SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8K/A
AMENDMENT TO APPLICATION OF REPORT
Filed Pursuant to Section 12, 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
CALGON CARBON CORPORATION
(Exact Name of Registrant as Specified in Charter)
AMENDMENT NUMBER 1
The Undersigned registrant hereby amends the following
items, financial statements, exhibits or other positions of its
Current Report dated January 15, 1997 on Form 8-K as set forth in
the pages attached hereto:
Amended Item 2
Information provided under Item 7(a): Financial Statements
of Business Acquired
Audited Financial Statements of Advanced Separation
Technologies Inc. for the Year Ended December 31,
1996
Information provided under Item 7(b): Pro Forma Financial
Information
Consolidated Balance Sheet as of December 31, 1996
Combined Statement of Income for the Year Ended
December 31, 1996
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to be
signed on its behalf by undersigned thereto duly authorized.
CALGON CARBON CORPORATION
-------------------------
(REGISTRANT)
Date: March 12, 1997
By /s/R. Scott Keefer
------------------------------
R. Scott Keefer
Senior Vice President-Finance,
Chief Financial Officer
Amendments to current report on Form 8-K dated January 15, 1997 are highlighted
by underscore.
Item 2. Acquisition or disposition of Assets.
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On December 31, 1996, Calgon Carbon Corporation (the Company) purchased
the Stock of Advanced Separation Technologies, Inc. (AST) form Progress Capital
Holdings, Inc. and Potomac Capital Investment Corporation for $70 million in
cash. The cash purchase price was subsequently increased by $.5 million because
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the Adjusted Closing Net Current Assets reflected on the Closing Date Balance
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Sheet was greater than the amount stated in the purchase agreement. Such amount
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was paid on February 27, 1997.
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AST is headquartered in Lakeland, Florida, and designs and assembles
proprietary separation equipment that employs continuous ion exchange and
continuous chromatography technologies. AST serves both the industrial process
and environmental markets worldwide and is a leader in supplying separation
systems to the lysine and corn syrup industries. The assets acquired include
technology, equipment and other assets used in the normal course of business.
The equipment acquired will be used by the Company in the same manner as before
the acquisition.
AST provides the Company with innovative proven technologies that are
complementary to activate carbon. AST's technical expertise and leadership
position will enable the Company to broaden its participation in certain key
markets and
will provide an entry into other existing and promising markets that the Company
does not currently serve.
The Company utilized both currently available funds and drawings on its
United States revolving credit facilities to purchase the stock of AST.
Subsequently, the Company entered into a five-year $50 million bank credit
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facility to refinance the amounts outstanding under its United States revolving
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credit facilities.
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Item 7. Financial Statements and Pro Forma Financial Information.
- ------- ---------------------------------------------------------
(a) Financial Statements of Business Acquired
Financial Statements of Advanced Separation Technologies, Inc.
Report of Independent Accountants
Balance Sheets as of December 31, 1996
Statement of Income and Retained Earnings for the Year Ended
December 31, 1996
Statement of Cash Flows for the Year Ended December 31, 1996
Notes to Financial Statements
(b) Pro Forma Financial Information
Calgon Carbon Corporation and Subsidiary
(Advanced Separation Technologies, Inc.)
Consolidated Balance Sheet at December 31, 1996
Combined Statement of Income for the Year Ended
December 31, 1996
The consolidated balance sheet at December 31, 1996 represents the
latest historical balance sheet of the Company and includes the transaction
enumerated in Item 2.
The Pro Forma Combined Statement of Income for the Year Ended December
31, 1996 reflects the combination of Calgon Carbon Corporation (Consolidated)
and Advanced Separation Technologies, Inc. for the annual period from January 1,
1996 to December 31, 1996.
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.
CALGON CARBON CORPORATION
-------------------------
(REGISTRANT)
Date: March 12, 1997 By /s/ R. Scott Keefer
----------------------
R. Scott Keefer
Senior Vice President-Finance,
Chief Financial Officer
Price Waterhouse LLP [Logo of Price Waterhouse]
Report of Independent Accountants
February 13, 1997
To the Board of Directors of
Florida Progress Corporation and
Calgon Carbon Corporation
In our opinion, the accompanying balance sheet and the related statements of
income and retained earnings and of cash flows present fairly, in all material
respects, the financial position of Advanced Separation Technologies, Inc. (the
Company) at December 31, 1996, and the results of its operations and its cash
flows for the year then ended, 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 audit. We conducted our audit 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 audit provides a reasonable basis
for the opinion expressed above.
/s/ Price Waterhouse LLP
ADVANCED SEPARATION TECHNOLOGIES, INC.
