13.75% Notes in
1993, 1992 and 1991, respectively, and $40,900 of its 1997 Notes in 1991. The
Company incurred extraordinary charges of $234, $89 and $3,576 (net of taxes of
$138, $52 and $2,056, respectively) related to the early retirement of debt in
1993, 1992 and 1991, respectively.
The indentures relating to the 13.75% Notes, the Variable Rate Notes, and
the 10.25% Notes (collectively, the "Notes") have been guaranteed by Poly-Tech
and contain certain restrictive covenants affecting the Company and its
subsidiaries. Such restrictive covenants limit the incurrence of additional debt
by the Company, additional secured debt by the Company and its subsidiaries,
sale and leaseback transactions, debt and preferred stock of the Company's
subsidiaries, redemptions of capital stock of the Company and its subsidiaries,
redemptions of certain subordinated obligations of the Company, sales of assets
and subsidiary stock, transactions with affiliates, mergers and amendments to
certain intercompany securities. In addition, the covenants generally prohibit
dividends or distributions on capital stock of the Company and its subsidiaries,
except for dividends or distributions payable in certain equity securities and
except for dividends or distributions payable to the Company or a subsidiary
and, if a subsidiary has minority stockholders, pro rata to such stockholders.
Under certain circumstances the Company's subsidiaries (other than Poly-Tech)
may be required to guarantee the Notes. Upon a "change of control" or
"fundamental change of control" (as such terms are defined in the indentures) of
the Company, each holder of the notes has the right to require the Company to
repurchase its notes at 101% of the principal amount plus accrued interest.
Certain property, plant and equipment are utilized as collateral to secure
certain indebtedness.
<TABLE>
As of December 31, 1993, the aggregate annual payments due on long-term
debt and the future minimum lease payments under capital lease obligations are
as follows:
<CAPTION>
CAPITAL OTHER
LEASE LONG-TERM
OBLIGATIONS DEBT TOTAL
----------- --------- --------
<S> <C> <C> <C>
Year ending December 31:
1994............................................... $ 500 $ 10,962 $ 11,462
1995............................................... 511 916 1,427
1996............................................... 535 1,010 1,545
1997............................................... 561 179,180 179,741
1998............................................... 545 175 720
1999 and thereafter................................ 139 115 254
------- -------- --------
Total minimum payments............................... 2,791 192,358 195,149
Less amount representing interest.................... 839 -- 839
------- -------- --------
Total................................................ $ 1,952 $192,358 $194,310
======= ======== ========
</TABLE>
Cash paid for interest during the years ended December 31, 1993, 1992 and
1991 was $21,946, $20,813 and $23,537, respectively.
23
<PAGE> 25
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
5. EMPLOYEE BENEFIT PLANS
The Company maintains a noncontributory defined benefit pension plan which
covers certain employees. Benefits payable pursuant to the plan are determined
by formulas based on certain percentages of compensation for each year of
service with the Company. The actuarial projected unit credit method has been
used to determine the net pension expense and the actuarial accrued liability.
The Company's funding policy is to contribute annually the amount necessary to
satisfy the minimum funding standards under the Employee Retirement Income
Security Act.
The following table sets forth the funded status of the pension plan as
estimated by consulting actuaries as of December 31, 1993 and 1992 and amounts
recognized in the Company's financial statements:
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Accumulated benefit obligation (substantially all vested)........ $(5,744) $(4,534)
======= =======
Projected benefit obligation..................................... $(5,968) $(4,758)
Plan assets at fair value........................................ 5,960 5,492
======= =======
Excess (deficiency) of plan assets over projected benefit
obligation..................................................... (8) 734
Unrecognized net loss............................................ 699 128
Unrecognized net transition asset................................ (583) (642)
Prior service costs.............................................. 3 2
------- -------
Prepaid pension cost included in other assets.................... $ 111 $ 222
======= =======
</TABLE>
<TABLE>
The components of the net pension expense for the years ended December 31
are as follows:
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Service cost............................................... $ 355 $ 317 $ 189
Interest cost.............................................. 374 350 175
Actual return on plan assets............................... (543) (34) (154)
Other -- net............................................... 48 (453) (84)
----- ----- -----
Net pension expense........................................ $ 234 $ 180 $ 126
===== ===== =====
</TABLE>
The discount rate used in determining the projected benefit obligation was
7% in 1993 and 8% in 1992 and 1991. The assumed long-term rate of return on plan
assets was 8% in 1993, 1992 and 1991. The rate of increase in future
compensation levels used in determining the projected benefit obligation was 4.5
to 5.5% in 1993, 1992 and 1991. Plan assets consist of guaranteed insurance
contracts, pooled fixed income, pooled equity and pooled real estate
investments. Cash contributions to the pension plan were $122, $294 and $208 for
the years ended December 31, 1993, 1992 and 1991, respectively.
The Company also maintains a defined contribution plan (the "Plan"). Full
time employees of the Company who are not members of collective bargaining units
or who are not covered by another qualified retirement plan sponsored by the
Company are eligible to participate in the Plan after six months of employment.
Under the Plan, a participant may elect to reduce annual compensation by 1% to
16% and to have that amount contributed to the Plan by the Company on a pre-tax
basis. The Company matches employee contributions at a rate of 50% of the
employee's contribution up to 6% of the employee's salary up to the maximum
allowable deferral per the Internal Revenue Code. Employee contributions vest
immediately, whereas employer contributions vest over a period of three years.
During 1993, 1992 and 1991, the Company's aggregate matching contributions were
$372, $405 and $421, respectively.
24
<PAGE> 26
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES
As discussed in Note 1, the Company adopted SFAS No. 109, "Accounting for
Income Taxes," effective January 1, 1993. This Statement supersedes SFAS No. 96,
"Accounting for Income Taxes." The cumulative effect of adopting SFAS No. 109 on
the Company's financial statements was to increase net income by $1,586 ($.09
per share).
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b)
operating loss and tax credit carryforwards.
<TABLE>
Significant components of the Company's net deferred tax liability as of
December 31, 1993 were as follows:
<CAPTION>
CURRENT NON-CURRENT
------- -----------
<S> <C> <C>
DEFERRED TAX LIABILITIES:
Tax over book depreciation..................................... $ -- $18,616
Differences between book and tax basis of property............. -- 27
Prepaid expenses............................................... 80 --
Other.......................................................... 260 67
------- -------
340 18,710
DEFERRED TAX ASSETS:
Reserves not currently deductible.............................. 2,716 --
Operating loss carryforwards................................... -- 3,507
Tax credit carryforwards....................................... -- 2,553
Differences between book and tax basis of property............. -- 807
Deferred revenue on interest rate contract settlement.......... -- 641
Other.......................................................... 175 386
------- -------
2,891 7,894
------- -------
Net deferred tax (asset) liability............................. $(2,551) $10,816
======= =======
</TABLE>
The Company provided a valuation allowance of $1,165 against deferred tax
assets recorded as of January 1, 1993. The valuation reserve decreased $1,165
for the year ended December 31, 1993. The valuation allowance was reversed
because the Company acquired the minority interest of its 67%-owned subsidiary
on January 1, 1994 and the realization of tax loss carryforwards became more
likely than not. Of the valuation allowance reversed, $675 was allocated to
reduce goodwill, which primarily relates to the tax loss carryforwards acquired
in a prior year business combination.
