Back to GetFilings.com
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
ALLTRISTA CORPORATION
DELAWARE 0-21052 35-1828377
State of Incorporation Commission File Number IRS Identification Number
555 THEODORE FREMD AVENUE, SUITE B302
RYE, NEW YORK 10580
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (914) 967-9400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------------------ ------------------------------------------
Common Stock, $.01 par value New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
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. [X] YES [ ] 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. [ ]
As of March 25, 2002, the aggregate market value of voting common stock
held by non-affiliates of the registrant was $162.5 million based upon the
closing market price on such date as reported on the New York Stock Exchange.
All (i) executive officers and directors of the registrant and (ii) all
persons filing a Schedule 13D with the Securities and Exchange Commission in
respect to registrant's common stock who hold 10% or more of the registrant's
outstanding common stock, have been deemed, solely for the purpose of the
foregoing calculation, to be "affiliates" of the registrant.
There were 6,936,244 shares outstanding of the registrant's common stock,
par value $.01 per share, as of March 3, 2002.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required for Part III of this report is incorporated
herein by reference to the proxy statement for the 2002 annual meeting of the
Company's stockholders.
================================================================================
ALLTRISTA CORPORATION
INDEX TO FORM 10-K
PAGE
-----
PART I
Item 1. Business ................................................................... 1
Item 2. Properties ................................................................. 6
Item 3. Legal Proceedings .......................................................... 7
Item 4. Submission of Matters to a Vote of Security Holders ........................ 7
Executive Officers of the Company .......................................... 8
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters ....... 9
Item 6. Selected Financial Data .................................................... 9
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations .............................................................. 10
Item 7a. Quantitative and Qualitative Disclosures About Market Risk ................. 17
Item 8. Financial Statements and Supplementary Data ................................ 17
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure ....................................................... 41
PART III
Item 10. Directors and Executive Officers of the Registrant ......................... 41
Item 11. Executive Compensation ..................................................... 41
Item 12. Security Ownership of Certain Beneficial Owners and Management ............. 41
Item 13. Certain Relationships and Related Transactions ............................. 41
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ........... 41
Signatures ......................................................................... 46
Financial Statement Schedule ....................................................... 47
Index to Exhibits .................................................................. 48
PART I
ITEM 1. BUSINESS
Alltrista Corporation (the "Company") was incorporated in the State of
Indiana in 1991 and reincorporated in the State of Delaware in December 2001.
We operate two distinct business segments, Consumer Products and Materials
Based Group. Consumer Products is the leading provider of home canning products
in North America primarily under the Ball (Registered Trademark) , Kerr
(Registered Trademark) and Bernardin (Registered Trademark) brands. The
Materials Based Group consists of manufacturing operations in injection molded
plastics and industrial plastics and is the country's largest producer of zinc
strip and fabricated products, including coin blanks for U.S. and foreign
mints. In addition to the information included below in this Item 1, see Item 7
(Management's Discussion and Analysis of Financial Condition and Results of
Operations) and Item 8, Note 1 (Significant Accounting Policies) and Note 4
(Business Segment Information) for financial and other information concerning
the Company's operations.
During 2001, we repositioned our growth strategy to focus on consumer
products. Our Consumer Products segment markets and distributes a broad line of
home food preservation and preparation products that includes recognized brand
name home canning jars, jar closures and related food products (including fruit
pectin, Fruit-Fresh (Registered Trademark) brand fruit protector, pickle mixes
and tomato mixes).
Our materials based group is comprised of three businesses: zinc strip
products, injection molded plastics, and industrial plastics. Our zinc strip
business is the sole source supplier of copper plated zinc penny blanks to both
the United States Mint and the Royal Canadian Mint and is currently exploring
opportunities with several other countries. In addition, we manufacture a line
of industrial zinc items used in the plumbing, automotive, electrical component
and European architectural markets, and the Lifejacket (Registered Trademark)
anti-corrosion system. Unimark, our plastic injection molding business,
manufactures precision custom components for major companies in the healthcare
and consumer products industries including CIBA Vision Corporation, Johnson &
Johnson, Meridian Diagnostics, Inc., The Scotts Company and Winchester
Ammunition. Through our industrial plastic operations, we also manufacture and
sell thermoformed plastic door liners and evaporator trays for refrigerators,
primarily for Whirlpool Corporation, with whom we have enjoyed a business
relationship for over 25 years.
On December 18, 2001, at a special meeting of stockholders, our
stockholders approved a proposal to reincorporate the Company in the State of
Delaware. In order to reincorporate as a Delaware corporation, the Company
organized a Delaware corporation as one of its subsidiaries. Effective December
19, 2001, the Company merged with the new Delaware subsidiary, and the Delaware
corporation was the corporation that survived the merger. The surviving
corporation (i.e., the Company) was renamed "Alltrista Corporation", the same
name of the Company prior to the merger. In addition, the Company succeeded to
the rights, properties and assets and assumed the liabilities held by the
Company prior to the merger, and the financial statements of the Company are
substantially identical to its financial statements prior to the merger, the
only difference being those appropriate to reflect the Company's new corporate
identity and common stock's par value of $0.01 per share. The business and
management of the Company after the merger remain the same as those of the
Company before the merger. However, since the merger, we are subject to the
corporate laws of the State of Delaware and are no longer subject to the
corporate laws of the State of Indiana.
On September 24, 2001, we appointed Martin E. Franklin as Chairman and
Chief Executive Officer and Ian G.H. Ashken as Vice Chairman, Chief Financial
Officer and Secretary. On October 15, 2001, the Company announced the closing
of its Indianapolis, Indiana corporate office. Corporate functions are now
performed at the Company's new headquarters in Rye, New York and the Company's
Consumer Products location in Muncie, Indiana.
CONSUMER PRODUCTS
Alltrista manufactures, markets and distributes a line of home food
preservation products to serve value, mid-tier and premium oriented customers,
which products include home canning jars, jar closures, home canning tools and
other accessories. These products are marketed under the well-known Ball
(Registered Trademark) ,
1
Kerr (Registered Trademark) , Golden Harvest (Registered Trademark) and
Bernardin (Registered Trademark) brand names. We also market and distribute
related food products, including fruit pectin, Fruit-Fresh (Registered
Trademark) brand fruit protector, pickle mixes, tomato mixes and all-in-one
canning kits, including a jam pectin kit and jelly and salsa kits. In addition,
we market a line of housewares under the Golden Harvest (Registered Trademark)
brand, including tumblers, beverage tappers and other glassware.
Customers
Our customers are a diverse group of 1,800 wholesalers and retailers in
the United States and Canada. Our principal customers include grocery stores,
mass merchants, and hardware stores. We have been Wal-Mart's category manager
for the home canning segment since 1998. In this role, we are responsible for
the home canning section within the store, including inventory management, the
introduction of new items, and the creation of various reports to track
inventory, sales, and margins.
Sales and Marketing
Our consumer products sales are made in the United States and Canada
through food brokers and manufacturer representative organizations as well as
through our internal sales force and house accounts. We employ regional sales
managers located in key geographic areas who oversee the sales and retail
activities of food brokerage firms and independent manufacturer
representatives.
Distribution and Fulfillment
We utilize independent warehouses located in various regions of the United
States and Canada to distribute our products. The largest of these warehouses
is located in Muncie, Indiana and is operated by an outsourced provider, which
utilizes highly automated packaging equipment allowing us to maintain our
efficient and effective logistics and freight management processes. We also
work with an outsourced provider for the delivery of our products in order to
ensure that as many shipments as possible are processed as full truckloads,
saving significant freight costs.
Manufacturing
We manufacture the metal closures for our home canning jars at our Muncie,
Indiana facility. Lithographed tin plated steel sheet is cut and formed to
produce the lids and bands. Liquid plastisol, which we formulate, is applied to
lids, forming an airtight seal, which is necessary for safe and effective home
canning. Finished products are packaged for integration with glass jars or sold
in multi-packs as replacement lids.
Intellectual Property
Management believes that none of our active trademarks or patents is
essential to the successful operation of our business as a whole. However, one
or more trademarks or patents may be material in relation to individual
products or product lines such as our property rights to use the Kerr
(Registered Trademark) , Ball (Registered Trademark) , Fruit-Fresh (Registered
Trademark) and Bernardin (Registered Trademark) brand names. In addition, we
have developed a proprietary two-piece closure system incorporating a plastisol
sealant that differentiates our jar lids from our competitors' lids. See below,
"Patents and Trademarks."
Raw Materials
Most of our glass canning jars are supplied under an agreement with Anchor
Glass Container Corporation. Such glass materials are also available from a
variety of other sources at competitive prices. The tin plate raw material used
in the manufacture of our home canning jar lids and closures is supplied by
multiple vendors and is currently available from a variety of sources at
competitive prices. Historically, the raw materials and components that are
necessary for the manufacture of our products have been available in the
quantities that we require.
MATERIALS BASED GROUP
Our materials based group is currently comprised of three businesses: zinc
products, injection molded plastics, and industrial plastics.
2
Effective November 26, 2001, we sold our underperforming thermoformed
plastics operations consisting of the assets of our Triangle, TriEnda and
Synergy World divisions (the "TPD Assets") to Wilbert, Inc. for $21.0 million
in cash, a $1.9 million noninterest-bearing one-year note, and the assumption
of certain identified liabilities. We recorded a pre-tax loss of $121.1 million
in 2001 related to the sale.
Effective November 1, 2001, we sold our majority interest in Microlin,
LLC, a developer of proprietary battery and fluid delivery technology, for
$1,000 in cash plus contingent consideration based upon future performance
through December 31, 2012 and the cancellation of future funding requirements.
We recorded a pre-tax loss of $1.4 million in 2001 related to the sale.
Effective May 24, 1999, we sold our plastic packaging product line, which
produced coextruded, high-barrier plastic sheet and containers for the food
processing industry.
Effective September 28, 1998, we sold the x-ray inspection equipment
production line of LumenX, ending our involvement in the capital goods market.
Effective September 30, 1997, we sold the machine vision inspection
equipment product line of LumenX.
ZINC
We believe our zinc strip business is the largest zinc splitting operation
in the United States. We are the sole source supplier of copper plated zinc
penny blanks to both the United States Mint and the Royal Canadian Mint and are
currently exploring opportunities with several other countries. In addition, we
manufacture a line of industrial zinc items used in the plumbing, automotive,
electrical component and European architectural markets, and the Lifejacket
(Registered Trademark) anti-corrosion system. Our anticorrosion zinc
Lifejacket (Registered Trademark) is gaining recognition as a cost-effective
solution to arrest the corrosion of the reinforcement steel within poured
concrete structures.
We are affected by fluctuations in penny blank requirements of the United
States Department of the Treasury and the Federal Reserve System. Although the
future use of the penny as legal tender has been debated in recent years,
management believes that the zinc penny will remain an important part of the
currency system for the foreseeable future.
Sales and Marketing
Our sales and marketing staff consists of individuals with considerable
technical background in the field of metallurgy. These individuals focus on
leveraging our core capabilities in zinc metallurgy and electrochemistry to
exploit new market opportunities. The sales and marketing staff works closely
with our engineering and technical services group to deliver products to the
customer. We maintain a website which contains technical information regarding
the advantageous physical properties of zinc versus other metals.
Manufacturing
In our Greeneville, Tennessee facility, we manufacture alloys of zinc
strip and fabricated zinc products in a number of configurations for our
customers. We have five lines used to slit the coils into widths specific by
customers. Many customers require less than the full master coil diameters, so
the large coils are broken down into the requested diameters at the time they
are slit. We also produce coin blanks stamped from slit coils using one of five
high-speed presses. The stamped blanks are then rimmed and put into one of
three electroplating lines where the copper coating is applied.