BALANCE SHEET
DECEMBER 31, 1996
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(in thousands of dollars)
DECEMBER 31,
1996
ASSETS
Current assets:
Cash $ 5
Accounts receivable (less $79 allowance for doubtful accounts) 11,033
Inventories 1,762
Deferred income taxes 274
Other current assets 42
-----------
Total current assets 13,116
Property and equipment, net 1,528
Deferred income taxes 215
Other assets 17
-----------
Total assets $ 14,876
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,302
Other current liabilities 1,860
-----------
Total current liabilities 4,162
Shareholders' equity:
Common stock - $1 par value, 10,000 shares authorized,
issued and outstanding 10
Paid-in capital 10,589
Retained earnings 115
-----------
Total liabilities and shareholders' equity $ 14,876
===========
The accompanying notes are an integral part of these financial statements
ADVANCED SEPARATION TECHNOLOGIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1996
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(in thousands of dollars)
YEAR ENDED
DECEMBER 31,
1996
Revenues $ 27,318
Cost of goods sold 18,526
------------
Gross profit 8,792
Selling, general and administrative expenses 3,584
------------
Operating income 5,208
Other income (expense), net 71
------------
Income before income taxes 5,279
Income tax provision 1,978
------------
Net income 3,301
------------
Retained earnings (deficit), beginning of year (2,810)
Less - Dividends paid to parent (376)
---- ------------
Retained earnings (deficit), end of year $ 115
============
The accompanying notes are an integral part of these financial statements
ADVANCED SEPARATION TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
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(in thousands of dollars)
YEAR ENDED
DECEMBER 31,
1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,301
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 489
Deferred income taxes (6)
Changes in assets and liabilities:
Accounts receivable 162
Inventories (1,036)
Other current assets 17
Accounts payable (1,579)
Other current liabilities (297)
------------
Net cash provided by operating activities 1,051
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (724)
------------
Net cash used in investing activities (724)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividend paid (376)
------------
Net cash used in financing activities (376)
Net decrease in cash (49)
Cash at beginning of period 54
------------
Cash at end of period $ 5
============
SUPPLEMENTAL INFORMATION:
Cash payments of income taxes to parent $ 2,441
============
Cash payments of interest to parent $ 9
============
The accompanying notes are an integral part of these financial statements
Advanced Separation Technologies, Inc.
December 31, 1996
Notes to Financial Statements
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1. Business Description
Advanced Separation Technologies, Inc (the Company) designs and manufactures
separation process equipment primarily for use in the sweeteners, biotech and
specialty chemicals industries. The Company also provides auxiliary equipment
packages, technical support for commercial installations and development work
and rental equipment for on-site testing of separation processes.
Prior to December 31, 1996, the Company was an 80% owned subsidiary of
Progress Capital Holdings, Inc. (PCH), a wholly owned subsidiary of Florida
Progress Corporation (FPC). The remaining 20% was owned by Potomac Capital
Investment Corporation (Potomac), a wholly owned subsidiary of Potomac
Electric Power Company. Effective December 31, 1996, PCH and Potomac sold
their ownership interests in the Company to Calgon Carbon Corporation through
a stock purchase agreement, dated December 2, 1996 (the sale transaction).
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements reflect the financial results of the
Company and AST Trading Corporation (AST Trading), a wholly owned foreign
sales corporation for the year ended December 31, 1996.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized for both financial statement and income tax purposes
for major equipment sales contracts under the percentage of completion method
of accounting. Under this method, the estimated percentage for each contract,
based on the cost of work incurred to date on the production of the contract
compared to total estimated cost, is applied to total estimated revenue. This
method is used because management considers the cost of work incurred to
be the best available measure of progress on these contracts. Contract costs
include all direct material and labor, plus an allocation of indirect costs
related to contract performance, such as indirect labor and depreciation
costs. Provision is made for all future estimated costs in the period in
which such costs are determined.
Revenue from sales of other products and services is recognized as the
products are shipped or services rendered.
Advanced Separation Technologies, Inc.
December 31, 1996
Notes to Financial Statements
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Selling, general administrative and research and development costs are
charged to expense as incurred.
Income Taxes
The provision for income taxes is based on taxes payable for the current
year and deferred taxes based upon the differences between the book and tax
bases of assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse. In April 1996, the
Company formed AST Trading pursuant to Section 922 of the Internal Revenue
Code of 1954, as amended. The tax law provides that a portion of the export
income of an eligible foreign sales corporation will be exempt from federal
and certain state income tax.
Inventories
Inventories are stated at the lower of cost or market. Cost is based on
actual prices paid for major components and equipment in process. Work in
process and finished unit inventory include direct labor and indirect costs.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided on the
straight line method over the estimated useful lives of the individual
assets. Leasehold improvements are amortized over the lease term.
Warranties
Equipment sold by the Company is generally under warranty against defects in
material and workmanship for one year. The Company has accrued for estimated.
future warranty costs.
