Document/Exhibit Description Pages Size
1: 10-K Annual Report 46 230K
2: EX-10.8 Lease Settlement Agreement 1 7K
3: EX-11 Computation of Per Share Earnings 2± 9K
4: EX-21 Subsidiaries of Carlisle Plastics 1 6K
5: EX-23 Consent of Deloitte & Touche LLP 1 6K
6: EX-27 Financial Data Schedule 1 7K
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K
[Download Table]
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
[Download Table]
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-10756
CARLISLE PLASTICS, INC.
(Exact name of registrant as specified in its Charter)
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DELAWARE 04-2891825
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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COMMISSION FILE NUMBER 33-35966
POLY-TECH, INC.
(Exact name of registrant as specified in its Charter)
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MINNESOTA 41-1503086
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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1314 NORTH THIRD STREET, PHOENIX, AZ 85004
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (602) 407-2100
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
[Enlarge/Download Table]
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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CLASS A COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT*:
Senior Variable Rate Notes Due 1997
10.25% Senior Notes Due 1997 Issued 1992
Series A 10.25% Senior Notes Due 1997
(TITLE OF CLASS)
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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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as a specified date within 60 days prior to the date of filing.
AS OF JANUARY 31, 1995 THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD
BY NON-AFFILIATES OF THE REGISTRANT WAS $30,790,162 BASED ON THE CLOSING MARKET
VALUE ON THAT DAY.
APPLICABLE ONLY TO REGISTRANTS 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 Section 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 / /
AT JANUARY 31, 1995, 8,193,733 AND 9,510,552 SHARES OF CARLISLE PLASTICS,
INC. CLASS A COMMON STOCK AND CLASS B COMMON STOCK, RESPECTIVELY, WERE
OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Company's Annual Meeting of
Shareholders to be held April 18, 1995 are incorporated by reference into Part
III of this Form 10-K, to the extent described in such Part III.
* The classes of securities set forth under the above heading have not been
registered under Section 12(g) of the Act. With respect to the
securities, this Form 10-K is filed pursuant to Section 15(d) of the Act,
because registration statements were filed under the Securities Act of
1933 relating to such classes of securities. Poly-Tech, Inc.
("Poly-Tech"), as a guarantor of the Senior Variable Rate Notes Due 1997
(the "1997 Notes"), the 10.25% Senior Notes Due 1997 Issued 1992 (the
"1992 10.25% Notes") and the Series A 10.25% Senior Notes Due 1997 (the
"Series A 10.25% Notes") (together with the 1992 10.25% Notes, the
"10.25% Notes"), is a registrant under this form 10-K.
PART I
ITEM 1. BUSINESS
GENERAL
Carlisle Plastics, Inc. (the "Company") is a global leader in the
production of consumer and industrial products made from plastics. The Company's
products include trash bags, garment hangers and sheeting used for home
improvement, construction and agriculture. The Company's trash bag products
include private label and institutional lines, as well as the Company's own
national consumer brands. Other products include plastic bottles, containers and
packaging.
The following table sets forth the Company's major product categories as a
percentage of net sales for each of the three years ended December 31:
[Download Table]
1994 1993 1992
----- ----- -----
Hangers..................................................... 31.9% 26.6% 23.2%
Consumer Bags............................................... 25.0 28.3 30.0
Do-It-Yourself/Wholesale.................................... 16.6 16.1 15.8
Packaging/Other............................................. 14.5 14.9 16.4
Institutional Bags.......................................... 12.0 14.1 14.6
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
Poly-Tech, which is an additional registrant hereunder, is a wholly-owned
subsidiary of the Company.
HISTORY
The Company was incorporated in Delaware in 1985 and adopted its present
name in February, 1989. In 1989, the Company acquired 79% ownership in
Poly-Tech. In 1990, the Company, through Poly-Tech, purchased 100% of the
outstanding capital stock of American Western Corporation ("American Western").
In 1991, the Company completed an initial public offering (the "Class A
Stock Offering"). In conjunction with the Class A Stock Offering, the Company
converted all shares of the Company's outstanding common stock into shares of
Class B Common Stock; acquired the 21% minority interests in its directly owned
subsidiaries in exchange for shares of Class A Common Stock; and changed its tax
status from a "S" corporation to a "C" corporation.
In July 1991, the Company purchased a two-thirds interest in Rhino-X
Industries, Inc. ("Rhino-X"). Under a put and call arrangement signed in
conjunction with the acquisition of Rhino-X, the Company purchased the remaining
shares on January 1, 1994.
PRODUCTS
The Company supplies plastic trash bags to three major markets: mass
merchandise, grocery chains, and institutional. The Company provides Ruffies(R),
a national brand consumer trash bag, for mass merchandise and other retail
stores. Consumer trash bags and food contact products, such as sandwich bags,
recloseable freezer bags and wrap are provided for grocery chains nationwide
under private label. For institutional customers, such as food service
distributors, janitorial supply houses, restaurants, hotels and hospitals, the
Company provides heavy-duty trash liners.
In the consumer trash bag market, the Company competes primarily with two
highly advertised national brands, as well as other private and controlled label
products. The Company has historically concentrated on mass merchandisers as the
primary market for its branded trash bags, while the other major national brands
are marketed primarily through food retailers.
Film-Gard(R), the Company's leading plastic sheeting product, is sold to
consumers and professional contractors through do-it-yourself outlets, home
improvement centers and hardware stores. A wide range of
1
Film-Gard(R) products are sold for various uses, including painting,
renovation/construction, landscaping and agriculture. The Company's industrial
packaging film is sold directly to manufacturers for use as shrink wrap and
other packaging requirements.
Molded plastic garment hangers are sold by the Company to four markets:
garment manufacturers, national and regional or local retailers, and mass
merchandisers. Garment manufacturers place their clothes on the Company's
hangers before shipping to retail outlets. The Company creates and sells
customized hanger designs to national retailers. Regional or local retailers buy
standard Company hanger lines for retail clothing display. The Company supplies
mass merchandise stores with consumer plastic hangers for sale to the general
public.
The Company manufactures a line of plastic bottles marketed to the dairy,
water, juice, food and industrial markets on the eastern coast of the United
States.
The Company operates in a competitive marketplace where success is
dependent upon price, service and quality. The Company has positioned itself as
a major supplier of innovative plastic products to large, rapidly growing
national customers at the highest levels of value, service and quality.
RAW MATERIALS
The primary raw materials used by the Company in the manufacture of its
products are various plastic resins, primarily polyethylene. The Company's
financial performance is thus dependent to a substantial extent on the
polyethylene resin market. The primary plastic resins used by the Company are
produced from petrochemical intermediates derived from products of the natural
gas and crude oil refining processes, respectively. Because plastic resins are
commodity products, the Company selects its suppliers primarily on the basis of
price. Consequently, the Company's sources for plastic resins tend to vary from
year to year. Shortages of plastic resins have been infrequent.
Natural gas and crude oil markets experience substantial cyclical price
fluctuations as well as other market disturbances, including shortages of
supply, the effect of OPEC policy and crises in the oil producing regions of the
world. The capacity, supply and demand for plastic resins and the petrochemical
intermediates from which they are produced are also subject to cyclical and
other market factors. Consequently, plastic resin prices may fluctuate as a
result of changes in natural gas and crude oil prices and the capacity, supply
and demand for resin and petrochemical intermediates from which they are
produced.
The Company uses in excess of 425 million pounds of plastic resins
annually. At this level, the Company is one of the largest purchasers of plastic
resin in the United States. Management believes that large volume purchases of
plastic resin result in lower unit raw material costs.
The Company may not always be able to pass through increases in the cost of
its raw materials to its customers in the form of price increases. To the extent
that increases in the cost of plastic resin cannot be passed on to its
customers, such increases may have an adverse impact on profit margins and the
overall profitability of the Company.
MAJOR CUSTOMERS
The Company has no customer that accounts for over 10% of its consolidated
net sales.
EMPLOYEES
As of December 31, 1994, the Company employed approximately 2,900 full-time
employees, of whom approximately 2,450 are in manufacturing and approximately
450 are in administration and sales. Approximately 300 of the Company's total
work force are represented by labor unions under contracts which are due to
expire in 1996 and 1997 and will be renegotiated in due course. The Company has
historically enjoyed satisfactory relations with both union and non-union
employees.
2
CYCLICALITY AND SEASONALITY OF PORTIONS OF BUSINESS
Historically, the Company's results have been affected, in part, by the
nature of its customers' purchasing trends for various seasonal and promotional
programs. The first quarter is typically the least profitable quarter, and the
third quarter is the strongest due to demands for hangers during the holiday
season, lawn and leaf bags in the fall and strong promotional activity by major
mass merchandisers.
ENVIRONMENTAL AND SAFETY MATTERS
The Company routinely monitors environmental compliance at its
manufacturing facilities. The cost of such compliance has not been significant.
The Company is currently not subject to any environmental proceedings. During
1994, the Company did not make any material capital expenditures for
environmental control facilities, nor does it anticipate any in the near future.
Actions by federal, state and local governments concerning environmental
matters could result in laws or regulations that could increase the cost of
producing the products manufactured by the Company or otherwise adversely affect
the demand for its products.
At present, environmental laws and regulations do not have a material
adverse effect upon the demand for the Company's products. The Company is aware,
however, that certain local governments have adopted ordinances prohibiting or
restricting the use or disposal of certain plastic products that are among the
types of products produced by the Company. If such prohibitions or restrictions
were widely adopted, such regulatory and environmental measures could have a
material adverse effect upon the Company. In addition, a decline in consumer
preferences for plastic products due to environmental considerations could have
a material adverse effect upon the Company.
Certain of the Company's operations are subject to federal, state and local
environmental laws and regulations that impose limitations on the discharge of
pollutants into the air and water and establish standards for the treatment,
storage and disposal of solid and hazardous wastes. While historically the
Company has not had to make significant capital expenditures for environmental
compliance, the Company cannot predict with any certainty its future capital
expenditures for environmental compliance because of continually changing
compliance standards and technology. The Company does not currently have any
insurance coverage for environmental liabilities and does not anticipate
obtaining such coverage in the future.
3
ITEM 2. PROPERTIES
The Company utilizes approximately 618,000 square feet of leased space and
approximately 1,780,000 square feet of space owned by the Company.
The principal properties of the Company are as follows:
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DESCRIPTION LEASED
LOCATION OF PROPERTY (SQ.FT.) OWNED
---------------------------------------- -------------------------------- -------- --------
Phoenix, Arizona........................ Distribution Warehouse 115,000
Phoenix, Arizona........................ Corporate and Divisional Office 33,000
Corona, California...................... Distribution Warehouse 7,000
San Francisco, California............... Distribution Warehouse 11,000
Santa Ana, California................... Distribution Warehouse 124,000
Portland, Maine......................... Manufacturing 17,000
Jessup, Maryland........................ Manufacturing 60,000
Los Pinos, Mexico....................... Manufacturing 45,000
Tijuana, Mexico......................... Manufacturing 100,000
Fairmont, Minnesota..................... Manufacturing and Distribution 66,000
Warehouse
Minneapolis, Minnesota.................. Manufacturing, Distribution 189,000
Warehouse and Divisional
Offices
Woodbridge, New Jersey.................. Sales and Marketing 12,000
Batavia, New York....................... Manufacturing 20,000
Long Island City, New York.............. Distribution Warehouse 2,000
Battleboro, North Carolina.............. Manufacturing and Distribution 391,000
Warehouse
Forest City, North Carolina............. Manufacturing and Distribution 180,000
Warehouse
Thomasville, North Carolina............. Manufacturing and Distribution 157,000
Warehouse
Berwick, Pennsylvania................... Manufacturing and 5,000 197,000
Divisional Offices
E. Greenville, Pennsylvania............. Manufacturing 20,000
Ringtown, Pennsylvania.................. Manufacturing and Distribution 232,000
Warehouse
Sioux Falls, South Dakota............... Manufacturing and Distribution 221,000
Warehouse
Victoria, Texas......................... Manufacturing and Distribution 184,000
Warehouse
Webster, Texas.......................... Distribution Warehouse 10,000
---------------
The Company also leases properties in Hong Kong.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position, results of operations, or cashflows of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
4
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Class A Common Stock has been listed on the New York Stock
Exchange under the trading symbol "CPA" since May 1991. The Company's Class B
Common Stock has restrictions on transfer and ownership; accordingly, no trading
market will develop for the Class B Common Stock and the Class B Common Stock
will not be listed or traded on any exchange or in any market.
