SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from_______________to_____________________
Commission file number 333-28157
TEKNI-PLEX, INC.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3286312
- ---------------------------------- -------------------------------------
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
260 N. Denton Tap Road, Suite 150 (972) 304-5077
- ---------------------------------- ---------------------------------
Coppell, TX 75019 (Registrant's telephone number)
- ---------------------------------
(Address of principal executive office)
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 [ ]
TEKNI-PLEX, INC.
Page #
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 28, 2003 and June 28, 2002 3
Consolidated Statements of Operations for the nine months and three months
ended March 28, 2003 and March 29, 2002 4
Consolidated Statements of Other Comprehensive Income (loss) for the nine months
and three months ended March 28, 2003 and March 29, 2002 4
Consolidated Statements of Cash Flows for the nine months ended March 28, 2003
and March 29, 2002 5
Notes to Consolidated Financial Statements 6-18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 19-21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 21
ITEM 4. CONTROLS AND PROCEDURES 22
PART II. OTHER INFORMATION
Item 1. Legal proceedings 23
Item 2. Changes in securities 23
Item 3. Defaults upon senior securities 23
Item 4. Submission of matters to a vote of securities holders 23
Item 5. Other information 23
Item 6. Exhibits and reports on Form 8-K 23
Item 7. Certifications 24-26
TEKNI-PLEX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
MARCH 28, 2003 June 28, 2002
(UNAUDITED)
----------- --------------------
ASSETS
CURRENT:
Cash $ 16,842 $ 28,199
Accounts receivable, net of allowance for doubtful
accounts of $2,101 and $1,671 142,714 147,198
Inventories 165,823 117,632
Deferred income taxes 7,472 7,472
Prepaid and other current assets 7,853 5,583
--------- ---------
TOTAL CURRENT ASSETS 340,704 306,084
PROPERTY, PLANT AND EQUIPMENT, NET 177,829 158,118
INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION
OF $79,085 AND $78,399 215,383 204,252
DEFERRED CHARGES, NET OF ACCUMULATED
AMORTIZATION OF $6,899 AND $5,030 12,474 14,343
DEFERRED INCOME TAXES 18,879 16,278
OTHER ASSETS 967 1,078
--------- ---------
$ 766,236 $ 700,153
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt $ 13,290 $ 13,407
Accounts payable - trade 39,386 32,643
Accrued payroll and benefits 9,103 8,965
Accrued interest 17,026 4,789
Accrued liabilities - other 25,424 28,846
Income taxes payable 4,539 515
--------- ---------
TOTAL CURRENT LIABILITIES 108,768 89,165
LONG-TERM DEBT 715,806 679,414
OTHER LIABILITIES 25,956 22,685
--------- ---------
TOTAL LIABILITIES 850,530 791,264
--------- ---------
STOCKHOLDERS' DEFICIT:
Common stock -- --
Additional paid-in capital 170,568 170,176
Accumulated other comprehensive loss (4,745) (6,805)
Accumulated deficit (29,595) (33,959)
Treasury stock (220,522) (220,523)
--------- ---------
TOTAL STOCKHOLDERS' DEFICIT (84,294) (91,111)
--------- ---------
$ 766,236 $ 700,153
========= =========
See accompanying notes to consolidated financial statements.
3
TEKNI-PLEX, INC. AND SUBSIDIARIES
(Unaudited -- in thousands)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Nine months ended
MARCH 28, March 29, MARCH 28, March 29,
2003 2002 2003 2002
-------- --------- --------- --------
NET SALES $166,091 $ 153,393 $ 425,258 $382,297
COST OF SALES 121,966 111,385 319,871 285,591
-------- --------- --------- --------
GROSS PROFIT 44,125 42,008 105,387 96,706
OPERATING EXPENSES:
Selling, general and administrative 14,562 18,529 43,046 50,314
-------- --------- --------- --------
OPERATING PROFIT 29,563 23,479 62,341 46,392
OTHER EXPENSES:
Interest expense 18,722 19,014 53,971 53,389
Unrealized (gain) loss on derivative
contracts (833) 1,085 1,303 3,675
Other (income) expenses (359) (105) 23 229
-------- --------- --------- --------
INCOME (LOSS) BEFORE INCOME TAXES 12,033 3,485 7,044 (10,901)
PROVISION (BENEFIT) FOR INCOME TAXES 4,430 1,180 2,680 (3,820)
-------- --------- --------- --------
NET INCOME (LOSS) $ 7,603 $ 2,305 $ 4,364 $ (7,081)
======== ========= ========= ========
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)
NET INCOME (LOSS) $ 7,603 $ 2,305 $ 4,364 $ (7,081)
COMPREHENSIVE INCOME (LOSS), NET OF TAXES
Foreign currency translation adjustment 1,240 (3,985) 2,060 (4,277)
-------- --------- --------- --------
COMPREHENSIVE INCOME (LOSS) $ 8,843 $ (1,680) $ 6,424 $(11,358)
======== ========= ========= ========
See accompanying notes to consolidated financial statements.
