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, 1997
( ) 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
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------------------- -----------------------------------------
Common Stock, without par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 ]
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The aggregate market value of voting stock held by non-affiliates of the
registrant was $202.3 million based upon the closing market price on March 19,
1998
Number of shares outstanding as of the latest practicable date.
Class Outstanding at March 19, 1998
------------------------------ ----------------------------------
Common Stock, without par value 7,355,135
DOCUMENTS INCORPORATED BY REFERENCE
1. Annual Report to Shareholders for the year ended December 31, 1997 to the
extent indicated in Parts I, II, and IV. Except as to information specifically
incorporated, the 1997 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, 1998 to the extent
indicated in Part III.
This document contains 73 pages. The exhibit index is on page 17 and 18 of 73.
<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 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 10
Part III
Item 10. Directors and Executive Officers of the Registrant 11
Item 11. Executive Compensation 12
Item 12. Security Ownership of Certain Beneficial Owners and Management 12
Item 13. Certain Relationships and Related Transactions 12
Part IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 12
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. On September 30, 1997, the Company sold the
machine vision inspection equipment product line of LumenX. The sale consisted
primarily of inventory, fixed assets and intangibles.
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 1997 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 14 and 15
through 16; and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 6 through 9.
FOOD CONTAINERS SEGMENT
The Company's food containers 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, Bernardin and Golden Harvest 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. At the end of the first quarter of 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. In October 1997, the Company
entered into an agreement to market and distribute the Golden Harvest line of
home canning products, which includes jars and lids.
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.
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
<PAGE>
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. The Company is also exploring
marketing home canning products outside of the United States and Canada.
Sales are made through well-established distribution channels to
approximately 1,750 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 1997 net sales.
Consumer Products Company continues to be a market leader in the sale of
home canning supplies in the United States. Consumer Products' acquisition in
1994 of Bernardin Ltd. provides a leadership position in the Canadian market.
The Company competes with companies who specialize in other food preservation
mediums such as freezing and dehydration. 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 consolidated
the plastic packaging business in Muncie, Indiana.
Plastic Packaging produces high-barrier, multilayer and monolayer,
coextruded and extruded 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).
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 1997 net sales. Combined sales to these three customers comprised
over 80% of Plastic Packaging's 1997 net sales and 10% of the Company's net
sales. Industry purchasing practices normally involve 1 to 3 year supply
contracts which are placed for competitive bid at term. The contracts provide
for periodic price adjustment as a result of changes in the price of plastic
resin, the most significant cost component. During 1997, a two year contract
representing net sales of approximately $5 million expired and was
unsuccessfully rebid by Plastic Packaging. This and other industry supply
contracts ranging in term from one to ten years will be periodically available
for bid. 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 will have a
negative impact on Plastic Packaging's operating earnings in the short-term
until new business is developed.
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. While the number of competitors has declined, the remaining capacity
exceeds current demand with resulting pressure on market share and margins
likely to continue. 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. Glass canning jars are supplied under supply agreements with Ball Foster
Glass Container Company and Anchor Glass Container Corporation, 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
and Royal Canadian 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, electrical component markets and European rain goods
markets.
Zinc Products has three major customers: the U.S. Mint and two major
domestic manufacturers of zinc/carbon batteries. These three customers comprised
approximately 57% of Zinc Products' 1997 net sales and approximately 14% 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. During 1997, one
of the battery manufacturers whose business represented 15.7% of Zinc Products'
1997 net sales notified the Company they were moving production of its
zinc/carbon batteries to Mexico in 1998 and will no longer purchase battery cans
from the Company. Sales to the other battery manufacturer are under a multi-year
contract, which allows 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 in recent years and will continue to
decline as U.S. manufacturers shift their emphasis toward the alkaline battery
market.
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 80% of the U.S.
Mint's total requirements in 1997, 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. Zinc Products won a multi-year contract in 1996 to produce copper
plated zinc penny blanks for the Royal Canadian Mint. Zinc Products is currently
pursuing other coinage tolling opportunities in the United States and abroad.
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 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 plastic 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
<PAGE>
during 1995, and began production early in 1996 in Springfield, Missouri. A
major part of this facility is devoted to fulfilling a long-term contract to
produce wads for shot gun shells.
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' 1997 net sales. Consumer products include
components for retail items and accounted for approximately 35% of the
division's 1997 net sales. The remaining sales were primarily closures. Sales to
each of four major customers were greater than 10% of Unimark Plastics' 1997
sales. Together, sales to these customers were approximately 62% of Unimark
Plastics' 1997 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
and evaporator trays for refrigerators in its Fort Smith, Arkansas, facility.
This facility was built by Ball in 1974 as an expansion of Ball's plastics
business started in 1952. Approximately 60% of Industrial Plastics' 1997 net
sales were to one customer. The Company is well established in serving this
account based on its focus to provide a high level of customer service, such as
product tooling design, high quality standards, proximity and just-in-time
delivery. Therefore, it enjoys a sole source position with this customer. The
Company is in the fourth year of a four and one-half year supply agreement with
the customer. The Company plans to extend this supply arrangement and continue
to strengthen it's alliance with this customer. In addition, sales of the
Company's plastic tabletops continue to grow and other products are being
developed to reduce the division's dependency on a single customer.
On May 19, 1997, the Company purchased certain assets and assumed certain
liabilities of Viking Industries ("Viking Plastics") who manufactures
thermoformed plastic tubs, shower stalls and other bath products sold to the
manufactured housing, recreational vehicle, home, and marine industries under
the "Capri bath products" name. Viking Plastics operates out of two facilities,
one in El Dorado, Arkansas and the other in South Whitely, Indiana. These
products are sold primarily through distributors to manufactured housing and
recreational vehicle manufacturers. Approximately 22% of Industrial Plastics'
1997 net sales were to one distributor. During 1997, the Company redirected the
distribution of its bath products from this distributor to various regional
distributors and a direct sales strategy. The Company will be able to supplement
Viking's sheet requirements, which is currently purchased from unaffiliated
vendors, with sheet produced by the Fort Smith facility.
LumenX
LumenX, headquartered in Mogadore, Ohio, builds customized industrial
inspection systems based on its proprietary hardware and software products.
These systems are used primarily by the automotive and automotive component
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 or a combination of x-ray and
machine vision technologies. 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.
On September 30, 1997, the Company sold its machine vision inspection
product line. These systems were primarily used by the food/beverage container
industry and represented approximately one-third of the division's annual net
sales.
LumenX sells to a variety of customers. Sales to each of two customers were
greater than 10% of LumenX's 1997 net sales. Together, sales to these customers
were approximately 35% of the division's 1997 sales. Total export sales
accounted for 40% of the division's 1997 net sales with sales to western Europe
accounting for approximately 10% of this division's 1997 net sales.
<PAGE>
The division's most significant market is tire x-ray inspection. Sales of
x-ray inspection equipment to the tire industry was approximately two-thirds of
the division's 1997 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.
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, 1997 and 1996 applicable to LumenX was $1.9 million
and $3.8 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.
<PAGE>
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 operation of one 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.
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.
Currently, neither the federal government nor 48 states call wastes
"hazardous" on the basis of zinc content. California and Michigan do label
wastes as "hazardous" because of zinc content, however, regulators in both
states have indicated movement away from this classification. 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 additional restrictive
legislation will not become law. Such legislation could reduce the demand for
the Company's products and increase its operating costs.
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 December 1997, the Company employed approximately 1,100 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
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<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
El Dorado, Arkansas (leased) Industrial components/Industrial Plastics Company 94,000
South Whitely, Indiana (leased) Industrial components/Industrial Plastics Company 67,000
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
</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 1997.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Alltrista Corporation common stock was traded on the Nasdaq National Market
System under the symbol "JARS" until December 31, 1997, when Alltrista
Corporation common stock began trading on the New York Stock Exchange under the
symbol "ALC". There were 4,256 common shareholders of record on March 19, 1998.
The Company currently does not and does not intend to pay cash dividends on its
common stock in the foreseeable future. Cash generated from operations will be
invested to support competitiveness and growth. In addition, the Company will
purchase its own common stock into treasury to offset the dilutive effect of
shares issued under employee benefit plans. The Company will also periodically
repurchase additional shares as a flexible and tax efficient means of
distributing excess cash to shareholders.
Other information required by Item 5 appears under the caption "Quarterly
Stock Prices" on page 21 of the 1997 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,
1997 appearing in the section titled "Five Year Review of Selected Financial
Data" on page 23 of the 1997 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 6 through 9 of the 1997 Annual Report to Shareholders is
incorporated herein by reference.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and notes thereto, appearing on pages
10 through 23 of the 1997 Annual Report to Shareholders, together with the
report thereon of Price Waterhouse LLP dated January 30, 1998 appearing on page
23 of the 1997 Annual Report to Shareholders, are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
A change in the Company's certifying accountant was disclosed in a Form 8-K
(Commission File Number 0-21052) dated March 18, 1998.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the company are as follows:
Thomas B. Clark, age 52, 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.
Kevin D. Bower, age 39, is senior vice president and chief financial officer of
the Company. From March 1994 to April 1997 Mr. Bower served as 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.
Jerry T. McDowell, age 56, is group vice president, metal products, of the
Company. From December 1994 to March 1998 Mr. McDowell served as 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 60, 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.
Angela K. Knowlton, age 35, is vice president and treasurer of the Company. From
August 1994 to April 1997 Ms. Knowlton served as director, taxation. From August
1993 to August 1994 Ms. Knowlton served as manager, taxation. Prior to joining
the Company in August 1993, Ms. Knowlton served as a manager with the public
accounting firm of Price Waterhouse.
Larry D. Miller, age 63, 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.
J. David Tolbert, age 37, is vice president, human resources and corporate risk
of the Company. From October 1993 to April 1997 Mr. Tolbert served as director
of human resources of the Company. Since joining Ball in 1987, Mr. Tolbert
served in various human resource and operating positions of Ball's and the
Company's Plastic Packaging division.
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, 1998, is incorporated
herein by reference. The proxy statement will be filed with the Commission no
later than April 8, 1998.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 appearing under the caption "Executive
Compensation" on pages 6 through 15 of the Company's proxy statement filed
pursuant to Regulation 14A dated April 8, 1998 is incorporated herein by
reference. The proxy statement will be filed with the Commission no later than
April 8, 1998.
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, 1998, is incorporated
herein by reference. The proxy statement will be filed with the Commission no
later than April 8, 1998.
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 1997 Annual Report to Shareholders.
Page(s) in
Annual Report
--------------
Consolidated statements of income --
Years ended December 31, 1997, 1996 and 1995 10
Consolidated balance sheets -- December 31, 1997 and 1996 11
Consolidated statements of cash flows --
Years ended December 31, 1997, 1996 and 1995 12
Consolidated statements of changes in shareholders' equity --
Years ended December 31, 1997, 1996 and 1995 13
Notes to consolidated financial statements 14 to 23
Report of independent accountants 23
(2) Financial Statement Schedule:
See the Index to the Financial Statement Schedule on page 14 of this
Form 10-K, which is incorporated by reference herein.
(3) Exhibits:
See the Index to Exhibits on pages 17 and 18 of this Form 10-K, which
is incorporated by reference herein.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the fourth quarter of
the year ended December 31, 1997.