The effect of applying SFAS No. 109 was to decrease pretax accounting
income by $495 for the year ended December 31, 1993. The impact resulted from a
requirement to adjust the assets and liabilities for prior business combinations
from net-of-tax to pretax amounts.
As of December 31, 1993, the Company had net operating loss carryforwards
from a subsidiary which is not consolidated for the purpose of filing income tax
returns. These carryforwards, totalling $9,385, expire in the years 2006 to
2008. The Company also had alternative minimum tax credits totalling $2,553,
which have no expiration date.
25
<PAGE> 27
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The provision for income taxes (benefit) consists of the following for the
years ended December 31:
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
CURRENT:
Federal................................................... $1,845 $(285) $2,209
State..................................................... 351 (134) 390
------ ----- ------
Total current............................................. 2,196 (419) 2,599
------ ----- ------
DEFERRED:
Federal................................................... 903 (293) 4,998
State..................................................... 360 24 727
------ ----- ------
Total deferred............................................ 1,263 (269) 5,725
------ ----- ------
Total..................................................... $3,459 $(688) $8,324
====== ===== ======
</TABLE>
<TABLE>
The primary sources of deferred income tax expense (benefit) and the
related tax effect of each are as follows:
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Tax over book depreciation................................ $ 225 $ 60
Differences between book and tax basis of property........ 293 909
Deferred taxes established in connection with change from
"S" to "C" corporation status........................... -- 3,010
Deductible expenditures charged to goodwill............... -- 2,010
Reserves not currently deductible......................... (731) --
Other..................................................... (56) (264)
----- ------
Total..................................................... $(269) $5,725
===== ======
</TABLE>
<TABLE>
The provision for income taxes (benefit) differs from an amount computed at
the statutory tax rates as follows:
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Provision (benefit) using statutory tax rate.................. 35.0% (34.0%) 34.0%
Graduated tax rate............................................ (1.0) -- --
"S" corporation status........................................ -- -- (2.3)
Goodwill amortization......................................... 7.8 9.8 5.4
State taxes, net of federal income tax benefit................ 5.1 (1.1) 3.7
Deferred taxes established in connection with change from "S"
to "C" corporation status................................... -- -- 21.9
Loss from a 67%-owned subsidiary for which federal benefit may
not be recognized........................................... -- 7.9 --
Reversal of valuation allowance............................... (3.6) -- --
Other -- net.................................................. (6.1) 7.4 (2.1)
---- ----- -----
Provision for income taxes (benefit).......................... 37.2% (10.0%) 60.6%
---- ----- -----
---- ----- -----
</TABLE>
Cash paid for income taxes during the years ended December 31, 1993, 1992
and 1991 was $2,382, $1,864 and $3,497, respectively.
The Omnibus Budget Reconciliation Act of 1993 (the "Act") was signed into
law on August 10, 1993. The Act did not significantly change the income tax
consequences for the Company.
26
<PAGE> 28
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. RELATED PARTY TRANSACTIONS
NOTES RECEIVABLE FROM AFFILIATES
At December 31, 1993 and 1992, the Company had a $125 non-interest bearing
note receivable from an affiliate. The Company provides purchasing, accounting,
and other administrative services for the affiliate. In 1993, 1992 and 1991, the
Company received $86, $130 and $203, respectively, from the affiliate as payment
for the services rendered.
SUBORDINATED PROMISSORY NOTES
Interest expense paid to stockholders and affiliates (the notes were
retired in 1992) was $263 and $564 in 1992 and 1991, respectively.
MANAGEMENT FEES
In May 1991, the Company entered into a three-year Management Agreement
with Carlisle Plastics Management Corporation ("CPMC"), an affiliate of the
Company, which receives an annual management fee of $1,500. Management fees in
1993, 1992 and 1991 include $1,500, $1,500 and $875, respectively, paid by the
Company to CPMC under this agreement. In addition, prior to May, in 1991 the
Company paid management fees of $1,763 to other affiliates of the Company.
The indentures for the 10.25% Notes require that management fees do not
exceed 2.0% of sales per year and that each affiliate execute a management fee
subordination agreement.
LEASES
Rental expense of approximately $246, $217, and $206 was incurred during
the years ended December 31, 1993, 1992 and 1991, respectively, with respect to
the lease of office, manufacturing and warehouse space owned by affiliates of
the Company.
The Company leases an aircraft from Carlisle Air Corporation ("CAC"), an
affiliate of the Company. Lease payments were paid to CAC in the amount of $303,
$325 and $90 for 1993, 1992 and 1991, respectively, in connection therewith.
INSURANCE PREMIUMS
During a portion of 1991, the Company obtained insurance coverage from
Greenhill Financial Group, Inc. ("Greenhill"), an affiliate of the Company.
Greenhill consolidated the insurance coverage for various entities, including
the Company. In 1991, the Company paid $2,100 in premiums to Greenhill.
AFFILIATED PURCHASES
Purchases from affiliates of the Company were $257, $355 and $28 for the
years ended December 31, 1993, 1992 and 1991, respectively.
OTHER TRANSACTIONS
Distributions to stockholders of $1,744 were made during the year ended
December 31, 1991. These distributions were approximately equal to income taxes
owed by stockholders with respect to the Company's taxable income for a period
of time during which the Company operated as a "S" corporation.
In conjunction with the Class A Stock Offering, the Company made a special
distribution to those stockholders who owned common stock of the Company prior
to the Class A Stock Offering. The special distribution was valued at $4,493 and
consisted of the Company's interest in a metals foundry in Costa Rica,
27
<PAGE> 29
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
two unsecured notes payable to the Company by Carlisle Realty Holdings I Limited
Partnership plus accrued interest, and certain notes receivable from
stockholders plus accrued interest.
Prior to the Class A Stock Offering, the Chairman of the Board and Chief
Executive Officer and a former director of the Company owned an aggregate 21%
interest in each of the Company's direct subsidiaries (the "Minority
Interests"). Concurrent with the completion of the Class A Stock Offering, the
Company acquired their Minority Interests in exchange for issuance of 48,364
shares of Class A Stock having an aggregate fair market value equal to the book
value of the Minority Interests.
8. STOCKHOLDERS' EQUITY
As of December 31, 1993 and 1992, the Company had authorized 10,000,000
shares of preferred stock at $.01 par value, 50,000,000 shares of Class A Common
Stock at $.01 par value, and 20,000,000 shares of Class B Common Stock at $.01
par value. The Class B Common Stock is one-for-one convertible to Class A Common
Stock and has restrictions on transfers other than those to entities outside the
current holders of Class B Common Stock. Each share of Class A Common Stock is
entitled to one vote, and each share of Class B Common Stock is entitled to
twenty votes.
<TABLE>
The Company maintains an incentive stock option plan (the "Incentive Plan")
for salaried key employees, directors and consultants of the Company or any
subsidiary or parent corporation. Approximately 350 employees and three
directors are currently eligible to participate in the Incentive Plan.
Generally, the term of an incentive stock option may not exceed ten years. As of
December 31, 1993, 1,880,000 shares of Class A Common Stock were reserved for
issuance under the Incentive Plan.
