UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
( ) 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, Suite 200, P. O. Box 5004
Muncie, Indiana 47307-5004
Registrant's telephone number, including area code: (765) 281-5000
--------------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
without par value
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. [ X ]
------
The aggregate market value of voting stock held by non-affiliates of the
registrant was $161.3 million based upon the closing market price on March 20,
1997
Number of shares outstanding as of the latest practicable date.
Class Outstanding at March 20, 1997
- --------------------------------- ------------------------------
Common Stock, without par value 7,501,526
DOCUMENTS INCORPORATED BY REFERENCE
1. Annual Report to Shareholders for the year ended December 31, 1996 to the
extent indicated in Parts I, II, and IV. Except as to information
specifically incorporated, the 1996 Annual Report to Shareholders is not to
be deemed filed as part of this Form 10-K report.
2. Proxy statement filed with the Commission dated April 8, 1997 to the extent
indicated in Part III.
This document contains 76 pages. The exhibit index is on page 17 and 18 of 76.
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-K
Part I PAGE
Item 1. Business 3
Item 2. Properties 8
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Part II
Item 5. Market for Registrant's Common Stock and Related
Shareholder Matters 9
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 9
Part III
Item 10. Directors and Executive Officers of the Registrant 10
Item 11. Executive Compensation 11
Item 12. Security Ownership of Certain Beneficial Owners and
Management 11
Item 13. Certain Relationships and Related Transactions 11
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 11
Signatures 13
Index to Financial Statement Schedules 14
Index to Exhibits 17
<PAGE>
PART I
Item 1. BUSINESS
On April 2, 1993 (the Distribution Date) Alltrista Corporation (the Company)
became an independent company as a result of the distribution of 7,291,208
shares of its common stock (no par value) in the form of a dividend to the
shareholders of Ball Corporation (Ball) on the basis of one share of the
Company's common stock for every four shares of Ball common stock held by Ball
shareholders (the Distribution). Prior to the Distribution Date, Ball
transferred to the Company, a wholly owned subsidiary of Ball, the net assets of
its Consumer Products, Zinc Products, Metal Services (previously Metal
Decorating and Service) and LumenX (previously Industrial Systems) Divisions and
its plastic products business (comprised of its Unimark Plastics and Industrial
Plastics Divisions and Plastic Packaging (previously Plastic Packaging Products
Co.)).
In April 1996, the Company sold its Metal Services plants, real estate,
equipment and certain inventory. The operation has been classified as a
discontinued operation on the income statement, and prior years' results have
been reclassified to conform to this presentation.
Effective January 1, 1997, the Company organized all of its operating
divisions except LumenX and corporate headquarters into newly formed, separate
legal entities. Consequently, the majority of the assets and liabilities
associated with these operating divisions were transferred to the new entities.
The businesses comprising the Company have interests in metal, plastics and
consumer products and industrial equipment.
The following sections of the 1996 Annual Report to Shareholders contain
financial and other information concerning company operations and are
incorporated herein by reference: the financial statement notes "Significant
Accounting Policies" and "Business Segment Information" on pages 18 and 19
through 20; and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 10 through 13.
Other Information Pertaining to the Businesses of the Company
In 1996, the Company redefined its businesses from three to two distinct
segments: food containers and industrial components. Unimark Plastics and
Industrial Plastics, previously included in the Company's plastic products
segment were combined with Zinc Products Company and LumenX to form the
industrial components segment.
Food Containers Segment
The Company's food containers reporting segment is comprised of two
operations, Consumer Products Company and Plastic Packaging Company.
Consumer Products Company
Consumer Products markets a line of home food preservation products which
includes Ball, Kerr and Bernardin brand home canning jars and jar closures and
related food products (including fruit pectin, fruit protector, pickle mixes and
tomato mixes) for home food preservation and preparation. Jar closures are
manufactured by Consumer Products principally from tin-plated steel sheet. Food
products purchased from others for resale are manufactured and packaged to the
division's specifications.
At the end of the third quarter of 1994, the company acquired the
Fruit-Fresh (R) brand of fruit protector from Joh. A. Benckiser GmbH. The
transaction resulted in the acquisition of inventory and the Fruit-Fresh (R)
brand name. Bernardin Ltd. was purchased from American National Can during the
fourth quarter of 1994. Bernardin Ltd. markets home canning products and
produces metal closures for home canning in Canada. On March 15, 1996, the
Company acquired certain assets from Kerr Group, Inc. related to their home food
preservation products. The Company purchased the equipment, raw materials
inventory and a license to use the Kerr trade name.
The demand for home canning supplies is seasonal. Sales generally reflect
the pattern of the growing season. Although home canning jars are reusable, the
jar closures are replaced after use. Accordingly, a large portion of Consumer
Products' sales is represented by sales of new closures and related food
products for use with home canning jars.
<PAGE>
The home canning market has declined somewhat over the last several years.
Management expects the decline to moderate based on its view that the home
canning market has already adjusted for the lifestyle changes that occurred in
the early 1980s (i.e., two wage-earning families and trends toward fast food and
convenience foods) and that a core base in this market will be maintained. The
demand for home canning supplies has historically been contra-cyclical relative
to the macro-economy. Consumer Products' line of home canning mixes simplify
food preservation consistent with consumer preferences for convenience. Growth
opportunities exist through new products and product line extensions as well as
business acquisitions.
Sales are made through well-established distribution channels to
approximately 1,500 wholesale and retail customers (principally food, hardware
and mass merchants) in the United States and Canada. Sales to one large retail
customer exceeded 10% of the division's 1996 net sales.
Consumer Products Company continues to be a market leader in the sale of
home canning supplies in the United States. The principal competitor is
Consumers Glass, with competition based on quality, price and various marketing
support programs. Consumer Products' acquisition in 1994 of Bernardin Ltd.
provides a leadership position in the Canadian market. The food product portion
of its business is much more segmented, with competitors ranging in size from
very small to very large.
Plastic Packaging Company
In 1978, Ball began the development of high-barrier coextruded plastic
packaging and, in 1984, built a manufacturing facility in Muncie, Indiana, which
was expanded in 1990. In 1991, Ball formed Plastic Packaging Products Co., a
partnership with Continental Plastics Ventures, Inc. ("CPV"). The partnership
was formed from the assets of Ball's high-barrier coextruded plastic packaging
business in Muncie, Indiana and CPV's plastic business located in West Chicago,
Illinois. In July 1992, Ball purchased CPV's interest in the partnership and
concurrently announced the closure of the West Chicago facility and the
consolidation of the plastic packaging business in Muncie, Indiana. The closure
and consolidation have been completed.
Plastic Packaging produces high-barrier, multilayer, coextruded plastic
products, including sheet (sold directly to processed food manufacturers who
"form, fill and seal" their own packages), formed containers (printed and
unprinted) and retort containers (reheatable and microwaveable trays). The
Company believes that Plastic Packaging supplies a substantial portion of the
total United States market for barrier plastic sheet and is also a primary
supplier of barrier plastic formed containers.
Plastic Packaging's customers include major companies in the food and pet
food businesses. Sales to each of three customers exceeded 10% of Plastic
Packaging's 1996 net sales. Combined sales to these three customers comprised
over 75% of Plastic Packaging's 1996 net sales and 10% of the Company's net
sales. Each of these customers is a party to a supply contract with Plastic
Packaging, the terms of which range from one to ten years and provide for
periodic price adjustment as a result of changes in the price of plastic resin,
the most significant cost component. Long development, testing and introduction
periods are common in order to qualify new food and pharmaceutical packaging
products for acceptance by customers. Accordingly, the loss of one or more key
customers could have a negative impact on Plastic Packaging's operating earnings
in the short-term until new business was developed. Conversely, the long
development and testing cycle reduces the likelihood of customers switching
suppliers.
Initially, the coextruded plastic business experienced competition as
several manufacturers attempted to enter this emerging market, leading to excess
capacity and thereby strengthening the substantial negotiating leverage of major
customers. Recently, however, the number of competitors has declined. Management
believes that continued growth in this business depends upon a number of
factors, including recyclability of barrier plastics, competition with other
packaging media, the desire by consumers for convenience packaging and the
ability to develop and successfully market innovative forms of plastic
packaging.
Raw Materials
Raw materials used by the Company's food containers segment include plastic
resins, most of which are available from a variety of sources at competitive
costs. Ball brand glass canning jars are supplied under a supply agreement with
Ball Foster Glass Container Company, and tin-plate used to manufacture jar
closures is supplied under various supply agreements. The Company's food
containers segment is not experiencing any shortage of raw materials.
<PAGE>
Industrial Components
The industrial components reporting segment is comprised of Zinc Products
Company, Unimark Plastics Company, Industrial Plastics Company, and LumenX, each
of which is discussed briefly below.
Zinc Products Company
Ball began the manufacture of closures for its home canning jars in 1885
using zinc as the primary material and expanded Zinc Products Company to include
other zinc products through internal development. The current manufacturing
facility for Zinc Products was constructed in Greeneville, Tennessee, in 1970.
Zinc Products produces copper plated zinc penny blanks for the U.S. Mint,
cans for use in zinc/carbon batteries, zinc strip and a line of industrial zinc
products, including various products used in the plumbing, automotive and
electrical component markets. In addition, the division won a five-year contract
in 1996 to produce copper plated zinc penny blanks for the Royal Canadian Mint.
Zinc Products has three major customers: the U.S. Mint and two major
domestic manufacturers of zinc/carbon batteries. These three customers comprised
approximately 71% of Zinc Products' 1996 net sales and approximately 18% of the
Company's net sales. Zinc Products is the principal supplier of battery cans to
two zinc/carbon battery manufacturers, which together account for a large
percentage of the United States zinc/carbon battery production. Sales to these
two manufacturers are under multi-year contracts, both of which allow for
monthly price adjustments for changes in the price of zinc, which is the most
significant cost component.
In order to meet environmental regulations, the battery market in the
United States has been shifting to components free of heavy metals. In 1991,
Zinc Products introduced a cadmium-free zinc alloy for zinc/carbon batteries
which meets current environmental standards in all states. The domestic market
for zinc/carbon batteries has declined modestly in recent years; however,
management expects the decline to level off and is aggressively pursuing export
opportunities.
Zinc Products is affected by fluctuations in penny blank requirements of
the United States Department of the Treasury and the Federal Reserve System.
Although the future use of the penny as legal tender has been debated in recent
years, the zinc penny is still considered a cost effective currency unit by the
U.S. Mint. The Company estimates that Zinc Products supplied 83% of the U.S.
Mint's total requirements in 1996, with one competitor producing the remainder.
Contracts with the U.S. Mint are normally for a period of one year; however, in
September 1996, the U.S. Mint awarded Zinc Products a five-year contract. The
U.S. Mint supplies the zinc and copper used to produce the penny blanks under
this contract.
In general, zinc offers superior performance and cost advantages relative
to competing materials in the specific product applications in which the
division competes. Producers of other metals have not viewed zinc as a major
competitor. Therefore, Zinc Products has been able to target new niche markets
where a zinc-based product offers cost savings with little competitive reaction.
Several new areas with potential high volume usage are being investigated as a
result of product development programs and include counterpoise grounding of
electrical transmission towers, electronic components and cathodic protection
systems for bridges and other structures in coastal areas.
The Company is the largest United States zinc strip producer. There are
only two other zinc strip producers in North America, neither of which has the
physical facilities to compete for high volume customer requirements in close
tolerance, high quality and specialty rolled products.
Unimark Plastics Company
In 1978, Ball acquired Unimark Plastics, a plastics injection molding
operation located in Reedsville, Pennsylvania. Unimark Plastics' operations
expanded in 1984 with a manufacturing facility in Greenville, South Carolina,
which is now the division's headquarters. Yorker Closures, a proprietary product
line of plastic closures, was acquired in 1988. In 1989, the division began
operations in Arecibo, Puerto Rico following major customers who established
operations in Puerto Rico. The division completed construction of a new
manufacturing facility during 1995, and began production early in 1996 in
Springfield, Missouri. A major part of the facility will be devoted to
fulfilling a long-term contract to produce wads for shot gun shells.
<PAGE>
The division manufactures precision custom injection molded components for
major companies in the medical, consumer products and packaging markets.
Products for the medical and pharmaceutical industries, which include such
items as intravenous harness components and surgical devices, comprised
approximately 51% of Unimark Plastics' 1996 net sales. Consumer products include
components for retail items and accounted for approximately 37% of the
division's 1996 net sales. The remaining sales were primarily closures. Sales to
each of three major customers were greater than 10% of Unimark Plastics' 1996
sales. Together, sales to these customers were approximately 44% of Unimark
Plastics' 1996 sales.
The market for injection molded plastics is highly competitive. Unimark
Plastics concentrates its marketing efforts in those markets that require high
levels of precision, quality and cleanliness. There is potential for continued
growth in all product lines, especially in the medical and pharmaceutical
market, where the division's quality, service and "clean room" molding
operations are critical competitive factors. The Company believes that the
quality and cleanliness of Unimark's facilities provide a competitive advantage
with respect to this market. Except for Yorker Closures, molds used by the
division to manufacture its products are owned by its customers.
Industrial Plastics Company
Industrial Plastics primarily manufactures thermoformed plastic door
liners, separators and evaporator trays for refrigerators. The division's
manufacturing facility in Fort Smith, Arkansas, was built by Ball in 1974 as an
expansion of Ball's plastics business started in 1952. Approximately 96% of
Industrial Plastics' 1996 net sales were to one customer. While this division is
reliant on one major customer, the Company is well established in serving this
account, based on its design, tooling, proximity and just-in-time delivery. It
enjoys a sole source position with this customer. The Company is in the third
year of a four and one-half year supply agreement with the customer. In
addition, sales of the Company's recently introduced plastic table tops continue
to grow. Other products are being developed to reduce the division's dependency
on a single customer.
LumenX
LumenX, headquartered in Mogadore, Ohio, builds customized industrial
inspection systems based on its proprietary hardware and software products.
These systems are used by automotive, automotive component, and food/beverage
container industries. The systems provide on-line inspection capabilities,
including assembly verification, detection of extraneous matter, and critical
parameter measurement. These inspections, used to assure quality and provide
process control information, are conducted using x-ray, machine vision or a
combination of x-ray and machine vision technologies.
The business was formerly operated as Penn Video, Inc., which was acquired
by Ball in late 1986. The machine vision inspection technology was supplemented
by technological contributions from Ball's aerospace operations under the name
of FastTrack. In 1990, an upgraded system was introduced and is being marketed
under the name FastTrackIII(R). In 1987 and 1988, the assets of the x-ray
inspection businesses of Monsanto Company and TFI, Inc., respectively, were
acquired by Ball in separate transactions to supplement the x-ray inspection
product line.
LumenX sells to a variety of customers. Sales to each of three customers
were greater than 10% of LumenX's 1996 net sales. Together, sales to these
customers were approximately 36% of the division's 1996 sales. Total export
sales accounted for 50% of the division's 1996 net sales with sales to France
and China each accounting for approximately 10% of this division's 1996 net
sales.
The division's most significant market is tire x-ray inspection. Sales of
x-ray inspection equipment to the tire industry exceeded one-third of the
division's 1996 net sales. The division's worldwide market share for such
equipment is estimated to be 70%.
Development of new market opportunities requires application engineering to
meet individual customer requirements. The division serves a number of niche
markets, none of which individually offers large market potential. Competition
within each market is intense, with a few major competitors. Competitive focus
is primarily on accuracy of inspection, product features, price and service.
<PAGE>
Raw Materials
Raw materials used by the Company's industrial components segment consist
primarily of zinc ingot and plastic resins, most of which are readily available
from a variety of sources at competitive prices. Currently, the industrial
components segment is not experiencing any shortage of raw materials.
Capital Expenditures
The Company's businesses generally are not significantly affected by rapid
technological change. Consequently, capital spending derives from the need to
replace existing assets, expand capacity, manufacture new products, improve
quality and efficiency, facilitate cost reduction and meet regulatory
requirements.
Patents and Trademarks
The Company believes that none of its active patents or trademarks is
essential to the successful operation of its business as a whole. However, one
or more patents or trademarks may be material in relation to individual products
or product lines such as property rights to use the Kerr brand, Ball brand and
Fruit-Fresh(R) brand names, and the Bernardin trade name in its Consumer
Products Company in connection with certain goods to be sold, including home
horticultural and food preservation supplies, kitchen housewares and
packaged foods for human consumption. In the event of a change of control of the
Company which has not received the approval of a majority of the board of
directors of the Company, Ball has the option to require the re-transfer
of the right to use the Ball brand.
Government Contracts
Zinc Products Company enters into contracts with the United States
Government which contain termination provisions customary for government
contracts. See "- Industrial Components - Zinc Products Company." The United
States Government retains the right to terminate such contracts at its
convenience. However, if the contract is terminated, the Company is entitled to
be reimbursed for allowable costs and profits to the date of termination
relating to authorized work performed to such date. The United States Government
contracts are also subject to reduction or modification in the event of changes
in government requirements or budgetary constraints. None of the United States
Government contracts with Zinc Products have been terminated since the inception
of the penny blank supply arrangement in 1981.
Backlog
Backlog at December 31, 1996 and 1995 applicable to LumenX Company was $3.8
million and $7.3 million, respectively. The backlog which exists at the end of a
fiscal year is generally delivered in its entirety during the following fiscal
year. The backlog consists of firm contracts and, although such contracts can be
changed or canceled, the extent of such changes or cancellations has
historically been insignificant. In its other lines of business, the Company
sells under supply contracts for minimum (generally exceeded) or indeterminate
quantities and, accordingly, is unable to furnish backlog information.
Research and Development
Research and development costs are expensed as incurred in connection with
the Company's internal programs for the development of products and processes
and have not been significant in recent years.
Environmental Matters
Compliance with federal, state and local provisions which have been enacted
or adopted relating to protection of the environment has not had a material
adverse effect on the Company.
In 1990, Congress passed amendments to the Clean Air Act which imposed more
stringent standards on air emissions. The Clean Air Act amendments will
primarily affect the operations of two of the Company's manufacturing
facilities. Although many of the specific standards to be promulgated as a
result of the Clean Air Act amendments are still unknown, environmental control
systems and capture systems in place currently meet the new standards.
<PAGE>
In September 1992, Ball was served with a lawsuit filed by Allied Signal,
Inc., and certain other fourth party plaintiffs, seeking the recovery of certain
response costs and contribution under the Comprehensive Environmental Response,
Compensation, and Liability Act with respect to the alleged disposal of
hazardous waste by the Company's former Metal Services division at the Cross
Brothers site in Kankakee, Illinois, during the years 1961 to 1980. In October
1992, the Illinois Environmental Protection Agency (EPA) filed an action to join
Ball as a defendant, seeking to recover the State's costs in removing waste from
the Cross Brothers site. In August 1993, the Company, obligated to indemnify
Ball under the Distribution Agreement, and several other defendants agreed to
pay the EPA $2.9 million as part of a settlement agreement. The Company's share
of this liability, $860,000 exclusive of interest, was paid in 1994; the Company
received insurance proceeds of approximately $500,000 related to this matter.
The settlement agreement contains a provision for additional payments should
clean up costs exceed a specified ceiling. The Company's information at this
time does not indicate that clean up of this waste site will exceed the ceiling.
