SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For
the quarterly period ended March 31, 1996
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 0-21052
ALLTRISTA CORPORATION
State of Indiana 35-1828377
345 South High Street, P. O. Box 5004
Muncie, IN 47307-5004
317/281-5000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 31, 1996
- - ------------------------------ -------------------------------
Common Stock,
without par value 7,806,950 shares
The Exhibit index is on page 12 of 13 Page 1 of 13
<PAGE>
ALLTRISTA CORPORATION
Quarterly Report on Form 10-Q
For the period ended March 31, 1996
INDEX
Page Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Unaudited Condensed Statement of Income
for the three month periods ended
March 31, 1996 and April 2, 1995 3
Unaudited Condensed Balance Sheet at
March 31, 1996 and December 31, 1995 4
Unaudited Condensed Statement of Cash
Flows for the three month periods ended
March 31, 1996 and April 2, 1995 5
Notes to Unaudited Condensed Financial
Statements 6 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 9
PART II. OTHER INFORMATION 10
Page 2 of 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ALLTRISTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED STATEMENT OF INCOME
(thousands of dollars except per share amounts)
Three month period ended
March 31, April 2,
1996 1995
---- ----
<S> <C> <C>
Net sales $51,128 $51,357
---------- ----------
Costs and expenses
Cost of sales 37,552 38,512
Selling, general and administrative
expenses 7,753 7,874
---------- ----------
Operating earnings 5,823 4,971
Interest expense, net (746) (966)
---------- ----------
Income from continuing operations before taxes 5,077 4,005
Provision for income taxes (1,987) (1,599)
---------- ----------
Income from continuing operations 3,090 2,406
---------- ----------
Discontinued operations:
Earnings from discontinued operations,
net of income taxes of $216 and $302 267 446
Net gain on disposal of discontinued operations - -
---------- ----------
Income from discontinued operations 267 446
---------- ----------
Net income $3,357 $2,852
========== ==========
Per share of common stock:
Income from continuing operations
Primary earnings per share $ .38 $ .30
========== ==========
Fully diluted earnings per share $ .38 $ .30
========== ==========
Net income
Primary earnings per share $ .42 $ .36
========== ==========
Fully diluted earnings per share $ .41 $ .36
========== ==========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
Page 3 of 13
<PAGE>
<TABLE>
<CAPTION>
ALLTRISTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED BALANCE SHEET
(thousands of dollars)
March 31, December 31,
1996 1995
----------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 1,464 $ 2,333
Accounts receivable, net 41,390 36,387
Inventories
Raw materials and supplies 25,902 28,373
Work in process and finished goods 28,243 26,202
Net assets to be sold 12,621 -
Deferred taxes on income 2,849 2,849
Prepaid expenses 646 607
----------- -----------
Total current assets 113,115 96,751
----------- -----------
Property, plant and equipment, at cost 149,538 196,135
Accumulated depreciation (100,934) (140,052)
----------- -----------
48,604 56,083
Intangible and other assets 18,519 9,816
----------- -----------
Total assets $180,238 $162,650
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 24,025 $ 3,500
Accounts payable 19,925 23,376
Other current liabilities 15,955 18,063
----------- -----------
Total current liabilities 59,905 44,939
----------- -----------
Noncurrent liabilities
Long-term debt 30,000 30,000
Deferred taxes on income 687 687
Other noncurrent liabilities 7,627 7,773
----------- -----------
Total noncurrent liabilities 38,314 38,460
----------- -----------
Contingencies
Shareholders' equity:
Common stock (includes 7,870,721 common
shares issued and 7,806,950 shares
outstanding at March 31, 1996) 41,135 40,679
Retained earnings 42,322 38,965
Minimum pension liability (367) (367)
Cumulative translation adjustment (15) (26)
----------- -----------
83,075 79,251
Less treasury stock (49,576 shares, at cost) (1,056) -
----------- -----------
Total shareholders' equity 82,019 79,251
----------- -----------
Total liabilities and shareholders' equity $180,238 $162,650
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
Page 4 of 13
<PAGE>
<TABLE>
<CAPTION>
ALLTRISTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
(thousands of dollars)
Three month period ended
March 31, April 2,
1996 1995
----------- ------
<S> <C> <C>
Cash flows from operating activities
Net income $ 3,357 $ 2,852
Reconciliation of net income to net cash
used in operating activities:
Depreciation and amortization 2,885 3,286