<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, 1998
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, 1998
(2) Principal Financial Accounting Officer:
Senior Vice President
/s/ Kevin D. Bower and Chief Financial Officer
----------------------------------
Kevin D. Bower March 27, 1998
(3) Board of Directors:
/s/ William L. Peterson Chairman and Director
----------------------------------
William L. Peterson March 27, 1998
President and Chief
/s/ Thomas B. Clark Executive Officer and Director
----------------------------------
Thomas B. Clark March 27, 1998
/s/ William A. Foley Director
----------------------------------
William A. Foley March 27, 1998
/s/ Richard L. Molen Director
----------------------------------
Richard L. Molen March 27, 1998
/s/ Lynda Watkins Popwell Director
----------------------------------
Lynda Watkins Popwell March 27, 1998
/s/ Patrick W. Rooney Director
----------------------------------
Patrick W. Rooney March 27, 1998
/s/ David L. Swift Director
----------------------------------
David L. Swift March 27, 1998
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1997
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 1997 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 30, 1998 in the 1997 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)(2) 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
Indianapolis, Indiana
January 30, 1998
<PAGE>
Schedule II
<TABLE>
<CAPTION>
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
------------ -------------- ---------------- -----------
<S> <C> <C> <C> <C>
Reserves against
accounts receivable:
1997 $(1,129) $ (542) $ 648 $(1,023)
1996 $(1,377) $(1,589) $ 1,837 $(1,129)
1995 $(1,159) $(1,049) $ 831 $(1,377)
</TABLE>
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1997
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 (filed as Exhibit 10.4 to the Company's
Annual Report on Form 10-K, Filing No. 0-21052, and incorporated
herein by reference), filed March 27, 1997
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 (filed as Exhibit 10.13 to the Company's Annual Report on
Form 10-K, Filing No. 0-21052, and incorporated herein by
reference), filed March 27, 1997
10.14 Alltrista Corporation 1997 Deferred Compensation Plan for
Directors
10.15 Alltrista Corporation Excess Savings and Retirement Plan
11.1 Computation of Earnings Per Share
13.1 Alltrista Corporation 1997 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
27.1 Financial Data Schedule (electronic copy only)
Copies of exhibits incorporated by reference can be obtained from the SEC
and are located in SEC File No. 0-21052.
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 Group Vice President, Metal Products
William L. Skinner Senior Vice President, Administration and
Corporate Development
Kevin D. Bower Senior Vice President and Chief Financial Officer
Larry D. Miller Vice President, Communications and Investor Relations
Garnet E. King Corporate Secretary and Director, Executive Services
Angela K. Knowlton Vice President and Treasurer
J. David Tolbert Vice President, Human Resources and Corporate Risk
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
John A. Metz President - Consumer Products Company
Timothy D. Sigley President - Plastic Packaging Company
Exhibit 10.14
Alltrista Corporation
1997 Deferred Compensation Plan For Directors
1. Statement Of Purpose
The purpose of the 1997 Deferred Compensation Plan for Directors (the
"Plan") is to establish an alternative method of compensating those
directors of Alltrista Corporation (the "Company") who do not receive
compensation as employees of the Company ("Directors") in order to aid
the Company in attracting and retaining as Directors persons whose
abilities, experience and judgment can contribute to the continued
progress of the Company.
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. Director - "Director" means a Director of the Company who is not an
employee of the Company or an affiliate.
2.5. Director's Fees - "Director's Fees" means any compensation payable to
a Director for services rendered as a Director for the Class Year,
including retainer fees, meeting fees, committee fees, chairmanship
fees and special assignment fees, but not including director's
reimbursable expenses.
2.6. 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.
2.7. Deferral Amount - "Deferral Amount" means the amount of Elective
Deferred Compensation deferred by the Participant for each Class Year.
2.8. Deferred Compensation Account - "Deferred Compensation Account" means
the account for each Class Year maintained by the Company for each
Participant pursuant to Section 6.
2.9. Distribution Date - "Distribution Date" means the date on which the
Company makes distributions from the Participant's Deferred
Compensation Account.
2.10.Effective Date - "Effective Date" means January 1, 1997, the date on
which the Plan commenced as approved by the Board of Directors on
November 21, 1996.
2.11.Election Form - "Election Form" means the form or forms attached to
this Plan and filed with the Executive Compensation Committee by the
Participant in order to participate in the 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 a Director in his/her
Election Form.
2.13.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.
2.14.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.
<PAGE>
2.15.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.
2.16.Investment Allocation Change Form - "Investment Allocation Change
For" 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.
2.17.Mood's - "Moody's" means the annual average composite yield on
Moody's Seasoned Corporate Bond Yield Index for the twelve (12) months
ending the 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.
2.18.Participant - "Participant" means a Director participating in the
Plan in accordance with the provisions of Section 4.
2.19.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).
2.20.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.
2.21.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.
Members of the Committee may be Participants under this Plan. The
Committee shall have full power to formulate additional details and
regulations for carrying out this Plan. The Committee shall also be
empowered to make any and all of the determinations not herein
specifically authorized which may be necessary or desirable for the
effective 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 Directors who elect to
participate in the Plan by filing an Election Form prior to the
beginning of the Class Year in which the Participant's Director's Fees
are earned. Notwithstanding the foregoing, an individual who first
becomes a Director during any Class Year may elect to participate in
the Plan for such Class Year with respect to any Director's Fees not
yet earned by filing an Election Form within thirty (30) days after
becoming a Director.
Such election shall be irrevocable and shall remain in effect with
respect to Director's Fees earned for each Class Year thereafter until
such election is terminated or amended, or until the Participant
ceases to be a Director, whichever shall first occur. Any such
election may be terminated, or amended by a new election having
specifications different from the election then in effect for the
Participant, but any such termination or amendment shall be effective
only with respect to Director's Fees for Class Years beginning after
the date such termination or amendment is filed.
<PAGE>
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. Deferred Director's Fees shall be credited to the
Deferred Compensation Account when otherwise payable and prior to the
last day of each calendar quarter in which such fees are earned.
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.
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
transfer 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 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.
<PAGE>
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
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 (not
beyond the year in which the Participant will attain age
seventy-one (71)); and
Increase the number of installments (to a number not to exceed
fifteen (15)).
Any such request(s) must be made at least ninety (90) days prior to
the earlier of (a) the beginning of the year which the Participant has
elected for distributions to commence, or (b) when the Participant
ceases to be a Director.
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. 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.
<PAGE>
7.6. 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. "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.
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
Director of the Company, 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.
7.7. Replacement of Committee Member. In the event the Participant
requesting a Hardship Benefit under Section 7.2., a delay in payment
under the Section 7.3., or a Liquidation Distribution under Section
7.6., is a member of the Executive Compensation Committee, he/she
shall not participate in the Committee's decision and, for purposes of
considering his/her request only, the Chief Executive Officer will
replace the Participant as a member of the Executive Compensation
Committee.
8. Beneficiary Designation
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.
9. Amendment And Termination Of Plan
9.1. Amendment. The Board of Directors may 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 which 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. Company's Right to Terminate. The Board of Directors may at
any time 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.
<PAGE>
b. Payments Upon Termination of Plan. Upon termination of the
Plan under this Section 9.2., Director's Fees not yet earned
shall prospectively cease to be deferred. With respect to
then-existing Deferred Compensation Accounts, the Company 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 enure 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.
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 Company,
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 Company. 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 Company. 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 Company, then the Company 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.Election to Board of Directors Not Guaranteed. Participation in this
Plan shall not confer upon any Participant any right to be nominated
for re-election to the Board of Directors, or to be re-elected to the
Board of Directors.
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.Applicable Law. This Plan shall be governed and construed in
accordance with the laws of the State of Indiana.
10.8.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.
10.9.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
Chief Executive Officer. 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.
Exhibit 10.15
Alltrista Corporation
Excess Savings And Retirement Plan
Effective May 1, 1997
1. Statement Of Purpose
The purpose of the Alltrista Corporation Excess Savings and Retirement Plan
(the "Excess Plan") is to provide benefits to current and retired employees
of Alltrista Corporation (the "Company") and its subsidiaries who
participate in or previously participated in the Alltrista Corporation
Savings and Retirement Plan (the "Underlying 401(k) Plan") and whose
allocable contributions under the Underlying 401(k) Plan will be or have
been limited due to the participant's compensation by one or more
provisions of the Internal Revenue Code of 1986, as amended, or the
regulations promulgated thereunder (the "Tax Law Restrictions").
2. Definitions (Any Term For Which A Definition Is Not Provided Shall Be Taken
To Have The Same Meaning As It Has, Or May Have From Time To Time Under The
Underlying 401(K) Plan):
2.01.Beneficiary - "Beneficiary" means the person or persons
designated as such in accordance with Section 8.
2.02.Committee - "Committee" (also referred to as the "Executive
Compensation Committee") means the committee appointed by the
Board of Directors that will administer the Excess Plan.
2.03.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
Excess 401(k) Account in the Equity Index Account as of the
Distribution Date and dividing by the number of years of
distributions remaining.
2.04.Disability - "Disability" means the Participant is receiving
disability benefits under the long term disability benefit plan
sponsored by the Employer.
2.05.Distribution Date - "Distribution Date" means the date on which
the Company makes distributions from the Participant's Excess
401(k) Account.
2.06.Effective Date - "Effective Date" means May 1, 1997, the date on
which the Excess Plan commenced.
2.07.Eligible Employee - "Eligible Employee" means any employee of
the Company whose compensation and participation in the
Underlying 401(k) Plan qualifies him/her for participation in the
Excess Plan.
2.08.Eligible Retiree - "Eligible Retiree" means any retiree of the
Company who had ten or more years of Vesting Service as of April
2, 1993 under the Ball Corporation Salary Conversion Plan and
whose former participation in the Underlying 401(k) Plan and
former compensation qualifies him/her for participation in the
Excess Plan.
2.09.Employer - "Employer" means Alltrista Corporation and any
subsidiary entity in which Alltrista Corporation holds a fifty
percent (50%) or more interest, either: (i) directly as a
stockholder or partner in such subsidiary entity; or (ii)
indirectly as a stockholder or partner in one or more other
entities which in turn are stockholders or partners in such
subsidiary entity.
2.10.Equity Index Account - "Equity Index Account" means an
investment option providing for a return based upon a
hypothetical investment of the Excess 401(k) Account, or a
portion thereof, in the S&P 500 Index.
<PAGE>
2.11.Excess 401(k) Account - "Excess 401(k) Account" means the
account maintained by the Company for each Participant pursuant
to Section 6.
2.12.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 Excess Plan.
2.13.Fixed Account - "Fixed Account" means an investment option
providing for a stated amount of interest to be credited to the
Excess 401(k) Account, or a portion thereof, based on Moody's.
2.14.Initial Make-up Contribution - "Initial Make-up Contribution"
means the amount determined by the Committee to be credited to
the Participant's Excess 401(k) Account that will provide for the
amount of contribution not made to the Participant's Underlying
401(k) Plan account due to associated Tax Law Restrictions for
the period from Company inception through the end of 1996.
2.15.Investment Allocation Change Form - "Investment Allocation
Change Form" means the form attached to this Excess Plan and
filed with the Committee by the Participant in order to request a
change in the allocation of the Participant's Excess 401(k)
Account 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 Excess Plan.
2.16.Investment Election and Distribution Form - "Investment Election
and Distribution Form" means the form attached to this Excess
Plan and filed with the Committee by the Participant in order to
participate in the Excess Plan. The terms and conditions
specified in the Investment Election and Distribution Form are
incorporated by reference herein and form a part of the Excess
Plan.
