UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1998
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Alltrista Corporation
Indiana 0-21052 35-1828377
State of Incorporation Commission File Number IRS Identification Number
345 South High Street, Suite 200, P. O. Box 5004
Muncie, Indiana 47307-5004
Registrant's telephone number, including area code: (765) 281-5000
--------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 26, 1998
- ------------------ --------------------------------
Common Stock,
without par value 7,326,036 shares
This document contains 10 pages. The exhibit index is on page 10 of 10.
Page 1 of 10
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the period ended March 29, 1998
INDEX
Page Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Unaudited Condensed Consolidated Statements of Income
for the three month periods ended
March 29, 1998 and March 30, 1997 3
Unaudited Condensed Consolidated Balance Sheets at
March 29, 1998 and December 31, 1997 4
Unaudited Condensed Consolidated Statements of Cash
Flows for the three month periods ended
March 29, 1998 and March 30, 1997 5
Notes to Unaudited Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 8
PART II. OTHER INFORMATION 9
Page 2 of 10
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ALLTRISTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(thousands except per share amounts)
Three month period ended
March 29, March 30,
1998 1997
---------- ----------
<S> <C> <C>
Net sales $46,370 $45,642
---------- ----------
Costs and expenses
Cost of sales 35,416 34,798
Selling, general and administrative expenses 7,882 7,938
---------- ----------
Operating earnings 3,072 2,906
Interest expense, net (401) (609)
---------- ----------
Income from operations before taxes 2,671 2,297
Provision for income taxes (1,015) (864)
---------- ----------
Net income $1,656 $1,433
========== ==========
Net income per share of common stock:
Basic earnings per share $ .23 $ .19
========== ==========
Diluted earnings per share $ .22 $ .19
========== ==========
Weighted average shares outstanding:
Basic 7,360 7,471
Diluted 7,500 7,614
See accompanying notes to unaudited condensed consolidated
financial statements.
</TABLE>
Page 3 of 10
<PAGE>
<TABLE>
<CAPTION>
ALLTRISTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
March 29, December 31,
1997 1998
--------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $10,730 $26,641
Accounts receivable, net 29,156 23,646
Inventories
Raw materials and supplies 10,770 9,410
Work in process and finished goods 37,802 23,773
Deferred taxes on income 4,243 4,243
Prepaid expenses 1,670 1,511
----------- -----------
Total current assets 94,371 89,224
----------- -----------
Property, plant and equipment, at cost 149,267 149,904
Accumulated depreciation (104,617) (104,894)
----------- -----------
44,650 45,010
Goodwill, net 24,604 24,947
Other assets 8,311 7,396
----------- -----------
Total assets $171,936 $166,577
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $4,286 $4,286
Notes payable 2,788 -
Accounts payable 25,341 18,424
Other current liabilities 10,403 12,755
----------- -----------
Total current liabilities 42,818 35,465
----------- -----------
Noncurrent liabilities
Long-term debt 25,714 25,714
Other noncurrent liabilities 8,330 8,089
----------- -----------
Total noncurrent liabilities 34,044 33,803
----------- -----------
Contingencies
Shareholders' equity:
Common stock 40,548 40,779
Retained earnings 69,968 68,312
Cumulative translation adjustment (255) (303)
----------- -----------
110,261 108,788
Less treasury stock (15,187) (11,479)
----------- -----------
Total shareholders' equity 95,074 97,309
----------- -----------
Total liabilities and shareholders' equity $171,936 $166,577
=========== ===========
See accompanying notes to unaudited condensed consolidated
financial statements.
</TABLE>
Page 4 of 10
<PAGE>
<TABLE>
<CAPTION>
ALLTRISTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
Three month period ended
March 29, March 30,
1998 1997
---------- ---------
<S> <C> <C>
Cash flows from operating activities
Net income $1,656 $1,433
Reconciliation of net income to net cash used in
operating activities:
Depreciation and amortization 2,564 2,523
Deferred employee benefits 250 202
Other (163) (108)
Changes in working capital components (16,502) (12,540)
---------- ----------
Net cash used in operating activities (12,195) (8,490)
---------- ----------
Cash flows from financing activities
Proceeds from revolving credit borrowings and notes payable 2,788 4,780
Proceeds from issuance of common stock 262 516
Purchase of treasury stock (4,229) -
---------- ----------
Net cash (used in) provided by financing activities (1,179) 5,296
---------- ----------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 13 36
Additions to property, plant and equipment (1,830) (2,378)
Investment in life insurance contracts (685) -
Other (35) (305)
---------- ----------
Net cash used in investing activities (2,537) (2,647)
---------- ----------
Net decrease in cash (15,911) (5,841)
Cash and cash equivalents, beginning of period 26,641 7,611
---------- ----------
Cash and cash equivalents, end of period $10,730 $1,770
========== ==========
See accompanying notes to unaudited condensed consolidated
financial statements.
