<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1995
--------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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*********************************************
Commission file number 1-10756
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CARLISLE PLASTICS, INC.
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(Exact name of registrant as specified in its Charter)
DELAWARE 04-2891825
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
*********************************************
1314 NORTH THIRD STREET, PHOENIX, AZ 85004
- ---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
(602) 407-2100
----------------------------------------------------
(Registrant's telephone number, including area code)
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
-- --
AT APRIL 30, 1995, 8,193,733 AND 9,510,552 SHARES OF CARLISLE PLASTICS, INC.
CLASS A COMMON STOCK AND CLASS B COMMON STOCK, RESPECTIVELY, WERE OUTSTANDING.
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CARLISLE PLASTICS, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 1995
INDEX
PART I - FINANCIAL INFORMATION:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1. Financial Statements ....................................... 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ....... 8
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings .......................................... 10
Item 2. Changes in Securities ...................................... 10
Item 3. Defaults Upon Senior Securities ............................ 10
Item 4. Submission of Matters to a Vote of Security Holders ........ 10
Item 5. Other Information .......................................... 10
Item 6. Exhibits and Reports on Form 8-K ........................... 10
SIGNATURES ................................................................... 11
INDEX TO EXHIBITS ............................................................ 12
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In thousands, except share (Unaudited)
and per share amounts) MARCH 31, DECEMBER 31,
1995 1994
-------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 3,369 $ 4,488
Receivables--net of allowances of $4,574 as of
March 31, 1995 and $4,055 as of
December 31, 1994 58,543 55,789
Inventories 65,497 56,538
Other current assets 7,772 7,608
-------- ---------
Total current assets 135,181 124,423
Property, plant and equipment--net of accumulated
depreciation of $88,774 as of March 31, 1995
and $84,606 as of December 31, 1994 136,759 139,327
Goodwill--net 65,584 66,117
Other assets--net 10,701 11,125
-------- ---------
TOTAL ASSETS $348,225 $ 340,992
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 9,805 $ 9,563
Accounts payable 42,593 37,999
Accrued interest 3,637 960
Other accrued liabilities 8,462 10,674
-------- ---------
Total current liabilities 64,497 59,196
-------- ---------
Long-term debt--net of current portion 199,591 198,277
Deferred income taxes 11,341 11,206
Other non-current liabilities 1,943 2,053
Commitments and contingencies
Stockholders' equity:
Preferred stock--$.01 par value; 10,000,000 shares
authorized, no shares issued or outstanding
Class A common stock--$.01 par value; 50,000,000
shares authorized; 8,193,733 issued and outstanding 82 82
Class B common stock--$.01 par value; 20,000,000
shares authorized; 9,510,552 issued and outstanding 95 95
Additional paid-in capital 68,359 68,359
Retained earnings 2,317 1,724
-------- ---------
Total stockholders' equity 70,853 70,260
-------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $348,225 $ 340,992
======== =========
</TABLE>
See notes to unaudited condensed consolidated financial statements and
independent accountants' report.
3
<PAGE> 4
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
(In thousands, except per share amounts) THREE MONTHS ENDED MARCH 31,
----------------------------
1995 1994
---- ----
<S> <C> <C>
Net sales $ 103,160 $ 86,092
Cost of goods sold 79,786 64,639
---------- ---------
Gross profit 23,374 21,453
Operating expenses 15,700 15,236
Goodwill and other amortization 777 744
---------- ---------
Operating income 6,897 5,473
Interest expense 5,807 5,547
Interest and other income (12) (101)
---------- ---------
Income before provision for
income taxes and extraordinary item 1,102 27
Provision for income taxes 469 11
---------- ---------
Income before extraordinary item 633 16
Extraordinary item (net of income tax
benefit of $1,574) -- (2,462)
---------- ---------
Net income (loss) $ 633 $ (2,446)
========== =========
Earnings per common share:
Before extraordinary item $ .04 $ --
Extraordinary item -- (.14)
---------- ---------
Net income (loss) $ .04 $ (.14)
========== =========
Weighted average number of common
and common equivalent shares 17,721 17,654
========== =========
</TABLE>
See notes to unaudited condensed consolidated financial statements and
independent accountants' report.
