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, 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 ______
-----
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 July 29, 1994
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Common Stock, $.01 par value 28,225,552 shares
Class A Stock, $.01 par value 12,148,508 shares
CALGON CARBON CORPORATION
SEC FORM 10-Q
QUARTER ENDED June 30, 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
----
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. . . 11
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Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 11
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SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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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 LLP 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 LLP 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 Six Months Ended
June 30, June 30,
----------------------- ------------------------
1994 1993 1994 1993
--------- ------------ ----------- ----------
Net sales..................... $ 69,156 $ 72,689 $131,659 $136,421
-------- -------- -------- --------
Cost of products sold
(excluding depreciation)..... 42,742 45,095 84,151 83,042
Depreciation.................. 4,751 4,643 9,553 9,508
Selling, general and
administrative expenses...... 11,823 11,655 22,260 22,334
Research and development
expenses..................... 1,566 1,590 3,212 3,159
-------- -------- -------- --------
60,882 62,983 119,176 118,043
-------- -------- -------- --------
Income from operations........ 8,274 9,706 12,483 18,378
Interest income............... 254 110 409 218
Interest expense.............. ( 99) (267) (229) (600)
Other income (expense)--net... (449) (151) (1,033) (691)
-------- -------- -------- --------
Income before income taxes.... 7,980 9,398 11,630 17,305
Provision for income taxes.... 2,758 3,674 4,064 6,415
-------- -------- -------- --------
Net income.................... 5,222 5,724 7,566 10,890
Common stock dividends........ (1,618) (1,642) (3,260) (3,282)
Retained earnings, beginning
of period.................... 180,129 170,361 179,427 166,835
-------- -------- -------- --------
Retained earnings, end of
period....................... $183,733 $174,443 $183,733 $174,443
======== ======== ======== ========
Net income per common share... $.13 $.14 $.19 $.27
======== ========== ======== ========
Weighted average shares
outstanding.................. 40,764,618 41,026,527 40,876,299 40,995,220
========== ========== ========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
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CALGON CARBON CORPORATION
CONSOLIDATED BALANCE SHEET
--------------------------
(Dollars in Thousands)
June 30, December 31,
1994 1993
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(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents................... $ 25,801 $ 21,792
Receivables................................. 46,720 48,898
Inventories................................. 50,297 47,653
Other current assets........................ 13,962 14,596
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Total current assets...................... 136,780 132,939
Property, plant and equipment, net........... 195,053 196,491
Other assets................................. 9,004 7,899
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Total assets.............................. $340,837 $337,329
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt due within one year.......... $ 234 $ 2,516
Accounts payable and accrued liabilities.... 25,287 24,412
Payroll and benefits payable................ 10,564 9,216
Accrued income taxes........................ 2,097 2,131
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Total current liabilities................. 38,182 38,275
Long-term debt............................... 6,481 6,477
Deferred income taxes........................ 39,326 35,718
Other liabilities............................ 9,910 9,793
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Total liabilities......................... 93,899 90,263
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Shareholders' equity:
Common shares, $.01 par value, 100,000,000
shares authorized, 41,273,660 and
41,102,360 shares issued................... 413 411
Additional paid-in capital.................. 61,457 61,339
Retained earnings........................... 183,733 179,427
Cumulative translation adjustments.......... 11,591 7,504
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257,194 248,681
Treasury stock, at cost, 826,700 and
153,600 shares............................. (10,256) (1,615)
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Total shareholders' equity................ 246,938 247,066
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Total liabilities and
shareholders' equity..................... $340,837 $337,329
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
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CALGON CARBON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
Increase (decrease) in Cash and Cash Equivalents
(Dollars in Thousands)
(Unaudited)
Six Months Ended
June 30,
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1994 1993