4
TEKNI-PLEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited -- in thousands)
Nine months ended
MARCH 28, 2003 March 29, 2002
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 4,364 $ (7,081)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 20,144 29,011
Unrealized loss on derivative contracts 1,303 3,675
Deferred income taxes (296) (3,465)
Changes in operating assets and liabilities:
Accounts receivable 8,139 (9,624)
Inventories (45,202) (21,769)
Prepaid expenses and other current assets (1,857) (2,703)
Income taxes 4,024 (2,202)
Accounts payable (833) (5,003)
Accrued interest 12,248 13,763
Accrued expenses and other liabilities (7,661) (10,033)
-------- ---------
NET CASH USED IN OPERATING ACTIVITIES (5,627) (15,431)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (24,587) (12,317)
Acquisitions of assets including acquisition costs (16,806) (65,757)
Additions to intangibles (807) 797
Deposits and other assets 119 846
-------- ---------
NET CASH USED IN INVESTING ACTIVITIES (42,081) (76,431)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 36,098 6,012
Payment for treasury stock -- (60)
Receipt of additional paid-in capital 392 50,000
Debt financing costs -- (120)
-------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 36,490 55,832
-------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (139) 5
-------- ---------
NET DECREASE IN CASH (11,357) (36,025)
CASH, BEGINNING OF PERIOD 28,199 44,645
-------- ---------
CASH, END OF PERIOD $ 16,842 $ 8,620
======== =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest $ 41,933 $ 38,290
Income taxes 2,716 1,912
See accompanying notes to consolidated financial statements.
5
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
( in thousands)
NOTE 1 - GENERAL
Tekni-Plex is a global, diversified manufacturer of packaging, packaging
products and materials as well as tubing products. Tekni-Plex primarily serves
the food, healthcare and consumer markets. Tekni-Plex has built leadership
positions in its core markets, and has focused on vertically integrated
production of highly specialized products. Tekni-Plex has operations in the
United States, Europe and Canada. Tekni-Plex's operations are aligned under two
business segments: Packaging and Tubing Products. Products that do not fit in
either of these two segments, including recycled PET, vinyl compounds and
specialty resins have been reflected as Other.
The consolidated financial statements include the accounts of Tekni-Plex, Inc.
and its Subsidiaries.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. For further information please refer to the
audited financial statements and footnotes thereto included in the Company's
Annual Report on Form 10-K for the year ended June 28, 2002.
The results of operations and cash flows for the nine months ended March 28,
2003 are not necessarily indicative of the results to be expected for the fiscal
year ending June 27, 2003 or any other period.
NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS
a) In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, Business Combinations (SFAS 141) and No. 142,
Goodwill and Other Intangible Assets (SFAS 142). SFAS 141, requires
the use of the purchase method of accounting and prohibits the use of
the pooling-of-interests method of accounting for business
combinations initiated after June 30, 2001. SFAS 141 requires that the
Company recognize acquired intangible assets apart from goodwill if
the acquired intangible assets meet certain criteria. SFAS 141 applies
to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It
also requires, upon adoption of SFAS 142, that the company reclassify
the carrying amounts of intangible assets and goodwill based on the
criteria in SFAS 141.
SFAS 142 requires, among other things, that the companies no longer
amortize goodwill, but instead test goodwill for impairment at least
annually. In addition, SFAS 142 requires that the Company identify
reporting units for the purposes of assessing potential future
impairments of goodwill, reassess the useful lives of other existing
recognized intangible assets, and cease amortization of intangible
assets with an indefinite useful life. An intangible asset with an
indefinite useful life should be tested for impairment in accordance
with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and
other intangible assets recognized at that date, regardless of when
those assets were initially recognized. SFAS 142 requires the Company
to complete a transitional goodwill impairment test six months from
the date of adoption. The Company is also required to reassess the
useful lives of other intangible assets within the first interim
quarter after adoption of SFAS 142.
The Company has completed its transitional analysis of goodwill and
has determined no adjustments are necessary.
6
If SFAS 142 had been adopted June 30, 2001, the Company's net loss for
the nine months ended March 29, 2002 would have reduced because of
lower amounts of amortization as follows:
Three Months Ended Nine Months Ended
Net income (loss), as reported $ 2,305 $ (7,081)
Add amortization, net of tax 3,462 10,377
-------- ---------
Adjusted net income $ 5,767 $ 3,296
======== =========
b) In December 2002, The FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation -- Transition and Disclosure -- an amendment
of FASB Statement No. 123". SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based Compensation," to provide alternative
methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No.
123 as it relates to accounting for stock-based employee compensation
and the effect of the method used on reported results. The Company
does not plan to adopt the fair value based method prescribed by
FASB 123.
Under the accounting provisions of FASB 123, the Company's net income
(loss) would have been adjusted to the pro forma amounts indicated
below, using the following assumptions: expected lives of 8 years, no
dividend yield, volatility at 0%, and risk free interest rate of 4.0%
for 2001 (the last year of grants).
Three months ended Nine months ended
March 28, March 29, March 28, March 29,
2003 2002 2003 2003
-------------------- --------------------
Net income (loss),
As reported $7,603 $2,305 $4,364 $(7,081)
Adjustments for fair value of
stock options, net of tax (32) (36) (96) (109)
-------------------- --------------------
Pro forma $7,571 $2,269 $4,268 $(7,190)
-------------------- --------------------
NOTE 3 - INVENTORIES
Inventories as of March 28, 2003 and June 28, 2002 are summarized as follows:
MARCH 28, 2003 June 28, 2002
-------------- -------------
Raw materials $ 51,268 $ 37,727
Work-in-process 9,970 8,621
Finished goods 104,585 71,284
--------- ---------
$ 165,823 $ 117,632
--------- ---------
7
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 4 - LONG-TERM DEBT
Long-term debt consists of the following:
MARCH 28, 2003 June 28, 2002
-------------- -------------
Senior Subordinated Notes issued June 21, 2000 at
12-3/4% due June 15, 2010. (Less unamortized $ 272,269 $ 271,985
discount of $2,731 and $3,015)
Senior Subordinated Notes issued May 2002 at
12-3/4% due June 15, 2010 (plus unamortized premium 40,531 40,588
at $531 and $588)
Senior Debt:
Revolving line of credit, expiring June, 2006.