2.17.Make-up Contribution - "Make-up Contribution" means the amount
determined by the Committee to be credited to the Participant's
Excess 401(k) Account each year that will provide for the amount
of contribution not made to the Participant's Underlying 401(k)
Plan account due to associated Tax Law Restrictions.
2.18.Moody's - "Moody's" means the annual average composite yield on
Moody's Seasoned Corporate Bond Yield Index 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.
2.19.Participant - "Participant" means an Eligible Employee or
Eligible Retiree participating in the Excess Plan in accordance
with the provisions of Section 4.
2.20.Related Employment - "Related Employment" means the transfer of
a Participant within the Employer entities defined in Section
2.09, provided: (i) that immediately prior to such employment the
Participant was an employee of the Employer or was engaged in
Related Employment as herein defined; and (ii) such employment is
recognized by the Committee, in its sole discretion, as Related
Employment.
2.21 Retirement - "Retirement" means termination of the Participant's
employment with the Employer after attaining age 55 and after
having a minimum of ten (10) Years of Vesting Service ( as
defined in the Underlying 401(k) Plan).
2.22.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 Excess 401(k) Account in the
Equity Index Account under Sections 6.5 and 6.6. The return for a
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).
<PAGE>
2.23.Substantially Equal Installments - "Substantially Equal
Installments" means a series of annual payments such that equal
payments over the payment periods chosen would exactly amortize
the Excess 401(k) Account balance in the Fixed Account as of the
final 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 periods.
2.24.Termination of Employment - "Termination of Employment" means:
(i) the termination of a Participant's employment with the
Employer for any reason other than Disability or Related
Employment; or (ii) the termination of a Participant's Related
Employment.
2.25.Valuation Date - "Valuation Date" means the date on which the
value of a Participant's Excess 401(k) Account 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 Excess Plan
The Executive Compensation Committee, by appointment of the Board of Directors
of the Company (also referred to as the "Board" or the "Board of Directors"),
shall be the sole administrator of the Excess Plan. The Committee shall have
full power to formulate additional details and regulations for carrying out this
Excess 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 administration of the Excess Plan. Any decision or
interpretation of any provision of this Excess Plan adopted by the Committee
shall be final and conclusive.
4. Participation
4.1. Participation by Eligible Retirees. Participation in the Excess
Plan shall be available to Eligible Retirees with an Initial
Make-up Contribution of $2,500 or more who elect to participate
in the Excess Plan by filing an Investment Election and
Distribution Form with the Committee prior to June 1, 1997. Those
Eligible Retirees with an Initial Make-up Contribution of less
than $2,500 will receive their Initial Make-up Contribution as
soon as feasible after the Effective Date of the Excess Plan.
4.2. Participation by Eligible Employees. Participation in the Excess
Plan shall be available to Eligible Employees who elect to
participate in the Excess Plan by filing an Investment Election
and Distribution Form with the Committee.
5. Vesting Of Excess 401(K) Account
A Participant's interest in his/her Excess 401(k) Account and interest and/or
investment return credited thereto shall vest immediately.
6. Accounts And Valuations
6.1. Excess 401(k) Accounts. The Committee shall establish and
maintain a separate Excess 401(k) Account for each Participant.
Initial Make-up Contributions from the Company shall be credited
to a Participant's Excess 401(k) Account as of June 1, 1997.
Make-up Contributions shall be credited to a Participant's Excess
401(k) Account on January 1 of the year following to which they
relate.
6.2. Investment Allocation of Excess 401(k) Account. The Participant's
Excess 401(k) Account shall be deemed to be invested in either
the Fixed Account or the Equity Index Account, or both, in
accordance with the Participant's election as provided in the
Investment and Distribution Election Form. In the event a
Participant fails to make a timely election, the Participant's
Excess 401(k) Account shall be deemed to be invested in the Fixed
Account.
6.3. Interest Rate Credited. That portion of the Participant's Excess
401(k) 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.
<PAGE>
6.4. Timing of Crediting of Interest. That portion of the
Participant's Excess 401(k) 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 Excess 401(k) Account in the Fixed Account shall
consist of the balance of such Excess 401(k) Account as of the
immediately preceding Valuation Date plus the amount of any
additional Make-up Contribution credited to the Fixed Account and
any transfers from the Equity Index Account since the preceding
Valuation Date, minus the amount of all distributions from and
transfers to the Equity Index Account since the preceding
Valuation Date. As of each Valuation Date, interest shall be
credited on that portion of the Participant's Excess 401(k)
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
Excess 401(k) 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 Excess 401(k) 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 Excess 401(k) 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
Make-up Contribution 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 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 Excess 401(k) 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 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 change his/ her 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 year.
7. Benefits
7.1. Normal Benefit
a. A Participant's Excess 401(k) Account shall be paid to the
Participant as requested in his/her Investment and Distribution
Election Form, subject to the terms and conditions set forth in
the Excess Plan, including the Investment and Distribution
Election Form. If a Participant elects to receive payment of his/
her Excess 401(k) 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 Excess 401(k)
Account in the Equity Index Account in installments, payments
shall be made in Declining Balance Installments. In the event a
<PAGE>
Participant fails to file an Investment and Distribution Election
Form (or files a form that fails to specify the timing of
payments), the Participant's Excess 401(k) Account shall be paid
to the Participant in a lump sum in the year following
Termination of Employment. 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.
b. If a Participant dies before receiving his/her total Excess
401(k) balance, 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 Excess
401(k) Account of the Participant or Beneficiary, as soon as
practicable following such determination, an amount necessary to
meet the emergency, not in excess of the amount of the Excess
401(k) Account. The Excess 401(k) 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 Excess 401(k) Account that
he/she has specified in his/her Investment and Distribution
Election Form. However, upon a written request submitted by the
Participant to the Committee, the Committee may, in its sole
discretion:
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 Excess
Plan, payments under this Excess 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 Excess 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 Retirement. In the event that a
Participant has a Termination of Employment prior to Retirement
(other than by death, for which benefits and/or accounts will be
paid in accordance with Section 7.1.b.), then the Participant's
Excess 401(k) 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 Excess 401(k) 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
<PAGE>
in installments, both Fixed and Equity Index Accounts will be
combined into one amount that will be the Participant's Excess
401(k) Account going forward and the interest rate credited to
the Participant's Excess 401(k) 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 calculating 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 Excess Plan or the Participant's Investment and
Distribution Election Form to the contrary, upon written request
for a Liquidating Distribution submitted by the Participant (or
Beneficiary) to the Executive Compensation Committee following a
Change in Control, the Company 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. "Liquidating
Distribution Account Balance" shall mean the Participant's (or
Beneficiary's) Excess 401(k) Account balance increased by
interest credited or investment return credited or debited on the
account 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 Excess 401(k) Account as
of the date of distribution.
Notwithstanding any provisions of the Excess 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) calendar years beginning with the
calendar year during which the request for Liquidating
Distribution is made, be ineligible to participate in the Excess
Plan.
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;
<PAGE>
(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
(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
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 Excess 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 Excess 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 any
Beneficiary designation 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.
9. Amendment and Termination of Excess Plan
9.1. Amendment. The Board of Directors at any time may amend the
Excess Plan in whole or in part, provided, however, that no
amendment shall be effective to reduce the value of any
Participant's Excess 401(k) 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 Excess Plan payable to any Participant
or Beneficiary with respect to any Make-up Contribution that was
made prior to the date of the amendment. Written notice of any
amendments shall be given promptly to each Participant.
9.2. Termination of Excess Plan
a. Company's Right to Terminate. The Board of Directors at
any time may terminate the Excess Plan as to
prospective contributions and credits of interest or
investment return, if it determines in good faith that
the economic acceptability of the Excess Plan has been
impaired substantially 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 Excess Plan shall reduce the
balance in a Participant's Excess 401(k) Account or
affect the Participant's vested right therein.
<PAGE>
b. Payments Upon Termination of Excess Plan. Upon
termination of the Excess Plan under this Section 9.2.,
Make-up Contributions for an additional year shall not
be made under the Excess Plan. With respect to
then-existing Excess 401(k) Accounts, the Company 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 Excess 401(k) Accounts; (ii) continue
to invest the contributions under the Excess 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 Excess Plan and Investment and
Distribution 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.
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 Company. The Company's obligation under the Excess 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 Excess 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 Company 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 Excess 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.
<PAGE>
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.
10.6.Captions. The captions to the articles, sections, and paragraphs
of this Excess Plan are for convenience only and shall not
control or affect the meaning or construction of any of its
provisions.
10.7.Applicable Law. This Excess Plan shall be governed and construed
in accordance with the laws of the State of Indiana.
10.8.Validity. In the event any provision of this Excess Plan is held
invalid, void, or unenforceable, the same shall not affect, in
any respect whatsoever, the validity of any other provision of
this Excess Plan.
10.9.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,
-----------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Basic Earnings Per Share
Income from continuing operations $ 14,837 $ 15,221 $ 12,528
Discontinued operation - (711) (1,029)
----------- ----------- ------------
Net income $ 14,837 $ 14,510 $ 11,499
=========== =========== ============
Weighted average number of common shares
outstanding 7,413 7,737 7,806
=========== =========== ===========
Basic earnings per common share:
Continuing operations $ 2.00 $ 1.97 $ 1.60
Discontinued operation - (.09) (.13)
----------- ----------- -----------
Net income $ 2.00 $ 1.88 $ 1.47
=========== ============ ===========
Diluted Earnings Per Share
Income from continuing operations $ 14,837 $ 15,221 $ 12,528
Discontinued operation - (711) (1,029)
----------- ----------- -----------
Net income $ 14,837 $ 14,510 $ 11,499
=========== =========== ===========
Weighted average number of common shares
outstanding 7,413 7,737 7,806
Additional shares assuming conversion of
stock options 145 169 190
----------- ------------ -----------
Weighted average number of common and
equivalent shares 7,558 7,906 7,996
=========== =========== ===========
Diluted earnings per common share:
Continuing operations $ 1.96 $ 1.93 $ 1.57
Discontinued operation - (.09) (.13)
----------- ------------ -----------
Net income $ 1.96 $ 1.84 $ 1.44
=========== ============ ===========
</TABLE>
Alltrista Corporation achieved record sales and earnings per share from
continuing operations in 1997. We successfully consolidated production of the
Ball and Kerr brands of home canning products, a product-extension acquisition
was made in the industrial plastics area, and at year-end Alltrista stock began
trading on the New York Stock Exchange, the new symbol being ALC.
<PAGE>
Company Profile
Alltrista Corporation manufactures consumer, plastic and zinc products. The
company has 12 manufacturing facilities located in the eastern third of the
United States, plus Puerto Rico and Canada. Alltrista stock is traded on the New
York Stock Exchange under the symbol ALC.