</TABLE>
Page 5 of 10
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Presentation of Condensed Consolidated Financial Statements
Certain information and footnote disclosures, including significant
accounting policies normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been
condensed or omitted. In the opinion of management, the accompanying
condensed consolidated financial statements include all adjustments
necessary for a fair presentation of the results for the interim periods
presented. Results of operations for the periods shown are not necessarily
indicative of results for the year, particularly in view of some seasonality
in the Consumer Products business. The accompanying unaudited condensed
consolidated financial statements should be read in conjunction with the
Consolidated Financial Statements and Notes to Consolidated Financial
Statements of Alltrista Corporation and Subsidiaries included in the
Company's latest annual report.
2. Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding for the period. Diluted earnings
per share computations assume outstanding stock options with a dilutive
effect on earnings were exercised. These common stock equivalents are added
to the weighted average number of shares outstanding in the calculation of
dilutive earnings per share.
A computation of earnings per share is as follows (in thousands except per
share data):
<TABLE>
<CAPTION>
Three month period ended
March 29, March 30,
1998 1997
---------- -----------
<S> <C> <C>
Basic Earnings Per Share
Net income $ 1,656 $ 1,433
============ ===========
Weighted average number of common shares outstanding 7,360 7,471
============ ===========
Basic earnings per share $ .23 $ .19
============ ===========
Diluted Earnings Per Share
Net income $ 1,656 $ 1,433
============ ===========
Weighted average number of common shares outstanding 7,360 7,471
Additional shares assuming conversion of stock options 140 143
------------ -----------
Weighted average number of common and equivalent shares 7,500 7,614
============ ===========
Diluted earnings per share $ .22 $ .19
============ ===========
</TABLE>
Page 6 of 10
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Continuing Operations
During the first quarter of 1998, the Company, as part of a newly launched
vision and strategy, redefined its businesses into two new distinct segments:
plastic products and metal products. The plastic products segment includes the
Plastic Packaging (coextruded sheet and formed containers for processed human
and pet food), Unimark Plastics (injection molding for medical, consumer
products and packaging markets) and Industrial Plastics (heavy gauge sheet
extrusion and thermoforming for appliance, manufactured housing and recreational
vehicle markets) operations. The metal products segment includes the Consumer
Products (home canning supplies and related products), Zinc Products (zinc strip
and products fabricated from that strip) and LumenX (industrial inspection
systems for the automotive and automotive component industries) operations.
Previously reported segment information was reclassified to correspond with this
presentation.
The Company reported net sales of $46.4 million for the first quarter of 1998 an
increase of 2% from sales of $45.6 million for the same period of 1997.
Operating earnings of $3.1 million for the quarter increased 7% from $2.9
million in the first quarter of 1997. Sales and earnings increased in the
plastic products segment 17% and 19%, respectively. Industrial Plastics had an
increase in sales and earnings primarily due to the May 1997 acquisition and
subsequent integration of Viking Plastics. Industrial Plastics also recorded
increased sales and earnings from the appliance components and table product
lines. Unimark Plastics recorded an increase in sales and earnings, which is the
result of new business including the transfer of a customer's in-house
production to the Company's Springfield, Missouri facility. Cost reduction
programs at Unimark Plastics also contributed to the improved earnings. Plastic
Packaging had a decrease in sales and earnings due to lower volume and a more
intense competitive environment. The metal products segment recorded a 12% and
11% decrease in sales and earnings, respectively. Zinc Products recorded a
decrease in sales and earnings primarily due to a customer's decision to move
production of its zinc/carbon batteries to Mexico City and to no longer purchase
battery cans from the Company. Penny blank shipments to the U.S. Mint averaged
17 truckloads per week for the first quarter of 1998 compared to 16 truckloads
per week a year ago. The Company anticipates shipments of 20 truckloads a week
in the second quarter. Consumer Products, which historically operates at a loss
in the first quarter, recorded an increase in sales in nearly every product
line. Assuming favorable growing conditions, the Company anticipates another
excellent year in the home canning business. LumenX recorded a decrease in sales
for the quarter due to the September 1997 divestiture of the machine vision
inspection product line. With a cost reduction program in place, the remaining
x-ray inspection equipment product line earned a profit for the quarter.
