UNITED STATES
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 June 30, 2000 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 1-15903
CALGON CARBON CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 25-0530110
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 717, Pittsburgh, PA 15230-0717
-----------------------------------------
(Address of principal executive offices)
(Zip Code)
(412) 787-6700
----------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report)
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
----- ------
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
----- ------
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 8, 2000
- ----------------------------- -----------------------------
Common Stock, $.01 par value 38,807,067 shares
CALGON CARBON CORPORATION
SEC FORM 10-Q
QUARTER ENDED June 30, 2000
The Quarterly Report on Form 10-Q contains historical information and forward-
looking statements. Statements looking forward in time are included in this
Form 10-Q pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. They involve known and unknown risks and
uncertainties that may cause the Company's actual results in the future to
differ from performance suggested herein. A specific example of such
uncertainties include references to reductions in working capital. In the
context of forward-looking information provided in this Form 10-Q and in other
reports, please refer to the discussion of risk factors detailed in, as well as
the other information contained in the Company's filings with the Securities and
Exchange Commission.
I N D E X
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PART 1 - FINANCIAL INFORMATION
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Item 1. Financial Statements
------
Page
-----
Introduction to the Financial Statements............. 2
Consolidated Statement of Income and
Retained Earnings.................................... 3
Consolidated Balance Sheet........................... 4
Consolidated Statement of Cash Flows................. 5
Selected Notes to Financial Statements............... 6
Item 2. Management's Discussion and Analysis of Results
------ -----------------------------------------------
of Operations and Financial Condition............... 9
-------------------------------------
PART II - OTHER INFORMATION
- ------- -----------------
Item 1. Legal Proceedings.................................... 13
------ -----------------
Item 4. Submission of Matters to a Vote of Security Holders.. 13
------ ---------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K..................... 14
------ --------------------------------
SIGNATURES....................................................... 15
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- 1 -
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
- ------- --------------------
INTRODUCTION TO THE FINANCIAL STATEMENTS
----------------------------------------
The consolidated financial statements included herein have been prepared by
Calgon Carbon Corporation (the Company), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading when
read in conjunction with the Company's consolidated financial statements and the
notes included therein for the year ended December 31, 1999.
The financial information presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for the interim periods presented.
The results for interim periods are not necessarily indicative of results to be
expected for the year.
- 2 -
CALGON CARBON CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
------------------------------------------------------
(Dollars in Thousands Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ----------------------
2000 1999 2000 1999
-------- -------- -------- --------
Net sales...................... $ 72,196 $ 80,215 $138,074 $152,007
-------- -------- -------- --------
Cost of products sold
(excluding depreciation)..... 45,108 51,869 86,533 97,551
Depreciation and amortization.. 5,267 5,873 10,568 11,854
Selling, general and
administrative expenses...... 12,098 14,768 24,894 27,519
Research and development
expenses..................... 1,887 2,020 3,648 3,887
-------- -------- -------- --------
64,360 74,530 125,643 140,811
-------- -------- -------- --------
Income from operations......... 7,836 5,685 12,431 11,196
Interest income................ 54 22 96 34
Interest expense............... (1,262) (1,245) (2,453) (2,379)
Other income (expense)--net.... (372) (319) (960) (668)
-------- -------- -------- --------
Income before income taxes
and minority interest........ 6,256 4,143 9,114 8,183
Provision for income taxes..... 2,257 1,498 3,290 2,953
-------- -------- -------- --------
Income before minority
interest..................... 3,999 2,645 5,824 5,230
Minority interest.............. (140) 47 (110) 56
-------- -------- -------- --------
Net income..................... 3,859 2,692 5,714 5,286
Common stock dividends......... (1,940) (3,104) (1,940) (6,202)
Retained earnings, beginning
of period.................... 140,791 163,407 138,936 163,911
-------- -------- -------- --------
Retained earnings, end of
period....................... $142,710 $162,995 $142,710 $162,995
======== ======== ======== ========
Net income per common
share (basic and diluted)..... $ .10 $ .07 $ .15 $ .14
======== ======== ======== ========
Weighted average shares outstanding
Basic......................... 38,805,065 38,784,415 38,803,604 38,755,432
========== ========== ========== ==========
Diluted....................... 38,845,591 38,784,415 38,843,378 38,755,432
========== ========== ========== ==========
The accompanying notes are an integral part
of these financial statements.