A summary of options granted is as follows:
<CAPTION>
NUMBER OPTION PRICE
OF SHARES PER SHARE
--------- ------------
<S> <C> <C>
Outstanding at January 1, 1991............................. --
Granted.................................................. 523,150 $7.66-$11.00
Cancelled or expired..................................... --
-------
Outstanding at December 31, 1991........................... 523,150 $7.66-$11.00
Granted.................................................. 125,000 $5.00-$ 9.50
Cancelled or expired..................................... (174,750) $5.00-$ 9.50
-------
Outstanding at December 31, 1992........................... 473,400 $5.00-$ 9.50
Granted.................................................. 395,400 $5.31-$ 6.00
Cancelled or expired..................................... (68,500) $5.00-$ 9.50
Exercised................................................ (8,650) $ 5.00
--------
Outstanding at December 31, 1993........................... 791,650 $5.00-$ 9.50
========
Exercisable at December 31, 1993........................... 379,151 $5.00-$ 9.50
========
</TABLE>
In 1992, 355,900 options granted in 1991 were repriced to $5.00, the market
price at the time of repricing. All options granted were at an option price per
share greater than or equal to the market value at the date of grant.
In 1992, a director and officer was granted options (which are not included
in the above table) to purchase 400,000 shares of the Company's Class A Common
Stock at $4.00 per share (which was the fair market value of the shares at the
date of the agreement). The options vest on September 1, 1993, 1994 and 1995 in
the amount of 50,000, 50,000 and 300,000, respectively.
28
<PAGE> 30
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. COMMITMENTS AND CONTINGENCIES
<TABLE>
OPERATING LEASES
The Company leases various manufacturing facilities, offices and equipment
under noncancellable operating leases with varying terms through 2002. The
following is a schedule of future minimum rental payments required under such
operating leases:
<S> <C>
1994........................................ $ 5,169
1995........................................ 4,897
1996........................................ 4,587
1997........................................ 2,930
1998........................................ 2,141
Thereafter.................................. 1,307
--------
Total....................................... $ 21,031
========
</TABLE>
Amounts above include $2,573 which is payable to affiliates of the Company.
Total rent expense under all operating leases was $4,476, $4,969 and $4,828
for 1993, 1992 and 1991, respectively.
LETTERS OF CREDIT
The Company had outstanding letters of credit amounting to approximately
$1,357 and $1,455 at December 31, 1993 and 1992, respectively, relating to
purchase commitments issued to suppliers and an insurance carrier.
LITIGATION
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial statements of the Company.
10. CONCENTRATION OF CREDIT RISK
In September 1993, the Company received $2,000 from the termination of an
interest rate swap agreement, which it had entered into in June 1993. This gain
has been deferred and is being amortized over the original term of the swap
agreement.
On September 15, 1993, the Company entered into a new interest rate swap
agreement on a notional principal amount of $90,000 terminating on June 15, 1997
(matching the principal and due date of the Company's 10.25% Notes). Under the
agreement, the Company receives interest at a fixed rate and pays interest at a
floating rate, which is established in arrears at six month intervals.
The net interest differential and amortization of the deferred gain of $752
was recorded as a reduction of interest expense in the year ended December 31,
1993. The agreement is collateralized by the Company's accounts receivable.
The Company is subject to interest rate risk during the term of the swap
agreement. A sufficient increase in market interest rates during the term of the
agreement could result in the Company having a net payment obligation under the
agreement. Further, the Company is subject to credit risk exposure from
nonperformance by the counterparty during periods when such party has a net
payment obligation to the Company.
29
<PAGE> 31
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company had accounts receivable from a single customer, Wal*Mart, of
$3,200 and $4,500 at December 31, 1993 and 1992, respectively. This customer has
a history of timely payments to the Company. The Company believes it had no
significant exposure to credit risk at December 31, 1993.
11. RESTRUCTURING CHARGE AND NEW PRODUCT INTRODUCTION
During 1992 and 1991, the Company recorded restructuring charges
aggregating $4,320 and $3,431, respectively. These restructuring charges
included realignment of production facilities, management reorganization,
product re-engineering and reduction of product offerings. In addition, in 1992
the Company incurred costs of $7,743 associated with a new product introduction.
12. BUSINESS ACQUISITION
In July 1991, the Company purchased a two-thirds interest in Rhino-X for
$5,000. This acquisition was accounted for using the purchase method of
accounting, and accordingly, the purchase price has been allocated to assets
acquired and liabilities assumed based on their fair market value. Included in
goodwill at December 31, 1993 is $6,230 relating to this acquisition.
Under a put and call arrangement signed in conjunction with the acquisition
of Rhino-X in July 1991, the Company purchased the minority interest shares at
the minimum price of $12 per share on January 1, 1994. The Company had
discounted this purchase at 10% and, accordingly, recorded an obligation of
$3,500 and $3,152 at December 31, 1993 and 1992, respectively. At December 31,
1993 and 1992, this obligation was reduced by $779 and $714, respectively, for
sales tax payments made by the Company and recoverable from the minority
shareholders.
30
<PAGE> 32
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
13. UNAUDITED SELECTED QUARTERLY FINANCIAL DATA
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
-------------------------------------------
QUARTERS
-------------------------------------------
FIRST SECOND THIRD FOURTH
----- ------ ----- ------
<S> <C> <C> <C> <C>
Net Sales.......................................... $90,831 $87,767 $94,790 $87,507
Gross Profit....................................... 24,336 24,508 26,682 23,382
Income Before Extraordinary Item and Change in
Accounting Principle............................. 683 1,052 2,665 1,432
Net Income......................................... 2,035 1,052 2,665 1,432
Income Per Share:
Income Before Extraordinary Item and Change in
Accounting Principle.......................... $ .04 $ .06 $ .15 $ .08
Net Income....................................... .12 .06 .15 .08
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1992
-------------------------------------------
QUARTERS
-------------------------------------------
SECOND THIRD
FIRST (A) (A) FOURTH
----- ------ ----- ------
<S> <C> <C> <C> <C>
Net Sales.......................................... $86,924 $87,435 $93,625 $91,872
Gross Profit....................................... 25,131 24,784 23,013 23,454
Income (Loss) Before Extraordinary Item............ 1,704 348 (8,471) 205
Net Income (Loss).................................. 1,704 348 (8,471) 116
Income (Loss) Per Share:
Income (Loss) Before Extraordinary Item.......... $ .10 $ .02 $ (.48) $ .01
Net Income (Loss)................................ .10 .02 (.48) .00
<FN>
- ---------------
Note:
(a) The Company recorded expenses of $4,886 and $2,857 for the second and third
quarters of 1992, respectively, for costs related to a new product
introduction. The third quarter of 1992 also included a restructuring charge
of $4,320.
</TABLE>
31
<PAGE> 33
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. CONDENSED FINANCIAL INFORMATION OF CARLISLE PLASTICS, INC. AND SUBSIDIARIES
Condensed consolidating financial information of the Company and
subsidiaries is included in this Note.