PRICE RANGE OF CLASS A COMMON STOCK:
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1994 1993
-------------- --------------
HIGH LOW HIGH LOW
---- --- ---- ---
First Quarter......................................... $ 8 7/8 $6 5/8 $ 7 $5 3/8
Second Quarter........................................ 7 3/4 4 1/2 6 5
Third Quarter......................................... 5 3 7/8 7 5 5/8
Fourth Quarter........................................ 4 7/8 3 3/4 8 1/4 5 1/4
The Company estimates that it had 8,600 beneficial owners of the Class A
Common Stock at December 31, 1994. The Company's Class B Common Stock was held
by 7 record holders at December 31, 1994. Each share of Class A Common Stock is
entitled to one vote and each share of Class B Common Stock is entitled to
twenty votes. As of December 31, 1994, officers and directors of the Company
controlled 74.1% of the combined voting power of the two classes of stock.
The indentures for the Company's senior notes generally prohibit the
Company from paying dividends on its common stock (other than dividends on
non-convertible capital stock or certain other securities). See Notes to
Consolidated Financial Statements included herein.
5
ITEM 6. SELECTED FINANCIAL DATA
Selected Historical Financial Data of the Company:
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YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1994(A) 1993 1992 1991(A) 1990(A)
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
INCOME STATEMENT DATA:
Net Sales........................... $387,664 $360,895 $359,856 $343,637 $324,724
Income (Loss) Before Extraordinary
Item and Cumulative Effect of
Change in Accounting
Principle(b)...................... $ 2,999 $ 5,832 $ (6,214) $ 5,393 $ 3,851
Net Income (Loss)(c)................ $ 537 $ 7,184 $ (6,303) $ 1,817 $ 3,851
Pro Forma Net Income(d)............. $ 4,505 $ 3,589
Income (Loss) per Common Share:
Income (Loss) Before Extraordinary
Item and Change in Accounting
Principle...................... $ .17 $ .33 $ (.35)
Net Income (Loss)................. $ .03 $ .41 $ (.36)
Pro Forma Income per Common
Share(d):
Income Before Extraordinary
Item........................... $ .54 $ .33
Net Income........................ $ .30 $ .33
Average Number of Common and Common
Equivalent Shares
Outstanding(e).................... 17,695 17,737 17,610 14,996 10,811
======== ======== ======== ======== ========
BALANCE SHEET DATA (END OF PERIOD):
Total Assets........................ $340,992 $325,848 $325,170 $304,596 $286,978
Long-Term Debt(f)................... $198,277 $183,101 $198,994 $155,885 $202,447
<FN>
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(a) In March 1990, Poly-Tech acquired 100% of the stock of American Western. In
May 1991, the Company acquired the remaining 21% of Poly-Tech which were not
previously owned by the Company. In July 1991, the Company acquired 66.7% of
the stock of Rhino-X and acquired the remaining 33.3% in January 1994.
Results are included from the date of each respective purchase.
(b) In 1992, pretax income was reduced by $7.7 million for a new product
introduction and $4.3 million for a restructuring charge. In 1991, pretax
income was reduced by $3.4 million for a restructuring charge and the
provision for income taxes includes a $3.0 million non-recurring deferred
tax charge to recognize tax effects of timing differences due to conversion
of the Company from a "S" corporation to a "C" corporation. In 1990, pretax
income was net of certain non-recurring costs aggregating approximately $4.1
million, including $1.3 million settlement of a loan guarantee, $0.7 million
estimated loss on property, and $2.1 million of costs associated with
termination of the phantom stock plan, expenses incurred in connection with
the American Western acquisition and transition of a manufacturing plant to
Mexico.
(c) Net income was reduced $2,462, $234, $89 and $3,576 in 1994, 1993, 1992 and
1991, respectively, for extraordinary items related to the early
extinguishment of debt. Net income in 1993 was also increased by $1,586 for
the cumulative effect of an accounting principle change relating to income
taxes.
(d) Pro forma net income and income per common share include a provision for
income taxes as if the entire Company had been a "C" corporation for the
entire year.
(e) Share amounts in 1991 and 1990 have been retroactively adjusted to reflect a
125.9-for-1 stock split which occurred in May 1991.
(f) Includes junior subordinated notes due to stockholders and affiliates in the
aggregate amount of $7.0 million in 1991 and 1990.
6
Selected Historical Financial Data of Poly-Tech(a):
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1994(B) 1993 1992 1991 1990(C)
-------- -------- -------- -------- --------
(IN THOUSANDS)
INCOME STATEMENT DATA:
Net Sales........................... $ 53,932 $200,100 $206,359 $213,217 $207,793
Income (Loss) Before Extraordinary
Item and Cumulative Effect of
Change in Accounting
Principle(d)...................... $ (2,841) $ (917) $ (6,945) $ 5,401 $ 4,451
Net Income (Loss)(e)................ (2,843) $ (1,820) $ (6,959) $ 5,260 $ 4,451
BALANCE SHEET DATA (END OF PERIOD):
Total Assets........................ $161,414 $176,306 $182,911 $192,571 $193,843
Long-Term Debt(f)................... $ 410 $ 640 $ 940 $ 24,551 $ 23,175
<FN>
---------------
(a) The financial data of Poly-Tech have been consolidated with those of the
Company.
(b) In 1994, Poly-Tech and American Western entered into asset purchase
agreements with the parent company, in which all of the accounts receivable
and inventory were sold to the parent. In 1994, Poly-Tech and American
Western also entered into manufacturing agreements with the parent, under
which they provide manufacturing services to the parent.
(c) In March 1990, Poly-Tech acquired 100% of the stock of American Western.
Results are included from the date of purchase.
(d) In 1992, pretax income is reduced by $3.6 million for a restructuring
charge. In 1990, pretax income is reduced by $0.7 million for an estimated
loss on property.
(e) Net income was reduced $2, $14 and $141 in 1994, 1992 and 1991,
respectively, for extraordinary items related to the early extinguishment of
debt. In 1993, net income was reduced $903 for the cumulative effect of an
accounting principle change relating to income taxes.
(f) Long-term debt does not include Intercompany Notes payable to Poly-Tech's
parent, Carlisle Plastics, Inc. Intercompany Notes totalled $130,164,
$118,806, $90,000, $90,000 and $35,000 for the periods ended December 31,
1994, 1993, 1992, 1991 and 1990, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain operating data as a percentage of
net sales for each of the three years ended December 31:
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31,
-------------------------
1994 1993 1992
----- ----- -----
Net sales................................................... 100.0% 100.0% 100.0%
Gross profit................................................ 25.0% 27.4% 26.8%
Operating expenses.......................................... 17.9% 17.9% 18.8%
Goodwill and other amortization............................. .8% .8% .7%
New product introduction.................................... -- -- 2.2%
Restructuring............................................... -- -- 1.2%
----- ----- -----
Total operating expenses.................................. 18.7% 18.7% 22.9%
Operating income............................................ 6.3% 8.7% 3.9%
Interest expense............................................ 5.0% 6.3% 6.1%
Interest and other income................................... -- (.1)% (.1)%
Income (loss) before extraordinary item and
change in accounting principle............................ .8% 1.6% (1.7)%
Net income (loss)........................................... .1% 2.0% (1.8)%
7
1994 COMPARED WITH 1993
Net sales increased $26.8 million, or 7.4%, to $387.7 million in 1994
compared to $360.9 million in 1993. The net growth was driven primarily by
increased hanger sales. Unit volume for the Company for 1994 increased 9% from
1993.
Gross profit decreased 1.9% to $97.1 million, or 25.0% of net sales in
1994, from $98.9 million, or 27.4% of net sales in 1993. The decrease in gross
profit is primarily attributable to plastic resin raw material cost increases
affecting the third quarter of 1994. Gross profit in the fourth quarter was
restored to 26.7% due to sales price increases.
Operating expenses increased 7.5% in 1994 to $72.5 million from $67.4
million in 1993, due to increases in freight, sales and marketing, and other
administrative costs. The increase in freight and sales and marketing is
attributable to increased unit volume. The increase in other administrative
costs is attributable to increased salaries and expenses related to the
relocation of our corporate offices from Boston and our hanger divisional
offices from North Carolina to Phoenix, Arizona. Operating expenses as a percent
of sales remained flat at 18.7%.
Interest expense, including amortization of deferred financing costs,
decreased 13.9% to $19.4 million in 1994 from $22.5 million in 1993 due to the
refinancing of 13.75% fixed rate debt with lower rate variable rate debt.
The Company recorded a tax provision of $2.3 million in 1994, reflecting an
effective tax rate of 43.9%, compared to a provision of $3.5 million in 1993,
reflecting an effective tax rate of 37.2%. The increase in the effective tax
rate is due to the effect of goodwill amortization which is not deductible for
tax purposes and a lower pretax income for 1994. Amortization related to
goodwill was $2.1 million, or 39.5% of pretax income and $2.1 million, or 22.8%
of pretax income for the years ending December 31, 1994 and 1993, respectively.
Net income decreased to $.5 million in 1994 from $7.2 million in 1993. The
decrease in net income is attributable to the effect of decreased gross margins,
increased operating expenses, and the recording of an after-tax extraordinary
charge of $2.5 million related to early extinguishment of debt. Net income in
1993 included after-tax extraordinary charge of $0.2 million and a $1.6 million
benefit from the adoption of Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes."
1993 COMPARED WITH 1992
Net sales were $360.9 million in 1993 compared to $359.9 million in 1992.
Unit volume for 1993 increased 4% from 1992.
Gross profit increased 2.6% to $98.9 million in 1993 from $96.4 million in
1992. Gross profit as a percent of sales increased to 27.4% in 1993 from 26.8%
in 1992. The increase was largely due to lower costs in the film products group.
Operating expenses decreased 18.1% in 1993 to $67.4 million from $82.3
million in 1992. Operating expenses as a percent of sales decreased to 18.7%
from 22.9% in 1992. Operating expenses in 1992 included $7.7 million associated
with a new product introduction and $4.3 million of restructuring charges. These
restructuring charges were utilized for realignment of production facilities,
management reorganization and product re-engineering.
Interest expense, including amortization of deferred financing costs,
increased to $22.5 million in 1993 from $22.0 million in 1992 due to the
issuance of $90.0 million 10.25% Senior Notes in June of 1992.
The Company recorded a tax provision of $3.5 million in 1993, reflecting an
effective tax rate of 37.2%, compared to a benefit of ($0.7) million in 1992 as
a result of losses incurred.
Net income increased to $7.2 million in 1993 from a net loss of ($6.3)
million in 1992. Net income in 1993 and 1992 included after-tax extraordinary
charges of $0.2 million and $0.1 million, respectively, relating to the early
extinguishment of debt. Net income in 1993 also included a $1.6 million net
benefit from the adoption SFAS No. 109, "Accounting for Income Taxes."
8
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased $10.9 million to $65.2 million at
December 31, 1994, compared to $54.3 million at December 31, 1993. The increase
in working capital is primarily attributable to increases in accounts receivable
and inventories as a result of increases in selling prices and raw material
costs.
For the year ended December 31, 1994, net cash provided by operations
decreased $16.4 million to $3.1 million from $19.5 million for the year ended
December 31, 1993. The decrease in net cash provided by operations is primarily
due to increases in accounts receivable and inventories discussed above.
Net cash used for investing activities increased $8.5 million to $22.3
million for the year ended December 31, 1994. The Company continued to invest in
production facilities for the Company's hanger and films divisions in order to
improve manufacturing efficiencies and support increased sales volume. In
addition, the Company purchased the remaining outstanding minority interest
shares of Rhino-X for $3.2 million. The Company anticipates that capital
expenditures for fiscal year 1995 will be less than the annual charge for
depreciation.
Net cash provided (used) in financing activities increased $7.7 million to
$4.0 million for the year ended December 31, 1994 from ($3.7) million for the
year ended December 31, 1993. During 1994, the Company entered into several new
debt agreements which are summarized below:
The Company executed a three-year $25 million revolving credit facility
which expires in March 1997 and is collateralized by the Company's inventories.
Under this facility, the Company may also execute letters of credit up to $9.0
million. The facility's availability is limited to the lesser of $25 million or
50% of eligible inventories as defined in the agreement. Interest is payable
monthly at rates of LIBOR plus 2.25% to 3.75% on the outstanding borrowings, and
1.5% to 2.5% on issued letters of credit. Available borrowings under the terms
of this facility at December 31, 1994 were $23.3 million. At December 31, 1994,
there were no outstanding borrowings and issued and outstanding letters of
credit were $2.1 million.