Non-recyclable packaging components, such as multilayer plastic, may become
targets for legislation which would prohibit, tax or restrict the sale or use of
certain types of packaging materials. The Company believes that if such
legislation were passed it would be on a state by state basis and it would not
have an immediate material adverse effect on the Company. There can be no
assurance, however, that such restrictive legislation would not be enacted at a
national level.
Federal legislation is currently under review which regulates how hazardous
materials are handled and disposed and which attempts to classify zinc as a
hazardous material. The Company believes there is adequate regulation under
existing clean water and air statutes to control the disposal of zinc and that
more restrictive regulation is unnecessary. There can be no assurance, however,
that such additional restrictive legislation will not become law. Such
legislation could reduce the demand for the Company's products and increase its
operating costs.
In addition to the Cross Brothers site described above, the EPA has
designated Ball a potentially responsible party, along with numerous other
companies, for the cleanup of hazardous waste sites with which the Company may
have been associated. Pursuant to the terms of the Distribution Agreement with
Ball, the Company assumed responsibility for any potential costs or liabilities
arising from existing or future environmental claims relating to the businesses
comprising the Company or prior facilities. However, the Company's information
at this time does not indicate these matters will have a material adverse effect
upon financial condition, results of operations, capital expenditures or
competitive position of the Company.
Employees
As of February 1997, the Company employed approximately 1,000 people.
Approximately 250 union workers are employed at the Zinc Products Company's
manufacturing facility and Consumer Products Company's closure manufacturing
facility and are covered by two collective bargaining agreements. These
agreements expire as follows: Consumer Products Company (Muncie, Indiana) --
October 14, 2001, and Zinc Products Company (Greeneville, Tennessee) -- October
31, 1998. The Company has not experienced a work stoppage during the past three
years. Management believes that its relationships with the Company's collective
bargaining units are good.
Item 2. PROPERTIES
The Company's properties are well maintained, considered adequate and being
utilized for their intended purposes. The Company's corporate headquarters is
located in Muncie, Indiana and is occupied under a lease agreement. The main
office of one of the subsidiaries of the Company, Quoin Corporation, is located
in Las Vegas, Nevada. Information regarding the approximate size of significant
manufacturing and warehousing facilities is provided below. All major
manufacturing facilities are owned or leased by the Company.
<PAGE>
<TABLE>
<CAPTION>
Approximate
Floor Space
Plant Location Industry Segment/ Subsidiary in Square Feet
-------------- ---------------------------- --------------
<S> <C> <C>
Greeneville, Tennessee Industrial components/Zinc Products Company 320,000
Mogadore, Ohio (leased) Industrial components/LumenX Company 61,000
Fort Smith, Arkansas Industrial components/Industrial Plastics Company 140,000
Reedsville, Pennsylvania Industrial components/Unimark Plastics Company 73,000
Greenville, South Carolina Industrial components/Unimark Plastics Company 48,000
Springfield, Missouri Industrial components/Unimark Plastics Company 43,000
Arecibo, Puerto Rico (leased) Industrial components/Unimark Plastics Company 22,000
Muncie, Indiana Food containers/Plastic Packaging Company 162,000
Muncie, Indiana Food containers/Consumer Products Company 173,000
Toronto, Canada (leased) Food containers/Consumer Products Company 30,000
Jackson, Tennessee (leased)* Food containers/Consumer Products Company 160,000
* not currently used in operations but used in warehousing
</TABLE>
Item 3. LEGAL PROCEEDINGS
In the ordinary course of business, the Company has been and is involved in
various legal disputes, including disputes related to allegations of
noncompliance with environmental and employment laws and regulations. Pursuant
to the terms of the Distribution Agreement with Ball, the Company assumed
liability, if any, for certain claims arising from the Company's businesses and
certain predecessor businesses. Management does not presently expect any
potential loss or settlement in connection with such disputes to have a material
adverse effect on the Company.
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
There were no matters submitted to the security holders during the fourth
quarter of 1996.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Alltrista Corporation common stock (JARS) is traded on the Nasdaq National
Market System. There were 4,582 common shareholders of record on March 20,
1997.
Other information required by Item 5 appears under the caption "Quarterly
Stock Prices" on page 24 of the 1996 Annual Report to Shareholders and is
incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
The information required by Item 6 for the five years ended December 31,
1996 appearing in the section titled "Five Year Review of Selected Financial
Data" on page 26 of the 1996 Annual Report to shareholders is incorporated
herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations, on pages 10 through 13 of the 1996 Annual Report to Shareholders is
incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and notes thereto, appearing on pages
14 through 26 of the 1996 Annual Report to Shareholders, together with the
report thereon of Price Waterhouse LLP dated January 31, 1997 appearing on page
26 of the 1996 Annual Report to Shareholders, are incorporated herein by
reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no matters required to be reported under this item.
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the company are as follows:
William L. Peterson, age 67, is chairman of the board. Mr. Peterson has been
chairman of the Company since May 1993 and was president and chief executive
officer from April 1993 to March 1994, when he relinquished the title of
president. He then relinquished the title of chief executive officer upon his
retirement in December 1994. Mr. Peterson, who joined Ball in 1965, was vice
chairman and executive vice president of Ball from August 1992 until April 1993.
Mr. Peterson served as executive vice president and chief financial officer of
Ball from April 1987 to August 1989 and vice chairman and chief financial
officer from August 1989 to August 1992. Prior to April 1987, he served in
various offices and positions in the financial, treasury, planning and
controller areas of Ball. Mr. Peterson resigned from the Ball Board of Directors
as of the Distribution Date. Mr. Peterson also serves as a director of ANB
Corporation, Muncie, Indiana.
Thomas B. Clark, age 51, is president and chief executive officer of the
Company. Mr. Clark has been president since March 1994 and became chief
executive officer on January 1, 1995. From April 1993 to March 1994, Mr. Clark
served as senior vice president and chief financial officer. Mr. Clark served as
vice president of Ball from August 1992 until April 1993. Mr. Clark joined Ball
in August 1976 as director of planning, was elected vice president, planning and
development in April 1985 and served as vice president, communications, planning
and development from May 1989 until August 1992. Mr. Clark also serves as a
director of First Merchants Corporation, Muncie, Indiana.
Jerry T. McDowell, age 55, is senior vice president and chief operating officer
of the Company. Mr. McDowell served as president of Zinc Products Company from
April 1993 to December 1994. Since joining Ball in 1970, Mr. McDowell served in
various operating positions within the Company's Zinc Products division. From
July 1979 to April 1993, Mr. McDowell served as president of Ball's Zinc
Products division.
William L. Skinner, age 59, is senior vice president, administration and
corporate development and assistant corporate secretary of the Company. From
January 1994 to December 1994, Mr. Skinner served as senior vice president,
administration and assistant corporate secretary of the Company. From April 1993
to January 1994 Mr. Skinner served as senior vice president, administration and
corporate secretary of the Company. After joining Ball in April 1989, Mr.
Skinner was director, corporate development. Prior to coming to Ball, Mr.
Skinner served in a number of corporate, division and subsidiary sales,
manufacturing and general management positions during a 25-year tenure with
Ontario Corporation, headquartered in Muncie, Indiana, and served as a member of
its board of directors. Mr. Skinner also serves as a director of American
National Trust and Investment Management Company, Muncie, Indiana.
Larry D. Miller, age 62, is vice president, communications and investor
relations of the Company. Prior to joining Alltrista when the Company began
operations on April 2, 1993, Mr. Miller served as director of corporate
communications for Ball. He joined Ball in November 1979.
Kevin D. Bower, age 38, is vice president of finance and controller of the
Company. From April 1993 to March 1994 Mr. Bower served as vice president and
controller of the Company. Mr. Bower joined Ball in November 1992. Prior to that
time, he served as a senior manager with the public accounting firm of Price
Waterhouse.
Gordon R. Stagge, age 57, is vice president and treasurer of the Company. Mr.
Stagge joined Alltrista in April 1993, when the Company began operations. From
January 1985 to April 1993, he served as director of cash management for Ball
Corporation. He had served in various capacities since joining Ball Corporation
in 1962.
Other information required by Item 10 appearing under the caption "Director
Nominees and Continuing Directors" on pages 2 and 3 of the Company's proxy
statement filed pursuant to Regulation 14A, dated April 8, 1997, is incorporated
herein by reference. The proxy statement will be filed with the Commission no
later than April 8, 1997.
<PAGE>
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 appearing under the caption "Executive
Compensation" on pages 6 through 12 of the Company's proxy statement filed
pursuant to Regulation 14A dated April 8, 1997, is incorporated herein by
reference. The proxy statement will be filed with the Commission no later than
April 8, 1997.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 appearing under the caption "Voting
Securities and Principal Shareholders" on page 4 of the Company's proxy
statement filed pursuant to Regulation 14A dated April 8, 1997, is incorporated
herein by reference. The proxy statement will be filed with the Commission no
later than April 8, 1997.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No disclosure required under Item 13.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report.
(1) Financial Statements
The following documents are filed as part of this report and incorporated
herein by reference from the indicated pages of the Company's 1996 Annual
Report to Shareholders.
Page(s) in
Annual Report
----------------
Consolidated statement of income -- Years ended
December 31, 1996, 1995 and 1994 14
Consolidated balance sheet -- December 31, 1996 and 1995 15
Consolidated statement of cash flows -- Years ended
December 31, 1996, 1995 and 1994 16
Consolidated statement of changes in shareholders' equity --
Years ended December 31, 1996, 1995 and 1994 17
Notes to consolidated financial statements 18 to 26
Report of independent accountants 26
(2) Financial Statement Schedule:
See the Index to the Financial Statement Schedule on page 14, which is
incorporated by reference herein.
(3) Exhibits:
See the Index to Exhibits on pages 17 and 18, which is incorporated by
reference herein.
<PAGE>
(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 home food preservation products
from Kerr Group, Inc. (No financial statements were filed with this
document).
Report on Form 8-K/A dated March 15, 1996, filed May 29, 1996, regarding
acquisition of certain assets related to home food preservation products
from Kerr Group, Inc. (The amendment included the financial statements
required under Item 7.)
Report on Form 8-K dated April 29, 1996, filed May 14, 1996, regarding the
disposition of the plants, real estate, equipment and coatings and inks
inventory of the Metal Services Company.
<PAGE>
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.
ALLTRISTA CORPORATION
(Registrant)
By: /s/Thomas B. Clark
---------------------------------------------
Thomas B. Clark
President and Chief Executive Officer
March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated below.
(1) Principal Executive Officer:
/s/Thomas B. Clark President and Chief Executive Officer
---------------------------
Thomas B. Clark March 27, 1997
(2) Principal Financial Accounting Officer:
/s/Kevin D. Bower Vice President of Finance and Controller
---------------------------
Kevin D. Bower March 27, 1997
(3) Board of Directors:
/s/William L. Peterson Chairman and Director
--------------------------
William L. Peterson March 27, 1997
President and Chief Executive Officer
/s/Thomas B. Clark and Director
--------------------------
Thomas B. Clark March 27, 1997
/s/William A. Foley Director
--------------------------
William A. Foley March 27, 1997
/s/Robert E. Fowler, Jr. Director
--------------------------
Robert E. Fowler, Jr. March 27, 1997
/s/Richard L. Molen Director
--------------------------
Richard L. Molen March 27, 1997
/s/Patrick W. Rooney Director
--------------------------
Patrick W. Rooney March 27, 1997
/s/David L. Swift Director
--------------------------
David L. Swift March 27, 1997
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996
Index to the Financial Statement Schedule
Form 10-K
Page
---------
Report of Independent Accountants on the Financial Statement Schedule 15
Schedule II Valuation and Qualifying Accounts and Reserves 16
The financial statement schedule should be read in conjunction with the
consolidated financial statements in the 1996 Annual Report to Shareholders.
Schedules not included in this additional financial data have been omitted
because they are not applicable or the required information is shown in the
consolidated financial statements or notes thereto.
<PAGE>
Report of Independent Accountants on the
Financial Statement Schedule
To the Board of Directors of
Alltrista Corporation
Our audits of the consolidated financial statements referred to in our report
dated January 31, 1997 appearing on page 26 of the 1996 Annual Report to
Shareholders of Alltrista Corporation (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item 14(a)
of this Form 10-K. In our opinion, this Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
Indianapolis, Indiana
January 31, 1997
<PAGE>
<TABLE>
<CAPTION>
Schedule II
ALLTRISTA CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(thousands of dollars)
Balance at Charges to Balance at
beginning costs and Deductions end of
of period expense from reserves period
-------------- -------------- ---------------- -------------
Reserves against accounts receivable:
<S> <C> <C> <C> <C>
1996 $ (1,377) $(1,589) $ 1,837 $(1,129)
1995 $ (1,159) $(1,049) $ 831 $(1,377)
1994 $ (884) $(1,318) $ 1,043 $(1,159)
</TABLE>
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996
Index to Exhibits
Exhibit
Number Description of Exhibit
- ------- ----------------------------------------------------------------------
3.1 Form of Amended Articles of Incorporation (filed as Exhibit 3.1 to the
Company's Registration Statement on Form 10, Filing No. 0-21052, and
incorporated herein by reference), filed October 20,1992
3.2 Form of Bylaws of Alltrista Corporation (filed as Exhibit 3.2 to the
Company's Annual Report on Form 10-K, Filing No. 0-21052, and
incorporated herein by reference), filed March 31, 1996
4.1 Form of Common Stock Certificate of Alltrista Corporation (filed as
Exhibit 4.1 to the Company's Registration Statement on Form 10, Filing
No.0-21052, and incorporated herein by reference), filed March 17, 1993
4.2 Form of Rights Agreement (filed as Exhibit 4.2 to the Company's
Registration Statement on Form 10, Filing No. 0-21052, and incorporated
herein by reference), filed October 20, 1992
10.1 Form of Alltrista Corporation 1993 Economic Value Added Incentive
Compensation Plan for Key Members of Management (filed as Exhibit 10.1
to the Company's Annual Report on Form 10-K, Filing No.0-21052, and
incorporated herein by reference), filed March 31, 1996
10.2 Form of Alltrista Corporation 1993 Stock Option Plan for Nonemployee
Directors (filed as Exhibit 10.2 to the Company's Registration
Statement on Form 10, Filing No. 0-21052, and incorporated herein by
reference), filed March 17, 1993
10.3 Form of Alltrista Corporation 1993 Stock Option Plan (filed as Exhibit
10.3 to the Company's Registration Statement on Form 10, Filing
No.0-21052, and incorporated herein by reference), filed March 17, 1993
10.4 Form of Alltrista Corporation 1996 Stock Option Plan for Nonemployee
Directors
10.5 Form of Alltrista Corporation 1993 Restricted Stock Plan (filed as
Exhibit 10.4 to the Company's Registration Statement on Form 10,
Filing No. 0-21052, and incorporated herein by reference), filed
March 17, 1993
10.6 Form of Change of Control Agreement (filed as Exhibit 10.5 to the
Company's Registration Statement on Form 10, Filing No. 0-21052, and
incorporated herein by reference), filed March 17, 1993
10.7 List of Alltrista Corporation employees party to Exhibit 10.6
10.8 Form of Distribution Agreement between Ball Corporation and Alltrista
Corporation (filed as Exhibit 10.7 to the Company's Registration
Statement on Form 10, Filing No. 0-21052, and incorporated herein by
reference), filed March 17, 1993
10.9 Form of Tax Sharing and Indemnification Agreement between Ball
Corporation and Alltrista Corporation (filed as Exhibit 10.10 to the
Company's Registration Statement on Form 10, Filing No. 0-21052, and
incorporated herein by reference), filed March 17, 1993
10.10 Form of Indemnification Agreement (filed as Exhibit 10.13 to the
Company's Registration Statement on Form 10, Filing No. 0-21052, and
incorporated herein by reference), filed March 17, 1993
<PAGE>
Exhibit
Number Description of Exhibit
- ------- ----------------------------------------------------------------------
10.11 List of Directors and Executive Officers party to Exhibit 10.10 (filed
as Exhibit 10.10 to the Company's Annual Report on Form 10-K, Filing
No. 0-21052, and incorporated herein by reference),filed March 31, 1996
10.12 Form of Alltrista Corporation 1993 Deferred Compensation Plan for
Selected Key Employees (filed as Exhibit 10.11 to the Company's Annual
Report on Form 10-K, Filing No. 0-21052, and incorporated herein by
reference), filed March 31, 1996
10.13 Form of Alltrista Corporation 1993 Deferred Compensation Plan
as amended
11.1 Computation of Earnings Per Share
13.1 Alltrista Corporation 1996 Annual Report to Shareholders (The Annual
Report to Shareholders, except for those portions thereof incorporated
by reference, is furnished for the information of the Commission and is
not to be deemed filed as part of this Form 10-K).
21.1 Subsidiaries of Alltrista Corporation
23.1 Consent of Independent Accountants
Copies of exhibits incorporated by reference can be obtained from the SEC and
are located in SEC File No.0-21052.
Exhibit 10.4
ALLTRISTA CORPORATION
1996 STOCK OPTION PLAN
FOR
NONEMPLOYEE DIRECTORS
1. Purpose. The purposes of the 1996 Stock Option Plan for Nonemployee
Directors of Alltrista Corporation are to enable Alltrista Corporation to
attract and retain persons of outstanding competence to serve as Nonemployee
Directors of the Corporation by encouraging and enabling the acquisition of a
proprietary interest in Common Stock of the Corporation pursuant to the terms of
this Plan and to provide a direct link between Nonemployee Directors'
consideration and the interests of the Corporation's shareholders.
2. Definitions. When used in this Plan, unless the context otherwise
requires:
A. "Board of Directors" shall mean the Board of Directors of the
Corporation as constituted at any time.
B. "Code" shall mean the Internal Revenue Code of 1986, as amended.
C. "Committee" shall mean the Stock Option Committee described in
Section 3 hereof.
D. "Corporation" shall mean Alltrista Corporation.
E. "Fair Market Value" shall mean the closing price of the Stock as
published in The Wall Street Journal report of the Nasdaq National
Market System, the New York Stock Exchange-Composite Transactions
or the American Stock Exchange, wherever the Corporation is listed,
corrected for any reporting errors, or if the Stock is not traded
on that day, on the next preceding day on which there was a sale of
such Stock.
F. "Non-Qualified Stock Options" shall mean stock options which do not
qualify under or meet the requirements of Section 422 of the Code.
G. "Plan" shall mean this 1996 Stock Option Plan for Nonemployee
Directors authorized by the Board of Directors at its meeting held
on March 21, 1996 as such Plan from time to time may be amended as
herein provided.
H. "Retirement" shall mean the termination of all service as a
Director of the Corporation for any reason, other than death or
Total Disability, after the Director has attained age 70.
I. "Share" shall mean a share of Stock.
J. "Stock" shall mean the Common Stock, without par value, of the
Corporation.
K. "Stock Options" shall mean the Non-Qualified Stock Options issued
pursuant to the Plan.
L. "Stock Option Agreement" shall mean the agreement between the
Corporation and the optionee evidencing the grant of a Stock Option
as provided in Section 5D hereof.
M. "Total Disability" shall mean "permanent and total disability" as
defined in Section 22(c)(3) of the Code.