<TABLE>
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
<CAPTION>
DECEMBER 31, 1993
-----------------------------------------------------------------
CARLISLE NON-GUARANTOR
PLASTICS, POLY-TECH, SUBSIDIARIES
INC. INC.(1) (2) ELIMINATIONS TOTAL
---------- ---------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 19,419 $ 1 $ 325 $ -- $ 19,745
Receivables -- net.................... 17,983 16,080 12,707 -- 46,770
Inventories........................... 15,554 7,307 20,171 -- 43,032
Notes receivable from subsidiary(4)... 21,317 -- -- (21,317) --
Receivable from subsidiaries or
parent............................. 32,706 -- 11,520 (44,226) --
Other current assets.................. 1,060 7,186 2,062 (4,558) 5,750
---------- ---------- ------------- ------------ --------
Total current assets.......... 108,039 30,574 46,785 (70,101) 115,297
Notes receivable from
subsidiaries(3)(4).................... 118,806 -- -- (118,806) --
Investment in subsidiaries.............. 17,329 70,540 -- (87,869) --
Property, plant and equipment -- net.... 50,433 29,823 55,499 -- 135,755
Goodwill -- net......................... 4,330 12,128 51,271 -- 67,729
Other assets -- net..................... 4,963 525 1,579 -- 7,067
---------- ---------- ------------- ------------ --------
TOTAL ASSETS............................ $ 303,900 $ 143,590 $ 155,134 $ (276,776) $325,848
========== ========== ============= ============ ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt..... $ 10,980 $ -- $ 229 $ -- $ 11,209
Accounts payable...................... 31,818 470 1,821 -- 34,109
Notes payable to parent(4)............ -- -- 21,317 (21,317) --
Payable to subsidiaries or parent..... -- 30,659 13,567 (44,226) --
Other accrued liabilities............. 6,813 2,688 10,779 (4,558) 15,722
---------- ---------- ------------- ------------ --------
Total current liabilities..... 49,611 33,817 47,713 (70,101) 61,040
Long-term debt -- net of current
portion............................... 182,457 -- 644 -- 183,101
Notes payable to parent(3)(4)........... -- 90,000 28,806 (118,806) --
Deferred income taxes................... 2,481 3,835 4,500 -- 10,816
Other non-current liabilities........... 1,625 -- -- -- 1,625
Stockholders' equity:
Intercompany preferred stock(5)....... -- 15,000 -- (15,000) --
Common stock.......................... 176 1,300 72,069 (73,369) 176
Additional paid-in capital............ 67,904 -- -- -- 67,904
Retained earnings (deficit)........... (354) (362) 1,402 500 1,186
---------- ---------- ------------- ------------ --------
Total stockholders' equity.... 67,726 15,938 73,471 (87,869) 69,266
---------- ---------- ------------- ------------ --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY.................. $ 303,900 $ 143,590 $ 155,134 $ (276,776) $325,848
========== ========== ============= ============ ========
</TABLE>
32
<PAGE> 34
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1992 (UNAUDITED)
-----------------------------------------------------------------
CARLISLE NON-GUARANTOR
PLASTICS, POLY-TECH, SUBSIDIARIES
INC.(3) INC.(1) (2) ELIMINATIONS TOTAL
-------- ---------- ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 17,253 $ 1 $ 496 $ -- $ 17,750
Receivables -- net.................... 16,315 16,082 14,678 -- 47,075
Inventories........................... 14,571 7,689 18,840 -- 41,100
Receivable from subsidiaries or
parent.............................. 36,503 -- 1,431 (37,934) --
Other current assets.................. 1,211 6,547 2,101 (2,498) 7,361
-------- --------- --------- ---------- --------
Total current assets........ 85,853 30,319 37,546 (40,432) 113,286
Notes receivable from subsidiaries (3)
(4)................................. 140,123 -- -- (140,123) --
Investment in subsidiaries............ 17,329 70,540 -- (87,869) --
Property, plant and
equipment -- net.................... 44,600 29,449 59,889 -- 133,938
Goodwill -- net....................... 4,689 12,472 53,374 -- 70,535
Other assets -- net................... 5,337 3 2,071 -- 7,411
-------- --------- --------- ---------- --------
TOTAL ASSETS.......................... $297,931 $ 142,783 $ 152,880 $ (268,424) $325,170
======== ========= ========= ========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt..... $ 867 $ -- $ 223 $ -- $ 1,090
Accounts payable...................... 31,244 268 2,465 -- 33,977
Payable to subsidiaries or parent..... -- 22,540 15,394 (37,934) --
Other accrued liabilities............. 4,381 6,472 8,058 (2,544) 16,367
-------- --------- --------- ---------- --------
Total current liabilities... 36,492 29,280 26,140 (40,478) 51,434
Long-term debt -- net of current
portion............................. 198,046 -- 948 -- 198,994
Notes payable to parent (3) (4)....... -- 90,000 50,123 (140,123) --
Stock purchase obligation............. 2,438 -- -- -- 2,438
Deferred income taxes................. 1,861 3,017 5,247 -- 10,125
Stockholders' equity:
Intercompany preferred stock (5)...... -- 15,000 -- (15,000) --
Common stock.......................... 176 1,300 72,069 (73,369) 176
Additional paid-in capital............ 67,861 -- -- -- 67,861
Retained earnings (deficit)........... (8,943) 4,186 (1,647) 546 (5,858)
-------- --------- --------- ---------- --------
Total stockholders'
equity.................... 59,094 20,486 70,422 (87,823) 62,179
-------- --------- --------- ---------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY.............................. $297,931 $ 142,783 $ 152,880 $ (268,424) $325,170
======== ========= ========= ========== ========
</TABLE>
33
<PAGE> 35
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATING OPERATIONS INFORMATION
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
------------------------------------------------------------------------
CARLISLE NON-GUARANTOR
PLASTICS, POLY-TECH, SUBSIDIARIES
INC. INC.(1) (2) ELIMINATIONS TOTAL
--------- ---------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
Net sales....................... $ 150,099 $ 87,914 $ 164,113 $(41,231) $360,895
Cost of goods sold.............. 115,824 59,715 127,679 (41,231) 261,987
--------- ---------- ------------- ------------ --------
Gross profit.................... 34,275 28,199 36,434 -- 98,908
Operating expenses.............. 21,771 19,647 26,019 -- 67,437
Intercompany interest expense
(income)...................... (18,988) 14,400 4,588 -- --
Interest expense................ 22,096 1 452 -- 22,549
Interest and other income....... (545) -- 30 146 (369)
--------- ---------- ------------- ------------ --------
Income (loss) before provision
for income taxes,
extraordinary item and
cumulative effect of change in
accounting principle.......... 9,941 (5,849) 5,345 (146) 9,291
Provision for income taxes
(benefit)..................... 3,607 (1,370) 1,222 -- 3,459
--------- ---------- ------------- ------------ --------
Income (loss) before
extraordinary item and
cumulative effect of change in
accounting principle.......... 6,334 (4,479) 4,123 (146) 5,832
Extraordinary item -- early
retirement of debt, net of
taxes......................... (234) -- -- -- (234)
Cumulative effect of change in
accounting principle relating
to income taxes............... 2,489 (69) (834) -- 1,586
--------- ---------- ------------- ------------ --------
Net income (loss)............... $ 8,589 $ (4,548) $ 3,289 $ (146) $ 7,184
========= ========== ============= ============ ========
YEAR ENDED DECEMBER 31, 1992 (UNAUDITED)
------------------------------------------------------------------------
Net sales....................... $ 147,070 $ 90,005 $ 157,976 $(35,195) $359,856
Cost of goods sold.............. 114,378 63,793 120,498 (35,195) 263,474
--------- ---------- ------------- ------------ --------
Gross profit.................... 32,692 26,212 37,478 -- 96,382
Operating expenses.............. 20,443 19,920 29,885 -- 70,248
New product introduction........ 7,743 -- -- -- 7,743
Restructuring................... 521 2,630 1,169 -- 4,320
Intercompany interest expense
(income)...................... (17,333) 14,400 2,933 -- --
Interest expense................ 19,902 -- 2,055 -- 21,957
Interest and other income....... (403) (1) (47) (533) (984)
--------- ---------- ------------- ------------ --------
Income (loss) before provision
for income taxes and
extraordinary item............ 1,819 (10,737) 1,483 533 (6,902)
Provision for income taxes
(benefit)..................... 224 (2,528) 1,616 -- (688)
--------- ---------- ------------- ------------ --------
Income (loss) before
extraordinary item............ 1,595 (8,209) (133) 533 (6,214)
Extraordinary item -- early
retirement of debt, net of
taxes......................... (75) -- (14) -- (89)
--------- ---------- ------------- ------------ --------
Net income (loss)............... $ 1,520 $ (8,209) $ (147) $ 533 $ (6,303)
========= ========== ============= ============ ========
</TABLE>
