<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 3, 1999
COMMISSION FILE NUMBER 0-21314
U.S. CAN CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
06-1094196
(I.R.S. EMPLOYER IDENTIFICATION NO.)
DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
900 COMMERCE DRIVE
OAK BROOK, ILLINOIS 60523
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(630) 571-2500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 (the "Exchange Act") 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
As of October 31, 1999, 13,447,171 shares of U.S. Can Corporation's common
stock were outstanding.
<PAGE> 2
U.S. CAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED OCTOBER 3, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
U.S. Can Corporation and Subsidiaries Condensed Consolidated
Statements of Operations for the Quarterly and Nine-Month Periods Ended
October 3, 1999 and October 4, 1998 3
U.S. Can Corporation and Subsidiaries Condensed Consolidated
Balance Sheets as of October 3, 1999 and December 31, 1998 4
U.S. Can Corporation and Subsidiaries Condensed Consolidated
Statements of Cash Flows for the Nine-Months Ended
October 3, 1999 and October 4, 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 16
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 19
</TABLE>
<PAGE> 3
U.S. CAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(000's omitted, except per share data)
<TABLE>
<CAPTION>
QUARTERLY PERIOD ENDED NINE-MONTHS PERIOD ENDED
------------------------------- --------------------------------
OCTOBER 3, 1999 OCTOBER 4, 1998 OCTOBER 3, 1999 OCTOBER 4, 1998
------------------------------- --------------------------------
<S> <C> <C> <C> <C>
NET SALES $ 178,123 $ 177,920 $ 549,812 $ 553,756
COST OF SALES 152,742 154,365 470,116 483,567
------------------------------- --------------------------------
Gross income 25,381 23,555 79,696 70,189
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 8,133 7,785 25,001 24,274
SPECIAL CHARGES - 35,869 - 35,869
------------------------------- --------------------------------
Operating income (loss) 17,248 (20,099) 54,695 10,046
INTEREST EXPENSE ON BORROWINGS 6,841 8,251 21,758 25,391
AMORTIZATION OF DEFERRED FINANCING COSTS 278 346 898 1,110
OTHER EXPENSES 432 450 1,296 1,317
------------------------------- --------------------------------
Income (loss) before income taxes 9,697 (29,146) 30,743 (17,772)
PROVISION (BENEFIT) FOR INCOME TAXES 3,691 (11,788) 12,048 (7,301)
------------------------------- --------------------------------
Income (loss) from continuing operations before discontinued
operations and extraordinary item 6,006 (17,358) 18,695 (10,471)
DISCONTINUED OPERATIONS, net of income taxes
Net loss on sale of discontinued business - (8,528) - (8,528)
EXTRAORDINARY ITEM, net of income taxes
Net loss from early extinguishment of debt (488) - (1,296) -
------------------------------- --------------------------------
NET INCOME (LOSS) $ 5,518 $ (25,886) $ 17,399 $ (18,999)
=============================== ================================
PER SHARE DATA:
Basic:
Income (loss) from continuing operations before
discontinued operations and extraordinary item $ 0.45 $ (1.30) $ 1.40 $ (0.79)
Discontinued operations - (0.64) (0.64)
Extraordinary item (0.04) - (0.10) -
------------------------------- --------------------------------
Net income $ 0.41 $ (1.94) $ 1.30 $ (1.43)
=============================== ================================
Weighted average shares outstanding (000's) 13,477 13,325 13,396 13,245
Diluted:
Income (loss) from continuing operations before
discontinued operations and extraordinary item $ 0.44 $ (1.30) $ 1.38 $ (0.79)
Discontinued operations - (0.64) - (0.64)
Extraordinary item (0.04) - (0.10) -
------------------------------- --------------------------------
Net income $ 0.40 $ (1.94) $ 1.28 $ (1.43)
=============================== ================================
Weighted average shares outstanding (000's) 13,739 13,325 13,555 13,245
</TABLE>
The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of these statements.
<PAGE> 4
U.S. CAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(000'S omitted, except per share data)
<TABLE>
<CAPTION>
OCTOBER 3, DECEMBER 31,
ASSETS 1999 1998
---------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 32,153 $ 18,072
Accounts receivables, less allowances of $15,470 and $17,063 as of October 3, 1999
and December 31, 1998, respectively 77,743 63,742
Inventories 83,482 94,887
Prepaid expenses and other current assets 14,655 16,011
Prepaid income taxes 22,934 22,934
---------- ------------
Total current assets 230,967 215,646
---------- ------------
PROPERTY, PLANT AND EQUIPMENT:
Land 5,770 5,862
Buildings 62,767 63,026
Machinery, equipment and construction in process 416,087 416,940
---------- ------------
484,624 485,828
Less -- Accumulated depreciation and amortization (226,273) (217,826)
---------- ------------
Total property, plant and equipment 258,351 268,002
---------- ------------
INTANGIBLE ASSETS, less amortization of $11,779 and $11,853 as of October 3, 1999
and December 31, 1998, respectively 50,632 51,928
OTHER ASSETS 18,640 19,995
---------- ------------
Total assets $ 558,590 $ 555,571
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 6,176 $ 6,731
Accounts payable 69,848 52,317
Accrued payroll, benefits and insurance 33,107 31,282
Restructuring reserves 19,122 25,674
Other current liabilities 32,848 23,530
---------- ------------
Total current liabilities 161,101 139,534
---------- ------------
SENIOR DEBT 38,739 45,617
SUBORDINATED DEBT 236,629 264,325
---------- ------------
Total long-term debt 275,368 309,942
---------- ------------
OTHER LONG-TERM LIABILITIES
Deferred income taxes 8,742 5,595
Other long-term liabilities 46,170 50,323
---------- ------------
Total other long-term liabilities 54,912 55,918
---------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued or
outstanding - -
Common stock, $0.01 par value; 50,000,000 shares authorized, 13,403,496 and
13,278,223 shares issued as of October 3, 1999 and December 31, 1998, respectively 135 133
Paid -in-capital 112,652 109,839
Unearned restricted stock (379) (829)
Treasury common stock, at cost; 115,460 and 90,011 shares at October 3, 1999 and
December 31, 1998, respectively (1,938) (1,728)