3. Committee. The Plan shall be administered by a Committee of no fewer
than two Directors of the Corporation. The Committee shall, subject to and not
inconsistent with the express terms of the Plan, have full and final authority
to interpret the Plan and the Stock Options granted thereunder; to prescribe,
amend and rescind rules and regulations, if any, relating to the Plan; and to
make all determinations necessary or advisable for the administration of the
Plan. No member of the Board or the Committee shall be liable for anything done
or omitted to be done by such member or by any other member of the Committee in
connection with the Plan, except his own willful misconduct or gross negligence.
All
<PAGE>
decisions which are made by the Committee with respect to interpretation of the
terms of the Plan, with respect to interpretation of the terms and conditions of
the Stock Options, with respect to the instruments evidencing the grant of Stock
Options, and with respect to any questions or disputes arising under this Plan,
shall be final and binding on the Corporation and the participants, their heirs
and beneficiaries.
4. Stock. The Stock subject to Stock Options and other provisions of the
Plan shall be authorized and issued and subject to adjustment in accordance with
the provisions of Section 8. The total number of Shares which, at any one time,
may be subject to issuance or which in the aggregate may be issued by exercise
of Stock Options pursuant to the Plan shall not exceed thirty thousand (30,000).
In the event that any outstanding Stock Option under the Plan for any
reason expires or is terminated, without having been exercised in full, prior to
the end of the period during which Stock Options may be granted, the Shares
allocable to the unexercised portion of such Stock Option may be again subjected
to a Stock Option under the Plan.
5. Stock Option Terms and Conditions.
A. Eligibility and Participation. All persons who serve as Directors of
the Corporation and who, at the time of grant, are not "employees" of
the Corporation or any of its subsidiaries, within the meaning of the
Employee Retirement Security Act of 1974, as amended, are eligible to
participate in the Plan.. The adoption of this Plan shall not be
deemed to give any Director any right to be granted an option to
purchase Shares, other than in accordance with the terms of this
Plan.
B. Price of Stock Options. The price of Shares to be purchased pursuant
to the exercise of any Stock Option shall be 100 percent of the Fair
Market Value of the Stock on the date of grant of the Stock Option.
The exercise price of Shares subject to Stock Options shall be
subject to adjustment as provided in Section 8.
C. Term of Stock Options. The term of any Stock Option granted under
the Plan shall be 10 years from the date on which it is granted.
D. Grant of Stock Options. Stock Options granted under the Plan shall
be Non-Qualified Stock Options at the time of each grant. Each Stock
Option granted pursuant to the Plan shall be evidenced by a
written Stock Option agreement between the Corporation and the
optionee in such form as the Committee may prescribe from time to
time, which agreement shall comply with and be subject to the
terms and conditions described herein. On April 30 commencing on
or after the effective date of the Plan, and on each April 30
thereafter each eligible Director shall be granted automatically,
without action by the Committee, a Stock Option to purchase one
thousand (1,000) Shares. The Stock Option Agreement shall serve
as the notification. Receipt of the Stock Option Agreement shall be
acknowledged by the Director on the duplicate copy, and by such
acknowledgment, the Director shall agree that in consideration of the
grant of such Stock Option he will abide by all the terms and
conditions of the Plan. The Director shall return the duplicate copy
of the Stock Option. Agreement to the Corporation either by delivery
in person or by mail within sixty (60) days after the date of grant.
Any inconsistencies between the terms of the Plan and the terms of
the Stock Option Agreement shall be governed by the terms of the
Plan.
E. Exercise of Stock Options. Except as otherwise provided herein, each
optionee must remain Director of the Corporation for one continuous
year from the date the Stock Option is granted before such Director
can exercise any part thereof. After such one-year period, the Stock
Option shall be exercisable in full for a period-of ten year from the
date of grant unless such Stock Option has earlier expired or
terminated subject to the provisions hereof and to any provisions in
the Stock Option Agreement. Notwithstanding the foregoing, all Stock
Options shall become exercisable in full (1) upon the occurrence of a
Change in Control (as defined below), (2) upon the optionee's death
or Total Disability or (3) upon attainment by the optionee of age 70;
provided, however, that if the optionee has attained age 70 at the
date of grant the Stock Option shall be exercisable as of such date.
As used herein, a "Change in Control of the Corporation" shall be
deemed to have occurred if:
(a) any "Person" which shall mean a "person" as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (other than the Corporation, any
<PAGE>
trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation, or any company owned, directly
or indirectly, by the shareholders of the Corporation in
substantially the same proportions as their ownership of stock
of the Corporation), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 30
percent or more of the combined voting power of the
Corporation's then outstanding securities;
(b) at any time during any period of two consecutive years,
individuals, who at the beginning of such period constitute the
Board, and any new director (other than a director designated by
a Person who has entered into an agreement with the Corporation
to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board or nomination for
election by the Corporation's shareholders was approved by a
vote of at least two-thirds (2/3) of the directors at the
beginning of the period of whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority, thereof;
(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other company, other
than (1) a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by representing
outstanding or by being converted into voting securities of the
surviving entity) more than 50 percent of the combined voting
power of the voting securities of the Corporation or such
surviving entity outstanding immediately after such merger or
consolidation, or (2) a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar
transaction) in which no Person acquires 50 percent or more of
the combined voting power of the Corporation's then outstanding
securities; or
d) the shareholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of
the Corporation's assets.
A Stock Option may be exercised, to the extent then exercisable, by giving
written notice of such exercise to the Committee. The purchase price of each
Share on the exercise of any Stock Option shall be paid in full in cash at the
time of exercise. A Stock certificate representing the Shares so purchased
shall be delivered to the person entitled thereto. Until a Stock Certificate
is actually issued, the person exercising the Stock Option shall not be deemed
a shareholder of those Shares so purchased for any purpose whatsoever.
6. Termination. In the event a Director voluntarily resigns as a Director
during any term or at the end of any term, such Director may, but only within
the 30-day period immediately following such resignation and in no event later
than the expiration date specified in the Stock Option Agreement, exercise such
Director's Stock Option to the extent that such Stock Options were exercisable
at the date of such resignation.
If a Director ceases to be a Director of the Corporation due to Retirement
or Total Disability, he may, but only within the two-year period immediately
following such Retirement or Total Disability and in no event later than the
expiration date specified in the Stock Option Agreement, exercise such
Director's Stock Options in full.
If an optionee dies (whether prior to or after termination as a Director),
any Stock Options of the optionee that were exercisable on the date of death may
be exercised within the two-year period after death by the person or persons to
whom such Director's rights to it hall pass by will or by the applicable laws of
descent and distribution; provided, however, that no such Stock Option may be
exercised after the expiration date specified in the Stock Option Agreement.
7. Non-Transferability of Stock Options. Each Stock Option granted under the
Plan shall by its terms be nontransferable and non-assignable by the optionee
other than by will or the laws of descent and distribution and shall be
exercisable during an optionee's lifetime only by the optionee. Any attempt of
assignment, transfer, pledge, hypothecation, or other disposition of any Stock
Option granted hereunder which is contrary to the provisions of the Plan, or the
levy of any attachment or similar proceedings upon any Stock Option shall be
null and void.
<PAGE>
8. Adjustment of Shares. In the event there is any change in the Common Stock
of the Corporation through the declaration of Stock dividends, or through
recapitalization resulting in a Stock spin-off, split-off, split-up or
combination or exchange of Shares, or otherwise, the number of Shares available
for Stock Options and the number of Shares thereof covered by outstanding Stock
Options and the price per Share in such Stock Options shall be proportionately
adjusted for any increase or decrease in the number of issued Shares of the
Corporation by the Committee; provided, however, that any fractions shares
resulting from such adjustment shall be eliminated.
9. Issuance of Shares and Compliance with Securities Act. The Corporation may
postpone the issuance and delivery of Shares upon any exercise of a Stock Option
until (a) the admission of such Shares to listing on any stock exchange on which
Shares of the Corporation of the same class and then listed and (b) the
completion of such registration or other qualifications of such Shares under any
state or federal law, rule or regulation as the Corporation shall determine to
be necessary or advisable. Any person exercising a Stock Option shall make such
representations and furnish such information as may, in the opinion of Counsel
for the Corporation, be appropriate to permit the Corporation, in light of the
then existence or nonexistence of an effective Registration Statement with
respect to such Shares under the Securities Act of 1933, as amended, to issue
the Shares in compliance with the provisions of that or any comparable act.
10. Administration, Amendment and Termination. The Board of Directors may
establish and adopt such resolutions, rules, regulations and revisions thereto,
not inconsistent with the provisions of the Plan, and construe and interpret
provisions of the Plan, as it may deem advisable to make the Plan and Stock
Options effective and to provide for the administration of the Plan, and may
take such other action with regard to the Plan and Stock Options as it shall
deem desirable to effect their purpose. All such actions shall be final,
conclusive and biding on all persons including the Corporation, shareholders and
their optionees, and no member of the Board of Directors shall be liable for any
action or determination made in good faith with respect to the Plan or any Stock
Option granted under it.
The Board of Directors may cancel any outstanding, unexercised Stock
Option, provided the optionee to whom such Stock Option was granted has given
written consent thereto.
Nothing in the Plan shall be construed to give any Director of the
Corporation any right to receive a Stock Option under the Plan unless all
conditions described within the Plan are met as determined in the sole
discretion of the Committee, and nothing in the plan or any Stock Option
Agreement shall confer upon an individual any right to continue in service as a
Director or interfere in any way with the right of the Corporation to terminate
such service.
The Plan may be amended at any time and from time to time by the Board of
Directors of the Corporation (including by or through the Board's Executive
Committee or Executive Compensation Committee), except that no amendment or
modification of the Plan shall,
(i) without the written consent of any Director, adversely affect any
right, with respect to any Stock Option, theretofore granted to such Director,
or
(ii)be effective unless and until shareholder approval is obtained if such
approval of such amendment or modification is required for the exemption
available under Rule 16b-3 of the Securities Exchange Act of 1934, amended, to
be applicable to the Plan.
The Committee may at any time suspend or terminate the Plan. No Stock
Option may be granted during any suspension of the Plan or after the Plan has
been terminated.
After the Plan shall terminate, the function of the Committee will be
limited to supervising the administration of the Stock Options previously
granted and no such termination or suspension shall adversely affect any right
of any Director with respect to any Stock Options theretofore granted to him.
The expenses of the Plan shall be borne by the Corporation.
The Plan shall become effective only upon the approval by the shareholders
of the Corporation, and no Stock Option shall be granted under the Plan after
March 21, 2006.
Exhibit 10.7
LIST OF ALLTRISTA CORPORATION
EMPLOYEES WHO ARE EXPECTED TO EXECUTE
CHANGE OF CONTROL AGREEMENTS
Elected Corporate
Officers
- ------------------
Thomas B. Clark President and Chief Executive Officer
Jerry T. McDowell Senior Vice President and Chief Operating Officer
William L. Skinner Senior Vice President, Administration and
Corporate Development
Kevin D. Bower Vice President, Finance and Controller
Larry D. Miller Vice President, Communications and Invested Relations
Gordon R. Stagge Vice President and Treasurer
Garnet E. King Corporate Secretary and Director, Executive Services
Appointed Officers
- ------------------
Kyle L. DeJaeger President - Industrial Plastics Company
Albert H. Giles President - Zinc Products Company
Charles M. Gilmore President - LumenX Company
Charles W. Orth President - Unimark Plastics Company
Michael D. Patrick President - Consumer Products Company
Timothy D. Sigley President - Plastic Packaging Company
Exhibit 10.13
ALLTRISTA CORPORATION
1993 DEFERRED COMPENSATION PLAN
(Amended and Restated in its Entirety, November 21, 1996)
1. Statement of Purpose
The purpose of the 1993 Deferred Compensation Plan, as amended
November, 1996, (the "Plan") is to aid Alltrista Corporation (the
"Company") and its subsidiaries in attracting and retaining key
employees by providing a non-qualified deferred compensation vehicle.
2. Definitions
2.1. Beneficiary - "Beneficiary" means the person or persons designated as
such in accordance with Section 8.
2.2. Class Year - "Class Year" means the year in respect of which
compensation is deferred under the Plan.
2.3. Committee - "Committee" (also referred to as the "Executive
Compensation Committee") means the committee appointed by the Board of
Directors that will administer the Plan.
2.4. Compensation - "Compensation" means the Participant's incentive
compensation for the Class Year.
2.5. Declining Balance Installments - "Declining Balance Installments" means
a series of annual payments such that each payment is determined by
taking that portion of the Participant's Deferred Compensation Account
in the Equity Index Account as of the Distribution Date and dividing by
the number of years of distributions remaining.
2.6. Deferral Amount - "Deferral Amount" means the amount of Elective
Deferred Compensation deferred by the Participant for each Class Year.
2.7. Deferred Compensation Account - "Deferred Compensation Account" means
the account for each Class Year maintained by the Company for each
Participant pursuant to Section 6 or the account that has been
established pursuant to the Transfer and Consent Form.
2.8. Disability - "Disability" means the Participant is receiving disability
benefits under the long term disability benefit plan sponsored by the
Employer or one of its subsidiaries.
<PAGE>
2.9. Distribution Date - "Distribution Date" means the date on which the
Employer makes distributions from the Participant's Deferred
Compensation Account.
2.10. Effective Date - "Effective Date" means January 1, 1993, the date on
which the Plan commenced.
2.11. Election Form - "Election Form" means the form or forms attached to
this Plan and filed with the Executive Compensation Committee of
Alltrista Corporation, or in the event such Deferred Compensation
Account was established pursuant to the Transfer and Consent Form,
then the form filed with the Executive Compensation Committee of Ball
Corporation by the Participant in order to participate in the 1989 Ball
Corporation Deferred Compensation Plan. The terms and conditions
specified in the Election Form(s) are incorporated by reference herein
and form a part of the Plan.
2.12. Elective Deferred Compensation - "Elective Deferred Compensation" means
the amount elected to be deferred by an Eligible Employee in his/her
Election Form.
2.13. Eligible Employee - "Eligible Employee" means any employee of the
Company who has been selected by the Executive Compensation Committee.
2.14. Employer - "Employer" means Alltrista Corporation and any of its
fifty percent (50%) or more owned subsidiaries.
2.15. Equity Index Account - "Equity Index Account" means an investment
option providing for a return based upon the hypothetical investment of
the Deferral Amount, or a portion thereof, in the S&P 500 Index.
2.16. Executive Compensation Committee - "Executive Compensation Committee"
(also referred to as the "Committee") means the committee appointed by
the Board of Directors that will administer the Plan.
2.17. Fixed Account - "Fixed Account" means an investment option providing for
a stated amount of interest to be credited to the Deferral Amount, or a
portion thereof, based on Moody's.
2.18 Investment Allocation Change Form - "Investment Allocation Change Form"
means the form attached to this Plan and filed with the Committee by the
Participant in order to request a change in the allocation of the
Participant's Deferred Compensation Account(s) between the Fixed Account
and the Equity Index Account. The terms and conditions specified in the
Investment Allocation Change Form are incorporated by reference herein
and form a part of the Plan.
2.19. Moody's - "Moody's" means the annual average composite yield on
Moody's Seasoned Corporate Bond Yield Index for the twelve (12) months
ending the
<PAGE>
October 31st immediately preceding the Valuation Date, as determined
from Moody's Bond Record published by Moody's Investors Service, Inc.(or
any successors thereto), or, if such yield is no longer published, a
substantially similar average selected by the Company.
2.20. Participant - "Participant" means an Eligible Employee participating in
the Plan in accordance with the provisions of Section 4.
2.21 S&P 500 Investment Return - "S&P 500 Investment Return" means the return
used to determine the amount of gain or loss credited to that portion
of a Participant's Deferred Compensation Account in the Equity Index
Account under Sections 6.5 and 6.6. The return for a Class Year shall be
determined by using a hypothetical investment in the Standard & Poor's
500 Composite Stock Index inclusive of reinvested dividends less
management fees (currently 25 basis points a year, but may be changed
by the Committee to no more than 50 basis points).
2.22. Substantially Equal Installments - "Substantially Equal Installments"
means a series of annual payments such that equal payments over the
remaining payment period would exactly amortize the Deferred
Compensation Account balance in the Fixed Account as of the Distribution
Date if the credited interest rate remained constant at the level
credited as of the Valuation Date immediately preceding the Distribution
Date for the remainder of the payment period.
2.23. Termination of Employment - "Termination of Employment" means the
termination of a Participant's employment with the Employer for any
reason other than Disability.
2.24. Transfer and Consent Form - "Transfer and Consent Form" means the
Transfer and Consent Form attached to this Plan and filed with the
Executive Compensation Committee of Alltrista Corporation. The terms and
conditions specified in the Transfer and Consent Form are incorporated
by reference herein and form a part of the Plan.
2.25. Valuation Date - "Valuation Date" means the date on which the value of a
Participant's Deferred Compensation Account for each Class Year is
determined as provided in Section 6 hereof. Unless and until changed by
the Committee, the Valuation Date shall be the last day of each
calendar year.
3. Administration of the Plan
The Executive Compensation Committee, by appointment of the Board of
Directors of the Company, shall be the sole administrator of the Plan.
The Committee shall have full power to formulate additional details and
regulations for carrying out this Plan. The Committee also shall be
empowered to make any and all of the determinations not authorized
specifically herein that may be necessary or desirable for the
effective
<PAGE>
administration of the Plan. Any decision or interpretation of any
provision of this Plan adopted by the Committee shall be final and
conclusive.
4. Participation
Participation in the Plan shall be limited to Eligible Employees who
elect to participate in the Plan by filing an Election Form with the
Committee prior to the commencement of the Class Year to which the
Election Form applies, or at such earlier time as determined by the
Committee. Notwithstanding the foregoing, an employee who first becomes
an Eligible Employee during any Class Year may elect to participate in
the Plan for such Class Year by filing an Election Form within thirty
(30) days after becoming an Eligible Employee.
The minimum annual deferral shall be $1,000, and the maximum deferral
shall be one hundred percent (100%) of the Participant's Compensation.
An Eligible Employee, who also has elected to defer incentive
compensation attributable to prior years under the Ball Corporation
1989 Deferred Compensation Plan, may elect to transfer, the December 31
of the calendar year preceding the year in which the Participant
becomes an Eligible Employee, to this Plan the dollar value, including
any interest thereon, of all his/her deferred compensation account as
of December 31 of the calendar year preceding the year in which the
Participant becomes an Eligible Employee. Such amounts, including
interest, shall be deemed to be Deferral Amounts under this Plan as of
the close of business on December 31 of the calendar year preceding the
year in which the Participant becomes an Eligible Employee, and no
interest shall be earned for that calendar year.
5. Vesting of Deferred Compensation Account
A Participant's interest in his/her Deferred Compensation Account and
interest credited thereto shall vest immediately.
6. Accounts and Valuations
6.1. Deferred Compensation Accounts. The Committee shall
establish and maintain a separate Deferred Compensation
Account for each Participant for each Class Year. Elective
Deferred Compensation, except for transfers from the Ball
Corporation 1989 Deferred Compensation Plan as described in
Section 4, shall be deemed credited to the Deferred
Compensation Account as of the close of business on December
31 of the Class Year, and no interest or gain/loss shall be
earned for that calendar year.
6.2. Investment Allocation of Deferred Compensation
Account. The Participant's Deferral Amount shall be deemed
to be invested in either the Fixed Account or the Equity Index
Account in accordance with the Participant's election.
<PAGE>
6.3 Interest Rate Credited. That portion of the Participant's
Deferred Compensation Account in the Fixed Account shall be
credited with interest on each Valuation Date, as provided
hereinafter, at an annual rate equal to Moody's.