Overall, gross margin percentages decreased slightly in the first quarter of
1998 compared to the same period last year. The decline in gross margin
percentages was primarily due to the industry wide margin erosion in plastic
packaging and increased employee benefit costs at Consumer Products. This
decline was offset in part by increased plant utilization at Unimark Plastics, a
decrease in zinc raw material prices and a change in product mix at Zinc
Products.
Selling, general and administrative expenses as a percentage of sales decreased
slightly in the first quarter of 1998 compared to the same period last year
reflecting a reduction in costs in the x-ray inspection equipment operation.
Interest expense, net for the first quarter of 1998 was $0.4 million compared to
$0.6 million in the first quarter of 1997. Lower net interest expense in the
first quarter of 1998 was primarily the result of earnings on higher levels of
short-term investment balances.
The effective income tax rate increased slightly from 37.6% to 38.0% in the
first quarter of 1998 versus 1997.
Page 7 of 10
<PAGE>
Financial Condition, Liquidity and Capital Resources
Working capital (excluding the current portion of long-term debt) as of March
29, 1998 decreased $2.2 million to $55.8 million from the 1997 year-end level.
Short-term borrowings increased $2.8 million to fund the seasonal working
capital needs of the Canadian home canning operations. The increase in accounts
receivable, inventories and accounts payable is reflective of customary seasonal
activity, particularly in the consumer products business.
The Company has $30 million outstanding under a long-term financing agreement
with a fixed interest rate of 7.8%. Maturities are $4.3 million per year for
seven years beginning in December 1998. 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. There were no borrowings
outstanding under this agreement at March 29, 1998 or at December 31, 1997. The
Company also has available from various banks $74 million in committed and
uncommitted short-term credit lines of which $2.8 million was outstanding at
March 29, 1998. As of March 29, 1998, borrowings on the Company's long-term debt
and credit lines were at a weighted average interest rate of 7.8%. After
reducing debt by the cash balance, the debt-to-total capital ratio was 18.8% at
the end of the first quarter of 1998. This is higher than the 3.3% at December
31, 1997, as a result of funding normal seasonal operating activities.
During the first quarter of 1998, the company purchased $4.2 million (150,000
shares) of its common stock. It is the Company's policy to annually repurchase
shares to offset the dilutive effect of shares issued under employee benefit
plans and as a flexible and tax-efficient means of distributing excess cash to
shareholders.
Capital expenditures for property, plant and equipment were $1.8 million for the
first quarter ended March 29, 1998 compared to $2.4 million for the same period
last year. Capital expenditures are largely related to maintaining manufacturing
facilities and, though lower in the first quarter, are expected to be at higher
levels for the full year 1998 compared to 1997. The Company believes that
existing funds, cash generated from operations and existing sources of debt
financing are adequate to satisfy its working capital and capital expenditure
requirements for the foreseeable future. However, the Company may raise
additional capital from time to time to take advantage of favorable conditions
in the capital markets or in connection with the Company's corporate development
activities.
The Company is subject to and involved in claims arising out of the conduct of
its business including those relating to product liability, environmental and
safety and health matters. The Company's information at this time does not
indicate that the resolution of the aforementioned claims will have a material,
adverse effect upon financial condition, results of operations, capital
expenditures or competitive position of the Company.
The Company is currently assessing its exposure to potential Year 2000
computer-related issues within its businesses. At this time, management does not
believe the Company will incur significant problems or costs associated with its
own financial or operational systems. Each division is either undertaking or
will be undertaking a study of vendors and customers to determine whether their
potential Year 2000 problems will have a material effect on the Company. The
Company's information at this time does not indicate that Year 2000 issues will
have a material, adverse effect upon the financial condition, results of
operations, cash flows or competitive position of the Company.
This Quarterly Report on Form 10-Q includes certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Those statements include, but may not be
limited to, discussions regarding expectations of future sales and
profitability, anticipated demand for the Company's products and expectations
regarding operating and other expenses. Reliance on forward-looking statements
involves risks and uncertainties. Although the Company believes that the
assumptions upon which the forward-looking statements contained herein are based
are reasonable, any of those assumptions could prove to be inaccurate. As a
result, the forward-looking statements based on those assumptions could also be
inaccurate. Please see the Company's Report on Form 8-K, dated June 10, 1997,
for a list of factors which could cause the Company's actual results to differ
materially from those projected in the Company's forward-looking statements.
