<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 33-45897
PLASTIC CONTAINERS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-3632393
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
2515 McKinney Ave.
Suite 850
Dallas, Texas 75201
(Address of principal executive offices)
Telephone number (214) 528-9922
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 twelve months, and (2) has been subject to such filing
requirements for the past 90 days:
Yes [X] No [ ]
As of May 10, 1999, there were 100 shares of the registrant's common stock
outstanding.
<PAGE>
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PLASTIC CONTAINERS, INC.
Condensed and Consolidated Balance Sheets as of March 31, 1999 (unaudited) and
December 31, 1998.
Condensed and Consolidated Statements of Income for the three months ended March
31, 1999 and 1998 (unaudited).
Condensed and Consolidated Statements of Cash Flows for the three months ended
March 31, 1999 and 1998 (unaudited).
Notes to Condensed and Consolidated Financial Statements.
CONTINENTAL PLASTIC CONTAINERS, INC. (A WHOLLY-OWNED SUBSIDIARY OF PLASTIC
CONTAINERS, INC.)
Condensed Balance Sheets as of March 31, 1999 (unaudited) and December 31, 1998.
Condensed Statements of Income for the three months ended March 31, 1999 and
1998 (unaudited).
Condensed Statements of Cash Flows for the three months ended March 31, 1999 and
1998 (unaudited).
Notes to Condensed Financial Statements.
2
<PAGE>
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONDENSED AND CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4,277 616
Investment securities 8,112 9,216
Accounts receivable, net 24,180 18,528
Inventories 18,902 18,129
Other current assets 2,199 2,250
-------- ----------
Total current assets 57,670 48,739
Property, plant and equipment, net 98,726 98,962
Goodwill 116,990 117,742
Other assets 22,738 24,451
-------- --------
$296,124 289,894
======== ========
Liabilities & Stockholder's Equity
Current liabilities:
Accounts payable - trade $ 14,058 13,016
Current portion of long-term obligations 1,012 1,012
Other current liabilities 23,233 19,871
-------- -------
Total current liabilities 38,303 33,899
Long-term obligations 132,902 133,108
Other liabilities 22,598 22,359
Stockholder's equity:
Common stock, $1 par value. Authorized 1,000
shares; 100 shares issued and outstanding -- --
Additional paid-in capital 137,968 137,244
Retained earnings 7,035 5,242
-------- -------
145,003 142,486
Less note receivable from stockholder 42,682 41,958
-------- -------
Total stockholder's equity 102,321 100,528
-------- -------
$296,124 289,894
======== =======
</TABLE>
3
<PAGE>
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONDENSED AND CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Predecessor
-----------
THREE MONTHS ENDED
March 31, March 31,
1999 1998
---- ----
<S> <C> <C>
Net sales $66,434 64,907
Cost of goods sold 53,201 54,790
------- ------
Gross profit 13,233 10,117
Selling, general and administrative expense 6,987 6,882
------- ------
Operating income 6,246 3,235
Other income (expense):
Interest income 118 360
Interest expense (2,916) (3,387)
Gain on disposal of assets -- 3
------- ------
Total other expense (2,798) (3,024)
------- ------
Income before income taxes 3,448 211
Income tax expense (benefit) 1,655 (994)
------- ------
Net income $ 1,793 1,205
======= ======
</TABLE>
4
<PAGE>
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Predecessor
-----------
THREE MONTHS ENDED
March 31, March 31,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,793 1,205
Adjustments:
Depreciation and amortization 4,035 3,382
Gain on disposal of assets -- (3)
Changes in assets and liabilities 676 2,184
------- ------
Net cash provided by operating activities 6,504 6,768
------- ------
Cash flows from investing activities:
Change in investment securities, net 1,104 (1,300)
Proceeds from disposal of assets 43 3
Purchases of property, plant and equipment (3,784) (4,262)
------- ------
Net cash used in investing activities (2,637) (5,559)
------- ------
Cash flows from financing activities -
Repayments of long-term obligations (206) (207)
------- ------
Net increase in cash and cash equivalents 3,661 1,002
Cash and cash equivalents - beginning 616 2,479
------- ------
Cash and cash equivalents - ending $ 4,277 3,481
======= ======
</TABLE>
5
<PAGE>
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(all dollars in thousands)
(1) Basis of Presentation
The accompanying condensed and consolidated financial statements include
Plastic Containers, Inc. and its wholly-owned subsidiaries, Continental
Plastic Containers, Inc. ("CPC") and Continental Caribbean Containers, Inc.