<TABLE>
<CAPTION>
Financial Highlights
(thousands of dollars and shares, except per share amounts)
Percentage
1997 1996 Increase
(Decrease)
----------- --------- ----------
<S> <C> <C> <C>
For the year
Net sales............................................ $ 255,167 $ 230,314 10.8
Net income........................................... 14,837 14,510 2.3
Diluted earnings per share
Income from continuing operations........... 1.96 1.93 1.6
Discontinued operation...................... - (.09) -
Net income.................................. $ 1.96 $ 1.84 6.5
Diluted weighted average common shares outstanding 7,558 7,906 (4.4)
Free cash flow....................................... 27,933 24,120 15.8
Interest expense, net................................ 2,256 2,571 (12.3)
Depreciation and amortization........................ 10,385 10,569 (1.7)
Property, plant and equipment additions.............. 7,897 10,699 (26.2)
After-tax return on year-end invested capital......... 17.28% 15.18% -
After-tax return on year-end common equity............ 15.25% 17.38% -
At year-end
Working capital, excluding cash and debt.............. $ 31,404 $ 41,261 23.9
Total assets.......................................... 166,577 154,079 8.1
Common shareholders' equity........................... 97,309 83,467 16.6
Market price per common share......................... 28.375 25.75 10.2
Common shareholders of record......................... 4,323 4,626 (6.5)
Number of employees................................... 1,097 1,019 7.7
</TABLE>
[BAR GRAPH]
Net Sales
(millions of dollars)
'93 $193.3
'94 $207.8
'95 $221.5
'96 $230.3
'97 $255.2
(from continuing operations)
[BAR GRAPH]
Net Income
(millions of dollars)
'93 $12.5
'94 $14.0
'95 $12.5
'96 $15.2
'97 $14.8
(from continuing operations)
[BAR GRAPH]
Diluted Earnings Per Share
(dollars)
'93 $1.65
'94 $1.80
'95 $1.57
'96 $1.93
'97 $1.96
(from continuing operations)
<PAGE>
Dear Shareholders,
In our letter to you a year ago, we said, "Our outlook for the full year
1997 is strong and we anticipate favorable comparisons on a year-over-year
basis." Results for the year substantiated that outlook as several performance
records were achieved. In addition to excellent performance, we continued to
streamline our operations, added a complementary business in the industrial
plastics area and divested an unprofitable product line. We also moved to the
New York Stock Exchange in 1997, where trading of our common stock began on
December 31 with the symbol ALC. Finally, in an action that should have a
far-reaching impact on the company, following year-end the board of directors
approved management's recommended corporate vision, strategy and growth goals,
which we believe will further focus our overall direction and enhance long-term,
attractive returns for shareholders. We'll discuss each of these topics in this
letter and would also refer you to management's discussion and analysis of
operations, beginning on page six, for a complete comparison of year-to-year
results.
RECORD SALES AND EPS FOR 1997
Beginning with financial results, sales for 1997 grew 11 percent from the
prior year to $255.2 million. Net income advanced by two percent to $14.8
million and diluted earnings per share showed a gain of seven percent to $1.96.
The income figures include a $3.6 million pretax charge (22 cents per share
after- tax) primarily related to the divestiture of a LumenX vision inspection
product line. Excluding this charge, and a 1996 loss on discontinued operations,
net income was up $1.28 million or 8 percent, with diluted earnings per share of
$2.18, rising 13 percent from 1996.
We ended the year with a strong final quarter, as well. Net income of $1.7
million was 23 percent above last year's $1.3 million, while diluted earnings
per share rose 22 percent to 22 cents against 18 cents a year ago. Sales for the
quarter of $50.9 million were 16 percent above the comparable 1996 period. Both
earnings per share and sales numbers were fourth quarter records.
Most of the increased sales and all of the higher operating earnings for
the year came from the food containers segment, which includes the consumer
products and plastic packaging operations.
Within the consumer products business, sales increased 39 percent, with
sales and operating earnings at record levels. This resulted from full-year
revenues from the Kerr brand home canning products line, acquired in 1996;
[GRAPHIC OMITTED] Thomas B. Clark, president and chief executive officer, (left)
with William L. Peterson, chairman of the board.
[GRAPHIC OMITTED] Alltrista Corporation is the primary supplier of copper-plated
zinc one-cent blanks to the U.S. and Royal Canadian Mints, and continues to
pursue additional international coinage business.
<PAGE>
from efficiencies resulting from consolidating metal closure manufacturing
operations of the Ball and Kerr brands; and from increased demand for home
canning jars and closures due to an excellent growing season for home gardening
and fresh produce.
1998 Should Be a Good Year for Consumer Products
We expect another excellent year in 1998 from consumer products, assuming a
normal growing season. That operation continues to pursue efficiencies which
will contribute to higher operating earnings. The most recent of those moves put
in place for the 1998 season entails consolidation and outsourcing of certain
packaging operations formerly performed by our glass container suppliers.
1997 was an excellent year, as well, for the plastic packaging operation.
Sales were off somewhat, but operating earnings were above a year ago, this due
largely to improved operating efficiencies and reduced labor costs. While we are
expecting lower earnings from this area in 1998 as a result of margin erosion
due to forecasted lower volume and a more intense competitive environment, we
remain optimistic about the longer-term growth prospects for this business as a
result of new application areas and product innovation on our part.
Within the industrial components segment, increased sales were posted by
the zinc products and industrial plastics businesses, but operating earnings
were under a year ago.
Zinc earnings were negatively impacted by lower coinage shipments to the
U.S. Mint. In 1998, we'll also feel the loss of a contract to supply Eveready
Battery with dry cell battery cans. Production of these batteries was moved to
Mexico by the customer. However, we are excited about several opportunities for
the zinc business and we will report on these during the year.
INDUSTRIAL PLASTICS SAW GROWTH IN 1997
Of the two plastics operations in the industrial components segment,
industrial plastics had a 62 percent increase in sales and improved operating
earnings. The sales increase was due largely to an acquisition, although it was
also a good year for both the refrigerator/freezer door liner business, as well
as the light-weight plastic table product line introduced in 1994. We should see
an operating earnings improvement this year in that business as manufacturing
and other operating efficiencies are realized in the acquired business.
Unimark plastics had lower sales and operating earnings for the year,
primarily attributable to the softness in demand in the healthcare market. With
the exception of one relatively small program, we have not lost any business to
competition. It's really a slowdown in demand in that market, which we expected
would turn around before the end of the year. We implemented a number of cost
reduction moves early in 1998 and as we look at the comparison
[GRAPHIC OMITTED] Zinc strip is slit into various widths for use in the
automotive, plumbing hardware, electrical, architectural and roofing markets,
and is also used to fabricate dry/cell battery cans and coin blanks.
<PAGE>
of sales over the last four or five months to comparable earlier periods, each
one of those months is up, so we're looking for improved sales and a greater
earnings contribution at Unimark in 1998.
Sales at LumenX were off primarily as a result of selling the machine
vision product line. While the disposition of the product line was a positive,
the real disappointment was the fact that prior to the sale this operation had
an increased operating loss. This loss stemmed from high operating costs, as
well as unfavorable margins in the divested machine vision business. We've taken
costs out of the business through reduced headcount and other expense
reductions. These reductions should not jeopardize the remaining x-ray
inspection product line. The business is projected to be profitable in 1998.
INTEREST EXPENSE AND TAX RATE LOWER FOR YEAR
Beyond operations, interest expense was down 12 percent for the year. We
lowered our effective tax rate during the year. Free cash flow for 1997 of $27.9
million was 16 percent above last year's amount. Finally, we repurchased 185,000
shares of our common stock during 1997, returning $4.2 million to our
shareholders; this repurchase covered the needs of employee stock programs. We
repurchased an additional 150,000 shares in early 1998.
During the year, Robert E. Fowler, Jr., was elected president and chief
executive officer of IMC Global, Inc. Time constraints of this added
responsibility forced Mr. Fowler to resign from our board of directors. We are
grateful for the guidance he provided Alltrista during his tenure as a director.
Lynda Watkins Popwell was elected to fill the board vacancy created by Mr.
Fowler's departure. Ms. Popwell is president of Eastman Chemical Company's
Carolina Eastman Division. She has been a member of that company's management
team since 1969. Her knowledge of the plastic resins business will be of value
as we continue to grow in the plastics area.
Viking Industries was acquired in May and is now a part of the industrial
plastics business. Viking has facilities in El Dorado, Arkansas and South
Whitley, Indiana and serves the manufactured housing and recreational vehicle
industries with a variety of proprietary and custom thermoformed plastic
products. We'll realize more earnings from this acquisition in 1998 as we supply
plastic sheet from our existing operations. In addition, several growth
initiatives in the Viking product line will be pursued during 1998, all of which
should contribute to increased sales and operating earnings.
[GRAPHIC OMITTED] Starting in the 1998 season, all home canning containers are
being packaged in a central location, prior to entering a variety of
distribution channels. It is the most recent move to gain efficiencies in the
consumer products operation.
<PAGE>
Alltrista Corporation began trading on the New York Stock Exchange on
December 31, 1997, with the symbol ALC. This was a significant event for the
company; we anticipate that Alltrista common stock will have greater liquidity,
reduced price volatility and tighter quotation spreads. Improving the market
efficiency for our stock is yet another step in our goal of creating shareholder
value.
VISION, STRATEGY, AND GROWTH GOALS
As most readers of this letter know, Alltrista will mark its fifth
anniversary as an independent public corporation in April of this year. During
these years, we have assessed our initial portfolio of businesses, divested
businesses that either did not have a strategic fit or the potential for
profitable growth and value creation, and have made acquisitions that are good
strategic complements to our core businesses. As a result of these actions,
Alltrista is a strong company with the financial resources to fuel significant
growth. And growth is what our vision and strategy are all about.
Alltrista is a growing, diversified company with businesses that command a
leading market position or possess other differentiating characteristics that
consistently create value for shareholders, employees and customers --this is
our vision of Alltrista Corporation.
As we pursue our growth goal to achieve at least $500 million in sales and
a minimum of $50 million in operating earnings by the year 2002, a doubling of
1997 results, we will refine our management approach. Among these refinements is
a tougher standard on economic performance in terms of Economic Value Added, or
EVA(R). If any activity in our company does not have a positive and growing EVA,
it will be eliminated.
Delivering value to our customers is essential. Each member of the
Alltrista team is focused on serving our customers; it's not just a marketing or
top management responsibility. If we do our job here, we should dominate every
market segment we choose to serve. This will be our scorecard in serving our
customers.
CONSUMER, ZINC WILL CONTINUE TO GROW
We expect continued excellent performance from the consumer and zinc
products operations. These businesses will be managed for long-term performance
and cash flow, and we will continue to invest to ensure competitiveness and to
exploit incremental growth opportunities.
The plastics businesses have been identified as units where we will exploit
growth opportunities in areas where we have or can develop a sustainable
competitive advantage. Here we will invest aggressively in businesses that will
provide sustainable earnings growth and profitability. These businesses will be
driven by a market-based competitive strategy that will maximize growth
opportunities.
[GRAPHIC OMITTED] It was an excellent year for plastic packaging operations.
While 1998 is expected to be below last year's level, we are optimistic about
the longer-term growth prospects for this business, fueled by new application
areas as well as product innovations.
<PAGE>
Finally, we will institute an aggressive program to identify a major new
business for the corporation consistent with our corporate performance
objectives. This new business will have near-term potential or current annual
sales of at least $100 million, with a clear competitive advantage and potential
for value creation. In all likelihood, this will be a manufacturing business and
have some characteristics that complement one or more of our current operations
so that additional value can be created and that the business risk is well
within our capability to manage.
If we are to meet the growth objectives outlined earlier in this letter, we
will need to grow sales and earnings at approximately 15 percent per year on
average and over time. This will be a challenge, but we are committed. Each of
our operations has opportunity for growth. Some of this growth will occur in the
near future, some further out.