Currency translation adjustment (4,865) (1,443)
Accumulated deficit (38,396) (55,795)
---------- ------------
Total stockholders' equity 67,209 50,177
---------- ------------
Total liabilities and stockholders' equity $ 558,590 $ 555,571
========== ============
</TABLE>
The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of these balance sheets
<PAGE> 5
U.S. CAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000s omitted)
<TABLE>
<CAPTION>
NINE-MONTH PERIOD ENDED
CASH FLOWS FROM OPERATING ACTIVITIES: OCTOBER 3, 1999 OCTOBER 4, 1998
--------------- ---------------
<S> <C> <C>
Net income $ 17,399 $ (18,999)
Adjustments to reconcile net income to net cash provided by
operating activities --
Depreciation and amortization 25,419 29,354
Special charges - 35,869
Extraordinary loss on extinguishment of debt 1,296 -
Deferred income taxes 2,240 (236)
Change in operating assets and liabilities
Accounts receivable (16,835) (16,214)
Inventories 5,847 (334)
Accounts payable 12,383 (983)
Accrued payrolls and benefits, insurance and other 9,712 16,841
Postretirement benefits 1,217 1,204
Other, net 128 4,091
--------------- ---------------
Net cash provided by operating activities 58,806 50,593
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (19,713) (12,336)
Proceeds on sale of business 4,500 -
Change in restricted cash - 29
Proceeds from sale of property 556 215
Investment in Formametal S.A. (1,644) -
--------------- ---------------
Net cash used in investing activities (16,301) (12,092)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock and exercise of stock options 1,959 782
Net borrowings under the revolving line of credit and changes in
cash overdrafts 6,217 (24,411)
Repurchase of 10 1/8% notes (27,696) -
Payments of other long-term debt, including capital lease
obligations (8,695) (8,621)
Payments of debt refinancing costs - (134)
Purchase of treasury stock, net (210) (1,585)
--------------- ---------------
Net cash used in financing activities (28,425) (33,969)
--------------- ---------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1 (2,020)
--------------- ---------------
DECREASE IN CASH AND CASH EQUIVALENTS 14,081 2,512
CASH AND CASH EQUIVALENTS, beginning of year 18,072 6,773
--------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 32,153 $ 9,285
=============== ===============
</TABLE>
The accompanying Notes to the Condensed Consolidated Financial Statements are an
integral part of these statements.
<PAGE> 6
U.S. CAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 3, 1999
(UNAUDITED)
(1) PRINCIPLES OF REPORTING
The condensed consolidated financial statements include the accounts of U.S.
Can Corporation (the "Corporation"), its wholly owned subsidiary, United States
Can Company ("U.S. Can") and U.S. Can's subsidiaries, all of which are foreign
companies. All significant intercompany balances and transactions have been
eliminated. The consolidated group including the Corporation is hereinafter
referred to as the Company. These financial statements have been prepared in
accordance with generally accepted accounting principles for interim reporting.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
These financial statements, in the opinion of management, include normal
recurring adjustments necessary for a fair presentation. Operating results for
any interim period are not necessarily indicative of results that may be
expected for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission; however, management believes that the
disclosures contained herein are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in
conjunction with the previously filed financial statements and footnotes
included in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1998.
Generally, quarterly accounting periods are based upon two four-week periods
and one five-week period. Management believes that this technique provides a
more consistent view of accounting data resulting in greater comparability than
the calendar month basis would provide.
(2) SPECIAL CHARGES AND DISCONTINUED OPERATIONS
1997 SPECIAL CHARGES
In 1998, the Company closed its Racine, Wisconsin aerosol assembly plant,
the Sparrows Point litho center in Baltimore, Maryland, and the California
Specialty plant in Vernalis, California. Costs associated with these actions
were recorded and provided for as part of 1997 restructuring charges. In
addition, the 1997 restructuring provision included a write-down to estimated
proceeds for the sale of the Orlando, Florida machine engineering center
("OMEC"). The sale of OMEC was completed on January 29, 1999 for $4.5 million in
cash.
DISCONTINUED OPERATIONS
On November 9, 1998, the Company sold its commercial Metal Services
business. Final net cash proceeds were approximately $28 million including final
working capital adjustments. Revenues from sales to third parties from these
operations were $94.3 million in the period ending November 8, 1998 (excluding
intra-company sales and ongoing third-party sales from the closed Midwest Litho
facility, which were transferred to other Metal Services facilities).
1998 SPECIAL CHARGES
In the third quarter of 1998, the Company established a pre-tax
restructuring provision of $35.9 million for additional plant closings,
implementation of a national lithography strategy, an incremental provision for
the anticipated loss on the sale of OMEC mentioned previously and a reassessment
of 1997 special charges. There have been no significant changes to the estimated
costs or timing of the Company's restructuring estimates.
Cash costs for restructuring activities in the first nine months of
1999 were $6.5 million. The Company anticipates spending another $1.5 million of
such costs in 1999 and $7.6 million in cash costs in the year 2000 and beyond.
The remainder of the restructuring provision primarily consists of non-cash
items associated with the write-off of assets.
<PAGE> 7
The Company continuously evaluates the composition of its various
manufacturing facilities in light of current and expected market conditions and
demand. While no formal plans currently exist to further consolidate plant
operations, such actions may be deemed appropriate in the future.
(3) ACQUISITIONS
In March 1998, the Company acquired a 36.5% interest in Formametal S.A.