At March 28, 2003, the interest rates ranged
from 4.44 % to 6.25%. 88,000 46,000
Term notes due June, 2006 and June, 2008, with
interest rates at March 28, 2003 of 4.38% and 322,900 329,120
4.88%.
Other, primarily international term loans, with
interest rates ranging from 4.44% to 5.44% and 5,396 5,128
maturities ranging from 2003 to 2010
--------- ----------
729,096 692,821
Less: Current maturities 13,290 13,407
--------- ----------
$ 715,806 $ 679,414
--------- ----------
8
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 5 - SEGMENT INFORMATION
Tekni-Plex has organized its business into two industry segments: Packaging and
Tubing Products. The Packaging segment principally produces foam egg cartons,
pharmaceutical blister films, poultry and meat processor trays, closure liners,
aerosol and pump packaging components and foam plates. The Tubing Products
segment principally produces garden and irrigating hose, medical tubing and pool
and vacuum hose. Products that do not fit in either of these segments, including
recycled PET, vinyl compounds and specialty resins, have been reflected in
Other. Tekni-Plex's segments have operations in the United States, Europe and
Canada.
Financial information concerning the Company's business segments and the
geographic areas in which they operate are as follows:
Tubing
Packaging Products Other TOTAL
-------- -------- ------- --------
Three months ended
March 28,2003
Revenues from external
Customers $ 69,005 $ 69,355 $27,731 $166,091
Interest expense 5,965 8,779 3,978 18,722
Depreciation and
Amortization 3,054 1,674 1,309 6,037
Operating profit (loss) 17,303 17,127 (289) 34,141
Expenditures for segment
Assets 6,554 2,437 1,761 10,752
-------- -------- ------- --------
Three months ended
March 29,2002
Revenues from external
Customers $ 59,143 $ 67,581 $26,669 $153,393
Interest expense 4,002 12,697 2,315 19,014
Depreciation and
Amortization 5,444 3,025 1,226 9,695
Operating profit (loss) 12,317 14,204 2,326 28,847
Expenditures for segment
Assets 2,146 142 632 2,920
-------- -------- ------- --------
9
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Tubing
Packaging Products Other TOTAL
-------- -------- ------- --------
Nine months ended
March 28, 2003
Revenues from external
Customers $199,253 $145,815 $80,190 $425,258
Interest expense 17,185 25,317 11,469 53,971
Depreciation and
Amortization 10,493 4,966 3,917 19,376
Operating profit (loss) 44,829 30,034 849 75,712
Expenditures for segment
Assets 10,519 9,082 4,371 23,972
-------- -------- ------- --------
Nine months ended
March 29, 2002
Revenues from external
Customers $174,744 $129,325 $78,228 $382,297
Interest expense 16,988 25,037 11,364 53,389
Depreciation and
Amortization 15,254 8,146 4,837 28,237
Operating profit (loss) 32,467 22,587 4,282 59,336
Expenditures for segment
Assets 6,435 3,224 2,112 11,771
-------- -------- ------- --------
Three months ended Nine months ended
MARCH 28, March 29, MARCH 28, March 29,
2003 2002 2003 2002
--------- -------- -------- ---------
PROFIT OR LOSS
Total operating profit for reportable
segments before income taxes $ 34,141 $ 28,847 $ 75,712 $ 59,336
Corporate and eliminations (4,578) (5,368) (13,371) (12,944)
--------- -------- -------- ---------
$ 29,563 $ 23,479 $ 62,341 $ 46,392
========= ======== ======== =========
DEPRECIATION AND AMORTIZATION
Segment totals $ 6,037 $ 9,695 $ 19,376 $ 28,237
Corporate 256 262 768 774
--------- -------- -------- ---------
Consolidated total $ 6,293 $ 9,957 $ 20,144 $ 29,011
========= ======== ======== =========
EXPENDITURES FOR SEGMENT ASSETS
Total reportable-segment expenditures $ 10,752 $ 2,920 $ 23,972 $ 11,771
Other unallocated expenditures 226 255 615 546
--------- -------- -------- ---------
Consolidated total $ 10,978 $ 3,175 $ 24,587 $ 12,317
========= ======== ======== =========
10
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINACIAL STATEMENTS
(in thousands)
SEGMENT ASSETS
Packaging Tubing Products Other TOTAL
--------- --------------- ------ -----
March 28, 2003 $ 265,367 $ 348,441 $ 130,546 $ 744,354
---------- ------------ --------- ---------
June 28, 2002 $ 222,798 $ 334,710 $ 130,050 $ 687,558
---------- ------------ --------- ---------
MARCH 28, 2003 June 28, 2002
-------------- -------------
TOTAL ASSETS
Total assets from reportable segments $ 744,354 $ 687,558
Other unallocated amounts 21,882 12,595
--------- ---------
Consolidated total $ 766,236 $ 700,153
========= =========
GEOGRAPHIC INFORMATION
Three months ended Nine months ended
MARCH 28, March 29, MARCH 28, March 29,
2003 2002 2003 2002
--------- --------- --------- ---------
REVENUES
United States $ 144,000 $ 137,685 $ 372,154 $ 341,366
International 22,091 15,708 53,104 40,931
--------- --------- --------- ---------
Total $ 166,091 $ 153,393 $ 425,258 $ 382,297
========= ========= ========= =========
MARCH 28, 2003 June 28, 2002
--------------- -------------
LONG-LIVED ASSETS
United States $ 378,698 $ 352,365
International 46,834 41,704
--------- ---------
Total $ 425,532 $ 394,069
========= =========
11
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 6 - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Consolidated Statement of Earnings
For the three months ended March 28, 2003
Non-
TOTAL Issuer Guarantors Guarantors
-------- --------- ---------- ----------
Net sales $ 166,091 $ 37,522 $ 106,478 $ 22,091
Cost of sales 121,966 26,400 79,396 16,170
