UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1998
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Alltrista Corporation
Indiana 0-21052 35-1828377
State of Incorporation Commission File Number IRS Identification Number
5875 Castle Creek Parkway, North Drive, Suite 440
Indianapolis, Indiana 46250-4330
Registrant's telephone number, including area code: (317) 577-5000
----------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 25, 1998
- -------------------- ---------------------------------
Common Stock,
without par value 6,744,092 shares
This document contains 13 pages. The exhibit index is on page 13 of 13.
Page 1 of 13
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ALLTRISTA CORPORATION AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the period ended September 27, 1998
INDEX
Page Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Unaudited Condensed Consolidated Statements of Income
for the three and nine month periods ended
September 27, 1998 and September 28, 1997 3
Unaudited Condensed Consolidated Balance Sheets at
September 27, 1998 and December 31, 1997 4
Unaudited Condensed Consolidated Statements of Cash
Flows for the nine month periods ended
September 27, 1998 and September 28, 1997 5
Notes to Unaudited Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION 12
Page 2 of 13
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ALLTRISTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(thousands except per share amounts)
Three month period ended Nine month period ended
September 27, September 28, September 27, September 28,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $72,646 $75,656 $197,840 $191,139
Costs and expenses
Cost of sales 49,464 51,847 139,421 135,045
Selling, general and administrative expenses 9,959 11,822 30,545 29,373
Costs to exit facility 1,260 - 1,260 -
-------- -------- -------- --------
Operating earnings 11,963 11,987 26,614 26,721
Interest expense, net (387) (567) (1,440) (1,927)
-------- -------- -------- --------
Income from continuing operations before taxes 11,576 11,420 25,174 24,794
Provision for income taxes (4,399) (4,375) (9,566) (9,404)
-------- -------- -------- --------
Income from continuing operations 7,177 7,045 15,608 15,390
Discontinued operation:
Loss from discontinued operation (714) (2,106) (908) (2,206)
Net loss on disposal of discontinued operation (962) - (962) -
-------- -------- -------- --------
Net income $ 5,501 $ 4,939 $ 13,738 $ 13,184
======== ======== ======== ========
Basic earning per share:
Income from continuing operations $ 1.03 $ .95 $ 2.17 $ 2.08
Discontinued operation (.24) (.28) (.26) (.30)
-------- -------- -------- --------
Net income $ .79 $ .67 $ 1.91 $ 1.78
======== ======== ======== ========
Diluted earnings per share:
Income from continuing operations $ 1.01 $ .94 $ 2.13 $ 2.04
Discontinued operation (.23) (.28) (.25) (.29)
-------- -------- -------- --------
Net Income $ .78 $ .66 $ 1.88 $ 1.75
======== ======== ======== ========
Weighted average shares outstanding:
Basic 6,971 7,386 7,200 7,407
Diluted 7,082 7,533 7,325 7,551
See accompanying notes to unaudited condensed consolidated
financial statements.
</TABLE>
Page 3 of 13
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<TABLE>
<CAPTION>
ALLTRISTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
September 27, December 31,
1998 1997
------------- --------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 25,252 $ 26,641
Accounts receivable, net 27,952 23,646
Inventories
Raw materials and supplies 10,118 9,410
Work in process and finished goods 17,680 23,773
Deferred taxes on income 2,951 4,243
Prepaid expenses 889 1,511
Net assets of a discontinued operation 3,196 -
----------- -----------
Total current assets 88,038 89,224
----------- -----------
Property, plant and equipment, at cost 151,740 149,904
Accumulated depreciation (105,384) (104,894)
----------- -----------
46,356 45,010
Goodwill, net 25,006 24,947
Other assets 7,465 7,396
----------- -----------
Total assets $166,865 $166,577
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 4,286 $ 4,286
Accounts payable 17,304 18,424
Other current liabilities 17,428 12,755
----------- -----------
Total current liabilities 39,018 35,465
----------- -----------
Noncurrent liabilities
Long-term debt 25,714 25,714
Other noncurrent liabilities 8,587 8,089
----------- -----------
Total noncurrent liabilities 34,301 33,803
----------- -----------
Shareholders' equity:
Common stock 40,545 40,779
Retained earnings 82,050 68,312
Cumulative translation adjustment (503) (303)
----------- -----------
122,092 108,788
Less: treasury stock (28,546) (11,479)
----------- -----------
Total shareholders' equity 93,546 97,309
----------- -----------
Total liabilities and shareholders' equity $166,865 $166,577
=========== ===========
See accompanying notes to unaudited condensed consolidated
financial statements.
