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 31, 1994 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 0-15903
CALGON CARBON CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 25-0530110
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 717, Pittsburgh, PA 15230-0717
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(Address of principal executive offices)
(Zip Code)
(412) 787-6700
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(Registrant's telephone number, including area code)
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(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
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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 April 29, 1994
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Common Stock, $.01 par value 28,879,852 shares
Class A Stock, $.01 par value 12,148,508 shares
CALGON CARBON CORPORATION
SEC FORM 10-Q
QUARTER ENDED March 31, 1994
I N D E X
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PART 1 - FINANCIAL INFORMATION
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Item 1. Financial Statements
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Page
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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
Report of Independent Accountants on Review of
Unaudited Interim Financial Information . . . . . . . 7
Item 2. Management's Discussion and Analysis of Results
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of Operations and Financial Condition . . . . . . . . . . 8
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PART II - OTHER INFORMATION
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Item 4. Submission of Matters to a Vote of Security Holders . . 10
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Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 10
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SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
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INTRODUCTION TO THE FINANCIAL STATEMENTS
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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, 1993.
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.
Price Waterhouse has made a review based on procedures adopted by the
American Institute of Certified Public Accountants of the unaudited consolidated
financial statements included in this filing on Form 10-Q. As stated in its
report on page 7, Price Waterhouse did not audit and, accordingly, does not
express an opinion on the unaudited consolidated financial statements.
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CALGON CARBON CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
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(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
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1994 1993
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Net sales.................................... $ 62,503 $ 63,732
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Cost of products sold
(excluding depreciation)................... 41,409 37,947
Depreciation................................. 4,802 4,865
Selling, general and
administrative expenses.................... 10,437 10,679
Research and development
expenses................................... 1,646 1,569
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58,294 55,060
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Income from operations....................... 4,209 8,672
Interest income.............................. 155 108
Interest expense............................. (130) (333)
Other income (expense)--net.................. (584) (540)
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Income before income taxes................... 3,650 7,907
Provision for income taxes................... 1,306 2,741
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Net income................................... 2,344 5,166
Common stock dividends....................... (1,642) (1,640)
Retained earnings, beginning
of period.................................. 179,427 166,835
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Retained earnings, end of
period..................................... $ 180,129 $ 170,361
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Net income per common share.................. $ .06 $ .13
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Weighted average shares outstanding.......... 40,989,220 40,963,564
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The accompanying notes are an integral part of these
consolidated financial statements.
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CALGON CARBON CORPORATION
CONSOLIDATED BALANCE SHEET
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(Dollars in Thousands)
March 31, December 31,
1994 1993
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(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents................... $ 25,973 $ 21,792
Receivables................................. 48,045 48,898
Inventories................................. 49,262 47,653
Other current assets........................ 13,870 14,596
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Total current assets..................... 137,150 132,939
Property, plant and equipment, net............ 195,674 196,491
Other assets.................................. 8,774 7,899
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Total assets............................. $341,598 $337,329
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt due within one year.......... $ 3,099 $ 2,516
Accounts payable and accrued liabilities.... 23,738 24,412
Payroll and benefits payable................ 10,477 9,216
Accrued income taxes........................ 1,651 2,131
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Total current liabilities................ 38,965 38,275
Long-term debt................................ 6,410 6,477
Deferred income taxes......................... 37,801 35,718
Other liabilities............................. 9,425 9,793
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Total liabilities........................ 92,601 90,263
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Shareholders' equity:
Common shares, $.01 par value, 100,000,000
shares authorized, 41,246,060 and
41,102,360 shares issued.................. 412 411
Additional paid-in capital.................. 61,438 61,339
Retained earnings........................... 180,129 179,427
Cumulative translation adjustments.......... 9,436 7,504
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251,415 248,681
Treasury stock, at cost, 216,400 and
153,600 shares............................ (2,418) (1,615)
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Total shareholders' equity............... 248,997 247,066
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Total liabilities and
shareholders' equity................... $341,598 $337,329
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The accompanying notes are an integral part of these
consolidated financial statements.
