1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ______________ to _______________
Commission File Number 1-3846
CHRISTIANA COMPANIES, INC.
(Exact name of registrant as specified in its charter.)
Wisconsin 95-1928079
(State of Incorporation) (IRS Employer Identification No.)
777 East Wisconsin Avenue, Suite 3380, Milwaukee, Wisconsin 53202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 291-9000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock $1.00 par value 5,195,630
(Class) (Outstanding at May 8, 1995.)
No exhibits are included in this report.
Page 1 of 10 total pages.
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
March 31, June 30,
1995 1994
------------ ------------
ASSETS:
Cash and cash equivalents $ 7,920,000 $ 3,929,000
Short-term investments 8,025,000 14,564,000
Accounts receivable 16,668,000 16,534,000
Inventories 13,630,000 15,351,000
------------ ------------
Total Current Assets 46,243,000 50,378,000
------------ ------------
Long-Term Assets:
Mortgage notes receivable 3,463,000 3,538,000
Rental properties, net 3,728,000 4,566,000
Fixed assets, net 78,709,000 77,049,000
Other assets 11,373,000 12,034,000
------------ ------------
Total Long-Term Assets 97,273,000 97,187,000
------------ ------------
$143,516,000 $147,565,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts payable $ 6,049,000 $ 6,905,000
Accrued liabilities 5,497,000 4,486,000
Short term debt 3,198,000 1,343,000
Current portion of long-term debt 3,912,000 4,803,000
------------ ------------
Total Current Liabilities 18,656,000 17,537,000
------------ ------------
Long-Term Liabilities:
Long-term debt 49,922,000 53,458,000
Deferred Federal and state income taxes 12,566,000 12,495,000
Other liabilities 1,187,000 1,201,000
------------ ------------
Total Long-Term Liabilities 63,675,000 67,154,000
------------ ------------
Total Liabilities 82,331,000 84,691,000
------------ ------------
Minority Shareholders' Interest 3,251,000 2,786,000
------------ ------------
Shareholders' Equity:
Preferred stock -0- -0-
Common stock, par value $1 per share;
authorized 12,000,000 shares; issued 5,195,630 and
5,440,899, respectively 5,196,000 5,441,000
Additional paid-in capital 12,022,000 18,217,000
Retained earnings 40,716,000 36,430,000
------------ ------------
Total Shareholders' Equity 57,934,000 60,088,000
------------ ------------
$143,516,000 $147,565,000
============ ============
See notes to consolidated financial statements.
Page 2 of 10 pages
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CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended Three Months Ended
March 31, March 31,
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- -----------
Revenues:
Product sales $39,911,000 $33,735,000 $14,221,000 $12,271,000
Warehousing, rental and
related services 53,933,000 27,287,000 17,356,000 16,030,000
----------- ----------- ----------- -----------
93,844,000 61,022,000 31,577,000 28,301,000
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of product sales 34,066,000 29,144,000 12,175,000 10,431,000
Warehousing, rental and
related expenses 43,057,000 21,333,000 14,459,000 13,600,000
Selling, general and administrative 8,386,000 5,895,000 2,936,000 2,577,000
----------- ----------- ----------- -----------
85,509,000 56,372,000 29,570,000 26,608,000
----------- ----------- ----------- -----------
Earnings from Operations 8,335,000 4,650,000 2,007,000 1,693,000
Other Income (Expense):
Interest income 746,000 638,000 234,000 207,000
Interest expense (3,634,000) (2,772,000) (1,223,000) (990,000)
Gain on sales of real estate 2,580,000 4,199,000 499,000 1,259,000
Other income (expense), net (361,000) (391,000) (92,000) (157,000)
---------- ---------- ---------- ----------
(669,000) 1,674,000 (582,000) 319,000
---------- ----------- ---------- ----------
Earnings before income taxes
and minority interest 7,666,000 6,324,000 1,425,000 2,012,000
Income tax provision 2,915,000 2,449,000 512,000 755,000
----------- ----------- ----------- ----------
Net earnings before minority interest 4,751,000 3,875,000 913,000 1,257,000
Minority interest (465,000) (333,000) (172,000) (188,000)
----------- ------------ ----------- -----------
Net Earnings $ 4,286,000 $ 3,542,000 $ 741,000 $ 1,069,000
=========== =========== =========== ===========
Net earnings per share $ 0.81 $ 0.67 $ 0.14 $ 0.20
=========== =========== ========== ===========
Average number of shares outstanding 5,302,622 5,281,015 5,195,630 5,440,899
See notes to consolidated financial statements.