34
<PAGE> 36
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<CAPTION>
YEAR ENDED DECEMBER 31, 1991 (UNAUDITED)
---------------------------------------------------------------
CARLISLE NON-GUARANTOR
PLASTICS, POLY-TECH, SUBSIDIARIES
INC. INC.(1) (2) ELIMINATIONS TOTAL
---------- ---------- ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
Net sales............................... $ 124,438 $ 98,237 $ 135,384 $(14,422) $343,637
Cost of goods sold...................... 99,905 62,724 91,468 (14,422) 239,675
--------- --------- --------- -------- --------
Gross profit............................ 24,533 35,513 43,916 -- 103,962
Operating expenses...................... 14,445 20,844 30,354 -- 65,643
Restructuring........................... 3,431 -- -- -- 3,431
Intercompany dividend income............ -- (10,325) -- 10,325 --
Intercompany interest expense
(income).............................. (14,861) 14,629 232 -- --
Interest expense........................ 18,619 (247) 4,276 -- 22,648
Interest and other income............... (1,236) (21) (241) 21 (1,477)
--------- --------- --------- -------- --------
Income (loss) before provision for
income taxes and extraordinary item... 4,135 10,633 9,295 (10,346) 13,717
Provision for income taxes.............. 4,604 2,038 1,682 -- 8,324
--------- --------- --------- -------- --------
Income (loss) before extraordinary
item.................................. (469) 8,595 7,613 (10,346) 5,393
Extraordinary item -- early retirement
of debt, net of taxes................. (3,435) -- (141) -- (3,576)
--------- --------- --------- -------- --------
Net income (loss)....................... $ (3,904) $ 8,595 $ 7,472 $(10,346) $ 1,817
========= ========= ========= ======== ========
<FN>
- ---------------
(1) Poly-Tech has guaranteed the Company's Notes. The aggregate principal amount
of this indebtedness was $187,625 as of December 31, 1993. American Western,
a wholly-owned subsidiary of Poly-Tech, is not and will not be obligated
under any of such guarantees by Poly-Tech.
(2) Non-guarantor subsidiaries include American Western, Rhino-X, Far East and
Plasticos from their respective dates of acquisition.
(3) Poly-Tech's Intercompany Notes include a $55,000 Intercompany Note issued
March 23, 1990 and a $35,000 Intercompany Note issued April 7, 1989
(together the "Intercompany Notes") that are payable to the Company ten
years from their respective dates of issuance, without amortization, and
bear interest at 16% per annum. The Intercompany Notes may be prepaid at any
time, in whole or in part, at 100% of their principal amount plus accrued
interest to the date of prepayment. The Intercompany Notes are unsecured and
rank pari passu in right of payment with all other existing and future
senior subordinated indebtedness of Poly-Tech. Additionally, the
Intercompany Notes, pursuant to their terms, are subordinated in right of
payment to all other unsubordinated indebtedness of Poly-Tech, including the
guarantees by Poly-Tech of the Notes.
(4) The Non-Guarantor Subsidiaries' Intercompany Notes include a $4,000
Intercompany Note issued July 16, 1991 that is payable May 15, 1994, without
amortization, bearing interest at 8% per annum; a $17,317 Intercompany Note
issued June 19, 1992 that is payable January 1, 1994, without amortization,
bearing interest at prime plus 2.5% per annum; and a $28,806 Intercompany
Note issued June 19, 1992 that is payable March 1, 1996, without
amortization, bearing interest at LIBOR plus 2.375% per annum. These
Intercompany Notes may be prepaid at any time, in whole or in part, at 100%
of their principal amount plus accrued interest to the date of prepayment.
The Intercompany Notes are unsecured and rank pari passu in right of payment
with all other existing and future indebtedness of Rhino-X and American
Western.
(5) The intercompany preferred stock has $1,500 cumulative preferred dividends
in arrears as of December 31, 1993.
</TABLE>
35
<PAGE> 37
<TABLE>
SCHEDULE III
CARLISLE PLASTICS, INC. AND SUBSIDIARIES*
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
(In thousands, except shares)
<CAPTION>
DECEMBER 31,
-----------------
1993 1992
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................... $ 19,419 $ 17,253
Receivables -- net.................................................. 17,983 16,315
Inventories......................................................... 15,554 14,571
Notes receivable from subsidiary.................................... 21,317 --
Receivable from subsidiary.......................................... 32,706 36,503
Other current assets................................................ 1,060 1,211
-------- --------
Total current assets........................................... 108,039 85,853
-------- --------
Notes receivable from subsidiaries.................................. 118,806 140,123
Investment in subsidiaries.......................................... 17,329 17,329
Property, plant and equipment -- net................................ 50,433 44,600
Goodwill -- net..................................................... 4,330 4,689
Other assets -- net................................................. 4,963 5,337
-------- --------
TOTAL ASSETS.......................................................... $303,900 $297,931
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................................... $ 10,980 $ 867
Accounts payable.................................................... 31,818 31,244
Stock purchase obligation........................................... 2,721 --
Other accrued liabilities........................................... 4,092 4,381
-------- --------
Total current liabilities...................................... 49,611 36,492
-------- --------
Long-term debt -- net of current portion............................ 182,457 198,046
Stock purchase obligation........................................... -- 2,438
Deferred income taxes............................................... 2,481 1,861
Other non-current liabilities....................................... 1,625 --
Stockholders' equity:
Preferred stock -- par value $.01; no shares issued or
outstanding
Class A common stock -- par value $.01; 8,000,401 and 7,556,524
issued and outstanding in 1993 and 1992, respectively........... 80 76
Class B common stock -- par value $.01; 9,618,694 and 10,053,694
issued and outstanding in 1993 and 1992, respectively........... 96 100
Additional paid-in capital....................................... 67,904 67,861
Retained earnings (deficit)...................................... (354) (8,943)
-------- --------
Total stockholders' equity..................................... 67,726 59,094
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................ $303,900 $297,931
======== ========
See Notes to Consolidated Financial Statements.
<FN>
* Information is presented for the parent company only.
</TABLE>
36
<PAGE> 38
<TABLE>
SCHEDULE III
(CONTINUED)
CARLISLE PLASTICS, INC. AND SUBSIDIARIES*
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
(In thousands)
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net sales.................................................. $150,099 $147,070 $124,438
Cost of goods sold......................................... 115,824 114,378 99,905
-------- -------- --------
Gross profit............................................... 34,275 32,692 24,533
Operating expenses......................................... 21,771 20,443 14,445
New product introduction................................... -- 7,743 --
Restructuring.............................................. -- 521 3,431
-------- -------- --------
Operating income........................................... 12,504 3,985 6,657
Interest expense........................................... 22,096 19,902 18,619
Intercompany interest income............................... (18,988) (17,333) (14,861)
Interest and other income.................................. (545) (403) (1,236)
-------- -------- --------
Income before provision for income taxes, extraordinary
item and cumulative effect of change in accounting
principle................................................ 9,941 1,819 4,135
Provision for income taxes................................. 3,607 224 4,604
-------- -------- --------
Income (loss) before extraordinary item and cumulative
effect of change in accounting principle................. 6,334 1,595 (469)
Extraordinary item -- early retirement of debt, net of
taxes.................................................... (234) (75) (3,435)
Cumulative effect of change in accounting principle
relating to income taxes................................. 2,489 -- --
-------- -------- --------
Net income (loss).......................................... $ 8,589 $ 1,520 $ (3,904)
======== ======== ========
See Notes to Consolidated Financial Statements.