--------- --------- --------- ----------
Gross profit 44,125 11,122 27,082 5,921
Operating expenses:
Selling, General and administrative 14,562 7,058 5,600 1,904
--------- --------- --------- ----------
Operating profit 29,563 4,064 21,482 4,017
Interest expense (income) 18,722 18,685 (11) 48
Unrealized gain on derivative contracts (833) (833) -- --
Other expense (income) (359) (554) (398) 593
--------- --------- --------- ----------
Income (loss) before income taxes 12,033 (13,234) 21,891 3,376
Provision (benefit) for income taxes 4,430 (5,812) 8,890 1,352
--------- --------- --------- ----------
Net income (loss) $ 7,603 $ (7,422) $ 13,001 $ 2,024
========= ========= ========= ==========
For the nine months ended March 28, 2003
Non-
TOTAL Issuer Guarantors Guarantors
--------- --------- ---------- ---------
Net sales $ 425,258 $ 111,882 $ 260,272 $ 53,104
Cost of sales 319,871 78,699 202,163 39,009
--------- --------- ---------- ---------
Gross profit 105,387 33,183 58,109 14,095
Operating expenses:
Selling, General and administrative 43,046 19,786 18,233 5,027
--------- --------- ---------- ---------
Operating profit 62,341 13,397 39,876 9,068
Interest expense (income) 53,971 53,918 (54) 107
Unrealized loss on derivative contracts 1,303 1,303 -- --
Other expense (income) 23 (578) (998) 1,599
--------- --------- ---------- ---------
Income (loss) before income taxes 7,044 (41,246) 40,928 7,362
Provision (benefit) for income taxes 2,680 (15,670) 15,550 2,800
--------- --------- ---------- ---------
Net income (loss) $ 4,364 $ (25,576) $ 25,378 $ 4,562
========= ========= ========== =========
12
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 6 - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Consolidated Statement of Earnings
For the three months ended March 29, 2002
Non-
TOTAL Issuer Guarantors Guarantors
--------- --------- ---------- ----------
Net sales $ 153,393 $ 40,360 $ 97,325 $ 15,708
Cost of sales 111,385 27,869 72,885 10,631
--------- --------- ---------- ---------
Gross profit 42,008 12,491 24,440 5,077
Operating expenses:
Selling, General and administrative 18,529 10,854 6,123 1,552
--------- --------- ---------- ---------
Operating profit 23,479 1,637 18,317 3,525
Interest expense (income) 19,014 19,002 (10) 22
Unrealized gain on derivative contracts 1,085 1,085 -- --
Other expense (income) (105) (222) (366) 483
--------- --------- ---------- ---------
Income (loss) before income taxes 3,485 (18,228) 18,693 3,020
Provision (benefit) for income taxes 1,180 (6,450) 6,700 930
--------- --------- ---------- ---------
Net income (loss) $ 2,305 $ (11,778) $ 11,993 $ 2,090
========= ========= ========== =========
For the nine months ended March 29, 2002
Non-
TOTAL Issuer Guarantors Guarantors
--------- --------- ---------- ----------
Net sales $ 382,297 $ 121,666 $ 219,700 $ 40,931
Cost of sales 285,591 87,956 167,882 29,753
--------- --------- ---------- ---------
Gross profit 96,706 33,710 51,818 11,178
Operating expenses:
Selling, General and administrative 50,314 29,737 16,000 4,577
--------- --------- ---------- ---------
Operating profit 46,392 3,973 35,818 6,601
Interest expense (income) 53,389 53,356 (86) 119
Unrealized loss on derivative contracts 3,675 3,675 -- --
Other expense (income) 229 (712) (630) 1,571
--------- --------- ---------- ---------
Income (loss) before income taxes (10,901) (52,346) 36,534 4,911
Provision (benefit) for income taxes (3,820) (18,360) 12,950 1,590
--------- --------- ---------- ---------
Net income (loss) $ (7,081) $ (33,986) $ 23,584 $ 3,321
========= ========= ========== =========
13
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 6 - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet - at March 28, 2003
Non-
TOTAL Eliminations Issuer Guarantors Guarantors
--------- ------------ --------- ---------- ----------
Current assets $ 340,704 $ -- $ 45,668 $ 239,002 $ 56,034
Property, plant and equipment, net 177,829 -- 40,813 112,825 24,191
Intangible assets, net 215,383 -- 8,533 194,481 12,369
Investment in subsidiaries -- (528,458) 528,458 -- --
Deferred income taxes 18,879 -- 19,230 1,430 (1,781)
Deferred charges, net 12,474 -- 12,358 116 --
Other assets 967 (343,029) 96,754 235,187 12,055
--------- --------- --------- --------- ---------
Total assets $ 766,236 $(871,487) $ 751,814 $ 783,041 $ 102,868
========= ========= ========= ========= =========
Current liabilities $ 108,768 $ -- $ 48,532 $ 42,440 $ 17,796
Long-term debt 715,806 -- 711,260 -- 4,546
Other liabilities 25,956 (343,029) 71,590 256,772 40,623
--------- --------- --------- --------- ---------
Total liabilities 850,530 (343,029) 831,382 299,212 62,965
--------- --------- --------- --------- ---------
Additional paid-in capital 170,568 (312,420) 170,549 296,783 15,656
Retained earnings, Accumulated (deficit) (29,595) (216,038) (29,595) 190,131 25,907
Accumulated other comprehensive loss (4,745) -- -- (3,085) (1,660)
Less: Treasury stock (220,522) -- (220,522) -- --
--------- --------- --------- --------- ---------
Total stockholders' deficit (84,294) (528,458) (79,568) 483,829 39,903
--------- --------- --------- --------- ---------
Total liabilities and stockholders'
deficit $ 766,236 $(871,487) $ 751,814 $ 783,041 $ 102,868
========= ========= ========= ========= =========
14
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 6 - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet - at June 28, 2002