An accounts receivable securitization agreement was also entered into
during 1994. This agreement provides for borrowings up to a maximum of $45
million based upon 80% of eligible accounts receivable, as defined by the
agreement, and expires in April 1999. Interest is payable daily based on the
weighted average rate of the commercial paper, which is issued and secured by
the receivables under the terms of the agreement, plus 1.25% on borrowings up to
$35 million and plus 2.0% on borrowings in excess of $35 million. Outstanding
borrowings under this agreement equaled the amount available at December 31,
1994 of $38.2 million.
The use of proceeds under these agreements is limited to funding working
capital requirements. In addition, an unused facility fee of .25%, per annum, is
charged on any unused portion of the related agreements.
A sale and lease-back agreement was executed during 1994 in which the
Company received $45 million, payable in monthly installments of variable
principal plus interest at LIBOR plus 2.65% through April 1999. The agreement is
collateralized by the underlying equipment. In addition to the required monthly
principal payments, the Company is required to prepay principal semi-annually in
an amount equal to 40% of consolidated net income, limited to $2.0 million in
each calendar year. Such principal payments are applied to required monthly
payments in inverse order of maturity. The use of proceeds received under the
lease-back agreement was restricted for use in the retirement of the 13.75%
Senior Notes (the "13.75% Notes") due in 1997, which had an outstanding
principal balance of $68.5 million.
The revolving credit facility, accounts receivable securitization agreement
and the sale and lease-back agreement contain covenants which require the
Company to maintain certain financial tests and ratios. Such tests and ratios
include the maintenance of minimum fixed charges coverage, interest rate and
taxes coverage and funded debt to equity ratios, minimum net worth, and limit
capital expenditures and the payment of dividends. At December 31, 1994, the
Company was in compliance with the required covenants.
In addition, the Company also completed a $15 million private placement of
its unsecured notes, with a discount of 2.06%. Net proceeds received were $14.7
million. The terms of the placement require interest
9
payable semi-annually at a fixed rate of 10.25% maturing in June 1997. The
proceeds received under the placement were utilized to provide additional
working capital.
The Company used available cash and proceeds received under the lease-back
agreement to retire $10 million in variable rate notes, the $68.5 million 13.75%
Notes discussed above, and $.3 million for a 5.7% Industrial Revenue Bond
originally issued in 1985.
The Company entered into an interest rate swap agreement, terminating in
June 1997, during the third quarter of 1993. In the second quarter of 1994, the
Company purchased an interest rate corridor for $1.5 million. The swap agreement
and corridor matched the principal and due date of the Company's 1992 10.25%
Senior Fixed Rate Notes. In December, 1994, the Company terminated both the
interest rate swap and corridor agreements at a termination cost of $6.3
million. The cost of the corridor and termination of the related agreements has
been deferred and will be amortized as an adjustment to interest expense, over
the remaining term of the 1992 10.25% Senior Fixed Rate Notes. The Company had
no interest rate agreements at December 31, 1994.
Management currently expects its cash on hand, funds from operations and
borrowings available under existing credit facilities to be sufficient to cover
future operating requirements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 14 beginning on page 11.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth in the Company's 1995 Proxy Statement under the
caption "Election of Directors" is incorporated herein by reference. Each of the
executive officers of the Company is also a director of the Company; thus, the
required information regarding executive officers of the Company is included in
the 1995 Proxy Statement. Information in response to this Item with respect to
Poly-Tech is set forth in Appendix A under the caption "Directors and Executive
Officers," which is included in this Form 10-K starting on page 40, following
the Consolidated Financial Statements and Consolidated Financial Statement
Schedules.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the 1995 Proxy Statement under the caption
"Executive Compensation" is incorporated herein by reference and also as it
relates to the directors and officers with respect to Poly-Tech (as described in
Appendix A under the caption "Executive Compensation"), except that information
under the captions "Compensation Committee Report on Executive Compensation" and
"Stock Performance" are not so incorporated.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth in the 1995 Proxy Statement under the caption
"Security Ownership of Principal Shareholders and Management" is incorporated
herein by reference. Information in response to this Item with respect to
Poly-Tech is set forth in Appendix A under the caption "Security Ownership of
Certain Beneficial Owners and Management."
10
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth in the 1995 Proxy Statement under the caption
"Certain Transactions" is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Consolidated Financial Statements
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
Independent Auditors' Report
Consolidated Balance Sheets at December 31, 1994 and 1993
Consolidated Statements of Operations for the years ended December
31, 1994,
1993 and 1992
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1994,
1993 and 1992
Consolidated Statements of Cash Flows for the years ended December
31, 1994,
1993 and 1992
Notes to Consolidated Financial Statements
2. Consolidated Financial Statement Schedules of Carlisle Plastics, Inc.
required to be filed by
Item 8 and Paragraph (d) of this Item 14
Schedule I -- Condensed Financial Information of Registrant
Schedule II -- Valuation and Qualifying Accounts
Such schedules and reports are at pages 36 through 39 of this report.
All other schedules for Carlisle Plastics, Inc. and Subsidiaries and
all schedules for Poly-Tech,
Inc. have been omitted because they are inapplicable, not required,
or the information is
included elsewhere in the consolidated financial statements or
notes thereto.
3. The Exhibits are listed in the Index of Exhibits required by Item 601
of Regulation S-K at
Item (c) below.
(b) No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
(c) The Index to Exhibits and required Exhibits are included following the
Consolidated Financial Statement Schedules beginning at page 41 of this report.
(d) The Index to Consolidated Financial Statements and Consolidated
Financial Statement Schedules are included following the signatures beginning at
page 14 of this report.
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CARLISLE PLASTICS, INC.
Dated: March 2, 1995
By /s/ WILLIAM H. BINNIE
------------------------------------
William H. Binnie
Chairman of The Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
[Enlarge/Download Table]
SIGNATURE TITLE DATE
--------------------------------------- ------------------------------- ---------------
/s/ WILLIAM H. BINNIE Chairman of the Board March 2, 1995
--------------------------------------- (principal executive officer)
William H. Binnie
/s/ CLIFFORD A. DEUPREE President and Director March 2, 1995
---------------------------------------
Clifford A. Deupree
/s/ PATRICK J. O'LEARY Chief Financial Officer, March 2, 1995
--------------------------------------- Secretary and Director
Patrick J. O'Leary (principal financial and
accounting officer)
/s/ YEHOCHAI SCHNEIDER Director March 2, 1995
---------------------------------------
Yehochai Schneider
/s/ CLARENCE M. SCHWERIN III Director March 2, 1995
---------------------------------------
Clarence M. Schwerin III
/s/ SAMUEL H. SMITH, JR. Director March 2, 1995
---------------------------------------
Samuel H. Smith, Jr.
/s/ DAVID E. WILBUR, JR. Director March 2, 1995
---------------------------------------
David E. Wilbur, Jr.
/s/ GRANT M. WILSON Director March 2, 1995
---------------------------------------
Grant M. Wilson
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
POLY-TECH, INC.
Dated: March 2, 1995
By /s/ WILLIAM H. BINNIE
------------------------------------
William H. Binnie
Chairman of The Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
[Download Table]
SIGNATURE TITLE DATE
----------------------------------- ------------------------------ ---------------
/s/ WILLIAM H. BINNIE Chairman of the Board March 2, 1995
----------------------------------- (principal executive officer)
William H. Binnie
/s/ CLIFFORD A. DEUPREE President March 2, 1995
-----------------------------------
Clifford A. Deupree
/s/ PATRICK J. O'LEARY Vice President, Chief March 2, 1995
----------------------------------- Financial Officer and
Patrick J. O'Leary Secretary (principal financial
and accounting officer)
13
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
[Enlarge/Download Table]
PAGE
REFERENCE IN
REPORT ON
FORM 10-K
------------
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
Independent Auditors' Report..................................................... 15
Consolidated Balance Sheets at December 31, 1994 and 1993........................ 16
Consolidated Statements of Operations for the years ended December 31, 1994, 1993
and 1992....................................................................... 17
Consolidated Statements of Stockholders' Equity for the years ended December 31,
1994, 1993 and 1992............................................................ 18
Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1993
and 1992....................................................................... 19
Notes to Consolidated Financial Statements....................................... 20 - 35
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
Consolidated Financial Statement Schedules:
Schedule I Condensed Financial Information of Registrant....................... 36 - 38
Schedule II Valuation and Qualifying Accounts.................................. 39
14
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Carlisle Plastics, Inc.
Phoenix, Arizona
We have audited the accompanying consolidated balance sheets of Carlisle
Plastics, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1994. Our
audits also included the financial statement schedules listed in the Index at
Item 14(a)2. These financial statements and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to express
an opinion on the financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Carlisle Plastics, Inc. and
subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
February 2, 1995
15
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
[Enlarge/Download Table]
DECEMBER 31,
---------------------
1994 1993
-------- --------
ASSETS
Current assets:
Cash and equivalents................................................. $ 4,488 $ 19,745
Receivables -- net of allowances of $4,055 in 1994 and $3,025 in
1993.............................................................. 55,789 46,770
Inventories.......................................................... 56,538 43,032
Other current assets................................................. 7,608 5,750
-------- --------
Total current assets.............................................. 124,423 115,297
Property, plant and equipment -- net................................... 139,327 135,755
Goodwill -- net........................................................ 66,117 67,729
Other assets -- net.................................................... 11,125 7,067
-------- --------
TOTAL ASSETS........................................................... $340,992 $325,848
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................................... $ 9,563 $ 11,209
Accounts payable..................................................... 37,999 34,109
Other accrued liabilities............................................ 11,634 15,722
-------- --------
Total current liabilities.................................... 59,196 61,040
-------- --------
Long-term debt -- net of current portion............................... 198,277 183,101
-------- --------
Deferred income taxes.................................................. 11,206 10,816
-------- --------
Other noncurrent liabilities........................................... 2,053 1,625
-------- --------
Commitments and contingencies (Notes 4 and 9)
Stockholders' equity:
Preferred stock -- par value $.01; 10,000,000 shares authorized, no
shares issued or outstanding
Class A common stock -- par value $.01; 50,000,000 shares authorized,
8,193,733 and 8,000,401 issued and outstanding in 1994 and 1993,
respectively...................................................... 82 80
Class B common stock -- par value $.01; 20,000,000 shares authorized,
9,510,552 and 9,618,694 issued and outstanding in 1994 and 1993,
respectively...................................................... 95 96
Additional paid-in capital........................................... 68,359 67,904
Retained earnings.................................................... 1,724 1,186
-------- --------
Total stockholders' equity........................................ 70,260 69,266
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................. $340,992 $325,848
======== ========
See notes to consolidated financial statements.
16
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
-------- -------- --------
Net sales.................................................. $387,664 $360,895 $359,856
Cost of goods sold......................................... 290,586 261,987 263,474
-------- -------- --------
Gross profit............................................... 97,078 98,908 96,382
Operating expenses......................................... 69,372 64,467 67,736
Goodwill and other amortization............................ 3,108 2,970 2,512
New product introduction................................... -- -- 7,743
Restructuring.............................................. -- -- 4,320
-------- -------- --------
Operating income........................................... 24,598 31,471 14,071
Interest expense........................................... 19,419 22,549 21,957
Interest and other income.................................. (168) (369) (984)
-------- -------- --------
Income (loss) before provision for income taxes,
extraordinary item and cumulative effect of change in
accounting principle..................................... 5,347 9,291 (6,902)
Provision (benefit) for income taxes....................... 2,348 3,459 (688)
-------- -------- --------
Income (loss) before extraordinary item and cumulative
effect of change in accounting principle................. 2,999 5,832 (6,214)
Extraordinary item -- early retirement of debt (net of
income tax benefit of $1,574 in 1994, $138 in 1993 and
$52 in 1992)............................................. (2,462) (234) (89)
Cumulative effect of change in accounting principle
relating to income taxes................................. -- 1,586 --
-------- -------- --------
Net income (loss).......................................... $ 537 $ 7,184 $ (6,303)
======== ======== ========
Income (loss) per common share:
Before extraordinary item and change in accounting
principle............................................. $ .17 $ .33 $ (.35)
Extraordinary item....................................... (.14) (.01) (.01)
Change in accounting principle........................... -- .09 --
-------- -------- --------
Net income (loss)........................................ $ .03 $ .41 $ (.36)
======== ======== ========
Average number of common and common equivalent shares
outstanding.............................................. 17,695 17,737 17,610
======== ======== ========
See notes to consolidated financial statements.