6.4. Timing of Crediting of Interest. That portion of the
Participant's Deferred Compensation Account in the Fixed
Account shall be revalued and credited with interest as of
each Valuation Date. As of each Valuation Date, the value of
that portion of the Participant's Deferred Compensation
Account in the Fixed Account shall consist of the balance of
such Deferred Compensation Account as of the immediately
preceding Valuation Date plus the amount of any Elective
Deferred Compensation credited to the Fixed Account and any
transfers from the Equity Index Account, if any, made to such
Deferred Compensation Account since the preceding Valuation
Date, minus the amount of all distributions and transfers to
the Equity Index Account, if any, made from such Deferred
Compensation Account since the preceding Valuation Date. As of
each Valuation Date, interest shall be credited on that
portion of the Participant's Deferred Compensation Account in
the Fixed Account since the immediately preceding Valuation
Date after adjustment for any additions thereto or
distributions or transfers therefrom. Normal benefit
distributions (under Section 7.1) from the Fixed Account made
on or before February 15 of the year of payment will be
considered to have been made from the account and deducted
from the account balance as of January 1 of such year for the
purpose of crediting interest under this Section 6.4. Interest
on Hardship Benefits distributed from the Fixed Account will
be prorated to the date of distribution for the purpose of
crediting interest under this Section 6.4.
6.5 Investment Return Credited. That portion of the
Participant's Deferred Compensation Account in the Equity
Index Account shall be credited annually with an investment
return at a rate equal to the S&P 500 Investment Return.
6.6 Timing of Crediting of Investment Return. That portion of
the Participant's Deferred Compensation Account in the Equity
Index Account shall be revalued and credited with investment
return as of each Valuation Date. As of each Valuation Date,
the value of that portion of the Participant's Deferred
Compensation Account in the Equity Index Account shall consist
of the balance of such Equity Index Account as of the
immediately preceding Valuation Date, plus any Elective
Deferred Compensation credited to the Equity Index Account and
any transfers from the Fixed Account since the preceding
Valuation Date, minus the amount of all distributions and
transfers to the Fixed Account, if any, made from such Equity
Index Account since the preceding Valuation Date. As of each
Valuation Date, the investment return shall be credited on
that portion of the Participant's Deferred Compensation
Account in the Equity Index Account since the immediately
preceding Valuation Date after adjustment for any additions
thereto or distributions or transfers therefrom. Benefit
distributions (under Section 7) from the Equity Index Account
made on or before February 15 of the
<PAGE>
year of payment will be considered to have been made and
deducted from the account balance as of January 1 of such year
for the purpose of crediting investment return under this
Section 6.6. The investment return on Hardship Benefits
distributed from the Equity Index Account will be calculated
to the date of distribution for the purpose of crediting the
investment return under this Section 6.6.
6.7 Change of Investment Allocation by a Participant. A
Participant may make different investment allocations for each
Class Year, and may change a Class Year's investment
allocation once a year. Any change will be effective as of
January 1 of the next year if the Participant submits an
Investment Allocation Change Form to the Committee by December
15 of any Plan year.
7. Benefits
7.1. Normal Benefit
a. A Participant's Deferred Compensation Account shall be
paid to the Participant as requested in his/her Election
Form, subject to the terms and conditions set forth in
the Plan, including the Election Form. If a Participant
elects to receive payment of his/her Deferred Compensation
Account in the Fixed Account in installments, payments
shall be made in Substantially Equal Installments. If a
Participant elects to receive payment of his/her Deferred
Compensation Account in the Equity Index Account in
installments, payments shall be made in Declining Balance
Installments. Unless the Executive Compensation Committee
determines otherwise, and subject to the provisions of
Section 7.4. as to when payments shall commence, distribution
payments, whether lump sum or installment, shall be made on or
before the fifteenth (15th) day of February of each year.
A Participant may elect different payment schedules for
different Class Year Deferred Compensation Accounts.
b. If a Participant dies before receiving his/her total Deferred
Compensation Account balances, whether distributions have
commenced earlier or not, his/her Beneficiary shall be
entitled to the remaining account balances in accordance
with the payment elections in the Election Form, except
that such payments, if not already commenced, shall commence
on or before February 15 next following the date of the
Participant's death.
7.2. Hardship Benefit. In the event that the Executive Compensation
Committee, upon written request of a Participant or
Beneficiary of a deceased Participant, determines in its sole
discretion, that such person has suffered an unforeseeable
financial emergency, the Company shall pay to such person,
from the Deferred Compensation Account designated by the
Participant or Beneficiary, as soon as practicable following
such determination, an amount necessary to meet the
<PAGE>
emergency, not in excess of the amount of the Deferred
Compensation Account. The Deferred Compensation Account of the
Participant shall thereafter be reduced to reflect the payment
as of the date paid of a Hardship Benefit.
7.3 Request to Committee for delay in Payment. A Participant
shall have no right to modify in any way the schedule for the
distribution of amounts from his/her Deferred Compensation
Account that he/she has specified in his/her Election Form.
However, upon a written request submitted by the Participant
to the Committee, the Committee may, in its sole discretion,
for each Class Year:
Postpone one time the date on which payment shall
commence, but not beyond the year in which he/she will
attain age seventy-one (71); and
At the same time, increase the number of installments to
a number not to exceed fifteen (15).
Any such request(s) must be made prior to the
earlier of (a) the beginning of the year that the Participant
has elected for distributions to commence, or (b) the
Termination of Employment.
7.4. Date of Payments. Except as otherwise provided in this plan,
payments under this Plan shall begin on or before the
fifteenth (15th) day of February of the calendar year
following receipt of notice by the Executive Compensation
Committee of an event that entitles a Participant (or
Beneficiary) to payments under the Plan, or at such earlier
date after receipt of such notice as may be determined by the
Executive Compensation Committee.
7.5 Termination of Employment Before Age 55. In the event that
a Participant has a Termination of Employment prior to his/her
attaining age fifty-five (55) (other than by death, for which
benefits and/or accounts will be paid in accordance with
Section 7.1.b.), then, whether or not distributions have
earlier commenced, the Participant's Deferred Compensation
Account will be paid to him/her in a lump sum on or before the
fifteenth (15th) day of February in the year following the
year in which the Termination of Employment occurred, unless
otherwise determined by the Committee. Upon written request of
the Participant made within thirty (30) days following
Termination of Employment, the Committee may, in its sole
discretion, determine that, in lieu of a lump sum, payments
shall be made to the Participant in not more than five (5)
Substantially Equal Installments, commencing on or before such
next fifteenth (15th) day of February following the date of
Termination of Employment. The interest or investment return
credited to the Participant's Deferred Compensation Account on
the Valuation Date next following the Termination of
Employment shall be as provided in Section 6., above. If
payments are to be made in installments, all Class Years
including both Fixed and Equity Index Accounts will be
combined into one amount that will be the Participant's
Deferred Compensation Account
<PAGE>
going forward and the interest rate credited to the
Participant's Deferred Compensation Account on all Valuation
Dates subsequent to the Valuation Date next following
Termination of Employment (and to be considered as the
interest rate on such Valuation Date next following
Termination of Employment for the sole purpose of calculation
Substantially Equal Installments under Section 2.22., above)
shall be limited to the daily weighted average borrowing rate
paid by the Company during the then calendar year for total
borrowing.
7.6. Taxes: Withholding. To the extent required by law, the Company
shall withhold from payments made hereunder any amount
required to be withheld by the federal government, or any
state or local government.
7.7 Liquidating Distributions. Notwithstanding any provisions
of the Plan or the Participant's Election Form to the
contrary, upon written request for a Liquidation Distribution
submitted by the Participant (or Beneficiary) to the Executive
Compensation Committee, the Committee may, in its sole
discretion, (or, following a Change in Control, the Committee
must) pay to the Participant (or Beneficiary following the
death of Participant) the Participant's (or Beneficiary's)
Liquidating Distribution Account Balance in a lump sum as soon
as practicable, but no later than 60 days, following the
request.
"Liquidating Distribution" shall mean a distribution requested
by the Participant (or Beneficiary) in writing directed to the
Committee and specifically referencing this section. If the
Participant requesting the Liquidating Distribution is, at the
time of the request, an active employee of the Employer,
"Liquidating Distribution Account Balance" shall mean all of
the Deferred Compensation Accounts under the Plan in which the
Participant has an undistributed balance, increased by
interest credited or investment return credited or debited on
the account(s) to the date of distribution from the preceding
Valuation Date, and decreased by a forfeiture penalty equal to
six percent (6%) of the value of the Participant's Deferred
Compensation Account(s) as of the date of distribution. If the
Participant requesting the Liquidating Distribution is, at the
time of the request, no longer an active employee of the
Employer, or in the case of a request made by a Participant's
Beneficiary, "Liquidating Distribution Account Balance" shall
mean all of the Deferred Compensation Accounts under the Plan
in which the Participant (or Beneficiary) has an undistributed
balance and all of the Deferred Compensation Accounts under
any Comparable Plans maintained by the Employer in which the
Participant (or Beneficiary) has an undistributed balance,
increased by interest credited or investment return credited
or debited on the account(s) to the date of distribution from
the preceding Valuation Date, and decreased by a forfeiture
penalty equal to six percent (6%) of the value of the
Participant's (or Beneficiary's) Deferred Compensation
Account(s) as of the date of distribution. "Comparable Plans"
shall mean the Alltrista Corporation 1993 Deferred
Compensation Plan, the Alltrista Corporation 1993 Deferred
<PAGE>
Compensation Plan for Selected Key Employees, and any
comparable successor plans so designated by the Committee.
Notwithstanding any provisions of the Plan or the
Participant's Election Form to the contrary, if the
Participant requesting the Liquidating Distribution is, at the
time of the request, an active employee of the Employer, then
the Participant shall, for a period of two (2) Class Years
beginning with the Class Year during which the request for
Liquidating Distribution is made, be ineligible to participate
in the Plan or any Comparable Plans with respect to any
Compensation not yet deferred.
For purposes of this Section, a "Change in Control" shall be
deemed to have occurred if:
(a) any "Person", which shall mean a "person" as such
term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), other
than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or
any company owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 30 percent or more of the combined voting
power of the Company's then outstanding securities;
(b) at any time during any period of two consecutive
years, individuals, who at the beginning of such period
constitute the Board, and any new director (other than a
director designated by a Person who has entered into an
agreement with the Company to effect a transaction described
in clause (a), (c) or (d) of this Section) whose election by
the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of
the directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease
for any reason to constitute at least a majority thereof;
(c) the shareholders of the Company approved a merger
or consolidation of the Company with any other company, other
than (i) a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 50 percent of the combined
voting power of the voting securities of the Company, or such
surviving entity outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person acquired 50 percent or more of
the combined voting power of the Company's then outstanding
securities; or
<PAGE>
(d) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets.
8. Beneficiary Designation
With respect to those Participants who have filed a Transfer and
Consent form with the Executive Compensation Committee of Alltrista
Corporation, their Beneficiary or Beneficiaries (both principal and
contingent) shall be as designated under the terms of the 1989 Ball
Corporation Deferred Compensation Plan, unless or until a new
Beneficiary designation form is filed with the Committee, or the then
existing Beneficiary is revoked by divorce.
A Participant shall have the right at any time, and from time to time,
to designate and/or change or cancel any person, persons, or entity as
his/her Beneficiary or Beneficiaries (both principal and contingent) to
whom payment under this Plan shall be paid in the event of his/her
death prior to complete distribution to Participant of the benefits due
him/her under the Plan. Each beneficiary change or cancellation shall
become effective only when filed in writing with the Executive
Compensation Committee during the Participant's lifetime on a form
provided by the Committee.
The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. Any finalized divorce of a
Participant subsequent to the date of filing of a Beneficiary
designation form shall revoke such designation if it was for the spouse
Participant subsequently divorced. The spouse of a married Participant
domiciled in a community property jurisdiction shall be required to
join in any designation of Beneficiary or Beneficiaries other than the
spouse in order for the Beneficiary designation to be effective.
If a Participant fails to designate a Beneficiary as provided above, or
if his/her beneficiary designation is revoked by divorce, or otherwise,
without execution of a new designation, or if all designated
Beneficiaries predecease the Participant, then the distribution of such
benefits shall be made in a lump sum to the Participant's estate.
If any installment distribution has commenced to a Beneficiary and the
Beneficiary dies before receiving all installments, any remaining
installments shall be paid in a lump sum to the estate of the
Beneficiary.
<PAGE>
9. Amendment and Termination of Plan
9.1. Amendment. The Board of Directors at any time may amend
the Plan in whole or in part, provided, however, that no
amendment shall be effective to reduce the value of any
Participant's Deferred Compensation Account or to affect the
Participant's vested right therein, and, except as provided in
9.2. or 9.3., no amendment shall be effective to decrease the
future benefits under the Plan payable to any Participant or
Beneficiary with respect to any Elective Deferred Compensation
that was deferred prior to the date of the amendment. Written
notice of any amendments shall be given promptly to each
Participant.
9.2. Termination of Plan
a. Employer's Right to Terminate. The Board of
Directors at any time may terminate the Plan as to
prospective contributions and credits of interest or
investment return, if it determines in good faith
that the economic acceptability of the Plan has been
substantially impaired and that the resulting cost to
the Company is substantially and unacceptably greater
than the cost anticipated at the Effective Date. No
such termination of the Plan shall reduce the balance
in a Participant's Deferred Compensation Account or
affect the Participant's vested right therein.
b. Payments Upon Termination of Plan. Upon
termination of the Plan under this Section 9.2.,
Compensation for additional Class Years shall not be
deferred under the Plan. With respect to
then-existing Deferred Compensation Accounts, the
Employer will, depending upon the Participant's
election at that time: (i) pay to the Participant, in
a lump sum, the value of each of his/her Deferred
Compensation Accounts; (ii) continue to defer the
Compensation under the Plan, but with only the Fixed
Account option and with the interest rate credited on
all future Valuation Dates to be equal to the daily
average of the best interest rate available to the
Company during the then calendar year for short-term
borrowings; or (iii) make such other arrangement as
the Committee determines appropriate.
9.3. Successors and Mergers, Consolidations or Change in
Control. The terms and conditions of this Plan and Election
Form shall inure to the benefit of and bind the Company, the
Participants, their successors, assigns, and personal
representatives. If substantially all of the stock or assets
of the Company are acquired by another corporation or entity,
or if the Company is merged into, or consolidated with,
another corporation or entity, then the obligations created
hereunder shall be obligations of the acquirer or successor
corporation or entity.
<PAGE>
10. Miscellaneous
10.1. Unsecured General Creditor. Participants and their
beneficiaries, heirs, successors and assigns shall have no
legal or equitable rights, interests, or other claims in any
property or assets of the Employer, nor shall they be
beneficiaries of, or have any rights, claims, or interests
in any life insurance policies, annuity contracts, or the
policies therefrom owned or that may be acquired by the
Company ("Policies"). Such Policies or other assets shall not
be held under any trust for the benefit of Participants, their
beneficiaries, heirs, successors, or assigns, or held in any
way as collateral security for the fulfilling of the
obligations of the Company under this Plan. Any and all of
such assets and policies shall be and remain general,
unpledged, unrestricted assets of the Employer. The Company's
obligation under the Plan shall be that of an unfunded and
unsecured promise to pay money in the future.
10.2. Obligations to the Employer. If a Participant becomes entitled
to a distribution of benefits under the Plan, and if at such
time the Participant has outstanding any debt, obligation, or
other liability representing an amount owed to the Employer,
then the Employer may offset such amounts owing it or an
affiliate against the amount of benefits otherwise
distributable. Such determination shall be made by the
Committee.
10.3. Non-Assignability. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer,
pledge, anticipate, mortgage, or otherwise encumber,
transfer, hypothecate or convey in advance of actual receipt,
the amounts, if any, payable hereunder, or any part thereof,
that are, and all rights to which are expressly declared to be
unassignable and nontransferable. No part of the amounts
payable shall, prior to actual payment, be subject to seizure
or sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Participant or any
other person, nor be transferable by operation of law in the
event of a Participant's or any other person's bankruptcy or
insolvency.
10.4. Employment or Future Eligibility to Participant Not
Guaranteed. Nothing contained in this Plan, nor any action
taken hereunder, shall be construed as a contract of
employment or as giving an Eligible Employee any right to be
retained in the employ of the Employer. Designation as an
Eligible Employee may be revoked at anytime by the Executive
Compensation Committee with respect to any Compensation not
yet deferred.
10.5. Gender Singular and Plural. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine,
or neuter, as the identity of the person or persons may
require. As the context may require, the singular may be
read as the plural and the plural as the singular.
<PAGE>
10.6. Captions. The captions to the articles, sections, and
paragraphs of this Plan are for convenience only and shall not
control or affect the meaning or construction of any of
its provisions.
10.7. Protective Provisions. A Participant will cooperate with the
Company by furnishing any and all information requested by the
Company in order to facilitate the payment of benefits
hereunder, including taking such physical examinations as the
Company reasonably may deem necessary and taking such other
relevant action as may be requested by the Company. If a
Participant refuses to cooperate, the Company shall have no
further obligation to the Participant under the Plan. If,
during the two-year period beginning on the first day of a
Plan Cycle, the Participant commits suicide, or dies after
providing any material misstatement of information or
nondisclosure or medical history with regard to a Cycle,
then no benefits shall be payable to such Participant or
his/her Beneficiary from such Cycle other than a return of the
Participant's Deferral Amount.
10.8. Applicable Law. This Plan shall be governed and construed
in accordance with the laws of the State of Indiana.
10.9. Validity. In the event any provision of this Plan is held
invalid, void, or unenforceable, the same shall not affect,
in any respect whatsoever, the validity of any other provision
of this Plan.
10.10. Notice. Any notice or filing required or permitted to be given
to the Executive Compensation Committee shall be sufficient if
in writing and hand delivered, or sent by registered or
certified mail, to the principal office of the Company,
directed to the attention of the President of the Company.
Such notice shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
<TABLE>
<CAPTION>
Exhibit 11.1
ALLTRISTA CORPORATION AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Thousands of dollars and shares except per share data)
Year ended December 31,
-----------------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Income from continuing operations $ 15,221 $ 12,528 $ 14,012
Discontinued operation (711) (1,029) 2,116
----------- ------------ ------------
Net income $ 14,510 $ 11,499 $ 16,128
=========== ============ ===========
Weighted average number of common
shares outstanding 7,737 7,806 7,569
Additional shares assuming
conversion of stock options 169 190 229
----------- ------------ -----------
Weighted average number of common
and equivalent shares 7,906 7,996 7,798
=========== ============ ===========
Primary earnings per common share:
Continuing operations $ 1.93 $ 1.57 $ 1.80
Discontinued operation (.09) (.13) .27
----------- ------------ -----------
Net income $ 1.84 $ 1.44 $ 2.07
=========== ============ ===========
FULLY DILUTED EARNINGS PER SHARE
Income from continuing operations $ 15,221 $ 12,528 $ 14,012
Discontinued operation (711) (1,029) 2,116
----------- ------------ -----------
Net income $ 14,510 $ 11,499 $ 16,128
=========== ============ ===========
Weighted average number of common
shares outstanding 7,737 7,806 7,569
Additional shares assuming
conversion of stock options 199 206 228
----------- ------------ -----------
Weighted average number of common
and equivalent shares 7,936 8,012 7,797
=========== ============ ===========
Fully diluted earnings per common share:
Continuing operations $ 1.92 $ 1.56 $ 1.80
Discontinued operation (.09) (.12) .27
----------- ------------ -----------
Net income $ 1.83 $ 1.44 $ 2.07
=========== ============ ===========
</TABLE>
Alltrista Corporation expanded a profitable product line by acquisition and
sold an underperforming business in 1996. $14 million was returned to
shareholders through a stock repurchase program and earnings per share grew by
23%. At year-end, the company's stock price stood at $25 3/4, an increase of 43%
for the year. This, and more, is detailed in this annual report to shareholders.