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CALGON CARBON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
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Increase (decrease) in Cash and Cash Equivalents
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
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1994 1993
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Cash flows from operating activities
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Net income.................................... $ 2,344 $ 5,166
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization............. 4,941 4,996
Employee benefit plan provisions.......... 163 190
Changes in assets and liabilities:
(Increase) decrease in receivables.... 853 (2,113)
(Increase) in inventories............. (1,609) (6,993)
Decrease in other current
assets.............................. 726 101
(Decrease) in accounts
payable and accruals................ (181) (777)
Increase in deferred income
tax liabilities..................... 1,042 376
Other items--net.......................... (1,333) (19)
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Net cash provided by
operating activities.................. 6,946 927
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Cash flows from investing activities
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Property, plant and equipment expenditures.. (2,049) (1,491)
Proceeds from disposals of equipment........ 74 49
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Net cash used in investing activities... (1,975) (1,442)
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Cash flows from financing activities
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Net proceeds from borrowings................ 354 2,515
Treasury stock purchases.................... (515) --
Common stock dividends...................... (1,642) (1,640)
Other....................................... 100 73
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Net cash (used in) provided by
financing activities.................. (1,703) 948
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Effect of exchange rate changes on cash....... 913 (125)
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Increase in cash and cash equivalents......... 4,181 308
Cash and cash equivalents, beginning
of period................................... 21,792 8,225
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Cash and cash equivalents, end of period...... $25,973 $ 8,533
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The accompanying notes are an integral part of these
consolidated financial statements.
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CALGON CARBON CORPORATION
SELECTED NOTES TO FINANCIAL STATEMENTS
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(Dollars in Thousands)
(Unaudited)
1. Inventories:
March 31, 1994 December 31, 1993
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Raw materials $ 9,643 $ 8,758
Finished goods 39,619 38,895
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$ 49,262 $ 47,653
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2. Supplemental Cash Flow Information:
Three Months Ended March 31,
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1994 1993
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Cash paid during the period for:
Interest $ 65 $ 145
Income taxes (refunds) net $ (1,057) $ 228
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Bank debt:
Borrowings $ 8,588 $ 6,857
Repayments (8,234) (4,342)
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Net proceeds from
borrowings $ 354 $ 2,515
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3. Common stock dividends declared in each of the quarters ended March 31,
1994 and 1993 were $.04 per common share.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of
Calgon Carbon Corporation
We have reviewed the consolidated balance sheet of Calgon Carbon Corporation
and its subsidiaries as of March 31, 1994 and the related consolidated
statements of income and retained earnings and of cash flows for the three-
month periods ended March 31, 1994 and 1993. This financial information is
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying interim financial information for it to be
in conformity with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1993, and the
related consolidated statements of income, shareholders' equity and cash
flows for the year then ended (not presented herein), and in our report dated
February 10, 1994, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the accompanying consolidated balance
sheet information as of December 31, 1993 is fairly stated in all material
respects in relation to the consolidated balance sheet from which it has been
derived.
PRICE WATERHOUSE
Pittsburgh, PA
May 10, 1994
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Item 2. Management's Discussion and Analysis of Results of
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Operations and Financial Condition
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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
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Net sales decreased by $1.2 million or 1.9% for the three month period
ended March 31, 1994 versus the corresponding period in 1993. Net sales to
the industrial process markets of $30.6 million for the three months ended
March 31, 1994 were below the three month period ended March 31, 1993 by $2.4
million or 7.4%. This decrease can be primarily attributed to reduced
European sales in the personal protection and solvent recovery system areas.
