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 September 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 ______
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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 October 31, 1994
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Common Stock, $.01 par value 28,510,352 shares
Class A Stock, $.01 par value 11,898,508 shares
CALGON CARBON CORPORATION
SEC FORM 10-Q
QUARTER ENDED SEPTEMBER 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
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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. . 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 Nine Months Ended
September 30, September 30,
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1994 1993 1994 1993
-------------- ------------ ----------- ----------
Net sales...................... $ 69,354 $ 65,967 $201,013 $202,388
-------- ----------- -------- --------
Cost of products sold
(excluding depreciation)...... 45,821 40,881 129,972 123,923
Depreciation................... 4,871 4,734 14,424 14,242
Selling, general and
administrative expenses....... 11,577 11,367 33,837 33,701
Research and development
expenses...................... 1,481 1,751 4,693 4,910
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63,750 58,733 182,926 176,776
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Income from operations......... 5,604 7,234 18,087 25,612
Interest income................ 237 166 646 384
Interest expense............... (91) (178) (320) (778)
Other income (expense)--net . (383) (422) (1,416) (1,113)
-------- ----------- -------- --------
Income before income taxes..... 5,367 6,800 16,997 24,105
Provision for income taxes..... 1,652 2,682 5,716 9,097
-------- ----------- -------- --------
Net income..................... 3,715 4,118 11,281 15,008
Common stock dividends......... (1,616) (1,641) (4,876) (4,923)
Retained earnings, beginning
of period..................... 183,733 174,443 179,427 166,835
-------- ----------- -------- --------
Retained earnings, end of
period........................ $185,832 $ 176,920 $185,832 $176,920
======== =========== ======== ========
Net income per common share . $ .09 $ .10 $ .28 $ .37
======== =========== ======== ========
Weighted average shares
outstanding . . . . . . . . 40,393,502 41,037,197 40,713,598 41,009,366
========== =========== ========== ==========
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)
September 30, December 31,
1994 1993
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(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents................... $ 31,127 $ 21,792
Receivables................................. 47,544 48,898
Inventories................................. 47,280 47,653
Other current assets........................ 14,281 14,596
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Total current assets...................... 140,232 132,939
Property, plant and equipment, net........... 192,878 196,491
Other assets................................. 8,753 7,899
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Total assets.............................. $341,863 $337,329
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt due within one year.......... $ 448 $ 2,516
Accounts payable and accrued liabilities.... 22,231 24,412
Payroll and benefits payable................ 10,606 9,216
Accrued income taxes........................ 1,101 2,131
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Total current liabilities................. 34,386 38,275
Long-term debt............................... 6,402 6,477
Deferred income taxes........................ 41,834 35,718
Other liabilities............................ 9,942 9,793
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Total liabilities......................... 92,564 90,263
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Shareholders' equity:
Common shares, $.01 par value, 100,000,000
shares authorized, 41,323,760 and
41,102,360 shares issued................... 413 411
Additional paid-in capital.................. 61,491 61,339
Retained earnings........................... 185,832 179,427
Cumulative translation adjustments.......... 13,046 7,504
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260,782 248,681
Treasury stock, at cost, 927,300 and
153,600 shares............................. (11,483) (1,615)
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Total shareholders' equity................ 249,299 247,066
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Total liabilities and
shareholders' equity..................... $341,863 $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)
Nine Months Ended
September 30,
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1994 1993
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Cash flows from operating activities
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Net income................................... $ 11,281 $ 15,008
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization.............. 14,823 14,632
Employee benefit plan provisions........... 513 678
Changes in assets and liabilities:
Decrease in receivables.................. 1,354 2,210
(Increase) decrease in inventories....... 373 ( 5,780)
Decrease in other current assets......... 315 1,749
(Decrease) in accounts payable
and accruals............................ (1,821) ( 5,571)
Increase in deferred income
tax liabilities......................... 3,131 1,255
Other items--net........................... ( 1,326) 1,946
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Net cash provided by
operating activities..................... 28,643 26,127
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Cash flows from investing activities
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Property, plant and equipment expenditures.. ( 5,383) (10,795)
Proceeds from disposals of equipment........ 537 725
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Net cash used in investing activities..... ( 4,846) (10,070)
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Cash flows from financing activities
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Net (repayments of) borrowings.............. ( 2,238) ( 4,225)
Treasury stock purchases.................... ( 9,868) -
Common stock dividends...................... ( 4,876) ( 4,923)
Other....................................... 154 94
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Net cash (used in)
financing activities..................... (16,828) ( 9,054)
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Effect of exchange rate changes on cash...... 2,366 ( 929)
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Increase in cash and cash equivalents........ 9,335 6,074
Cash and cash equivalents, beginning
of period................................... 21,792 8,225
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Cash and cash equivalents, end of period..... $ 31,127 $ 14,299
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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:
September 30, 1994 December 31, 1993
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Raw materials $ 10,498 $ 8,758
Finished goods 36,782 38,895
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$ 47,280 $ 47,653
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2. Supplemental Cash Flow Information:
Nine Months Ended September 30,
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1994 1993
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Cash paid during the period for:
Interest $ 306 $ 720
Income taxes (refunds) net $ 3,540 $ 3,063
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Bank debt:
Borrowings $ 11,611 $ 19,812
Repayments (13,849) (24,037)
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Net (repayments of)
borrowings $ (2,238) $ (4,225)
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3. On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993 became
law. This act changed the United States tax rates retroactively to
January 1, 1993. These new income tax rates resulted in an increase to
"Provision for income taxes" of $644 during the three months ended
September 30, 1993. Of this amount $456 resulted from the adjustment of
the liability for deferred income taxes as required by SFAS 109
"Accounting for Income Taxes". The net income per common share effect
for the total adjustment was $.016.