("Formametal"), an aerosol can manufacturer in Argentina, for $4.6 million,
payable over a 15-month period. In connection with this investment, the Company
provided a guaranty, in an amount not to exceed $2.0 million, to secure the
repayment of certain indebtedness of Formametal. In 1999, the Company loaned
Formametal $1.0 million for capital expenditures with all principal and interest
payable in January 2004. In addition, the Company received a three-year option
to convert this loan into additional shares of Formametal, which, if exercised,
would take the Company's interest in Formametal up to 39.8%. In addition, the
Company loaned Formametal an additional $0.4 million in the third quarter of
1999, for working capital investment purposes.
(4) INVENTORIES
All domestic inventories, except machine parts, are stated at cost
determined by the last-in, first-out ("LIFO") cost method, not in excess of
market. Inventories of approximately $19.9 million at December 31, 1998, and
$19.5 million at October 3, 1999, at the European subsidiaries and machine shop
inventory are stated at cost determined by the first-in, first-out ("FIFO") cost
method, not in excess of market. FIFO cost of LIFO inventories approximated
their LIFO value at December 31, 1998 and at October 3, 1999.
Inventories reported in the accompanying balance sheets were classified as
follows (000's omitted):
OCTOBER 3, DECEMBER 31,
1999 1998
--------- -----------
Raw materials $ 18,885 $ 21,171
Work in process 37,761 42,146
Finished goods 26,836 26,848
Machine shop inventory -- 4,722
-------- --------
$ 83,482 $ 94,887
======== ========
(5) DEBT OBLIGATIONS
The primary debt obligations of the Company at October 3, 1999 and December
31, 1998 consisted of the following (000's omitted):
OCTOBER 3, DECEMBER 31,
1999 1998
--------- ----------
Senior Debt
Capital lease obligations $ 10,995 $ 15,511
Secured term loan 24,401 25,128
Industrial revenue bonds 7,500 7,500
Mortgages and other 2,019 4,209
--------- --------
44,915 52,348
Less--Current maturities (6,176) (6,731)
--------- --------
Total senior debt 38,739 45,617
Senior subordinated 10 1/8% notes 236,629 264,325
--------- --------
Total long-term debt $ 275,368 $309,942
========= ========
In 1997, U.S. Can entered into an Amended and Restated Credit Agreement with
a group of banks (the "Credit Agreement"), originally providing a $110 million
revolving credit facility, which was reduced to $80 million in 1998 and to $50
million in April, 1999 because of the Company's reduced needs. Obligations under
the Credit Agreement were secured by U.S. Can's domestic accounts receivable and
inventories, however, this collateral was released in May, 1999 because of the
improved credit profile of the Company. Funds available under the Credit
Agreement may be used for general corporate purposes (including working capital
needs and permitted acquisitions).
As of December 31, 1998 and October 3, 1999, U.S. Can had no borrowings
outstanding under the Credit Agreement, $12.3 million and $11.6 million,
respectively, in letters of credit had been issued pursuant thereto, and $67.7
million and $38.4 million, respectively, of unused credit remained available.
The weighted average interest rate of the loans outstanding was 9.90% and 9.83%,
respectively.
<PAGE> 8
In October 1996, the Corporation issued $275 million principal amount of 10
1/8% Senior Subordinated Notes due 2006 in a private placement. These notes were
exchanged in March 1997 for similar notes which are publicly registered. These
exchange notes (the "10 1/8% Notes") are unsecured and are subordinated to all
other senior debt of the Corporation and its subsidiaries. The 10 1/8% Notes are
fully and unconditionally guaranteed on an unsecured senior subordinated basis
by U.S. Can. On or after October 15, 2001, the Corporation may, at its option,
redeem all or some of the 10 1/8% Notes at declining redemption premiums which
begin at approximately 105.1% in 2001. Upon a change of control of the
Corporation, as defined, the Noteholders could require that the Corporation
repurchase all or some of the 10 1/8% Notes at a 101% premium. As part of the
Company's focus on debt reduction, it repurchased through the open market, and
subsequently retired, $10.7 million and an additional $27.7 million of the
outstanding 10 1/8% Notes through December 31, 1998 and October 3, 1999,
respectively. As a result of the early redemption, there was an extraordinary
charge in 1999 of $1.3 million, net of taxes of $0.8 million, which represents
the redemption premiums related to the retirement of the 10 1/8% Notes and
related deferred financing costs. Under the Credit Agreement, the Company can
elect to repurchase up to $40.0 million of the outstanding 10 1/8% Notes. As of
July 1999, the Company had purchased the maximum amount of notes allowed under
the Credit Agreement.
The Credit Agreement and certain of the Company's other debt agreements
contain various financial and other restrictive covenants, as well as
cross-default provisions. The financial covenants include, but are not limited
to, limitations on annual capital expenditures and certain required ratios of
borrowings to earnings before interest, taxes, depreciation and amortization
("EBITDA"), senior debt to EBITDA and interest coverage. In conjunction with the
release of the collateral, certain covenants under the Credit Agreement were
tightened moderately. The covenants also restrict the Company's ability to
distribute dividends, to incur additional indebtedness, to dispose of assets and
to consummate investments, acquisitions, mergers and affiliated transactions.
The Company was in compliance with all required ratios and covenants as of
October 3, 1999.
(6) SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid interest on borrowings of approximately $18.0 million and
$14.3 million for the nine-month periods ended October 4, 1998 and October 3,
1999, respectively.
The Company paid approximately $1.0 million and $0.8 million of income taxes
for the nine-month periods ended October 4, 1998 October 3, 1999, respectively.
During the nine-month periods ended October 4, 1998 and October 3, 1999, the
Company issued stock valued at approximately $0.7 million and $0.9 million,
respectively, into certain of its employee benefit plans.
(7) NEW ACCOUNTING PRONOUNCEMENTS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," was issued in June 1998 and will be adopted by the Company in 2001.
