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, 1995 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
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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
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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 31, 1995
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Common Stock, $.01 par value 40,418,860 shares
CALGON CARBON CORPORATION
SEC FORM 10-Q
QUARTER ENDED June 30, 1995
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, 1994.
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,
---------------------- -----------------------
1995 1994 1995 1994
--------- --------- --------- ---------
Net sales................................................ $ 75,968 $ 69,156 $144,777 $131,659
-------- -------- -------- --------
Cost of products sold
(excluding depreciation)................................ 48,076 42,742 92,245 84,151
Depreciation............................................ 4,632 4,751 9,154 9,553
Selling, general and
administrative expenses................................. 12,395 11,823 24,434 22,260
Research and development
expenses................................................ 1,456 1,566 2,780 3,212
-------- -------- -------- --------
66,559 60,882 128,613 119,176
-------- -------- -------- --------
Income from operations................................... 9,409 8,274 16,164 12,483
Interest income.......................................... 347 254 707 409
Interest expense......................................... (200) ( 99) (412) (229)
Other income (expense)--net.............................. (438) (449) (1,078) (1,033)
-------- -------- -------- --------
Income before income taxes............................... 9,118 7,980 15,381 11,630
Provision for income taxes............................... 3,067 2,758 5,411 4,064
-------- -------- -------- --------
Net income............................................... 6,051 5,222 9,970 7,566
Common stock dividends................................... (3,031) (1,618) (26,272) (3,260)
Retained earnings, beginning
of period............................................... 145,003 180,129 164,325 179,427
-------- -------- -------- --------
Retained earnings, end of
period.................................................. $148,023 $183,733 $148,023 $183,733
======== ======== ======== ========
Net income per common share.............................. $.15 $.13 $.25 $.19
======== ======== ======== ========
Weighted average shares
outstanding 40,418,860 40,764,618 40,418,860 40,876,299
========== ========== ========== ==========
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)
June 30, December 31,
1995 1994
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(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents................... $ 30,844 $ 45,376
Receivables................................. 53,433 50,855
Inventories................................. 51,587 41,672
Other current assets........................ 13,218 11,225
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Total current assets...................... 149,082 149,128
Property, plant and equipment, net........... 179,449 179,148
Other assets................................. 17,667 15,208
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Total assets.............................. $346,198 $343,484
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt due within one year.......... $ 6,320 $ 3,273
Accounts payable and accrued liabilities.... 30,224 28,623
Restructuring reserve....................... 21,562 22,761
Payroll and benefits payable................ 12,977 10,691
Accrued income taxes........................ 2,316 501
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Total current liabilities................. 73,399 65,849
Long-term debt............................... 5,744 6,401
Deferred income taxes........................ 42,734 34,341
Other liabilities............................ 10,005 9,746
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Total liabilities......................... 131,882 116,337
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Shareholders' equity:
Common shares, $.01 par value, 100,000,000
shares authorized, 41,424,960
shares issued.............................. 414 414
Additional paid-in capital.................. 61,986 61,986
Retained earnings........................... 148,023 164,325
Cumulative translation adjustments.......... 16,221 12,750
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226,644 239,475
Treasury stock, at cost, 1,006,100 shares... (12,328) (12,328)
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Total shareholders' equity................ 214,316 227,147
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Total liabilities and
shareholders' equity..................... $346,198 $343,484
======== ========
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)
Six Months Ended
June 30,
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1995 1994
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Cash flows from operating activities
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Net income......................................... $ 9,970 $ 7,566
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization.................... 9,220 9,822
Employee benefit plan provisions................. 386 333
Changes in assets and liabilities
(net of exchange):
(Increase) decrease in receivables............. ( 997) 2,178
(Increase) in inventories...................... ( 6,692) ( 2,644)
(Increase) decrease in other current
assets....................................... ( 1,553) 634
(Decrease) in restructuring reserve............ ( 3,673) -
Increase in accounts payable
and accruals.................................. 3,505 2,189
Increase in long-term deferred