("Caribbean"), on a consolidated basis. All significant intercompany
transactions have been eliminated in the consolidated financial statements.
The consolidated entities are referred to as Plastic Containers, Inc.
("PCI" or "the Company") in the notes to condensed and consolidated
financial statements.
PCI is a wholly-owned subsidiary of Continental Can Company, Inc.
("Continental Can"). On May 29, 1998, Continental Can was acquired by Suiza
Foods Corporation ("Suiza") in a transaction accounted for as a purchase.
Purchase accounting adjustments, including goodwill, have been pushed down
and reflected in the consolidated financial statements of PCI subsequent to
May 29, 1998. The consolidated financial statements of PCI for the periods
ended before May 29, 1998 were prepared using PCI's historical basis of
accounting and are designated as "predecessor". The comparability of the
operating results for the predecessor and the periods encompassing push
down accounting are affected by the purchase accounting adjustments.
Separate financial statements of CPC accompany these consolidated financial
statements, since the issued and outstanding stock of CPC, which is pledged
as security for the Company's 10% Senior Secured Notes due 2006 (the "10%
Notes"), constitutes a substantial portion of the collateral for the 10%
Notes. Separate financial statements for Caribbean are not included
herewith because (i) the issued and outstanding stock of Caribbean, which
is also pledged as security for the Company's 10% Notes, does not
constitute a substantial portion of the collateral for the 10% Notes, and
(ii) management has determined that separate financial statements of
Caribbean are not material to investors. CPC and Caribbean constitute all
of PCI's direct and indirect subsidiaries and have fully and
unconditionally guaranteed the 10% Notes on a joint and several basis. PCI
is a holding company with no assets, operations or cash flows separate from
its investments in CPC and Caribbean.
The condensed and consolidated financial statements are unaudited and
reflect all adjustments which are, in the opinion of management, necessary
for a fair presentation of the financial position and operating results for
the interim periods. The condensed and consolidated financial statements
should be read in conjunction with the consolidated financial statements
and notes thereto contained in the Company's Form 10-K for the year ended
December 31, 1998.
(Continued)
6
<PAGE>
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS
(2) Inventories
Major classes of inventories at March 31, 1999 and December 31, 1998
consist of the following:
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
1999 1998
---- ----
<S> <C> <C>
Raw materials $ 7,262 7,305
Finished goods 9,818 9,133
-------- ------
17,080 16,438
LIFO reserve - -
-------- ------
17,080 16,438
Caribbean 519 416
Repair parts and supplies 1,303 1,275
-------- -------
$ 18,902 18,129
======== ======
</TABLE>
(3) Leases
PCI leases certain facilities and equipment used in connection with its
operations. Rental expense under these operating leases was $3,492 and
$3,456 for the three months ended March 31, 1999 and 1998, respectively.
(4) Subsequent Event
On April 29, 1999, Suiza agreed to sell a majority interest in its U.S.
plastic packaging operations to Consolidated Container Company LLC
("Consolidated Container"), a newly formed company to be controlled by
Vestar Capital Partners III, L.P. ("Vestar"). Pursuant to the proposed
transaction, Suiza's U.S. plastic packaging operations (PCI and Franklin
Plastics, Inc.) would be combined with Vestar's Reid Plastics Holdings,
Inc. If the proposed transaction is completed, Vestar and certain of its
affiliates will own 51%, and Suiza and the minority interest shareholders
of Franklin Plastics, Inc. will own a 43% and 6% interest, respectively, in
Consolidated Container. Upon completion of the transaction, PCI will become
a wholly-owned subsidiary of Consolidated Container. Closing of the
transaction is expected to occur on or about July 1, 1999, subject to
certain customary conditions. The accompanying condensed and consolidated
financial statements of PCI do not include any adjustments that might
result from this transaction.
7
<PAGE>
<PAGE>
CONTINENTAL PLASTIC CONTAINERS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PLASTIC CONTAINERS, INC.)
CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 3,668 110
Investment securities 7,950 9,053
Accounts receivable, net 23,407 17,823
Inventories 18,383 17,713
Other current assets 2,199 2,250
-------- -------
Total current assets 55,607 46,949
Property, plant and equipment, net 95,066 95,244
Goodwill 116,990 117,742
Other assets 22,733 24,447
-------- -------
$290,396 284,382
======== =======
Liabilities & Stockholder's Equity
Current liabilities:
Accounts payable - trade $ 13,963 12,934
Current portion of long-term obligations 1,012 1,012
Other current liabilities 23,120 19,931
-------- -------
Total current liabilities 38,095 33,877
Long-term obligations 132,902 133,108
Other liabilities 22,576 22,340
Stockholder's equity:
Common stock, $1 par value. Authorized 25,000
shares; 10,000 shares issued and outstanding 10 10
Additional paid-in capital 132,286 131,562
Retained earnings 7,209 5,443
-------- -------
139,505 137,015
Less note receivable from stockholder of parent 42,682 41,958
-------- -------
Total stockholder's equity 96,823 95,057
-------- -------
$290,396 284,382
======== =======
</TABLE>
8
<PAGE>
<PAGE>
CONTINENTAL PLASTIC CONTAINERS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PLASTIC CONTAINERS, INC.)
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Predecessor
-----------
THREE MONTHS ENDED
March 31, March 31,
1999 1998
---- ----
<S> <C> <C>
Net sales $ 65,165 63,051
Cost of goods sold 51,972 53,027
-------- ------
Gross profit 13,193 10,024
Selling, general and administrative expense 6,972 6,860
-------- ------
Operating income 6,221 3,164
Other income (expense):
Interest income 110 349
Interest expense (2,916) (3,387)
Gain on disposal of assets -- 3
-------- ------
Total other expense (2,806) (3,035)
-------- ------
Income before income taxes 3,415 129
Income tax expense (benefit) 1,649 (1,000)
-------- ------
Net income $ 1,766 1,129
======== ======
</TABLE>
9
<PAGE>
<PAGE>
CONTINENTAL PLASTIC CONTAINERS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PLASTIC CONTAINERS, INC.)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Predecessor
-----------
THREE MONTHS ENDED
March 31, March 31,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,766 1,129
Adjustments:
Depreciation and amortization 3,943 3,269
Gain on disposal of assets -- (3)
Changes in assets and liabilities 658 2,552
------- -----
Net cash provided by operating activities 6,367 6,947
------- -----
Cash flows from investing activities:
Change in investment securities, net 1,103 (1,301)
Proceeds from disposal of assets 43 3
Purchases of property, plant and equipment (3,749) (4,212)
------- -----
Net cash used in investing activities (2,603) (5,510)
------- -----
Cash flows from financing activities -
Repayments of long-term obligations (206) (207)
------- -----
Net increase in cash and cash equivalents 3,558 1,230
Cash and cash equivalents - beginning 110 1,164
------- -----
Cash and cash equivalents - ending $ 3,668 2,394
======= =====
</TABLE>
10
<PAGE>
<PAGE>
CONTINENTAL PLASTIC CONTAINERS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PLASTIC CONTAINERS, INC.)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
(all dollars in thousands)
(1) Basis of Presentation
Continental Plastic Containers, Inc. ("CPC") develops, manufactures and
markets a wide range of custom extrusion blow-molded plastic containers for
food and juice, household chemicals, automotive products and motor oil,
industrial and agricultural chemicals, and hair care products.
CPC is a wholly-owned subsidiary of Plastic Containers, Inc. ("PCI"). PCI
was organized in October 1991 for the purpose of acquiring CPC and
Continental Caribbean Containers, Inc. ("Caribbean"). PCI is a holding
company with no assets, operations and cash flows separate from its
investment in CPC and Caribbean and is dependent upon funding provided by
CPC to service its debt.
PCI is a wholly-owned subsidiary of Continental Can Company, Inc.
("Continental Can"). On May 29, 1998, Continental Can was acquired by Suiza
Foods Corporation ("Suiza") in a transaction accounted for as a purchase.