- 3 -
CALGON CARBON CORPORATION
CONSOLIDATED BALANCE SHEET
--------------------------
(Dollars in Thousands)
June 30, December 31,
2000 1999
-------- --------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents..................... $ 4,247 $ 4,194
Receivables, (net of allowance of $2,788 and
$3,843)..................................... 53,254 58,886
Inventories................................... 40,493 44,368
Other current assets.......................... 10,102 9,032
-------- --------
Total current assets....................... 108,096 116,480
Property, plant and equipment, net.............. 154,342 161,752
Intangibles..................................... 75,466 76,620
Other assets.................................... 8,341 7,288
-------- --------
Total assets............................... $346,245 $362,140
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt due within one year............ $ 3,256 $ 4,604
Accounts payable and accrued liabilities...... 26,507 30,495
Restructuring reserve......................... 8,157 19,244
Payroll and benefits payable.................. 7,697 8,617
Accrued income taxes.......................... 3,975 2,396
-------- --------
Total current liabilities.................. 49,592 65,356
Long-term debt.................................. 68,892 76,120
Deferred income taxes........................... 30,511 26,650
Other liabilities............................... 11,804 11,020
-------- --------
Total liabilities.......................... 160,799 179,146
-------- --------
Minority interest............................... 1,866 1,878
-------- --------
Commitments and contingencies................... - -
-------- --------
Shareholders' equity:
Common shares, $.01 par value, 100,000,000
shares authorized, 41,587,042 and
41,582,632 shares issued.................... 416 416
Additional paid-in capital.................... 63,398 63,371
Retained earnings............................. 142,710 138,936
Accumulated other comprehensive income........ 4,171 5,508
-------- --------
210,695 208,231
Treasury stock, at cost, 2,780,500 shares..... (27,115) (27,115)
-------- --------
Total shareholders' equity................. 183,580 181,116
-------- --------
Total liabilities and
shareholders' equity..................... $346,245 $362,140
======== ========
The accompanying notes are an integral part
of these financial statements.
- 4 -
CALGON CARBON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(Dollars in Thousands)
(Unaudited)
Six Months Ended
June 30,
------------------
2000 1999
-------- -------
Cash flows from operating activities
- ------------------------------------
Net income...................................... $ 5,714 $ 5,286
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization................. 10,568 11,854
Employee benefit plan provisions.............. 1,072 1,181
Changes in assets and liabilities - net of
effects from purchase of businesses and
exchange:
(Increase) decrease in receivables.......... 4,667 (5,723)
(Increase) decrease in inventories.......... 3,313 (639)
(Increase)in other current assets........... (1,189) (1,728)
(Decrease) in restructuring reserve......... (10,884) (2,238)
Increase (decrease) in accounts payable
and accruals............................... (342) 1,006
Increase in long-term deferred
income taxes (net)......................... 5,838 648
Other items--net.............................. (2,172) (458)
-------- -------
Net cash provided by
operating activities....................... 16,585 9,189
-------- -------
Cash flows from investing activities
- ------------------------------------
Purchase of businesses........................ - (725)
Property, plant and equipment expenditures.... (3,728) (5,138)
Proceeds from disposals of equipment.......... 138 431
-------- -------
Net cash (used in) investing activities...... (3,590) (5,432)
-------- -------
Cash flows from financing activities
- ------------------------------------
Net proceeds from (repayments of) borrowings.. (8,054) 7,351
Treasury stock purchases...................... - (129)
Common stock dividends........................ (3,880) (6,202)
-------- -------
Net cash provided by (used in) financing
activities................................. (11,934) 1,020
-------- -------
Effect of exchange rate changes on cash......... (1,008) (647)
-------- -------
Increase in cash and cash equivalents........... 53 4,130
Cash and cash equivalents, beginning
of period..................................... 4,194 1,325
-------- -------
Cash and cash equivalents, end of period........ $ 4,247 $ 5,455
======== =======
The accompanying notes are an integral part
of these financial statements.
- 5 -
CALGON CARBON CORPORATION
SELECTED NOTES TO FINANCIAL STATEMENTS
--------------------------------------
(Dollars in Thousands)
(Unaudited)
1. Reclassifications: Certain reclassifications have been made to the 1999
financial statements to conform to the 2000 presentation.