17
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
[Enlarge/Download Table]
COMMON STOCK ADDITIONAL RETAINED
------------------ PAID-IN EARNINGS
CLASS A CLASS B CAPITAL (DEFICIT) TOTAL
------- ------- ---------- --------- -------
Balance, January 1, 1992....................... $74 $ 102 $ 67,896 $ 376 $68,448
Class B shares converted to Class A shares..... 2 (2) -- -- --
Foreign currency translation adjustment........ -- -- -- 69 69
Other.......................................... -- -- (35) -- (35)
Net loss....................................... -- -- -- (6,303) (6,303)
--- ----- -------- ------ -------
Balance, December 31, 1992..................... 76 100 67,861 (5,858) 62,179
Class B shares converted to Class A shares..... 4 (4) -- -- --
Exercise of stock options...................... -- -- 43 -- 43
Foreign currency translation adjustment........ -- -- -- (140) (140)
Net income..................................... -- -- -- 7,184 7,184
--- ----- -------- ------ -------
Balance, December 31, 1993..................... 80 96 67,904 1,186 69,266
Class B shares converted to Class A shares..... 1 (1) -- -- --
Exercise of stock options...................... 1 -- 455 -- 456
Foreign currency translation adjustment........ -- -- -- 1 1
Net income..................................... -- -- -- 537 537
--- ----- -------- ------ -------
Balance, December 31, 1994..................... $82 $ 95 $ 68,359 $ 1,724 $70,260
=== ===== ======== ======= =======
See notes to consolidated financial statements.
18
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................. $ 537 $ 7,184 $(6,303)
Adjustments to reconcile net income (loss) to net cash flows
from operating activities:
Depreciation and amortization............................... 21,546 19,402 15,562
Deferred income taxes....................................... 788 1,263 (121)
Allowance for accounts receivable........................... 1,598 969 1,399
Write-off of deferred financing costs....................... 1,331 122 69
Change in accounting principle.............................. -- (1,586) --
Other....................................................... 1 (140) 69
Changes in assets and liabilities:
Receivables.............................................. (10,617) (664) (1,371)
Inventories.............................................. (13,506) (1,932) 4,926
Other current assets..................................... (210) 1,513 2,703
Accounts payable......................................... 3,890 132 (2,736)
Other accrued liabilities................................ (1,288) (5,064) (1,356)
Other assets............................................. (1,005) (1,705) 362
------- ------- -------
Net cash provided by operating activities..................... 3,065 19,494 13,203
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment -- net........... (19,095) (15,274) (27,889)
Purchase of minority interest of subsidiary................... (3,221) -- --
Sale of assets of trucking subsidiary......................... -- 1,500 --
------- ------- -------
Net cash used for investing activities........................ (22,316) (13,774) (27,889)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt.................................... 59,918 467 94,290
Repayments of long-term debt.................................. (84,567) (6,241) (34,370)
Repayments of notes to stockholders and affiliates............ -- -- (7,046)
Borrowings under long-term accounts receivable
securitization.............................................. 38,163 -- --
Borrowings under long-term line of credit..................... 33,168 -- 9,629
Repayments under long-term line of credit..................... (33,168) -- (31,014)
Interest rate contracts settled............................... (7,805) 2,000 --
Deferred financing costs...................................... (2,171) (277) (2,833)
Issuance of common stock...................................... 456 43 --
Other......................................................... -- 283 665
------- ------- -------
Net cash provided by (used for) financing activities.......... 3,994 (3,725) 29,321
------- ------- -------
CASH AND EQUIVALENTS:
Net (decrease) increase....................................... (15,257) 1,995 14,635
BALANCE, BEGINNING OF YEAR.................................... 19,745 17,750 3,115
------- ------- -------
BALANCE, END OF YEAR.......................................... $ 4,488 $19,745 $17,750
======= ======= =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid................................................. $20,511 $21,946 $20,813
Income taxes paid............................................. $ 730 $ 2,382 $ 1,864
See notes to consolidated financial statements.
19
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. BUSINESS ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The principal business of Carlisle Plastics, Inc. (the "Company") is the
manufacture, distribution and sale of consumer and industrial plastic products.
BASIS OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts
of Poly-Tech, Inc. ("Poly-Tech"), American Western Corporation ("American
Western"), Rhino-X Industries, Inc. ("Rhino-X"), Carlisle Plastics Funding
Corporation ("CPFC"), A&E Products (Far East) Ltd. ("Far East"), A&E -- Korea,
Ltd. ("Korea") and Plasticos Bajacal, S.A. De C.V. ("Plasticos"). Significant
intercompany transactions have been eliminated in consolidation.
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year's presentation.
CASH EQUIVALENTS
Cash equivalents include highly liquid investments with an original
maturity of three months or less. The recorded amount of cash equivalents
approximates fair market value.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is principally
determined using the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is computed
on a straight-line basis over the estimated lives of the assets ranging from two
to fifty years. Amortization of property acquired under capital leases and
leasehold improvements is computed on a straight-line basis over the estimated
useful lives of the assets or the remaining term of the lease.
GOODWILL AND OTHER ASSETS
Goodwill arising from the excess purchase price over net assets acquired is
amortized on the straight-line method principally over forty years. Accumulated
amortization aggregated $12,464 and $10,352 as of December 31, 1994 and 1993,
respectively.
Included in other assets at December 31, 1994 and 1993 are $3,808 and
$4,215 (net of accumulated amortization of $6,602 and $5,355), respectively, of
deferred financing costs which are being amortized using the interest method
over the term of the related debt.
REVENUE RECOGNITION
Revenues are generally recognized when products are shipped.
INCOME TAXES
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," effective January 1, 1993. The
cumulative effect of adopting SFAS No. 109 was to increase 1993 net income by
$1,586 ($.09 per share). Deferred tax assets and liabilities are determined
based
20
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
on the differences between the financial statement and the tax bases of assets
and liabilities using enacted tax rates.
INCOME PER COMMON SHARE
Income per common share is computed on the basis of the weighted average
number of common and common equivalent shares, consisting of the dilutive effect
of stock options outstanding during each year.
2. INVENTORIES
Inventories consist of the following at December 31:
[Download Table]
1994 1993
------- -------
Raw materials.................................................... $21,823 $13,909
Finished goods................................................... 34,715 29,123
------- -------
Total.................................................. $56,538 $43,032
======= =======
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following at December 31:
[Download Table]
1994 1993
-------- --------
Land, buildings and improvements............................... $ 40,586 $ 38,721
Fixtures, machinery and equipment.............................. 179,372 158,055
Property under capital leases.................................. 3,046 3,142
-------- --------
Total................................................ 223,004 199,918
Less accumulated depreciation and amortization................. (84,606) (68,606)
Construction-in-process........................................ 929 4,443
-------- --------
Property, plant and equipment -- net........................... $139,327 $135,755
======== ========
Accumulated depreciation and amortization includes $1,911 and $1,745 at
December 31, 1994 and 1993, respectively, relating to assets acquired under
capital leases.
21
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
[Download Table]
1994 1993
-------- --------
Senior notes, interest at 10.25%, due 1997..................... $ 90,000 $ 90,000
Equipment sale and leaseback, interest at LIBOR plus 2.65%, due
in installments from 1995 through 1999....................... 40,356 --
Accounts receivable securitization, interest at the weighted
average of underlying issued commercial paper (6.1% at
December 31, 1994) plus 1.25% to 2.0%, due 1997.............. 38,163 --
Senior variable rate notes, interest at LIBOR plus 4.0%, due
1997......................................................... 19,100 19,100
Senior notes, interest at 10.25%, $15,000 principal due 1997,
net of unamortized discount.................................. 14,709 --
Capital expenditure loans, interest at fixed rates of 8.09% to
9.16%, due in installments from 1995 to 1998................. 3,146 3,844
Capital lease obligations at implicit interest rates ranging
from 8.5% to 15%, due in installments from 1995 to 1999...... 1,710 1,952
Other.......................................................... 656 565
Notes retired in 1994.......................................... -- 78,849
-------- --------
Subtotal....................................................... 207,840 194,310
Less current portion........................................... 9,563 11,209
-------- --------
Total................................................ $198,277 $183,101
======== ========
LIBOR was 6.07% at December 31, 1994.
During 1994, the Company entered into several new debt agreements which are
summarized below:
The Company executed a three-year $25,000 revolving credit facility which
expires in March 1997, and is collateralized by the Company's inventories. Under
this facility, the Company may also execute letters of credit up to $9,000. The
facility's availability is limited to the lesser of $25,000 or 50% of eligible
inventories, as defined by the agreement. Interest is payable monthly at the
following incremental rates: LIBOR plus 2.25% on borrowings up to $5,000, LIBOR
plus 3.25% on borrowings of $5,000 to $10,000, and LIBOR plus 3.75% on
borrowings in excess of $10,000. The letters of credit accrue interest payable
monthly at 1.5% up to $2,500, 2.0% on $2,500 to $5,000, and 2.5% in excess of
$5,000. Available borrowings under the terms of this facility at December 31,
1994 were $23,300. At December 31, 1994, there were no outstanding borrowings
and issued and outstanding letters of credit were $2,116.
The Company also executed an accounts receivable securitization agreement
in 1994. The agreement provides borrowings up to a maximum of $45,000 based upon
80% of eligible accounts receivable, as defined by the agreement, and expires in
April 1999. Interest is payable daily based upon the weighted average rate of
the commercial paper which is issued on the secured receivables under the terms
of the agreement, plus 1.25% on borrowings up to $35,000 and plus 2.0% on
borrowings in excess of $35,000. Outstanding borrowings under this agreement
equalled the amount available at December 31, 1994 of $38,163.
The use of proceeds received by the Company under the revolving credit
facility and the accounts receivable securitization agreement are limited to
funding working capital requirements. In addition, an unused facility fee of
.25% is charged on any unused portion of the related agreements.
A sale and lease-back agreement was executed during 1994 in which the
Company received $45,000, payable in monthly installments of variable principal
plus interest at LIBOR plus 2.65%, collateralized by the underlying equipment.
The net gain of $2,369, which was recorded in connection with the sale and
lease-back
22
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
agreement, has been deferred and is being amortized over the term of the
agreement. Monthly principal payments are payable as follows: $584 through April
1995, $725 through April 1997, $834 through April 1998, and $817 through April
1999 at which time the remaining balance becomes due. In addition to the
required monthly principal payments, the Company is required to prepay principal
semi-annually in an amount equal to 40% of consolidated net income, limited to
$2,000 in each calendar year. Such principal payments are applied to required
monthly payments in inverse order of maturity.
The revolving credit facility, accounts receivable securitization agreement
and the sale and lease-back agreement contain cross default covenants which
require the Company to maintain certain financial tests and ratios. Such tests
and ratios include the maintenance of minimum fixed charges coverage and
interest rate and income taxes coverage ratios, maximum funded debt to equity,
minimum net worth, and limit capital expenditures and the payment of dividends.
At December 31, 1994, the Company was in compliance with the required covenants.
In addition, the Company also completed a $15,000 private placement, which
requires the payment of interest semi-annually at a fixed rate of 10.25%
maturing in June 1997 (hereinafter the "1994 10.25% Notes"). The 1994 10.25%
Notes were issued at a discount of 2.06%. Net proceeds received were $14,693 and
were restricted for working capital requirements. The holders of the 1994 10.25%
Notes were given registration rights.
In June 1992, the Company issued $90,000 in Senior Notes with interest
payable semi-annually at 10.25% (hereinafter the "1992 10.25% Notes").
The 1992 10.25% Notes and the 1994 10.25% Notes (together, the "10.25%
Notes") may be redeemed at the option of the Company after June 14, 1995, in
whole or in part, at 102.56% of the face amount if redeemed during the 12-month
period commencing June 15, 1995 and 100% of the face amount thereafter.
In March 1990, the Company issued $60,000 Senior Variable Rate Notes due in
1997 (the "1997 Notes"), with interest payable quarterly at LIBOR plus 4.0%. The
1997 Notes may be redeemed at the option of the Company, in whole or in part, at
par plus accrued interest. The balance outstanding at December 31, 1994 was
$19,100.
The indentures relating to the 1997 Notes and the 10.25% Notes
(collectively, the "Notes") have been guaranteed by Poly-Tech and contain
certain restrictive covenants affecting the Company and its subsidiaries. Such
covenants include certain limitations on the sale of assets, issuance of debt,
and issuance of common and preferred stock of the Company.