<PAGE>
Alltrista Corporation is guided by several uncompromising values. These
core values represent the beliefs that guide our company. Taken together, they
are the rules of the road in conducting our business, and none is emphasized to
the exclusion of others. We've made Alltrista Corporation employees familiar
with these core values, and believe that shareholders should know them, as well.
We are guided by a principle of respect. Our behavior is characterized by
honesty, integrity, high ethical standards and fairness; we expect those with
whom we have a continuing association to be of like character.
We are dedicated to extraordinary customer satisfaction. We are in business to
meet the needs of our customers with value-added products and services. Maximum
customer satisfaction is driven by an organization which is focused on customers
and which also recognizes the need for internal customer satisfaction. Costs
which do not translate into customer value should be eliminated or minimized.
We pursue the best people, the best technology and the best performance.
Extraordinary performance for shareholders and customers can only be sustained
by attracting the best individual performers who understand the imperative of
working cooperatively and accepting the values and objectives of the company. In
our products, our processes and our management systems, we utilize the best
technology that can be justified.
We manage for enduring success. Our decisions reflect a long-term orientation, a
strong history and tradition.We will not trade our best long-term interests for
a short-term expedient. We only pursue growth which creates value for customers
and shareholders. We select customers who value long-term relationships. We
understand the value of leadership in the markets we serve and we defend our
right to compete. We provide the opportunity for all our people to achieve their
greatest potential and we wish to be associated only with those who strive to
achieve that potential.
We are merit-based. There is no room for politics. Our organization is not
stratified. Rewards are proportional to the value we create. Ideas are judged on
the value they create in serving customers and rewarding shareholders. We place
a premium on common sense, decisiveness, a sense of urgency, results, and
enjoying our work. Our actions and assets reflect a sense of economy and
simplicity.
We are a diverse and whole corporate community that vests authority among
competent people. Authority is determined by ability, which must be informed by
clear objectives and the necessary management information. All strengths are
shared throughout the corporation for the benefit of the whole. We will maintain
an optimal level of business diversity, and the diversity of our people is a
strength, yielding creativity and innovation; but there can be no contradiction
of essential values.
<PAGE>
COMPANY PROFILE
Alltrista Corporation manufactures consumer, plastic and zinc products. The
company has 10 manufacturing facilities located in the eastern third of the
United States, plus Puerto Rico and Canada. Alltrista stock is traded on the
Nasdaq National Market under the symbol JARS.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(thousands of dollars and shares except per share amounts)
1996 1995 Percentage
Increase
(Decrease)
----------- --------- ----------
<S> <C> <C> <C>
For the year
Net sales $ 230,314 $ 221,458 4.0
Net income 14,510 11,499 26.2
Fully diluted earnings per share
Income from continuing operations 1.92 1.56 23.1
Discontinued operation (.09) (.12) 25.0
Net income $ 1.83 $ 1.44 27.1
Fully diluted weighted average
common shares outstanding 7,936 8,012 (.9)
Free cash flow 24,120 3,260 639.9
Interest expense, net 2,571 3,342 (23.1)
Depreciation and amortization 10,569 12,816 (17.5)
Property, plant and equipment additions 10,699 13,693 21.9
After-tax return on year-end invested capital* 15.18% 13.79% -
After-tax return on year-end common equity* 17.38% 16.35% -
At year-end
Working capital, excluding cash and debt $ 41,261 $ 52,979 (22.1)
Total assets 154,079 162,650 (5.3)
Common shareholders' equity 83,467 79,251 5.3
Market price per common share 25.75 18 43.1
Common shareholders of record 4,626 6,915 (33.1)
Number of employees 1,019 1,410 (27.7)
*excludes the effect of unusual item in 1995
</TABLE>
[BAR GRAPH]
NET SALES
(millions of dollars)
'92 184.9
'93 193.3
'94 207.8
'95 221.5
'96 230.3
[BAR GRAPH]
PRIMARY EARNINGS PER SHARE
FROM CONTINUING OPERATIONS
(dollars)
'92 $ .89
'93 $1.65
'94 $1.80
'95 $1.57
'96 $1.93
<PAGE>
TO OUR SHAREHOLDERS
The year 1996 was a strong one for Alltrista Corporation. Although we would like
to have seen some of our operations perform at higher levels than they did,
we`re pleased with results considering the obstacles that stood in the way. In
addition, we made an extremely strategic acquisition and successfully divested a
large operation that was earning little to no return on capital.
First, let's take a look at financial results for the year. Net income of
$14.5 million was 26 percent above last year. Fully diluted earnings per share
of $1.83 were 27 percent higher than in 1995. Sales of $230.3 million were 4
percent above last year.
Sales have been restated to reflect the disposition of the metal services
business. To best compare our year-to-year results, one should look at
continuing operations, that is without metal services. That number on a per
share basis is $1.92 against $1.56 in 1995, a 23 percent increase.
Additional financial information appears in management's discussion and
analysis of financial condition that begins on page 10, and the financial
statements and notes, beginning on page 14. We also call your attention to a
discussion on Economic Value Added that appears on page 8. EVA(R) is determined
by subtracting from net operating profit after taxes a charge for the cost of
capital employed. We use EVA for all major corporate decisions and as the basis
for our incentive compensation program.
As alluded to at the top of this page, a major event during the year was
the acquisition on March 15 of the home canning business of Kerr Group, Inc. We
acquired these assets for $14.6 million. The Kerr brand of home canning products
joins our existing Ball brand in the U.S. and the Bernardin brand in Canada.
While we had a loss from the Kerr brand in 1996 as a result of integration
costs, we are expecting good returns from this business in 1997 and beyond.
Key to this improvement will be savings from consolida-
[GRAPHIC OMMITTED]
Thomas B. Clark, president and chief exeutive officer, (left) with William L.
Peterson, chairman of the board.
<PAGE>
tion of the Kerr manufacturing facility into our existing operation. This
consolidation occurred during the latter part of 1996, and production began at
the Muncie plant in early February of 1997. Last year during the peak part of
the season, there were 155 production employees involved in manufacturing the
two domestic brands. With the consolidation, we expect to handle all production
with about 90 employees, and should have much greater efficiencies, as well.
In addition to the labor savings, we should see a positive impact from
better raw material costs, the consolidation of warehousing operations and
reduced marketing expenses.
We're excited about the opportunities we have in the home canning business.
We feel that the consolidation will enable us to extend the life of the product
line while providing better service to consumers.
While we spent $14.6 million for the Kerr assets, we received almost that
amount from the sale of the metal services business fixed assets in late April.
This sale was a strong positive for the company. Including working capital, we
had between $28-30 million invested in this business, with plants in Chicago,
Baltimore and Birmingham. Metal services was earning little to no return on that
investment, and in late 1995 lost its largest customer. Despite the significant
amount of management time devoted to strengthening the business, we determined
that we would never attain satisfactory returns (a minimum 11 percent after tax,
our cost of capital). Conversely, the sale frees up capital that can be invested
in higher return opportunities.
A few other highlights should be mentioned here. We ended the year with no
short-term debt, and remained at $30 million in long-term debt.
We returned $14 million in cash to shareholders during the year through the
repurchase of 630,000 shares of our stock at an average price of $22.16 per
share. Our stock price at year-end was $25.75, providing a 43 percent return to
shareholders for the year. Since year-end, the price has shown some
deterioration, which is not consistent with our performance or outlook. If it
remains at the low recent level, we will give consideration to additional
repurchases.
Productivity and careful cost management resulted in improvement of our
operating margin by 1.2 percentage points, from 10.9 percent to 12.1 percent.
Free cash flow for the year was $24.1 million, compared with $3.3 million
in 1995. Much of this improvement came in the area of working capital.
Our debt-to-total capitalization at the end of 1996 was 26.4 percent,
compared with 29.7 percent in 1995 and 37.1 percent in 1994.
Our outlook for the full year is strong and we anticipate favorable
comparisons on a year-over-year basis. However, we expect first quarter earnings
to be below a year ago, due to lower shipments of penny blanks to the U.S. Mint.
We appreciate your support and assure you that creating value for our
shareholders guides every major decision.
/s/William L. Peterson
----------------------
William L. Peterson
Chairman of the Board
/s/Thomas B. Clark
------------------
Thomas B. Clark
President and Chief Executive Officer
March 3, 1997
<PAGE>
Q & A
Alltrista is now benefitting from strategy developed when we became an
independent company, and we are capitalizing on our competitive advantages. Our
1996 results are discussed here, and we share our expectations for 1997.
Please comment on the year. What went well, and what didn't?
In addition to the acquisition and divestiture mentioned earlier (and
discussed later in this report), we were most pleased with the improved
operation of the plastic packaging business. A relatively new team there
has made vast improvements in operating efficiencies and has brought scrap
levels to historical lows. This, during 1996, translated into considerable
operating earnings improvement. These improvements justify increased
investment in this area to pursue growth opportunities. In addition, the
business was successful in obtaining a 10-year supply contract with its
largest customer, and with that the expectation of increased orders. The
industrial plastics operation, where we thermoform large parts, had another
good year, as well. A poor growing season dampened earnings in our consumer
products operation and lower than expected volume negatively affected
operations at two plastics injection molding facilities.
How do you feel about 1997?
Earnings for the full year should advance by at least 13 percent, which is
our corporate objective. We expect an unfavorable comparison in the first
quarter, however, compared to a year ago when our earnings per share were
42 cents. Within food containers, we are expecting a good year for the
consumer products business, while plastic packaging is expected to be
somewhat below 1996's level. Within the industrial components segment, the
zinc business will be negatively impacted by lower coinage shipments
related to Federal Reserve inventory management, while the injection molded
plastics operation will see growth and the plastics thermoforming business
will be about equal to a year ago. We expect to see LumenX in the black for
the year, as well.
You say the consumer products operation should show considerable improvement in
1997. Why?
Of the two primary reasons, one we can influence and the other is beyond
our control. The former is tied to consolidation of the Ball(R) and Kerr(R)
product lines. This is addressed at length in the letter to shareholders,
on pages 2 and 3. We're confident the consolidation will be carried out
successfully. At this writing, we are certainly on schedule to meet this
objective. The latter favorable influence for the consumer products
business this year should be the
[GRAPHIC OMITTED]
Alltrista was awarded multi-year contracts in 1996 by both the U.S. Mint and
Royal Canadian Mint to produce copper-plated zinc one cent coin blanks.
<PAGE>
[GRAPHIC OMITTED]
Alltrista Corporation produces shotgun shell wads at two of its plastics
infection molding manufacturing facilities. The wads are used by the two leading
domestic ammunition manufacturers to produce shotgun shells. Target shooting of
clay pigeons (left of picture) is a sport growing in popularity in the United
States.
Zinc strip produced by the company's zinc products operation is used in many
industrial applications. These automotive blade fuses, manufactured by the
leading fuse suppliers in the U.S., have a much higher zinc content than the
round glass fuse (left) they replaced.
<PAGE>
weather. We've had two consecutive bad growing seasons for home gardening,
and therefore lower demand for home canning products. The odds of three
consecutive bad growing seasons are pretty low, but as mentioned, this is
out of our control. We do know that over time, and that is what we are most
concerned with, we will have more good growing years than bad. We're ready
for a good one. The consumer products business is gearing up not only for a
better 1997 in the home canning business, but future growth opportunities,
and that is what our shareholders are really interested in.
As a follow-up, if 1996 (and 1995) were slow years for home canning, does this
mean you have substantial inventory to carry-over into 1997?
There was considerable carryover from 1995 into 1996, but inventory
reduction was stressed in 1996 and the Ball brand home canning inventories
are at reasonable levels as we enter the current season. The Kerr Group had
inventory remaining at the end of the 1996 season, inventory we had not
acquired at the March purchase. We negotiated a bulk purchase of that
inventory, on good terms, so will start the `97 season with higher Kerr
brand inventory than we will have in future years. Despite this aberration,
we look for an excellent year in home canning.
Why did you repurchase stock last year? Will you repeat the program?
The cash we generate can be paid out as dividends, invested for growing the
business, or for repurchasing stock. Simply stated, our stock repurchase was
an investment, a good one, we believe. At certain times during the year we
felt our stock was undervalued. We repurchased 630,000 shares for $14
million, or an average price of $22.16, versus a year-end share price of
$25.75. We'll consider additional repurchases in the future, depending on
share price and availability of cash.
You mentioned investing cash to grow the business. Are there any acquisitions on
the horizon?
We are still digesting the Kerr acquisition of 1996, but are seriously
considering additional opportunities. We'll probably have more to report to
our shareholders on this activity this year. The acquisition of
complimentary businesses is one of the primary ways we expect to grow
Alltrista Corporation.
You say penny shipments will be down in the first quarter. Why? And, how viable
is the penny long-term?
Shipments will be down due to the Federal Reserve having a temporary
oversupply of all coins, not just pennies. The Fed increased the number of
distribution warehousing points last year, creating additional demand for
coins. Now, the flow-back of coins in the post-holiday period has filled
that pipeline. We expect this to be worked down during the first quarter.
On a longer-term basis, we expect the one cent coin blank to remain a major
product line for our zinc business. Demand for the coin remains strong.
Surveys indicate the general population wants the penny to remain in the
system. The alternative would be to round all prices to the nearest five
cents. Prices would likely be rounded up, not down, and this would be
inflationary. Incidentally, the U.S. Mint agrees with this thinking.
[GRAPHIC OMITTED]
The Kerr brand of home food preservation products was acquired by Alltrista in
1996. Kerr and Ball brand home canning supplies are marketed in the United
States, while the Bernardin brand is the company's entry in the Canadian market.
<PAGE>
[GRAPHIC OMITTED]
Alltrista Corporation's high-barrier coextruded plastic packaging business had
an excellent year in 1996, with improved profitability paced by higher
production efficiencies and lower scrap rates. The company won a 10-year supply
contract from Hunt Wesson to continue production of roll stock for its Snack
Pack and Gel products. Hunt Wesson purchases roll stock from Alltrista and uses
it on automated form, fill and seal machinery. The Hunt Wesson contract is a
good example of how our operations are establishing strategic alliances with
customers. During the year we received an "Excellent - Exceeds Expectations"
award from the customer.
Customer acceptance of the company's light-weight thermoformed plastic tables
grew during 1996, and we expect a substantial increased in sales volume for that
product line in 1997. The company has expanded the table program to include 28
different models.
<PAGE>
EVA
Alltrista Corporation's objective is to move earnings and value ahead 13
percent per year. The earnings part is self-explanatory; however, we measure
value using an internal financial and operational performance metric called
Economic Value Added, or EVA.
EVA - What is it?
EVA is simply net operating profits after tax less a charge for the use of
capital (11 percent for Alltrista) employed in the business. Operating profits
are also adjusted to account for certain differences between accounting and
economic profits. The capital charge is the minimum rate of return necessary to
compensate shareholders and lenders for the risk of their investments in
Alltrista. Research shows that changes in EVA have a closer correlation to
changes in shareholder value than any other performance metric, including
traditional measures such as earnings per share, earnings growth, return on
equity, and return on assets.
EVA can be improved in three ways:
1. Growth - Invest in projects that earn more than the cost of capital.
2. Productivity Improvement - Increase profits without using additional
capital.
3. Divest - Elimimate non-strategic assets that do not generate operating
profits greater than the cost of capital.
Actions to increase EVA
By focusing on EVA, employees throughout Alltrista are making strategic and
operating decisions that will increase EVA and in turn, shareholder value.
During 1996 Alltrista Corporation used all three methods described above to
increase EVA. A few of the more significant actions include the following:
- Sale of the Metal Services Company
- Acquisition of the Kerr brand of home canning products
- Improved operating efficiencies at Plastic Packaging
Operating profits in the Metal Services unit had been well below the cost of
capital and long term prospects in this industry did not show signs of a
turnaround. On the other hand, the acquisition and integration of the Kerr brand
of home canning products provides an opportunity to increase EVA significantly,
beginning as soon as 1997. Improved operating efficiency, combined with a
reduction in capital employed in our Plastic Packaging operation, also
contributed to our 1996 EVA improvement.
Incentive compensation
To assure that management's interest is in line with that of our shareholders',
all of management's incentive compensation is tied to EVA. Simply put,
management is rewarded when our shareholders are rewarded. Our EVA incentive
compensation plan is based upon a specific formula; incentives are not
discretionary. Annual EVA targets are established for each operation based upon
the prior year's target, adjusted up or down based upon the prior year's actual
performance. This target setting approach rewards managers for continuous EVA
improvement and is consistent with our long-term value creation strategy.
EVA is our primary performance measure because more than any other standard, it
aligns our internal processes, business strategies and employee behavior in the
pursuit of realizing Alltrista's value creation potential.
<PAGE>
[GRAPHIC OMITTED]
Kevin D. Bower, vice president of finance and controller, explains Economic
Value Added results to a group of management employees.
[LINE GRAPH]
MARKET VALUE ADDED
($ millions)
Market Value Book Value
'93 174.8 93.1
'94 191.0 106.7
'95 175.2 112.8
'96 221.9 112.8
Market Value Added represents the value that has been created
for shareholders.
[LINE GRAPH]
EVA PERFORMANCE
Year End Annual EVA
Stock Price (millions)
'93 17 4.5
'94 19.75 7.0
'95 18 6.0
'96 25.75 6.9
Compound Annual Growth Rates
Stock Price-14.8% EVA-15.2%
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Management's discussion and analysis of financial condition and results of
operations should be read in conjunction with the financial statements and the
accompanying notes. All amounts have been restated to reflect the metal services
business as a discontinued operation, as discussed below.
RESULTS OF OPERATIONS - COMPARING 1996 TO 1995
The company reported net sales of $230.3 million and operating earnings of
$27.8 million for 1996. This represents a 4.0% and 15.2% increase over sales and
operating earnings of $221.5 million and $24.1 million in 1995. Excluding the
impact of a $2.4 million pretax, non-cash charge related to the termination of
the zinc wine capsule development program in 1995, operating earnings increased
4.6% for the year. Sales in each operating unit either equaled or exceeded those
of the prior year. The food containers segment had both increased sales and
earnings in 1996 versus 1995. Although a poor growing season and costs
associated with the Kerr acquisition were responsible for lower earnings in
Consumer Products, this decrease was more than offset by higher earnings
resulting from improved operating efficiencies and reduced material scrap at
Plastic Packaging. The industrial components segment also achieved increased
sales and operating earnings in 1996, with nearly every operation showing sales
increases. Excluding the effect of the unusual item in 1995, operating earnings
for the segment were in line with 1995.