</TABLE>
Page 4 of 13
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<TABLE>
<CAPTION>
ALLTRISTA CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
Nine month period ended
September 27, September 28,
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net income $13,738 $13,185
Reconciliation of net income to net cash provided by
operating activities:
Depreciation and amortization 7,863 7,741
Loss on disposal of fixed assets 35 67
Loss on disposal of product line and discontinued operation 2,451 3,612
Costs to exit facility 1,260 -
Deferred income taxes 1,177 (2,396)
Deferred employee benefits 522 743
Other (590) 7
Changes in working capital components (31) 8,520
---------- ----------
Net cash provided by operating activities 26,425 31,479
---------- ----------
Cash flows from financing activities
Proceeds from revolving credit borrowings 4,431 15,967
Payments on revolving credit borrowings (4,431) (15,967)
Proceeds from issuance of common stock 913 2,059
Purchase of treasury stock (18,304) (4,206)
---------- ----------
Net cash used in financing activities (17,391) (2,147)
---------- ----------
Cash flows from investing activities
Additions to property, plant and equipment (9,098) (5,054)
Proceeds from sale of property, plant and equipment 33 46
Acquisition of businesses (1,000) (8,399)
Cash proceeds from the sale of product line 386 -
Investment in insurance contracts (685) -
Other (59) (464)
---------- ----------
Net cash used in investing activities (10,423) (13,871)
---------- ----------
Net (decrease) increase in cash (1,389) 15,461
Cash and cash equivalents, beginning of period 26,641 7,611
---------- ----------
Cash and cash equivalents, end of period $25,252 $23,072
========== ==========
See accompanying notes to unaudited condensed consolidated
financial statements.
</TABLE>
Page 5 of 13
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ALLTRISTA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Presentation of Condensed Consolidated Financial Statements
Certain information and footnote disclosures, including significant
accounting policies normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been
condensed or omitted. In the opinion of management, the accompanying
condensed consolidated financial statements include all adjustments
necessary for a fair presentation of the results for the interim periods
presented. Results of operations for the periods shown are not necessarily
indicative of results for the year, particularly in view of some seasonality
in the Consumer Products business. The accompanying unaudited condensed
consolidated financial statements should be read in conjunction with the
Consolidated Financial Statements and Notes to Consolidated Financial
Statements of Alltrista Corporation and Subsidiaries included in the
Company's latest annual report.
2. Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding for the period. Diluted earnings
per share computations assume outstanding stock options with a dilutive
effect on earnings were exercised. These common stock equivalents are added
to the weighted average number of shares outstanding in the calculation of
diluted earnings per share.