Page 3 of 10 pages
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CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common Stock Additional
-------------------- Paid-in Retained
Shares Amount Capital Earnings
-------- -------- ---------- ---------
Balance, June 30, 1993 5,206,630 $5,207,000 $12,945,000 $33,309,000
Stock issuance 234,269 234,000 5,272,000 -0-
Net earnings for the year -0- -0- -0- 3,121,000
--------- --------- ---------- -----------
Balance, June 30, 1994 5,440,899 $5,441,000 $18,217,000 $36,430,000
Repurchase of stock (245,269) (245,000) ( 6,195,000) -0-
(unaudited)
Net earnings for the nine months
(unaudited) -0- -0- -0- 4,286,000
--------- --------- ---------- -----------
Balance, March 31, 1995 5,195,630 $5,196,000 $12,022,000 $40,716,000
(unaudited) ========= ========== =========== ===========
See notes to consolidated financial statements.
Page 4 of 10 pages
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CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
Nine Months Ended
March 31,
----------------------
1995 1994
-------- ----------
CASH FLOW FROM OPERATING ACTIVITIES:
Net earnings $ 4,286,000 $ 3,542,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 6,044,000 4,297,000
Gains on sales of assets (2,694,000) (4,206,000)
Deferred income tax expenses 71,000 304,000
Minority interest in consolidated income of
subsidiaries 465,000 333,000
Changes in assets and liabilities:
(Increase) in accounts receivable (1,187,000) (3,076,000)
(Increase) decrease in inventory 1,720,000 (3,537,000)
(Increase) decrease in other assets 719,000 (5,000)
Increase in accounts payable
and accrued liabilities 141,000 1,761,000
---------- -----------
Net cash provided by (used in) operating activities 9,565,000 (587,000)
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 5,595,000 8,533,000
Decrease in mortgage notes receivable 148,000 932,000
(Increase) decrease in short-term investments 6,539,000 (5,473,000)
Capital expenditures (9,194,000) (4,483,000)
Business acquired, net of cash received -0- (5,422,000)
----------- -----------
Net cash provided by (used in) investing activities 3,088,000 (5,913,000)
CASH FLOW FROM FINANCING ACTIVITIES:
Net proceeds from credit lines 104,000 -0-
Net proceeds from long-term notes 1,266,000 3,921,000
Payments of notes and loans payable (6,227,000) (3,086,000)
Stock repurchase (3,805,000) -0-
----------- -----------
Net cash provided by (used in) financing activities (8,662,000) 835,000
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,991,000 (5,665,000)
BEGINNING CASH AND CASH EQUIVALENTS, July 1 3,929,000 12,809,000
----------- -----------
ENDING CASH AND CASH EQUIVALENTS, March 31 $ 7,920,000 $ 7,144,000
=========== ===========
Supplemental disclosures of cash flow information:
Interest paid $ 3,620,000 $ 2,770,000
Income taxes paid $ 2,066,000 $ 1,432,000
See notes to consolidated financial statements.
Page 5 of 10 pages
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CHRISTIANA COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
The accompanying unaudited financial statements reflect all adjustments
which are, in the opinion of management, necessary to fairly present the
results for the interim periods presented and should be read in conjunction
with the Company's 1994 Annual Report.
NOTE 2 - PRO FORMA OPERATING RESULTS
On January 4, 1994, Christiana Companies, Inc. acquired the assets and
business of The TLC Group, Inc. This acquisition was accounted for as a
purchase.
The following summarizes the unaudited consolidated pro forma operating
results of the Company as if the acquisition of The TLC Group, Inc. had
occurred as of July 1, 1993 the beginning of the period.
(In thousands except amounts per share)
Nine Months Ended
March 31, 1994
Net revenues $87,820
Net earnings $ 4,276
Earnings per share $ 0.81
Pro forma results are not necessarily indicative of results that would have
occurred had the purchase been made at July 1, 1993, or of results which
may occur in the future.
Page 6 of 10 pages
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Operations
Christiana Companies consolidated revenues for the three months ended March
31, 1995 totaled $31,577,000 compared to $28,301,000 for the same period
last year. The increase in revenues is due to improved volume and
utilization of facilities in both the Warehousing and Logistics businesses
and at Prideco. Christiana's consolidated earnings from operations
increased 19% in the third quarter to $2,007,000 and 79% in the first nine
months of fiscal 1995 to $8,335,000. The increase reported for the third
quarter is primarily attributable to increased volume at Wiscold and
Prideco. The higher revenues reported for the nine month period in fiscal
1995 was attributable to increased volume at both Wiscold and Prideco and
the addition of The TLC Group for the full period this year compared to
three months of operations in the same period last year. For the quarter
ended March 31, 1995, net earnings were $741,000 or $0.14 per share
compared to $1,069,000 or $0.20 per share for the same period one year ago.