<FN>
* Information is presented for the parent company only.
</TABLE>
37
<PAGE> 39
<TABLE>
SCHEDULE III
(CONTINUED)
CARLISLE PLASTICS, INC. AND SUBSIDIARIES*
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................. $ 8,589 $ 1,520 $ (3,904)
Adjustments to reconcile net income to net cash flows from
operating activities:
Depreciation and amortization............................... 8,527 5,679 5,553
Deferred income taxes....................................... 902 (724) 2,585
Bad debt expense............................................ 781 467 631
Write-off of deferred financing costs....................... 122 47 868
Change in accounting principle.............................. (2,489) -- --
Net change in current assets and liabilities................ (990) (5,122) (21,700)
Other....................................................... -- -- 175
------- ------- -------
Total adjustments............................................. 6,853 347 (11,888)
------- ------- -------
Net cash provided by (used for) operating activities.......... 15,442 1,867 (15,792)
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment -- net........... (9,891) (12,685) (15,098)
Investment in subsidiaries.................................... -- -- (1,418)
Dividends from subsidiaries................................... -- -- 750
Notes to subsidiaries......................................... -- (46,123) (4,000)
------- ------- -------
Net cash used for investing activities........................ (9,891) (58,808) (19,766)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Initial public offering....................................... -- -- 67,904
Issuance of long-term debt.................................... 467 94,290 --
Repayments of long-term debt.................................. (5,943) (2,046) (65,717)
Repayments of notes to stockholders and affiliates............ -- (7,046) --
Borrowings under line of credit............................... -- 4,000 9,500
Repayments under line of credit............................... -- (13,500) --
Interest rate contract settlement............................. 2,000 -- --
Distributions and dividends................................... -- -- (1,744)
Deferred financing costs...................................... (235) (2,812) (15)
Other......................................................... 326 (97) --
------- ------- -------
Net cash (used for) provided by financing activities.......... (3,385) 72,789 9,928
------- ------- -------
CASH AND CASH EQUIVALENTS
Net increase (decrease)....................................... 2,166 15,848 (25,630)
Balance beginning of year..................................... 17,253 1,405 27,035
------- ------- -------
Balance end of year........................................... $19,419 $17,253 $ 1,405
======= ======= =======
<FN>
NOTE: See consolidated financial statements for details of and changes in
stockholders' equity. See Note 1 to the consolidated financial statements
for information regarding business combinations. Long-term debt maturities
include $10,980, $1,049, $1,202, $179,516 and $554 due 1994 through 1998,
respectively.
See Notes to Consolidated Financial Statements.
* Information is presented for the parent company only.
</TABLE>
38
<PAGE> 40
<TABLE>
SCHEDULE V
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
(IN THOUSANDS)
<CAPTION>
BALANCES
AT BALANCES
BEGINNING ADDITIONS RETIREMENTS OTHER AT END
OF PERIOD AT COST(A) OR SALES CHARGES(B) OF PERIOD
--------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991:
Land, buildings, and improvements.............. $ 23,058 $ 11,564 $ -- $ (1,604) $ 33,018
Fixtures, machinery and equipment.............. 80,612 34,253 (787) (4,366) 109,712
Construction-in-process........................ 5,963 -- -- 4,791 10,754
--------- ---------- ----------- ---------- ---------
$ 109,633 $ 45,817 $ (787) $ (1,179) $ 153,484
========= ========= =========== ========== =========
Property under capital leases.................. $ 3,061 $ 31 $ -- $ -- $ 3,092
========= ========= =========== ========== =========
YEAR ENDED DECEMBER 31, 1992:
Land, buildings, and improvements.............. $ 33,018 $ 377 $ -- $ 859 $ 34,254
Fixtures, machinery and equipment.............. 109,712 27,863 (2,250) (5,836) 129,489
Construction-in-process........................ 10,754 -- -- 4,977 15,731
--------- ---------- ----------- ---------- ---------
$ 153,484 $ 28,240 $(2,250) $ -- $ 179,474
========= ========= =========== ========== =========
Property under capital leases.................. $ 3,092 $ 16 $ -- $ -- $ 3,108
========= ========= =========== ========== =========
YEAR ENDED DECEMBER 31, 1993:
Land, buildings, and improvements.............. $ 34,254 $ 3,207 $ -- $ 1,260 $ 38,721
Fixtures, machinery and equipment.............. 129,489 12,052 (2,373) 18,887 158,055
Construction-in-process........................ 15,731 -- -- (11,288) 4,443
--------- ---------- ----------- ---------- ---------
$ 179,474 $ 15,259 $(2,373) $ 8,859 $ 201,219
========= ========= =========== ========== =========
Property under capital leases.................. $ 3,108 $ 224 $ (190) $ -- $ 3,142
========= ========= =========== ========== =========
<FN>
- ---------------
(a) Additions at cost for the year ended December 31, 1991 include $52 of land,
buildings and improvements and $19,134 of fixtures, machinery and equipment
as a part of the acquisition of Rhino-X Industries, Inc.
(b) Reclassification of asset category. (1991 includes ($1,179) distribution of
Costa Rica facility as part of the special distribution in conjunction with
the Class A Stock Offering and 1993 includes $8,859 relating to the adoption
of SFAS No. 109 to adjust plant and equipment for prior business
combinations from net-of-tax to pretax amounts.)
</TABLE>
39
<PAGE> 41
<TABLE>
SCHEDULE VI
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
(IN THOUSANDS)
<CAPTION>
BALANCES
AT BALANCES
BEGINNING DEPRECIATION RETIREMENTS OTHER AT END
OF PERIOD (A) OR SALES CHARGES(B) OF PERIOD
--------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991
Land, buildings and improvements............... $ 2,994 $ 893 $ -- $ -- $ 3,887
Fixtures, machinery and equipment.............. 24,683 9,032 (672) -- 33,043
--------- ------------ ----------- ---------- ---------
$27,677 $ 9,925 $ (672) $ -- $36,930
========= ============ =========== ========== =========
Property under capital leases.................. $ 1,281 $ 204 $ -- $ -- $ 1,485
========= ============ =========== ========== =========
YEAR ENDED DECEMBER 31, 1992
Land, buildings and improvements............... $ 3,887 $ 1,095 $ -- $ -- $ 4,982
Fixtures, machinery and equipment.............. 33,043 10,607 (1,677) -- 41,973
--------- ------------ ----------- ---------- ---------
$36,930 $ 11,702 $(1,677) $ -- $46,955
========= ============ =========== ========== =========
Property under capital leases.................. $ 1,485 $ 204 $ -- $ -- $ 1,689
========= ============ =========== ========== =========
YEAR ENDED DECEMBER 31, 1993
Land, buildings and improvements............... $ 4,982 $ 1,281 $ -- $ 330 $ 6,593
Fixtures, machinery and equipment.............. 41,973 13,915 (1,264) 5,644 60,268
--------- ------------ ----------- ---------- ---------
$46,955 $ 15,196 $(1,264) $5,974 $66,861
========= ============ =========== ========== =========
Property under capital leases.................. $ 1,689 $ 246 $ (190) $ -- $ 1,745
========= ============ =========== ========== =========
<FN>
- ---------------
(a) Depreciation is computed on a straight-line method over the estimated useful
lives of the assets ranging from two to fifty years.