Raw Materials
We purchase special high-grade zinc ingot and a variety of metals,
including copper, lead, titanium, magnesium, manganese and other alloys, to
produce the zinc alloys we use in our various applications. These alloys have
been developed by our technical staff to meet the specific physical and
chemical characteristics of the finished product applications. We purchase zinc
ingot based on market prices quoted on the London Metals Exchange (month-end
average price) from a variety of suppliers. Certain
3
customers, including the United States Mint, provide their own purchased zinc
that is utilized to manufacture product at a toll conversion price. We purchase
copper for both alloying and plating purposes based on market prices quoted on
the New York Commodities and Metals Exchange. As with zinc ingot, the United
States Mint supplies the required copper for one-cent coin blanks. We also
purchase a variety of chemicals for production and waste treatment, primarily
for use in copper plating. Prices for chemicals are negotiated with suppliers
based on market supply and demand conditions and volume purchase levels.
UNIMARK-INJECTION MOLDED PLASTICS
We manufacture precision custom injection molded components for major
companies in the healthcare and consumer products industries. We also own
Yorker (Registered Trademark) Closures, a proprietary product line of plastic
closures. Products for the healthcare industry include items such as
intravenous harness components and surgical devices. Products for manufacturers
of consumer goods primarily include packaging and sport shooting ammunition
components.
Customers
The three major customers of our injection molded plastics business
represented approximately 58% of the Company's 2001 injection molded plastics
sales. We supply shotgun shell components to Winchester Ammunition, healthcare
products (contact lens cases) to CIBA Vision Corporation, Ethicon, Inc.,
Johnson & Johnson, CB Fleet Company, Inc., and Meridian Diagnostics, Inc. and
consumer products for The Scotts Company, among others.
Sales and Marketing
We concentrate our marketing efforts in those markets that require high
levels of precision, quality, and engineering expertise. There is potential for
continued growth in all product lines, especially in the healthcare market,
where our quality, service and "clean room" molding operations are critical
competitive factors.
Manufacturing
We manufacture at three facilities located in Greenville, South Carolina;
Reedsville, Pennsylvania; and Springfield, Missouri. The injection-molding
process involves converting plastic resin pellets to a fluid state through
elevated temperature and pressure, at which point the resin is injected into a
mold where it is then formed into a finished part. Molded parts are usually
small, intricate components that are produced using multi-cavity tooling.
Post-molding operations employ robotics and automation for assembly and
packaging.
Raw Materials
We purchase resin from regular commercial sources of supply and, in most
cases, multiple sources. The supply and demand for plastic resins are subject
to cyclical and other market factors.
Competition
The market for injection molded plastics is highly competitive. We
concentrate our marketing efforts in those markets that require high levels of
precision, quality, engineering expertise and cleanliness. We have
differentiated ourselves from our competitors by developing long-lasting
relationships with a number of specialty tooling manufacturers and by
possessing strong design capabilities. We believe that the quality and
cleanliness of our facilities provides another competitive advantage for us. As
a result, we believe that we will continue to capture new injection molding
programs as they come to market, as well as benefit from continued outsourcing
trends among original equipment manufacturers.
INDUSTRIAL PLASTICS
Our industrial plastics business manufactures thermoformed white goods for
a variety of customers in our Fort Smith, Arkansas facility. We also
manufacture and sell extruded plastic sheet and roll stock
4
products in smooth, textured and laminated finishes for a variety of customers.
We produce plastic tables for original equipment manufacturers in our Fort
Smith plant and have a proprietary line of tables selling under the Vision
(Trade Mark) brand that are primarily sold to the hospitality and
institutional markets.
Customers
We manufacture refrigerator inner door liners and evaporator trays for
Whirlpool, the largest customer of our industrial plastics business, which whom
we have enjoyed a business relationship for over 25 years. In addition, we
supply the after-market inner door liner service parts for Whirlpool. We also
manufacture products for other white goods manufacturers, including Diversified
Refrigeration, Inc., a supplier to General Electric and McCall Refrigeration.
Sales and Marketing
Our sales and marketing focuses on establishing and building relationships
with major customers in our market. Our experienced sales and marketing teams,
which include members of senior management, emphasize to the customer our total
capabilities. Marketing, product design and manufacturing personnel interface
with multiple contacts within the customer organization from the initiation of
a new program through production.
Manufacturing
Our products are produced through a thermoforming process. Thermoforming
is an operation in which plastic sheet is converted into a formed product
through single- or twin-sheet vacuum or pressure formed in conjunction with the
application of heat. After the product is formed, the process of removing the
excess material, or trimming, is generally performed by automated equipment
programmed to execute the appropriate steps to produce the finished part to the
customer's specifications. We have the capability to provide value-added
services such as assembling components into finished parts, performing various
finishing operations, or attaching hardware or other items to a thermoformed
part.
Raw Materials
We purchase resin directly for use in the manufacture of extruded sheet
and also purchase plastic sheet from third-party suppliers in those instances
where we are unable to provide for our needs internally. These raw materials
are obtained from regular commercial sources of supply and, in most cases,
multiple sources. The supply and demand for plastic resins are subject to
cyclical and other market factors. Under our agreement with Whirlpool, we
purchase resin used in the production of Whirlpool products under a supply
contract that Whirlpool negotiates with resin suppliers. This agreement
provides us protection from price fluctuations in materials for Whirlpool
products, while we can usually pass through any changes in material pricing to
its other customers.
PATENTS AND TRADEMARKS
The Company believes that none of its active patents or trademarks is
essential to the successful operation of its business as a whole. However, one
or more patents or trademarks may be material in relation to individual
products or product lines such as property rights to use the Kerr (Registered
Trademark) brand, Ball (Registered Trademark) brand, and Fruit-Fresh
(Registered Trademark) brand names, and the Bernardin (Registered Trademark)
trade name in connection with certain goods to be sold, including home food
preservation supplies, kitchen housewares and packaged foods for human
consumption. Pursuant to the terms of the 1993 distribution agreement with Ball
Corporation, we were granted a license to use the Ball (Registered Trademark)
brand name for our consumer products. In the event of a change of control of
the Company which has not received the approval of a majority of the board of
directors or causes us to be controlled or majority owned by a competitor of
Ball, Ball has the option to terminate our license to use the Ball (Registered
Trademark) brand name. Pursuant to the terms of an agreement with Kerr Group,
Inc., we have a perpetual exclusive, worldwide license to use the Kerr
(Registered Trademark) brand name in our consumer products division. However,
in the event of a change of control of the Company which has not received the
approval of a majority of the board of directors of the Company, Kerr has the
option to terminate our license to use the Kerr (Registered Trademark) brand
name.
5
GOVERNMENT CONTRACTS
The Company enters into contracts with the United States Government which
contain termination provisions customary for government contracts. See "Zinc
Products" under the Materials Based Group Segment discussion above. The United
States Government retains the right to terminate such contracts at its
convenience. However, if the contract is terminated, the Company is entitled to
be reimbursed for allowable costs and profits to the date of termination
relating to authorized work performed to such date. The United States
Government contracts are also subject to reduction or modification in the event
of changes in government requirements or budgetary constraints. Since entering
into a contract with the Company in 1981, the United States Government has not
terminated the penny blank supply arrangement.
BACKLOG
The Company typically sells under supply contracts for minimum (generally
exceeded) or indeterminate quantities and, accordingly, is unable to furnish
backlog information.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred in connection with
the Company's internal programs for the development of products and processes
and have not been material in recent years.
ENVIRONMENTAL MATTERS
Our operations are subject to federal, state and local environmental and
health and safety laws and regulations, including those that impose workplace
standards and regulate the discharge of pollutants into the environment and
establish standards for the handling, generation, emission, release, discharge,
treatment, storage and disposal of materials and substances including solid and
hazardous wastes. We believe that we are in material compliance with such laws
and regulations. Further, the cost of maintaining compliance has not, and we
believe, in the future, will not, have a material adverse effect on our
business, results of operations or financial condition. Due to the nature of
our operations and the frequently changing nature of environmental compliance
standards and technology, we cannot predict with any certainty that future
material capital or operating expenditures will not be required in order to
comply with applicable environmental laws and regulations.
In addition to operational standards, environmental laws also impose
obligations on various entities to clean up contaminated properties or to pay
for the cost of such remediation, often upon parties that did not actually
cause the contamination. We have attempted to limit our exposure to such
liabilities through contractual indemnities and other mechanisms. We do not
believe that any of our existing remediation obligations, including at
third-party sites where we have been named a potentially responsible party,
will have a material adverse effect upon our business, results of operations or
financial condition.
EMPLOYEES
As of December 31, 2001, the Company employed approximately 800 people.
Approximately 215 union workers are covered by two collective bargaining
agreements at the Company's zinc products and consumer products manufacturing
facilities. These agreements expire at the consumer products facility (Muncie,
Indiana) on October 15, 2006, and at the zinc products facility (Greeneville,
Tennessee) on October 4, 2003.
The Company has not experienced a work stoppage during the past five
years. Management believes that its relationships with the Company's employees
and collective bargaining unions are satisfactory.
ITEM 2. PROPERTIES
The Company's properties are well maintained, considered adequate and
being utilized for their intended purposes. Information regarding the
approximate size of principal manufacturing, warehousing and office facilities
is provided below.
6
APPROXIMATE
LOCATION TYPE OF USE BUSINESS SEGMENT SQUARE FEET OWNED/LEASED
- -------- ----------- ---------------- ------------ ------------
Fort Smith, Arkansas Manufacturing/Warehousing Materials Based Group 140,000 Owned
Greeneville, Tennessee Manufacturing/Warehousing Materials Based Group 320,000 Owned
Greenville, South Carolina Manufacturing/Warehousing Materials Based Group 48,000 Owned
Muncie, Indiana Manufacturing/Warehousing Consumer Products 173,000 Owned
Reedsville, Pennsylvania Manufacturing/Warehousing Materials Based Group 73,000 Owned
Rye, New York Corporate offices -- 3,000 Leased
Springfield, Missouri Manufacturing/Warehousing Materials Based Group 43,000 Owned
Toronto, Canada Warehousing Consumer Products 48,000 Leased
In 2001, the Company consolidated its home canning metal closure
production from its Toronto, Canada facility into its Muncie, Indiana facility.
The Toronto facility is still being used for warehousing and its lease expires
in July 2004.
In 1999, the Company's industrial plastics business ceased operations in
El Dorado, Arkansas. The Company is currently subleasing a portion of the El
Dorado, Arkansas facility where the lease expires in May 2004.
On October 15, 2001 the Company announced the closing of its Indianapolis
corporate office. Corporate functions are now being performed out of the
Company's new headquarters in Rye, New York and the Company's Consumer Products
location in Muncie, Indiana. The Company is currently seeking a sublessor for
the site of its previous 9,000 square feet headquarters located in
Indianapolis, Indiana, for which the annual lease payment is approximately
$160,000.
ITEM 3. LEGAL PROCEEDINGS
We are involved in various legal disputes and environmental matters in the
ordinary course of business. In addition, the Environmental Protection Agency
has designated the Company as a potentially responsible party, along with
numerous other companies, for the clean up of several hazardous waste sites.
Based on currently available information, the Company does not believe that the
disposition of any of the legal disputes or environmental matters the Company
is currently involved in will have a material, adverse effect upon the
financial condition, results of operations, cash flows or competitive position
of the Company. It is possible, that as additional information becomes
available, the impact on the Company of an adverse determination could have a
different effect.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Listed below are the matters voted upon by proxy and the respective voting
results associated with a special meeting of stockholders held on December 18,
2001:
7
WITHHELD/ABSTAINED/
VOTED FOR VOTED AGAINST BROKER NON-VOTES
----------- --------------- --------------------
Proposal to approve the reincorporation of the
Corporation in the State of Delaware ................. 4,046,426 1,258,262 1,545
Proposal to increase the number of shares of
Common Stock authorized for issuance ................. 4,109,852 1,955,308 2,181
Proposal to include a provision eliminating
directors liability other than as required under
Delaware law in the certificate of
incorporation of the new Delaware
corporation. ......................................... 3,344,362 1,382,455 579,416
Proposal to amend the Corporation's 1998
Long-Term Equity Incentive Plan to increase
the number of shares of Common Stock that
may be issued thereunder by 350,000 shares
and to eliminate the annual automatic share
increase currently provided for in the Plan. ......... 3,832,987 1,305,601 167,645
Proposal to approve the Corporation's 2001
Stock Option Plan. ................................... 3,863,823 1,432,212 10,198
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
Martin E. Franklin is our Chairman and Chief Executive Officer. Mr.