During 1994, the Company used available cash and proceeds received under
the sale and lease-back agreement to retire $10,000 in variable rate notes, and
$300 of 5.7% Industrial Revenue Bonds. The Company also retired $68,525, $5,000
and $1,800 of its 13.75% Notes in 1994, 1993 and 1992, respectively. As a result
of the early retirements of debt, the Company recorded extraordinary charges of
$2,462, $234 and $89 (net of taxes of $1,574, $138 and $52, respectively) in
1994, 1993 and 1992, respectively.
23
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As of December 31, 1994, the aggregate annual payments due on long-term
debt and the future minimum lease payments under capital lease obligations are
as follows:
[Enlarge/Download Table]
CAPITAL OTHER
LEASE LONG-TERM
OBLIGATIONS DEBT TOTAL
----------- --------- ---------
Year ending December 31:
1995........................................................... $ 505 $ 9,274 $ 9,779
1996........................................................... 531 9,708 10,239
1997........................................................... 555 134,971 135,526
1998........................................................... 546 10,047 10,593
1999........................................................... 139 42,130 42,269
------- -------- --------
Total minimum payments......................................... 2,276 206,130 208,406
Less amount representing interest.............................. 566 -- 566
------- -------- --------
Total.......................................................... $ 1,710 $206,130 $ 207,840
======= ======== ========
Based upon available market information and borrowing rates currently
available to the Company for bank loans with similar terms and average
maturities, the fair value of long-term debt was approximately $206,900 and
$204,300 at December 31, 1994 and 1993, respectively.
5. EMPLOYEE BENEFIT PLANS
The Company maintains a noncontributory defined benefit pension plan which
covers certain employees. Benefits payable are determined based on percentages
of compensation for each year of service. The actuarial projected unit credit
method has been used to determine the net pension expense and the funded status.
The Company's funding policy is to contribute annually the amount necessary to
satisfy the minimum funding standards under the Employee Retirement Income
Security Act ("ERISA").
The following table sets forth the funded status of the pension plan as
estimated by consulting actuaries as of December 31, 1994 and 1993 and amounts
recognized in the Company's financial statements:
[Enlarge/Download Table]
1994 1993
------- -------
Accumulated benefit obligation (substantially all vested).......... $(5,250) $(5,744)
======= =======
Projected benefit obligation....................................... $(5,381) $(5,968)
Plan assets at fair value.......................................... 5,634 5,960
------- -------
Excess of plan assets (projected benefit obligation)............... 253 (8)
Unrecognized net loss.............................................. 91 699
Unrecognized net transition asset.................................. (523) (583)
Prior service costs................................................ 2 3
------- -------
(Accrued) prepaid pension cost..................................... $ (177) $ 111
======= =======
Components of net pension expense for the years ended December 31 are as
follows:
[Enlarge/Download Table]
1994 1993 1992
----- ----- -----
Service cost................................................... $ 415 $ 355 $ 317
Interest cost.................................................. 402 374 350
Actual loss (return) on plan assets............................ 69 (543) (34)
Deferred loss on plan assets................................... (538) -- --
Other -- net................................................... (60) 48 (453)
----- ----- -----
Net pension expense............................................ $ 288 $ 234 $ 180
===== ===== =====
24
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The discount rate used in determining the projected benefit obligation was
8.5% in 1994, 7% in 1993 and 8% in 1992. The assumed long-term rate of return on
plan assets was 8% in 1994, 1993 and 1992. The rate of increase in future
compensation levels used in determining the projected benefit obligation was
4.5% in 1994 and 4.5% to 5.5% in 1993 and 1992. Plan assets consist of
guaranteed insurance contracts, pooled fixed income, pooled equity and pooled
real estate investments. For the year ended December 31, 1994, the Company was
not required to make any cash contributions under the minimum funding standards
of ERISA. Cash contributions to the pension plan for the years ended December
31, 1993 and 1992 were $122 and $294, respectively.
The Company also maintains defined contribution plans (the "Plans"). Full
time employees of the Company who are not members of collective bargaining units
or who are not covered by another qualified retirement plan sponsored by the
Company are eligible to participate in the Plans after six months of employment.
Under the Plans, a participant may elect to reduce annual compensation by 1% to
16% and to have that amount contributed to the Plan by the Company on a pretax
basis. The Company matches employee contributions, for one of the Plans, at a
rate of 50% of the employee's contribution up to 6% of the employee's salary up
to the maximum allowable deferral per the Internal Revenue Code. Employee
contributions vest immediately, whereas employer contributions vest over a
period of three years. During the years ended December 31, 1994, 1993 and 1992,
the Company's aggregate matching contributions were $366, $372 and $405,
respectively.
6. INCOME TAXES
Significant components of the Company's net deferred tax asset (liability)
as of December 31:
[Enlarge/Download Table]
1994 1993
----------------------- ------------------------
CURRENT NON-CURRENT CURRENT NON-CURRENT
------- ----------- ----------- --------
DEFERRED TAX ASSETS:
Accruals not currently deductible.............. $ 2,355 $ -- $ 2,716 $ --
Operating loss carryforwards................... -- 7,067 -- 3,507
Tax credit carryforwards....................... -- 2,601 -- 2,553
Differences between book and tax basis of
property..................................... -- 652 -- 807
Deferred revenue on interest rate contract
settlement................................... -- -- -- 641
Other.......................................... -- 406 175 386
------- ---------- --------- --------
2,355 10,726 2,891 7,894
------- ---------- --------- --------
DEFERRED TAX LIABILITIES:
Tax over book depreciation..................... -- (19,274) -- (18,616)
Deferred net loss on interest rate contract
settlement................................... -- (2,588) -- --
Differences between book and tax basis of
property..................................... -- (28) -- (27)
Prepaid expenses............................... (88) -- (80) --
Other.......................................... (193) (42) (260) (67)
------- --------- -------- -------
(281) (21,932) (340) (18,710)
------- ---------- --------- --------
Net deferred tax asset (liability)............. $ 2,074 $ (11,206) $ 2,551 $(10,816)
====== ========= ========= ========
The Company provided a valuation allowance of $1,165 against deferred tax
assets recorded as of January 1, 1993. The valuation allowance decreased $1,165
for the year ended December 31, 1993. The valuation allowance was reversed
because the Company acquired the minority interest of its 67%-owned subsidiary
on January 1, 1994 and the realization of tax loss carryforwards became more
likely than not. Of the
25
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
valuation allowance reversed, $675 was allocated to reduce goodwill, which
primarily relates to the tax loss carryforwards acquired in a prior year
acquisition.
As of December 31, 1994, the Company had net operating loss carryforwards
from a purchased subsidiary which expire in the years 2006 through 2008 in the
amount of $9,862, which may be utilized to reduce consolidated taxable income to
the extent of taxable income generated by the purchased subsidiary. The Company
also had a net consolidated operating loss carryforward of $8,540 which expires
in 2009 and alternative minimum tax credits totaling $2,601, which have no
expiration date.
The provision (benefit) for income taxes consists of the following for the
years ended December 31:
[Enlarge/Download Table]
1994 1993 1992
------ ------ -----
Current:
Federal......................................................... $ (114) $1,845 $(285)
State........................................................... 100 351 (134)
------ ------ -----
Total current................................................ (14) 2,196 (419)
------ ------ -----
Deferred:
Federal......................................................... 2,233 903 (293)
State........................................................... 129 360 24
------ ------ -----
Total deferred............................................... 2,362 1,263 (269)
------ ------ -----
Total................................................... $2,348 $3,459 $(688)
====== ====== =====
The provision (benefit) for income taxes differs from an amount computed at
the statutory tax rate as follows:
[Enlarge/Download Table]
1994 1993 1992
---- ---- -----
Provision (benefit) using statutory tax rate.......................... 35.0% 35.0% (34.0)%
Graduated tax rate.................................................... (1.0) (1.0) --
Goodwill amortization................................................. 13.4 7.8 9.8
State taxes, net of federal income tax benefit........................ 2.8 5.1 (1.1)
Loss from a 67%-owned subsidiary...................................... -- -- 7.9
Reversal of valuation allowance....................................... -- (3.6)
Other -- net.......................................................... (6.3) (6.1) 7.4
---- ---- -----
Provision for income taxes (benefit).................................. 43.9% 37.2% (10.0)%
==== ==== =====
7. RELATED PARTY TRANSACTIONS
NOTE RECEIVABLE
At December 31, 1994, the Company had a note receivable from an officer and
director of the Company, in the amount of $100, due August 1997. Interest is
payable annually at a rate of 6%, compounded monthly.
SUBORDINATED PROMISSORY NOTES
For the year ended December 31, 1992, interest expense paid to stockholders
and affiliates related to notes which were retired during the same year was
$263.
26
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MANAGEMENT FEES
In May 1991, the Company entered into a three-year Management Agreement
with Carlisle Plastics Management Corporation ("CPMC"), an affiliate of the
Company. Under the terms of the original agreement, CPMC received an annual
management fee of $1,500. In May, 1994 this agreement was extended and in
September, 1994 the agreement was amended to one year with an annual fee of
$750. Management fees paid by the Company to CPMC under the agreement were
$1,250, $1,500 and $1,500, for the years ended December 31, 1994, 1993 and 1992,
respectively.
The indentures for the 10.25% Notes require that management fees do not
exceed 2.0% of sales per year and that each affiliate execute a management fee
subordination agreement.
The Company also provides purchasing, accounting, and other administrative
services for an affiliate. In 1994, 1993 and 1992, the Company received $124,
$86 and $130, respectively, from the affiliate as payment for services rendered.
LEASES
The Company leases certain office, manufacturing and warehouse space which
is owned by affiliates of the Company. During 1994, the Company terminated its
office lease for its Boston office and incurred lease termination costs of $125.
In addition, lease expense of $282, $246 and $217 was incurred for the years
1994, 1993 and 1992, respectively.
The Company also leased an aircraft from an affiliate of the Company. Lease
expense in connection with the aircraft was $297, $303 and $325 for the years
1994, 1993 and 1992, respectively. In January 1995, the aircraft lease was
terminated.
AFFILIATED PURCHASES
The Company purchases certain raw materials from an affiliate of the
Company. Purchases for the years ended December 31, 1994, 1993 and 1992 were
$112, $257 and $355, respectively.
8. STOCKHOLDERS' EQUITY
The Company's Class B common stock is one-for-one convertible to Class A
common stock and has restrictions on transfers. Each share of Class A common
stock is entitled to one vote, and each share of Class B common stock is
entitled to twenty votes.
The Company maintains an incentive stock option plan (the "Incentive Plan")
for key salaried employees and directors of the Company. The term of an
incentive stock option may not exceed ten years.
As of December 31, 1994, 1,880,000 shares of Class A Common Stock were
reserved for issuance under the Incentive Plan.
27
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of options granted under the Incentive Plan is as follows:
[Enlarge/Download Table]
NUMBER OPTION PRICE
OF SHARES PER SHARE
--------- ------------
Outstanding at January 1, 1992..................................... 523,150 $7.66-$11.00
Granted.......................................................... 125,000 $5.00-$ 9.50
Cancelled or expired............................................. (174,750) $5.00-$ 9.50
---------
Outstanding at December 31, 1992................................... 473,400 $5.00-$ 9.50
Granted.......................................................... 395,400 $5.31-$ 6.00
Cancelled or expired............................................. (68,500) $5.00-$ 9.50
Exercised........................................................ (8,650) $ 5.00
---------
Outstanding at December 31, 1993................................... 791,650 $5.00-$ 9.50
Granted.......................................................... 983,400 $4.00-$ 7.44
Cancelled or expired............................................. (460,800) $5.00-$ 7.66
Exercised........................................................ (85,200) $5.00-$ 6.00
---------
Outstanding at December 31, 1994................................... 1,229,050 $4.00-$ 9.50
========
Exercisable at December 31, 1994................................... 111,784 $5.00-$ 9.50
========
In 1992, 355,900 options granted in 1991 were repriced to $5.00, the market
price at the time of repricing. All options granted were at a per share option
price greater than or equal to the market value at the date of grant.
In 1992, a director and officer was granted non-qualified options, which
are not included in the above table, to purchase 400,000 shares of the Company's
Class A Common Stock at $4.00 per share (the fair market value of the shares at
the date of the agreement). The options vest on September 1, 1993, 1994 and 1995
in the amount of 50,000, 50,000 and 300,000, respectively.
9. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases various manufacturing facilities under noncancellable
operating leases with varying terms through 2002. The following is a schedule of
future minimum lease payments required under such operating leases:
[Download Table]
1995....................................................... $ 4,985
1996....................................................... 4,671
1997....................................................... 3,574
1998....................................................... 2,920
1999....................................................... 1,034
Thereafter................................................. 272
-------
Total...................................................... $17,456
=======
Amounts above include $203 which is payable to affiliates of the Company
(Note 7).