3. Inventories
Inventories consist of the following at December 31, 1996 (in thousands
of dollars):
December 31,
1996
Parts $ 878
Work-in-process 957
Less - Reserve for obsolescence (73)
---- -------
Total inventories $ 1,762
=======
Advanced Separation Technologies, Inc.
December 31, 1996
Notes to Financial Statements
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4. Property and Equipment
Property and Equipment consist of the following at December 31, 1996
(in thousands of dollars):
December 31,
1996
Plant equipment $ 968
Pilot plant rental units 1,519
Office equipment and vehicles 758
Leasehold improvements 138
Less - Accumulated depreciation (1,855)
---- ------------
Property and Equipment, net $ 1,528
============
5. Lease Obligations
The Company's primary lease obligation is the lease on its office and
plant facility, which has been leased under a series of one year renewal
options, with the final year expiring July 31, 1997. Rental expense for
the year ended December 31, 1996 was $126.
6. Accrued Expenses
Accrued expenses consist of the following at December 31, 1996 (in thousands
of dollars):
December 31,
1996
Payroll, benefits and related taxes $ 83
Accrued vacation 145
Sales commissions 748
Warranty costs 402
Employee bonus program 464
Other 18
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Total accrued expenses $ 1,860
============
7. Employee Benefit Expenses
The Company's employees were included in the various benefit plans of
FPC prior to the sale transaction. These plans included the Employees
Retirement Plan of FPC, employee medical, dental, long term disability and
life insurance plans, the Savings Plan for Employees of FPC and other such
benefits. All existing liabilities relating to such plans were retained by
-3-
Advanced Separation Technologies, Inc.
December 31, 1996
Notes to Financial Statements
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FPC. For the purpose of these financial statements, the Company is considered
to have participated in multiemployer benefit plans.
8. Income Taxes
Historically, the Company has been included in the consolidated U.S.
federal income tax return of FPC. The income tax provision presented
represents the current and deferred income taxes that would have resulted
if the Company had operated as a stand alone entity filing its own income
tax returns. The provision for income taxes consists of the following
(in thousands of dollars):
Year ended
December 31,
1996
Current:
Federal $ 1,752
State 232
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1,984
Deferred:
Federal _
State (6)
-----------
Total income tax provision $ 1,978
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The differences between the U.S. federal statutory tax rate and the Company's
effective income tax rate is as follows (in thousands of dollars):
Year ended
December 31,
1996
Income before taxes $ 5,279
=============
U.S. federal statutory rate applied
to income before tax $ 1,848
State income taxes, net of federal
income tax benefit 211
Reductions in tax resulting from:
Foreign sales corporation credit (127)
Miscellaneous 46
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Income taxes $ 1,978
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-4-
Advanced Separation Technologies, Inc.
December 31, 1996
Notes to Financial Statements
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Deferred income tax assets consist of the following at December 31,
1996 (in thousands of dollars):
December 31,
1996
Patents $ 118
Intangibles 68
Property and equipment 30
Inventory reserve 28
Accrued warranty costs 157
Bad debt reserve 32
Accrued vacation 56
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Total deferred tax assets $ 489
============
The Company has no deferred income tax liabilities at December 31, 1996.
9. Related-Party Transactions
Certain administrative services, such as accounting, auditing, legal,
treasury, risk management, payroll, and human resources were provided by
PCH and FPC prior to the sale transaction. Both direct and indirect costs
of providing these services were allocated to the Company based upon actual
time incurred or other methods that management believed to be reasonable.
The direct and indirect costs allocated to the Company were as follows
(in thousands of dollars):
Year ended
December 31,
1996
Corporate overhead $139
Services rendered $372
The Company also had an arrangement with PCH whereby the Company's surplus
cash was transferred to PCH for investment or the Company borrowed cash
to satisfy cash requirements. Interest was paid or charged on the daily
balance at PCH's average commercial borrowing rate. In connection with
the sale transaction, on December 31, 1996 all of the Company's then
outstanding receivables and payables with PCH were settled and all of
the Company's surplus cash was transferred to PCH. In addition, PCH agreed
to fund the payment of the Company's accrued employee bonus program;
accordingly, the Company has recorded a receivable of $463 from PCH at
December 31, 1996.
-5-
Advanced Separation Technologies, Inc.
December 31, 1996
Notes to Financial Statements
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10. Major Customers
For the year ended December 31, 1996, two customers accounted for 31
percent and 10 percent of the Company's revenues, respectively.
At December 31, 1996, accounts receivable included balances totaling
$4,410 from two major customers.