This new pronouncement establishes accounting and reporting standards for
derivative instruments and hedging activities. It requires that the Company
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. Management of
the Company does not believe this pronouncement will have a material impact upon
current reporting or results.
(8) SEGMENTATION
The Company has established three segments by which management monitors and
evaluates business performance, customer base and market share. These segments
(Aerosol, Paint, Plastic & General Line and Custom & Specialty) have separate
management teams and distinct product lines.
The Aerosol segment has two units: United States and International. The
segment produces steel aerosol containers for personal care, household,
automotive, paint and industrial products. Paint, Plastic & General Line
principally produces round cans for paint and coatings, oblong cans for items
such as lighter fluid and turpentine, and plastic containers for industrial and
consumer products. Custom & Specialty produces a wide array of functional and
decorative tins, containers and other products.
<PAGE> 9
The following is a summary of revenues from external customers and income
(loss) from operations for the periods ended October 3, 1999 and October 4,
1998, respectively (000's omitted):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 3, OCTOBER 4, OCTOBER 3, OCTOBER 4,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES FROM EXTERNAL CUSTOMERS:
Aerosol $119,787 $117,010 $372,742 $364,389
Paint, Plastic, & General Line 41,135 40,805 127,209 131,704
Custom & Specialty 17,201 20,105 49,861 57,663
-------- -------- -------- --------
Total revenues $178,123 $177,920 $549,812 $553,756
======== ======== ======== ========
INCOME (LOSS) FROM OPERATIONS:
Aerosol $ 20,976 $ 20,496 $ 66,735 $ 60,071
Paint, Plastic, & General Line 4,190 3,010 14,380 13,123
Custom & Specialty 3,016 4,064 7,070 8,857
Corporate and eliminations (10,934) (47,669) (33,490) (72,005)
-------- -------- -------- --------
Total income (loss) from operations $ 17,248 $(20,099) $ 54,695 $ 10,046
======== ========= ======== ========
</TABLE>
(9) COMPREHENSIVE NET INCOME
The components of comprehensive income for the three months and nine months
ended October 3, 1999 and October 4, 1998 are as follows (000's omitted):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 3, OCTOBER 4, OCTOBER 3, OCTOBER 4,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Income $ 5,518 $(25,886) $17,399 $(18,999)
Foreign Currency Translation Adjustment 3,111 2,350 (3,422) 2,001
------- -------- ------- --------
Comprehensive Income $ 8,629 $(23,536) $13,977 $(16,998)
======= ======== ======= ========
</TABLE>
(10) SUBSIDIARY GUARANTOR INFORMATION
The 10 1/8% Notes are guaranteed on a full, unconditional, unsecured, senior
subordinated, joint and several basis by each of the Corporation's Subsidiary
Guarantors. As of and through October 3, 1999, U.S. Can, wholly owned by the
Corporation, was the only Subsidiary Guarantor. Separate financial statements of
U.S. Can are not presented because management of the Company has determined that
they are not material to investors.
The following condensed consolidating financial data illustrates the
composition of the Corporation (the "Parent"), U.S. Can (the "Subsidiary
Guarantor"), and the other subsidiaries (the "Non-Guarantor Subsidiaries"), as
of December 31, 1998 and October 3, 1999, and for the nine-month periods ended
October 4, 1998 and October 3, 1999. Investments in subsidiaries are accounted
for by the Parent and the Subsidiary Guarantor under the equity method for
purposes of the supplemental consolidating presentation. Earnings of
subsidiaries are, therefore, reflected in their parent's investment accounts and
earnings.
<PAGE> 10
U.S. CAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Nine-Month Period Ended October 3, 1999
(Unaudited)
(000's omitted)
<TABLE>
<CAPTION>
UNITED STATES
U.S. CAN CAN COMPANY USC EUROPE (NON- U.S. CAN
CORPORATION (SUBSIDIARY GUARANTOR CORPORATION
(PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CORSOLIDATED
----------- ------------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET SALES $ - $424,465 $ 125,347 $ - $ 549,812
COST OF SALES - 361,358 108,758 - 470,116
------- -------- ---------- ----------- ---------
Gross income - 63,107 16,589 - 79,696
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - 18,148 6,853 - 25,001
------- -------- ---------- ----------- ---------
Operating income - 44,959 9,736 - 54,695
INTEREST EXPENSE ON BORROWINGS - 19,250 2,508 - 21,758
AMORTIZATION OF DEFERRED FINANCING COSTS - 898 - - 898
OTHER EXPENSES - 1,296 - - 1,296
EQUITY EARNINGS (LOSS) FROM SUBSIDIARY 17,399 4,772 - (22,171) -
PROVISION FOR INCOME TAXES - 9,592 2,456 - 12,048
EXTRAORDINARY ITEM - LOSS ON THE EARLY
EXTINGUISHMENT OF DEBT, net of income tax - (1,296) - - (1,296)
------- -------- ---------- ----------- ---------
NET INCOME (LOSS) $17,399 $ 17,399 $ 4,772 $ (22,171) $ 17,399
======= ======== ========== =========== =========
</TABLE>
<PAGE> 11
U.S. CAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Nine-Month Period Ended October 4, 1998
(Unaudited)
(000's omitted)
<TABLE>
<CAPTION>
UNITED STATES
U.S. CAN CAN COMPANY USC EUROPE (NON- U.S. CAN
CORPORATION (SUBSIDIARY GUARANTOR CORPORATION
(PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CORSOLIDATED
----------- ------------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET SALES $ - $ 464,227 $ 89,529 $ - $553,756
COST OF SALES - 403,308 80,259 - 483,567
-------- ---------- ------------- ----------- --------
Gross income - 60,919 9,270 - 70,189
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - 21,062 3,212 - 24,274