A computation of earnings per share is as follows (in thousands except per
share data):
<TABLE>
<CAPTION>
Three month period ended Nine month period ended
--------------------------- ---------------------------
September 27, September 28, September 27, September 28,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Basic earnings per share
Income from continuing operations $ 7,177 $ 7,045 $ 15,608 $ 15,390
Discontinued operation:
Loss from discontinued operation (714) (2,106) (908) (2,206)
Net loss on disposal of discontinued operation (962) - (962) -
--------- --------- --------- ---------
Net income $ 5,501 $ 4,939 $ 13,738 $ 13,184
========= ========= ========= =========
Weighted average number of common shares
outstanding 6,971 7,386 7,200 7,407
========= ========= ========= =========
Basic earnings per share:
Income from continuing operations $ 1.03 $ .95 $ 2.17 $ 2.08
Discontinued operation (.24) (.28) (.26) (.30)
--------- --------- --------- --------
Net income $ .79 $ .67 $ 1.91 $ 1.78
========= ========= ========= =========
Diluted Earnings Per Share
Income from continuing operations $ 7,177 $ 7,045 $ 15,608 $ 15,390
Discontinued operation:
Loss from discontinued operation (714) (2,106) (908) (2,206)
Net loss on disposal of discontinued operation (962) - (962) -
--------- --------- --------- ---------
Net income $ 5,501 $ 4,939 $ 13,738 $ 13,184
========= ========= ========= =========
Weighted average number of common shares
outstanding 6,971 7,386 7,200 7,407
Additional shares assuming conversion of stock options 111 147 125 144
--------- --------- --------- ---------
Weighted average number of common and
equivalent shares 7,082 7,533 7,325 7,551
========= ========= ========= =========
Diluted Earnings Per Share:
Income from continuing operations $ 1.01 $ .94 $ 2.13 $ 2.04
Discontinued operation (.23) (.28) (.25) (.29)
--------- --------- --------- ---------
Net income $ .78 $ .66 $ 1.88 $ 1.75
========= ========= ========= =========
</TABLE>
Page 6 of 13
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. Discontinued Operation
On October 28, 1998, the Company sold the assets of LumenX, its x-ray
inspection equipment business. The sale is effective September 28, 1998. As
a result of the sale, the Company's consolidated financial statements and
the notes thereto for the period ended September 27, 1998, report this
business as a discontinued operation. Prior-period financial statements have
been restated accordingly. The assets, net of liabilities, are carried on
the September 27, 1998, balance sheet as net assets of a discontinued
operation at the sale price. LumenX had net sales of $7.2 million and $15.5
million for the nine and twelve months ended September 27, 1998, and
December 31, 1997, respectively.
4. Costs to Exit Facility
In July 1998, management initiated a plan to exit the Company's plastic
injection molding facility in Arecibo, Puerto Rico. Operations in this
facility will cease no later than March 31, 1999. Certain equipment will be
sold at that time. The total cost to exit the facility is anticipated to be
$1.3 million which includes a $.7 million loss on the sale and disposal of
equipment and $.6 million in other costs consisting primarily of employee
severance, costs to return the leased facility to its original condition and
legal fees. The Company expects this action to provide approximately $1.3
million of cash by the end of the first quarter of 1999.
Page 7 of 13
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
During the first quarter of 1998, the Company, as part of a newly launched
vision and strategy, redefined its businesses into two new distinct segments:
plastic products and metal products. The plastic products segment includes the
Plastic Packaging (coextruded sheet and formed containers for processed human
and pet food), Unimark Plastics (injection molding for medical, consumer
products and packaging markets) and Industrial Plastics (heavy gauge sheet
extrusion and thermoforming for appliance, manufactured housing and recreational
vehicle markets) operations. The metal products segment includes the Consumer
Products (home canning supplies and related products) and Zinc Products (zinc
strip and products fabricated from that strip). Previously reported segment
information was reclassified to correspond with the current presentation. Due to
the sale of LumenX (industrial inspection systems for the automotive and
automotive component industries), this business is classified as a discontinued
operation for all periods presented.