Purchase accounting adjustments, including goodwill, have been pushed down
and reflected in the consolidated financial statements of PCI subsequent to
May 29, 1998. The consolidated financial statements of PCI for the periods
ended before May 29, 1998 were prepared using PCI's historical basis of
accounting and are designated as "predecessor". The comparability of the
operating results for the predecessor and the periods encompassing push
down accounting are affected by the purchase accounting adjustments.
The condensed financial statements are unaudited and reflect all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the
interim periods. The condensed financial statements should be read in
conjunction with the financial statements and notes thereto contained in
PCI's Form 10-K for the year ended December 31, 1998.
(2) Inventories
Major classes of inventories at March 31, 1999 and December 31, 1998
consist of the following:
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
1999 1998
---- ----
<S> <C> <C>
Raw materials $ 7,262 7,305
Finished goods 9,818 9,133
-------- ------
17,080 16,438
LIFO reserve - -
-------- ------
17,080 16,438
Repair parts and supplies 1,303 1,275
-------- ------
$ 18,383 17,713
======== ======
</TABLE>
(Continued)
11
<PAGE>
<PAGE>
CONTINENTAL PLASTIC CONTAINERS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF PLASTIC CONTAINERS, INC.)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(3) Leases
CPC leases certain facilities and equipment used in connection with its
operations. Rental expense under these operating leases was $3,492 and
$3,456 for the three months ended March 31, 1999 and 1998, respectively.
(4) Subsequent Event
On April 29, 1999, Suiza agreed to sell a majority interest in its U.S.
plastic packaging operations to Consolidated Container Company LLC
("Consolidated Container"), a newly formed company to be controlled by
Vestar Capital Partners III, L.P. ("Vestar"). Pursuant to the proposed
transaction, Suiza's U.S. plastic packaging operations (PCI and Franklin
Plastics, Inc.) would be combined with Vestar's Reid Plastics Holdings,
Inc. If the proposed transaction is completed, Vestar and certain of its
affiliates will own 51%, and Suiza and the minority interest shareholders
of Franklin Plastics, Inc. will own a 43% and 6% interest, respectively, in
Consolidated Container. Upon completion of the transaction, PCI will become
a wholly-owned subsidiary of Consolidated Container. Closing of the
transaction is expected to occur on or about July 1, 1999, subject to
certain customary conditions. The accompanying condensed and consolidated
financial statements of CPC do not include any adjustments that might
result from this transaction.
12
<PAGE>
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(All Dollars in Thousands).
RESULTS OF OPERATIONS
PCI is a subsidiary of Continental Can Company, Inc. ("Continental Can").
On May 29, 1998, Continental Can was acquired by Suiza Foods Corporation
("Suiza") in a transaction accounted for as a purchase. Purchase accounting
adjustments, including goodwill, have been pushed down and reflected in the
consolidated financial statements of PCI subsequent to May 29, 1998. The
consolidated financial statements of PCI for the periods ended before May 29,
1998 were prepared using PCI's historical basis of accounting and are designated
as "predecessor". The comparability of the operating results for the predecessor
and the periods encompassing push down accounting are affected by the purchase
accounting adjustments.
Net Sales. Net sales for the first quarter of 1999 increased $1,527 (2.4%)
to $66,434, compared to $64,907 for the first quarter of 1998. The increase in
sales reflected an increase in unit volume offset by decreases in raw material
costs that were passed on to customers in the form of lower prices. Lower resin
prices accounted for lower sales of approximately $4,200 for the first quarter
of 1999 compared to 1998. Total unit volume for the first quarter of 1999 was
13.3% higher than the first quarter of 1998, resulting from new product
introductions as well as stronger demand in most existing product categories.
Gross Profit. Gross profit for the first quarter of 1999 was $13,233, an
increase of $3,116 (30.8%) over gross profit of $10,117 in the first quarter of
1998. The significant increase in gross profit is the result of the increase in
unit volume sales combined with sustained performance improvement and production
efficiencies at most of the Company's manufacturing facilities. Gross profit
percentage for the first quarter of 1999 was 19.9%, compared to 15.6% for the
first quarter of 1998. Excluding the impact on sales of lower resin prices,
gross profit percentage for the first quarter of 1999 would have been 18.7%.