The decrease in net earnings for the quarter was attributable to fewer real
estate sales. During the third quarter ended March 31, 1995, sales of 9
condominium homes generated gains of $499,000 as compared to 19 homes sold
in the comparable period last year for a gain of $1,259,000. During the
nine months ended March 31, 1995, sales of 39 homes generated gains of
$2,580,000 compared to sales of 63 homes in the same period last year which
generated gains of $4,199,000. Real estate sales this year have slowed due
to higher interest rates, generally unfavorable local economic conditions
and increased competition.
For the first nine months of fiscal 1995, Christiana Companies'
consolidated revenues were $93,844,000 versus $61,022,000 for the
comparable period last year reflecting a 54% increase. Earnings from
operations increased 79% to $8,335,000 for the nine months ended March 31,
1995 compared to $4,650,000 for the same period last year. Net earnings
for the nine months ended March 31, 1995 increased 21% to $4,286,000 or
$0.81 per share compared to $3,542,000 or $0.67 per share reported for the
same period a year ago.
Warehousing, rental and related service revenues for the third quarter
increased 8% to $17,356,000 from $16,030,000 in the comparable period a
year ago and was $53,933,000 compared to $27,287,000 for the nine months
ended March 31, 1995 and 1994, respectively. The increase in the quarter
was due to improved volume and utilization of Wiscold's facilities due to
growth in both existing and new customer relationships and The TLC Group
which had higher volume in logistic services. The increased revenues
reported for the nine month period ended March 31, 1995 is attributable to
both higher volume at Wiscold which had a significant improvement in
utilization due in part to a more normal season of vegetable processing and
freezing services and the inclusion of The TLC Group for the full period in
1995.
Product sales at Prideco and related gross profits for the three months
ended March 31, 1995 were $14,221,000 and $2,009,000 or 14% respectively,
compared to $12,271,000 and $1,784,000 or 15%, respectively for the three
months ended March 31, 1994. For the nine months ended March 31, 1995,
product sales were $39,911,000 with a gross profit of $5,808,000 or 15%
compared to sales of $33,735,000 and gross profit of $4,544,000 or 13%
reported for the same period ended a year ago. Christiana's share of
Prideco's net income for the three months ended March 31, 1995 and 1994
were $259,000 or $0.05 per share and $282,000 or $0.05 per share,
respectively. For the nine months ended March 31, 1995, Christiana's share
of Prideco's net earnings was $698,000 or $0.13 per share, versus $499,000
or $0.09 per share for the comparable period last year. The increases in
revenues and gross profit in both periods are attributable to a stronger
demand for Prideco's products due largely to increased drilling activity,
particularly in the Gulf of Mexico which continues to be an important
market for the Company.
Financial Condition
Cash equivalents and short term investments totaled $15,945,000 as of March
31, 1995 compared to $18,493,000 as of June 30, 1994, or a decrease of
$2,548,000. Cash provided by operating activities was primarily
attributable to net earnings, decreases in inventory and an increase in
accounts payable and accrued liabilities. The decrease in inventory was
the result of efforts to improve inventory turns at Prideco. The increase
in accrued liabilities is primarily related to accrued income taxes
payable.
Cash provided by investing activities of $3,088,000 was generated primarily
by a decrease in short-term investments and the sale of condominium homes
offset by capital expenditures. Net cash used in financing activities of
Page 7 of 10 pages
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$8,662,000 was primarily the result of the repurchase of 234,269 Christiana
shares previously issued in connection with the acquisition of The TLC
Group, Inc. These shares were repurchased in connection with the
termination of two former managers at TLC. The shares were repurchased at
$26.00 per share payable $3,805,438 in cash and a 7% note in the amount of
$2,285,556 with principal due September 15, 1997 and interest payable
quarterly.
Christiana has no commitments for any material capital expenditures.
Page 8 of 10 pages
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings: Not Applicable
Item 2. Change In Securities: Not Applicable
Item 3. Defaults under Senior Securities: Not Applicable
Item 4. Submission of Matters to a Vote of
Security Holders: See Item 4 of Form 10-Q
for the quarter ended
9/30/94.
Item 5. Other Information: Not Applicable
Item 6. Exhibits & Reports on Form 8-K: None
Page 9 of 10 pages
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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.
CHRISTIANA COMPANIES, INC.
(Registrant)
Date: May 8, 1995 Sheldon B. Lubar
_________________________________
Sheldon B. Lubar
Chairman and
Chief Executive Officer
Date: May 8, 1995 William T. Donovan
_________________________________
William T. Donovan
Chief Financial Officer and
Executive Vice President
Page 10 of 10 pages