Gross margin percentages ("margins") improved in 1996 in the food containers
segment mostly as a result of favorable product mix and operating efficiency and
scrap gains at Plastic Packaging and increased margins on increased Canadian
sales at Consumer Products. Overall, the indus-trial components segment had
slightly higher gross margin percentages. Improved margins at Industrial
Plastics were the result of increased volumes in the refrigeration market and
table products coupled with material cost decreases. LumenX also improved
margins on better production efficiencies. These improvements were somewhat
offset by start-up costs and lower than expected volume at Unimark's Missouri
and South Carolina locations.
Selling, general and administrative costs increased as a
percentage of total sales during 1996. This was due to costs associated with the
integration of the Kerr brand into Consumer Products, along with increased
marketing and promotional efforts in this division. Increased market research
activities at Zinc Products have also increased selling, general and
administrative costs.
Consolidated net interest expense of $2.6 million was well under interest
expense of $3.3 million for the prior year. Interest expense was incurred on the
company's $30 million long-term financing and seasonal borrowings under the
company's committed and uncommitted credit agreements. The 1996 interest expense
was offset by $.4 million of interest income earned on short-term investments.
Gross interest expense of $3.0 million in 1996 was lower than 1995's $3.3
million due to lower average daily borrowings.
Income from continuing operations of $15.2 million increased 21.5% from $12.5
million and primary earnings per share from continuing operations was $1.93, an
increase of 22.9% over the $1.57 reported for 1995. Excluding the after-tax
impact of terminating the wine capsule development program, 1995 net earnings
from continuing operations would have been $14.0 million and primary earnings
per share would have been $1.75. Fully diluted earnings per share from
continuing operations were a penny less in both 1996 and 1995 than primary
earnings per share as a result of the dilutive effect of stock options
outstanding.
In April 1996, the company sold its Metal Services plants, real estate,
equipment and certain inventory. The operation has been classified as a
discontinued operation on the income statement and prior years' results have
been reclassified to conform to this presentation. The 1996 loss from this
discontinued operation was $.7 million or $.09 per share, both primary and fully
diluted. This represents break-even results from operations for the first four
months of 1996 and a $.7 million loss on disposal, reflecting estimated costs
accrued in conjunction with the transfer of assets sold and a $.4 million
curtailment loss from the pension and
<PAGE>
postretirement plans. Metal Services had an after-tax loss of $1.0 million or
$.12 per share, fully diluted, in 1995.
In 1996, following the sale of the assets of Metal Services, the company
redefined its businesses from three to two distinct segments: food containers
and industrial components. Unimark Plastics and Industrial Plastics, previously
included in the company's plastic products segment, were combined with Zinc
Products and LumenX to form the industrial components segment. Consumer Products
and Plastic Packaging comprise the food containers segment. Prior year segment
presentations have been restated to reflect the change in segments.
FOOD CONTAINERS SEGMENT
The food containers segment increased sales and earnings 5.3% and 11.3%,
respectively, comparing 1996 with 1995. Consumer Products reported higher sales
and lower earnings while Plastic Packaging had higher earnings on similar sales
to 1995. In March 1996, the company acquired certain assets related to the home
food preservation product line of Kerr Group, Inc. ("Kerr"). While domestic home
canning sales of the Ball brand were hampered by a poor growing season, the
overall sales increase at Consumer Products was mostly the result of increased
market share in Canada and sales of the newly acquired Kerr brand. Current year
sales of the Kerr brand of home canning products were made primarily from
inventories retained by the previous owner and, consequently, sales for the
account of Alltrista were not as significant in 1996 as they will be in future
years. Operating earnings were also affected by higher warehousing costs,
increased advertising and sales promotion expense to support the home canning
category and costs associated with the integration of the Kerr product line. In
connection with the integration, the company announced the closing of the
Jackson, Tennessee facility (obtained in the Kerr transaction) and consolidation
of the domestic manufacture of home canning closures at its plant in Muncie,
Indiana. Although Plastic Packaging's sales were similar to 1995, its earnings
benefited from favorable product mix, reduced labor and scrap costs and focused
research and development spending.
INDUSTRIAL COMPONENTS SEGMENT
The industrial components segment increased sales by 3.0% and improved
operating earnings 16.3%. Zinc Products had increased sales due to higher
shipments of penny blanks and industrial products which more than offset lower
battery can volumes. Earnings were higher in 1996 due to the $2.4 million
pretax, non-cash charge related to the termination of the zinc wine capsule
development program taken in 1995. Excluding this charge, earnings were nearly
even with 1995. The volume gains were offset by increased scrap and benefits
costs in this unit. Industrial Plastics had similar sales as volume increases in
both the refrigeration and table businesses were offset by price reductions in
its refrigeration products. Earnings improved as a result of these volume
increases as well as lower material costs in 1996. Unimark Plastics had higher
sales but lower operating earnings comparing the two years. This division
completed construction of a new facility and began production in the first
quarter of 1996 as planned. However, volumes at this location were lower than
planned and the location operated at a larger loss than was anticipated. LumenX
reported increased sales and margins from the prior year; however, this business
continued to operate at a small deficit as it incurred increased benefits and
sales costs.
RESULTS OF OPERATIONS - COMPARING 1995 TO 1994
Consolidated net sales for 1995 increased 6.6% to $221.5 million over 1994
net sales of $207.8 million, while operating earnings of $24.1 million decreased
9.5% from 1994 earnings of $26.7 million. Food containers segment sales were
higher while sales were level in the industrial components segment. Operating
earnings for 1995 include a $2.4 million third quarter write-off of assets
related to a discontinued product development project in the Zinc Products
operation. 1995 operating earnings were also
<PAGE>
adversely affected by $.9 million due to the sale of inventories acquired by
Consumer Products in late 1994. The acquisition accounting required these
inventories to be valued at their selling price. Without the impact of these
items, 1995 operating earnings would have been $27.4 million, an increase of
3.0% over 1994.
Gross margin percentages ("margins") were lower in 1995 partially as a result
of lower sales volumes at Zinc Products and LumenX. In addition, margins in the
Consumer Products business were lower due to a decline in home canning sales and
the aforementioned sale of acquired inventories at no accounting profit. Plastic
Packaging incurred decreased margins on higher sales due to a shift in sales to
lower margin products. Resin price increases, which are generally passed on to
customers, also created margin erosion in each of the plastics businesses.
Selling, general and administrative expenses fluctuated in relative
proportion to the increase in sales from 1995 to 1994.
Consolidated net interest expense of $3.3 million in 1995 relates to interest
on the company's $30 million long-term financing completed in December of 1994
and borrowings under the company's committed and uncommitted credit agreements.
Interest expense of $2.7 million in 1994 relates only to interest on borrowings
under the company's revolving credit agreements and uncommitted lines of credit.
Interest expense increased $.6 million in 1995 as a result of higher interest
rates with respect to the long-term financing and short-term borrowings.
Income from continuing operations of $12.5 million in 1995 decreased 10.6%
from $14.0 million in 1994. Primary earnings per share from continuing
operations was $1.57 in 1995, a decrease of $.23 from 1994 primary earnings per
share of $1.80. Excluding the after-tax impact of the unusual item, income from
continuing operations and primary earnings per share would have been $14.0
million and $1.75, respectively. The discontinued operation incurred an after
tax loss of $1.0 million or $.12 per share versus a gain in 1994 of $2.1 million
or $.27 per share, on a fully diluted basis. The 1995 results of discontinued
operations included a $2.1 million after-tax charge primarily to write down
equipment to its net realizable value.
FOOD CONTAINERS SEGMENT
The food containers segment achieved a 14.7% increase in net sales with a
marginal increase in operating earnings from 1995. Within the segment, Consumer
Products' sales increased 19% while its operating earnings decreased 6.3%. The
sales increase was the result of a full year of activity from the late 1994
acquisitions of Bernardin Ltd. and Fruit-Fresh(R) brand fruit protector, offset
partially by decreased sales of U.S. home canning supplies. Home canning sales
and operating earnings decreased due to the negative impact of weather on
growing conditions. Operating earnings were also negatively affected $.9 million
in 1995 by sales of Bernardin Ltd. and Fruit-Fresh inventories acquired in 1994.
These inventories were valued at their net selling price (as required by
generally accepted accounting principles) and consequently their sale produced
no accounting profit. Operating earnings in 1995 were also impacted by the
inclusion of a full year of Bernardin Ltd. selling, general and administrative
expenses. The Plastic Packaging division increased sales and operating earnings
in 1995. The operating earnings improvement was largely the result of a
reduction in administrative costs and research and development spending.
INDUSTRIAL COMPONENTS SEGMENT
The industrial components segment showed a 1.1% increase in sales and a 3.3%
decrease in operating earnings in 1995, excluding the impact of the following
unusual item. Due to greater than expected acceptance of plastic and composite
capsules in the wine industry and certain performance limitations of zinc as a
capsule material, the company terminated a project to develop a zinc capsule for
the wine industry during the third quarter of 1995. As a result of this
decision, the company recorded a pretax charge of $2.4 million to write down
certain project-related assets to their estimated net realizable values. These
assets have now been sold or otherwise disposed of. Zinc Products reported a
2.5% decrease in 1995 sales with a similar decrease in operating earnings,
excluding the $2.4 million charge to terminate development of the zinc capsule.
The decreases were a result of lower volumes in
<PAGE>
the coinage and battery can product lines. LumenX's sales in 1995 were slightly
lower than 1994. Lower volumes coupled with a demand for lower margin products
caused operating earnings to fall below the 1994 break-even level. Unimark
Plastics experienced a sales increase of 6.1% with a nominal decrease in
operating earnings in 1995. Sales volume increases improved earnings; however,
the improvement was offset by costs incurred in connection with the construction
of a new facility in Springfield, Missouri which began operation during the
first quarter of 1996. Industrial Plastics increased its sales 9.1% in 1995. The
increase was due principally to resin price increases; operating earnings
remained flat in 1995, despite the sales increase because resin price increases
were passed on to the division's principal customer and certain price
concessions were implemented consistent with a long-term supply contract.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 1996 of $48.9 million decreased slightly from
the 1995 level of $51.8 million. Proceeds of $14.4 million from the sale of
certain assets of Metal Services were used to reduce borrowings under the
company's revolving credit agreement. The company retained all accounts
receivable and inventory other than inks and coatings, as well as substantially
all liabilities accrued prior to the sale. On June 28, 1996 the remaining Metal
Services inventory was sold to U.S. Can for approximately $9 million. Sale of
the remaining inventory and collection of the accounts receivable less
liabilities paid generated cash of approximately $13 million. These funds were
used to reduce short-term borrowings, repurchase the company's common stock, and
purchase short-term investments.
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%. Along with the long-term financing, the
company has committed credit agreements in the amount of $54 million. The
company also has available $90 million in uncommitted credit lines of which no
borrowings were outstanding at December 31, 1996. After reducing outstanding
debt by the cash balance, the debt-to-total capitalization ratio was 21.2% at
the end of 1996 versus 28.2% at December 31, 1995. During 1996, the company
purchased 630,000 shares of its common stock in the open market at a total cost
of $14.0 million, completing its board-authorized stock repurchase programs. The
stock acquired is being reissued for employee stock plans as needed.
Capital expenditures during 1996 were $25.3 million, including the $14.6
million acquisition of the Kerr home food preservation product line. Remaining
expenditures were as planned and less than 1995 due to less expenditures for the
discontinued Metal Services and the 1995 construction of the Missouri facility
for Unimark Plastics.
The Environmental Protection Agency and certain state agencies have
designated the company as a potentially responsible party, along with numerous
other companies, for the cleanup of several hazardous waste sites with which its
operations may have been associated. The company's information at this time does
not indicate that clean up of any of the waste sites referred to above will have
a material, adverse effect upon the financial condition, results of operations,
cash flows or competitive position of the company.
In the ordinary course of business, the company has been and is involved in
various legal disputes with respect to the businesses of the company, including
disputes related to allegations of non-compliance with environmental and labor
laws or regulations and product liability. Management does not expect any
potential loss or settlement in connection with such disputes to have a material
adverse effect upon the financial condition, results of operations, cash flows
or competitive position of the company.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
Alltrista Corporation and Subsidiaries
(thousands, except per share amounts) Year ended December 31,
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales....................................................................... $ 230,314 $ 221,458 $ 207,779
Costs and expenses
Cost of sales................................................................ 163,435 161,662 147,590
Selling, general and administrative expenses................................. 39,108 33,256 33,537
Unusual items................................................................ - 2,430 -
---------- ---------- ----------
Operating earnings.............................................................. 27,771 24,110 26,652
Interest expense, net........................................................... (2,571) (3,342) (2,700)
Other expense................................................................... - - (400)
---------- ---------- ----------
Income from continuing operations before taxes.................................. 25,200 20,768 23,552
Provision for income taxes...................................................... (9,979) (8,240) (9,540)
---------- ---------- ----------
Income from continuing operations............................................... 15,221 12,528 14,012
---------- ---------- ----------
Discontinued operation:
(Loss)/income from discontinued operation,
net of income taxes of $641 and $(1,440), respectively.................... - (1,029) 2,116
Net loss on disposal of discontinued operation, net
of income tax benefit of $468............................................. (711) - -
--------- ---------- ---------
Net income...................................................................... $ 14,510 $ 11,499 $ 16,128
========= ========== =========
Primary earnings per share:
Income from continuing operations........................................... $ 1.93 $ 1.57 $ 1.80
Discontinued operation...................................................... (.09) (.13) .27
---------- --------- ---------
Net income.................................................................. $ 1.84 $ 1.44 $ 2.07
========== ========= =========
Fully diluted earnings per share:
Income from continuing operations........................................... $ 1.92 $ 1.56 $ 1.80
Discontinued operation...................................................... (.09) (.12) .27
---------- --------- ---------
Net income $ 1.83 $ 1.44 $ 2.07
========== ========= =========
Weighted average shares outstanding:
Primary...................................................................... 7,906 7,996 7,798
Fully diluted................................................................ 7,936 8,012 7,797
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
Alltrista Corporation and Subsidiaries
(thousands of dollars) December 31,
1996 1995
---------- ----------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents................................................................... $ 7,611 $ 2,333
Accounts receivable, net of reserve for doubtful accounts of $1,129 and $1,377.............. 27,621 36,387
Inventories................................................................................. 42,262 54,575
Prepaid expenses............................................................................ 726 607
Deferred taxes on income.................................................................... 3,312 2,849
---------- ----------
Total current assets...................................................................... 81,532 96,751
---------- ----------
Property, plant and equipment, at cost
Land........................................................................................ 782 1,601
Buildings................................................................................... 29,349 36,032
Machinery and equipment..................................................................... 115,004 158,502
---------- ----------
145,135 196,135
Accumulated depreciation.................................................................... (99,475) (140,052)
---------- ----------
45,660 56,083
---------- ----------
Goodwill, net of accumulated amortization of $1,083 and $2,965................................. 20,549 7,534
---------- ----------
Other assets................................................................................... 6,338 2,282
---------- ----------
Total assets................................................................................... $ 154,079 $ 162,650
========== ==========
Liabilities and shareholders' equity
Current liabilities
Notes payable............................................................................... $ - $ 3,500
Accounts payable............................................................................ 17,181 23,376
Accrued salaries, wages and employee benefits............................................... 7,370 10,270
Other current liabilities................................................................... 8,109 7,793
---------- ----------
Total current liabilities................................................................. 32,660 44,939
---------- ----------
Noncurrent liabilities
Long-term debt.............................................................................. 30,000 30,000
Deferred taxes on income.................................................................... 92 687
Other noncurrent liabilities................................................................ 7,860 7,773
---------- ----------
Total noncurrent liabilities.............................................................. 37,952 38,460
---------- ----------
Contingencies
Shareholders' equity
Common stock, 25,000,000 shares authorized, 7,968,868 and 7,883,627 shares issued
and 7,454,920 and 7,871,939 shares outstanding in 1996 and 1995, respectively............. 41,457 40,679
Retained earnings........................................................................... 53,475 38,965
Minimum pension liability................................................................... (253) (367)
Cumulative translation adjustment........................................................... (38) (26)
---------- ----------
94,641 79,251
Less: treasury stock (503,946 shares, at cost) (11,174) -
---------- ----------
Total shareholders' equity................................................................ 83,467 79,251
---------- ----------
Total liabilities and shareholders' equity..................................................... $ 154,079 $ 162,650
========== ==========
The accompanying notes are an integral part of the
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
Alltrista Corporation and Subsidiaries
(thousands of dollars) Year ended December 31,
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 14,510 $ 11,499 $ 16,128
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization 10,569 12,816 12,612
Deferred taxes on income (1,134) (1,815) (794)
Loss/(gain) on sale of assets 550 (410) 77
Loss on disposal of discontinued operation 1,179 - -
Deferred employee benefits 1,008 746 1,953
Other 63 190 (107)
Unusual item - 2,430 -
Unusual item from discontinued operation - 3,480 -
Changes in working capital components excluding acquisitions:
Accounts receivable 7,803 (1,453) (3,769)
Inventories 12,041 (7,165) (1,399)
Accounts payable (6,195) 891 (343)
Accrued salaries, wages and employee benefits (3,241) (1,242) 866
Other current liabilities (2,334) (2,955) 429
--------- --------- ---------
Net cash provided by operating activities 34,819 17,012 25,653
--------- --------- ---------
Cash flows from financing activities
Proceeds from revolving credit borrowings and notes payable 20,695 20,713 39,000
Principal payments on revolving credit borrowings and notes payable (24,195) (25,713) (48,500)
Debt acquisition costs - (19) (122)
Proceeds from issuance of common stock 3,091 2,417 3,246
Purchase of treasury stock (13,980) - -
--------- --------- ---------
Net cash used in financing activities (14,389) (2,602) (6,376)
--------- --------- ---------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 950 446 86
Additions to property, plant and equipment (10,699) (13,693) (11,703)
Acquisitions of businesses, net of cash acquired (14,633) - (9,974)
Proceeds from sale of certain assets of discontinued operation 14,384 - -
Investment in life insurance contracts (4,308) - -
Other (846) (59) (445)
--------- --------- ---------
Net cash used in investing activities (15,152) (13,306) (22,036)
--------- --------- ---------
Net increase (decrease) in cash 5,278 1,104 (2,759)
Cash and cash equivalents, beginning of year 2,333 1,229 3,988
--------- --------- ---------
Cash and cash equivalents, end of year $ 7,611 $ 2,333 $ 1,229
========= ========= =========
The accompanying notes are an integral part of the
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Changes in Shareholders' Equity
Alltrista Corporation and Subsidiaries
(thousands of dollars and shares)
Minimum Cumulative
Common Stock Treasury Stock Retained Pension Translation
Shares Amount Shares Amount Earnings Liability Adjustment
-------- -------- -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 7,473 $ 34,396 - $ - $ 11,338 $ (612) $ -
Net income - - - - 16,128 - -
Minimum pension liability - - - - - 288 -
Stock options exercised and
stock plan purchases 261 3,759 - - - - -
Cumulative translation adjustment - - - - - - (144)
------- --------- -------- --------- ---------- --------- -----------
Balance, December 31, 1994 7,734 38,155 - - 27,466 (324) (144)
Net income - - - - 11,499 - -
Minimum pension liability - - - - - (43) -
Stock options exercised and
stock plan purchases 150 2,524 - - - - -
Cumulative translation adjustment - - - - - - 118
------- --------- -------- --------- ---------- --------- -----------
Balance, December 31, 1995 7,884 40,679 - - 38,965 (367) (26)
Net income - - - - 14,510 - -
Minimum pension liability - - - - - 114 -
Stock options exercised
and stock plan purchases 85 778 127 2,806 - - -
Cumulative translation adjustment - - - - - - (12)
Purchase of common stock - - (631) (13,980) - - -
------- --------- -------- --------- ---------- --------- -----------
Balance, December 31, 1996 7,969 $ 41,457 (504) $(11,174) $ 53,475 $ (253) $ (38)
======= ========= ======== ========= ========== ========= ===========
The accompanying notes are an integral part of the
consolidated financial statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
Alltrista Corporation and Subsidiaries
SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These consolidated financial statements have been prepared in accordance with
generally accepted accounting principles. The consolidated financial statements
include the accounts of the company and its wholly owned subsidiaries. All
significant intercompany transactions and balances have been eliminated upon
consolidation.