Rent expense under operating leases totaled $5,955, $4,476 and $4,969 for
1994, 1993 and 1992, respectively.
28
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LITIGATION
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position or results of operations of the Company.
10. CONCENTRATION OF CREDIT RISK
In September, 1993, the Company entered into an interest rate swap
agreement, terminating in June 1997. In the second quarter of 1994, the Company
purchased an interest rate corridor for $1,500. The swap agreement and corridor
matched the principal and due date of the Company's 1992 10.25% Notes. In
December, 1994, the Company terminated both the interest rate swap and corridor
for $6,300. The cost of the corridor and termination of the related agreements
has been deferred and will be amortized as an adjustment to interest expense
over the remaining term of the 1992 10.25% Notes.
In September 1993, the Company received $2,000 from the termination of an
interest rate swap agreement which it had entered into in June 1993. This gain
has been deferred and is being amortized through June 1997, the original term of
the swap agreement.
For the years ended December 31, 1994 and 1993, the Company recorded as a
reduction to interest expense $350 and $751, respectively, for the net interest
differential and amortization of the deferred gain relating to the interest rate
agreements.
The Company had accounts receivable from a single customer of $4,055 and
$3,200 at December 31, 1994 and 1993, respectively. This customer has a history
of timely payments to the Company, and the Company believes it had no unusual
exposure to credit risk at December 31, 1994.
11. RESTRUCTURING CHARGE AND NEW PRODUCT INTRODUCTION
During 1992, the Company recorded restructuring charges aggregating $4,320.
The restructuring charge included realignment of production facilities,
management reorganization and product re-engineering. In addition, in 1992 the
Company incurred costs of $7,743 associated with a new product introduction.
12. MINORITY INTEREST
On January 1, 1994 the Company purchased the outstanding one-third minority
interest shares of Rhino-X at a purchase price of $3.2 million ($12 per share).
The purchase price was determined under a put and call arrangement signed in
conjunction with the Company's acquisition of a two-thirds interest in July
1991.
29
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. UNAUDITED SELECTED QUARTERLY FINANCIAL DATA
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31, 1994
---------------------------------------------
QUARTERS
---------------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- -------- --------
Net Sales......................................... $86,092 $95,002 $104,258 $102,312
Gross Profit...................................... 21,453 23,775 24,485 27,365
Income Before Extraordinary Item.................. 16 1,154 122 1,707
Net (Loss) Income................................. (2,446) 1,154 122 1,707
Income Per Share:
Income Before Extraordinary Item................ $ .00 $ .07 $ .01 $ .10
Net (Loss) Income............................... (.14) .07 .01 .10
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31, 1993
---------------------------------------------
QUARTERS
---------------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- -------- --------
Net Sales......................................... $90,831 $87,767 $ 94,790 $ 87,507
Gross Profit...................................... 24,336 24,508 26,682 23,382
Income Before Extraordinary Item and Cumulative
Effect of Change in Accounting Principle........ 683 1,052 2,665 1,432
Net Income........................................ 2,035 1,052 2,665 1,432
Income Per Share:
Income Before Extraordinary Item and Change in
Accounting Principle......................... $ .04 $ .06 $ .15 $ .08
Net Income...................................... .12 .06 .15 .08
30
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. CONDENSED FINANCIAL INFORMATION OF CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
[Enlarge/Download Table]
DECEMBER 31, 1994
------------------------------------------------------------------------
CARLISLE
PLASTICS, POLY-TECH, NON-GUARANTOR
INC. INC.(1) SUBSIDIARIES(2) ELIMINATIONS TOTAL
--------- ---------- ------------- ------------ --------
ASSETS
Current assets:
Cash and equivalents............ $ 4,094 $ 1 $ 393 $ -- $ 4,488
Receivables -- net(6)(8)........ -- -- 55,789 -- 55,789
Inventories(6).................. 56,369 -- 169 -- 56,538
Notes receivable from
subsidiary(4)(7).............. 22,738 -- -- (22,738) --
Receivable from subsidiaries or
parent........................ -- 36,306 51,125 (87,431) --
Other current assets............ 6,809 7,194 634 (7,029) 7,608
--------- ---------- ----------- ----------- --------
Total current assets....... 90,010 43,501 108,110 (117,198) 124,423
Notes receivable from
subsidiaries(3)(4)(7)......... 140,937 -- -- (140,937) --
Investment in subsidiaries...... 17,400 70,540 -- (87,940) --
Property, plant and equipment --
net(7)........................ 53,672 29,197 56,458 -- 139,327
Goodwill -- net................. 3,970 11,784 50,363 -- 66,117
Other assets -- net............. 9,696 (131) 1,560 -- 11,125
--------- ---------- ----------- ----------- --------
TOTAL ASSETS.................... $ 315,685 $ 154,891 $ 216,491 $ (346,075) $340,992
======== ======== =========== ========= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term
debt(7)....................... $ 9,481 $ -- $ 82 $ -- $ 9,563
Accounts payable................ 36,149 383 1,467 -- 37,999
Note payable to parent(4)(7).... -- 1,364 21,374 (22,738) --
Payable to subsidiaries or
parent........................ 29,193 40,941 17,297 (87,431) --
Other accrued liabilities....... 10,486 504 7,673 (7,029) 11,634
--------- ---------- ----------- ----------- --------
Total current
liabilities.............. 85,309 43,192 47,893 (117,198) 59,196
Long-term debt -- net of current
portion(7)(8)................. 159,704 -- 38,573 -- 198,277
Note payable to
parent(3)(4)(7)............... -- 95,224 45,713 (140,937) --
Deferred income taxes........... 1,212 3,606 6,388 -- 11,206
Other non-current liabilities... 2,053 -- -- -- 2,053
Stockholders' equity:
Intercompany preferred
stock(5)...................... -- 15,000 -- (15,000) --
Common stock.................... 177 1,300 70,569 (71,869) 177
Additional paid-in capital...... 68,359 -- 1,071 (1,071) 68,359
Retained earnings (deficit)..... (1,129) (3,431) 6,284 -- 1,724
--------- ---------- ----------- ----------- --------
Total stockholders'
equity................... 67,407 12,869 77,924 (87,940) 70,260
--------- ---------- ----------- ----------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY.......... $ 315,685 $ 154,891 $ 216,491 $ (346,075) $340,992
======== ======== =========== ========= ========
31
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
[Enlarge/Download Table]
DECEMBER 31, 1993
-----------------------------------------------------------------------
CARLISLE
PLASTICS, POLY-TECH, NON-GUARANTOR
INC. INC.(1) SUBSIDIARIES(2) ELIMINATIONS TOTAL
-------- --------- -------------- ------------ --------
ASSETS
Current assets:
Cash and equivalents............ $ 19,419 $ 1 $ 325 $ -- $ 19,745
Receivables -- net.............. 17,983 16,080 12,707 -- 46,770
Inventories..................... 15,554 7,307 20,171 -- 43,032
Notes receivable from
subsidiary(4)................. 21,317 -- -- (21,317) --
Receivable from subsidiaries or
parent........................ 32,706 -- 11,520 (44,226) --
Other current assets............ 1,060 7,186 2,062 (4,558) 5,750
-------- --------- ----------- ----------- --------
Total current assets....... 108,039 30,574 46,785 (70,101) 115,297
Notes receivable from
subsidiaries(3)(4)............ 118,806 -- -- (118,806) --
Investment in subsidiaries...... 17,329 70,540 -- (87,869) --
Property, plant and equipment --
net........................... 50,433 29,823 55,499 -- 135,755
Goodwill -- net................. 4,330 12,128 51,271 -- 67,729
Other assets -- net............. 4,963 525 1,579 -- 7,067
-------- --------- ----------- ----------- --------
TOTAL ASSETS.................... $303,900 $ 143,590 $155,134 $ (276,776) $325,848
======== ======== =========== ========= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term
debt.......................... $ 10,980 $ -- $ 229 $ -- $ 11,209
Accounts payable................ 31,818 470 1,821 -- 34,109
Note payable to parent(4)....... -- -- 21,317 (21,317) --
Payable to subsidiaries or
parent........................ -- 30,659 13,567 (44,226) --
Other accrued liabilities....... 6,813 2,688 10,779 (4,558) 15,722
-------- --------- ----------- ------------ --------
Total current
liabilities.............. 49,611 33,817 47,713 (70,101) 61,040
Long-term debt -- net of current
portion....................... 182,457 -- 644 -- 183,101
Note payable to parent(3)(4).... -- 90,000 28,806 (118,806) --
Deferred income taxes........... 2,481 3,835 4,500 -- 10,816
Other non-current liabilities... 1,625 -- -- -- 1,625
Stockholders' equity:
Intercompany preferred
stock(5)...................... -- 15,000 -- (15,000) --
Common stock.................... 176 1,300 72,069 (73,369) 176
Additional paid-in capital...... 67,904 -- -- -- 67,904
Retained earnings (deficit)..... (354) (362) 1,402 500 1,186
-------- --------- ----------- ----------- --------
Total stockholders'
equity................... 67,726 15,938 73,471 (87,869) 69,266
-------- --------- ----------- ----------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY.......... $303,900 $ 143,590 $155,134 $ (276,776) $325,848
======== ======== =========== ========= ========
32
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED CONSOLIDATING OPERATIONS INFORMATION
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------------------------------
CARLISLE
PLASTICS, POLY-TECH, NON-GUARANTOR
INC. INC.(1) SUBSIDIARIES(2) ELIMINATIONS TOTAL
-------- ---------- --------------- ------------ --------
Net sales............................... $372,349 $ 22,255 $ 72,064 $(79,004) $387,664
Cost of goods sold...................... 305,613 11,419 52,558 (79,004) 290,586
-------- --------- ------------ ---------- --------
Gross profit............................ 66,736 10,836 19,506 -- 97,078
Operating expenses...................... 63,862 1,565 7,053 -- 72,480
Intercompany interest expense
(income).............................. (16,763) 14,742 2,021 -- --
Interest expense........................ 17,576 -- 1,843 -- 19,419
Interest and other income............... (165) (1) (2) -- (168)
-------- --------- ------------ ---------- --------
Income (loss) before provision for
income taxes and extraordinary item... 2,226 (5,470) 8,591 -- 5,347
Provision for income taxes (benefit).... 1,041 (2,401) 3,708 -- 2,348
-------- --------- ------------ ---------- --------
Income (loss) before extraordinary
item.................................. 1,185 (3,069) 4,883 -- 2,999
Extraordinary item -- early retirement
of debt, net of taxes................. (2,460) -- (2) -- (2,462)
-------- --------- ------------ ---------- --------
Net income (loss)....................... $ (1,275) $ (3,069) $ 4,881 $ -- $ 537
======== ======== =========== ========= ========
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31, 1993
-----------------------------------------------------------------
CARLISLE
PLASTICS, POLY-TECH, NON-GUARANTOR
INC. INC.(1) SUBSIDIARIES(2) ELIMINATIONS TOTAL
-------- ---------- --------------- ------------ --------
Net sales............................... $150,099 $ 87,914 $ 164,113 $(41,231) $360,895
Cost of goods sold...................... 115,824 59,715 127,679 (41,231) 261,987
-------- --------- ------------ ---------- --------
Gross profit............................ 34,275 28,199 36,434 -- 98,908
Operating expenses...................... 21,771 19,647 26,019 -- 67,437
Intercompany interest expense
(income).............................. (18,988) 14,400 4,588 -- --
Interest expense........................ 22,096 1 452 -- 22,549
Interest and other income............... (545) -- 30 146 (369)
-------- --------- ------------ ---------- --------
Income (loss) before provision for
income taxes, extraordinary item and
cumulative effect of change in
accounting principle.................. 9,941 (5,849) 5,345 (146) 9,291
Provision for income taxes (benefit).... 3,607 (1,370) 1,222 -- 3,459
-------- ---------- ------------ ---------- --------
Income (loss) before extraordinary item
and cumulative effect of change in
accounting principle.................. 6,334 (4,479) 4,123 (146) 5,832
Extraordinary item -- early retirement
of debt, net of taxes................. (234) -- -- -- (234)
Cumulative effect of change in
accounting principle relating to
income taxes.......................... 2,489 (69) (834) -- 1,586
-------- --------- ------------ ---------- --------
Net income (loss)....................... $ 8,589 $ (4,548) $ 3,289 $ (146) $ 7,184
======== ======== =========== ========= ========
33
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
[Enlarge/Download Table]
DECEMBER 31, 1992 (UNAUDITED)
---------------------------------------------------------------------
CARLISLE
PLASTICS, POLY-TECH, NON-GUARANTOR
INC. INC.(1) SUBSIDIARIES(2) ELIMINATIONS TOTAL
--------- ---------- ------------- ------------ --------
Net sales........................... $ 147,070 $ 90,005 $ 157,976 $(35,195) $359,856
Cost of goods sold.................. 114,378 63,793 120,498 (35,195) 263,474
--------- ---------- ----------- ---------- --------
Gross profit........................ 32,692 26,212 37,478 -- 96,382
Operating expenses.................. 20,443 19,920 29,885 -- 70,248
New product introduction............ 7,743 -- -- -- 7,743
Restructuring....................... 521 2,630 1,169 -- 4,320
Intercompany interest expense
(income).......................... (17,333) 14,400 2,933 -- --
Interest expense.................... 19,902 -- 2,055 -- 21,957
Interest and other income........... (403) (1) (47) (533) (984)
--------- ---------- ----------- ---------- --------
Income (loss) before provision for
income taxes and extraordinary
item.............................. 1,819 (10,737) 1,483 533 (6,902)
Provision for income taxes
(benefit)......................... 224 (2,528) 1,616 -- (688)
--------- ---------- ----------- ---------- --------
Income (loss) before extraordinary
item.............................. 1,595 (8,209) (133) 533 (6,214)
Extraordinary item -- early
retirement of debit, net of
taxes............................. (75) -- (14) -- (89)
--------- ---------- ----------- ---------- --------
Net income (loss)................... $ 1,520 $ (8,209) $ (147) $ 533 $ (6,303)
======== ======== =========== ========= ========
<FN>
---------------
(1) Poly-Tech has guaranteed the Company's Notes. The aggregate principal amount
of this indebtedness was $124,100 as of December 31, 1994. American Western,
a wholly-owned subsidiary of Poly-Tech, is not obligated under any of such
guarantees by Poly-Tech.