Franklin was appointed to our board of directors on June 25, 2001 and became
Chairman and Chief Executive Officer effective September 24, 2001. Mr. Franklin
is also a managing member of Marlin Management, L.L.C., the general partner of
Marlin Partners II, L.P. He also has been the Chairman and Chief Executive
Officer of the general partner of Marlin Capital, L.P., a private investment
partnership, and its affiliates since October 1996. Mr. Franklin was the
Chairman of the Board of Directors of Bolle Inc. from February 1997 until
February 2000. Mr. Franklin previously held positions as Chairman and Chief
Executive Officer of Lumen Technologies, Inc. (formerly BEC Group, Inc.) from
May 1996 to December 1998, and Benson Eyecare Corporation from October 1992 to
May 1996. Since January 1, 2002, Mr. Franklin has served as the Chairman of the
Board of Directors of Find/SVP, Inc., a Nasdaq OTC Bulletin Board company.
Ian G.H. Ashken is our Vice Chairman, Chief Financial Officer and
Secretary. Mr. Ashken was appointed to our board of directors on June 25, 2001
and became Vice Chairman, Chief Financial Officer and Secretary effective
September 24, 2001. Mr. Ashken is also a managing member of Marlin Management,
L.L.C., the general partner of Marlin Partners II, L.P. He also has been the
Vice Chairman and Executive Vice President of the general partner of Marlin
Capital, L.P., a private investment partnership, and its affiliates since
October 1996. Mr. Ashken was the Vice Chairman of the Board of Directors of
Bolle, Inc. from December 1998 until February 2000; from February 1997 until
his appointment as Vice Chairman, Mr. Ashken was the Chief Financial Officer
and a director of Bolle. Mr. Ashken previously held positions as Chief
Financial Officer and a director of Lumen Technologies, Inc. (formerly BEC
Group, Inc.) from May 1996 to December 1998 and Benson Eyecare Corporation from
October 1992 to May 1996.
J. David Tolbert is our Vice President, Human Resources and
Administration. From April 1997 to October 1998, Mr. Tolbert served as our Vice
President, Human Resources and Corporate Risk. From October 1993 to April 1997,
Mr. Tolbert served as our Director of Human Resources. Since joining Ball
Corporation in 1987, Mr. Tolbert served in various human resource and operating
positions throughout the company.
8
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Alltrista Corporation common stock is traded on the New York Stock
Exchange under the symbol "ALC." There were 3,648 common stockholders of record
on March 3, 2002. The Company currently does not and does not intend to pay
cash dividends on its common stock in the foreseeable future, and is restricted
from doing so under the terms of its credit facility. Cash generated from
operations will be invested to support competitiveness and growth.
For other information required by Item 5, see Item 8, Note 17 (Quarterly
Stock Prices).
ITEM 6. SELECTED FINANCIAL DATA
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2001 (A) 2000 (B) 1999 (C) 1998 (D) 1997
------------- ------------ ------------ ------------ -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA
Net sales ............................................ $ 304,978 $357,356 $ 358,031 $258,489 $249,604
Costs and expenses
Cost of sales ........................................ 233,676 275,571 257,308 188,174 183,371
Selling, general and administrative expenses ......... 52,212 56,019 55,322 37,452 34,868
Goodwill amortization ................................ 5,153 6,404 4,605 1,399 1,265
Special charges (credits) and reorganization
expenses ........................................... 4,978 380 2,314 1,260 --
Loss (gain) on divestiture of assets and product
lines .............................................. 122,887 -- (19,678) -- --
---------- -------- --------- -------- --------
Income (loss) before interest, taxes and minority
interest ............................................. (113,928) 18,982 58,160 30,204 30,100
Interest expense, net ................................. 11,791 11,917 8,395 1,822 2,256
Income tax provision (benefit) ........................ (40,443) 2,402 19,458 10,785 10,603
Minority interest in gain (loss) of consolidated
subsidiary ........................................... 153 (259) -- -- --
---------- -------- --------- -------- --------
Income (loss) from continuing operations .............. (85,429) 4,922 30,307 17,597 17,241
========== ======== ========= ======== ========
Loss from discontinued operations ..................... -- -- (87) (1,870) (2,404)
Extraordinary loss from early extinguishment of
debt (net of income taxes) ........................... -- -- (1,028) -- --
---------- -------- --------- -------- --------
Net income (loss) ..................................... $ (85,429) $ 4,922 $ 29,192 $ 15,727 $ 14,837
========== ======== ========= ======== ========
Basic earnings (loss) per share:
Income (loss) from continuing operations ............. (13.43) .78 4.50 2.48 2.33
Loss from discontinued operations .................... -- -- ( .01) ( .26) ( .33)
Extraordinary loss from early extinguishment of
debt (net of income taxes) ......................... -- -- ( .15) -- --
---------- -------- --------- -------- --------
$ (13.43) $ .78 $ 4.34 $ 2.22 $ 2.00
========== ======== ========= ======== ========
Diluted earnings (loss) per share:
Income (loss) from continuing operations ............. (13.43) .77 4.44 2.45 2.28
Loss from discontinued operations .................... -- -- ( .01) ( .26) ( .32)
Extraordinary loss from early extinguishment of
debt (net of income taxes) ......................... -- -- ( .15) -- --
---------- -------- --------- -------- --------
$ (13.43) $ .77 $ 4.28 $ 2.19 $ 1.96
========== ======== ========= ======== ========
9
YEAR ENDED DECEMBER 31,
------------------------------------------------------
2001 (A) 2000 (B) 1999 (C) 1998 (D) 1997
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA (AT END OF YEAR)
Cash and cash equivalents .......... $ 6,376 $ 3,303 $ 17,394 $ 21,454 $ 26,641
Working capital .................... 8,035 22,975 54,611 46,923 53,759
Total assets ....................... 161,303 308,739 338,751 165,831 166,577
Total debt ......................... 84,875 137,060 140,761 25,715 30,000
Total stockholders' equity ......... 35,129 118,221 123,025 94,893 97,309
- ----------
(a) 2001 special charges (credits) and reorganization expenses include:
a $2.3 million pretax charge associated with corporate
restructuring; $2.6 million of pretax separation costs related to
the management reorganization; $1.4 million of pretax costs to
evaluate strategic options, $1.4 million of pretax costs to exit
facilities; a $2.4 million pretax charge for stock option
compensation; $4.1 million of pretax income associated with the
discharge of deferred compensation obligations; and a $1.0 million
pretax gain related to an insurance recovery.
(b) 2000 special charges (credits) and reorganization expenses included
$1.6 million of pretax income associated with the reduction in
long-term performance-based compensation, $1.4 million of pretax
litigation charges, net of recoveries and $.6 million of costs to
evaluate strategic options.
(c) 1999 special charges (credits) and reorganization expenses were a
$2.3 million charge to exit a plastic thermoforming facility.
(d) 1998 special charges (credits) and reorganization expenses were a
$1.3 million pretax charge to exit a plastic injection molding
facility.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MANAGEMENT AND CORPORATE OFFICE REORGANIZATION
On September 24, 2001, our board of directors appointed Martin E. Franklin
as our Chairman and Chief Executive Officer and Ian G.H. Ashken as our Vice
Chairman, Chief Financial Officer and Secretary. On October 15, 2001, we
announced the closing of our Indianapolis, Indiana corporate office. Corporate
functions have been transitioned to our new headquarters in Rye, New York, and
our consumer products division in Muncie, Indiana.
Following the sale of the TPD Assets and the third quarter 2001
appointment of new executive management, we reorganized our business segments
to reflect the new business and management strategy. We are now organized into
two distinct segments: consumer products and materials based group. Prior
periods have been reclassified to conform to the current segment definitions.
DIVESTITURES IN 2001
Effective November 26, 2001, we sold the TPD Assets to Wilbert, Inc. for
$21.0 million in cash, a $1.9 million noninterest-bearing one-year note, and
the assumption of certain identified liabilities. We recorded a pre-tax loss of
$121.1 million in 2001 related to the sale. The cash proceeds from the sale
were used to pay down our term debt.
As a result of the sale, in January 2002 we recovered approximately $15.7
million of federal income taxes paid in 1999 and 2000, received a further
federal income tax refund of $22.2 million in March 2002 and are anticipating
an additional $.6 million federal income tax refund from the enactment, in
March 2002, of the Job Creation and Workers' Assistance Act of 2002 by
utilizing the carryback of a tax net operating loss generated in 2001 (See
Notes 2 and 19 to our Consolidated Financial Statements). This refund was used
to pay down our debt.
The combined net sales of the TPD Assets included in our historical
results were $63.8 million in 2001 (through the date of sale), $100.3 million
in 2000 and $70.7 million in 1999. Operating earnings (losses) associated with
these assets were $(12.0) million in 2001, $(8.4) million in 2000 and $2.8
million in 1999.
Effective November 1, 2001, we sold our majority interest in Microlin,
LLC, a developer of proprietary battery and fluid delivery technology, for
$1,000 in cash plus contingent consideration based
10
upon future performance through December 31, 2012 and the cancellation of
future funding requirements. We recorded a pre-tax loss of $1.4 million in 2001
related to the sale.
Excluding the TPD Assets, Microlin, LLC and other divested businesses,
Alltrista's net sales for 2001, 2000 and 1999 would have been $241.7 million,
$258.1 million and $275.0 million, respectively, and Alltrista's EBITDA for
2001, 2000 and 1999 would have been $36.3 million, $36.6 million and $44.7
million, respectively.
RECENT DEVELOPMENTS
We expect that the net sales and operating income of our materials based
group segment for the three months ended March 31, 2002 will be lower than the
comparable period in 2001. Our zinc business has experienced reduced sales to
the United States Mint, which announced in the fourth quarter of 2001 that it
was implementing an inventory reduction program for all coinage. We anticipate
that this inventory reduction program will result in lower sales and earnings
for zinc compared to prior years until the fourth quarter of 2002.
RESULTS OF OPERATIONS -- COMPARISON OF 2001 AND 2000
We reported consolidated net sales of $305.0 million in 2001, a decrease
of 14.7% from sales of $357.4 million in 2000. Our loss before interest and
taxes for the year ended December 31, 2001 was $113.9 million, including
special charges and reorganization expenses of $5.0 million and a total loss on
divestiture of assets and product lines of $122.9 million. For the year ended
December 31, 2001, excluding all of these one-time items, earnings before
interest and taxes was $13.9 million. These results compare to earnings before
interest, taxes and minority interest for the year ended December 31, 2000 of
$19.0 million.
Sales of consumer products were relatively flat in 2001 compared to 2000.
Domestic increases were offset by Canadian decreases due to unfavorable weather
conditions and customers carrying higher levels of inventory over from 2000.
Sales within the materials based group for 2001 decreased by $52.6 million due
primarily to (i) lower demand for industrial thermoformed parts (part of the
divested TPD Assets) in the heavy truck and material handling markets, (ii) the
fact that full year sales in 2001 did not include December sales for the
divested TPD Assets, and (iii) the decline in sales of zinc products resulting
from lower coinage sales to the United States Mint, due to the Mint's stated
objective of reducing inventory.
Gross margin percentages increased to 23.4% in 2001 from 22.9% in 2000.