Non-
Total Eliminations Issuer Guarantors Guarantors
--------- ------------ --------- ---------- ----------
Current assets $ 306,084 $ -- $ 44,828 $ 209,798 $ 51,458
Property, plant and equipment, net 158,118 -- 41,704 95,366 21,048
Intangible assets, net 204,252 -- 7,907 184,093 12,252
Investment in subsidiaries -- (498,518) 498,518 -- --
Deferred charges, net 14,343 -- 14,134 -- 209
Deferred taxes 16,278 -- 20,177 -- (3,899)
Other income assets 1,078 (321,468) 74,008 236,444 12,094
--------- --------- --------- --------- ---------
Total assets $ 700,153 $(819,986) $ 701,276 $ 725,701 $ 93,162
========= ========= ========= ========= =========
Current liabilities $ 89,165 $ -- $ 29,889 $ 42,563 $ 16,713
Long-term debt 679,414 -- 675,253 -- 4,161
Other liabilities 22,685 (321,468) 80,460 229,752 33,941
--------- --------- --------- --------- ---------
Total liabilities 791,264 (321,468) 785,602 272,315 54,815
--------- --------- --------- --------- ---------
Additional paid-in capital 170,176 (312,420) 170,156 296,784 15,656
Retained earnings, Accumulated (deficit) (33,959) (186,098) (33,959) 159,960 26,138
Accumulated other comprehensive income (6,805) -- -- (3,358) (3,447)
Treasury stock (220,523) -- (220,523) -- --
--------- --------- --------- --------- ---------
Total stockholders' deficit (91,111) (498,518) (84,326) 453,386 38,347
--------- --------- --------- --------- ---------
Total liabilities and stockholders'
deficit $ 700,153 $(819,986) $ 701,276 $ 725,701 $ 93,162
========= ========= ========= ========= =========
15
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Condensed Consolidated Cash Flows
For the nine months ended March 28, 2003
Non-
TOTAL Issuer Guarantors Guarantors
-------- -------- ---------- ----------
Net cash provided by (used in) operating
activities $ (5,627) $(19,537) $ 17,303 $ (3,393)
-------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures (24,587) (5,013) (14,350) (5,224)
Acquisition costs (16,806) -- (16,806) --
Additions to intangibles (807) (571) -- (236)
Deposits and other assets 119 74 -- 45
-------- -------- -------- --------
Net cash used in investing activities (42,081) (5,510) (31,156) (5,415)
-------- -------- -------- --------
Cash flows from financing activities
Repayment of long term debt 36,098 36,007 -- 91
Receipt of additional paid-in capital 392 392 -- --
Change in intercompany accounts -- (11,939) 3,390 8,549
-------- -------- -------- --------
Net cash flows provided by financing
activities 36,490 24,460 3,390 8,640
-------- -------- -------- --------
Effect of exchange rate changes on cash (139) -- -- (139)
-------- -------- -------- --------
Net decrease in cash (11,357) (587) (10,463) (307)
Cash, beginning of period 28,199 9,035 10,660 8,504
-------- -------- -------- --------
Cash, end of period $ 16,842 $ 8,448 $ 197 $ 8,197
======== ======== ======== ========
For the nine months ended March 29, 2002
Non-
TOTAL Issuer Guarantors Guarantors
-------- -------- ---------- ----------
Net cash used in operating
activities $(15,431) $(13,346) $ (154) $ (1,931)
-------- -------- -------- --------
Cash flows from Investing activities:
Capital expenditures (12,317) (5,209) (4,779) (2,329)
Acquisition costs (65,757) -- (65,757) --
Additions to intangibles 797 (191) 1,206 (218)
Deposits and other assets 846 117 299 430
-------- -------- -------- --------
Net cash used in investing activities (76,431) (5,283) (69,031) (2,117)
-------- -------- -------- --------
Cash flows from financing activities
Repayment of long term debt 6,012 6,298 -- (286)
Receipt of additional paid in capital 50,000 50,000 -- --
Payment for treasury stock (60) (60) -- --
Debt financing cost (120) (120) -- --
Change in intercompany accounts -- (68,272) 64,148 4,124
-------- -------- -------- --------
Net cash flows provided by (used in)
financing activities 55,832 (12,154) 64,148 3,838
-------- -------- -------- --------
Effect of exchange rate changes on cash 5 -- -- 5
-------- -------- -------- --------
Net decrease in cash (36,025) (30,783) (5,037) (205)
Cash, beginning of period 44,645 32,890 5,321 6,434
-------- -------- -------- --------
Cash, end of period $ 8,620 $ 2,107 $ 284 $ 6,229
======== ======== ======== ========
16
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
NOTE 7- ACQUISITIONS
The Company purchased certain assets and assumed certain liabilities of ELM
Packaging "ELM" on July 10, 2002, for approximately $16,806, including
acquisition costs, in cash. The allocation of the purchase is as follows:
Assets:
Accounts receivable $ 3,449
Inventories 1,829
Prepaid expenses 334
Deferred Taxes 2,280
Property, Plant & Equipment 12,487
Intangibles including goodwill 11,010
--------
Total Assets 31,389
--------
Accounts payable and accrued
liabilities 8,583
Integration reserve 6,000
--------
Net Investment $ 16,806
========
The Company has utilized preliminary estimates and assumptions in determining
the allocation of purchase price to assets acquired and liabilities assumed of
ELM. While management believes such estimates and assumptions are reasonable,
the final allocation of the purchase price may differ from that reflected in the
March 28, 2003 consolidated balance sheet after a more extensive review of fair
values of inventory and the acquisition reserve. The Company expects to finalize
this allocation in the next three months.