SG&A. Selling, general and administrative (SG&A) expense for the first
quarter of 1999 was $6,987, an increase of $105 (1.5%), compared to SG&A expense
of $6,882 for the first quarter of 1998. Amortization expense was $413 higher
from increased goodwill in purchase accounting, while other SG&A costs were $308
lower, in the first quarter of 1999 compared to the first quarter of 1998. SG&A
expense as a percentage of net sales for the first quarter of 1999 was 10.5%,
compared to 10.6% for the first quarter of 1998. Excluding the impact on sales
of lower resin prices, the SG&A percentage for the first quarter of 1999 would
have been 9.9%.
Other Expense. Other expense for the first quarter of 1999 was $2,798, a
decrease of $226 (7.5%), compared to $3,024 for the first quarter of 1998. This
decrease results from a decline in interest expense related to a revaluation of
long-term obligations in 1998.
Income Taxes. Income tax expense for the first quarter of 1999 was $1,655,
reflective of an effective income tax rate of approximately 48%. Income tax
benefit of $994 in the first quarter of 1998 resulted from a decrease in the
valuation reserve for deferred tax assets.
Net Income. Net income for first quarter of 1999 was $1,793, an increase of
$588 (48.8%) over first quarter 1998 net income of $1,205. The increase is the
result of higher operating income offset by an increase in income tax expense.
13
<PAGE>
<PAGE>
CAPITAL REQUIREMENTS
PCI acquired $3,784 in capital assets in the first quarter of 1999,
compared to $4,262 in the first quarter of 1998. Substantially all of the assets
acquired were packaging equipment for the manufacture of plastic containers or
related support equipment. The capital requirements in the first quarter of 1999
were met with cash generated by operations and from existing funds.
LIQUIDITY
The Company's primary sources of liquidity are provided through a revolving
credit facility and cash flows from operations. At March 31, 1999, the Company
had no borrowings outstanding under the revolving credit facility and had
available cash and cash equivalents of approximately $12,400.
The revolving credit facility has a term of seven years expiring October
31, 2002. Interest is based on the bank's prime rate or LIBOR, at the Company's
option. The amount of availability under the revolving credit facility is
subject to borrowing base limitations based on inventory and receivables. At
March 31, 1999, the Company had undrawn availability of approximately $28,300.
Working capital was $19,367 at March 31, 1999, compared to $14,840 at
December 31, 1998. The increase is primarily the result of cash generated from
operations and a higher level of accounts receivable corresponding to the
increase in sales. Cash flows from operating activities were $6,504 in the first
quarter of 1999, compared to $6,768 in the first quarter of 1998.
Management believes that existing funds and the funds expected to be
generated from operations and provided by existing credit facilities will be
sufficient to meet working capital and capital investment needs for the
foreseeable future.
YEAR 2000 COMPLIANCE
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a
two-digit year is commonly referred to as the Year 2000 problem. The Year 2000
problem arises from the way dates are recorded and computed in most
applications, operating systems, hardware and embedded chips. If the problem is
not corrected, systems that use a date in its prescribed function may fail or
produce erroneous results before, on and after the year 2000.
PCI, along with Suiza, is currently engaged in a comprehensive and
aggressive project to identify and address any Year 2000 issues that may
adversely impact the business. The areas being assessed are: enterprise systems
and related applications; plant floor systems and equipment, personal computers
and related applications; networks and communications; supplier and customer
chains; internal and external Electronic Data Interchange and associated
interfaces; and miscellaneous equipment (time clocks, postage machines,
facsimiles, etc.). These areas relate not only to "information technology" but
also to all segments of PCI's business, finance, sales, marketing, operations,
etc.
A corporate project team consisting of both PCI and Suiza corporate and
regional employees representing key segments of the business is guiding the
Company's Year 2000 compliance effort. This team has developed a structured
approach that includes detailed specific tasks needed to satisfy Year 2000
compliance. The plan is broken into five phases including awareness,
assessment/inventory,
14
<PAGE>
<PAGE>
remediation, certification and testing. These phases are designed to enable us
to comprehensively and effectively track all activities. External consultants
are being utilized to assist in compliance efforts.
PCI has completed its assessment of the Company's information systems and
is aggressively proceeding with remediation, testing and implementation
processes using both internal and external resources. For information and
non-information applications that are provided by a third party software vendor,
available upgrades have been identified and are being certified and implemented.