Results of Operations - Comparing Year to Date 1998 to Year to Date 1997
The Company reported net sales of $197.8 million for the first nine months of
1998 an increase of 4% from sales of $191.1 million for the same period last
year. Including a one-time charge of $1.3 million to exit the Company's plastic
injection molding facility in Arecibo, Puerto Rico, operating earnings of $26.6
million were slightly lower than the $26.7 million in the first nine months of
1997. The increase in sales and operating earnings, excluding the one-time
charge, was primarily due to new consumer product offerings that the Company
began marketing during the year, a full nine months sales resulting from the May
1997 acquisition of Viking Plastics and new business at Unimark Plastics. The
impact of these increases were offset to a lesser extent by reduced sales at
Plastic Packaging. Although profits are not impacted, Zinc Products reported
lower sales as a result of lower zinc ingot costs.
On a segment basis, sales increased in the plastic and metal products segments
5% and 3%, respectively. Within the metal products segment, operating earnings
increased 15% whereas in the plastic products segment, excluding the charge to
exit the plastic injection molding facility, operating earnings decreased 14%
compared to a year ago. Consumer Products sales and operating earnings for the
first nine months of 1998 increased 13% and 25% respectively compared to the
same period last year. The increase in sales and operating earnings was
primarily due to (i) the Company marketing and distributing new consumer
products in 1998, (ii) good home garden growing conditions, especially in the
northern two thirds of the United States and Canada and (iii) the increased
usage of palletized home canning product displays in mass merchandiser stores.
The Company had another good year in the home canning business despite the
drought conditions in the southern third of the United States. A reduction in
operating expenses also attributed to the increase in earnings at Consumer
Products. Zinc Products recorded a 14% and 2% decrease in sales and earnings,
respectively, primarily due to two customers deciding to move production of its
zinc/carbon batteries to foreign countries which significantly reduced the
number of battery cans purchased from the Company. The decrease in sales was
also attributed to the average price of zinc ingot dropping 22% in the first
nine months of 1998 compared to the same period last year. Fluctuations in zinc
ingot prices are passed on to customers. Penny blank shipments increased 36% for
the first nine months of 1998 compared to the same period last year reflecting
strong demand from both the U.S. Mint and the Royal Canadian Mint. The Company
anticipates penny blank demand to remain strong for the remainder of 1998.
Within the plastic products segment, Industrial Plastics had an increase in
sales primarily due to the May 1997 acquisition of Viking Plastics. Industrial
Plastics also recorded increased sales and operating earnings from the appliance
components product line. Unimark Plastics recorded an increase in sales and
operating earnings, which is the result of new business including the transfer
of a customer's in-house production to the Company's Springfield, Missouri
facility. Cost reduction programs at Unimark Plastics also contributed to the
improved earnings. Plastic Packaging had a decrease in sales and operating
earnings due to lower volume and a more intense competitive environment.
Overall, gross margin percentages increased slightly in the first nine months of
1998 compared to the same period last year. The increase in gross margin
percentages was primarily due to increased plant utilization at Unimark
Plastics, a decrease in zinc raw material prices and an increase in coinage and
industrial volume at Zinc Products.
Page 8 of 13
<PAGE>
This increase was offset in part by the industry wide margin erosion in plastic
packaging and a less favorable product mix at Consumer Products.
Selling, general and administrative expenses as a percentage of sales for the
first nine months of 1998 were unchanged compared to the same period last year.
A reduction in selling and marketing costs at Consumer Products were offset by
the impact of lower sales volume and a more intense competitive environment in
the plastic packaging industry and lower battery can production and lower zinc
ingot prices which are passed on to customers at Zinc Products.
As part of the Company's commitment to exit operations which do not produce
positive Economic Value Added, the Company will close its plastic injection
molding facility in Arecibo, Puerto Rico. As a result, the Company recorded a
one-time charge of $1.3 million which includes an anticipated $0.7 million loss
on the sale and disposal of equipment and $0.6 million in other costs including
employee severance, costs to return the leased facility to its original
condition and legal fees. The Company will cease operations in this plant no
later than March 31, 1999.
Interest expense, net for the first nine months of 1998 was $1.4 million
compared to $1.9 million in the first nine months of 1997. Lower net interest
expense was primarily the result of interest earned on higher levels of
short-term investments of cash.