2. Inventories:
June 30, 2000 December 31, 1999
-------------- ------------------
Raw materials $ 9,418 $ 9,453
Finished goods 31,075 34,915
-------- -------
$ 40,493 $44,368
======== =======
3. Supplemental Cash Flow Information:
Six Months Ended June 30,
----------------------------
2000 1999
-------- -------
Cash paid during the period for:
Interest $ 2,470 $ 2,616
Income taxes, (net of refunds) $ (1,311) $ 671
======== =======
Bank debt:
Borrowings $ 4,489 $11,624
Repayments (12,543) (4,273)
-------- -------
Net proceeds from (repayments of)
borrowings $ (8,054) $ 7,351
======== =======
4. Common stock dividends declared during the quarter ended June 30, 2000 were
$.05 per common share. Common stock dividends declared during the quarter
ended June 30, 1999 were $.08 per common share. Common stock dividends in the
amount of $.05 per common share were declared on July 26, 2000.
5. Comprehensive Income:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------------
2000 1999 2000 1999
------ ------- ------- -------
Net income $3,859 $ 2,692 $ 5,714 $ 5,286
Other comprehensive (loss),
net of (tax benefit) of
($95), ($694), ($720) and
($2,605) respectively (176) (1,289) (1,337) (3,835)
------ ------- ------- -------
Comprehensive income $3,683 $ 1,403 $ 4,377 $ 1,451
====== ======= ======= =======
The only matter contributing to the other comprehensive (loss) was the currency
translation adjustment.
- 6 -
6. Segment Information:
Prior to January 1, 2000, the Company had two reportable segments: Activated
Carbon and Engineered Systems. Each of these segments produced, designed and
marketed products and services specifically developed for the purification,
separation and concentration of liquids and gases and both sold to the same
markets.
The Company, as a result of a new strategy to transform the Company from a
product to a service and solutions provider, has changed the structure of its
internal organization in a manner that causes the composition of its
reportable segments to change. As a result, the Company has four reportable
segments: Activated Carbon, Service, Engineered Solutions and Consumer
Health. These reportable segments are comprised of strategic business units
which offer different products and services. The Company evaluates segment
performance based primarily on economic profit (as defined by the Company)
and operating income.
The Activated Carbon segment manufactures granular activated carbon for use
in applications to remove organic compounds from liquids, gases, water and
air. The Service segment consists of reactivation of spent carbon and the
leasing, monitoring and maintenance of mobile carbon adsorption equipment.
The Engineered Solutions segment provides solutions to customer's air and
water process problems through the design, fabrication and operation of
systems that utilize a combination of the Company's enabling technologies:
carbon adsorption, ultraviolet light and advanced ion exchange separation.
The Consumer Health segment brings the Company's industrial purification
technologies directly to the consumer in the form of products and services.
The Company has restated the segment information for the three and six months
ended June 30, 1999, to conform to the 2000 presentation.
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ------------------------
2000 1999 2000 1999
------- ------- -------- --------
Net Sales
Activated Carbon $31,506 $36,160 $ 63,644 $ 70,180
Service 24,404 26,437 46,495 50,785
Engineered Solutions 7,302 10,524 14,602 19,493
Consumer Health 8,984 7,094 13,333 11,549
------- ------- -------- --------
$72,196 $80,215 $138,074 $152,007
======= ======= ======== ========
Income (loss) from operations
before amortization
Activated Carbon $ 4,328 $ 735 $ 7,840 $ 3,729
Service 4,693 6,119 8,211 10,170
Engineered Solutions (1,309) (790) (2,661) (1,344)
Consumer Health 694 192 183 (200)
------- ------- -------- --------
8,406 6,256 13,573 12,355
Reconciling items
Amortization of intangibles
and organization costs (570) (571) (1,142) (1,159)
Interest income 54 22 96 34
Interest expense (1,262) (1,245) (2,453) (2,379)
Other expense - net (372) (319) (960) (668)
------- ------- -------- --------
Consolidated income before
income taxes and
minority interest $ 6,256 $ 4,143 $ 9,114 $ 8,183
======= ======= ======== ========
- 7 -
June 30, 2000 December 31, 1999
------------- -----------------
Total Assets
Activated Carbon $148,783 $162,736
Service 91,782 89,064
Engineered Solutions 86,474 90,672
Consumer Health 19,206 19,668
-------- --------
$346,245 $362,140
======== ========
7. Litigation
On April 18, 2000, the Company and Trojan Technologies, Inc. announced a
settlement agreement for ongoing litigation in Canada and the U.S. with
respect to products made and sold for UV disinfection of municipal
wastewater. The effects of this settlement were not material to the financial
condition or operations of the Company. Final closing of the settlement
agreement was completed during the quarter ended June 30, 2000.