SPECIAL CHARGES - 35,869 - - 35,869
-------- ---------- ------------- ----------- --------
Operating income - 3,988 6,058 - 10,046
INTEREST EXPENSE ON BORROWINGS - 23,428 1,963 - 25,391
AMORTIZATION OF DEFERRED FINANCING COSTS - 1,110 - - 1,110
OTHER EXPENSES - 1,317 - - 1,317
EQUITY EARNINGS (LOSS) FROM SUBSIDIARY (18,999) 2,990 - 16,009 -
PROVISION (BEBEFIT) FOR INCOME TAXES - (8,406) 1,105 - (7,301)
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS,
net of income tax - (8,528) - (8,528)
-------- ---------- ------------- ----------- --------
NET INCOME (LOSS) $(18,999) $ (18,999) $ 2,990 $ 16,009 $(18,999)
======== ========== ============= =========== ========
</TABLE>
<PAGE> 12
U.S. CAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
As of October 3, 1999
(Unaudited)
(000s omitted)
<TABLE>
<CAPTION>
UNITED STATES
U.S. CAN CAN COMPANY USC EUROPE U.S. CAN
CORPORATION (SUBSIDIARY (NON-GUARANTOR CORPORATION
(PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CONSOLIDATED
----------- ------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ - $ 19,725 $ 12,428 $ - $ 32,153
Accounts receivable - 51,089 26,654 - 77,743
Inventories - 63,999 19,483 - 83,482
Prepaid expenses and other assets 33,672 3,917 - 37,589
---------- ----------- -------------- ----------- -----------
Total current assets - 168,485 62,482 - 230,967
NET PROPERTY, PLANT AND EQUIPMENT - 191,749 66,602 - 258,351
INTANGIBLE ASSETS - 50,632 - - 50,632
OTHER ASSETS 236,629 11,905 6,735 (236,629) 18,640
INVESTMENT IN SUBSIDIARIES 43,962 59,846 - (103,808) -
---------- ----------- -------------- ----------- -----------
Total assets $ 280,591 $ 482,617 $ 135,819 $ (340,437) $ 558,590
========== =========== ============== =========== ===========
CURRENT LIABILITIES
Current maturities of long-term debt $ - $ 3,422 $ 2,754 $ - $ 6,176
Accounts payable - 52,335 17,513 - 69,848
Other current liabilities - 73,083 11,994 - 85,077
---------- ----------- -------------- ----------- -----------
Total current liabilities - 128,840 32,261 - 161,101
SENIOR DEBT - 15,093 23,646 - 38,739
SUBORDINATED DEBT 236,629 236,629 - (236,629) 236,629
OTHER LONG-TERM LIABILITIES - 50,590 4,322 - 54,912
INTERCOMPANY ADVANCES (23,247) 7,503 15,744 - -
STOCKHOLDERS' EQUITY 67,209 43,962 59,846 (103,808) 67,209
---------- ----------- -------------- ----------- -----------
Total liabilities and stockholders' equity $ 280,591 $ 482,617 $ 135,819 $ (340,437) $ 558,590
========== =========== ============== =========== ===========
</TABLE>
<PAGE> 13
U.S. CAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 1998
(Unaudited)
(000s omitted)
<TABLE>
<CAPTION>
UNITED STATES
U.S. CAN CAN COMPANY USC EUROPE U.S. CAN
CORPORATION (SUBSIDIARY (NON-GUARANTOR CORPORATION
(PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CONSOLIDATED
----------- ------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ - $ 9,408 $ 8,664 $ - $ 18,072
Accounts receivable - 41,461 22,281 - 63,742
Inventories - 74,965 19,922 - 94,887
Prepaid expenses and other assets 35,856 3,089 - 38,945
---------- ----------- -------------- ----------- -----------
Total current assets - 161,690 53,956 - 215,646
NET PROPERTY, PLANT AND EQUIPMENT - 197,677 70,325 - 268,002
INTANGIBLE ASSETS - 51,928 - - 51,928
OTHER ASSETS 270,587 6,847 6,886 (264,325) 19,995
INVESTMENT IN SUBSIDIARIES 40,383 53,144 - (93,527) -
---------- ----------- -------------- ----------- -----------
Total assets $ 310,970 $ 471,286 $ 131,167 $ (357,852) $ 555,571
========== =========== ============== =========== ===========
CURRENT LIABILITIES
Current maturities of long-term debt $ - $ 3,922 $ 2,809 $ - $ 6,731
Accounts payable - 37,089 15,228 - 52,317
Other current liabilities - 67,735 12,751 - 80,486
---------- ----------- -------------- ----------- -----------
Total current liabilities - 108,746 30,788 - 139,534
SENIOR DEBT 19,134 26,483 - 45,617
SUBORDINATED DEBT 264,325 264,325 - (264,325) 264,325
OTHER LONG-TERM LIABILITIES - 51,656 4,262 - 55,918
INTERCOMPANY ADVANCES (3,532) (12,958) 16,490 - -
STOCKHOLDERS' EQUITY 50,177 40,383 53,144 (93,527) 50,177
---------- ----------- -------------- ----------- -----------
Total liabilities and stockholders' equity $ 310,970 $ 471,286 $ 131,167 $ (357,852) $ 555,571
========== =========== ============== =========== ===========
</TABLE>
<PAGE> 14
U.S. CAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE-MONTH PERIOD ENDED OCTOBER 3, 1999
(Unaudited)
(000s omitted)
<TABLE>
<CAPTION>
UNITED STATES
U.S. CAN CAN COMPANY USC EUROPE U.S. CAN
CORPORATION (SUBSIDIARY (NON-GUARANTOR CORPORATION
(PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CONSOLIDATED
----------- ------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ - $ 52,165 $ 6,641 $ - $ 58,806
---------- ----------- -------------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - (16,691) (3,022) - (19,713)
Proceeds on the sale of business - 4,500 - - 4,500
Proceeds on the sale of property - 556 - - 556
Investment in Formamental S.A. - - (1,644) - (1,644)
---------- ----------- -------------- ----------- -----------
Net cash used in investing activities - (11,635) (4,666) - (16,301)
---------- ----------- -------------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in intercompany advances (1,749) (3,993) 5,742 - -
Issuance of common stock and exercise of
stock options 1,959 - - - 1,959
Net borrowings under the revolving line of credit
and changes in cash overdrafts - 6,014 203 - 6,217
Repurchase of 10 1/8% notes (27,696) - - (27,696)
Payments of other long-term debt, including capital
lease obligations - (4,539) (4,156) - (8,695)
Purchase of treasury stock, net (210) - - - (210)
---------- ----------- -------------- ----------- -----------
Net cash (used in) provided by financing