(2) Non-guarantor subsidiaries include American Western, Rhino-X, Far East,
Plasticos, Korea and CPFC.
(3) Poly-Tech's Intercompany Notes include a $55,000 Intercompany Note issued
March 23, 1990 and a $35,000 Intercompany Note issued April 7, 1989
(together the "Intercompany Notes") payable to the Company ten years from
their respective dates of issuance, without amortization, and bear interest
at 16% per annum. The Intercompany Notes may be prepaid at any time, in
whole or in part, at 100% of their principal amount plus accrued interest to
the date of prepayment. The Intercompany Notes are unsecured and rank pari
passu in right of payment with all other existing and future senior
subordinated indebtedness of Poly-Tech. Additionally, the Intercompany
Notes, pursuant to their terms, are subordinated in right of payment to all
other unsubordinated indebtedness of Poly-Tech, including the guarantees by
Poly-Tech of the Notes.
(4) The Non-Guarantor Subsidiaries' Intercompany Notes include a $4,000 note
issued July 16, 1991, bearing interest at 8% per annum, which was repaid on
January 1, 1994; a $17,317 note issued January 1, 1994 payable upon demand,
without amortization, bearing interest at the commercial paper rate (6.07%
at December 31, 1994) plus 1.25% per annum; and a $28,806 note issued June
19, 1992 payable March 1, 1996, without amortization, bearing interest at
LIBOR (6.07% at December 31, 1994) plus 2.375% per annum. These Intercompany
Notes maybe prepaid at any time, in whole or in part, at 100% of their
principal amount plus accrued interest to the date of prepayment. The
Intercompany Notes are unsecured and rank pari passu in right of payment
with all other existing and future indebtedness of Rhino-X and American
Western.
(5) The intercompany preferred stock has $2,250 cumulative preferred dividends
in arrears.
34
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(6) On March 9, 1994, Poly-Tech, American Western and Rhino-X entered into asset
purchase agreements with Carlisle Plastics, Inc. Under these asset purchase
agreements, all accounts receivable and inventory were sold from the
subsidiaries to Carlisle Plastics, Inc. On March 9, 1994, these three
subsidiaries also entered into contract manufacturing agreements with
Carlisle Plastics, Inc., under which the subsidiaries provide manufacturing
services to Carlisle Plastics, Inc. With the implementation of these
agreements, Carlisle Plastics, Inc. became responsible for all selling and
administrative duties for the Company. The asset purchase and contract
manufacturing agreements were effective January 1, 1994.
(7) On April 4, 1994, Poly-Tech, American Western and Rhino- X sold certain
assets as part of the Company's sale and leaseback financing. The
subsidiaries entered into sublease agreements with Carlisle Plastics, Inc.
The sublease agreements were equal to each subsidiary's pro rata share
(based on assets sold by each subsidiary) of the Company's external sale and
leaseback financing and have similar terms. The capital lease obligations
related to these subleases are included in Intercompany Notes of $6,588,
$4,770 and $16,194 for Poly-Tech, American Western and Rhino-X,
respectively.
(8) On April 14, 1994, the Company entered into a five-year $35,000 accounts
receivable securitization program. The line was increased to $45,000 on
October 25, 1994. Under this program, the Company sold and will continue to
sell substantially all of its accounts receivable to its newly-formed,
wholly-owned subsidiary, CPFC. CPFC purchases the accounts receivable of the
Company with proceeds from its borrowings under a commercial paper facility.
The purchased accounts receivable are solely the assets of CPFC. In the
event of liquidation of CPFC, creditors of CPFC would be entitled to satisfy
their claims from CPFC's assets prior to any distribution to the Company.
35
SCHEDULE I
CARLISLE PLASTICS, INC. AND SUBSIDIARIES*
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
[Enlarge/Download Table]
DECEMBER 31,
---------------------
1994 1993
-------- --------
ASSETS
Current assets:
Cash and equivalents................................................. $ 4,094 $ 19,419
Receivables -- net................................................... -- 17,983
Inventories.......................................................... 56,369 15,554
Notes receivable from subsidiary..................................... 22,738 21,317
Receivable from subsidiary........................................... -- 32,706
Other current assets................................................. 6,809 1,060
-------- --------
Total current assets................................................... 90,010 108,039
-------- --------
Notes receivable from subsidiaries................................... 140,937 118,806
Investment in subsidiaries........................................... 17,400 17,329
Property, plant and equipment -- net................................. 53,672 50,433
Goodwill -- net...................................................... 3,970 4,330
Other assets -- net.................................................. 9,696 4,963
-------- --------
TOTAL ASSETS........................................................... $315,685 $303,900
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................................... $ 9,481 $ 10,980
Accounts payable..................................................... 36,149 31,818
Payable to subsidiary................................................ 29,193 --
Other accrued liabilities............................................ 10,486 6,813
-------- --------
Total current liabilities......................................... 85,309 49,611
-------- --------
Long-term debt -- net of current portion............................... 159,704 182,457
-------- --------
Deferred income taxes.................................................. 1,212 2,481
-------- --------
Other non-current liabilities.......................................... 2,053 1,625
-------- --------
Stockholders' equity:
Preferred stock -- par value $.01; no shares issued or outstanding
Class A common stock -- par value $.01; 8,193,733 and 8,000,401
issued and outstanding in 1994 and 1993, respectively............. 82 80
Class B common stock -- par value $.01; 9,510,552 and 9,618,694
issued and outstanding in 1994 and 1993, respectively............. 95 96
Additional paid-in capital........................................... 68,359 67,904
Retained earnings (deficit).......................................... (1,129) (354)
-------- --------
Total stockholders' equity........................................ 67,407 67,726
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................. $315,685 $303,900
======== ========
---------------
* Information is presented for the parent company only.
36
SCHEDULE I -- (CONTINUED)
CARLISLE PLASTICS, INC. AND SUBSIDIARIES*
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
[Enlarge/Download Table]
YEAR ENDED DECEMBER 31,
---------------------------------
1994 1993
-------- -------- 1992
-----------
(UNAUDITED)
Net Sales..................................................... $372,349 $150,099 $ 147,070
Cost of goods sold............................................ 305,613 115,824 114,378
-------- -------- ----------
Gross profit.................................................. 66,736 34,275 32,692
Operating expenses............................................ 63,862 21,771 20,443
New product introduction...................................... -- -- 7,743
Restructuring................................................. -- -- 521
-------- -------- ----------
Operating income.............................................. 2,874 12,504 3,985
Interest expense.............................................. 17,576 22,096 19,902
Intercompany interest income.................................. (16,763) (18,988) (17,333)
Interest and other income..................................... (165) (545) (403)
-------- -------- ----------
Income before provision for income taxes, extraordinary item
and cumulative effect of change in accounting principle..... 2,226 9,941 1,819
Provision for income taxes.................................... 1,041 3,607 224
-------- -------- ----------
Income before extraordinary item and cumulative effect of
change in accounting principle.............................. 1,185 6,334 1,595
Extraordinary item -- early retirement of debt, net of
taxes....................................................... (2,460) (234) (75)
Cumulative effect of change in accounting principle relating
to
income taxes................................................ -- 2,489 --
-------- -------- ----------
Net income (loss)............................................. $ (1,275) $ 8,589 $ 1,520
======== ======== =========
---------------
* Information is presented for the parent company only.
37
[Enlarge/Download Table]
SCHEDULE I -- (CONTINUED)
CARLISLE PLASTICS, INC. AND SUBSIDIARIES*
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEAR ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
---- ---- ----
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income.......................................... $ (1,275) $ 8,589 $ 1,520
Adjustments to reconcile net income to net cash flows from
operating activities:
Depreciation and amortization............................ 10,629 8,527 5,679
Deferred income taxes.................................... (1,269) 902 (724)
Allowance for accounts receivable........................ 1,594 781 467
Write-off of deferred financing costs.................... 1,328 122 47
Change in accounting principle........................... -- (2,489) --
Change in payable to subsidiaries........................ 47,910 -- --
Net change in current assets and liabilities............. (4,037) (990) (5,122)
-------- ------- ---------
Net cash provided by operating activities.................. 54,880 15,442 1,867
-------- ------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment -- net........ (10,163) (9,891) (12,685)
Purchase of minority interest of subsidiary................ (3,221) -- --
Investment in subsidiaries................................. (1) -- --
Notes to subsidiaries...................................... 4,000 -- (46,123)
-------- ------- ---------
Net cash used for investing activities..................... (9,385) (9,891) (58,808)
-------- ------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt................................. 59,918 467 94,290
Sale and leaseback with subsidiaries....................... (27,552) -- --
Repayments of long-term debt............................... (84,186) (5,943) (2,046)
Repayments of notes to stockholders and affiliates......... -- -- (7,046)
Borrowings under long-term line of credit.................. 33,168 -- 4,000
Repayments under long-term line of credit.................. (33,168) -- (13,500)
Interest rate contracts settled............................ (7,805) 2,000 --
Deferred financing costs................................... (1,651) (235) (2,812)
Other...................................................... 456 326 (97)
-------- ------- ---------
Net cash (used for) provided by financing activities....... (60,820) (3,385) 72,789
-------- ------- ---------
CASH AND CASH EQUIVALENTS
Net (decrease) increase.................................... (15,325) 2,166 15,848
Balance, beginning of year................................. 19,419 17,253 1,405
-------- ------- ---------
Balance, end of year....................................... $ 4,094 $19,419 $ 17,253
======== ======= =========
<FN>
---------------
NOTE: See consolidated financial statements for details of and changes in stockholders' equity.
See Note 1 to the consolidated financial statements for information regarding business combinations.
Long-term debt maturities include $9,481, $9,975, $135,306, $10,434 and $3,989 due 1995 through 1999,
respectively.
* Information is presented for the parent company only.
38
SCHEDULE II
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
[Enlarge/Download Table]
BALANCE AT CHARGED TO DEDUCTIONS BALANCE
BEGINNING COSTS AND FROM AT END
DESCRIPTION OF YEAR EXPENSE RESERVES(A) OF YEAR
------------------------------------------------- ---------- ---------- ----------- --------
YEAR ENDED DECEMBER 31, 1992:
Allowance for doubtful accounts................ $2,413 $1,399 $ 1,212 $2,600
YEAR ENDED DECEMBER 31, 1993:
Allowance for doubtful accounts................ $2,600 $ 969 $ 544 $3,025
YEAR ENDED DECEMBER 31, 1994:
Allowance for doubtful accounts................ $3,025 $1,598 $ 568 $4,055
<FN>
---------------
(a) Accounts determined to be uncollectible and charged against reserve, net of
collections on accounts previously charged against reserve.