Alltrista Corporation has an exciting future. We will continue to build a
team and company that will provide employees with growth, satisfaction and
opportunity; provide our customers with high quality products and services at
competitive prices; and provide an attractive and growing return to our
shareholders. We dedicate ourselves to that future every day.
/s/Thomas B. Clark
Thomas B. Clark
President and Chief Executive Officer
/s/ William L. Peterson
William L. Peterson
Chairman of the Board
March 2, 1998
[GRAPHIC OMITTED] Value-added operations in plastics injection molding, such as
the self-injection syringes shown immediately below, will contribute to
Unimark's growth objectives. The corner tub, bottom of page, is manufactured by
Viking Plastics, acquired in 1997 and now a part of the industrial plastics
operation. Viking serves the manufactured housing and recreational vehicle
markets.
<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.
RESULTS OF OPERATIONS - COMPARING 1997 TO 1996
The company reported net sales of $255.2 million for 1997 which represents
a 10.8% increase over 1996 sales of $230.3 million. Operating earnings of $25.3
million for 1997 were 9.0% lower than 1996 operating earnings of $27.8 million.
Excluding the impact of a $3.6 million pretax charge relating to LumenX,
operating earnings were $28.9 million, a 4.0% increase for the year. Sales
increases were reported in both the food containers and the industrial
components segments, while operating earnings were up significantly in the food
containers segment and well under year ago performance in the industrial
components segment. The March 1996 acquisition of the Kerr brand of home canning
products and a good growing season for home gardening and fresh produce along
with the May 1997 acquisition of Viking Plastics were the primary drivers of the
sales increase. The food containers segment's operating earnings benefited from
the additional Kerr brand volumes, the excellent growing season and cost
reductions in the Plastic Packaging operation. Earnings in the industrial
components segment were lower than year ago levels due to reduced coinage
shipments to the U.S. Mint, increased losses at LumenX and reduced customer
requirements in Unimark Plastics.
Overall, gross margin percentages ("margins") declined in 1997. Though all
of the divisions within the industrial components segment reported a decline in
margins, Zinc Products, due to a 45% reduction in coinage sales volume to the
U.S Mint, contributed the largest portion of the decline. The reduction in
margins within the industrial components segment was also due to reduced plant
utilization at Unimark Plastics and lower than normal margins during the
integration of Viking Plastics. The food containers segment reported an increase
in margins as Consumer Products benefited from a full year of Kerr home canning
product sales and economies resulting from integrated operations and Plastic
Packaging benefited from its cost reduction efforts.
Selling, general and administrative expenses increased 5.9% or $2.3 million
to $41.4 million in 1997 from $39.1 million in 1996. The increase was almost
entirely a function of the increased Consumer Products business level and the
Viking Plastics acquisition. Selling, general and administrative expenses as a
percentage of net sales were 16.2% for 1997 compared to 17.0% for 1996. The
improvement is primarily attributed to efficiencies resulting from consolidating
the operations of the Ball and Kerr brands.
Net interest expense for 1997 was $2.3 million compared to $2.6 million for
the same period last year. Lower 1997 daily average borrowings and higher
interest income from short-term cash investments were offset in part by slightly
higher interest rates.
Income from continuing operations of $14.8 million decreased 2.3% from
$15.2 million and diluted earnings per share from continuing operations was
$1.96, an increase of 1.6% over the $1.93 reported for 1996. Excluding the
after-tax impact of the LumenX charge, 1997 net earnings from continuing
operations would have been $16.5 million and diluted earnings per share would
have been $2.18.
FOOD CONTAINERS SEGMENT
Sales within the food containers segment increased $20.6 million in 1997
compared to 1996. The increase was due to a $22.5 million increase in sales in
Consumer Products, reflecting the March 1996 acquisition of the Kerr brand of
home canning products and an increase in sales within all brand lines due to a
good growing season for home gardening and fresh produce in the United States as
well as in Canada. During 1996, the company, under the terms of a non-exclusive
Sales Agent Agreement, sold certain pre-closing inventory retained by the
seller. These sales and any resulting profits are not reflected in the company's
1996 results of operations. Since the company fulfilled the agreement at the end
of 1996, 1997 sales and profits from all Kerr products are reflected in the
company's results.
Plastic Packaging's $1.9 million decrease in sales was primarily due to
lower customer requirements. Sales are anticipated to be lower in 1998 due to
the loss of a competitive bid package representing approximately $5.0 million in
annual sales. In addition, intensified market competition is expected to lead to
industrywide margin erosion in 1998.
Operating earnings within the food containers segment increased $7.5
million in 1997 compared to 1996. The addition of the Kerr product line as well
as the good home canning season were the primary reasons for the improved
results. Despite the decline in sales, Plastic Packaging also contributed to the
increase in operating earnings through increased labor and production
efficiencies and reduced selling, general and administrative expenses.
In October 1997, Consumer Products entered into an agreement to market and
distribute the Golden Harvest line of home canning products, which includes jars
and lids. Under the agreement the company anticipates it will add approximately
$8.0 million to annual sales.
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
INDUSTRIAL COMPONENTS SEGMENT
Sales within the industrial components segment increased $4.3 million in
1997 compared to 1996. Industrial Plastics and Zinc Products both reported
increases in sales. Industrial Plastics posted a $10.4 million increase in sales
primarily as a result of the May 1997 acquisition of Viking Plastics ($9.7
million in sales). Zinc Products reported a $2.8 million increase in sales
despite U.S. Mint coinage shipments averaging 16 truck loads per week for 1997
compared to 29 truck loads per week in 1996. The effect the decline in coinage
volume had on sales was offset by (i) zinc ingot prices increasing from an
average of 52 cents per pound in 1996 to 66 cents per pound in 1997, (ii) an
increase in European industrial sales volume, and (iii) increased sales to the
Royal Canadian Mint for the Canadian one cent coin. The Zinc Products division
does not anticipate any further erosion of coin volume to the U.S. Mint for
1998. One of the two customers for which Zinc Products produces dry cell battery
cans notified the company it would be moving production of its zinc/carbon
batteries to Mexico in 1998 and will no longer purchase battery cans from the
company. The company reported $9.5 million in sales with this customer in 1997.
The increases in sales at Industrial Plastics and Zinc Products were offset
in part by decreases in sales at Unimark Plastics and LumenX. Unimark Plastics
reported a $2.7 million decrease in sales for 1997 as a result of reduced
customer requirements, including several customers with in-house molding
facilities moving production back into their own locations during slow periods.
The company expects increased sales activity for 1998. In addition, the company
has reduced headcount to eliminate cost in this business for 1998. LumenX
reported a $6.3 million decrease in sales due to the sale of the machine vision
inspection equipment product line on September 30, 1997 and a reduction in
demand for tire and airbag inspection equipment within the x-ray product line.
Operating earnings for the industrial components segment decreased $9.6
million in 1997 compared to 1996. Excluding the $3.6 million charge related to
LumenX, operating earnings for the industrial components segment decreased $6.0
million in 1997. The $3.6 million charge consisted of an estimated loss on the
vision inspection assets sold, transaction costs, a write-off of vision related
assets not sold and a write-down of x-ray business assets. Within this segment,
only Industrial Plastics had an increase in operating earnings, although slight,
as costs were higher than normal during the integration phase at Viking
Plastics. The aforementioned decline in U.S. Mint coinage shipments within Zinc
Products, reduced customer requirements within Unimark Plastics and increased
losses within LumenX all contributed to the decline in operating earnings.
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.
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 industrial 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,
respectively.
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 $0.4
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
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 diluted 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 diluted
earnings per share would have been $1.75.
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. The 1996 loss from this
discontinued operation was $0.7 million. This represents break-even results from
operations for the first four months of 1996 and a $0.7 million loss on
disposal, reflecting estimated costs accrued in conjunction with the transfer of
assets sold and a $0.4 million curtailment loss from the pension and
postretirement plans. Metal Services had an after-tax loss of $1.0 million in
1995.
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. 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. 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 going forward. 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.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Working capital (excluding the current portion of long-term debt) as of
December 31, 1997 increased $9.1 million to $58.0 million from the 1996 level of
$48.9 million. Cash and cash equivalents increased $19.0 million. This increase
was offset in part by a $9.1 million decrease in inventories. Cash provided by
operating activities was $35.8 million for 1997 compared to $34.8 million
produced in 1996. The company purchased $4.2 million (185,000 shares) of its
common stock during 1997 and $14.0 million (630,000 shares) in 1996. It is the
company's policy to annually repurchase shares to offset the dilutive effect of
shares issued under employee benefit plans. The company will also periodically
repurchase additional shares as a flexible and tax efficient means of
distributing excess cash to shareholders. In May 1997, the company's board of
directors approved a new 600,000 share repurchase program. As of December 31,
1997, the company may purchase up to 565,500 additional shares under this
approval. The decrease in inventory was primarily due to the strong selling
season within Consumer Products, including a reduction in the stock of Kerr
products acquired in a bulk purchase at year-end 1996 and the sale of the LumenX
vision inspection inventory. Receivables decreased $4.0 million primarily due to
the sale of the machine vision inspection equipment product line and lower
demand for
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
tire and airbag inspection equipment within the x-ray product line of LumenX.
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,
including the company's stock repurchase program. 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 compan's corporate development
activities.
On May 19, 1997, the company purchased certain assets and assumed certain
liabilities of Viking Industries, an Arkansas-based producer of large
thermoformed plastic products sold to manufactured housing and recreational
vehicle industries. The $8.4 million transaction was financed through available
credit lines. The company could pay up to an additional $5.0 million based upon
incremental sales over a three-year period. Other capital expenditures for
property, plant and equipment were $7.9 million during 1997 compared to $10.7
million during 1996. 1997 capital expenditures were largely related to
maintaining manufacturing facilities and were lower than 1996 levels primarily
due to $2.8 million spent in 1996 to complete the Missouri facility for Unimark
Plastics.
On September 30, 1997 the company completed the sale of certain assets of
LumenX's machine vision inspection equipment product line to Pressco Technology
Inc. ("Pressco"). The sale, which consisted primarily of inventory, fixed assets
and intangibles, was for $1.0 million in cash and future consideration based
upon Pressco's future sales of vision inspection equipment to the container
industry. Taking into account the cash received, future cash proceeds expected,
tax benefits and costs paid, the company expects the transaction to provide
approximately $4.0 million in cash over the next three years. The company has
taken steps to reduce costs in the remaining x-ray inspection business so it can
be operated at a profitable level. Management continues to assess its plans for
the remaining business. If a determination to exit this business is made, there
can be no assurance that the entire value of its net assets ($4.8 million as of
December 31, 1997) would be recovered.
The company has $30 million of long-term debt with maturity dates beginning
in December 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 $0.5 million. This gain was amortized over the original three-year term
of the swap and effectively fixed the company's interest rate on the long-term
debt through December 1997 at 7.19%. The company participates in a $50 million
revolving credit agreement with a group of banks, of which no borrowings were
outstanding at year-end 1997 or 1996. The company also has available $74 million
in committed and uncommitted credit lines of which no borrowings were
outstanding at year-end 1997 or 1996. After reducing outstanding debt by the
cash balance, the debt-to-total capitalization ratio was 3.3% at December 31,
1997.
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 cleanup 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.