Page 8 of 10
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
27.1 Financial Data Schedule [EDGAR filing only]
27.2 Financial Data Schedule [EDGAR filing only] - Restatement of 1997
earnings per share in accordance with Financial Accounting Standards
No. 128, "Earnings Per Share"
27.3 Financial Data Schedule [EDGAR filing only] - Restatement of 1996
earnings per share in accordance with Financial Accounting Standards
No. 128, "Earnings Per Share"
b. Reports on Form 8-K
A change in the Company's certifying accountant was disclosed in a Form 8-K
(Commission File Number 0-21052) dated March 18, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Alltrista Corporation
----------------------
(Registrant)
Date: May 13, 1998 By: /s/ Kevin D. Bower
------------ -------------------------
Kevin D. Bower
Senior Vice President and
Chief Financial Officer
Page 9 of 10
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
March 29, 1998
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
27.1 Financial Data Schedule [EDGAR filing only]
27.2 Financial Data Schedule, 1997 Earnings Per Share [EDGAR filing only]
27.3 Financial Data Schedule, 1996 Earnings Per Share [EDGAR filing only]
Page 10 of 10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM
THE UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
AND STATEMENTS OF INCOME FOUND IN THE
COMPANY'S FORM 10-Q FOR THE
YEAR-TO-DATE, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-29-1998
<CASH> 10730
<SECURITIES> 0
<RECEIVABLES> 29156
<ALLOWANCES> 0
<INVENTORY> 48572
<CURRENT-ASSETS> 94371
<PP&E> 149267
<DEPRECIATION> 104617
<TOTAL-ASSETS> 171936
<CURRENT-LIABILITIES> 42818
<BONDS> 25714
0
0
<COMMON> 40548
<OTHER-SE> 54526
<TOTAL-LIABILITY-AND-EQUITY> 171936
<SALES> 46370
<TOTAL-REVENUES> 46370
<CGS> 35416
<TOTAL-COSTS> 43298
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 401
<INCOME-PRETAX> 2671
<INCOME-TAX> 1015
<INCOME-CONTINUING> 1656
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1656
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.22
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-END> MAR-30-1997 JUN-29-1997 SEP-28-1997
<CASH> 1770 3168 23072
<SECURITIES> 0 0 0
<RECEIVABLES> 29808 39437 32186
<ALLOWANCES> 0 0 0
<INVENTORY> 44387 38803 28749
<CURRENT-ASSETS> 80615 85962 89290
<PP&E> 146566 148619 149209
<DEPRECIATION> 100746 102684 103906
<TOTAL-ASSETS> 153271 164380 168765
<CURRENT-LIABILITIES> 30082 37439 36094
<BONDS> 30000 30000 30000
0 0 0
0 0 0
<COMMON> 41440 41090 40574
<OTHER-SE> 43907 47788 53938
<TOTAL-LIABILITY-AND-EQUITY> 153271 164380 168765
<SALES> 45642 124592 204224
<TOTAL-REVENUES> 45642 124592 204224
<CGS> 34798 89417 144394
<TOTAL-COSTS> 34798 110019 182011
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 609 1360 1927
<INCOME-PRETAX> 2297 13213 20286
<INCOME-TAX> 864 4968 7102
<INCOME-CONTINUING> 1433 8245 13184
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 1433 8245 13184
<EPS-PRIMARY> 0.19 1.11 1.78
<EPS-DILUTED> 0.19 1.09 1.75
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
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<CASH> 1464 5955 12040 7611
<SECURITIES> 0 0 0 0
<RECEIVABLES> 41390 48659 38917 27621
<ALLOWANCES> 0 0 0 0
<INVENTORY> 54145 40182 33051 42262
<CURRENT-ASSETS> 113115 98276 87849 81532
<PP&E> 149538 151677 152105 145135
<DEPRECIATION> 100934 102536 107201 99475
<TOTAL-ASSETS> 180238 166215 156257 154079
<CURRENT-LIABILITIES> 59905 39196 32778 32660
<BONDS> 30000 30000 30000 30000
0 0 0 0
0 0 0 0
<COMMON> 41135 40686 40900 41457
<OTHER-SE> 40884 47171 44154 42010
<TOTAL-LIABILITY-AND-EQUITY> 180238 166215 156257 154079
<SALES> 51128 120526 186289 230314
<TOTAL-REVENUES> 51128 120526 186289 230314
<CGS> 37552 84195 129842 163435
<TOTAL-COSTS> 37552 84195 162332 202543
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 746 1588 2155 2571
<INCOME-PRETAX> 5077 14889 21802 25200
<INCOME-TAX> 1987 5895 8632 9979
<INCOME-CONTINUING> 3090 8994 13170 15221
<DISCONTINUED> 267 0 0 (711)
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 3357 8994 13170 14510
<EPS-PRIMARY> 0.43 1.14 1.68 1.88
<EPS-DILUTED> 0.42 1.12 1.64 1.84
</TABLE>