In connection with the acquisition, a reserve of $6,000 has been established for
the costs to integrate ELM's operations with the Company. The reserve is
included in accrued liabilities. The components of the integration reserve and
activity through March 28, 2003, is as follows:
BALANCE COSTS CHARGED BALANCE
JULY 10, 2002 TO RESERVE MARCH 28, 2003
------------- ------------- --------------
Manufacturing
Reconfiguration $ 2,500 $ 2,157 $ 343
Reduction in personnel
and related costs 1,000 729 271
Legal, environmental
and other 2,500 2,120 380
-------- -------- --------
$ 6,000 $ 5,006 $ 994
======== ======== ========
The remaining costs are expected to be paid over the next three to six months.
17
TEKNI-PLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
The proforma results of operations for the quarter and nine months ended March
29, 2002, assuming ELM was acquired on June 30, 2001, would not be materially
different from the historical presentation.
In October 2001, the Company purchased certain assets and assumed certain
liabilities of Swan Hose for approximately $63,600. The acquisition was recorded
under the purchase method, whereby Swan's net assets were recorded at estimated
fair value and its operations have been reflected in the statement of operations
since that date. The components of the Integration reserve and activity through
March 28, 2003 is as follows:
BALANCE COSTS CHARGED BALANCE
OCTOBER 2001 TO RESERVE MARCH 28, 2003
------------ -------------- --------------
Cost to close duplicate
facilities $ 3,500 $ 2,571 $ 929
Reduction in personnel
and related costs 2,100 1,196 904
Legal and environmental 1,275 1,388 (113)
Manufacturing
reconfiguration 1,455 2,747 (1,292)
Other 1,670 2,098 (428)
-------- -------- --------
$ 10,000 $ 10,000 $ 0
======== ======== ========
The following table represents the unaudited proforma results of operations as
though the acquisition of Swan occurred on June 30, 2001. Since Swan was
purchased subsequent to July 1, 2001, no amortization of goodwill has been
reflected in accordance with SFAS 142.
NINE MONTHS ENDED
MARCH 29, 2002
-----------------
Net sales $393,593
Operating profit 44,407
Loss before income taxes 12,886
==========
18
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THIRD QUARTER OF FISCAL 2003 COMPARED WITH THE THIRD QUARTER OF FISCAL 2002
Net sales increased to $166.1 million for the three months ended March 28, 2003
from $153.4 million for the three months ended March 29, 2002, representing an
8.3% gain. Net sales in our Packaging Segment grew 16.7%, primarily due to our
Elm acquisition which closed in July 2002. Net sales in our Tubing Products
Segment grew 2.6% and other net sales grew 4.0%.
Cost of Sales increased to $122.0 million for the three months ended March 28,
2003 from $111.4 million for the three months ended March 29, 2002. Expressed as
a percentage of net sales, cost of sales increased to 73.4% in the current
period compared to 72.6% in the prior period primarily due to higher raw
material costs.
Gross Profit, as a result of the above, increased to $44.1 million in the
current period compared to $42.0 million in the prior period. Expressed as a
percentage of net sales, gross profit declined to 26.6% for the three months
ended March 28, 2003 from 27.4% in comparable period of last year.
Our Packaging Segment gross profit increased to $22.2 million for the three
months ended March 28, 2003 from $18.2 million for the three months ended March
29, 2002. Expressed as a percentage of net sales, Packaging Segment gross
profit increased to 32.2% in the current period from 30.7% in the previous
period.
Our Tubing Products Segment gross profit increased to $20.7 million for the
three months ended March 28, 2003 from $19.5 million for the three months ended
March 29, 2002. Expressed as a percentage of net sales, Tubing Products Segment
gross profit increased to 29.8% in the current period from 28.8% in the previous
period.
Other gross profit fell to $1.3 million for the three months ended March 28,
2003 from $4.4 million for the three months ended March 29, 2002.