Deferred employee benefits 232 191
Other 54 151
Changes in working capital components (9,403) (15,453)
--------- ---------
Net cash used in operating activities (2,875) (8,973)
---------- ----------
Cash flows from financing activities
Proceeds from revolving credit borrowings
and notes payable 20,526 10,500
Proceeds from issuance of common stock 623 801
Acquisition of treasury stock (1,227) -
----------- ----------
Net cash provided by financing activities 19,922 11,301
----------- ----------
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment 15 54
Additions to property, plant and equipment,
including product line acquisition (17,931) (1,987)
---------- ----------
Net cash used in investing activities (17,916) (1,933)
---------- ----------
Net increase (decrease) in cash (869) 395
Cash and cash equivalents, beginning of period 2,333 1,229
---------- ----------
Cash and cash equivalents, end of period $ 1,464 $ 1,624
========== ==========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
Page 5 of 13
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Presentation of Condensed Financial Statements
Certain information and footnote disclosures, including significant
accounting policies normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been
condensed or omitted. In the opinion of management, the accompanying
condensed financial statements include all adjustments necessary for a fair
presentation of the results for the interim periods presented. Results of
operations for the periods shown are not necessarily indicative of results
for the year, particularly in view of some seasonality in the Consumer
Products business. The accompanying unaudited condensed financial statements
should be read in conjunction with the Consolidated Financial Statements and
Notes to Consolidated Financial Statements of Alltrista Corporation and
Subsidiaries included in the Company's latest annual report.
2. Contingencies
The Company is subject to and involved in claims arising out of the conduct
of its business including those relating to product liability, environmental
and safety and health matters. The Company's information at this time does
not indicate that the resolution of the aforementioned claims will have a
material, adverse effect upon financial condition, results of operations,
cash flows or competitive position of the Company.
3. Earnings per share
Earnings per share for the periods are computed by dividing net income for
the period by the sum of the weighted average number of shares outstanding
for the period and the common stock equivalents which result from stock
option activity.
4. Acquisition of assets
On March 15, 1996, the Company acquired certain assets related to the home
food preservation product line of Kerr Group, Inc. ("Kerr") for $14.4
million and accounted for the acquisition as a purchase. The purchase price
was allocated to the equipment, raw materials inventory and a license to use
the Kerr trade name, based on their estimated fair values as of the date of
acquisition. The license to use the Kerr trade name will be amortized over
10 years. In addition, the Company will assume the operating lease at Kerr's
Jackson, Tennessee manufacturing facility. Concurrent with the purchase, the
Company and Kerr entered into a non-exclusive Sales Agent Agreement whereby
the Company will act as sales agent for certain pre-closing inventory of
Kerr. Management estimates that its duties under the Sales Agent Agreement
will last through June 1996. At this time, substantially all inventory
belonging to Kerr will have been sold. The Company estimates its incremental
1996 sales as a result of this acquisition will be approximately $18
million, with approximately $30 million expected annually under normal
conditions. The impact of including the financial results of Kerr in a pro
forma presentation for the first quarter of 1995 and 1996 would not have
been material.
5. Subsequent event - Sale of Metal Services Company assets
Effective April 26, 1996 ( "Measurement date"), the Company sold its Metal
Services Company plants, real estate, equipment and coatings and inks
inventory to U.S. Can Corporation for approximately $14.9 million. The
Company will retain all accounts receivable and inventory other than inks
and coatings, as well as substantially all liabilities accrued prior to
April 26, 1996. The Company expects to receive approximately $15 million,
primarily during 1996, from the sale of the retained inventory to former
customers or U.S. Can and the collection of the accounts receivable less
amounts required to settle the accounts payable and other liabilities. The
Company plans to use the proceeds from the sale to reduce outstanding
borrowings.