39
APPENDIX A
INFORMATION REGARDING POLY-TECH, INC.
DIRECTORS AND EXECUTIVE OFFICERS
The following tables set forth certain information with respect to each
person who is an executive officer or director of Poly-Tech, Inc. ("Poly-Tech").
[Enlarge/Download Table]
NAME AGE POSITION
-------------------------------------------- --- ------------------------------------
William H. Binnie........................... 37 Chairman of the Board of Directors
Clifford A. Deupree......................... 52 President
Patrick J. O'Leary.......................... 37 Vice President, Secretary and Chief
Financial Officer
Mr. Binnie has been Chairman of the Board of Directors of Poly-Tech since
1989.
Mr. Deupree has been President of Poly-Tech since September 1994.
Mr. O'Leary has been Vice President, Secretary and Chief Financial Officer
of Poly-Tech since September 1994.
EXECUTIVE COMPENSATION
The compensation paid or accrued in 1994 on behalf of Messrs. Binnie,
Deupree and O'Leary was paid or accrued for services rendered to Carlisle
Plastics, Inc., Poly-Tech and their respective subsidiaries. Information
regarding such compensation is included in Item 11 of the Annual Report on Form
10-K, which incorporates by reference the information set forth in the 1995
Proxy Statement under the caption "Executive Compensation."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of December 31, 1994
with regard to the beneficial ownership of the shares of common stock of
Poly-Tech by each holder of 5% thereof, each director of Poly-Tech and by all
directors and executive officers of Poly-Tech as a group.
[Enlarge/Download Table]
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
---------------------------------------------------------------- ------------ --------
Carlisle Plastics, Inc.(a)...................................... 1,000 100.0%
All directors and executive officers of Poly-Tech
as a group (3 persons)(b)..................................... 1,000 100.0%
<FN>
---------------
(a) The business address for such person is 1314 North Third Street, Phoenix,
Arizona 85004.
(b) The number of shares shown as being owned by all directors and officers of
Poly-Tech as a group attributes ownership of the Company's 1,000 shares to
Mr. Binnie. The number of shares shown as beneficially owned by Mr. Binnie
are by virtue of Mr. Binnie's ownership of a controlling interest in the
Company. Mr. Binnie disclaims beneficial ownership of the shares owned by
the Company. The business address for such person is P.O. Box 771, Rye, New
Hampshire 03870.
40
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
[Download Table]
EXHIBIT
NO. DESCRIPTION
-------- ------------------------------------------------------------------
3.1 -- Restated Certificate of Incorporation of Carlisle Plastics, Inc.
dated as of May 16, 1991 (incorporated by reference to Exhibit 3.1
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1991 (hereinafter, the "1991 10-K")). ...............
3.2 -- By-Laws of the Company (incorporated herein by reference to
Exhibit 3.2 to the Registration Statement on Form S-1,
Registration No. 33-27262, as filed with the Securities and
Exchange Commission on February 27, 1989 (hereinafter, the "1989
S-1")). ..........................................................
10.1(a) -- The Securities Purchase Agreement, dated as of March 23, 1990,
between the Company and Kawajitsu Leasing (H.K.) Ltd.
(incorporated by reference to Exhibit 10.1(a) to the Registration
Statement on Form S-1, Registration No. 33-35966, as filed with
the Securities and Exchange Commission on October 30, 1990
(hereinafter, the "1990 S-1")). ..................................
10.1(b) -- The Securities Purchase Agreement, dated as of March 23, 1990
between the Company and Show Leasing America, Inc. (incorporated
by reference to Exhibit 10.1(b) to the 1990 S-1). ................
10.2 -- Securities Purchase Agreement, dated as of March 23, 1990, between
the Company and each purchaser of the 1997 Notes (incorporated by
reference to Exhibit 10.2 to the 1990 S-1). ......................
10.3 -- Carlisle Acquisition Corp.'s Senior Subordinated Note in the
principal amount of $35,000,000, dated April 7, 1989 (incorporated
herein by reference to Exhibit A to Exhibit 4.1 of the 1989
S-1). ............................................................
10.4 -- Poly-Tech's Senior Subordinated Promissory Note in the principal
amount of $55,000,000, dated March 23, 1990 (incorporated by
reference to Exhibit 10.21 to the 1990 S-1). .....................
10.5 -- Indenture dated March 23, 1990, as supplemented by First
Supplemental Indenture dated as of October 9, 1990, relating to
the Company's Senior Variable Notes Due 1997 among the Company,
Poly-Tech, Inc., as guarantor, and the Bank of Montreal Trust
Company, as trustee (incorporated by reference to Exhibits 4.2 and
4.3 to the 1990 S-1, respectively). ..............................
10.6 -- Management Agreement dated as of September 12, 1994 between the
Company Carlisle Plastics Management Corporation (incorporated by
reference to Exhibit 10.8 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994 (hereinafter,
the "September 1994 10-Q")). .....................................
10.7 -- Restated 1991 Employee Incentive Plan (incorporated by reference
to Exhibit 4(a) to the Registration Statement on Form S-8,
Registration No. 33-64890, as filed with the Securities and
Exchange Commission on June 24, 1993). ...........................
41
[Download Table]
EXHIBIT
NO. DESCRIPTION
-------- ------------------------------------------------------------------
10.8 -- Lease between the Company and One Union Realty Trust dated Septem-
ber 1, 1991, as amended by Addendum Number 1 to the Lease dated
June 29, 1993 (incorporated by reference to Exhibits 10.35 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991 (The "1991 10-K") and 10.10 to the Annual Report
on Form 10-K for the fiscal year ended December 31, 1993) and
terminated by the Lease Settlement Agreement dated December 20,
1994 (filed herewith). ...........................................
10.9 -- Stockholders' Agreement dated as of July 16, 1991 by and among
High-D Acquisition Corp., Carlisle Plastics, Inc. and certain
individuals and institutions relating to Rhino-X Industries, Inc.
(incorporated by reference to Exhibit 10.45 to the 1991 10-K). ...
10.10 -- Employment Agreement dated September 1, 1992 between the Company
and David E. Wilbur, Jr. (incorporated by reference to Exhibit I
to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1992) as amended by the Amendment dated
September 20, 1994 (incorporated by reference to Exhibit 10.10 to
the Registration Statement on Form S-4, Registration No. 33-56825,
as filed with the Securities Exchange Commission on December 13,
1994 (hereinafter, the "1994 S-4")). .............................
10.11 -- Indenture relating to the Company's 10 1/4% Senior Notes Due 1997
among the Company, Poly-Tech, as Guarantor, and United States
Trust Company of New York, as Trustee (a form of the Notes is
contained as Exhibit A thereto) (incorporated by reference to
Exhibit 4.1 to the Registration Statement on Form S-1, as amended,
Registration No. 33-47627, as filed with the Securities and
Exchange Commission on May 1, 1992). .............................
10.12 -- Credit Agreement dated as of March 9, 1994 by and among the
Company, as borrower, Poly-Tech, A&E Products (Far East) Ltd.
("Far East"), Plasticos Bajacal S.A. de C.V. ("Plasticos"),
Rhino-X Industries, Inc. ("Rhino-X"), A&E Korea, Ltd. ("Korea"),
American Western Corporation ("American Western") and AWC
Transportation Corporation ("AWCT"), as co-obligors, and General
Electric Capital Corporation ("GECC"), as agent and lender, as
amended by the First Second and Third Amendments to Credit
Agreement and Security Agreement dated as of April 14, April 15,
and October 25, 1994 by and among the same parties (incorporated
by reference to Exhibits 10.14 to the Company's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1994 (the "March
1994 10-Q") and June 30, 1994 and the September 1994 10-Q). ......
10.13 -- Revolving Credit Note dated March 9, 1994 in the amount of
$55,000,000 issued by the borrowers under the Credit Agreement
referenced in Exhibit 10.12 to GECC (incorporated by reference to
Exhibit 10.15 to the March 1994 10-Q). ...........................
10.14 -- Security Agreement dated as of March 9, 1994 by and among the
borrowers under the Credit Agreement referenced in Exhibit 10.12
and GECC, as administrative agent, as amended by the First
Amendment to Credit Agreement and Security Agreement dated as of
April 14, 1994 by and among the same parties (included in Exhibit
10.12). ..........................................................
10.15 -- Asset Purchase Agreements dated March 9, 1994 by and between the
Company and American Western, Poly-Tech and Rhino-X (incorporated
by reference to Exhibit 10.17 to the March 1994 10-Q). ...........
42
[Download Table]
EXHIBIT
NO. DESCRIPTION
-------- ------------------------------------------------------------------
10.16 -- Contract Manufacturing Agreements dated March 9, 1994 by and
between the Company and American Western, Poly-Tech and Rhino-X
(incorporated by reference to Exhibit 10.18 to the March 1994
10-Q). ...........................................................
10.17 -- Subordination Agreement dated as of March 9, 1994 by and among
GECC, the Company, Poly-Tech, Far East, Plasticos, Rhino-X, Korea,
American Western and AWCT (incorporated by reference to Exhibit
10.19 to the March 1994 10-Q). ...................................
10.18 -- Equipment Lease Agreement dated as of April 4, 1994, as amended by
the First Amendment and Amendment No. 2 dated as of August 17 and
October 25, respectively, by and between the Company and GECC
(incorporated by reference to Exhibits 10.20 to the March 1994
10-Q and September 1994 10-Q). ...................................
10.19 -- Equipment Sublease Agreements dated as of April 4, 1994, as
amended by amendments dated as of August 17 and October 25, 1994,
by and between the Company and American Western, Poly-Tech and
Rhino-X (incorporated by reference to Exhibits 10.21 to the March
1994 10-Q and September 1994 10-Q). ..............................
10.20 -- Bills of Sale dated April 4, 1994 by the Company, Poly-Tech,
American Western and Rhino-X (incorporated by reference to Exhibit
10.22 to the March 1994 10-Q). ...................................
10.21 -- Subordination Agreement dated as of April 4, 1994 by and among
GECC, the Company, Poly-Tech, Far East, Plasticos, Rhino-X, Korea,
American Western and AWCT (incorporated by reference to Exhibit
10.23 to the March 1994 10-Q). ...................................
10.22 -- Subsidiary Guarantees dated as of April 4, 1994 by the Poly-Tech,
American Western and Rhino-X in favor of GECC (incorporated by
reference to Exhibit 10.24 to the March 1994 10-Q). ..............
10.23 -- Receivables Funding and Servicing Agreement dated as of April 14,
1994, as amended by Amendment No. 1 dated as of October 25, 1994,
by and among Carlisle Plastics Funding Corporation ("CPFC"), as
Borrower, Redwood Receivables Corporation ("Redwood"), as Lender,
the Company, as Servicer, and GECC, as Operating Agent and
Collateral Agent (incorporated by reference to Exhibits 10.25 to
the March 1994 10-Q and September 1994 10-Q). ....................
10.24 -- Note dated October 25, 1994 in the amount of $45,000,000 issued by
CPFC to Redwood pursuant to the Receivables Funding and Servicing
Agreement referenced in Exhibit 10.23 (incorporated by reference
to Exhibit 10.26 to the September 1994 10-Q). ....................
10.25 -- Receivables Sale Agreement dated as of April 14, 1994, as amended
by Amendment No. 1 dated as of October 25, 1994, by and between
the Company and CPFC (incorporated by reference to Exhibits 10.27
to the March 1994 10-Q and September 1994 10-Q). .................
10.26 -- Note dated October 25, 1994 in the amount of $45,000,000 issued by
the Company to CPFC pursuant to the Receivables Sale Agreement
referenced in Exhibit 10.25 (incorporated by reference to Exhibit
10.28 to the September 1994 10-Q). ...............................
43
[Download Table]
EXHIBIT
NO. DESCRIPTION
-------- -----------
10.27 -- Employment Agreement dated September 12, 1994 by and between the
Company and Clifford A. Deupree (incorporated by reference to
Exhibit 10.27 to the 1994 S-4). ..................................
11 -- Statement re: Computation of Per Share Earnings. .................
18 -- Letter re: Change in Accounting Principles (incorporated by
reference to Exhibit 18 of the 1989 S-1). ........................
21 -- Subsidiaries of the Company. .....................................
23 -- Consent of Deloitte & Touche LLP..................................
27 -- Financial Data Schedule...........................................
44
Dates Referenced Herein and Documents Incorporated by Reference
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