Selling, General and Administrative expense decreased to $14.6 million in the
most recent quarter from $18.5 million in the comparable period of the previous
year primarily due to a $4.0 million reduction in amortization expense
associated with a required change in accounting for goodwill. Measured as a
percentage of net sales, selling, general and administrative expense decreased
to 8.8% in the current period from 12.1% in the previous period.
Operating Profit, as a result of the above, increased to $29.6 million for the
three months ended March 28, 2003 from $23.5 million for the three months ended
March 29, 2002. Expressed as a percentage of net sales, operating profit
increased to 17.8% in the most recent period from 15.3% in the comparable period
of last year.
Our Packaging Segment operating profit increased to $17.3 million or 25.1% of
net sales in the current period compared to $12.3 million or 20.8% of net sales
in the previous period. Our Tubing Products Segment operating profit increased
to $17.1 million or 24.7% of net sales in the current period compared to $14.2
million or 21.0% of net sales in the previous period. Other operating profit
declined to a loss of $0.3 million in the current period from income of $2.3
million in the previous period.
Interest expense decreased to $18.7 million or 11.3% of net sales in the three
months ended March 28, 2003 from $19.0 million or 12.4% of net sales for the
three months ended March 29, 2002.
Unrealized (gain) loss on derivative transactions was a $0.8 million gain or
0.5% of net sales for the three months ending March 28, 2003 compared to a $1.1
million loss or 0.7% of net sales for the three months ending March 29, 2002.
The changes were due to changes in the market interest rates underlying our
derivatives.
Income before income taxes, as a result, was $12.0 million or 7.2% of net sales
for the three months ended March 28, 2003 compared to $3.5 million or 2.3% of
net sales for the three months ended March 29, 2002.
19
Income tax was $4.4 million for the three months ended March 28, 2003, compared
to $1.2 million for the three months ended March 29, 2002. The Company's
effective tax rate was 36.8% for the three months ended March 28, 2003 compared
to 33.9% for the three months ending March 29, 2002.
Net income, as a result, was $7.6 million for the three months ended March 28,
2003 or 4.6% of net sales compared with $2.3 million for the three months ended
March 29, 2002 or 1.5% of net sales.
20
FIRST NINE MONTHS OF FISCAL 2003 COMPARED WITH THE FIRST NINE MONTHS OF FISCAL
2002
Net sales increased to $425.3 million for the nine months ended March 28,
2003 from $382.3 million for the nine months ended March 29, 2002, representing
an 11.2% gain. Net sales in our Packaging Segment grew 14.0%, primarily due
to our Elm acquisition which closed in July 2002. Net sales in our Tubing
Products Segment grew 12.8% primarily due to the inclusion of net sales from our
Swan acquisition in the first quarter of fiscal 2003. Other net sales grew 2.5%.
Cost of Sales increased to $319.9 million for the nine months ended March 28,
2003 from $285.6 million for the nine months ended March 29, 2002. Expressed as
a percentage of net sales, cost of sales increased to 75.2% in the current
period compared to 74.7% in the prior period primarily due to higher raw
material costs.
Gross Profit, as a result of the above, increased to $105.4 million in the
current period compared to $96.7 million in the prior period. Expressed as a
percentage of net sales, gross profit declined to 24.8% for the nine months
ended March 28, 2003 from 25.3% in comparable period of last year.
Our Packaging Segment gross profit increased to $59.4 million for the nine
months ended March 28, 2003 from $49.6 million for the nine months ended March
29, 2002. Expressed as a percentage of net sales, Packaging Segment gross profit
increased to 29.8% in the current period from 28.4% in the previous period.
Our Tubing Products Segment gross profit increased to $40.3 million for the nine
months ended March 28, 2003 from $36.5 million for the nine months ended March
29, 2002. Expressed as a percentage of net sales, Tubing Products Segment gross
profit decreased to 27.6% in the current period from 28.2% in the previous
period.
Other gross profit fell to $5.7 million or 7.1% of net sales for the nine months
ended March 28, 2003 from $10.6 million or 13.6% of net sales for the nine
months ended March 29, 2002.
Selling, General and Administrative expense decreased to $43.0 million in the
most recent quarter from $50.3 million in the comparable period of the previous
year primarily due to a $12.1 million reduction in amortization expense
associated with a required change in accounting for goodwill. Measured as a
percentage of net sales, selling, general and administrative expense decreased
to 10.1% in the current period from 13.2% in the previous period.
Operating Profit, as a result of the above, increased to $62.3 million for the
nine months ended March 28, 2003 from $46.4 million for the nine months ended
March 29, 2002. Expressed as a percentage of net sales, operating profit
increased to 14.7% in the most recent period from 12.1% in the comparable period
of last year.
Packaging Segment operating profit increased to $44.8 million or 22.5% of net
sales in the current period compared to $32.5 million or 18.6% of net sales in
the previous period. Tubing Products Segment operating profit increased to $30.0
million or 20.6% of net sales in the current period compared to $22.6 million or
17.5% of net sales in the previous period. Other operating profit declined to
$0.8 million in the current period from $4.3 million in the previous period.
Interest expense increased to $54.0 in the nine months ended March 28, 2003 from
$53.4 million in the nine months ended March 29, 2002. Expressed as a percentage
of net sales, interest expense decreased to 12.7% in the current period compared
to 14.0% in the comparable period of last year.