Gross margin increased for consumer products due primarily to cost efficiencies
which continued during 2001 as the benefits of the segment's SAP system
implementation continued to be realized. This increase was offset by a decrease
in gross margin for the materials based group in 2000 due primarily to lower
sales of plastic thermoformed parts (part of the divested TPD Assets) resulting
from decreased demand in the heavy truck, material handling and manufactured
housing markets. Smaller orders reduced the length of production runs, and,
thus, diminished operating efficiencies. Lower sales of injection molded
precision consumer products also contributed to the decline in margins.
Selling, general and administrative expenses decreased 6.8% to $52.2
million in 2001 from $56.0 million in 2000. Consumer products expenses
decreased primarily due to lower expenses associated with sales and marketing,
warehousing and shipping. Expenses within the materials based group decreased
primarily as a result of the cost savings realized due to a third quarter 2000
realignment and consolidation of our divested thermoformed operations. Selling,
general and administrative expenses as a percentage of sales increased from
15.7% in 2000 to 17.1% in 2001 due primarily to lower overall sales.
Goodwill amortization decreased from $6.4 million in 2000 to $5.2 million
in 2001 due primarily to our November 2001 sale of the TPD Assets.
We incurred net special charges (credits) and reorganization expenses of
$5.0 million and $0.4 million for 2001 and 2000, respectively. These amounts
were comprised of the following (in millions):
11
2000 2001
--------- ---------
Costs to evaluate strategic options ............................ $ 0.6 $ 1.4
Discharge of deferred compensation obligations ................. -- (4.1)
Separation costs for former officers ........................... -- 2.6
Stock option compensation ...................................... -- 2.4
Corporate restructuring costs .................................. -- 2.3
Costs to exit facilities ....................................... -- 0.8
Reduction of long-term performance-based compensation .......... (1.6) --
Litigation charges ............................................. 1.4 --
Items related to divested thermoforming operations ............. -- (0.4)
------ ------
$ 0.4 $ 5.0
====== ======
During 2001, certain participants in our deferred compensation plans
agreed to forego balances in those plans in exchange for loans from us in the
same amounts. The loans, which were completed during 2001, bear interest at the
applicable federal rate and require the individuals to secure a life insurance
policy having the death benefit equivalent to the amount of the loan payable to
us. All accrued interest and principal on the loans mature and are payable upon
the death of the participant and their spouse. We recognized $4.1 million of
pretax income during 2001 related to the discharge of the deferred compensation
obligations.
Separation costs for former officers were associated with the 2001
management reorganization described above.
During September 2001, options were granted to participants under our 2001
Stock Option Plan. Because the options granted under this new plan were still
subject to stockholder approval at the time of grant, the options resulted in a
one-time charge of $2.4 million, which was recorded in the fourth quarter of
2001, following stockholder approval of the 2001 Stock Option Plan on December
18, 2001.
During the fourth quarter of 2001, we incurred corporate restructuring
costs in the amount of $2.3 million. These include costs related to the
transitioning of the corporate office function from Indianapolis, Indiana to
Rye, New York and Muncie, Indiana, costs to reincorporate in Delaware and to
hold a special meeting of shareholders, and related costs including
professional fees.
In late 2001, we consolidated our home canning metal closure production
from our Bernardin, Ltd. Toronto, Ontario facility into our Muncie, Indiana
manufacturing operation. The total cost to exit the Toronto facility was $0.8
million and includes a $0.3 million loss on the sale and disposal of equipment,
and $0.5 million of employee severance costs. We will continue to distribute
our products in Canada through Bernardin, Ltd.
During 2001, items recognized related to the divested TPD Assets included
a pre-tax gain of $1.0 million in connection with an insurance recovery
associated with a property casualty. Also in 2001 we vacated our former
Triangle Plastics facility in Independence, Iowa and integrated personnel and
capabilities into its other operating and distribution facilities in the area.
The total cost to exit this Iowa facility was $0.6 million and includes $0.4
million in future lease obligations and an additional $0.2 million of costs
related to the leased facility.
During 2000, we recorded a pretax gain of $1.6 million related to a
reduction in long-term performance-based compensation. Also during 2000, we
reached settlements in legal disputes incurring $1.4 million in net settlement
and legal expenses.
In 2001, we recognized a $121.1 million pretax loss on the sale of the TPD
Assets and a $1.4 million pre-tax loss on the sale of its interest in Microlin,
LLC.
Net interest expense in 2001 was $11.8 million compared to $11.9 million
for 2000. The effects of lower average borrowings outstanding and lower
interest rates during 2001 were offset by the write-off of $1.5 million of
previously deferred debt issuance and amendment costs in connection with the
November 2001 amendment of our term loan and revolving credit facility. Our
effective interest rate for
12
the year ended December 31, 2001 was 7.7%. As a result of decreasing interest
rates during the year ended December 31, 2001, our interest rate swaps, which
were at a fixed interest rate of 5.7%, resulted in additional interest expense
to us during the year ended December 31, 2001.
Our effective tax rate was 32.2% for 2001 compared to 34.0% for 2000. The
effective rate for 2001 is lower than the statutory federal rate primarily
because it includes a valuation allowance for tax benefits associated with the
loss on the sale of the TPD Assets that may not be realizable. The effective
rate for 2000 reflects the recognition of a tax benefit from exiting the
Central European home canning test market.
RESULTS OF OPERATIONS -- COMPARISON OF 2000 AND 1999
We reported consolidated net sales of $357.4 million in 2000, a slight
decrease from sales of $358.0 million in 1999. Earnings before interest, taxes
and minority interest were $19.0 million for the year ended December 31, 2000
compared to $58.2 million for the year ended December 31, 1999. Consumer
products reported lower sales and operating earnings, and the materials based
group reported increased sales and lower operating earnings.
Sales of consumer products decreased $12.7 million to $120.4 million in
2000 from $133.1 in 1999 as home canning sales volumes returned to more normal
levels compared to the 1999 season, which was influenced by the Year 2000
phenomenon. Within the materials based group, Triangle Plastics and its wholly
owned subsidiary, TriEnda, which were acquired on April 25, 1999 and sold
effective November 26, 2001, contributed $92.1 million to 2000 sales compared
to $72.2 million for the eight-month period in 1999. In 2000, competitive
pricing pressures and dramatically lower demand, chiefly in the heavy truck,
manufactured housing and material handling markets, negatively impacted sales
of thermoformed plastic parts. Prior year sales also included $13.0 million
from a plastic packaging product line, which was disposed of on May 24, 1999.
Gross margin percentages decreased from 28.1% in 1999 to 22.9% in 2000.
Gross margin decreased for consumer products due to a decline in sales of home
canning products from the abnormally high 1999 levels (due to Year 2000
concerns of consumers) accompanied by slightly higher sales of a lower margin
consumer product line contributed to the decrease in the consumer products
segment. Gross margin decreased for the materials based group due primarily to
raw material price increases, reduced sales volumes and operating
inefficiencies from several new customer programs for industrial thermoformed
parts, as well as lower coinage and battery can volumes for zinc products.
Selling, general and administrative expenses increased 1.3% to $56.0
million in 2000 from $55.3 million in 1999. Expenses within the consumer
products segment increased primarily due to higher depreciation expense on a
new information system. For the materials based group segment, the acquisition
of Triangle Plastics and disposal of the plastic packaging product line
contributed to the increase as Triangle Plastics maintained the personnel
necessary to offer customers extensive design, engineering and development
services, while the operations of the divested plastic packaging product line
did not require this level of staffing. The write-down of fixed assets and
severance costs of $1.2 million associated with the realignment and
consolidation of our thermoforming operations also contributed to the increase.
Additionally, research and development costs related to zinc-based products
also increased. These increases were offset somewhat by a decrease in incentive
compensation expense. Selling, general and administrative expenses as a
percentage of sales increased from 15.5% in 1999 to 15.7% in 2000.
Goodwill amortization increased to $6.4 million in 2000 from $4.6 million
in 1999. This was the result of a full year of amortization being recorded in
2000 related to the 1999 acquisition of Triangle Plastics.
Special charges (credits) and reorganization expenses were $0.4 million
for 2000, and consisted of $1.4 million of litigation charges (net of
recoveries) and $0.6 million of costs to evaluate strategic options, offset by
a $1.6 million gain related to a reduction in long-term performance-based
compensation. Special charges (credits) and reorganization expenses for 1999
consisted of $2.3 million of costs to exit a plastic thermoforming facility.
In 1999, we recognized a $19.7 million pretax gain on the sale of a
plastic packaging product line.
13
Net interest expense in 2000 was $11.9 million compared to $8.4 million
for 1999. The increase was due primarily to increased average borrowings driven
by the Triangle Plastics acquisition. Our effective tax rate decreased from
39.1% in 1999 to 34.0% in 2000 due primarily to the recognition of a tax
benefit from exiting the Central European home canning test market.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
In conjunction with the sale of the TPD Assets, in November 2001, the
Company entered into an agreement with its lenders to amend certain provisions
of its term loan and revolving credit facilities. The amendment reduced the
revolving credit facility from $50 million to $40 million, shortened the
facility termination date by one year, accelerated the required principal
payments to conform with the shortened term of the facility, modified certain
financial covenants, and required that the $21 million of cash proceeds from
the sale of the TPD Assets and $15 million from the recovery of income taxes
associated with the net operating loss carryback be used to prepay term debt.
As a result of these significant changes to the facility, the Company wrote off
the unamortized costs of $1.5 million relating to the issuance and previous
amendments of the Company's credit facility.
In accordance with the terms of the amendment, the Company applied the
$21.0 million of proceeds from the sale of the TPD assets to the outstanding
term loan balance. In January 2002, the Company utilized $15.0 million of
proceeds from the income tax refund related to the thermoformed sale to further
pay down the term loan.
The term loan, as amended and reflecting the payments mentioned above,
requires quarterly payments of principal of $3.1 million through the first
quarter of 2003, with quarterly payments of $11.2 million for the remainder of
the term (through March 31, 2004). Interest on borrowings under the term loan
and the revolving credit facility are based upon fixed increments over the
adjusted London Interbank Offered Rate or the agent bank's alternate borrowing
rate as defined in the agreement. The agreement also requires the payment of
commitment fees on the unused balance. As of December 31, 2001 and 2000, the
outstanding balances of the term loan were $75.5 million and $120.0 million,
respectively. As of December 31, 2001 and 2000, borrowings outstanding under
the revolving credit facility were $9.4 million and $16.0 million,
respectively.
In May 1999, the Company entered into a three-year interest rate swap with
an initial notional value of $90 million. The swap effectively fixed the
interest rate on approximately 60% of the Company's term debt at a maximum rate
of 7.98% for the three-year period. The effective interest rate on the swaps
was 5.7% during the year ended December 31, 2001. The swap matures and
terminates in March 2002. Due to the prepayment of term debt in accordance with
the amendment described above, as of December 31, 2001, the swap effectively
fixed the interest rate on all of the Company's term debt.
During 2000, the Company repurchased 452,600 shares of the Company's stock
for $10.5 million. No shares were repurchased during 2001. Dividends are not
presently paid on the Company's common stock nor does the Company anticipate
paying dividends in the foreseeable future and is restricted from doing so
under the terms of its credit facility.
Net current assets decreased to $8.0 million at December 31, 2001 from
$23.0 million at December 31, 2000 due primarily to the sale of the TPD assets.
Cash flow generated from operations totaled approximately $39.9 million for the
year ended December 31, 2001 and reflects an $11.2 million decrease in
inventories resulting from an increased focus on inventory management and a
$4.4 million decrease in accounts receivable due to better collection policies
and procedures.
Capital expenditures were $9.7 million in 2001 compared to $13.6 million
in 2000 and were largely related to maintaining facilities and improving
manufacturing efficiencies. Investments in 2001 included, among other items,
new injection molding machines and presses, a co-extrusion line for the
production of plastic sheet used in thermoforming operations and the repair and
replacement of portions of a building and equipment damaged in a
weather-related roof collapse.