Page 6 of 13
<PAGE>
The disposal of the Metal Services Company assets has been accounted for as
a discontinued operation and, accordingly, its operating results are
segregated and reported as discontinued operations in the accompanying
Unaudited Condensed Statement of Income. Prior year financial statements
have been reclassified to conform to the current year presentation.
Management estimates a $1.0 million pretax gain on disposal, after
considering estimated costs to be incurred in connection with the sale,
including a $.7 million curtailment loss for pension benefits related to
Metal Services Company, and assuming break-even operations during the
phase-out period. The Metal Services Company experienced a pre-tax operating
loss of approximately $.6 million for the period from April 1, 1996 to the
Measurement date. Sales from this operation were $18.0 million and $20.8
million for the first quarters of 1996 and 1995, respectively.
The assets sold and liabilities assumed of the discontinued Metal Services
Company have been separately identified on the Unaudited Condensed Balance
Sheet as of March 31, 1996. These net assets consist of coatings and inks
inventory of $.6 million and net property, plant and equipment of $12.7
million, which are reduced by the vacation liabilities assumed by the buyer.
Page 7 of 13
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Effective for the first quarter of 1996, in connection with the disposal of
Metal Services Company, the Company redefined its businesses into the following
distinct segments: food containers and industrial components. Consumer Products
Company and Plastic Packaging Company continue to be reported under the food
containers segment. The Company's remaining businesses now comprise the
industrial components segment.
Results of Continuing Operations
The Company reported net sales of $51.1 million for the first quarter of 1996.
This is slightly less than net sales of $51.4 million for the same period of
1995. Operating earnings of $5.8 million for the quarter increased 17.0% from
$5.0 million in the first quarter of 1995. Sales were slightly under prior year
results in the food containers segment; however, earnings more than doubled.
Plastic Packaging Company benefited from favorable product mix, high capacity
utilization, and controlled research and development spending which accounted
for a large portion of the increase. Consumer Products Company improved its
operating results over the prior year due mostly to FRUIT FRESH(R) and
Bernardin, Ltd. sales contributing to profit in the first quarter of 1996. Due
to purchase accounting adjustments, 1995 first quarter sales resulted in no
accounting profit. The industrial components segment had decreased sales and
operating earnings in the first quarter of 1996 compared to the same period in
1995. Sales increased in each of the companies in the industrial components
segment with the exception of Zinc Products Company. Zinc Products Company saw
shipments increase in the coinage area; however, these advances were offset by
decreased volume for battery cans and industrial products. LumenX increased
sales and reduced its operating loss compared to the previous year's quarter.
The sales increases occurred in the vision line. Resin price increases accounted
for the sales increases in the Industrial Plastics Company and Unimark Plastics
Company. These price increases are generally passed through to customers and
thus, do not impact operating earnings. Further decreases in operating earnings
in this segment were due to incremental start-up costs of approximately $.6
million at the new Unimark Plastics facility in Springfield, Missouri. Shipments
began from this location late in the first quarter; however, the plant is not
expected to be profitable until 1997. All of Unimark's other plants improved
operating earnings comparing the first quarter of 1996 to 1995.
Overall gross margin percentages have increased from the same period in 1995.
Both companies improved margins in the food containers segment. Plastic
Packaging margins improved due to tight cost control and excellent capacity
utilization, along with favorable sales mix. Margin improvements in the Consumer
Products Company were due to the temporary effect in 1995 of selling the
acquired FRUIT FRESH(R) and Bernardin inventories at no accounting profit.
Margins decreased slightly in the industrial components segment due to reduced
margins as a result of pricing concessions and passthrough resin price increases
at Industrial Plastics Company. Start-up costs for the new Unimark Plastics
facility also decreased margins in that company. These decreases were offset
somewhat by favorable sales mix from the coinage product line at Zinc Products
and improved throughput at LumenX.