4
<PAGE> 5
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
(In thousands) THREE MONTHS ENDED MARCH 31,
----------------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 633 $ (2,446)
Adjustments to reconcile net income (loss) to
net cash flows from operating activities:
Depreciation and amortization 6,128 5,212
Deferred income taxes 146 (426)
Bad debt expense 684 (73)
Write-off of deferred financing costs -- 1,331
Other (40) 14
Changes in assets and liabilities:
Receivables (3,538) (4,525)
Inventories (8,959) 2,446
Other current assets (8) (1,370)
Accounts payable 4,594 (1,557)
Other accrued liabilities 465 4,474
Other assets (433) (428)
------- --------
Net cash (used in) provided by operating activities (328) 2,652
------- --------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Acquisition of property, plant and equipment--net (2,198) (6,794)
Purchase of minority interest of subsidiary -- (3,221)
------- --------
Net cash used for investing activities (2,198) (10,015)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (2,244) (10,239)
Issuance of long-term debt -- 32,068
Borrowings under long-term accounts receivable securitization 455 --
Borrowings under long-term line of credit 3,317 --
Deferred financing costs (121) (509)
Exercise of stock options -- 406
------- --------
Net cash provided by financing activities 1,407 21,726
------- --------
CASH AND EQUIVALENTS:
Net increase (decrease) (1,119) 14,363
BEGINNING OF PERIOD 4,488 19,745
------- --------
END OF PERIOD $ 3,369 $ 34,108
======= ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 2,266 $ 809
Income taxes paid $ 187 $ 456
</TABLE>
See notes to unaudited condensed consolidated financial statements and
independent accountants' report.
5
<PAGE> 6
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
(Unaudited--See Independent Accountants' Report)
A. BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared by Carlisle
Plastics, Inc. (the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the condensed
consolidated financial statements reflect the adjustments, which are of a normal
recurring nature, necessary to present fairly the Company's financial position
as of March 31,1995 and December 31, 1994 and the results of operations and cash
flows for the three months ended March 31, 1995 and 1994. While the interim
financial statements and accompanying notes are unaudited, they have been
reviewed by Deloitte & Touche LLP, the Company's independent certified public
accountants.
Results of operations are not necessarily indicative of the results expected for
the full year. Certain amounts in prior periods' financial statements have been
reclassified to conform to the current period's presentation.
These condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes included in the
Company's Form 10-K for the year ended December 31, 1994.
B. INVENTORIES
Inventories consisted of the following at March 31, 1995 and December 31, 1994:
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1995 1994
-------- --------
<S> <C> <C>
Raw materials $ 23,847 $ 21,823
Finished Goods 41,650 34,715
-------- --------
Total $ 65,497 $ 56,538
======== ========
</TABLE>
C. RELATED PARTY TRANSACTIONS
Management fees incurred with respect to services rendered by affiliates of a
major stockholder were $188 and $375 for the three months ended March 31, 1995
and 1994, respectively.
D. MERGER OF POLY-TECH, INC.
On March 31, 1995, Poly-Tech, Inc., a wholly owned subsidiary, was merged into
Carlisle Plastics, Inc.
6
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INDEPENDENT ACCOUNTANTS' REPORT
Carlisle Plastics, Inc.
Phoenix, Arizona
We have reviewed the accompanying condensed consolidated balance sheet of
Carlisle Plastics, Inc. and subsidiaries (the Company) as of March 31, 1995
and the related condensed consolidated statements of operations and cash
flows for the three month periods ended March 31, 1995 and 1994. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Carlisle Plastics, Inc. and
subsidiaries as of December 31, 1994, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 2, 1995, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31,1994 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
April 14, 1995
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NET SALES
The Company's net sales for the three months ended March 31, 1995 increased
19.8% to $103.2 million from $86.1 million for the three months ended March 31,
1994. The increase in net sales is primarily attributable to sales price
increases.
GROSS PROFIT
Gross profit for the three months ended March 31, 1995 was $23.4 million and
22.7% of sales, compared to $21.5 million and 24.9% of sales for the comparable
period in 1994. The decrease in the Company's gross profit as a percentage of
sales is attributable to several factors including continued increases in the
cost of resin materials, new product introductions, and other product mix
changes.
OPERATING EXPENSES
Operating expenses, exclusive of goodwill and other amortization, for the three
months ended March 31, 1995 were $15.7 million compared to $15.2 million for the
comparable 1994 period. The increase is primarily attributable to higher selling
and marketing expenses partially offset by reductions in freight costs.
INTEREST EXPENSE
Interest expense, including amortization of deferred financing and interest rate
contract settlement costs, increased $.3 million or 4.7% to $5.8 million for the
three months ended March 31, 1995 from $5.5 million for the same period in 1994.