activities - (30,214) 1,789 - (28,425)
---------- ----------- -------------- ----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH - - 1 - 1
---------- ----------- -------------- ----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS - 10,316 3,765 - 14,081
---------- ----------- -------------- ----------- -----------
CASH AND CASH EQUIVALENTS, beginning of year - 9,408 8,664 - 18,072
---------- ----------- -------------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period - 19,724 12,429 - 32,153
========== =========== ============== =========== ===========
</TABLE>
<PAGE> 15
U.S. CAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE-MONTH PERIOD ENDED OCTOBER 4, 1998
(Unaudited)
(000s omitted)
<TABLE>
<CAPTION>
UNITED STATES
U.S. CAN CAN COMPANY USC EUROPE U.S. CAN
CORPORATION (SUBSIDIARY (NON-GUARANTOR CORPORATION
(PARENT) GUARANTOR) SUBSIDIARIES) ELIMINATIONS CONSOLIDATED
----------- ------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ - $ 49,934 $ 659 $ - $ 50,593
---------- ----------- ------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - (9,038) (3,298) - (12,336)
Proceeds on the sale of property - 215 - - 215
Changes in restricted cash - 29 - - 29
---------- ----------- ------------ ----------- -----------
Net cash used in investing activities - (8,794) (3,298) - (12,092)
---------- ----------- ------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in intercompany advances 803 (6,694) 5,891 - -
Issuance of common stock and exercise of stock options 782 - - - 782
Net borrowings under the revolving line of credit and
changes in cash overdrafts - (24,197) (214) - (24,411)
Payments of other long-term debt, including capital lease -
obligations - (7,465) (1,156) - (8,621)
Payments of debt refinancing costs - (134) - - (134)
Purchase of treasury stock, net (1,585) - - - (1,585)
---------- ----------- ------------ ----------- -----------
Net cash (used in) provided by financing activities - (38,490) 4,521 - (33,969)
---------- ----------- ------------ ----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH - - (2,020) - (2,020)
---------- ----------- ------------ ----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS - 2,650 (138) - 2,512
CASH AND CASH EQUIVALENTS, beginning of year - 415 6,358 - 6,773
---------- ----------- ------------ ----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ - $ 3,065 $ 6,220 $ - $ 9,285
========== =========== ============ =========== ===========
</TABLE>
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following narrative discusses the results of operations, liquidity and
capital resources for the Company on a consolidated basis. This section should
be read in conjunction with the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" contained therein.
RESULTS OF OPERATIONS
On November 9, 1998, U.S. Can sold substantially all of the assets of its
commercial Metal Services business and, accordingly, the Metal Services business
was shown as a discontinued operation. 1998 revenues of the Metal Services
business up to the point of the sale were $94.3 million. The Company also sold
its machine engineering center in Orlando, Florida ("OMEC") on January 29, 1999.
Revenues from this location were $8.2 million in 1998. In addition, as of
November 1999, the Company continues to actively work towards the sale of its
Metal Closure business which operates out of the Glen Dale, West Virginia
facility. In 1998, third quarter and nine-month period revenues from this
operation were $5.9 million and $ 14.3 million, respectively. Comparable
revenues from this facility in the third quarter and the nine-month period ended
October 3, 1999 were $4.0 million and $ 12.4 million, respectively.
QUARTERLY PERIOD ENDED OCTOBER 3, 1999 VERSUS QUARTERLY PERIOD ENDED OCTOBER 4,
1998
Net Sales
Net sales for the quarter ended October 3, 1999, totaled $178.1 million, a
0.1% increase versus the corresponding period in 1998. A slight increase in unit
volumes, both in the U.S. and Europe, contributed to the sales increase.
Along business segment lines, Aerosol net sales in the third quarter of 1999
were $119.8 million. This represented a 2.4% increase primarily due to the
ramp-up of the Wales facility and increased U.S. demand. The Paint, Plastic and
General Line segment had a 1.0% increase in net sales. The Custom & Specialty
segment sales of $17.2 million were down 14.4% versus the third quarter of 1998.
The decline in Custom & Specialty sales is due to a combination of market demand
and productivity issues currently being addressed by management.
Gross Income
Gross income of $25.4 million for the third quarter of 1999 was up $1.8
million, or 7.8%, versus the third quarter of 1998. Gross margin increased to
14.2% of net sales for the period from 13.2% in the comparable period last year.
The primary factors influencing the increase were the operating benefits being
realized from the 1997 and the 1998 restructuring programs, productivity
improvements in the Paint and General line segment, and increased production
from the Wales operation.
Along segment lines, Aerosol gross income increased from $20.5 to $21.0, or
2.4%, aided by slightly higher sales volume, the Welsh operation improvements,
and the effects of consolidating manufacturing operations. Paint, Plastic and
General Line gross income increased 39.2% versus the third quarter of 1998
primarily due to productivity improvements in paint and general line. Custom &
Specialty gross income decreased 25.8% for the third quarter of 1999, due to the
volume softness and productivity issues. Certain expenses are not allocated to
specific business segments including special charges, corporate engineering
costs and other miscellaneous charges.