income taxes (net)............................ 5,230 1,408
Other items--net................................. ( 921) ( 1,281)
Net cash provided by
operating activities........................... 14,475 20,205
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Cash flows from investing activities
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Property, plant and equipment expenditures........ ( 4,777) ( 4,156)
Proceeds from disposals of equipment.............. 172 392
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Net cash (used in) investing activities......... ( 4,605) ( 3,764)
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Cash flows from financing activities
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Net proceeds from (repayments of) borrowings...... 1,673 ( 2,324)
Treasury stock purchases.......................... - ( 8,641)
Common stock dividends............................ (26,272) ( 3,260)
Other............................................. - 120
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Net cash (used in)
financing activities........................... (24,599) (14,105)
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Effect of exchange rate changes on cash............ 197 1,673
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Increase (decrease) in cash and cash equivalents... (14,532) 4,009
Cash and cash equivalents, beginning
of period......................................... 45,376 21,792
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Cash and cash equivalents, end of period........... $ 30,844 $ 25,801
======== ========
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, 1995 December 31, 1994
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Raw materials $ 15,293 $ 7,119
Finished goods 36,294 34,553
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$ 51,587 $ 41,672
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2. Supplemental Cash Flow Information:
Six Months Ended June 30,
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1995 1994
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Cash paid during the period for:
Interest $ 512 $ 198
Income taxes (refunds) net $ (31) $ 1,476
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Bank debt:
Borrowings $ 21,611 $ 11,405
Repayments (19,938) (13,729)
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Net proceeds from (repayments of)
borrowings $ 1,673 $ (2,324)
======== ========
3. Common stock dividends declared during the quarter ended June 30, 1995
were $.075 per common share. Common stock dividends declared during the
quarter ended June 30, 1994 were $.04 per common share.
4. Restructuring Reserve:
The Company recorded restructuring charges in each of the years 1994,
1993 and 1992 (details of such charges are shown in the "Restructuring
Charges" note to the 1994 financial statements in the annual report).
Activity and adjustments to the Restructuring Reserve for the period of
January 1 through June 30, 1995 are as follows:
Currency
Balance Translation Balance
January 1, 1995 Payments Adjustments June 30, 1995
--------------- -------- ------------ ------------------
Employee separations $10,313 $(3,089) $1,105 $ 8,329
Demolition, disposition,
site protection and environ-
mental costs 12,448 (584) 1,369 13,233
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Total $22,761 $(3,673) $2,474 $21,562
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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, 1995 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, 1995 and 1994. 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, 1994, 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, 1995, except as to Note 7, which was as of March 1, 1995, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the accompanying consolidated balance sheet information as of
December 31, 1994 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 11, 1995
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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, 1995 increased by
$6.8 million or 9.9% and by $13.1 million or 10.0%, respectively, versus the
three and six months ended June 30, 1994. Net sales to the industrial
process markets of $36.1 million and $70.7 million for the three and six
month periods ended June 30, 1995 were above the comparable 1994 periods by
$4.5 million or 14.1% and $8.4 million or 13.5%, respectively. The increase
for both the quarter and six month periods were primarily related to
worldwide increases in the chemical/pharmaceutical and original equipment
manufacturer areas and in the European energy category. Net sales to the
environmental markets for the three and six month periods ended June 30, 1995
were $31.7 million and $61.8 million, respectively, representing increases of
$.5 million or 1.7% and $2.3 million or 3.9% over comparable 1994 periods.
The increase for the quarter was primarily the net result of increases in the
European municipal category partially offset by reduced large equipment sales
in the United States. In addition to the aforementioned improved quarterly
results in the European municipal category, the cumulative year-to-date
increase reflected a net increase for sales of large equipment in the United
States. The consumer area reported sales of $7.1 million for the three month
period ended June 30, 1995 and $10.3 million for the six month period then
ended. These results represented increases of $1.5 million or 27.7% and $1.8
million or 21.1% versus the comparable 1994 periods. Increases for both
periods were the result of wet weather in Central Europe during the 1994
barbecuing season. The overall sales increases were primarily due to
worldwide volume increases due to improved economic conditions and to
increases due to exchange rate changes of $4.2 million in the three month and
$7.2 million in the six month periods ended June 30, 1995.