Certain prior year amounts have been reclassified to conform to the current
year presentation, including reclassification of the results of an operation
sold during the year. See Discontinued Operation - Sale of Metal Services
Company Assets note.
The businesses comprising the company have interests in metal, plastics,
consumer products and industrial equipment. See Business Segment Information
note.
Revenue Recognition
Sales are recognized primarily upon shipment of products.
Cash and Cash Equivalents
Temporary investments are considered cash equivalents if original maturities to
the company are three months or less.
Inventories
Inventories are stated at the lower of cost or market, cost being determined on
the first-in, first-out method.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Maintenance and repair costs
are charged to expense as incurred, and expenditures that extend the useful
lives of the assets are capitalized. The company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
in the first quarter of 1996. The implementation of this standard did not impact
the financial position or results of operations of the company.
Depreciation and Amortization
Depreciation is provided on the straight-line method in amounts sufficient to
amortize the cost of the properties over their estimated useful lives (buildings
- - 30 to 50 years; machinery and equipment - 5 to 10 years). Goodwill and other
intangible assets are amortized over the periods benefited, generally up to 20
years.
Taxes on Income
Deferred taxes are provided for differences between the financial statement and
tax bases of assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse.
Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable, notes
payable, accounts payable, and accrued liabilities approximate their fair market
values due to the short-term maturities of these instruments. Investments in
life insurance contracts are carried at surrender value, which approximates fair
market value. The fair market value of long-term debt was estimated using rates
currently available to the company for debt with similar terms and maturities.
Stock Options
The company accounts for the issuance of stock options under the provisions of
Accounting Principles Board No. 25, "Accounting for Stock Issued to Employees."
Accordingly, for the company's stock option plans, no compensation cost is
recognized in the consolidated statement of income. Based on the grant date fair
value of options granted in 1996 and 1995, the impact on net income and earnings
per share for both years would have been insignificant had the company recorded
compensation expense for the options granted.
Environmental Expenditures
Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures which relate to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation are expensed. Liabilities are recorded when environmental
assessments or remediation efforts are probable and the costs can be reasonably
estimated, which generally coincides with the completion of a feasibility study
or the company's commitment to a formal plan of action.
Use of Estimates
Preparation of the consolidated financial statements requires estimates and
assumptions that affect amounts reported and disclosed in the financial
statements and related notes. Actual results could differ from those estimates.
Earnings per Share
Earnings per share are computed by dividing net income for the year by the
weighted average number of shares outstanding and common stock equivalents.
Fully diluted earnings per share computations assume that outstanding dilutive
stock options were exercised.
<PAGE>
PRODUCT LINE ACQUISITION
On March 15, 1996, the company acquired certain assets related to the home food
preservation product line of Kerr Group, Inc. ("Kerr") for approximately $14.6
million and accounted for the acquisition as a purchase. The purchase price was
allocated to the equipment, raw materials inventory and a perpetual license to
use the Kerr trade name, based on their estimated fair values. The license to
use the Kerr trade name is being amortized over 20 years. In addition, the
company assumed the operating lease at Kerr's Jackson, Tennessee manufacturing
facility. During the third quarter, the company completed a facility assessment
and announced its intention to close the Jackson facility and consolidate
operations in its Muncie, Indiana facility. As a result of this decision,
acquisition costs of $2.6 million have been recorded in "Other Current
Liabilities" for severance and the estimated net costs to close the Jackson
facility, resulting in additional goodwill. Concurrent with the purchase, the
company and Kerr entered into a non-exclusive Sales Agent Agreement whereby the
company agreed to sell certain pre-closing inventory retained by Kerr. The
company's duties under the Sales Agent Agreement were completed during 1996. The
impact of including the financial results of Kerr in a pro forma presentation
for 1995 and the first quarter of 1996 would not have been material.
DISCONTINUED OPERATION -- 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 $14.4 million after certain
transaction costs. The company retained all accounts receivable and essentially
all inventory, as well as substantially all liabilities accrued as of April 26,
1996. Proceeds from the sale were used to reduce outstanding borrowings. The
company entered into a non-exclusive sales agreement whereby U.S. Can agreed to
sell the retained inventory. On June 28, 1996, the two companies entered into an
agreement whereby U.S. Can purchased the remaining inventory for approximately
$9 million. In addition to the $14.4 million sale proceeds, the company received
approximately $13 million during 1996 from the sale of the retained inventory
and the collection of the accounts receivable retained less amounts required to
settle the accounts payable and other liabilities.
The disposal of the Metal Services Company assets has been accounted for as
a discontinued operation in the accompanying statement of income. The prior
years' statements of income have been restated to conform to the current year
presentation. The net assets of Metal Services Company are included in the
balance sheet at December 31, 1995. The combined effect of Metal Services' 1996
results from operations, the gain on the sale of the assets and 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 a $.3 million
curtailment gain for postretirement benefits is a loss of $.7 million, net of
tax. Sales from this operation were $79.7 and $88.4 in 1995 and 1994
respectively, and $18.0 million up to the Measurement date in 1996.
BUSINESS SEGMENT INFORMATION
In 1996, the company redefined its businesses from three to two distinct
segments: industrial components and food containers. Unimark Plastics and
Industrial Plastics, previously included in the company's plastic products
segment, were combined with Zinc Products and LumenX to form the industrial
components segment. Previously reported segment information was reclassified to
correspond with this presentation.
The industrial components segment includes Zinc Products, Unimark Plastics,
Industrial Plastics and LumenX. This segment provides cast zinc strip and
fabricated zinc products, primarily zinc battery cans and coinage. The U.S. Mint
is the primary purchaser of coinage and, on the basis of net sales, is the
largest customer of the company. The industrial components segment also produces
injection molded plastic products used in medical, pharmaceutical and consumer
products, thermoformed plastic parts for appliances, and packaging. Industrial
Plastics' sales are made primarily to one customer. This segment also supplies
inspection systems used primarily in the tire, packaging, and automotive
industries.
The food containers segment includes Consumer Products and Plastic
Packaging and produces multi-layer plastic sheet and formed containers used in
food packaging, and also markets a line of home food preservation products,
including Ball, Kerr, and Bernardin brand home canning jars, home canning jar
closures, and related food products, which are distributed through a wide
variety of retail outlets. Under the terms of a property transfer agreement, the
company has the right to use the B script trademark in a certain scope of
application. In the event of a change of control of the company not approved
prior to such change by a majority of the members of the board of directors of
the company, the previous owner has the option to require the retransfer of the
right to use the trademark.
The company's major customers and principal facilities are located within
the United States, Canada and Puerto Rico.
<PAGE>
<TABLE>
<CAPTION>
(thousands of dollars) 1996 1995* 1994*
------------ ---------- -----------
<S> <C> <C> <C>
Net sales:
Industrial components:
Zinc Products............................................................ $ 57,501 $ 56,328 $ 57,767
LumenX................................................................... 21,816 19,801 20,254
Unimark Plastics......................................................... 33,105 32,505 30,634
Industrial Plastics...................................................... 16,850 16,898 15,483
------------ ---------- -----------
Total industrial components.......................................... 129,272 125,532 124,138
------------ ---------- -----------
Food containers:
Consumer Products........................................................ 57,096 51,792 43,539
Plastic Packaging........................................................ 43,946 44,134 40,102
------------ ---------- -----------
Total food containers................................................ 101,042 95,926 83,641
------------ ---------- -----------
Total net sales.......................................................... $ 230,314 $ 221,458 $ 207,779
============ ========== ===========
Operating earnings:
Industrial components (1).................................................... $ 17,819 $ 15,315 $ 18,345
Food containers.............................................................. 11,066 9,939 9,895
Unallocated expenses (2)..................................................... (1,114) (1,144) (1,588)
------------ ----------- -----------
Total operating earnings.................................................. 27,771 24,110 26,652
Interest expense, net........................................................ (2,571) (3,342) (2,700)
Other expense .............................................................. - - (400)
------------ ----------- -----------
Income from continuing operations before taxes............................ $ 25,200 $ 20,768 $ 23,552
============ =========== ===========
Assets employed in operations:
Industrial components........................................................ $ 66,550 $ 65,705 $ 59,380
Food containers.............................................................. 70,224 50,599 49,859
------------ ----------- -----------
Total assets employed in operations....................................... 136,774 116,304 109,239
Discontinued operation........................................................ - 39,262 42,395
Corporate (3)................................................................. 13,993 4,235 2,757
Current deferred taxes........................................................ 3,312 2,849 2,334
------------ ----------- -----------
Total assets.............................................................. $ 154,079 $ 162,650 $ 156,725
============ =========== ===========
Capital expenditures:
Industrial components........................................................ $ 8,536 $ 10,194 $ 7,507
Food containers (4).......................................................... 16,087 1,370 11,812
Discontinued operation....................................................... 337 2,095 2,164
Corporate.................................................................... 372 34 194
------------ ----------- -----------
Total capital expenditures................................................ $ 25,332 $ 13,693 $ 21,677
============ =========== ===========
Depreciation and amortization:
Industrial components........................................................ $ 6,024 $ 5,891 $ 5,285
Food containers.............................................................. 3,832 3,627 3,893
Discontinued operation....................................................... 499 3,128 3,314
Corporate ................................................................. 214 170 120
------------ ----------- ------------
Total depreciation and amortization....................................... $ 10,569 $ 12,816 $ 12,612
============ =========== ============
<FN>
* Amounts have been restated to reflect the redefined business segments and the
discontinued operation.
(1) Operating earnings for 1995 include a pre-tax provision of $2.4 million to
write-off assets related to a discontinued product development project in
the Zinc Products company.
(2) Unallocated expenses are general and administrative corporate expenses
previously absorbed by the discontinued operation.
(3) Corporate assets include cash and cash equivalents, amounts related to
employee benefit plans and corporate facilities and equipment.
(4) Capital expenditures for 1996 include the purchase of the Kerr brand home
food preservation product line and expenditures for 1994 include the
purchase of Bernardin Ltd.
and the Fruit-Fresh brand fruit protector.
</FN>
</TABLE>
<PAGE>
INVENTORIES
Inventories were comprised of the following at December 31:
(thousands of dollars) 1996 1995
Raw materials and supplies.............. $ 9,894 $ 28,373
Work in process and finished goods...... 32,368 26,202
-------- --------
Total inventories.................... $ 42,262 $ 54,575
======== ========
DEBT AND INTEREST
The company has a revolving credit agreement with a group of banks whereby the
company can borrow up to $50 million through March 31, 2000, when all borrowings
mature. The agreement may be terminated by the company with three days notice or
extended to March 31, 2002. Interest on the borrowings is based upon fixed
increments over the adjusted London Interbank Offered Rate ("LIBOR") or the
agent bank's alternate borrowing rate as defined in the agreement. The agreement
also requires the payment of commitment fees on the unused balance. At December
31, 1996 and 1995, no borrowings were outstanding under this agreement. The
company also has available from various banks $94 million in committed and
uncommitted short-term credit lines of which no borrowings were outstanding at
December 31, 1996.
In 1994, the company borrowed $30 million under a private placement
long-term financing agreement with a fixed interest rate of 7.8%. Maturities are
$4.3 million per year for seven years beginning December 1998. Concurrent with
this borrowing, the company entered into a three-year interest rate swap
agreement with two counterparties which effectively converted the $30 million
debt to LIBOR-based floating rate debt, with the interest rate reset every six
months. In May 1995, the company terminated the swap agreement. This transaction
resulted in a gain of $.5 million which is being amortized over the original
term of the swap and effectively fixes the company's interest rate on the
long-term debt through December 1997 at 7.19%. The fair market value of the
company's long-term debt at December 31, 1996 is estimated to be $31.4 million.
The company's debt agreements contain certain guarantees and financial
covenants including current ratio requirements, interest coverage, minimum
equity and maximum financial leverage requirements.
Interest paid on the company's borrowings during the years ended December
31, 1996, 1995, and 1994 was $3.0, $3.3, and $2.7 million, respectively.
UNUSUAL ITEM
Due to greater than expected market acceptance of plastic and composite capsules
in the wine industry and certain performance limitations of a zinc capsule,
during 1995, the company terminated a project to develop a zinc capsule for the
wine industry. As a result of this decision, the company recorded a pretax
charge of $2.4 million to write down certain project-related assets to their
estimated net realizable value.
TAXES ON INCOME
The components of the provision for income taxes attributable to continuing
operations were as follows for the years ended December 31:
(thousands of dollars) 1996 1995 1994
Current income tax expense:
U.S. federal................ $ 8,658 $ 7,189 $ 8,085
State, local and other...... 2,471 1,914 1,812
-------- -------- --------
Total current income
tax expense............. 11,129 9,103 9,897
-------- -------- --------
Deferred income tax benefit:
U.S. federal................ (944) (633) (290)
State, local and other...... (206) (230) (67)
-------- -------- --------
Total deferred income
tax benefit............. (1,150) (863) (357)
-------- -------- --------
Total provision for income taxes $ 9,979 $ 8,240 $ 9,540
======== ======== ========
Deferred tax liabilities (assets) are comprised of the following at
December 31:
(thousands of dollars) 1996 1995
--------- --------
Depreciation........................... $ 2,311 $ 3,902
Other.................................. 631 511
--------- --------
Gross deferred tax liabilities...... 2,942 4,413
--------- --------
Accounts receivable allowances......... (594) (558)
Inventory valuation.................... (962) (767)
Accrued vacation....................... (576) (761)
Postretirement benefit obligation...... (694) (739)
Employee benefits/compensation......... (2,259) (3,037)
Environmental reserve.................. (256) (384)
Other.................................. (821) (329)
-------- --------
Gross deferred tax assets........... (6,162) (6,575)
-------- --------
Net deferred tax asset................. $(3,220) $(2,162)
======== ========
At December 31, 1996 and 1995, there were no valuation allowances for
deferred tax assets.
<PAGE>
The difference between the federal statutory income tax rate and the
company's effective income tax rate as a percentage of income from continuing
operations can be reconciled as follows:
1996 1995 1994
------ ------ ------
Federal statutory tax rate...... 35.0% 35.0% 35.0%
Increase (decrease) in rates
resulting from:
State and local taxes, net. 4.7 4.7 5.0
Amortization of intangibles .4 .6 .4
Other...................... (.5) (.6) .1
------ ------ ------
Effective income tax rate....... 39.6% 39.7% 40.5%
====== ====== ======
The difference between the effective income tax rate for discontinued
operations of 39.7% in 1996, 38.4% in 1995 and 40.5% in 1994 and the federal
statutory income tax rate of 35% in each of these years results from state
income taxes.
Total income tax payments made by the company during the years ended
December 31, 1996, 1995 and 1994 were $10.1, $11.9, and $11.3 million,
respectively.
RETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS
All active employees other than those represented by bargaining units
participate in a defined contribution plan ("Retirement Plan"). The company
makes contributions to the Retirement Plan based on age and on length of
service. In addition, the company matches 100% of employee contributions of up
to 1% of base compensation and 50% of additional employee contributions up to a
maximum company match of 3%, subject to statutory limitations. The company's
contributions to the Retirement Plan were $1.7, $1.9, and $1.7 million,
respectively, in the years ended December 31, 1996, 1995, and 1994.
For all active hourly employees at locations represented by bargaining
units and the former hourly employees of the Metal Services division, the
company maintains a defined benefit pension plan. Plan benefits are based upon
fixed rates for each year of service. Plan assets consist primarily of fixed
income securities and common stocks. The company's funding policy is to
contribute at least the statutorily required amount.
The components of net periodic pension expense for the years ended December
31, 1996, 1995, and 1994 are as follows:
(thousands of dollars) 1996 1995 1994
Service cost of benefits earned
during the period........... $ 313 $ 307 $ 304
Interest cost of projected
benefit obligation.......... 630 558 479
Investment (gain) loss
on plan assets.............. (835) (692) 413
Net amortization and deferral.. 421 433 (704)
------- ------ ------
Net periodic pension expense $ 529 $ 606 $ 492
======= ====== ======
The following table summarizes the funded status of the plan as of December
31, 1996 and 1995:
(thousands of dollars) 1996 1995
Actuarial present value of benefit obligations:
Vested............................... $ 7,658 $ 6,644
Non vested........................... 1,297 1,214
-------- --------
Accumulated benefit obligation....... 8,955 7,858
-------- --------
Projected benefit obligation......... 9,183 8,389
Plan assets at fair value............ 7,989 5,412
-------- --------
Funded status........................ 1,194 2,977
Unrecognized net transitional asset..... 36 45
Unrecognized prior service cost......... (566) (1,238)
Unrecognized net loss................... (685) (1,187)
Additional minimum liability............ 988 1,849
-------- --------
Accrued pension liability............ $ 967 $ 2,446
======== ========
In accordance with the provisions of SFAS 87, "Employer's Accounting for
Pensions," the company recorded an additional minimum liability of $1.0 and $1.8
million at December 31, 1996 and 1995, representing the excess of the unfunded
accumulated benefit obligation over the accrued pension cost. The additional
liability has been offset by intangible assets to the extent of previously
unrecognized prior service cost, with the balance, net of the related deferred
tax benefit of $169,000 and $246,000 for 1996 and 1995, recorded as a separate
reduction of shareholders' equity.
The actuarial assumptions used to compute the funded status of the plan
include a discount rate of 7.5% and an expected long-term rate of return on
assets of 9.0% in both 1996 and 1995.
<PAGE>
The company also provides certain postretirement medical and life insurance
benefits for substantially all of its non-union employees. Most employees not
covered by the plan are covered by collective bargaining agreements, under which
the company contributes to multi-employer health and welfare plans.
The components of net periodic postretirement benefit expense for the years
ended December 31, 1996, 1995, and 1994 are as follows:
(thousands of dollars) 1996 1995 1994
------ ------ ------
Service cost of benefit earned...... $ 72 $ 66 $ 106
Interest cost on liability.......... 118 120 125
Net amortization and deferral....... 4 (12) 9
------ ------ ------
Net postretirement benefit cost.. $ 194 $ 174 $ 240
====== ====== ======
The status of the company's unfunded postretirement benefit obligation at
December 31, 1996 and 1995 follows:
(thousands of dollars) 1996 1995
-------- --------
Actuarial present value of accumulated postretirement benefit obligation:
Fully eligible active plan participants $ 549 $ 730
Other active plan participants..... 617 895
Retirees........................... 353 328
-------- --------
Accumulated postretirement
benefit obligation................... $ 1,519 $ 1,953
Unrecognized net gain................... 312 122
Unrecognized prior service cost......... (63) (192)
-------- --------
Accrued postretirement benefit cost $ 1,768 $ 1,883
======== ========
The assumed discount rate used to measure the Accumulated postretirement
benefit obligation ("APBO") was changed from 8.0% as of December 31, 1995 to
7.5% as of December 31, 1996. This change in assumption resulted in an
immaterial increase in the APBO. Increases in health care costs would not impact
the APBO or the annual service and interest costs recognized, except for one of
the company's facilities, as benefits under the medical plan consist of a
defined dollar monthly subsidy toward the retiree's purchase of medical
insurance. Due to the small number of employees not receiving a defined dollar
monthly subsidy, the effect of a one-percent increase in the health care cost
trend rate on the APBO and the annual service and interest costs is immaterial.