Operating Income
Operating income in the third quarter of 1999 was $17.2 million versus a
$(20.1) million loss in the third quarter of 1998. Operating margin increased to
9.7% of net sales. Higher gross margins in 1999 favorably impacted operating
income. In 1998, the Company recorded a $35.9 million special charge, resulting
in the 1998 operating loss. Refer to Note (2) to the Condensed Consolidated
Financial Statements for further discussion on the special charge. Operating
margin before the special charge for the period ended October 4, 1998 was 8.9%
of net sales. Selling, general, and administrative expenses as a percentage of
net sales were relatively flat compared to the same period a year ago.
Interest and Other Expenses
<PAGE> 17
Interest expense in the third quarter of 1999 was down 17.1%, or $1.4
million, versus the third quarter of 1998. Tighter controls on working capital
and capital expenditures, coupled with strong operating cash flows, have
resulted in long-term debt reductions of $61.2 million since the third quarter
of last year and $35.1 million since year-end 1998.
Income from Continuing Operations
Third quarter income from continuing operations was $6.0 million ($ 0.44
diluted earnings per share) up $23.4 million versus the same period last year.
Income from continuing operations before the special charge for the period ended
October 4, 1998 was $4.1 million or $0.30 per diluted share. Positive gross
margin impact, a decrease in interest expense and the $35.9 million special
charge taken in the third quarter of 1998 are the primary drivers of this
increase.
Extraordinary Item
In third quarter of 1999, the Company recorded a $0.5 million extraordinary
charge (net of related income taxes of $0.3 million) relating to the early
redemption premium on $3.9 million of its 10 1/8% subordinated notes and the
write-off of deferred financing costs.
Net Income
Third quarter net income of $5.5 million ($0.40 diluted earnings per share)
and $6.0 million ($0.44 diluted earnings per share) before the extraordinary
item. 1998 third quarter net loss was $ (25.9) million or $(1.94) diluted
earnings per share including a loss of $(2.69) per diluted share associated with
the special charge and a loss of $(0.64) per diluted share for discontinued
operations. The special charge taken in 1998, the sale of the discontinued Metal
Services business and a positive gross margin impact are all components of the
overall growth in 1999.
NINE-MONTH PERIOD ENDED OCTOBER 3, 1999 VERSUS NINE-MONTH PERIOD ENDED OCTOBER
4, 1998
Net Sales
Net sales for the nine-month period ended October 3, 1999, totaled $549.8
million, a 0.7% decrease versus the corresponding period in 1998. Severe heat
across the continental United States in the last half of July negatively
impacted demand from some of the Company's customers.
Along business segment lines, Aerosol net sales in the first three quarters
of 1999 were $372.7 million, 2.3% ahead of the same period last year. Stronger
U.S. volumes and increased production in Wales enhanced year-to-date sales
comparisons. Consistent with expectations, the Paint, Plastic and General Line
segment had a slight decrease of 3.4% in net sales due to reduced customer
requirements during the year. In the Custom & Specialty segment, sales were down
13.5% due principally to significant liquidation of excess holiday products in
early 1998 and reduced productivity in 1999.
Gross Income
Gross income of $79.7 million for the nine month period in 1999 was up $9.5
million, or 13.5%, versus the corresponding period in 1998. Gross margin of
14.5% for the first three quarters of 1999 compares favorably to the 12.7%
reported in the first three quarters of 1998. Improved margins reflect
productivity improvements in some segments and benefits derived from
restructuring programs.
Aerosol gross income increased 11.0%, which is due to higher sales volume,
the Welsh operation ramp-up, and the effects of consolidating manufacturing
operations (as part of the restructuring plans). Paint, Plastic and General Line
gross income increased 9.6% versus the first nine months of 1998 due to
productivity improvements in paint and general line. Custom & Specialty gross
income declined 20.1% for the nine-month period of 1999, due largely to lower
sales levels and productivity declines. Certain expenses are not allocated to
specific business segments including special charges, corporate engineering
costs and other miscellaneous charges.
Operating Income
Operating income reported for the first nine months of 1999 was $54.7
million versus $10.0 million in the first nine months of 1998. Operating margin
increased to 9.9% of net sales for the period from 1.8% in the comparable period
last year. 1998 operating
<PAGE> 18
income includes the $35.9 million special charge for restructuring programs.
Operating margin before the special charge for the period ended October 4, 1998
was 8.3% of net sales. 1999 operating margins reflect higher gross margins,
attributable in part to the restructuring actions taken as well as overhead
reduction programs and productivity improvements. Selling, general, and
administrative expenses as a percentage of net sales were relatively unchanged
compared to the same period one year ago.
Interest and Other Expenses
Interest expense in the first three quarters of 1999 was down 14.3%, or $3.6
million, versus the first nine months of 1998, as a result of long-term debt
reduction. Tighter controls on working capital and capital expenditures, coupled
with strong operating cash flows, provided the sources for debt repayment.
Income from Continuing Operations
Income from continuing operations for the first nine months of 1999 was
$18.7 million ($1.38 diluted earnings per share), up $29.2 million versus the
same period last year. Income from continuing operations before the special
charge for the nine months ended October 4, 1998 was $11.0 million or $0.82 per
diluted share. The benefits realized from the restructuring charges taken in
1998, positive gross margin impact and a decrease in interest expense are the
primary components of the growth.
Extraordinary Item
In 1999, the Company recorded a $1.3 million extraordinary charge (net of
related income taxes of $0.8 million) relating to the early redemption premium
and deferred financing costs on $27.7 million of its 10 1/8% subordinated notes.