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Cash flows from operating activities
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Net income.................................... $ 7,566 $ 10,890
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization............. 9,822 9,768
Employee benefit plan provisions.......... 333 456
Changes in assets and liabilities:
Decrease in receivables............... 2,178 774
(Increase) in inventories............. ( 2,644) ( 5,334)
(Increase) decrease in other current
assets.............................. 634 ( 583)
Increase (decrease) in accounts
payable and accruals................ 2,189 ( 4,509)
Increase in deferred income
tax liabilities..................... 1,408 186
Other items--net.......................... ( 1,281) 986
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Net cash provided by
operating activities.................. 20,205 12,634
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Cash flows from investing activities
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Property, plant and equipment expenditures.. ( 4,156) ( 5,303)
Proceeds from disposals of equipment........ 392 201
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Net cash used in investing activities... ( 3,764) ( 5,102)
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Cash flows from financing activities
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Net (repayments of) borrowings.............. ( 2,324) ( 2,168)
Treasury stock purchases.................... ( 8,641) --
Common stock dividends...................... ( 3,260) ( 4,924)
Other....................................... 120 92
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Net cash (used in)
financing activities.................. (14,105) ( 7,000)
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Effect of exchange rate changes on cash....... 1,673 ( 776)
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Increase (decrease) in cash and cash
equivalents................................. 4,009 ( 244)
Cash and cash equivalents, beginning
of period................................... 21,792 8,225
-------- --------
Cash and cash equivalents, end of period...... $ 25,801 $ 7,981
======== ========
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:
June 30, 1994 December 31, 1993
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Raw materials $ 10,369 $ 8,758
Finished goods 39,928 38,895
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$ 50,297 $ 47,653
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2. Supplemental Cash Flow Information:
Six Months Ended June 30,
-----------------------------------
1994 1993
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Cash paid during the period for:
Interest $ 198 $ 497
Income taxes (refunds) net $ 1,476 $ 5,279
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Bank debt:
Borrowings $ 11,405 $ 13,770
Repayments (13,729) (15,938)
-------- --------
Net proceeds from
borrowings $ (2,324) $ (2,168)
======== ========
3. Common stock dividends declared in each of the quarters ended June 30,
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 June 30, 1994 and the related consolidated
statements of income and retained earnings and of cash flows for the three-
month and six-month periods ended June 30, 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 LLP
Pittsburgh, PA
August 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 for the three and six months ended June 30, 1994 decreased by
$3.5 million or 4.9% and by $4.8 million or 3.5% respectively, versus the three
and six months ended June 30, 1993. Net sales to the industrial process
markets of $31.7 million and $62.3 million for the three and six months periods
ended June 30, 1994 were below the comparable 1993 periods by $.8 million or
2.4% and $3.2 million or 4.9%, respectively. The decreases for both periods
can be primarily attributed to lower sales in Europe particularly in the
solvent recovery systems and personnel protection areas. During the quarter,
these decreases were partially offset by improved domestic carbon sales in the
food process, home water filter, gold and energy markets. Net sales to the
environmental markets for the three and six month periods ended June 30, 1994
were $31.1 million and $59.5 million, respectively, representing a decrease of
$.5 million or 1.6% for the quarter and an increase of $1.3 million or 2.3%
versus the six months ended June 30, 1993. The decrease for the quarter can
primarily be related to non-repeat and delayed equipment sales in the United
States. The increase for the six month period 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 charcoal area reported
net sales of $5.6 million for the three months ended June 30, 1994 and $8.5
million for the six months then ended. These results represented decreases of
$2.3 million or 29.1% and $2.8 million or 24.7% versus the comparable 1993
periods. Both results were due to wetter weather in Central Europe during the
barbecuing season. Overall, sales for both periods were affected by weak
customer demand, the recession in Europe, worldwide competitive pressures and
decreases due to exchange rate changes of $.5 million in the three month period
and $1.3 million in the six month period ended June 30, 1994.