11. Backlog
The following table shows the amount of revenue the Company expects
to realize from work to be performed on uncompleted contracts in progress
at December 31, 1996 and from contractual agreements on which work has
not yet begun (in thousands of dollars):
Balance, December 31, 1995 $ 3,685
Contract adjustments 540
New contracts, 1996 23,282
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27,507
Less-Contract revenue earned, 1996 (24,913)
---- -----------
Balance, December 31, 1996 $ 2,594
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CALGON CARBON CORPORATION
CONSOLIDATED BALANCE SHEET
--------------------------
December 31, 1996
(Dollars in Thousands)
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 15,439
Receivables................................................ 63,762
Inventories................................................ 46,471
Other current assets....................................... 9,247
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Total current assets..................................... 134,919
Property, plant and equipment, net........................... 173,564
Intangibles.................................................. 72,658
Other assets................................................. 16,110
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Total assets............................................. $397,251
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt due within one year......................... $ 4,451
Accounts payable and accrued liabilities................... 35,846
Restructuring reserve...................................... 7,847
Payroll and benefits payable............................... 12,903
Accrued income taxes....................................... 5,202
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Total current liabilities................................ 66,249
Long-term debt............................................... 65,837
Deferred income taxes........................................ 40,522
Other liabilities............................................ 7,748
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Total liabilities........................................ 180,356
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Shareholders' equity:
Common shares, $.01 par value, 100,000,000
shares authorized, 41,435,960 shares issued............... 414
Additional paid-in capital.................................. 62,102
Retained earnings........................................... 162,098
Cumulative translation adjustments.......................... 12,347
--------
236,961
Treasury stock, at cost, 1,761,300 shares................... (20,066)
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Total stockholders' equity................................ 216,895
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Total liabilities and
shareholders' equity.................................... $397,251
========
CALGON CARBON CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
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Twelve Months Ended December 31, 1996
(Unaudited)
(Dollar in Thousands)
Advanced
Calgon Carbon Separation Reclassifi-
Corporation Technologies cations Adjustments
(Consolidated) Inc. (Note 2) (Note 3) Combined
------------- ------------ ------------ ------------ ---------
Net sales............................. $290,196 $27,318 $ - $ - $317,514
-------- ------- ---------- ------------ --------
Cost of products sold
(excluding depreciation)............ 180,600 18,526 (377) - 198,749
Depreciation and amortization......... 19,049 - 531 (a) 1,647 21,227
Selling, general and
administrative expenses............. 50,277 3,584 (642) - 53,219
Research and development
expenses............................ 6,518 - 488 - 7,006
-------- ------- ---------- ------------ --------
256,444 22,110 - 1,647 280,201
-------- ------- ---------- ------------ --------
Income from operations................ 33,752 5,208 (1,647) 37,313
Interest income....................... 1,551 - 33 (b) (727) 857
Interest expense...................... (752) - (9) (c) (3,000) (3,761)
Other income (expense)--net........... (742) 71 (24) - (695)
-------- ------- ---------- ------------ --------
Income before income taxes............ 33,809 5,279 - (5,374) 33,714
Provision for income taxes............ 12,171 1,978 - (d) (1,846) 12,303
-------- ------- ---------- ------------ --------
Net income............................ $ 21,638 $ 3,301 $ - $ (3,528) $ 21,411
======== ======= ========== ============ ========
Net income per common shares.......... $ .54 $ .08 $ - $ (.09) $ .53
======== ======= ========== ============ ========
CALGON CARBON CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
--------------------------------------
Twelve Months Ended December 31, 1996
(Unaudited)
(Dollars in Thousands)
Note 1 - Net income per common share amounts are based on the weighted average
- ------
number of shares (40,266,971) of the acquiring company, Calgon Carbon
Corporation, outstanding during the period.
Note 2 - The reclassifications adjust the amounts presented for Advanced
- ------
Separation Technologies Inc. to the same basis used for Calgon Carbon
Corporation (Consolidated).
Note 3 - The following pro forma adjustments relate to the pro forma combined
- ------
statement of income for the twelve months ended December 31, 1966. The
adjustments have been computed assuming the transactions enumerated in Item
2 were consummated at the beginning of the period presented and give effect
to events that are (i) directly attributable to the transactions, (ii) expected
to have a continuing impact on the Company, and (iii) factually supportable.
There are no material nonrecurring charges or credits and related tax effects
which directly resulted from the transactions.
The pro forma results of operations for the twelve months ended December
31, 1996, are not necessarily indicative of the actual results of operations
had the transactions enumerated in Item 2 been made at the beginning of the
period presented, or of results which may occur in the future.
(a) To amortize goodwill and organization expenses. Goodwill was
amortized on a straight-line basis over 40 years. Organization expenses
were amortized on a straight-line basis over 5 years.
(b) To reflect the decrease in interest income related to the portion
of the purchase price that was paid from internally generated funds.
(c) To reflect the increase in interest expense related to the portion
of the purchase price that was paid by the use of debt.
(d) To adjust the provision for income taxes to reflect the combination
of the entities reported.