(b) Reclassification of asset category. (1993 includes $5,974 relating to the
adoption of SFAS No. 109 to adjust plant and equipment for prior business
combinations from net-of-tax to pretax amounts.)
</TABLE>
40
<PAGE> 42
<TABLE>
SCHEDULE VIII
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<CAPTION>
BALANCE AT CHARGED TO DEDUCTIONS
BEGINNING COSTS AND FROM BALANCE AT
DESCRIPTION OF YEAR EXPENSE RESERVES(A) END OF YEAR
- ---------------------------------------------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991(b):
Allowance for doubtful accounts................ $2,086 $1,161 $ 834 $2,413
YEAR ENDED DECEMBER 31, 1992:
Allowance for doubtful accounts................ $2,413 $1,399 $1,212 $2,600
YEAR ENDED DECEMBER 31, 1993:
Allowance for doubtful accounts................ $2,600 $ 969 $ 544 $3,025
<FN>
- ---------------
(a) Accounts determined to be uncollectible and charged against reserve, net of
collections on accounts previously charged against reserve.
(b) The charges to costs and expenses for December 31, 1991 include $347
relating to the acquisition of Rhino-X Industries, Inc.
</TABLE>
41
<PAGE> 43
<TABLE>
SCHEDULE X
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(IN THOUSANDS)
<CAPTION>
CHARGED TO COSTS AND EXPENSES
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
-------- -------- -------
<S> <C> <C> <C>
Maintenance and repairs........................................ $6,537 $ 6,400 $6,568
Amortization of intangible assets, pre-operating costs and
similar deferrals............................................ $3,960 $ 3,656 $3,638
Taxes, other than payroll and income taxes..................... * * *
Royalties...................................................... * * *
Advertising costs.............................................. $6,007 $12,665 $4,416
<FN>
- ---------------
* Costs are not included as they do not exceed one percent (1%) of total net
sales.
</TABLE>
42
<PAGE> 44
<TABLE>
APPENDIX A
INFORMATION REGARDING POLY-TECH, INC.
DIRECTORS AND EXECUTIVE OFFICERS
The following tables set forth certain information with respect to each
person who is an executive officer or director of Poly-Tech, Inc. ("Poly-Tech").
<CAPTION>
NAME AGE POSITION
--------------------------------------- --- -----------------------------------
<S> <C> <C>
William H. Binnie...................... 36 Chairman of the Board of Directors
David E. Wilbur, Jr.................... 51 President
Rajiv P. Bhatt......................... 36 Chief Financial Officer
</TABLE>
Mr. Binnie has been Chairman of the Board of Directors of Poly-Tech since
1989.
Mr. Wilbur has been President of Poly-Tech since September 1992. From 1990
to 1992, Mr. Wilbur was President of Wilbur and Associates, a consulting and
merger and acquisition company, and Vice Chairman of Edina Group, Inc., a merger
and acquisition company. Mr. Wilbur was President and Chief Operating Officer of
Poly-Tech, Inc. from 1984 to 1990.
Mr. Bhatt has been Vice President, Secretary and Chief Financial Officer of
Poly-Tech since 1989.
EXECUTIVE COMPENSATION
The compensation paid or accrued in 1993 on behalf of Messrs. Binnie,
Wilbur and Bhatt was paid or accrued for services rendered to Carlisle Plastics,
Inc., Poly-Tech and their respective subsidiaries. Information regarding such
compensation is included in Item 11 of the Annual Report on Form 10-K, which
incorporates by reference the information set forth in the 1994 Proxy Statement
under the caption "Executive Compensation."
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of December 31, 1993
with regard to the beneficial ownership of the shares of common stock of
Poly-Tech by each holder of 5% thereof, each director of Poly-Tech and by all
directors and executive officers of Poly-Tech as a group.
<CAPTION>
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
-------------------------------------------------------- ------------ --------
<S> <C> <C>
Carlisle Plastics, Inc.(a).............................. 1,000 100.0%
All directors and executive officers of Poly-Tech as a
group (3 persons)(b).................................. 1,000 100.0%
<FN>
- ---------------
(a) The business address for such person is One Union Street, Boston,
Massachusetts 02108.
(b) The number of shares shown as being owned by all directors and officers of
Poly-Tech as a group attributes ownership of the Company's 1,000 shares to
Mr. Binnie. The number of shares shown as beneficially owned by Mr. Binnie
are by virtue of Mr. Binnie's ownership of a controlling interest in the
Company. Mr. Binnie disclaims beneficial ownership of the shares owned by
the Company. The business address for such person is P.O. Box 771, Rye, New
Hampshire 03870.
</TABLE>
43
<PAGE> 45
<TABLE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
<CAPTION>
EXHIBITS
- --------
<S> <C> <C>
3.1 -- Restated Certificate of Incorporation of Carlisle Plastics, Inc. dated as of
May 16, 1991 (incorporated by reference to Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1991 (hereinafter, the
"1991 10-K").
3.2 -- By-Laws of the Company (incorporated herein by reference to Exhibit 3.2 to the
Registration Statement on Form S-1, Registration No. 33-27262, as filed with
the Securities and Exchange Commission on February 27, 1989 (hereinafter, the
"1989 S-1")).
10.1 (a) -- The Securities Purchase Agreement, dated as of March 23, 1990, between the
Company and Kawajitsu Leasing (H.K.) Ltd. (incorporated by reference to
Exhibit 10.1(a) to the Registration Statement on Form S-1, Registration No.
33-35966, as filed with the Securities and Exchange Commission on October 30,
1990 (hereinafter, the "1990 S-1")).
10.1 (b) -- The Securities Purchase Agreement, dated as of March 23, 1990 between the
Company and Show Leasing America, Inc. (incorporated by reference to Exhibit
10.1(b) to the 1990 S1).
10.2 -- Securities Purchase Agreement, dated as of March 23, 1990, between the Company
and each purchaser of the 1997 Notes (incorporated by reference to Exhibit
10.2 to the 1990 S-1).
10.3 -- Indenture dated as of April 1, 1989, as supplemented by First Supplemental
Indenture dated as of March 20, 1990 and Second Supplemental Indenture dated
March 23, 1990, relating to the Company's 13 3/4% Senior Notes Due 1997
between the Company and United States Trust Company of New York, as trustee,
and Poly-Tech, Inc., as guarantor (incorporated herein by reference to
Exhibits 4.1 of the 1989 S-1, 10.13 to the 1990 S-1 and 10.14 to the 1990 S-1,
respectively).
10.4 -- Carlisle Acquisition Corp.'s Senior Subordinated Note in the principal amount
of $35,000,000, dated April 7, 1989 (incorporated herein by reference to
Exhibit A to Exhibit 4.1 of the 1989 S-1).
10.5 -- Poly-Tech's Senior Subordinated Promissory Note in the principal amount of
$55,000,000, dated March 23, 1990 (incorporated by reference to Exhibit 10.21
to the 1990 S-1).