- 8 -
Item 2. Management's Discussion and Analysis of Results of
- ------ --------------------------------------------------
Operations and Financial Condition
----------------------------------
This discussion should be read in connection with the information contained
in the Consolidated Financial Statements and Selected Notes to Financial
Statements.
Results of Operations
- ---------------------
Consolidated net sales for the three months ended June 30, 2000 decreased
by $8.0 million or 10.0% while sales for the six months then ended were down by
$13.9 million or 9.2% versus the similar 1999 periods. (An analysis of sales by
segment can be found in Note 6 of Selected Notes to Financial Statements.) Net
sales for the activated carbon segment decreased by $4.7 million or 12.9% and
$6.5 million or 9.3% for the three and six-month periods ended June 30, 2000
respectively, versus the three and six months ended June 30, 1999. Both the
quarter and year-to-date results included a combination of net losses due to
foreign exchange rate changes associated with the strengthening of the U.S.
dollar versus the Belgian franc and German deutche mark, partially offset by its
weakening compared to the Japanese yen, and losses associated with exiting of
unprofitable business areas. The decrease for the quarter also was the result
of unshipped orders, included in the quarter end backlog, because of our
strategy to reduce capacity. Sales to the service segment in the second quarter
of 2000 were below the second quarter of 1999 by $2.0 million or 7.7% and below
the first half of 1999 by $4.3 million or 8.4%. Reductions for both periods
included losses associated with foreign exchange rate changes in Europe, as
stated previously, and the non-repeat of large equipment sales that occurred in
1999. The year-to-date decline also was the result of the non-repeat of
emergency related sales of temporary systems that occurred in 1999. Revenues
associated with the engineered solutions segment declined by $3.2 million or
30.6% for the second quarter of 2000 versus the second quarter of 1999 and by
$4.9 million or 25.1% for the six-month period ended June 30, 2000 versus the
six-month period ended June 30, 1999. Both decreases were due to reduced volume
of projects. Sales to the consumer health segment increased by $1.9 million or
26.6% for the quarter ended June 30, 2000 versus the similar 1999 quarter and
also increased by $1.8 million or 15.4% for the year-to-date period in 2000
compared to the year-to-date period in 1999. The increases for both the quarter
and year-to-date periods were primarily due to increased demand for charcoal and
carbon cloth products. The total sales decrease due to the effect of exchange
rate changes was $2.1 million for the quarter and $3.9 million for the year-to-
date period.
Gross profit, before depreciation, as a percentage of net sales was 37.5% for
the three months ended June 30, 2000. This compares to 35.3% for the three
months ended June 30, 1999. This 2.2 percentage point improvement was primarily
the result of the implementation of cost reduction programs at the Company's
North American manufacturing facilities, cost reductions associated with the
mid-quarter shut-down of the European activated carbon producing facility and a
minor effect from price increases. This result also reflects the exiting of
unprofitable business areas. For the year-to-date period, gross profit, before
depreciation, as a percentage of net sales was 37.3% in 2000 versus 35.8% in the
1999 period resulting in a 1.5% improvement. The improvement in the quarter was
greater than in the six-month period due to the timing of the European
production facility shut-down.
The depreciation and amortization decreases of $.6 million during the three
months ended June 30, 2000 versus the three months ended June 30, 1999 and $1.3
million for the six months ended June 30, 2000 compared to the six months ended
June 30, 1999 were related to fourth quarter 1999 asset write-offs that were
primarily included in the restructuring charge.
- 9 -
Combined, selling, general and administrative expenses and research and
development expenses in the 2000 quarter period were below the 1999 quarter
period by $2.8 million. This result was the net effect of cost reduction
actions taken in the fourth quarter of 1999, which were primarily related to the
restructuring and non-recurring 1999 costs, offset by costs associated with the
establishment of the Pittsburgh, Pennsylvania center of excellence, which is
part of the Company's new strategy. This category's results for the six-month
periods then ended reflected a $2.9 million reduction due to the aforementioned
circumstances, but the net reduction was also partially offset by management
termination costs in Europe.