Unrealized (gain) loss on derivative transactions was a $1.3 million loss or
0.3% of net sales for the nine months ending March 28, 2003 compared to a $3.7
million loss or 1.0% of net sales for the nine months ending March 29, 2002. The
changes were due to changes in the market interest rates underlying our
derivatives.
Income (loss) before income taxes, as a result, was $7.0 million for the nine
months ended March 28, 2003 compared to a loss of ($10.9) million for the nine
months ended March 29, 2002.
21
Income tax expense (benefit) was $2.7 million for the nine months ended March
28, 2003, compared to a benefit of ($3.8) million for the nine months ended
March 29, 2002. The Company's effective tax rate was 38.0% for the nine months
ended March 28, 2003 compared to 35.0% for the nine months ending March 29,
2002.
Net income (loss), as a result, was $4.4 million for the nine months
ended March 28, 2003 compared with a loss of ($7.1) million for the nine months
ended March 29, 2002.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operations for the nine months ended March 28, 2003 was $5.6
million compared with $15.4 million in the same period of the prior year. The
decrease of $9.8 million was primarily due to a larger seasonal reduction in
accounts receivable at our garden hose unit compared to last year.
Working capital on March 28, 2003 was $231.9 million compared to $216.9 million
on June 28, 2002. The increase was due primarily to a normal seasonal increase
in garden hose inventories.
As of March 28, 2003, the Company had an outstanding balance of $88.0 million
under the $100.0 million revolving credit line. This represents an increase of
$42.0 million from the outstanding balance as of June 28, 2002.
The Company's capital expenditures for the nine months ended March 28, 2003 and
March 29, 2002 were $24.6 million and $12.3 million respectively. In addition,
the Company paid $16.8 million for acquisitions in the nine months ending March
28, 2003 compared to $65.8 million in the comparable period of the previous
year.
The Company continues to expect that its principal uses of cash for the next
several years will be acquisitions, debt service, capital expenditures and
working capital requirements. Management believes that cash generated from
operations plus funds available in the Company's credit facility will be
sufficient to meet its needs and to provide it with the flexibility to make
capital expenditures and acquisitions which management believes will provide an
attractive return on investment. However, the Company may need additional
financing to take advantage of acquisition opportunities that may arise in the
next several quarters. There can be no assurance that such financing will be
available in the amounts required for such acquisitions and on terms acceptable
to the Company.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to market risk inherent in certain debt instruments. At
March 28, 2003, the principal amount of the Company's aggregate outstanding
variable rate indebtedness was $410.9 million. A hypothetical 10% adverse change
in interest rates would have an annualized unfavorable impact of approximately
$1.3 million on the Company's after-tax earnings and cash flows, assuming the
Company's current effective tax rate and assuming no change in the principal
amount. Conversely, a reduction in interest rates would favorably impact the
Company's after-tax earnings and cash flows in a similar proportion. To
mitigate these risks, in June 2000, the Company entered into interest rate
Swap and Cap Agreements for a notional amount of $344,000.
ITEM 4. Controls and Procedures
22
(a) Evaluation of disclosure controls and procedures. Our chief executive
officer and our chief financial officer, after evaluating the effectiveness of
the Company's "disclosure controls and procedures" (as defined in Exchange Act
Rules 13a-14(C) and 15-d-14(C)) as of a date (the "Evaluation Date") within 90
days of the filing date of this quarterly report, have concluded that as of the
Evaluation Date, our disclosure controls and procedures were adequate and
designed to ensure that material information relating to us and our consolidated
subsidiaries would be made known to them by others within those entities.
(b) Changes in internal controls. There were no significant changes in our
internal controls or to our knowledge, in other factors that could significantly
affect our internal controls subsequent to the Evaluation Date.
PART II. OTHER INFORMATION
Item 1 Legal Proceedings The Company is party to certain litigation in the
ordinary course of business, none of which the Company believes is
likely to have a material adverse effect on its consolidated financial
position or results of operations.
Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a Vote of Securities holders Not applicable
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K
None
23
CERTIFICATION
I, Dr. F. Patrick Smith, Chairman of the Board and Chief Executive Officer of
Tekni-Plex, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Tekni-Plex, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statement made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 12, 2003
By: /s/ Dr. F. Patrick Smith
------------------------
Dr. F. Patrick Smith
Chairman and Chief Executive Officer
24
CERTIFICATION
I, James E. Condon, Chief Financial Officer of Tekni-Plex, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Tekni-Plex, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statement made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 12, 2003
By: /s/ James E. Condon
-------------------
James E. Condon
Chief Financial Officer
25
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Tekni-Plex, Inc. (the
"Company") on Form 10-Q for the period ending March 28, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I, Dr.
F. Patrick Smith, Chairman and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
BY: /s/ DR. F. PATRICK SMITH
Dr. F. Patrick Smith
Chairman and Chief Executive Officer
May 12, 2003
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Tekni-Plex, Inc. (the
"Company") on Form 10-Q for the period ending March 28, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
James E. Condon, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
BY: /s/ JAMES E. CONDON
James E. Condon
Chief Financial Officer
May 12, 2003
26
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.
TEKNI-PLEX, INC.
May 12, 2003
By: /s/ F. Patrick Smith
--------------------
F. Patrick Smith
Chairman of the Board and
Chief Executive Officer
By: /s/ Kenneth W.R. Baker
-----------------------
Kenneth W. R. Baker
President and Chief Operating Officer
By: /s/ James E.Condon
------------------
James E.Condon
Vice President and Chief Financial Officer
27