The increase in interest expense is attributable to an increase in the Company's
average outstanding debt and amortization related to the interest rate contract
settlement, partially offset by the reduction in interest due to the replacement
of $68.5 million 13.75% Senior Notes with lower variable rate debt in April
1994.
INCOME TAXES
The Company recorded a tax provision of $.5 million reflecting an effective tax
rate of 42.6% for the three months ended March 31, 1995.
8
<PAGE> 9
NET INCOME (LOSS)
Net income for the three months ended March 31, 1995 increased to $633,000 from
a loss of ($2.5) million for the three months ended March 31, 1994. The first
quarter of 1994 included a $2.5 million extraordinary charge related to the
early extinguishment of debt.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital as of March 31, 1995 was $70.7 million, an
increase of $5.5 million from the working capital at December 31, 1994. This is
primarily attributable to increases in inventory and accounts receivable as a
result of increases in raw material costs and selling prices, respectively.
For the three months ended March 31, 1995, net cash used by operations was
$328,000 compared to net cash provided by operations of $2.7 million for the
comparable period in 1994, reflecting increased cash requirements for working
capital.
Net cash used for investing activities decreased approximately $7.8 million to
$2.2 million for the three months ended March 31, 1995 from $10.0 million for
the comparable 1994 period. The 1994 period includes the purchase of the
remaining outstanding minority interest of Rhino-X and the expansion of plant
capacity for the Company's high density product lines. The Company anticipates
that capital expenditures for fiscal year 1995 will be less than the annual
charge for depreciation.
Net cash provided from financing activities was $1.4 million compared to $21.7
million for the three months ended March 31, 1995 and 1994, respectively. The
1994 period reflects the effect of building cash for the early retirement of
the 13.75% Senior Notes which occurred in April 1994.
Available and outstanding borrowings under the Company's accounts receivable
securitization program at March 31, 1995 were $41.8 million and $38.6 million,
respectively. At March 31, 1995 available and outstanding borrowings under the
Company's revolving inventory credit facility were $25.0 million and $3.3
million, respectively.
Management currently expects its cash on hand, funds from operations and
borrowings available under existing credit facilities will be sufficient to
cover future operating requirements.
9
<PAGE> 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
None.
Item 2. Changes in Securities:
None.
Item 3. Defaults Upon Senior Securities:
None.
Item 4. Submission of Matters to a Vote of Security Holders:
None.
Item 5. Other Information:
None.
Item 6. Exhibits and Reports on Form 8-K:
The Index to Exhibits as set forth on page 12.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARLISLE PLASTICS, INC.
Date May 5, 1995 /S/ PATRICK J. O'LEARY
----------- ------------------------------
Patrick J. O'Leary
Chief Financial Officer
(Principal Financial and
Accounting Officer) and
Director
11
<PAGE> 12
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
QUARTERLY PERIOD ENDED MARCH 31, 1995
INDEX TO EXHIBITS
2.1 Articles of Merger of Poly-Tech, Inc. ("Poly-Tech") into Carlisle
Plastics, Inc. (the "Company") as of March 31, 1995.
27 Financial Data Schedule
12
<PAGE> 1
Exhibit 2.1
ARTICLES OF MERGER
OF
POLY-TECH, INC.
INTO
CARLISLE PLASTICS, INC.
Carlisle Plastics, Inc., a Delaware corporation, by action of its Board
of Directors in accordance with Section 302A.621 of the Minnesota Business
Corporation Act, as amended, hereby adopts the following Articles of Merger:
ARTICLE I
Included herein as Article III is the Plan of Merger, which has been
approved by the affirmative vote of a majority of the directors of Carlisle
Plastics, Inc. ("Parent"), setting forth the terms of the merger of Poly-Tech,
Inc., a Minnesota Corporation ("Subsidiary") with and into Parent (the "Merger")
(Subsidiary and Parent are sometimes hereinafter collectively referred to as the
"Constituent Corporations").
ARTICLE II
Subsidiary has outstanding a total of 1,000 shares of common stock,
$.01 par value (the "Common Stock") and a total of 150 shares of Non-Voting
Cumulative Participating Preferred Stock, Series A (the "Preferred Stock"), all
of which shares of Common Stock and Preferred Stock are owned by Parent.
ARTICLE III
The Plan of Merger is as follows:
1. Merger. The Merger shall be effected pursuant to applicable state
law and will be consistent with the requirements for a reorganization described
in Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended.