Interest expenses for the three and six-month periods ended June 30, 2000 and
June 30, 1999 were consistent. This was the net of a reduced debt level and
increased interest rates.
The effective tax rate for the three and six months ended June 30, 2000 was
36.1% versus similar effective tax rates for the comparable periods in 1999.
Financial Condition
- -------------------
Working Capital and Liquidity
-----------------------------
Cash flows from operating activities were $16.6 million for the six months
ended June 30, 2000 versus $9.2 million for the comparable 1999 period. The
$7.4 million improvement was primarily related to reduced investment in non-
restructuring related working capital in the 2000 period versus an increase in
the 1999 period. Payments related to the restructuring were $10.9 million in
the 2000 period. The Company intends to continue to reduce its investment in
working capital by more attention to monies owed by customers and more efficient
usage of its enterprise computer system.
Common stock dividends paid during the three month period ended June 30, 2000
represent $.05 per common share while the payment in the comparable 1999 period
represented $.08 per common share.
Total debt at June 30, 2000 was $72.1 million, a decrease, including exchange,
of $8.6 million from December 31, 1999.
The Company expects that cash from operating activities plus cash balances and
available external financing will be sufficient to meet its requirements.
The Company has a $113.4 million credit facility consisting of an $86.8 million
five-year revolving credit facility expiring in May 2004 and a $26.6 million
364-day revolving credit facility renewed in May 2000, which expires in May
2001. Included in this facility is a letter of credit subfacility which may not
exceed $30.0 million. At June 30, 2000 there were no borrowings outstanding
under the 364-day revolving credit agreement.
Restructuring of Operations
- ---------------------------
During the fourth quarter of 1999, the Company adopted a strategy aimed at
lowering costs to serve the activated carbon markets, investing to grow its
service and solutions businesses and repositioning its proven technologies to
bring more value to consumers. In order to achieve these goals, the Company has
been reorganized as a globally integrated business with emphasis on becoming a
service business.
- 10 -
As part of this strategy, three activated carbon production lines have been shut
down and dismantled. One of these lines was at the Feluy, Belgium location,
another was at Neville Island, Pennsylvania and the third was at the Company's
Big Sandy, Kentucky facility. Associated with cessation of activated carbon
production activity at the Feluy plant, office activity has been moved from
Brussels, Belgium to the plant. This has resulted in the formation of a center
of excellence at Feluy for the growth of the service business. Operations at
several other locations have been consolidated to gain global productivity and
centralized processes to promote corporate-wide sharing of technical,
operational and financial information. Included in this consolidation was the
transfer of production and administration activities from Markham, Ontario,
Canada and Lakeland, Florida to Pittsburgh, Pennsylvania to form a center of
excellence for engineered solutions. All of the aforementioned strategy-related
actions have been completed. With the exception of asset write-offs, these
restructuring charges require cash outlays. The implementation was begun in
December 1999 and is expected to be completed before the end of the third
quarter of 2000 with minor contractual cash outlays being deferred through the
second quarter of 2001. The number of employee separations from this
restructuring is expected to be at least 147. There are a number of personnel
actions that will be completed during the third quarter of 2000. These
separations have occurred primarily at the locations impacted by the strategy
and were spread evenly between plant personnel and administrative positions.
Additional hires will result in a net staff reduction of at least 120 positions.
Separations through June 30, 2000 were 145.
In the third quarter of 1998, the Company initiated a worldwide plan to reduce
costs and realign the organizational structure. The implementation was begun in
September 1998 and is essentially completed. Contractual cash outlays were made
in the second quarter of 2000 and others will continue during the balance of the
year. With the exception of the asset write-offs, these restructuring charges
required cash outlays. The number of planned employee separations from this
restructuring was 131. All separations have been completed and were in line
with the plan.
The restructuring reserve activity for the six months ended June 30, 2000 was:
Balance Balance
($000) 1-1-00 Payments Exchange 6-30-00
------- -------- -------- --------
1999 Plan
- ---------
Employee severance and
termination benefit costs $13,062 $ (9,767) $ - $ 3,295
Other costs 4,882 (729) (203) 3,950
------- -------- ----- --------
17,944 (10,496) (203) 7,245
------- -------- ----- --------
1998 Plan
- ---------
Employee severance and
termination benefit costs 1,091 (315) - 776
Other costs 209 (73) - 136
------- -------- ----- --------
1,300 (388) - 912
------- -------- ----- --------
$19,244 $(10,884) $(203) $ 8,157
======= ======== ===== ========
Management believes the reserve balances are adequate.