Net sales to the environmental markets were $28.3 million for the three month
period ended March 31, 1994. This represented an increase of $1.9 million or
7.0% versus the similar 1993 period. This increase occurred primarily in the
municipal category, the net effect of declines in the United States due to
non-repeat sales in the service and equipment areas, which were more than
offset by increases in Europe resulting from sales under major contracts with
water authorities in the United Kingdom. The consumer area reported sales of
$2.9 million for the three months ended March 31, 1994. These results,
representing a decrease of $.5 million or 14.5% versus the three months ended
March 31, 1993, were due to colder and wetter weather in Central Europe.
Overall, sales were affected by weak customer demand, the recession in
Europe, worldwide competitive pressures and decreases due to exchange rate
changes of $.8 million.
Gross profit, before depreciation, as a percent of net sales was 33.7% for
the three month period ended March 31, 1994. This represented a decline of
6.7 percentage points from the comparable three month period ended March 31,
1993. This decline was the result of lower unit selling prices and customer
shifts to lower margin products.
Selling, general and administrative expenses decreased by $.2 million or 2.3%
during the three months ended March 31, 1994 versus the similar period in
1993. This reduction included the effect of the year-end 1993 voluntary
retirement incentive program and other staff terminations.
Interest expense for the three months ended March 31, 1994 was $.1 million
representing a decrease of $.2 million from the comparable 1993 period. This
decrease was the result of lower debt in Germany.
The effective tax rate for the three month period ended March 31, 1994 was
35.8% compared to 34.7% for the comparable 1993 period. The increase was due
primarily to the reduced availability of foreign tax credits.
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Financial Condition
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Working Capital and Liquidity
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Historically, the Company has been a net generator of cash, providing
sufficient funds on an annual basis for its debt service, working capital,
normal capital expenditures and dividend requirements. The Company expects
to continue to generate significant cash from operations in the foreseeable
future. The Company has recently completed the negotiation for an extension
of a $10 million credit facility with a United States bank and is in the
process of negotiations for the extension of another $10 million credit
facility with another United States bank. Upon completion of this
negotiation, the Company will have two United States credit facilities in the
amounts of $10 million each, expiring at the end of April 1995 and at the end
of May 1995, respectively, and a German credit facility in the amount of
$12.0 million (deutsche mark 20 million) with a duration of "until further
notice". Based upon its present financial position and history of
operations, it is contemplated that these credit facilities, coupled with
cash flow from operations, will provide sufficient liquidity to cover its
debt service and any reasonable foreseeable working capital, capital
expenditure, stock repurchase (see below) and dividend requirements.
During 1993, the board of directors authorized the purchase of up to two
million shares, or approximately 5%, of the Company's common stock. During
the three months ended March 31, 1994, 62,800 shares of treasury stock were
purchased at a cost of $.8 million. (Payment of $.3 million of this amount
did not take place until early April 1994). Through March 31, 1994 the
Company has purchased a total of 216,400 shares at a total cost of $2.4
million.
Net cash provided by operating activities was $6.9 million for the three
month period ended March 31, 1994. This represents an increase of $6.0
million from the three months ended March 31, 1993. The overall increase was
the net effect of lower net income, offset by a reduced increase in working
capital in 1994 versus 1993 and a greater increase in deferred income tax
liabilities in 1994 versus 1993.
Capital Expenditures and Investments
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Capital expenditures for property, plant and equipment totaled $2.0
million for the three months ended March 31, 1994. This compares to
expenditures of $1.5 million for the same period in 1993. The major portion
of the 1994 expenditure amount was related to improvements at the Bodenfelde,
Germany plant ($.9 million). Capital expenditures for the year 1994 are
currently projected to be approximately $21.0 million.
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PART II - OTHER INFORMATION
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Item 4. Submission of Matters to a Vote of Security Holders
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None
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
None
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter
ended March 31, 1994.
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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
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(REGISTRANT)
Date: May 10, 1994 By /s/C.P. Shannon
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C. P. Shannon
Sr. Vice President-Finance
(Chief Financial Officer)
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