During 2001, certain participants in the Company's deferred compensation
plans agreed to forego balances totaling $4.1 million in those plans in
exchange for loans from the Company in the same
14
amounts. The loans, which were completed during 2001, bear interest at the
applicable federal rate and require the individuals to secure a life insurance
policy having the death benefit equivalent to the amount of the loan payable to
the Company. All accrued interest and principal on the loans mature and are
payable upon the death of the participant and their spouse. In June 2001, the
Company surrendered the variable rate life insurance contracts used to fund all
deferred compensation obligations. The proceeds from this surrender were $6.7
million.
The Company believes that existing funds, cash generated from operations
and its debt facility are adequate to satisfy its working capital and capital
expenditure requirements for the foreseeable future.
CONTINGENCIES
The Company is involved in various legal disputes and environmental
matters in the ordinary course of business. In addition, the Environmental
Protection Agency has designated the Company as a potentially responsible
party, along with numerous other companies, for the clean up of several
hazardous waste sites. Based on currently available information, the Company
does not believe that the disposition of any of the legal disputes or
environmental matters the Company is currently involved in will have a material
adverse effect upon the financial condition, results of operations, cash flows
or competitive position of the Company. It is possible, that as additional
information becomes available, the impact on the Company of an adverse
determination could have a different effect.
STOCK PLANS
Effective September 24, 2001, the Company established the 2001 Stock
Option Plan for the purpose of granting options for the purchase of common
shares to the Company's executive officers and independent directors. Options
vest to, and are exercisable by, participants on the earlier of 1) the date the
Company's closing stock price equals or exceeds $17 per share or 2) the seventh
anniversary of the grant date. During September, 570,000 options were granted
to participants under this new plan. The Company's stock price exceeded $17 in
January 2002, thereby vesting all option grants under this plan. Because the
options granted under this new plan were still subject to stockholder approval
at the time of grant, the options resulted in a one-time charge of $2.4
million, which was recorded in the fourth quarter of 2001. The charge
represents the difference between the exercise price of the options of $10.95
(the fair value at the date of grant) and the fair value of the Company's stock
at the time of stockholder approval on December 18, 2001 of $15.20. This charge
is included in Special Charges (Credits) and Reorganization Expenses on the
Consolidated Statement of Operations.
NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standard 133 (SFAS
133), Accounting for Derivative Instruments and Hedging Activities, on January
1, 2001. The statement requires the Company to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be adjusted
to fair value through income. If the derivative is a hedge, depending on the
nature of the hedge, changes in the fair value of derivatives will either be
offset against the change in fair value of the hedged assets, liabilities, or
firm commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. Hedge ineffectiveness, the
amount by which the change in the value of a hedge does not exactly offset the
change in the value of the hedged item, will be immediately recognized in
earnings. The adoption of SFAS 133 on January 1, 2001 did not have a material
impact on the Company's results of operations or financial position.
In July 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards No. 141, Business Combinations,
and No. 142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill (and
intangible assets deemed to have indefinite lives) will no longer be amortized
but will be subject to annual impairment tests in accordance with the
Statements. Other intangible assets will continue to be amortized over their
useful lives. The Company will apply the new rules on accounting for goodwill
and other intangible assets beginning in the first quarter of 2002. During
2002, the Company will perform the first of the required impairment tests of
goodwill and indefinite lived intangible assets, but does not anticipate a
material impact on its results of operations or financial position.
15
In June 2001, the FASB issued Statement of Financial Accounting Standard
No. 143 (SFAS 143), Accounting for Asset Retirement Obligations, effective for
fiscal years beginning after June 15, 2002. This standard requires entities to
record the fair value of a liability for an asset retirement obligation in the
period in which it is incurred. SFAS 143 is effective for the Company beginning
with the first quarter of 2003, and its adoption is not expected to have a
material impact on the Company's results of operations or financial position.
In August 2001, the FASB issued Statement of Financial Accounting Standard
No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived
Assets, effective for fiscal years beginning after December 15, 2001. This
standard supercedes SFAS 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, and provides a single
accounting model for long-lived assets to be disposed of. The new standard also
supersedes the provisions of APB Opinion 30 with regard to reporting the
effects of a disposal of a segment of a business and requires expected future
operating losses from discontinued operations to be displayed in discontinued
operations in the period(s) in which the losses are incurred. SFAS 144 is
effective for the Company beginning with the first quarter of 2002, and its
adoption is not expected to have a material impact on the Company's results of
operations or financial position.
FORWARD-LOOKING STATEMENTS
From time to time, we may make or publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, and similar matters. Such
statements are necessarily estimates reflecting management's best judgment
based on current information. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. Such statements are
usually identified by the use of words or phases such as "believes,"
"anticipates," "expects," "estimates," "planned," "outlook," and "goal."
Because forward-looking statements involve risks and uncertainties, our actual
results could differ materially. In order to comply with the terms of the safe
harbor, we note that a variety of factors could cause our actual results and
experience to differ materially from the anticipated results or other
expectations expressed in forward-looking statements.
While it is impossible to identify all such factors, the risks and
uncertainties that may affect the operations, performance and results of our
business include the following:
o Reductions, cancellations or delays in customer purchases would
adversely affect our profitability;
o We may be adversely affected by the trend towards retail trade
consolidation;
o Some of our products may suffer because of unfavorable weather
conditions and market trends;
o Competition in our industries may hinder our ability to execute our
business strategy, achieve profitability, or maintain relationships
with existing customers;
o If we fail to develop new or expand existing customer relationships,
our ability to grow our business will be impaired;
o Our operations are subject to a numbers of federal, state and local
environmental regulations;
o We depend on key personnel;
o We enter into contracts with the United States government and other
governments;
o Our operating results can be adversely affected by changes in the cost
or availability of raw materials
o Continuation of the US penny as a currency denomination;
o The nature and extent of any current or future state and federal
environmental regulations on our operations and the amount of any
costs which may be incurred for the clean up of several hazardous
waste sights;
16
o Our business could be adversely affected because of risks which are
particular to international operations;
o Certain of our employees are represented by labor unions; and
o Any other factors which may be identified from time to time in our
periodic SEC filings and other public announcements.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in the forward-looking statement, we do not intend to update
forward-looking statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In general, business enterprises can be exposed to market risks including
fluctuations in commodity prices, foreign currency values, and interest rates
that can affect the cost of operating, investing, and financing. The Company's
exposures to these risks are low. Most of the Company's zinc business is
conducted on a tolling basis whereby customers supply zinc to the Company for
processing, or supply contracts provide for fluctuations in the price of zinc
to be passed on to the customer.
The Company conducts a portion of its business through its Canadian
subsidiary, Bernardin, Ltd., and as a result, is subject to the exposure that
arises from foreign exchange rate movements between the Canadian and U.S.
dollars. Such exposure arises pimarily from the translation of the results of
operations of Bernardin. Sales of Bernardin were less than 5% of total
consolidated sales during 2001.
The Company from time to time invests in short-term financial instruments
with original maturities usually less than thirty days. The Company is exposed
to short-term interest rate variations with respect to the LIBOR on its term
and revolving debt obligations. To manage a portion of this risk, in May 1999,
the Company entered into a three-year interest rate swap which effectively
fixed the interest rate on approximately 60% of the Company's term debt at a
maximum rate of 7.98% for the three-year period. Due to the prepayment of term
debt in accordance with the November 2001 amendment of the Company's credit
facility, as of December 31, 2001, the swap effectively fixed the interest rate
on 100% of the Company's term debt.
Changes in LIBOR interest rates would affect the earnings of the Company
either positively or negatively depending on the changes in short-term interest
rates. Assuming that LIBOR rates increased 100 basis points over period end
rates on the outstanding term and revolver debt, the Company's interest
expense, after considering the effects of its interest rate swap, would have
increased by approximately $535,000 and $620,000 for the years ended December
31, 2001 and 2000, respectively. The amount was determined by considering the
impact of the hypothetical interest rates on the Company's borrowing cost,
short-term investment rates, interest rate swap and estimated cash flow. Actual
changes in rates may differ from the assumptions used in computing this
exposure.
The Company does not invest or trade in any derivative financial or
commodity instruments, nor does it invest in any foreign financial instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
17
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Alltrista Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Alltrista
Corporation and subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of operations, comprehensive income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 2001. Our audits also included the financial statement schedule listed in
the Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Alltrista
Corporation and subsidiaries at December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
/s/ ERNST & YOUNG LLP
Indianapolis, Indiana
January 23, 2002,
Except for Note 19, as to which the date is
March 22, 2002
18
ALLTRISTA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31,
-----------------------------------------
2001 2000 1999
------------- ----------- -----------
Net sales ........................................................... $ 304,978 $ 357,356 $ 358,031
Costs and expenses
Cost of sales ...................................................... 233,676 275,571 257,308
Selling, general and administrative expenses ....................... 52,212 56,019 55,322
Goodwill amortization .............................................. 5,153 6,404 4,605
Special charges (credits) and reorganization expenses .............. 4,978 380 2,314
Loss (gain) on divestitures of assets and product lines ............ 122,887 -- (19,678)
---------- --------- ---------
Income (loss) before interest, taxes and minority interest .......... (113,928) 18,982 58,160
Interest expense, net ............................................... (11,791) (11,917) (8,395)
---------- --------- ---------
Income (loss) from continuing operations before taxes and
minority interest .................................................. (125,719) 7,065 49,765
Income tax (provision) benefit ...................................... 40,443 (2,402) (19,458)
Minority interest in loss (gain) of consolidated subsidiary ......... (153) 259 --
---------- --------- ---------
Income (loss) from continuing operations ............................ (85,429) 4,922 30,307
Discontinued operations:
Loss on disposal of discontinued operations, net of income tax
benefit of $54.................................................... -- -- (87)
Extraordinary loss from early extinguishment of debt, net of
income tax benefit of $635.......................................... -- -- (1,028)
---------- --------- ---------
Net income (loss) ................................................... $ (85,429) $ 4,922 $ 29,192
========== ========= =========
Basic earnings (loss) per share:
Income (loss) from continuing operations ........................... $ (13.43) $ .78 $ 4.50
Net income (loss) .................................................. $ (13.43) $ .78 $ 4.34
Diluted earnings (loss) per share:
Income (loss) from continuing operations ........................... $ (13.43) $ .77 $ 4.44
Net income (loss) .................................................. $ (13.43) $ .77 $ 4.28
Weighted average shares outstanding:
Basic .............................................................. 6,363 6,338 6,734
Diluted ............................................................ 6,363 6,383 6,819
The accompanying notes are an integral part of
the consolidated financial statements.
19
ALLTRISTA CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31,
---------------------------
2001 2000
------------ ------------
ASSETS
Current assets
Cash and cash equivalents ............................................. $ 6,376 $ 3,303
Accounts receivable, net of reserve for doubtful accounts of $778
and $1,517........................................................... 13,986 32,250
Income taxes receivable ............................................... 16,252 --
Inventories, net ...................................................... 26,994 52,548
Deferred taxes on income .............................................. 4,832 4,621
Other current assets .................................................. 3,134 1,658
--------- ---------
Total current assets ................................................ 71,574 94,380
--------- ---------
Property, plant and equipment, at cost
Land .................................................................. 782 1,998
Buildings ............................................................. 24,356 35,059
Machinery and equipment ............................................... 106,106 149,405
--------- ---------
131,244 186,462
Accumulated depreciation .............................................. (87,701) (97,410)
--------- ---------
43,543 89,052
--------- ---------
Goodwill, net of accumulated amortization of $6,628 and $16,192......... 15,487 114,138
Deferred taxes on income ............................................... 25,417 --
Other assets ........................................................... 5,282 11,169
--------- ---------
Total assets ........................................................... $ 161,303 $ 308,739
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term debt and current portion of long-term debt ................. $ 28,500 $ 41,995
Accounts payable ...................................................... 14,197 17,842
Accrued salaries, wages and employee benefits ......................... 9,252 8,344
Other current liabilities ............................................. 11,590 3,224
--------- ---------
Total current liabilities ........................................... 63,539 71,405
--------- ---------
Noncurrent liabilities
Long-term debt ........................................................ 56,375 95,065
Deferred taxes on income .............................................. -- 13,068
Other noncurrent liabilities .......................................... 6,260 9,957
--------- ---------
Total noncurrent liabilities ........................................ 62,635 118,090
--------- ---------
Minority interest in subsidiary ........................................ -- 1,023
--------- ---------
Commitments and contingencies (Notes 11 & 12) ..........................