The company is currently assessing its exposure to potential Year 2000
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 operating 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.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
Alltrista Corporation and Subsidiaries
(thousands, except per share amounts) Year ended December 31,
1997 1996 1995
---------- --------- ---------
<S> <C> <C> <C>
Net sales................................................ $ 255,167 $ 230,314 $ 221,458
---------- --------- ---------
Costs and expenses
Cost of sales....................................... 184,856 163,435 161,662
Selling, general and administrative expenses........ 41,426 39,108 33,256
Unusual items....................................... 3,612 - 2,430
---------- --------- ---------
Operating earnings....................................... 25,273 27,771 24,110
Interest expense, net.................................... (2,256) (2,571) (3,342)
---------- --------- ---------
Income from continuing operations before taxes........... 23,017 25,200 20,768
Provision for income taxes............................... (8,180) (9,979) (8,240)
---------- --------- ---------
Income from continuing operations........................ 14,837 15,221 12,528
---------- --------- ---------
Discontinued operation:
Loss from discontinued operation,
net of income taxes of $641.................... - - (1,029)
Net loss on disposal of discontinued operation,
net of income tax benefit of $468............. - (711) -
---------- --------- ---------
Net income.............................................. $ 14,837 $ 14,510 $ 11,499
========== ========= =========
Basic earnings per share:
Income from continuing operations.................. $ 2.00 $ 1.97 $ 1.60
Discontinued operation............................. - (.09) (.13)
---------- --------- ---------
Net income......................................... $ 2.00 $ 1.88 $ 1.47
========== ========= =========
Diluted earnings per share:
Income from continuing operations.................. $ 1.96 $ 1.93 $ 1.57
Discontinued operation............................. - (.09) (.13)
---------- --------- ---------
Net income......................................... $ 1.96 $ 1.84 $ 1.44
========== ========= =========
Weighted average shares outstanding:
Basic.............................................. 7,413 7,737 7,806
Diluted............................................ 7,558 7,906 7,996
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
Alltrista Corporation and Subsidiaries
(thousands of dollars)
December 31,
1997 1996
-------- --------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents..................................................... $26,641 $ 7,611
Accounts receivable, net of reserve for doubtful accounts of $1,023 and $1,129 23,646 27,621
Inventories................................................................... 33,183 42,262
Prepaid expenses.............................................................. 1,511 726
Deferred taxes on income...................................................... 4,243 3,312
------- -------
Total current assets........................................................ 89,224 81,532
------- -------
Property, plant and equipment, at cost
Land.......................................................................... 782 782
Buildings..................................................................... 30,500 29,349
Machinery and equipment....................................................... 118,622 115,004
-------- --------
149,904 145,135
Accumulated depreciation...................................................... (104,894) (99,475)
-------- --------
45,010 45,660
-------- --------
Goodwill, net of accumulated amortization of $2,347 and $1,083.................. 24,947 20,549
Deferred taxes on income........................................................ 200 -
Other assets.................................................................... 7,196 6,338
-------- --------
Total assets.................................................................... $166,577 $154,079
Liabilities and shareholders' equity ======== ========
Current liabilities
Current portion of long-term debt............................................. $ 4,286 $ -
Accounts payable.............................................................. 18,424 17,181
Accrued salaries, wages and employee benefits................................. 7,139 7,370
Other current liabilitie...................................................... 5,616 8,109
--------- --------
Total current liabilities................................................... 35,465 32,660
--------- --------
Noncurrent liabilities
Long-term debt................................................................ 25,714 30,000
Deferred taxes on income...................................................... - 92
Other noncurrent liabilities.................................................. 8,089 7,860
-------- --------
Total noncurrent liabilities................................................ 33,803 37,952
-------- --------
Contingencies
Shareholders' equity
Common stock, 25,000,000 shares authorized, 7,976,747 and 7,968,868 shares issued
and 7,461,765 and 7,464,886 shares outstanding in 1997 and 1996, respectively 40,779 41,457
Retained earnings............................................................. 68,312 53,475
Minimum pension liability..................................................... - (253)
Cumulative translation adjustment............................................. (303) (38)
-------- --------
108,788 94,641
Less: treasury stock (514,982 and 503,982 shares, at cost).................... (11,479) (11,174)
-------- --------
Total shareholders' equity.................................................. 97,309 83,467
-------- --------
Total liabilities and shareholders' equity...................................... $166,577 $154,079
======== ========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Alltrista Corporation and Subsidiaries
(thousands of dollars) Year ended December 31,
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities
Net income.................................................................... $ 14,837 $ 14,510 $ 11,499
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization............................................... 10,385 10,569 12,816
Deferred taxes on income.................................................... (1,391) (1,134) (1,815)
Loss/(gain) on sale of assets............................................... 267 550 (410)
Loss on disposal of discontinued operation.................................. - 1,179 -
Deferred employee benefits.................................................. 1,071 1,008 746
Other....................................................................... (105) 63 190
Unusual item................................................................ 3,612 - 2,430
Unusual item from discontinued operation.................................... - - 3,480
Changes in working capital components excluding acquisitions:
Accounts receivable......................................................... 5,567 7,803 (1,453)
Inventories................................................................. 6,724 12,041 (7,165)
Accounts payable............................................................ (683) (6,195) 891
Accrued salaries, wages and employee benefits............................... (734) (3,241) (1,242)
Other current assets and liabilities........................................ (3,720) (2,334) (2,955)
-------- -------- --------
Net cash provided by operating activities................................. 35,830 34,819 17,012
-------- -------- --------
Cash flows from financing activities
Proceeds from revolving credit borrowings and notes payable................... 15,967 20,695 20,713
Principal payments on revolving credit borrowings and notes payable........... (15,967) (24,195) (25,713)
Debt acquisition costs........................................................ - - (19)
Proceeds from issuance of common stock........................................ 2,653 3,091 2,417
Purchase of treasury stock.................................................... (4,230) (13,980) -
-------- -------- --------
Net cash used in financing activities..................................... (1,577) (14,389) (2,602)
-------- -------- --------
Cash flows from investing activities
Proceeds from sales of property, plant and equipment.......................... 229 950 446
Additions to property, plant and equipment.................................... (7,897) (10,699) (13,693)
Acquisitions of businesses, net of cash acquired.............................. (8,379) (14,633) -
Proceeds from divestitures of businesses and product lines.................... 1,000 14,384 -
Investment in life insurance contracts........................................ - (4,308) -
Other......................................................................... (176) (846) (59)
-------- -------- --------
Net cash used in investing activities..................................... (15,223) (15,152) (13,306)
-------- -------- --------
Net increase in cash............................................................ 19,030 5,278 1,104
Cash and cash equivalents, beginning of year.................................... 7,611 2,333 1,229
-------- -------- --------
Cash and cash equivalents, end of year.......................................... $ 26,641 $ 7,611 $ 2,333
======== ======== ========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements 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, 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........... 212 3,584 - - - - -
Shares reissued from treasury for
stock options exercised and stock
plan purchases..................... (127) (2,806) 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)
Net income.......................... - - - - 14,837 - -
Minimum pension liability........... - - - - - 253 -
Stock options exercised
and stock plan purchases........... 183 3,247 - - - - -
Shares reissued from treasury for
stock options exercised and stock
plan purchases..................... (175) (3,925) 175 3,925 - - -
Cumulative translation adjustment... - - - - - - (265)
Purchase of common stock............ - - (186) (4,230) - - -
------ -------- ------ ------- -------- --------- -----------
Balance, December 31, 1997.......... 7,977 $40,779 (515) $(11,479) $68,312 $ - $(303)
====== ======== ====== ======= ======== ========= ===========
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.
The businesses comprising the company have interests in metal, plastics,
consumer products and industrial equipment. See Business Segment Information
note.
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.
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 reviews property, plant and
equipment for impairment whenever events or circumstances indicate that carrying
amounts may not be recoverable through future undiscounted cash flows, excluding
interest cost. If the sum of the expected undiscounted future cash flows is less
than the carrying amount of the asset, an impairment loss is recognized.
DEPRECIATION
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 INTANGIBLES
Goodwill represents the excess of the purchase prices of acquired businesses
over the estimated fair values of the tangible and intangible net assets
acquired. Goodwill and other intangibles are being amortized on a straight-line
basis over periods ranging from 5 to 20 years. The company evaluates these
assets for impairment whenever events or circumstances indicate that carrying
amounts may not be recoverable through future undiscounted cash flows, excluding
interest cost. If the sum of the expected undiscounted future cash flows is less
than the carrying amount of the asset, an impairment loss is recognized.
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, 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. Had compensation cost for
the company's stock option plans been determined based on the fair value at the
grant dates for awards under those plans, the company's net income and earnings
per share would have been reduced to the pro forma amounts indicated below:
thousands of dollars, 1997 1996 1995
except per share amounts ------- ------- -------
Net income
As reported............. $14,837 $14,510 $11,499
Pro forma............... 14,612 14,349 11,416
Basic earnings per share
As reported............. $ 2.00 $ 1.88 $ 1.47
Pro forma............... 1.97 1.85 1.46
Diluted earnings per share
As reported............. $ 1.96 $ 1.84 $ 1.44
Pro forma............... 1.93 1.81 1.43
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Alltrista Corporation and Subsidiaries
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1997, 1996 and 1995, respectively: no dividend
yield for all years, expected volatility of 23, 21 and 19 percent, risk-free
interest rates of 6.2, 6.3 and 7.1 percent and expected lives of 7.5 years for
all periods.
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.
EARNINGS PER SHARE
The company adopted the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share", in the last quarter of 1997. All prior
period earnings per share amounts have been restated. Basic earnings per share
is computed by dividing income from continuing operations, discontinued
operations and net income by the weighted average number of 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 diluted earnings per share.