10.6 -- Indenture dated March 23, 1990, as supplemented by First Supplemental
Indenture dated as of May 24, 1990 and Second Supplemental Indenture dated as
of October 9, 1990, relating to the Company's Senior Variable Notes Due 1994
among the Company, Poly-Tech, Inc., as guarantor, and the Bank of Montreal
Trust Company, as trustee (incorporated by reference to Exhibits 4.1 to the
1990 S-1, 4.4 to the 1990 S-1 and 4.5 to the 1990 S-1, respectively).
10.7 -- Indenture dated March 23, 1990, as supplemented by First Supplemental
Indenture dated as of October 9, 1990, relating to the Company's Senior
Variable Notes Due 1997 among the Company, Poly-Tech, Inc., as guarantor, and
the Bank of Montreal Trust Company, as trustee (incorporated by reference to
Exhibits 4.2 and 4.3 to the 1990 S-1, respectively).
10.8 -- Management Agreement dated as of May 22, 1991 between the Company and Carlisle
Plastics Management Corporation (incorporated by reference to Exhibit 10.22 to
the 1990 S-1).
10.9 -- Restated 1991 Employee Incentive Plan (incorporated by reference to Exhibit
4(a) to the Registration Statement on Form S-8, Registration No. 33-64890, as
filed with the Securities and Exchange Commission on June 24, 1993.
10.10 -- Lease between the Company and One Union Realty Trust dated September 1, 1991
(incorporated by reference to Exhibit 10.35 to the 1991 10-K), as amended by
Addendum Number 1 to the Lease dated June 29, 1993 (filed herewith).
</TABLE>
44
<PAGE> 46
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C> <C>
10.11 -- Stockholders' Agreement dated as of July 16, 1991 by and among High-D
Acquisition Corp., Carlisle Plastics, Inc. and certain individuals and
institutions relating to Rhino-X Industries, Inc. (incorporated by reference
to Exhibit 10.45 to the 1991 10-K).
10.12 -- Employment Agreement dated July 14, 1992 between the Company and David E.
Wilbur, Jr. (incorporated by reference to Exhibit I to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1992).
10.13 -- Indenture relating to the Company's 10 1/4% Senior Notes Due 1997 among the
Company, Poly-Tech, as Guarantor, and United States Trust Company of New York,
as Trustee (a form of the Notes is contained as Exhibit A thereto)
(incorporated by reference to Exhibit 4.1 to the Registration Statement on
Form S-1, as amended, Registration No. 33-47627, as filed with the Securities
and Exchange Commission on May 1, 1992).
11 -- Statement re: Computation of Per Share Earnings.
18 -- Letter re: Change in Accounting Principles (incorporated by reference to
Exhibit 18 of the 1989 S-1).
21 -- Subsidiaries of the Company.
23 -- Consent of Deloitte & Touche.
</TABLE>
45
<PAGE> 1
EXHIBIT 10.10
ADDENDUM #1
ADDENDUM to Lease dated September 1, 1991 between ONE UNION REALTY TRUST,
as the Landlord, and CARLISLE PLASTICS, INC., as the Tenant.
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have agreed to execute an addendum to reflect
an extension of the term of said Lease;
NOW, THEREFORE, Landlord and Tenant acknowledge and agree as follows:
1. The Term Commencement Date of said Lease is September 1, 1991.
2. The lease term (section 3. of said Lease) is hereby extended from a
term of eight (8) years to a term of eleven (11) years commencing on the
Term Commencement Date and ending on the day immediately prior to the
eleventh (11th) anniversary thereof (the "Term of this Lease").
3. All other terms and conditions of said Lease remain in full force
and effect.
IN WITNESS WHEREOF, Landlord and Tenant have caused this instrument to be
executed under seal this 29th day of June, 1993.
LANDLORD: TENANT:
ONE UNION REALTY TRUST CARLISLE PLASTICS, INC.
By /s/ RICHARD G. FOWNES By /s/ WILLIAM H. BINNIE
46
<PAGE> 1
<TABLE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
INCOME:
Income (loss) before provision for income taxes,
extraordinary item and change in accounting
principle........................................... $ 9,291 $ (6,902) $ 13,717
Income tax expense (benefit)........................... 3,459 (688)
---------- ----------
Income (loss) before extraordinary item and change in
accounting principle................................ 5,832 (6,214)
Extraordinary item..................................... (234) (89)
Change in accounting principle......................... 1,586 --
---------- ----------
Net income (loss)...................................... $ 7,184 $ (6,303)
========== ==========
Pro forma income tax expense (1)....................... 5,636
----------
Pro forma income before extraordinary item............. 8,081
Extraordinary item..................................... (3,576)
----------
Pro forma net income................................... $ 4,505
==========
SHARES:
Weighted average number of common shares outstanding
(2)................................................. 17,616,901 17,609,463 14,971,593
Common share equivalents from the assumed exercise of
stock options (3) 120,421 -- 24,518
---------- ---------- ----------
17,737,322 17,609,463 14,996,111
========== ========== ==========
EARNINGS PER SHARE:
Income (loss) before extraordinary item and change
in accounting principle........................... $ .33 $ (.35)
Extraordinary item.................................. (.01) (.01)
Change in accounting principle...................... .09 --
---------- ----------
Net income (loss)................................... $ .41 $ (.36)
========== ==========
Pro forma income before extraordinary item.......... $ .54
Extraordinary item.................................. (.24)
----------
Pro forma net income................................ $ .30
==========
<FN>
- ---------------
(1) Pro forma income taxes reflect the effect on income taxes in 1991 as if the
Company had been a "C" corporation for the entire period.
(2) Beginning balance of common stock is adjusted for changes in the number of
shares outstanding (retroactively adjusted to reflect a 125.9-for-1 stock
split in May 1991), weighted monthly by the elapsed portion of the period
during which the shares were outstanding.
(3) Common share equivalents are computed by the "treasury stock" method. Share
amounts represent the dilutive effect of outstanding stock options which
have an option price below the closing market price for the period
presented.
</TABLE>
47
<PAGE> 1
<TABLE>
EXHIBIT 21
SUBSIDIARIES
SUBSIDIARIES OF CARLISLE PLASTICS, INC.
<CAPTION>
NAME JURISDICTION OF INCORPORATION
- ---- -----------------------------
<S> <C>
Poly-Tech, Inc. Minnesota
A&E Products (Far East) Ltd. Hong Kong
Plasticos Bajacal S.A. de C.V. Mexico
Rhino-X Industries, Inc. Delaware
A&E -- Korea, Ltd. Delaware
</TABLE>
<TABLE>
SUBSIDIARIES OF POLY-TECH, INC.
NAME JURISDICTION OF INCORPORATION
- ---- -----------------------------
<S> <C>
American Western Corporation Delaware
</TABLE>
<TABLE>
SUBSIDIARIES OF AMERICAN WESTERN CORPORATION
<CAPTION>
NAME JURISDICTION OF INCORPORATION
- ---- -----------------------------
<S> <C>
AWC Transportation Corporation South Dakota
</TABLE>
48
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-47006, 33-64890 and 33-65000 of Carlisle Plastics, Inc. on Form S-8 of our
report dated February 9, 1994, appearing in this Annual Report on Form 10-K of
Carlisle Plastics, Inc. for the year ended December 31, 1993.
DELOITTE & TOUCHE
Boston, Massachusetts
February 18, 1994
49