Stockholders' equity:
Common stock ($.01 par value), 50,000 shares authorized, 7,963 and
7,963 shares issued and 6,398 and 6,341 shares outstanding in
2001 and 2000, respectively ......................................... 64 40,017
Additional paid-in capital ............................................ 41,789 --
Retained earnings ..................................................... 32,724 118,153
Accumulated other comprehensive loss .................................. (1,862) (978)
Less: treasury stock (1,565 and 1,622 shares, at cost) ................ (37,586) (38,971)
--------- ---------
Total stockholders' equity .......................................... 35,129 118,221
--------- ---------
Total liabilities and stockholders' equity ............................. $ 161,303 $ 308,739
========= =========
The accompanying notes are an integral part of
the consolidated financial statements.
20
ALLTRISTA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEAR ENDED DECEMBER 31,
------------------------------------------
2001 2000 1999
------------- ----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ................................................... $ (85,429) $ 4,922 $ 29,192
Reconciliation of net income (loss) to net cash provided by
operating activities:
Depreciation ...................................................... 13,427 14,533 12,030
Amortization ...................................................... 5,370 6,778 5,667
Loss (gain) on divestitures of assets and product lines ........... 122,887 -- (19,678)
Loss on disposal of fixed assets .................................. 402 338 152
Special charges (credits) and reorganization expenses ............. 680 (1,600) 2,314
Write-off of debt issuance and amendment costs .................... 1,507 -- --
Deferred taxes on income .......................................... (27,804) 3,892 (4,215)
Deferred employee benefits ........................................ 378 (40) 1,297
Minority interest ................................................. 153 (259) --
Other, net ........................................................ 310 450 (459)
Changes in working capital components, net of effects from
acquisitions and divestitures:
Accounts receivable ............................................... 4,351 6,678 1,760
Inventories ....................................................... 11,219 5,952 (7,023)
Accounts payable .................................................. 794 (12,613) (1,086)
Accrued salaries, wages and employee benefits ..................... 2,212 (2,589) 510
Other current assets and liabilities .............................. (10,600) (7,298) 1,863
--------- --------- ----------
Net cash provided by operating activities ........................ 39,857 19,144 22,324
--------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving credit borrowings ........................... 41,050 57,332 37,260
Payments on revolving credit borrowings ............................. (47,650) (41,940) (36,652)
Proceeds from issuance of long-term debt ............................ -- -- 150,995
Payments on long-term debt .......................................... (45,585) (19,094) (37,076)
Debt issue cost ..................................................... -- -- (2,262)
Debt modification cost .............................................. (867) -- --
Proceeds from issuance of common stock .............................. 815 1,219 1,672
Purchase of treasury stock .......................................... -- (10,485) (3,146)
--------- --------- ----------
Net cash provided (used) by financing activities ................... (52,237) (12,968) 110,791
--------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ................................................ (9,707) (13,637) (16,628)
Insurance proceeds from property casualty ........................... 1,535 -- --
Proceeds from sale of property, plant and equipment ................. 70 105 1,658
Acquisitions of businesses, net of cash acquired .................... -- (6,930) (151,278)
Proceeds from divestitures of assets and product lines .............. 21,001 220 29,305
Proceeds from the surrender of insurance contracts .................. 6,706 -- --
Proceeds from insurance contracts loaned to former officers ......... (4,059) -- --
Investments in insurance contracts .................................. -- -- (274)
Other, net .......................................................... (93) (25) 42
--------- --------- ----------
Net cash provided (used) by investing activities .................. 15,453 (20,267) (137,175)
--------- --------- ----------
NET INCREASE (DECREASE) IN CASH ...................................... 3,073 (14,091) (4,060)
Cash and cash equivalents, beginning of year ......................... 3,303 17,394 21,454
--------- --------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR ............................... $ 6,376 $ 3,303 $ 17,394
========= ========= ==========
The accompanying notes are an integral part of
the consolidated financial statements.
21
ALLTRISTA CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
COMMON STOCK TREASURY STOCK
---------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ------------- -------------
Balance, December 31, 1998 .......... 7,967 $ 40,494 (1,203) $ (29,021)
Net income .......................... -- -- -- --
Stock options exercised and stock
plan purchases ..................... 139 2,497 -- --
Shares reissued from treasury ....... (141) (3,039) 141 3,039
Shares tendered for stock options
and taxes .......................... -- -- (23) (611)
Cumulative translation
adjustment ......................... -- -- -- --
Purchase of common stock ............ -- -- (144) (3,146)
----- ---------- ------ ----------
Balance, December 31, 1999 .......... 7,965 39,952 (1,229) (29,739)
Net income .......................... -- -- -- --
Stock options exercised and stock
plan purchases ..................... 63 1,449 -- --
Shares reissued from treasury ....... (65) (1,384) 65 1,384
Shares tendered for stock options
and taxes .......................... -- -- (6) (131)
Cumulative translation
adjustment ......................... -- -- -- --
Purchase of common stock ............ -- -- (452) (10,485)
----- ---------- -------- ----------
Balance, December 31, 2000 .......... 7,963 40,017 (1,622) (38,971)
Net income (loss) ................... -- -- -- --
Stock options exercised and stock
plan purchases ..................... 67 929 -- --
Shares reissued from treasury ....... (67) (1,515) 67 1,515
Shares tendered for stock options
and taxes .......................... -- -- (10) (130)
Stock option compensation ........... -- 2,422 -- --
Restatement of par value of
common stock associated with
reincorporation in Delaware ........ -- (41,789) -- --
Cumulative translation
adjustment ......................... -- -- -- --
Translation adjustment recorded
to net income due to
liquidation of investment in
foreign subsidiary ................. -- -- -- --
Interest rate swap unrealized
loss ............................... -- -- -- --
Minimum pension liability ........... -- -- -- --
----- ---------- -------- ----------
Balance, December 31, 2001 .......... 7,963 $ 64 (1,565) $ (37,586)
===== ========== ======== ==========
ACCUMULATED OTHER COMPREHENSIVE LOSS
------------------------------------
ADDITIONAL CUMULATIVE INTEREST MINIMUM
PAID-IN RETAINED TRANSLATION RATE PENSION
CAPITAL EARNINGS ADJUSTMENT SWAP LIABILITY
------------ ------------ ------------- ---------- ----------
Balance, December 31, 1998 .......... $ -- $ 84,039 $ (619) $ -- $ --
Net income .......................... -- 29,192 -- -- --
Stock options exercised and stock
plan purchases ..................... -- -- -- -- --
Shares reissued from treasury ....... -- -- -- -- --
Shares tendered for stock options
and taxes .......................... -- -- -- -- --
Cumulative translation
adjustment ......................... -- -- 200 -- --
Purchase of common stock ............ -- -- -- -- --
------- ---------- ------ ------- -------
Balance, December 31, 1999 .......... -- 113,231 (419) -- --
Net income .......................... -- 4,922 -- -- --
Stock options exercised and stock
plan purchases ..................... -- -- -- -- --
Shares reissued from treasury ....... -- -- -- -- --
Shares tendered for stock options
and taxes .......................... -- -- -- -- --
Cumulative translation
adjustment ......................... -- -- (559) -- --
Purchase of common stock ............ -- -- -- -- --
------- ---------- ------ ------- -------
Balance, December 31, 2000 .......... -- 118,153 (978) -- --
Net income (loss) ................... -- (85,429) -- -- --
Stock options exercised and stock
plan purchases ..................... -- -- -- -- --
Shares reissued from treasury ....... -- -- -- -- --
Shares tendered for stock options
and taxes .......................... -- -- -- -- --
Stock option compensation ........... -- -- -- -- --
Restatement of par value of
common stock associated with
reincorporation in Delaware ........ 41,789 -- -- -- --
Cumulative translation
adjustment ......................... -- -- (424) -- --
Translation adjustment recorded
to net income due to
liquidation of investment in
foreign subsidiary ................. -- -- 461 -- --
Interest rate swap unrealized
loss ............................... -- -- -- (524) --
Minimum pension liability ........... -- -- -- -- (397)
------- ---------- ------ ------- -------
Balance, December 31, 2001 .......... $41,789 $ 32,724 $ (941) $ (524) $ (397)
======= ========== ====== ======= =======
The accompanying notes are an integral part of
the consolidated financial statements.
22
ALLTRISTA CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(THOUSANDS OF DOLLARS)
YEAR ENDED DECEMBER 31,
--------------------------------------
2001 2000 1999
------------- --------- ----------
Net income (loss) .......................................... $ (85,429) $4,922 $29,192
Foreign currency translation:
Translation adjustment during period ...................... (424) (559) 200
Translation adjustment recorded to net income due to
liquidation of investment in foreign subsidiary ......... 461 -- --
Interest rate swap unrealized gain (loss):
Transition adjustment ..................................... 45 -- --
Change during period ...................................... (569) -- --
Minimum pension liability .................................. (397) -- --
--------- ------ -------
Comprehensive income (loss) ................................ $ (86,313) $4,363 $29,392
========= ====== =======
The accompanying notes are an integral part of
the consolidated financial statements.
23
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These consolidated financial statements have been prepared in accordance
with generally accepted accounting principles. The consolidated financial
statements include the accounts of Alltrista Corporation and its subsidiaries
(the "Company"). All significant intercompany transactions and balances have
been eliminated upon consolidation. Certain reclassifications have been made in
the Company's financial statements of prior years to conform to the current
year presentation. These reclassifications have no impact on previously
reported net income.
The businesses comprising the Company have interests in consumer and
materials based products. See Business Segment Information (Note 4).
Use of Estimates
Preparation of the consolidated financial statements requires estimates
and assumptions that affect amounts reported and disclosed in the financial
statements and related notes. Actual results could differ from those estimates.
Revenue Recognition
Revenue from the sale of products is primarily recognized at the time
product is shipped to customers. The Company allows customers to return
defective or damaged products as well as certain other products for credit,
replacement, or exchange. Revenue is recognized as the net amount to be
received after deducting estimated amounts for product returns, discounts, and
allowances. The Company provides credit, in the normal course of business, to
its customers. The Company also maintains an allowance for doubtful customer
accounts and charges actual losses when incurred to this allowance.
Freight Costs
Freight costs on goods shipped to customers are included in Cost of Sales.
Cash and Cash Equivalents
Cash equivalents include financial investments with a maturity of three
months or less when purchased.
Inventories
Inventories are stated at the lower of cost, determined on the first-in,
first-out method, or market.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Maintenance and repair
costs are charged to expense as incurred, and expenditures that extend the
useful lives of the assets are capitalized. The Company reviews property, plant
and equipment for impairment whenever events or circumstances indicate that
carrying amounts may not be recoverable through future undiscounted cash flows,
excluding interest cost.
Depreciation
Depreciation is provided on the straight-line method in amounts sufficient
to amortize the cost of the assets over their estimated useful lives (buildings
- -- 30 to 50 years; machinery and equipment -- 5 to 15 years).
Goodwill
Goodwill represents the excess of the purchase prices of acquired
businesses over the estimated fair values of the net assets acquired. Goodwill
is amortized on a straight-line basis over periods not to exceed
24
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
20 years. The Company evaluates these assets for impairment whenever events or
circumstances indicate that carrying amounts may not be recoverable through
future undiscounted cash flows, excluding interest costs. If facts and
circumstances suggest that a subsidiary's net assets are impaired, the Company
assesses the fair value of the underlying business and reduces goodwill to an
amount that results in the book value of the operation approximating fair
value.