Selling, general and administrative expenses fluctuated in the quarter ended
March 31, 1996 in relative proportion to the change in sales volume.
Interest expense for the first quarter of 1996 was $746,000, compared to
$966,000 for the same period in 1995. The decrease in interest expense from 1995
is the result of lower interest rates during the 1996 quarter on reduced daily
average borrowings. Credit line borrowings were at a year-to-date weighted
average interest rate of 4.5% compared to 5.0% a year ago.
Financial Condition, Liquidity and Capital Resources
Working capital as of March 31, 1996 decreased $11.2 million to $40.6
million from the 1995 year end level (exclusive of the impact of the
reclassified net assets to be sold). Short-term borrowings increased $20.5
million in the first quarter mostly due to the March 15 purchase of Kerr's home
food preservation assets for $14.5
Page 8 of 13
<PAGE>
million. This acquisition will not result in additional cash flow for most of
the 1996 growing season because the Company did not purchase the receivables on
Kerr's books at the time of acquisition and the Company will be acting as a
Sales Agent for Kerr, selling most of the pre-closing inventory on its behalf.
Management estimates that sales of Kerr product on Alltrista's behalf will be
$18 million in 1996 and will not begin until the third quarter. Future years'
sales of this product are estimated at $30 million annually.
Effective April 26, 1996, the Company sold its Metal Services Company plants,
real estate, equipment and coatings and inks inventory to U.S. Can Corporation
for approximately $14.9 million. The Company will retain all accounts receivable
and inventory other than inks and coatings, as well as substantially all
liabilities accrued prior to April 26, 1996. The Company expects to receive
approximately $15 million, primarily during 1996, from the sales of the retained
inventory to former customers or U.S. Can and the collection of the accounts
receivable less amounts required to settle the accounts payable and other
liabilities. The Company plans to use the proceeds from the sale to reduce its
borrowings under its revolving credit agreement. Accordingly, results for the
Metal Services business have been reflected as a discontinued operation in the
statement of income. The corporate general and administrative cost allocation
made to the discontinued operation of the Metal Services Company during the
first quarter of 1995 and 1996 was not included in the computation of earnings
from discontinued operations and was not allocated to the remaining segments.
The related net assets to be sold have been reclassified as such in the balance
sheet as of March 31, 1996.
The Company has $30 million of long-term debt with maturity dates beginning in
1998 and continuing through 2004 at a fixed interest rate of 7.8%. In May 1995,
the Company terminated a swap agreement, resulting in a transaction gain of $.5
million. This gain is being amortized over the original three-year term of the
swap and effectively fixes the Company's interest rate on the long-term debt
through December 1997 at 7.19%. The Company participates in a $50 million
revolving credit agreement with a group of banks, of which $15 million in
borrowings were outstanding at quarter end. No borrowings were outstanding on
the revolver at year end. The Company also has available $95 million in
committed and uncommitted credit lines of which $9 million in borrowings was
outstanding as of March 31, 1996. The debt-to-total capitalization ratio of
39.7% at the end of the first quarter of 1996 is higher than the 29.7% at
December 31, 1995, as a result of borrowings to finance an acquisition in the
first quarter of 1996, along with seasonal borrowings. As of March 31, 1996,
borrowings on the Company's long-term debt and uncommitted credit lines were at
a weighted average interest rate of 5.2%. During the first quarter the Company
purchased 58,000 shares of its stock in the open market at a total cost of $1.2
million.
Capital expenditures of $17.9 million in the first quarter ended March 31, 1996
include the $14.5 million acquisition of the Kerr home food preservation product
line. Remaining spending is in line with the 1996 plan. Approximately $3 million
of the 1996 capital spending budget will be used to complete the construction of
the manufacturing facility in Springfield, Missouri for the Unimark Plastics
Company. Limited production in this facility began in the first quarter of 1996.