PCI has finalized the inventory and assessment phase for its plant
equipment and is in the process of researching the detailed inventories for
compliance issues. Indicators are showing that there will be minimal impact in
the plant operations area.
A critical step in the Company's strategic plan is the coordination of Year
2000 readiness with third parties. PCI has an aggressive program in effect to
determine the extent to which the Company and any interface systems are
vulnerable if they fail to resolve Year 2000 issues. The program is designed to
insure that the external business contributors (suppliers, vendors and
customers) are pursuing acceptable compliance efforts so that they will have
minimal impact on the Company's business. Contingency plans are being developed
in any areas that pose a possible threat.
Management believes that all Year 2000 remediation efforts for its business
will be completed on time and within budget estimates. Should any critical
service providers, suppliers or customers be unable to achieve timely
compliance, there may be an adverse impact on the Company's operations.
Management's current assessment of risks, based on the most reasonable worst
case scenario, is that there will be no significant adverse impact on the
Company's operations or financial performance. Management believes that if any
disruption to operations does occur, it will be isolated and/or short-term in
duration.
Over the past several years the Company has had an ongoing information
systems development plan with scheduled replacements of systems throughout the
organization. Year 2000 compliance has been a significant part of this
development plan. In connection with the development plan, information systems
expenditures have been made in the normal course of business and, through March
31, 1999, the Company has made expenditures of approximately $150 related to
Year 2000 compliance. The Company expects to spend up to $300 in total during
1999 for Year 2000 compliance activities.
RECENT DEVELOPMENTS
On April 29, 1999 Suiza agreed to sell a majority interest in its U.S.
plastic packaging operations to Consolidated Container Company LLC, a newly
formed company to be controlled by Vestar Capital Partners III, L.P., a private
equity firm. Closing of the proposed transaction is subject to customary
conditions, including the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, receipt of acceptable
financing for Consolidated Container Company LLC and receipt of certain third
party consents. The closing is expected to occur on or about July 1, 1999,
however, there can be no assurance that the proposed transaction will be
completed within the currently anticipated timeframe or at all. For more
information about the proposed transaction, please see Note 4 to the Condensed
and Consolidated Financial Statements contained in this report.
CAUTIONARY STATEMENT
Certain statements and information in this Quarterly Report constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be indicated by
phrases such as "believes," "anticipates," "expects," "intends," "foresees,"
"projects," "forecasts" or words of similar meaning or import. Such statements
15
<PAGE>
<PAGE>
are subject to certain risks, uncertainties, or assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those set forth in
applicable forward-looking statements. Among the key factors that may have a
direct bearing on the Company's results and financial condition are (i) risks
associated with intense competition in the Company's industry, (ii) the impact
of governmental regulations, and (iii) risks associated with volatility in the
costs of raw goods. Any forward-looking statements made or incorporated by
reference herein speak only as of the date of this Quarterly Report. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any such statements, to reflect any change in its
expectations with regard thereto or any change in events, conditions, or
circumstances on which any such statement is based. Additional information
concerning these and other risk factors is contained in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998, a copy of which
may be obtained from the Company upon request.
16
<PAGE>
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule p. 18
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 1999.
SIGNATURE
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 authorized.
PLASTIC CONTAINERS, INC.
By: /s/ Brian L. Ketcham
----------------------
Brian L. Ketcham
Principal Financial and
Accounting Officer on behalf
of the registrant
Dated this 10th day of May, 1999.
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,277
<SECURITIES> 8,112
<RECEIVABLES> 25,856
<ALLOWANCES> 1,676
<INVENTORY> 18,902
<CURRENT-ASSETS> 57,670
<PP&E> 108,460
<DEPRECIATION> 9,734
<TOTAL-ASSETS> 296,124
<CURRENT-LIABILITIES> 38,303
<BONDS> 132,902
<COMMON> 0
0
0
<OTHER-SE> 102,321
<TOTAL-LIABILITY-AND-EQUITY> 296,124
<SALES> 66,434
<TOTAL-REVENUES> 66,434
<CGS> 53,201
<TOTAL-COSTS> 60,188
<OTHER-EXPENSES> 2,798
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,916
<INCOME-PRETAX> 3,448
<INCOME-TAX> 1,655
<INCOME-CONTINUING> 1,793
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,793
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