Results of Operations - Comparing Third Quarter 1998 to Third Quarter 1997
The Company reported net sales of $72.6 million for the third quarter of 1998, a
decrease of 4% from sales of $75.7 million for the same period of 1997.
Operating earnings were $12.0 million for both the third quarters of 1998 and
1997. The decrease in sales was primarily due to lower volume and a more intense
competitive environment in the plastic packaging industry and Consumer Products
having higher than normal sales in this year's second quarter, thus resulting in
somewhat lower sales in the third quarter compared to last year. Operating
earnings for the third quarter of 1998 includes a $1.3 million one-time charge
to exit an unprofitable plastic injection molding plant. Excluding this charge,
third quarter 1998 operating earnings increased 10% compared to the same period
last year. This increase in operating earnings is primarily due to a reduction
in operating expenses at Consumer Products.
On a segment basis, metal products recorded a 4% decrease in sales and a 32%
increase in operating earnings, respectively. Consumer Products recorded a 4%
decrease in sales and a 36% increase in operating earnings for the quarter.
Consumer Products had higher than normal sales in this year's second quarter,
thus resulting in somewhat lower sales in the third quarter compared to last
year. The increase in operating earnings is primarily due to a reduction in
operating expenses. Zinc Products recorded a 6% decrease in sales and an 18%
increase in operating earnings, respectively. The decrease in sales was
primarily due to the average price of zinc ingot dropping 33% in the third
quarter of 1998 compared to the same period last year. The decrease in sales was
also attributed to the aforementioned reduction in battery can sales to the two
customers who have moved their production of zinc/carbon batteries to foreign
countries. The increase in operating earnings at Zinc Products was primarily due
to increased demand for penny blanks from both the U.S. Mint and the Royal
Canadian Mint.
Sales and operating earnings, excluding the one-time charge to exit the plastic
injection molding plant, decreased 4% and 34%, respectively, in the plastic
products segment. The decrease in sales and operating earnings is due to due to
lower volume and a more intense competitive environment in the plastic packaging
industry. Industrial Plastics had an increase in sales primarily due to higher
sales from the appliance components product line. Operating earnings were
slightly lower in the third quarter of 1998 compared to the same quarter last
year due to a slower integration of Viking Plastics than anticipated and some
price erosion in the manufactured housing industry. Unimark Plastics recorded an
increase in sales and operating earnings, which is the result of new business
including the transfer of a customer's in-house production to the Company's
Springfield, Missouri facility.
Overall, gross margin percentages increased slightly in the third quarter of
1998 compared to the same period last year. The increase in gross margin
percentages was primarily due to increased plant utilization at Unimark
Plastics, a decrease in zinc ingot prices and an increase in coinage volume at
Zinc Products. This increase was
Page 9 of 13
<PAGE>
offset in part by industry wide margin erosion in plastic packaging, slower than
anticipated integration of Viking Plastics and some price erosion in the
manufactured housing product line.
Selling, general and administrative expenses as a percentage of sales decreased
in the third quarter of 1998 compared to the same period last year primarily due
to a reduction in selling and marketing cost at Consumer Products. This decrease
was offset in part by increased research and development and selling costs at
Zinc Products and the impact of lower sales in the plastic packaging business.
Financial Condition, Liquidity and Capital Resources
Working capital (excluding the current portion of long-term debt) as of
September 27, 1998 decreased $4.7 million to $53.3 million from the 1997
year-end level. During the first nine months of 1998, the Company purchased
$18.3 million (716,000 shares) of its common stock. It is the Company's policy
to annually repurchase shares to offset the dilutive effect of shares issued
under employee benefit plans (approximately 150,000 shares). In May 1997, the
Company's board of directors approved a 600,000 share repurchase program. In
September of 1998, the Company completed the purchase of shares under this
program. The increase in accounts receivable and other current liabilities and
decrease in inventories is reflective of customary seasonal activity,
particularly in the consumer products business. The increase in accounts
receivables is also attributed to the increased sales at Unimark Plastics.