The company has a deferred compensation plan that permits eligible
employees to defer a specified portion of their compensation. The deferred
compensation earns rates of return as specified in the plan. As of year end 1996
and 1995, the company had accrued $4.2 million and $3.9 million, respectively,
for its obligations under this plan. Interest expense on this obligation was $.3
million in 1996 and 1995 and $.2 million in 1994. To effectively fund this
obligation, in December 1996 the company purchased variable rate life insurance
contracts. Proceeds from the insurance contracts are payable to the company upon
the death of the participants. The cash surrender value of these contracts
included in Other Assets was $4.3 million as of year end 1996.
STOCK PLANS
The company maintains a stock option plan for key employees, for which it has
reserved 1,200,000 shares of the company's common stock. It also maintains a
stock option plan, for which it has reserved 10,000 shares of the company's
common stock, for the issuance of stock options to nonemployee directors of the
company. The stock option price under both plans will not be less than the fair
market value of the company's common stock on the date of grant. Payment must be
at the time of exercise in cash or with shares of stock owned by the option
holder which are valued at fair market value on the exercise date. Options under
the employee plan terminate ten years from date of grant and are exercisable in
four equal installments commencing one year from grant. Options under the
nonemployee directors plan terminate ten years from date of grant and are
exercisable one year from the grant date.
<PAGE>
<TABLE>
<CAPTION>
A summary of stock option activity for the years ended December 31, 1996 and
1995 follows:
1996 1995
------------------------------------------- -----------------------------------------
Weighted Avg. Weighted Avg.
Shares Option Price Price Range Shares Option Price Price Range
--------- ------------- -------------- ------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of year 596,128 13.87 10.70 - 24.125 629,063 12.67 9.43 - 19.63
New options granted 70,775 21.25 21.25 69,475 22.29 22.25 - 24.125
Exercised (155,451) 12.37 10.70 - 22.25 (76,940) 11.98 9.43 - 19.63
Canceled (38,378) 18.91 10.70 - 22.25 (25,470) 16.27 13.09 - 22.25
--------- --------
Outstanding at end of year 473,074 15.05 10.70 - 24.125 596,128 13.87 10.70 - 24.125
Exercisable at end of year 325,401 12.78 10.70 - 24.125 415,425 12.01 10.70 - 19.63
Reserved for future grants 186,205 - - 218,602 - -
</TABLE>
<TABLE>
<CAPTION>
Significant option groups outstanding at December 31, 1996 and related weighted
average price and life information follows:
Options Weighted average Options Weighted average Weighted average
Exercise price outstanding exercise price exercisable exercise price remaining life (years)
-------------- ----------- ---------------- ----------- ---------------- ----------------------
<C> <C> <C> <C> <C> <C>
18.75 - 24.125 160,887 21.14 36,414 20.67 8
13.09 - 15.14 123,728 13.21 100,528 13.20 6
10.70 - 12.03 188,459 11.06 188,459 11.06 3
</TABLE>
The company also maintains a restricted stock plan for key employees, for
which it has reserved 50,000 shares of the company's common stock. Restrictions
under the plan lapse at a rate of 20% per year commencing one year from grant.
Restricted stock equaling 24,610 shares was available for grant at December 31,
1996.
In 1993, the company established an employee stock purchase plan, whereby
the company contributes 20% of up to $500 of each participating employee's
monthly payroll deduction. The company contributed $206,000, $267,000, and
$241,000 for the plan in 1996, 1995 and 1994, respectively.
During 1996, the company's board of directors authorized the repurchase of
up to 630,000 shares of the company's common stock. The company completed the
repurchase of those shares in the fourth quarter of 1996 at a cost of $14.0
million. Acquired shares are being used to fund employee stock plans and for
general corporate uses.
<PAGE>
CONTINGENCIES
The company is involved in various legal disputes in the ordinary course of
business. In addition, the Environmental Protection Agency has designated the
company as a potentially responsible party, along with numerous other companies,
for the clean up of several hazardous waste sites. Information at this time does
not indicate that disposition of any of the legal or environmental disputes the
company is currently involved in will have a material, adverse effect upon the
financial condition, results of operations, cash flows or competitive position
of the company.
QUARTERLY STOCK PRICES (UNAUDITED)
Quarterly sales prices for the company's common stock, as reported on the
composite tape, were as follows:
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
1996
High............. 24 24 1/8 24 1/4 26 1/8
Low.............. 18 21 19 3/4 21 1/4
1995
High............. 24 1/2 24 1/2 21 1/4 19 3/4
Low.............. 19 1/4 19 1/4 18 1/2 17 3/4
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
First Second Third Fourth
(thousands of dollars except per share amounts) Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
1996
Net sales........................................................ $51,128 $69,398 $65,763 $44,025 $230,314
Gross profit..................................................... 13,576 22,755 20,116 10,992 67,439
Net income from continuing operations............................ 3,090 5,904 4,176 2,051 15,221
Net income....................................................... 3,357 5,637 4,176 1,340 14,510
Primary earnings per share:
Income from continuing operations............................. .38 .73 .53 .27 1.93
Net income.................................................... .42 .70 .53 .18 1.84
Fully diluted earnings per share:
Income from continuing operations............................. .38 .73 .53 .27 1.92
Net income.................................................... $ .41 $ .70 $ .53 $ .18 $ 1.83
1995
Net sales........................................................ $51,357 $66,614 $60,123 $43,364 $221,458
Gross profit..................................................... 12,800 19,889 17,723 9,384 59,796
Net income from continuing operations............................ 2,406 5,047 3,099 1,976 12,528
Net income (loss)................................................ 2,852 5,571 3,355 (279) 11,499
Primary earnings per share:
Income from continuing operations............................. .30 .63 .39 .25 1.57
Net income (loss)............................................. .36 .69 .42 (.03) 1.44
Fully diluted earnings per share:
Income from continuing operations............................. .30 .63 .39 .25 1.56
Net income (loss)............................................. $ .36 $ .69 $ .42 $ (.03) $ 1.44
1994
Net sales........................................................ $44,052 $61,971 $59,508 $42,248 $207,779
Gross profit..................................................... 11,622 19,530 18,474 10,563 60,189
Net income from continuing operations............................ 2,183 5,195 5,164 1,470 14,012
Net income....................................................... 2,636 5,967 5,895 1,630 16,128
Earnings per share:
Income from continuing operations, primary and fully diluted.. .28 .67 .66 .19 1.80
Net income, primary and fully diluted......................... $ .34 $ .77 $ .75 $ .21 $ 2.07
</TABLE>
Earnings per share calculations for each quarter are based on the weighted
average number of shares outstanding for each period, and the sum of the
quarterly amounts may not necessarily equal the annual earnings per share
amounts. In addition, the dilutive effect of outstanding stock options has been
included in primary earnings per share in each year. Quarterly results have been
restated to reflect the discontinued operation.
<PAGE>
<TABLE>
<CAPTION>
FIVE-YEAR REVIEW OF SELECTED FINANCIAL DATA
(thousands of dollars, except per share amounts) 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Statement of Income Data
Net sales.............................................. $ 230,314 $ 221,458 $ 207,779 $ 193,260 $ 184,940
Earnings before interest and taxes (a)(b).............. 27,771 24,110 26,252 24,643 17,181
Income from continuing operations...................... 15,221 12,528 14,012 12,463 6 ,493
Gain (loss) from discontinued operation................ (711) (1,029) 2,116 981 (287)
Effect of accounting change (net of income taxes)...... - - - (714) -
---------- ---------- ---------- ---------- ----------
Net income(a)(b)....................................... $ 14,510 $ 11,499 $ 16,128 $ 12,730 $ 6,206
========== ========== ========== ========== ==========
Primary earnings per share:(c)
Income from continuing operations................... $ 1.93 $ 1.57 $ 1.80 $ 1.65 $ .89
Gain (loss) from discontinued operation............. (.09) (.13) .27 .13 (.04)
Effect of accounting change (net of income taxes)... - - - (.09) -
---------- ---------- ---------- ---------- ----------
$ 1.84 $ 1.44 $ 2.07 $ 1.69 $ .85
========== ========== ========== ========== ==========
Fully diluted earnings per share:(c)
Income from continuing operations................... $ 1.92 $ 1.56 $ 1.80 $ 1.65 $ .89
Gain (loss) from discontinued operation............. (.09) (.12) .27 .12 (.04)
Effect of accounting change (net of income taxes)... - - - (.09) -
---------- ---------- ---------- ---------- ----------
$ 1.83 $ 1.44 $ 2.07 $ 1.68 $ .85
========== ========== ========== ========== ==========
Balance Sheet Data (at end of year)
Total assets........................................... $ 154,079 $ 162,650 $ 156,725 $ 143,107 $ 137,475
Property, plant and equipment, net..................... 45,660 56,083 59,040 58,693 60,924
Long-term debt......................................... 30,000 30,000 30,000 35,000 75,000
<FN>
(a)The year ended December 31, 1996 includes a $2.4 million pretax provision to
write-off assets related to a discontinued product development project in the
Zinc Products company.
(b)The year ended December 31, 1992 includes a $4.9 million pretax provision for
consolidation costs related to the closure of one Plastic Packaging facility.
(c)Earnings per share for the periods prior to 1993 are computed by dividing net
income for the periods by 7,291,208, the number of Alltrista shares
distributed to shareholders on April 2, 1993.
</FN>
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Alltrista Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of changes in shareholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Alltrista Corporation and its subsidiaries at December 31, 1996 and 1995, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
Indianapolis, Indiana
January 31, 1997
<PAGE>
DIRECTORS, CORPORATE OFFICERS AND DIVISION PRESIDENTS
ALLTRISTA CORPORATION
DIRECTORS
Thomas B. Clark
President and Chief Executive Officer
Alltrista Corporation
Muncie, Indiana
William A. Foley(1) (3)
Chairman, President and Chief Executive Officer
LESCO, Inc.
Rocky River, Ohio
Robert E. Fowler, Jr.(2) (3)
President and Chief Operating Officer
IMC Global, Inc.
Northbrook, Illinois
Richard L. Molen(2) (3)
Chairman, President and Chief Executive Officer
Huffy Corporation
Miamisburg, Ohio
William L. Peterson(1) (2)
Chairman of the Board
Retired President and Chief Executive Officer
Alltrista Corporation
Muncie, Indiana
Patrick W. Rooney(1) (3)
Chairman, President and Chief Executive Officer
Cooper Tire & Rubber Company
Findlay, Ohio
David L. Swift(1) (2)
Retired Chairman, President and Chief Executive Officer
Acme-Cleveland Corporation
Cleveland, Ohio
(1) Audit Committee, (2) Executive Compensation Committee,
(3) Nominating Committee
CORPORATE OFFICERS
Thomas B. Clark (20)
President and Chief Executive Officer
Jerry T. McDowell (26)
Senior Vice President and Chief Operating Officer
William L. Skinner (7)
Senior Vice President, Administration and Corporate Development
Kevin D. Bower (4)
Vice President of Finance and Controller
Larry D. Miller (17)
Vice President, Communications and Investor Relations
Gordon R. Stagge (35)
Vice President and Treasurer
Garnet E. King (15)
Corporate Secretary
Division Presidents
Kyle L. DeJaeger (21)
Industrial Plastics Company
Albert H. Giles (25)
Zinc Products Company
Charles M. Gilmore (3)
LumenX Company
Charles W. Orth (26)
Unimark Plastics Company
Michael D. Patrick (4)
Consumer Products Company
Timothy D. Sigley (2)
Plastic Packaging Company
(Years of service)
<PAGE>
CORPORATE INFORMATION
ALLTRISTA CORPORATION
CORPORATE HEADQUARTERS
Alltrista Corporation
345 South High Street, Suite 200
Muncie, IN 47305-2398
Mailing address is P.O. Box 5004, Muncie, IN 47307-5004
Telephone: 765.281.5000
Fax: 765.281.5400
TRANSFER AGENT AND REGISTRAR First Chicago Trust Company of New York P.O. Box
2500, Jersey City, NJ 07303-2500
Inquiries about stock holdings, transfer requirements and address changes should
be directed to the First Chicago address or by telephone at 1.800.446.2617.
DUPLICATE COPIES
If you currently receive duplicate copies of annual or quarterly reports, extras
may be eliminated by requesting that only one copy be sent. Send labels or
information to the transfer agent, indicating which name you wish to keep on the
list and which names should be deleted. This change will not affect proxy
mailings. The address to use is First Chicago Trust Company of New York, P.O.
Box 2500, Jersey City, NJ 07303-2500.
FORM 10-K
A copy of the company's Form 10-K (annual report filed with the Securities and
Exchange Commission) will be sent to any stockholder upon request in writing to
Garnet E. King, Corporate Secretary, Alltrista Corporation, P.O.
Box 5004, Muncie, IN 47307-5004.
STOCK EXCHANGE LISTING
Alltrista Corporation stock is traded on the Nasdaq National Market. The symbol
is JARS. Registered market makers as of December 31, 1996, were Robert W. Baird
& Co., Inc.; Herzog, Heine, Geduld, Inc.; Mesirow & Co., Inc.; NatCity
Investments Inc. and Troster Singer Corp.
ANNUAL MEETING
Alltrista Corporation's 1997 annual meeting will be held solely to report the
results of voting on those matters listed in the proxy statement sent to all
shareholders. There will be no other business transacted, and it is not
anticipated that any directors or senior executives will be in attendance. The
meeting to count votes will be at 8 a.m. (EST) on May 14, 1997, in the corporate
offices, Suite 200 at 345 South High Street in Muncie. A written report of the
vote will be mailed to shareholders.
Since becoming an independent company in 1993, shareholder attendance at the
annual meeting has declined steadily. In 1996 only 33 individuals attended who
were not employees, relatives of employees or company suppliers. These
shareholders represented one tenth of one percent of our total shares
outstanding. Considering the expense and top management time it takes to conduct
a formal meeting with presentations by senior officers and others, it will be in
the best interest of shareholders to have management devote its time and
attention to increasing shareholder value, rather than reiterate information
appearing in this annual report and other shareholder communications.
Alltrista will continue to report financial results and our outlook for the
future to shareholders on a quarterly basis. In addition, we have a world wide
web site where all news releases and SEC documents are posted as they are
released. Finally, we encourage shareholders to write or communicate with us at
any time. Addresses are listed below.
COMPANY CONTACTS
For shareholder records questions write Garnet E. King, Corporate Secretary,
Alltrista Corporation, P.O. Box 5004, Muncie, IN 47307-5004, call her at
1.800.428.8150 or contact her by e-mail at [email protected].
For information or assistance about stock holdings, transfer requirements and
address changes, or duplicate mailings, contact the transfer agent and registrar
at the addresses listed under transfer agent and registrar above.
For any other information about the company, shareholders, analysts,
institutional investors or media representatives should contact Larry D. Miller,
Vice President, Communications and Investor Relations, Alltrista Corporation,
P.O. Box 5004, Muncie, IN 47307-5004, call him at 1.800.428.8150 or contact him
by e-mail at [email protected].
Information about the company and its operating business units, as well as news
releases and SEC documents, are on the company's world wide web site, which is
at www.alltrista.com.
<PAGE>
EQUAL OPPORTUNITY
Alltrista Corporation is an equal opportunity employer.
TRADEMARKS
Bernardin(TM) and Fruit-Fresh(R) are trademarks of Alltrista Corporation.
Ball(R) and [GRAPHIC OMITTED] are trademarks of Ball Corporation, under limited
license to Alltrista Corporation; Kerr(R) is a trademark of Kerr Group, Inc.,
under limited license to Alltrista Corporation; EVA(R) is a trademark of Stern
Stewart & Co.; Snack Pack(R) is a trademark of Hunt-Wesson, Inc.
FORWARD-LOOKING STATEMENTS
Under the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995, the company cautions investors that any forward-looking statement or
projections made by the company, including those made in this document, are
subject to risks and uncertainties that may cause actual results to differ
materially from those projected. The company's operations may be influenced by
weather effects on home canning; U.S. Mint/Federal Reserve requirements for the
U.S. penny; competition and/or substitute products; economic factors, such as
changes in inflation and interest rates; and legal factors, including
environmental and product liability matters.
<TABLE>
<CAPTION>
Exhibit 21.1
ALLTRISTA CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF ALLTRISTA CORPORATION
COMPANY SHAREHOLDER STATE OF INCORPORATION/
ORGANIZATION
- ----------------------- ----------------------- -----------------------
<S> <C> <C>
Alltrista Unimark, Inc. Alltrista Corporation Indiana
Bernardin Ltd. Alltrista Limited Canada
Alltrista Limited Alltrista Corporation Canada
Alltrista Newco Corporation Alltrista Corporation Indiana
Quoin Corporation Alltrista Corporation Delaware
Hearthmark, Inc.* Quoin Corporation Indiana
Alltrista Plastics
Corporation** Quoin Corporation Indiana
Alltrista Zinc
Products, L.P.*** Quoin Corporation(LP 99%) Indiana
Alltrista Newco Corporation(GP 1%)
<FN>
* (DBA) Alltrista Consumer Products Company
** (DBA) Alltrista Plastic Packaging Company
Alltrista Industrial Plastics Company
Alltrista Unimark Plastics Company
*** (DBA) Alltrista Zinc Products Company
</FN>
</TABLE>
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in each Registration
Statement on Form S-8 (Registration Nos. 33-60622, 33-60624, and 33-60730) of
Alltrista Corporation of our report dated January 31, 1997 appearing on page 26
of the 1996 Annual Report to Shareholders which is incorporated in this Annual
Report on Form 10-K. We also consent to the incorporation by reference of our
report on the Financial Statement Schedule, which appears on page 15.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
Indianapolis, Indiana
March 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME FOUND IN
THE COMPANY'S FORM 10-K FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 7611
<SECURITIES> 0
<RECEIVABLES> 27621
<ALLOWANCES> 0
<INVENTORY> 42262
<CURRENT-ASSETS> 81532
<PP&E> 145135
<DEPRECIATION> 99475
<TOTAL-ASSETS> 154079
<CURRENT-LIABILITIES> 32660
<BONDS> 30000
0
0
<COMMON> 41457
<OTHER-SE> 42010
<TOTAL-LIABILITY-AND-EQUITY> 154079
<SALES> 230314
<TOTAL-REVENUES> 230314
<CGS> 163435
<TOTAL-COSTS> 202543
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2571
<INCOME-PRETAX> 25200
<INCOME-TAX> 9979
<INCOME-CONTINUING> 15221
<DISCONTINUED> (711)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14510
<EPS-PRIMARY> 1.84
<EPS-DILUTED> 1.83
</TABLE>