Taxes on Income
Deferred taxes are provided for differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates. The
Company established a valuation allowance against a portion of the net tax
benefit associated with all carryforwards and temporary differences at December
31, 2001, as it is more likely than not that these will not be fully utilized
in the available carryforward period.
Fair Value and Credit Risk of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable,
notes payable, accounts payable and accrued liabilities approximate their fair
market value due to the short-term maturities of these instruments. The fair
market value of long-term debt was estimated using rates currently available to
the Company for debt with similar terms and maturities.
The Company enters into interest rate swaps to manage interest rate
exposures. The Company designates the interest rate swaps as hedges of
underlying debt. Interest expense is adjusted to include the payment made or
received under the swap agreements. The fair market value of the swap
agreements was estimated based on the current market value of similar
instruments.
Financial instruments that potentially subject the Company to credit risk
consist primarily of trade receivables and interest-bearing investments. Trade
receivable credit risk is limited due to the diversity of the Company's
customers and the Company's ongoing credit review procedures. Collateral for
trade receivables is generally not required. The Company places its
interest-bearing cash equivalents with major financial institutions and limits
the amount of credit exposure to any one financial institution.
Stock Options
The Company accounts for the issuance of stock options under the
provisions of Accounting Principles Board No. 25, "Accounting for Stock Issued
to Employees." Generally for the Company's stock option plans, no compensation
cost is recognized in the consolidated statement of income because the exercise
price of the Company's stock options equals the market price of the underlying
stock on the date of grant. Under the Company's 2001 Stock Option Plan,
however, the Company did recognize a one-time charge of compensation cost
because of stockholder approval of the plan subsequent to the grant date (see
Note 10).
2. ACQUISITIONS AND DIVESTITURES
Effective November 26, 2001, the Company sold the assets of its Triangle,
TriEnda and Synergy World plastic thermoforming operations to Wilbert, Inc. for
$21 million in cash, a $1.85 million noninterest-bearing one-year note as well
as the assumption of certain identified liabilities. The Company recorded a
pre-tax loss of $121.1 million in 2001 related to the sale. The amount of
goodwill included in the loss on the sale was $82.0 million. The proceeds from
the sale were used to pay down the Company's term debt.
As a result of the sale, the Company also recovered in January 2002
approximately $15.7 million of federal income taxes paid in 1999 and 2000 by
utilizing the carryback of a tax net operating loss generated in 2001. $15
million of the proceeds related to this recovery of income taxes was also used
to pay down the Company's term debt. The tax net operating loss not utilized
during the allowable carryback period will be available to offset taxable
income in future periods. (See Note 19.)
25
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The combined net sales of the thermoformed business sold included in the
Company's historical results were $63.8 million in 2001 (through the date of
sale), $100.3 million in 2000 and $70.7 million in 1999. Operating earnings
(losses) associated with this business were $(12.0) million in 2001, $(8.4)
million in 2000 and $2.8 million in 1999.
Effective November 1, 2001, the Company sold its majority interest in
Microlin, LLC for $1,000 in cash plus contingent consideration based upon
future performance through December 31, 2012 and the cancellation of future
funding requirements. The Company recorded a pre-tax loss of $1.4 million in
2001 related to the sale.
On June 1, 2000, the Company acquired the net assets of Synergy World, a
St. Louis, Missouri-based designer and marketer of portable restrooms sold to
equipment rental companies, waste services companies and diversified sanitation
firms, for $6.9 million in cash plus acquisition costs. The transaction was
accounted for as a purchase with the purchase price allocated to the assets
purchased and liabilities assumed based on their estimated fair values as of
the date of acquisition. These assets were sold effective November 26, 2001.
On December 21, 1999, the Company acquired a 51 percent equity interest in
Microlin, LLC ("Microlin"), a developer of proprietary battery technology. The
initial cash outlay for this investment was $1.5 million, with an agreement to
fund working capital needs over the next several years. This investment was
sold effective November 1, 2001.
Effective May 24, 1999, the Company sold its plastic packaging product
line, which produced coextruded high-barrier plastic sheet and containers for
the food processing industry, for $28.7 million in cash. This transaction
resulted in a gain of $19.7 million. Proceeds from the sale were used for debt
repayment. The Company's sales from this product line were $13.0 million in
1999.
Effective April 25, 1999, the Company acquired the net assets of Triangle
Plastics, Inc. and its TriEnda subsidiary ("Triangle Plastics"), a manufacturer
of heavy gauge industrial thermoformed parts for original equipment
manufacturers in the heavy trucking, agricultural, portable toilet,
recreational and construction markets, and producer of plastic thermoformed
products for material handling applications, for $148.0 million in cash plus
acquisition costs. The transaction was accounted for as a purchase with the
purchase price allocated to the assets purchased and liabilities assumed based
on their estimated fair values as of the date of acquisition. These assets were
sold effective November 26, 2001.
3. PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information presents a summary
of consolidated results of the Company as if the sale of the assets of the
Triangle, TriEnda and Synergy World plastic thermoforming operations (as
described in Note 2 above) had occurred at the beginning of each period
presented. The pro forma financial information also reflects the sale of the
Company's interest in Microlin, LLC that became effective November 1, 2001. The
pro forma information assumes the proceeds from the sale of thermoformed assets
and recovery of income taxes were received at the beginning of each period, and
assumes a 35.0% effective income tax rate for all periods.
2001 2000
(thousands of dollars, except per share data) ------------- -------------
Net sales ...................................................... $ 241,679 $ 257,995
Earnings before interest, taxes and minority interest .......... 20,530 26,676
Net income ..................................................... 7,260 11,251
Diluted earnings per share ..................................... $ 1.14 $ 1.76
The Company's pro forma net income adjusted to reflect the elimination of
all special charges and reorganization expenses, all losses on divestitures of
assets, and the write-off of debt issuance and amendment costs would have been
$12.0 million, or $1.88 per share, for 2001 and $11.4 million, or $1.78 per
share, for 2000.
26
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. BUSINESS SEGMENT INFORMATION
Following the sale of the Triangle, TriEnda and Synergy World plastic
thermoforming assets and the third quarter 2001 appointment of new executive
management, the Company reorganized its business segments to reflect the new
business and management strategy. Prior periods have been reclassified to
conform to the current segment definitions.
The Company is now organized into two distinct segments: Consumer Products
and Materials Based Group. The Company's operating segments are managed by the
Company's Chief Executive Officer and, with respect to the Consumer Products
segment, the division president for consumer products as well. They are
responsible for the segments' performance and are also part of the Company's
operating decision-making group.
The Consumer Products segment markets a line of home food preservation
products under Ball (Registered Trademark) , Kerr (Registered Trademark) and
Bernardin (Registered Trademark) brands. Products include home canning jars
which are sourced from major commercial glass container manufacturers, home
canning metal closures, and related food products, which are distributed
through a wide variety of retail outlets.
The Materials Based Group provides cast zinc strip and fabricated zinc
products primarily for zinc coinage and industrial applications, produces
injection molded plastic products used in medical, pharmaceutical and consumer
products, and manufactures industrial thermoformed plastic parts for
appliances. This segment also included through November 26, 2001, the plastic
thermoforming operations of Triangle, TriEnda and Synergy (see Note 2) which
produced industrial thermoformed plastic parts for manufactured housing,
recreational vehicles, heavy trucking, agriculture equipment, portable
restrooms, recreational and construction products.
Net sales, operating earnings, assets employed in operations, capital
expenditures, and depreciation and amortization by segment are summarized as
follows:
2001 2000 1999
(thousands of dollars) -------------- ------------ --------------
NET SALES:
Consumer products ...................................................... $ 120,644 $ 120,381 $133,074
Materials based group(1)(3)(4) ......................................... 185,437 238,047 225,584
Intercompany ........................................................... (1,103) (1,072) (627)
---------- --------- --------
Total net sales ...................................................... $ 304,978 $ 357,356 $358,031
========== ========= ========
OPERATING EARNINGS (LOSS):
Consumer products ...................................................... $ 13,291 $ 10,362 $ 17,091
Materials based group .................................................. 1,801 9,928 21,467
Intercompany ........................................................... 13 39 (69)
Unallocated corporate expenses ......................................... (6,146) (1,347) (7)
Gain (loss) on divestitures of assets and product lines(1)(4) .......... (122,887) -- 19,678
---------- --------- ---------
Earnings (loss) before interest, taxes and minority interest ......... (113,928) 18,982 58,160
Interest expense, net ................................................... (11,791) (11,917) (8,395)
---------- --------- ---------
Income (loss) before taxes and minority interest ........................ $ (125,719) $ 7,065 $ 49,765
========== ========= =========
ASSETS EMPLOYED IN OPERATIONS:
Consumer products ...................................................... $ 51,301 $ 60,713 $ 71,625
Materials based group(1) ............................................... 55,152 231,956 232,619
---------- --------- ---------
Total assets employed in operations .................................. 106,453 292,669 304,244
Corporate(2) ........................................................... 54,850 16,070 34,507
---------- --------- ---------
Total assets ......................................................... $ 161,303 $ 308,739 $338,751
========== ========= =========
27
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2001 2000 1999
(thousands of dollars) ---------- --------- ---------
CAPITAL EXPENDITURES:
Consumer products ............................. $ 633 $ 1,314 $ 5,477
Materials based group ......................... 9,067 12,036 10,893
Corporate ..................................... 7 287 258
------- ------- -------
Total capital expenditures .................. $ 9,707 $13,637 $16,628
======= ======= =======
DEPRECIATION AND AMORTIZATION:
Consumer products ............................. $ 3,202 $ 3,264 $ 2,505
Materials based group ......................... 15,395 17,813 14,372
Corporate ..................................... 200 234 820
------- ------- -------
Total depreciation and amortization ......... $18,797 $21,311 $17,697
======= ======= =======
- ----------
(1) Effective November 26, 2001, the Company sold the assets of its Triangle,
TriEnda and Synergy World plastic thermoforming operations.
(2) Corporate assets primarily include cash and cash equivalents, amounts
relating to benefit plans, deferred tax assets and corporate facilities
and equipment.
(3) Includes the net sales of Triangle Plastics effective April 25, 1999.
(4) Effective May 24, 1999, the Company sold its plastic packaging product
line.
The Company's major customers are located within the United States and
Canada. Net sales of the Company's products in Canada, including home food
preservation products, coinage and thermoformed plastic parts were $26.8
million, $35.3 million and $35.7 million in 2001, 2000 and 1999, respectively.
Long-lived assets located outside the United States and net sales outside of
the United States and Canada are not material.
5. INVENTORIES
Inventories were comprised of the following at December 31:
2001 2000
(thousands of dollars) --------- ----------
Raw materials and supplies .......... $ 5,563 $14,311
Work in process ..................... 4,746 10,253
Finished goods ...................... 16,685 27,984
------- -------
Total inventories ................ $26,994 $52,548
======= =======
6. DEBT AND INTEREST
In November 2001, the Company entered into an agreement with its lenders
to amend certain provisions of its term loan and revolving credit facilities.
The amendment reduced the revolving credit facility from $50 million to $40
million, shortened the facility termination date by one year, accelerated the
required principal payments to conform with the shortened term of the facility,
modified certain financial covenants, and required that the proceeds from the
sale of the thermoforming assets and $15 million from the recovery of income
taxes associated with the net operating loss carryback be used to prepay term
debt.
In December 2001, the Company applied the $21.0 million of proceeds from
the sale of the thermoformed assets to the outstanding term loan balance. In
January 2002, the Company applied $15.0 million of proceeds from the income tax
refund related to the thermoformed sale to further pay down the term loan.