The Company has $30 million outstanding under a long-term financing agreement
with a fixed interest rate of 7.8%. Maturities are $4.3 million per year for
seven years beginning in December 1998. The Company has a revolving credit
agreement with a group of banks whereby the Company can borrow up to $50 million
through March 31, 2000 when all borrowings mature. There were no borrowings
outstanding under this agreement at September 27, 1998 or at December 31, 1997.
The Company also has available from various banks $74 million in short-term
credit lines. There were no borrowings outstanding under these credit lines at
September 27, 1998 or at December 31, 1997. After reducing debt by the cash
balance, the debt-to-total capital ratio was 4.8% at the end of the third
quarter of 1998. This is somewhat higher than the 3.3% at December 31, 1997,
primarily as a result of funding normal seasonal operating activities and the
aforementioned purchase of the Company's common stock.
Capital expenditures for property, plant and equipment were $9.1 million for the
first nine months ended September 27, 1998 compared to $5.1 million for the same
period last year. Capital expenditures are largely related to maintaining
manufacturing facilities. The increase in 1998 capital spending is primarily due
to investments in new injection molding machines for Unimark Plastics, upgrading
an existing plating line, investing in a new high precision industrial slitting
line, and construction of a railcar unloading station for chlorine supply at
Zinc Products and new integrated information systems and other capital
improvements for Industrial Plastics. Overall, capital expenditures are expected
to be at higher levels for the full year 1998 compared to 1997. The Company
believes that existing funds, cash generated from operations and existing
sources of debt financing are adequate to satisfy its working capital and
capital expenditure requirements for the foreseeable future. However, the
Company may raise additional capital from time to time to take advantage of
favorable conditions in the capital markets or in connection with the Company's
corporate development activities.
On October 28, 1998, the Company sold the assets of LumenX, its x-ray inspection
equipment operation and ended the Company's participation in the capital goods
market. The sale is effective September 28, 1998. Taking into account the cash
proceeds from the sale, tax benefits and costs paid, the Company expects the
transaction to provide approximately $3.4 million in cash.
In July 1998, management initiated a plan to exit the Company's plastic
injection molding facility in Arecibo, Puerto Rico. Operations in this facility
will cease no later than March 31, 1999. Taking into account the cash proceeds
from the sale of certain equipment, tax benefits and costs paid, the Company
expects the transaction to provide approximately $1.3 million in cash by the end
of the first quarter of 1999.
The Company is subject to and involved in claims arising out of the conduct of
its business including those relating to product liability, environmental and
safety and health matters. The Company's information at this time does not
indicate that the resolution of the aforementioned claims will have a material,
adverse effect upon financial condition, results of operations, capital
expenditures or competitive position of the Company.
Page 10 of 13
<PAGE>
The Company is currently assessing its exposure to potential Year 2000 issues
within its businesses. The assessment includes information technology (IT),
non-information technology (non-IT), and customer and vendor readiness. Non-IT
systems include computer-controlled devices with embedded technology such as
microcontrollers. Phases within the process include assessment, remediation,
testing and implementation. With respect to each of the divisions, the Company's
percentage of completion for the assessment phase for both IT and non-IT ranges
from 55% to 100% and 50% to 100% complete, respectively. The Company anticipates
all divisions will have the assessment complete by December 1998. Through the
assessment process, the Company has identified certain financial and
manufacturing systems that are not Year 2000 ready. The Company has plans to
replace or upgrade these systems with remediation, testing and implementation to
be completed with dates ranging from December 1998 to the third quarter of 1999.
Certain contingency plans are in place and others will be developed if
implementation is delayed or otherwise required following the identification of
any material Year 2000 risks or uncertainties. The failure of the Company to
properly assess and remediate Year 2000 problems and test or implement solutions
could result in disruptions of normal business operations. Such failures could
have a material, adverse effect upon the financial condition, results of
operations, cash flows or competitive position of the Company.