Gross profit, before depreciation, as a percentage of net sales was 38.2% for
the three month period ended June 30, 1994 and 36.1% for the six month period
then ended. Both periods included the positive effect of a credit received
from the German government in the amount of DM 1.7 million (approximately $1.0
million) resulting from the installation of a new boiler at the Bodenfelde
plant which enabled the plant to meet discharge requirements. During the period
1991 through 1993, amounts were paid when such discharge levels were exceeded.
Had this credit not been received, gross profit, before depreciation, would
have been 36.7% for the three months ended June 30, 1994 and 35.3% for the six
months then ended. These adjusted results represented declines of
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1.3 percentage points and 3.8 percentage points versus the three and six month
periods ended June 30, 1993, respectively. Both declines, as adjusted, were
the result of lower unit selling prices and customer shifts to lower margin
products.
Selling, general and administrative expenses increased by $.2 million or 1.4%
over the similar three month period in 1993 but decreased by $.1 million or .3%
versus the six month period ended June 30, 1993.
Interest expense for the three and six month periods ended June 30, 1994 was
$.1 million and $.2 million representing reductions of $.2 million and $.4
million from the similar 1993 periods. Both declines were the result of lower
debt in Germany.
Other income (expense) -- net was unfavorable for both the quarter and six
months ended June 30, 1994 versus the similar 1993 periods due to unfavorable
swings in currency gains and losses and to increased "non-income" taxes.
The effective tax rates for the three and six months ended June 30, 1994 were
34.6% and 34.9 respectively. These rates represented decreases of 4.5
percentage points and 2.2 percentage points, respectively. Both decreases were
primarily related to increased availability of foreign tax credits.
Financial Condition
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Working Capital and Liquidity
-----------------------------
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 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 $12.7 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
reasonably 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
six months ended June 30, 1994, 673,100 shares of treasury stock were purchased
at a cost of $8.6 million. (During the three month period ended June 30, 1994,
610,300 shares were purchased at a cost of $7.8 million). Through June 30, 1994
the Company has purchased a total of 826,700 shares at a total cost of $10.3
million.
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Net cash provided by operating activities was $20.2 million for the six month
period ended June 30, 1994. This represents an increase of $7.6 million from
the six months ended June 30, 1993. The overall increase was the net effect of
lower net income, offset by a decrease in working capital in 1994 versus an
increase in 1993, a greater increase in deferred income tax liabilities in 1994
versus 1993 and a number of other positive changes.
Cash flows from financing activities during the six months ended June 30, 1993
included the payment of three dividends versus two payments in the comparable
1994 period. This was due to the acceleration of the normal July 1 dividend
payment to June 30, 1993.
Capital Expenditures and Investments
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Capital expenditures for property, plant and equipment totaled $4.1
million for the six months ended June 30, 1994. This compares to expenditures
of $5.3 million for the same period in 1993. The major portion of the 1994
expenditure amount was related to improvements at the Bodenfelde, Germany plant
($1.2 million) and domestic service customer capital ($.9 million). Capital
expenditures for the year 1994 are currently projected to be approximately
$12.0 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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The annual meeting of stockholders was held April 19, 1994. In connection with
the meeting, proxies were solicited pursuant to the Securities Exchange Act.
The following are the voting results on proposals considered and voted upon at
the meeting, all of which were described in the proxy statement.
1. All nominees for director listed in the proxy statement were elected.
Votes For Votes Withheld
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Colin Bailey 145,243,193 208,128
Ronald R. Tisch 145,229,757 221,564
Roger H. Zanitsch 145,250,089 201,232
The following directors continued in office after the meeting:
Class of 1995
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Robert W. Cruickshank
Arthur L. Goeschel
Thomas A. McConomy
Class of 1996
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William J. Gilliam
Nick H. Prater
Harry H. Weil
2. Price Waterhouse was elected as the independent accountants for 1994.
(For, 145,324,403; Against, 64,456; Abstained, 62,462.)
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 June 30, 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: August 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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