The Company is subject to and involved in claims arising out of the conduct of
its business including those relating to product liability, environmental and
safety and health matters. The Company's information at this time does not
indicate that the resolution of the aforementioned claims will have a material,
adverse effect upon financial condition, results of operations, capital
expenditures or competitive position of the Company.
Page 9 of 13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings
There were no events required to be reported under Item 1 for the quarter ending
March 31, 1996.
Item 2. Changes in securities
There were no events required to be reported under Item 2 for the quarter ending
March 31, 1996.
Item 3. Defaults upon senior securities
There were no events required to be reported under Item 3 for the quarter ending
March 31, 1996.
Item 4. Submission of matters to a vote of security holders
There were no events required to be reported under Item 4 for the quarter ending
March 31, 1996.
Item 5. Other information
There were no events required to be reported under Item 5 for the quarter ending
March 31, 1996.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11.1 Computation of earnings per share
27 Financial Data Schedule [EDGAR filing only]
(b) Reports on Form 8-K
Report on Form 8-K dated March 15, 1996, filed March 27, 1996, regarding
acquisition of certain assets related to the home food preservation
products from Kerr Group, Inc. (No financial statements have been filed.)
Page 10 of 13
<PAGE>
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 duly authorized.
Alltrista Corporation
(Registrant)
Date: May 14, 1996 By: /s/ Kevin D. Bower
----------------- --------------------
Kevin D. Bower
Vice President of Finance and
Controller
Page 11 of 13
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
March 31, 1996
EXHIBIT INDEX
Exhibit Description Page
- - -------- ----------------------- ----------
11.1 Computation of earnings per share. 13
27 Financial Data Schedule [EDGAR filing only]
Page 12 of 13
<TABLE>
<CAPTION>
Exhibit 11.1
ALLTRISTA CORPORATION
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Thousands of dollars except share data)
Three month period ended
March 31, April 2,
1996 1995
------------ ---------
<S> <C> <C>
Primary Earnings Per Share
Income from continuing operations $ 3,090 $ 2,406
Discontinued operation 267 446
---------- ----------
Net income $ 3,357 $ 2,852
========== ==========
Weighted average number of common shares
outstanding (000s) 7,868 7,741
Additional shares assuming conversion of
stock options 173 225
---------- ----------
Weighted average number of common and
equivalent shares 8,041 7,966
========== ==========
Primary earnings per common share:
Continuing operations $ .38 $ .30
Discontinued operation .04 .06
---------- ----------
Net income $ .42 $ .36
========== ==========
Fully Diluted Earnings Per Share
Income from continuing operations $ 3,090 $ 2,406
Discontinued operation 267 446
---------- ----------
Net income $ 3,357 $2,852
========== ==========
Weighted average number of common shares
outstanding (000s) 7,868 7,741
Additional shares assuming conversion of
stock options 225 262
---------- ----------
Weighted average number of common and
equivalent shares 8,094 8,003
========== ==========
Fully diluted earnings per common share:
Continuing operations $ .38 $ .30
Discontinued operation .03 .06
---------- ----------
Net income $ .41 $ .36
========== ==========
</TABLE>
Page 13 of 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000895655
<NAME> ALLTRISTA CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,464
<SECURITIES> 0
<RECEIVABLES> 41,390
<ALLOWANCES> 0
<INVENTORY> 54,145
<CURRENT-ASSETS> 113,115
<PP&E> 149,538
<DEPRECIATION> 100,934
<TOTAL-ASSETS> 180,238
<CURRENT-LIABILITIES> 59,905
<BONDS> 30,000
0
0
<COMMON> 41,135
<OTHER-SE> 40,884
<TOTAL-LIABILITY-AND-EQUITY> 180,238
<SALES> 51,128
<TOTAL-REVENUES> 51,128
<CGS> 37,552
<TOTAL-COSTS> 37,552
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 746
<INCOME-PRETAX> 5,077
<INCOME-TAX> 1,987
<INCOME-CONTINUING> 3,090
<DISCONTINUED> 267
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,357
<EPS-PRIMARY> .42
<EPS-DILUTED> .41
</TABLE>