The Company has incurred less than $200,000 in costs to date directly associated
with the remediation of its own systems. Management does not believe future Year
2000 assessment and remediation costs will be material. The Company intends to
fund any necessary Year 2000 assessment and remediation costs from internal
financial resources. These costs do not include the cost of upgrading or
replacing systems for other business reasons. Such measures usually provide the
additional benefit of making the systems Year 2000 compliant. The Company will
be in a better position to estimate total Year 2000 anticipated costs once its
assessment process has been completed.
The assessment of customers and suppliers for Year 2000 readiness ranges from
the planning stage to 95% complete across the Company's businesses as of October
1998. The assessment of third parties is scheduled to be complete no later than
May 1999. The assessments include essential third party electronic interfaces.
The Company currently is not aware of any significant customer or supplier with
a Year 2000 issue that would materially impact the Company's financial
condition, results of operations, cash flows or competitive position. However,
the Company has no means of ensuring that customers or suppliers will be Year
2000 ready. The inability of one of these entities to be prepared could have a
material adverse effect on the Company.
While the Company has not yet completed its assessment process, it is not
expected that Year 2000 issues will have a material adverse effect on the
Company. However, it is possible that, for example, disruptions in the economy
generally or interruptions in the Company's manufacturing processes because of
Year 2000 problems could adversely affect the Company's results of operations,
liquidity and financial condition.
This Quarterly Report on Form 10-Q includes certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Those statements include, but may not be
limited to, discussions regarding expectations of future sales and
profitability, anticipated demand for the Company's products and expectations
regarding operating and other expenses. Reliance on forward-looking statements
involves risks and uncertainties. Although the Company believes that the
assumptions upon which the forward-looking statements contained herein are
reasonable, any of those assumptions could prove to be inaccurate. As a result,
the forward-looking statements based on those assumptions could also be
inaccurate. Please see the Company's Report on Form 8-K, dated June 10, 1997,
for a list of factors which could cause the Company's actual results to differ
materially from those projected in the Company's forward-looking statements.
Page 11 of 13
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
27 Financial Data Schedule
b. Reports on Form 8-K
There were no events required to be reported under Form 8-K for the quarter
ending September 27, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Alltrista Corporation
(Registrant)
Date: November 11, 1998 By: /s/ Kevin D. Bower
------------------- --------------------
Kevin D. Bower
Senior Vice President and
Chief Financial Officer
Page 12 of 13
<PAGE>
ALLTRISTA CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
September 27, 1998
EXHIBIT INDEX
Exhibit Description Page
- ------- ------------------------ --------
27 Financial Data Schedule [EDGAR filing only]
Page 13 of 13
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM
THE UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
AND STATEMENTS OF INCOME FOUND IN THE
COMPANY'S FORM 10-Q FOR THE
YEAR-TO-DATE, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-27-1998
<CASH> 25252
<SECURITIES> 0
<RECEIVABLES> 27952
<ALLOWANCES> 0
<INVENTORY> 27798
<CURRENT-ASSETS> 88038
<PP&E> 151740
<DEPRECIATION> 105384
<TOTAL-ASSETS> 166865
<CURRENT-LIABILITIES> 39018
<BONDS> 25714
0
0
<COMMON> 40545
<OTHER-SE> 53001
<TOTAL-LIABILITY-AND-EQUITY> 166865
<SALES> 197840
<TOTAL-REVENUES> 197840
<CGS> 139421
<TOTAL-COSTS> 171226
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1440
<INCOME-PRETAX> 25174
<INCOME-TAX> 9566
<INCOME-CONTINUING> 15608
<DISCONTINUED> 1870
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13738
<EPS-PRIMARY> 1.91
<EPS-DILUTED> 1.88
</TABLE>