- 11 -
Capital Expenditures and Investments
- ------------------------------------
Capital expenditures for property, plant and equipment totaled $3.7 million
for the six-month period ended June 30, 2000 compared to expenditures of $5.1
million for the same period in 1999. The decrease was primarily due to non-
recurring expenditures associated with the recently implemented business
information system. Total capital expenditures are currently expected to be
approximately $10.0 million for the year 2000.
The purchase of business expenditures for the period ended June 30, 1999,
represents the continuation of previously accrued cash expenditures for Advanced
Separation Technologies' (a 1996 acquisition) project failures for projects
completed before the acquisition.
Year 2000
- ---------
The Company encountered no unusual problems during the rollover to the Year
2000. To date, no Year 2000-related problems have been encountered with third
parties. Until all processes and systems are run in production for the first
time after the rollover and through the year, there is the potential for date-
related problems. The Company plans to continue monitoring its processes and
systems to ensure dates and date-related information continue to be processed
correctly.
New Accounting Pronouncements
- -----------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This new standard requires recognition of
all derivatives as either assets or liabilities at fair value. This new
standard may result in additional volatility in both current period earnings and
other comprehensive income as a result of recording recognized and unrecognized
gains and losses resulting from changes in the fair value of derivative
instruments. At adoption, this new standard requires a comprehensive review of
all outstanding derivative instruments to determine whether or not their use
meets the hedge accounting criteria. It is possible that there will be
derivative instruments employed in our businesses that do not meet all of the
designated hedge criteria and they will be reflected in income on a mark-to-
market basis. Based upon the strategies currently used by the Company and the
level of activity related to forward exchange contracts and commodity-based
derivative instruments in recent periods, the Company does not anticipate the
effect of adoption to have a material impact on either financial position or
results of operations. The effective date of SFAS No. 133 was amended by SFAS
No. 137. The Company plans to adopt the standard effective January 1, 2001, as
required.
- 12 -
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
- ------ -----------------
On April 18, 2000, the Company and Trojan Technologies, Inc.
(TSE/TUV)announced that they have reached a settlement of ongoing
litigation in Canada and the U.S. with respect to products made and
sold for UV disinfection of municipal wastewater. Final closing of the
settlement agreement is completed.
The Company will continue to focus its efforts on the use of UV
oxidation and disinfection technology for the treatment of water, but
has agreed to cease the manufacture and sale of the Aurora/TM/ UV
disinfection system. Impact of the settlement and litigation costs
incurred in this fiscal year will not be material to the financial
statements.
The agreement will allow both companies to focus on growing their
respective businesses. TSE/TUV and the Company are extremely pleased to
have reached this agreement, which brings to conclusion a costly and
distracting litigation process. The parties have agreed to terminate
all litigation.
Because the parties have agreed that the terms of the agreement are
confidential, no further comment, beyond that contained in the press
release, can be forthcoming from the parties.
Item 4. Submission of Matters to a Vote of Security Holders
- ------ ---------------------------------------------------
The annual meeting of stockholders was held April 18, 2000. In
connection with the meeting, proxies were solicited pursuant to the
Securities Exchange Act. The following are the voting results on the
proposal considered and voted upon at the meeting and described in the
proxy statement.
The nominees for directors listed in the proxy statements were elected.
Votes For Votes Withheld
--------- --------------
Class of 2003
-------------
James A. Cederna 34,437,654 240,026
Harry H. Weil 33,785,260 892,420
Robert L. Yohe 33,699,104 978,526
The following directors continued in office after the meeting:
Class of 2002
-------------
Nick H. Prater
Seth E. Schofield
Class of 2001
-------------
Robert W. Cruickshank
Arthur L. Goeschel
Thomas A. McConomy
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Item 6. Exhibits and Reports on Form 8-K
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(c) Exhibits
None
(d) Reports on Form 8-K
A report on Form 8-K, dated April 14, 2000 and amended on May 17, 2000,
was filed under Item 4, changes in Registrant's Certifying Accountant,
the dismissal of PricewaterhouseCoopers LLP and the appointment of
Deloitte & Touche LLP as the Corporation's independent accountants.
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SIGNATURES
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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: August 10, 2000 By /s/ William E. Cann
---------------------------------
William E. Cann
Senior Vice President,
Chief Financial Officer
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