A reconciliation of the basic and diluted weighted average shares
outstanding is as follows for the years ended December 31:
(thousands) 1997 1996 1995
----- ----- -----
Weighted average number of
common shares outstanding used
as the denominator in the basic
earnings per share calculation.... 7,413 7,737 7,806
Additional shares assuming
conversion of dilutive
stock options..................... 145 169 190
----- ----- -----
Weighted average number of
common and equivalent shares
used as the denominator in the
diluted earnings per
share calculation................. 7,558 7,906 7,996
===== ===== =====
BUSINESS SEGMENT INFORMATION
The company has two distinct segments: industrial components and food
containers. 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
industrial components segment also produces injection molded plastic products
used in medical, pharmaceutical and consumer products, thermoformed plastic
parts for appliances, and plastic products sold to the manufactured housing and
recreational vehicle industries. The majority of Industrial Plastics' sales were
to one customer. This segment also supplies inspection systems used primarily in
the tire 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. In October 1997, Consumer Products entered into an
agreement to market and distribute the Golden Harvest line of home canning
products, which includes jars and lids. Under the terms of a property transfer
agreement, the company has the right to use the Ball 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>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Alltrista Corporation
(thousands of dollars) 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net sales:
Industrial Components:
Zinc Products........................................................... $ 60,291 $ 57,501 $ 56,328
LumenX.................................................................. 15,520 21,816 19,801
Unimark Plastics........................................................ 30,434 33,105 32,505
Industrial Plastics..................................................... 27,297 16,850 16,898
-------- -------- --------
Total industrial components......................................... 133,542 129,272 125,532
-------- -------- --------
Food containers:
Consumer Products....................................................... 79,573 57,096 51,792
Plastic Packaging....................................................... 42,052 43,946 44,134
-------- -------- --------
Total food containers............................................... 121,625 101,042 95,926
-------- -------- --------
Total net sales................................................................. $255,167 $230,314 $221,458
Operating earnings: ======== ======== ========
Industrial components(1)(2)................................................. $ 8,177 $ 17,819 $ 15,315
Food containers............................................................. 18,592 11,066 9,939
Unallocated corporate expenses.............................................. (1,496) (1,114) (1,144)
-------- -------- --------
Total operating earnings................................................ 25,273 27,771 24,110
Interest expense, net....................................................... (2,256) (2,571) (3,342)
-------- -------- --------
Income from continuing operations before taxes.......................... $ 23,017 $ 25,200 $ 20,768
======== ======== ========
Assets employed in operations:
Industrial components....................................................... $ 66,090 $ 66,550 $ 65,705
Food containers............................................................. 61,390 70,224 50,599
-------- -------- --------
Total assets employed in operations..................................... 127,480 136,774 116,304
Discontinued operation...................................................... - - 39,262
Corporate(3)................................................................ 39,097 17,305 7,084
-------- -------- --------
Total assets............................................................ $166,577 $154,079 $162,650
======== ======== ========
Capital expenditures:
Industrial components(4).................................................... $ 13,840 $ 8,536 $ 10,194
Food containers(5).......................................................... 2,337 16,087 1,370
Discontinued operation...................................................... - 337 2,095
Corporate................................................................... 99 372 34
-------- -------- --------
Total capital expenditures.............................................. $ 16,276 $ 25,332 $ 13,693
======== ======== ========
Depreciation and amortization:
Industrial components....................................................... $ 6,628 $ 6,024 $ 5,891
Food containers............................................................. 3,565 3,832 3,627
Discontinued operation...................................................... - 499 3,128
Corporate................................................................... 192 214 170
-------- -------- --------
Total depreciation and amortization..................................... $ 10,385 $ 10,569 $ 12,816
======== ======== ========
<FN>
(1) Operating earnings for 1997 include a pre-tax charge of $3.6 million which
consists primarily of an estimated loss on the sale of the machine vision
inspection equipment product line, write-off of vision related assets not
sold and the write-down of x-ray business assets in the LumenX company.
(2) 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.
(3) Corporate assets include cash and cash equivalents, amounts related to
employee benefit plans, deferred tax assets and corporate facilities and
equipment.
(4) Capital expenditures for 1997 include the purchase of certain assets and
assumed liabilities of Viking Plastics.
(5) Capital expenditures for 1996 include the purchase of the Kerr brand home
food preservation product line.
</FN>
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Alltrista Corporation and Subsidiaries
INVENTORIES
Inventories were comprised of the following at December 31:
(thousands of dollars) 1997 1996
------- -------
Raw materials and supplies............ $ 9,410 $ 9,894
Work in process and finished goods.... 23,773 32,368
------- -------
Total inventories..................... $33,183 $42,262
======= =======
DEBT AND INTEREST
The company has $30 million outstanding 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 $0.5 million which was amortized over the original term of
the swap and effectively fixed 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, 1997 is estimated to be $31.5 million.
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. 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, 1997 and 1996,
no borrowings were outstanding under this agreement. The company also has
available from various banks $74 million in committed and uncommitted short-term
credit lines of which no borrowings were outstanding at December 31, 1997 and
1996.
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, 1997, 1996, and 1995 was $2.5, $2.9, and $3.3 million, respectively.
ACQUISITIONS
On May 19, 1997, the company purchased certain assets and assumed certain
liabilities of Viking Industries ("Viking Plastics") an Arkansas-based producer
of large thermoformed plastic products sold to the manufactured housing and
recreational vehicle industries for $8.4 million and future consideration. The
acquisition was accounted for as a purchase. The purchase price was allocated to
the assets purchased and liabilities assumed based on their estimated fair
values as of the date of acquisition. The purchase price in excess of the fair
value of assets purchased and liabilities assumed of $5.2 million is being
amortized over a 20-year period. The aforementioned future consideration may
range from no consideration to $5.0 million based upon incremental sales over a
three-year period. The impact of including the financial results of Viking
Plastics in a pro forma presentation for the six months ended June 30, 1997 and
twelve months ended December 31, 1996 would not have been material.
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 of 1996, the company 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 were recorded in "Other Current Liabilities" for severance and the
estimated net costs to close the Jackson facility, resulting in additional
goodwill. The Jackson facility closure was completed in December 1997, as
contemplated.
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
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Alltrista Corporation and Subsidiaries
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 statements of income. 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 $0.7 million curtailment loss for pension benefits related to Metal
Services company, and a $0.3 million curtailment gain for postretirement
benefits is a loss of $0.7 million, net of tax. Sales from this operation were
$79.7 in 1995 and $18.0 million up to the Measurement date in 1996.
UNUSUAL ITEMS
On September 30, 1997, the company completed the sale of the machine vision
inspection equipment product line of its LumenX division to Pressco Technology
Inc. ("Pressco"). The sale, which consisted primarily of inventory, fixed assets
and intangibles, was for $1.0 million in cash and future consideration based
upon Pressco's future sales of vision inspection equipment to the container
industry. The company had vision inspection equipment sales of $5.3 million for
the nine months ended September 28, 1997 and $7.2 million and $7.7 million for
the twelve months ended December 31, 1996 and 1995, respectively.
Concurrent with the sale of certain assets of the vision inspection product
line, the company incurred a $3.6 million charge which consisted of (i) an
estimated $1.3 million loss on the vision inspection assets sold, including
transaction costs, (ii) an additional $1.0 million write-off of vision related
assets which were not part of the transaction, and (iii) the write down of $1.0
million of x-ray inventory and $0.3 million of other x-ray business assets.
Given the nature of the x-ray business products and recent performance,
management is assessing their plans for this business. If a determination to
exit this business is made, there can be no assurance that the entire value of
its net assets ($4.8 million as of December 31, 1997) would be recovered.
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) 1997 1996 1995
------ ------- ------
Current income tax expense:
U.S. federal.............. $7,675 $ 8,658 $7,189
Foreign................... 806 449 247
State and local........... 1,073 2,022 1,667
------ ------- ------
Total current income
tax expense........... 9,554 11,129 9,103
------ ------- ------
Deferred income tax benefit:
U.S. federal............. (1,198) (944) (633)
State, local and other... (176) (206) (230)
------ ------- ------
Total deferred income
tax benefit.......... (1,374) (1,150) (863)
------ ------- ------
Total provision for
income taxes......... $8,180 $ 9,979 $8,240
====== ======= ======
Foreign pre-tax income was $2,078,000 in 1997, $1,110,000 in 1996 and $330,000
in 1995.
Deferred tax liabilities (assets) are comprised of the following at December 31:
(thousands of dollars) 1997 1996
------- -------
Depreciation and amortization.......... $ 2,287 $ 2,311
Other.................................. 711 631
------- -------
Gross deferred tax liabilities..... 2,998 2,942
------- -------
Accounts receivable allowances......... (388) (594)
Inventory valuation.................... (1,143) (962)
Accrued vacation....................... (538) (576)
Postretirement benefit obligation...... (667) (694)
Employee benefits/compensation......... (3,029) (2,259)
Environmental reserve.................. (237) (256)
Other.................................. (1,439) (821)
------- -------
Gross deferred tax assets.......... (7,441) (6,162)
------- -------
Net deferred tax asset................. $(4,443) $(3,220)
======== ========
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Alltrista Corporation and Subsidiaries
At December 31, 1997 and 1996, there were no valuation allowances for
deferred tax assets as management believes it is more likely than not that they
will be realized through future taxable earnings or alternative tax strategies.
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 is reconciled as follows:
1997 1996 1995
----- ----- -----
Federal statutory tax rate............. 35.0% 35.0% 35.0%
Increase (decrease) in rates
resulting from:
State and local taxes, net..... 2.6 4.7 4.7
Amortization of intangibles.... (1.0) .4 .6
Other.......................... (1.1) (.5) (.6)
----- ----- -----
Effective income tax rate.............. 35.5% 39.6% 39.7%
===== ===== =====
The difference between the effective income tax rate for discontinued
operations of 39.7% in 1996 and 38.4% in 1995 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, 1997, 1996 and 1995 were $9.8 million, $10.1 million, and $11.9
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 2% of base compensation and 50% of additional employee contributions up to a
maximum company match of 4%, subject to statutory limitations. The company's
contributions to the Retirement Plan were $1.8, $1.7, and $1.9 million
respectively, in the years ended December 31, 1997, 1996, and 1995.
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, 1997, 1996, and 1995 are as follows:
(thousands of dollars) 1997 1996 1995
------- ----- -----
Service cost of benefits
earned during the period..... $ 254 $ 313 $ 307
Interest cost on projected
benefit obligation............ 685 630 558
Investment gain on plan assets.... (1,649) (835) (692)
Net amortization and deferral..... 959 421 433
------- ----- -----
Net periodic pension expense.. $ 249 $ 529 $ 606
======= ====== =====
The following table summarizes the funded status of the plan as of December
31, 1997 and 1996 (thousands of dollars):
1997 1996
------- ------
Actuarial present value of benefit obligations:
Vested............................................ $ 8,958 $7,658
Non vested........................................ 1,058 1,297
------- ------
Accumulated benefit obligation.................... 10,016 8,955
------- ------
Projected benefit obligation...................... 10,130 9,183
Plan assets at fair value......................... 9,799 7,989
------- ------
Funded status..................................... 331 1,194
Unrecognized net transitional asset................... 27 36
Unrecognized prior service cost....................... (380) (566)
Unrecognized net loss................................. (14) (685)
Additional minimum liability.......................... 253 988
------- ------
Accrued pension liability......................... $ 217 $ 967
======= ======
In accordance with the provisions of SFAS 87, "Employer's Accounting for
Pensions," the company recorded an additional minimum liability of $0.3 and $1.0
million at December 31, 1997 and 1996, 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 for 1996, 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 7.25% and 7.5% in 1997 and 1996, respectively, and an
expected long-term rate of return on assets of 9.0% in both 1996 and 1995. The
change in assumption had an immaterial effect of the funded status of the plan.
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
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Alltrista Corporation and Subsidiaries
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, 1997, 1996, and 1995 are as follows (thousands of dollars):
1997 1996 1995
----- ----- -----
Service cost of benefit earned....... $ 73 $ 72 $ 66
Interest cost on liability........... 102 118 120
Net amortization and deferral........ (7) 4 (12)
----- ----- -----
Net postretirement benefit cost.. $168 $194 $174
===== ===== =====
The status of the company's unfunded postretirement benefit obligation at
December 31, 1997 and 1996 follows (thousands of dollars):
1997 1996
------ -------
Actuarial present value of accumulated
postretirement benefit obligation:
Fully eligible active
plan participants................ $ 542 $ 549
Other active plan participants... 642 617
Retirees......................... 395 353
------ -------
Accumulated postretirement
benefit obligation.................. 1,579 1,519
Unrecognized net gain................... 278 312
Unrecognized prior service cost......... (60) (63)
------- ------
Accrued postretirement
benefit cost................ $1,797 $1,768
======= =======
The assumed discount rate used to measure the APBO was changed from 7.5% as
of December 31, 1996 to 7.25% as of December 31, 1997. 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 1997
and 1996, the company had accrued $5.3 million and $4.2 million, respectively,
for its obligations under this plan. Interest expense on this obligation was
$0.4 million in 1997 and $0.3 million in 1996. 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 $4.6 and $4.3 million as of the years ended 1997
and 1996, respectively.