Gross profit, before depreciation, as a percentage of net sales was 36.7% for
the three month period ended June 30, 1995 and 36.3% for the six month period
then ended. These rates compare to 38.2% and 36.1% for the comparable 1994
periods, respectively. The 1994 periods included a one-time tax credit from
the German government of approximately $1.0 million. Had this credit not
been received in 1994, gross profit, before depreciation, as a percentage of
net sales would have been 36.7% and 35.3% for the respective three and six
month periods ending June 30, 1994.
Depreciation expense for the three months ended June 30, 1995 and for the six
month period then ended decreased by $.1 million and $.4 million versus the
three and six months ended June 30, 1994 due to the write off of unproductive
fixed assets in the 1994 restructuring charge.
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Selling, general and administrative expenses increased by $.6 million or 4.8%
during the quarter ended June 30, 1995 versus the comparable 1994 quarter and
by $2.2 million or 9.8% compared to the same six month period in 1994. Both
increases were primarily the result of the effect of exchange rate changes
but also included a provision for the Company's Employee Growth Sharing Plan
in 1995 of $.1 million in the quarter and $.4 million in the six month period
ended June 30, 1995 due to the Company's improved performance. There were no
1994 provisions for this plan.
Research and Development expenses decreased by $.1 million or 7.0% during the
three months ended June 30, 1995 and by $.4 million or 13.4% for the six
months then ended versus the corresponding 1994 periods.
The effective tax rates for the three and six months ended June 30, 1995 were
33.6% and 35.2%, respectively. These rates represented a decrease of 1.0
percentage point from the three month period ended June 30, 1994 and an
increase of .3 percentage points versus the six month period then ended. The
decrease for the quarter was the result of reduced state taxes while the net
increase for the six month period also reflected reduced foreign tax
benefits.
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 1996 and at the end of May
1996, respectively, and a German credit facility in the amount of $10.8
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 and dividend
requirements.
Net cash provided by operating activities was $14.5 million for the six month
period ended June 30, 1995. This represented a decrease of $5.7 million from
the six month period ended June 30, 1994. This overall decrease was the net
effect of a greater increase in working capital in the 1995 period versus
1994, partially offset by increased net income and a larger increase in long-
term deferred income taxes--net.
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Restructuring of Operations
---------------------------
The Company continued to execute the plan to close the Brilon Wald plant
in Germany and to pay other liabilities recognized as of December 31, 1994.
Production at this plant ceased at the end of June, 1995 and total shutdown
continues as scheduled. Evaluations of demolition, disposition, site
protection and environmental costs continue and the existing reserves were
determined to be sufficient.
Cash outlays to cover restructuring costs are projected to be paid as
follows:
Projected Payments
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Reserve at 1995 1996
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Millions June 30, 1995 2nd Half 1st Half 2nd Half
------------- -------- -------- --------
Employee separations $ 8.3 $ 7.1 $1.2 $ -
Demolition, disposition,
site protection and
environmental costs 13.3 8.8 2.9 1.6
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Total $21.6 $15.9 $4.1 $ 1.6
===== ===== ==== =====
Capital Expenditures and Investments
------------------------------------
Capital expenditures for property, plant and equipment totaled $4.8
million for the six months ended June 30, 1995. This compares to
expenditures of $4.2 million for the same period in 1994. The major portion
of the 1995 expenditure amount was related to domestic service customer
capital ($.8 million) and improvements to a production line at the Big Sandy,
Kentucky plant ($2.4 million). Capital expenditures for the year 1995 are
currently projected to be approximately $16 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 18, 1995. 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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Robert W. Cruickshank 32,433,288 106,529
Arthur L. Goeschel 32,413,306 126,511
Thomas A. McConomy 32,430,905 108,912
The following directors continued in office after the meeting:
Class of 1996
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William J. Gilliam
Nick H. Prater
Harry H. Weil
Class of 1997
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Colin Bailey
Ronald R. Tisch
Roger H. Zanitsch
2. Price Waterhouse LLP was elected as the independent accountants for
1995. (For - 32,461,526; Against - 43,418; Abstained - 34,873).
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, 1995.
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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 11, 1995 By /s/C.P. SHANNON
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C. P. Shannon
Sr. Vice President-Finance
(Chief Financial Officer)
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