Net Income
Net income was $17.4 million ($1.28 diluted earning per share) or $18.7
million ($1.38 diluted earnings per share) before the extraordinary item. The
net loss for the nine months ended October 4, 1998 was $ (19.0) million or $
(1.43) diluted earnings per share, which included a loss of $(2.71) per diluted
share associated with the special charge and a loss of $(0.64) per diluted share
related to discontinued operations. The benefits realized from the restructuring
charges taken in 1998, positive gross margin impact and a decrease in interest
expense are the primary components of the growth.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 1999, the Company met its liquidity needs
through internally generated cash flow. Principal liquidity needs included
operations, debt amortization, capital expenditures and the Company's minority
investment in Formametal (see Note (3) to the Condensed Consolidated Financial
Statements). Cash flow from operations was $58.8 million in the first nine
months of 1999, compared to $50.6 million in the first nine months of 1998. Cash
outflows in the first nine months of 1999 included $6.5 million of payments
related to restructuring costs.
As of October 3, 1999, U.S. Can had no borrowings outstanding under the
Credit Agreement, $11.6 million in letters of credit had been issued pursuant
thereto, and $38.4 million of unused credit remained available thereunder. In
April 1999, the revolver was reduced from $80 million to $50 million due to the
Company's reduced borrowing needs. As of October 3, 1999, U.S. Can was in
compliance with the Credit Agreement and its other long-term debt agreements.
(See Note (5) to the Condensed Consolidated Financial Statements for a
description of the Credit Agreement.)
The Company expects total capital expenditures in 1999 to be approximately
$30 to $33 million and has spent $19.7 million in the first nine months of the
year. The 1999 expenditures include plans to install two new state-of-the-art
lithography presses in the fourth quarter. The Company's capital investments
have historically yielded reduced operating costs and improved the Company's
profit margins, and management believes that the strategic deployment of capital
will enable the Company to improve its overall profitability by leveraging the
economies of scale inherent in the manufacture of containers.
Management believes that cash flow from operations, amounts available under
its credit facilities and proceeds from sales of assets should provide
sufficient funds for the Company's short-term and long-term capital expenditure
and debt amortization requirements, and other cash needs in the ordinary course
of business. The Company believes it will be able to refinance the Revolving
Credit Facility on or prior to maturity. The Company believes future strategic
acquisition opportunities are important to its growth and should
<PAGE> 19
they arise, the Company would expect to finance them though some combination of
cash, stock and/or debt financing.
YEAR 2000
Management has reviewed, evaluated and assessed the implication of the Year
2000 issue and believes that it will not pose significant operational problems
for the Company. The Company divided its Year 2000 issues into four major
categories, namely, corporate information technology, embedded technology in its
manufacturing operations, supporting customers' and suppliers' capabilities. The
Company's corporate information systems are near completion relative to the Year
2000 compliance issues and the Company does not expect any disruption in its
activities. The majority of embedded technology in the manufacturing operations
had been made Year 2000 compliant as of the end of the second quarter. Those
systems that are not yet corrected have been identified and are in the process
of being resolved, and contingency plans are being finalized. The Company has
met with numerous customers and believes it has satisfied their concerns about
the Company's Year 2000 readiness. Many key suppliers have been visited or
surveyed and there seems to be a general state of readiness. Appropriate
contingency plans are being made if the Company believes there may be a Year
2000 risk at a specific supplier.
If Year 2000 issues are not identified, or assessment, remediation and
testing are not effected in a timely manner, it is possible that the Year 2000
issue will materially and adversely impact the Company's results of operations.
It is also possible that there will be an adverse impact on its relationships
with customers, vendors, or others. Any failure to become Year 2000 compliant by
banks, vendors, customers, and governmental agencies may also have an impact on
the results of the Company to the extent they relate to the Company's ongoing
operations and business requirements.
FORWARD LOOKING STATEMENT
Certain statements in this filing constitute "forward-looking statements"
within the meaning of the Federal securities laws. Such statements involve known
or unknown risks and uncertainties which may cause the Company's actual results,
performance or achievements to be materially different than future results,
performance or achievements expressed or implied in this filing. By way of
example and not limitation and in no particular order, known risks and
uncertainty include the timing of, and net proceeds realized from, divestitures;
the timing and cost of plant closures; the level of cost reduction achieved
through restructuring; the success of new technology; changes in market
conditions or product demand; loss of important customers; changes in raw
material costs; the effect Year 2000 may have on computer systems; and currency
fluctuation. In light of these and other risks and uncertainties, the inclusion
of a forward-looking statement in this filing should not be regarded as a
representation by the Company that any future results, performance or
achievement will be attained.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management does not believe the Company's exposure to market risk has
significantly changed since year-end 1998 and believes that such risks are
immaterial.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
INCORPORATION
EXHIBIT BY REFERENCE
NUMBER DESCRIPTION OF DOCUMENT (IF APPLICABLE)
- ------- ------------------------------------------------------------------
27.1 Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
<PAGE> 20
SIGNATURES
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 and this report has been signed by the
undersigned, in his capacity as the principal financial officer of the
registrant.
U.S. CAN CORPORATION
Date: November 17, 1999 By: /s/ John L. Workman
-----------------------------
John L. Workman
Executive Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> OCT-04-1999
<CASH> $32,153
<SECURITIES> 0
<RECEIVABLES> $77,743
<ALLOWANCES> 15,470
<INVENTORY> 83,482
<CURRENT-ASSETS> 230,967
<PP&E> 484,624
<DEPRECIATION> (226,273)
<TOTAL-ASSETS> 558,590
<CURRENT-LIABILITIES> 161,101
<BONDS> 0
0
0
<COMMON> 135
<OTHER-SE> 67,074
<TOTAL-LIABILITY-AND-EQUITY> 558,590
<SALES> 549,812
<TOTAL-REVENUES> 549,812
<CGS> 470,116
<TOTAL-COSTS> 470,116
<OTHER-EXPENSES> 2,194
<LOSS-PROVISION> 422
<INTEREST-EXPENSE> 21,758
<INCOME-PRETAX> 30,743
<INCOME-TAX> 12,048
<INCOME-CONTINUING> 18,695
<DISCONTINUED> 0
<EXTRAORDINARY> (1,296)
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<NET-INCOME> 17,399
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