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
made 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>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Alltrista Corporation and Subsidiaries
<TABLE>
<CAPTION>
A summary of stock option activity for the years ended December 31, 1997 and
1996 is as follows:
1997 1996
----------------------------------------- ---------------------------------------
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...... 473,074 $15.05 $10.70-$24.125 596,128 $13.87 $10.70-$24.125
New options granted................... 55,175 21.50 21.50 70,775 21.25 21.25
Exercised............................. (133,521) 12.79 10.70-22.25 (155,451) 12.37 10.70-22.250
Canceled.............................. (20,667) 19.64 10.89-24.125 (38,378) 18.91 10.70-22.250
--------- ---------
Outstanding at end of year............ 374,061 16.55 10.70-24.125 473,074 15.05 10.70-24.125
Exercisable at end of year............ 249,263 14.12 10.70-24.125 325,401 12.78 10.70-24.125
Reserved for future grants............ 151,697 - - 186,205 - -
</TABLE>
<TABLE>
<CAPTION>
Significant option groups outstanding at December 31, 1997 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)
--------------- ----------- ---------------- ----------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
$21.25-$24.125 149,286 $21.67 34,002 $22.02 8
13.25 - 19.63 87,294 15.73 77,780 15.26 6
10.70 - 13.09 137,481 11.52 137,481 11.52 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 14,004 shares was available for grant at December 31,
1997.
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 $164,000, $206,000, and
$267,000 to the plan in 1997, 1996 and 1995, respectively.
During 1997, the company's board of directors authorized the repurchase of
up to 600,000 shares of the company's common stock. The company has purchased
34,500 shares at a cost of $0.8 million as a part of this program.
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.
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 cleanup 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
------- ------- ------- -------
1997
High.............. 25 27 3/8 27 3/4 29 3/4
Low............... 20 5/8 20 1/2 24 1/2 26 5/8
1996
High.............. 24 24 1/8 24 1/4 26 1/8
Low............... 18 21 19 3/4 21 1/4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Alltrista Corporation and Subsidiaries
<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>
1997
Net sales........................................... $45,642 $78,950 $79,632 $50,943 $255,167
Gross profit........................................ 10,844 24,331 24,655 10,481 70,311
Net income from continuing operations............... 1,433 6,812 4,939 1,653 14,837
Net income.......................................... 1,433 6,812 4,939 1,653 14,837
Basic net income per share.......................... $ .19 $ .93 $ .67 $ .22 $ 2.00
Diluted net income per share........................ $ .19 $ .91 $ .66 $ .22 $ 1.96
1996
Net sales........................................... $51,128 $69,398 $ 65,763 $ 44,025 $230,314
Gross profit........................................ 13,576 22,755 20,116 10,432 66,879
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
Basic earnings per share:
Income from continuing operations............... $ .39 $ .75 $ .54 $ .28 $ 1.97
Net income...................................... $ .43 $ .72 $ .54 $ .18 $ 1.88
Diluted earnings per share:
Income from continuing operations............... $ .38 $ .73 $ .53 $ .27 $ 1.93
Net income...................................... $ .42 $ .70 $ .53 $ .18 $ 1.84
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
Basic earnings per share:
Income from continuing operations............... $ .31 $ .64 $ .40 $ .25 $ 1.60
Net income (loss)............................... $ .37 $ .71 $ .43 $ (.04) $ 1.47
Diluted earnings per share:
Income from continuing operations............... $ .30 $ .63 $ .39 $ .25 $ 1.57
Net income (loss)............................... $ .36 $ .69 $ .42 $ (.03) $ 1.44
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 effect of outstanding dilutive stock options has been
included in diluted earnings per share in each year.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Alltrista Corporation and Subsidiaries
<TABLE>
<CAPTION>
Five-Year Review of Selected Financial Data
Year ended December 31,
(thousands of dollars, except per share amounts) 1997 1996 1995 1994 1993
-------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Statement of Income Data
Net sales.................................................. $255,167 $230,314 $221,458 $207,779 $193,260
Earnings before interest and taxes(a)(b)................... 25,273 27,771 24,110 26,252 24,643
Income from continuing operations.......................... 14,837 15,221 12,528 14,012 12,463
Gain (loss) from discontinued operation.................... - (711) (1,029) 2,116 981
Effect of accounting change (net of income taxes).......... - - - - (714)
-------- -------- -------- -------- --------
Net income (a) (b)......................................... $ 14,837 $ 14,510 $ 11,499 $ 16,128 $ 12,730
======== ======== ======== ======== ========
Basic earnings per share:
Income from continuing operations...................... $ 2.00 $ 1.97 $ 1.60 $ 1.85 $ 1.70
Gain (loss) from discontinued operation................ - (.09) (.13) .28 .13
Effect of accounting change (net of income taxes)...... - - - - (.10)
-------- -------- -------- -------- --------
$ 2.00 $ 1.88 $ 1.47 $ 2.13 $ 1.73
======== ======== ======== ======== ========
Diluted earnings per share:
Income from continuing operations...................... $ 1.96 $ 1.93 $ 1.57 $ 1.80 $ 1.65
Gain (loss) from discontinued operation................ - (.09) (.13) .27 .13
Effect of accounting change (net of income taxes)...... - - - - (.09)
-------- -------- -------- -------- --------
$ 1.96 $ 1.84 $ 1.44 $ 2.07 $ 1.69
======== ======== ======== ======== ========
Balance Sheet Data (at end of year)
Total assets............................................... $166,577 $154,079 $162,650 $156,725 $143,107
Property, plant and equipment, net......................... 45,010 45,660 56,083 59,040 58,693
Goodwill, net.............................................. 24,947 20,549 7,534 8,219 819
Long-term debt............................................. 25,714 30,000 30,000 30,000 35,000
<FN>
(a) The year ended December 31, 1997 includes a $3.6 million pretax charge
which consists of an estimated loss on the sale of the machine inspection
equipment product line, write-off of vision-related assets not sold and the
write-down of x-ray business assets in the LumenX company.
(b) The year ended December 31, 1995 includes a $2.4 million pretax provision
to write-off assets related to a discontinued product development project
in the Zinc Products company.
</FN>
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Alltrista Corporation
In our opinion, the accompanying consolidated balance sheets 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, 1997 and 1996, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1997, 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
Indianapolis, Indiana
January 30, 1998
<PAGE>
DIRECTORS, CORPORATE OFFICERS AND DIVISION PRESIDENTS
Alltrista Corporation and Subsidiaries
DIRECTORS
Thomas B. Clark (3) (4)
President and Chief Executive Officer
Alltrista Corporation
Muncie, Indiana
William A. Foley(2) (3) (4)
Chairman, President and Chief Executive Officer
LESCO, Inc.
Rocky River, Ohio
Richard L. Molen(2) (3) (4)
Retired Chairman, President and Chief Executive Officer
Huffy Corporation
Miamisburg, Ohio
William L. Peterson(1) (2)
Chairman of the Board
Retired President & Chief Executive Officer
Alltrista Corporation
Muncie, Indiana
Lynda Watkins Popwell (1)
President
Carolina Eastman Division
Eastman Chemical Company
Columbia, South Carolina
Patrick W. Rooney(1) (3)
Chairman, President and Chief Executive Officer
Cooper Tire & Rubber Company
Findlay, Ohio
David L. Swift(1) (2) (4)
Former Chairman, President and Chief Executive Officer
Acme-Cleveland Corporation
Cleveland, Ohio
(1) Audit Committee
(2) Executive Compensation Committee
(3) Nominating Committee
(4) Strategy Committee
CORPORATE OFFICERS
Thomas B. Clark (21)
President and Chief Executive Officer
Kevin D. Bower (5)
Senior Vice President and Chief Financial Officer
Jerry T. McDowell (27)
Group Vice President
William L. Skinner (8)
Senior Vice President, Administration and
Corporate Development
Angela K. Knowlton (4)
Vice President and Treasurer
Larry D. Miller (18)
Vice President, Communications and Investor Relations
J. David Tolbert (10)
Vice President, Human Resources and Corporate Risk
Garnet E. King (16)
Corporate Secretary
DIVISION PRESIDENTS
Kyle L. DeJaeger (22)
Industrial Plastics Company
Albert H. Giles (26)
Zinc Products Company
Charles M. Gilmore (4)
LumenX Company
John A. Metz*
Consumer Products Company
Charles W. Orth (27)
Unimark Plastics Company
Timothy D. Sigley (3)
Plastic Packaging Company
(Years of service)
*Joined company in September 1997
<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
STOCK TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company of New York
The bank maintains the company's shareholder records. Changes of address and
questions should be addressed to: General Shareholder Correspondence, First
Chicago Trust Company of New York, P.O. Box 2500, Jersey City, NJ 07303-2500.
Questions concerning transfers of stock ownership should be directed to the
First Chicago Trust Company of New York, P.O. Box 2506, Jersey City, NJ
07303-2506. Phone: 1.800.446.2617. Internet at http://www.fctc.com and for the
hearing impaired at TDD 201.222.4955.
DUPLICATE COPIES
If you receive duplicate copies of annual or quarterly reports, extras may be
eliminated by requesting only one copy be sent. Send labels or information
indicating which name you wish to keep on the list and which names should be
deleted. The address to use is First Chicago Trust Company of New York, P.O. Box
2500, Jersey City, NJ 07303-2500. You may also contact the First Chicago Trust
Company of New York web site at http://www.fctc.com.
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.
RESEARCH REPORTS
Two securities firms currently write research reports on Alltrista Corporation.
For copies, contact Mesirow Financial at 312.595.6600, Gary Prestopino, CFA,
analyst; or NatCity Investments at 317.635.4551, Matthew J. Striebel, investment
analyst.
ANNUAL MEETING
Alltrista Corporation's 1998 annual meeting will, like last year, 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 13, 1998, in the
corporate offices, Suite 200 at 345 South High Street in Muncie. A written
report of the vote will be mailed to shareholders immediately following the
meeting.
COMPANY CONTACTS
For shareholder records questions write Garnet E. King, Corporate Secretary.
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.
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. 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
EQUAL OPPORTUNITY
Alltrista Corporation is an equal opportunity employer.
TRADEMARKS
Ball(R) is a trademark 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. Golden
Harvest(R) is a registered trademark under license to Hearthmark, Inc.
FORWARD-LOOKING STATEMENTS
This annual report to shareholders 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
incorrect. 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.
<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 333-27459) of
Alltrista Corporation of our report dated January 30, 1998 appearing on page 23
of the 1997 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 of this
Form 10-K.
/s/PRICE WATERHOUSE LLP
Indianapolis, Indiana
March 27, 1998
<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-31-1997
<PERIOD-END> dec-31-1997
<CASH> 26641
<SECURITIES> 0
<RECEIVABLES> 23646
<ALLOWANCES> 0
<INVENTORY> 33183
<CURRENT-ASSETS> 89224
<PP&E> 149904
<DEPRECIATION> 104894
<TOTAL-ASSETS> 166577
<CURRENT-LIABILITIES> 35465
<BONDS> 25714
0
0
<COMMON> 40779
<OTHER-SE> 56530
<TOTAL-LIABILITY-AND-EQUITY> 166577
<SALES> 255167
<TOTAL-REVENUES> 255167
<CGS> 184856
<TOTAL-COSTS> 229894
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2256
<INCOME-PRETAX> 23017
<INCOME-TAX> 8180
<INCOME-CONTINUING> 14837
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14837
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 1.96
</TABLE>