4. Common stock dividends declared in each of the quarters ended September
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 September 30, 1994 and the related consolidated
statements of income and retained earnings and of cash flows for the three-
month and nine-month periods ended September 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
November 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 months ended September 30, 1994 improved by $3.4
million or 5.1% over the similar 1993 period while net sales for the nine
months ended September 30, 1994 decreased by $1.4 million or .7% from the
comparable nine months of 1993. Net sales to the industrial process markets
of $28.9 million and $91.2 million for the three and nine month periods ended
September 30, 1994 were below the comparable 1993 periods by $2.3 million or
7.4% and $5.5 million or 5.7%, respectively. The decrease for the quarter
was primarily the result of worldwide shortfalls in the food related category
and to reductions in Europe in the original equipment manufacture area
specifically related to the personnel protection industry. The nine month
reduction can also be attributed to the aforementioned European decrease.
Net sales to the environmental markets for the three and nine month periods
ended September 30, 1994 were $35.3 million and $94.7 million, respectively,
representing increases of $3.3 million or 10.4% and $4.7 million or 5.2%
versus the three and nine months ended September 30, 1993, respectively. The
increase for the quarter can be associated with both the municipal and
industrial areas of the market. The municipal change was the result of
improved carbon sales both in the United States and in Europe partially
offset by equipment reductions in the United States. The industrial
improvement was primarily generated in the United States. The increase for
the nine month period occurred primarily in the municipal category, the net
effect of declines in 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 $4.5 million for the three months ended September 30, 1994 and $13.0
million for the nine months then ended. The quarter results represented an
increase of $2.2 million or 97.4% due to warm late summer weather in Europe
while the overall nine month period ended September 30, 1994 experienced a
decrease of $.6 million or 4.3% representing activity for the entire
barbecuing season. Overall, sales for both periods were affected by the
recession in Europe, worldwide competitive pressures and increases due to
exchange rate changes of $1.3 million in the three month period and $.1
million in the nine month period ended September 30, 1994. The results for
the quarter also represent volume improvements in the United States for all
product lines and increases in European service sales.
Gross profit, before depreciation, as a percentage of net sales was 33.9% for
the three month period ended September 30, 1994 and 35.3% for the nine
month period then ended. These results
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represented declines of 4.1 percentage points and 3.5 percentage points
versus the three and nine month periods ended September 30, 1993,
respectively. Both declines were primarily the result of lower unit selling
prices and customer shifts to lower margin products. The decline for the
nine month period was net of the positive effect of a credit received from
the German government in the amount of DM 1.7 million (approximately $1.0
million or .5 percentage points) in the second quarter of 1994 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.
Selling, general and administrative expenses increased by $.2 million or 1.8%
during the quarter ended September 30, 1994 over the similar three month
period in 1993 and by $.1 million or .4% during the nine month period in 1994
versus the nine month period ended September 30, 1993.
Research and development expenses decreased by $.3 million or 15.4% and by
$.2 million or 4.4% during the three and nine month periods ended September
30, 1994 versus the comparable periods in 1993.
Interest expense for the three and nine month periods ended September 30,
1994 was $.1 million and $.3 million representing reductions of $.1 million
and $.5 million from the similar 1993 periods. Both declines were the result
of lower debt in Germany.
Other income (expense) -- net was unfavorable for the nine months ended
September 30, 1994 versus the similar 1993 period due to unfavorable swings
in currency gains and losses and to increased "non-income" taxes.
The effective tax rates for the three and nine months ended September 30,
1994 were 30.8% and 33.6%, respectively. These rates represented decreases
of 8.6 percentage points and 4.1 percentage points, respectively. The
quarter tax rate for 1993 included a retroactive rate adjustment associated
with the "Omnibus Budget Reconciliation Act of 1993" (See Selected Notes to
Financial Statements). Both decreases were primarily related to increased
availability of foreign tax credits and benefits.
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 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 $12.9
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
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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 nine months ended September 30, 1994, the Company continued to purchase
shares of its common stock as authorized. During this period, 773,700 shares
of treasury stock were purchased at a cost of $9,868. (During the three
month period ended September 30, 1994, 100,600 shares were purchased at a
cost of $1,227). Through September 30, 1994 the Company has purchased a
total of 927,300 shares at a total cost of $11,483.
Net cash provided by operating activities was $28.6 million for the nine
month period ended September 30, 1994. This represents an increase of $2.5
million from the nine months ended September 30, 1993. The overall increase
was primarily the net effect of lower net income, offset by a minor decrease
in working capital in 1994 versus an increase in 1993 and a greater increase
in deferred income tax liabilities in 1994 versus 1993.
Capital Expenditures and Investments
------------------------------------
Capital expenditures for property, plant and equipment totaled $5.4
million for the nine months ended September 30, 1994. This compares to
expenditures of $10.8 million for the same period in 1993. The major portion
of the 1994 expenditure amount was related to improvements at the Bodenfelde,
Germany plant ($1.4 million) and domestic service customer capital ($1.2
million). Capital expenditures for the year 1994 are currently projected to
be approximately $10.3 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 September 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: November 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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