2. Surviving Corporation. Subsidiary shall be merged with and into
Parent and Parent shall be the surviving corporation after the Merger (Parent
being sometimes hereinafter referred to as the "Surviving Corporation") and
shall continue to exist as a corporation created and governed by the laws of the
State of Delaware.
3. Effective Date. The Merger shall be effective as of March 31, 1995
(the "Effective Date").
4. Share of Common Stock. Each share of common stock of Parent issued
and outstanding at the time of the Merger shall continue as one share of common
stock of the Surviving Corporation which shall be fully paid and nonassessable.
Each Share of common stock of Subsidiary issued and outstanding at the time of
the Merger shall be automatically retired and cancelled.
13
<PAGE> 2
5. Shares of Preferred Stock. Each share of Non-Voting Cumulative
Participating Preferred Stock, Series A (the "Preferred Stock") of Subsidiary
issued and outstanding at the time of the Merger shall be automatically retired
and cancelled.
6. Certificate of Incorporation and Bylaws.
6.1 The Certificate of Incorporation of Parent shall remain in
effect after the Effective Date of the Merger as the Certificate of
Incorporation of the Surviving Corporation, and such Certificate of
Incorporation shall not be amended by virtue of the Merger.
6.2 The Bylaws of Parent as in effect on the Effective Date shall
be the Bylaws of the Surviving Corporation until the same shall be
altered, amended or repealed as therein provided.
7. Succession to All Rights and Obligations. From and after the
Effective Date, the Surviving Corporation shall automatically succeed to all of
the assets and rights, and all of the liabilities and obligations of
the Subsidiary as provided by law.
8. Directors. The directors of Parent at the Effective Date shall
continue as directors of the Surviving Corporation until the election and
qualification of their successors.
9. Officers. The officers of Parent at the Effective Date shall
continue as officers of the Surviving Corporation until the election and
qualification of their successors.
10. Abandonment. Notwithstanding the approval of this Plan of Merger
by the directors of Parent, this Plan of Merger may be abandoned by either
party at any time prior to the issuance of Certificates of Merger by the
Secretaries of State of the State of Minnesota and the State of Delaware.
11. Waiver. Parent, as the sole shareholder of Subsidiary, hereby
acknowledges receipt of a copy of this Plan of Merger and hereby waives the
mailing of this Plan of Merger as provided by Minnesota Statutes, Section
302A.621, Subd. 3(c) and Subd.4.
ARTICLE IV
The Surviving Corporation to the Merger hereby agrees that if it is to
transact business in the State of Minnesota, it shall comply with the provisions
of the Business Corporation Act of Minnesota, with respect to foreign
corporations, and whether or not it is to transact business in Minnesota, agrees
that:
(a) It may be served with process in the State of Minnesota in a
proceeding for the enforcement of any obligation of a Constituent Corporation
and in any proceeding for the enforcement of the rights of a dissenting
shareholder of a Constituent Corporation against the Surviving Corporation;
(b) The Secretary of State of the State of Minnesota shall be and
hereby is irrevocably appointed as the agent of the Surviving corporation to
accept service of process in any proceeding; the post office address to which
the service of process in any such proceeding shall be mailed is 1401 West 94th
Street, Bloomington, Minnesota 55431; and
14
<PAGE> 3
(c) The Surviving Corporation will promptly pay to the dissenting
shareholders of the Merging Corporation the amount, if any, to which they shall
be entitled under the provisions of Minnesota Statutes, Section 302A.473.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Merger as of the 28th day of March, 1995.
CARLISLE PLASTICS, INC.
By: /s/ CLIFFORD A. DEUPREE
---------------------------
Clifford A. Deupree
President
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 3,369
<SECURITIES> 0
<RECEIVABLES> 63,117
<ALLOWANCES> 4,574
<INVENTORY> 65,497
<CURRENT-ASSETS> 135,181
<PP&E> 225,533
<DEPRECIATION> 88,774
<TOTAL-ASSETS> 348,225
<CURRENT-LIABILITIES> 64,497
<BONDS> 199,591
<COMMON> 177
0
0
<OTHER-SE> 70,676
<TOTAL-LIABILITY-AND-EQUITY> 348,225
<SALES> 103,160
<TOTAL-REVENUES> 103,160
<CGS> 79,786
<TOTAL-COSTS> 79,786
<OTHER-EXPENSES> 15,793
<LOSS-PROVISION> 684
<INTEREST-EXPENSE> 5,807
<INCOME-PRETAX> 1,102
<INCOME-TAX> 469
<INCOME-CONTINUING> 633
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 633
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