28
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The term loan, as amended and reflecting the payments mentioned above,
requires quarterly payments of principal of $3.1 million through the first
quarter of 2003, with quarterly payments of $11.2 million for the remainder of
the term (through March 31, 2004). Interest on the term loan is based upon
fixed increments over the adjusted London Interbank Offered Rate or the agent
bank's alternate borrowing rate as defined in the agreement. The Company's
weighted average interest rate on the term loan outstanding borrowings at
December 31, 2001 was 4.3%, exclusive of the effects of the interest rate swap
(see below). As of December 31, 2001 and 2000, the outstanding balances of the
term loan were $75.5 million and $120.0 million, respectively.
Because the interest rates applicable to the term loan are based on
floating rates identified by reference to market rates, the fair market value
of the long-term debt as of December 31, 2001 and 2000 approximates its
carrying value.
Interest on borrowings under the revolving credit facility are based upon
fixed increments over the adjusted London Interbank Offered Rate or the agent
bank's alternate borrowing rate as defined in the agreement. The agreement also
requires the payment of commitment fees on the unused balance. As of December
31, 2001, $9.4 million of borrowings were outstanding under this agreement with
a weighted average interest rate of 4.7%. As of December 31, 2000, $16 million
of borrowings were outstanding with a weighted average interest rate of 8.1%.
In February 2001, the Company entered into an agreement with its lenders
to amend certain provisions of its term loan and revolving credit facilities.
The amendment reduced the revolving credit facility to $50 million, provided
for the Company's accounts receivable and inventory to be pledged as
collateral, and modified certain financial covenants.
The Company financed the 1999 acquisition of Triangle Plastics with a $250
million credit facility consisting of a six-year $150 million term loan and a
$100 million revolving credit facility with all borrowings scheduled to mature
on March 31, 2005. The agreement contains certain guarantees and financial
covenants including minimum net worth requirements, minimum fixed charge
coverage ratios and maximum financial leverage ratios.
As part of the financing in 1999, the Company paid off $25.7 million of
existing debt. The Company incurred a $1.7 million pretax ($1.0 million
after-tax) prepayment charge in connection with the payoff. The charge is
reported as an extraordinary loss on the Consolidated Statement of Operations.
In May 1999, the Company entered into a three-year interest rate swap with
an initial notional value of $90 million. The swap effectively fixed the
interest rate on approximately 60% of the Company's term debt at a maximum rate
of 7.98% for the three-year period. Adjusted for the application of proceeds
from the sale of thermoformed assets and from the related income tax refund,
the swap now covers 100% of the Company's term debt. The fair market value of
the swap as of December 31, 2001 and 2000 was approximately $(524,000) and
$45,000, respectively.
As of December 31, 2001, maturities on long-term debt over the next five
years, were $19.1 million in 2002, $43.5 million in 2003, $12.9 million in
2004, and none for 2005 and 2006. Maturities on long-term debt over the next
five years, as adjusted to reflect the application of the $15 million of
proceeds from the income tax refund as mentioned above, are $27.4 million in
2002, $36.8 million in 2003, $11.2 million in 2004, and none for 2005 and 2006.
Interest paid on the Company's borrowings during the years ended December
31, 2001, 2000 and 1999 was $9.5 million, $11.4 million and $8.3 million,
respectively.
29
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. SPECIAL CHARGES (CREDITS) AND REORGANIZATION EXPENSES
The Company incurred net special charges (credits) and reorganization
expenses of $5.0 million, $0.4 million and $2.3 million for 2001, 2000 and
1999, respectively. These amounts are comprised of the following (in millions):
2001 2000 1999
--------- --------- ---------
Costs to evaluate strategic options ............................ $ 1.4 $ 0.6 $ --
Discharge of deferred compensation obligations ................. (4.1) -- --
Separation costs for former officers ........................... 2.6 -- --
Stock option compensation ...................................... 2.4 -- --
Corporate restructuring costs .................................. 2.3 -- --
Costs to exit facilities ....................................... 0.8 -- 2.3
Reduction of long-term performance-based compensation .......... -- (1.6) --
Litigation charges ............................................. -- 1.4 --
Items related to divested thermoforming operations ............. (0.4) -- --
------ ------ -----
$ 5.0 $ 0.4 $ 2.3
====== ====== =====
During 2001, certain participants in the Company's deferred compensation
plans agreed to forego balances in those plans in exchange for loans from the
Company in the same amounts. The loans, which were completed during 2001, bear
interest at the applicable federal rate and require the individuals to secure a
life insurance policy having the death benefit equivalent to the amount of the
loan payable to the Company. All accrued interest and principal on the loans
are payable upon the death of the participant and their spouse. The Company
recognized $4.1 million of pre-tax income during 2001 related to the discharge
of the deferred compensation obligations.
On September 25, 2001, the Company announced the departure from the
Company of Thomas B. Clark, Chairman, President and Chief Executive Officer,
and Kevin D. Bower, Senior Vice President and Chief Financial Officer. The
Board announced the appointment of Martin E. Franklin as Chairman and Chief
Executive Officer and Ian G.H. Ashken as Vice Chairman, Chief Financial Officer
and Secretary. Separation costs associated with this management reorganization
were approximately $2.6 million.
During September 2001, options were granted to participants under the
Company's 2001 Stock Option Plan. Because the options granted under this new
plan were still subject to stockholder approval at the time of grant, the
options resulted in a one-time charge of $2.4 million which was recorded in the
fourth quarter of 2001 (see Note 10) following stockholder approval of the 2001
Stock Option Plan on December 18, 2001.
During the fourth quarter of 2001, the Company incurred corporate
restructuring costs in the amount of $2.3 million. These include costs related
to the transitioning of the corporate office function from Indianapolis,
Indiana to Rye, New York and Muncie, Indiana, costs to reincorporate in
Delaware and to hold a special meeting of stockholders, and other costs
including professional fees. Of this amount, $1.8 million remained unpaid as of
December 31, 2001.
In August 2001, the Company announced that it would be consolidating its
home canning metal closure production from its Bernardin Ltd. Toronto, Ontario
facility into its Muncie, Indiana manufacturing operation. The total cost to
exit the Toronto facility was $0.8 million and includes a $0.3 million loss on
the sale and disposal of equipment, and $0.5 million of employee severance
costs. Of the $0.5 million accrued liability established for severance costs,
approximately $0.4 million had been expended through December 31, 2001. The
Company will continue to distribute its products in Canada through Bernardin,
Ltd.
During 2001, items recognized related to the divested thermoforming
operations included a pre-tax gain of $1.0 million in connection with an
insurance recovery associated with a property casualty. Also in
30
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
August 2001, the Company announced that it had vacated its former Triangle
Plastics facility in Independence, Iowa and integrated personnel and
capabilities into its other operating and distribution facilities in the area.
The total cost to exit this Iowa facility was $0.6 million and includes $0.4
million in future lease obligations and an additional $0.2 million of costs
related to the leased facility.
During 2000, the Company recorded a pre-tax gain of $1.6 million related
to a reduction in long-term performance-based compensation. Also during 2000,
the Company reached settlements in legal disputes incurring $1.4 million in net
settlement and legal expenses.
During 1999, the Company incurred $2.3 million in costs associated with
the exit of a plastic thermoforming facility.
8. TAXES ON INCOME
The components of the provision for income taxes attributable to
continuing operations were as follows for the years ended December 31:
2001 2000 1999
(thousands of dollars) -------------- ----------- ----------
Current income tax expense (benefit):
U.S. federal ................................... $ (13,978) $ (166) $ 19,233
Foreign ....................................... 1,163 462 960
State and local ............................... (500) (59) 2,880
---------- ------- --------
Total ....................................... (13,315) 237 23,073
---------- ------- --------
Deferred income tax expense (benefit):
U.S. federal .................................. (33,707) 1,135 (3,635)
State, local and other ........................ (4,962) 187 (580)
---------- ------- --------
Total ....................................... (38,669) 1,322 (4,215)
---------- ------- --------
Income tax benefit applied to goodwill ......... 11,541 843 600
---------- ------- --------
Total income tax provision (benefit) ........... $ (40,443) $ 2,402 $ 19,458
========== ======= ========
Foreign pre-tax income was $0.9 million, $2.5 million and $1.0 million in
2001, 2000 and 1999, respectively.
Deferred tax liabilities (assets) are comprised of the following at
December 31:
2001 2000
(thousands of dollars) -------------- ----------
Property, equipment and intangibles .......... $ 9,430 $ 17,559
Other ........................................ 2,314 346
---------- --------
Gross deferred tax liabilities .............. 11,744 17,905
---------- --------
Net operating loss ........................... (39,909) --
Accounts receivable allowances ............... (388) (580)
Inventory valuation .......................... (1,730) (1,312)
Compensation and benefits .................... (4,010) (5,352)
Other ........................................ (1,351) (2,214)
---------- --------
Gross deferred tax assets ................... (47,388) (9,458)
---------- --------
Valuation allowance .......................... 5,395 --
---------- --------
Net deferred tax liability (asset) ........... $ (30,249) $ 8,447
========== ========
31
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Approximately $103 million of net operating loss carryforwards remain at
December 31, 2001. Their use is limited to future taxable income of the
Company. The carryforwards expire in 2021. The Company established a valuation
allowance against a portion of the net tax benefit associated with all
carryforwards and temporary differences at December 31, 2001, as it is more
likely than not that these will not be fully utilized in the available
carryforward period. (See Note 19.)
The difference between the federal statutory income tax rate and the
Company's effective income tax rate as a percentage of income from continuing
operations is reconciled as follows:
2001 2000 1999
---------- ---------- ----------
Federal statutory tax rate ................. 35.0% 35.0% 35.0%
Increase (decrease) in rates resulting from:
State and local taxes, net ................ 3.3 1.0 3.0
Foreign ................................... ( .9) (2.2) 1.2
Valuation allowance ....................... (4.3) -- --
Other ..................................... (0.9) .2 ( .1)
---- ---- ----
Effective income tax rate .................. 32.2% 34.0% 39.1%
==== ==== ====
In 1999, the income tax expense or benefit from discontinued operations
differed from an expense or benefit calculated using the federal statutory tax
rate primarily due to state income taxes and the amortization of intangible
assets.
Total income tax payments made by the Company during the years ended
December 31, 2001, 2000 and 1999 were $1.0 million, $1.7 million and $23.2
million, respectively.
9. RETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS
The Company has multiple defined contribution retirement plans that
qualify under section 401(k) of the Internal Revenue Code. The Company's
contributions to these retirement plans were $1.5 million, $1.5 million and
$1.9 million, respectively, in the years ended December 31, 2001, 2000 and
1999.
The Company also maintains a defined benefit pension plan for certain of
its hourly employees. The components of net periodic pension expense for the
years ended December 31, 2001, 2000 and 1999 are as follows:
2001 2000 1999
(thousands of dollars) ----------- ----------- -----------
Service cost of benefits earned during the period .......... $ 273 $ 280 $ 291
Interest cost on projected benefit obligation .............. 907 853 807
Investment loss (gain) on plan assets ...................... 1,793 (1,648) (1,670)
Net amortization and deferral .............................. (2,942) 630 802
-------- -------- --------
Net periodic pension expense ............................... $ 31 $ 115 $ 230
======== ======== ========
32
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table is a reconciliation of the benefit obligation and the
fair value of plan assets as of December 31, 2001 and 2000:
2001 2000
(thousands of dollars) ------------ -------------
Change in benefit obligation:
Benefit obligation at beginning of year ................ $ 12,304 $11,541
Service cost ........................................... 273 280
Interest cost .......................................... 907 853
Amendments ............................................. 232 --
Actuarial gain ......................................... (113) (58)
Benefits paid .......................................... (386) (312)
-------- --------
Benefit obligation at end of year ...................... 13,217 12,304
-------- --------
Change in plan assets:
Fair value of plan assets at beginning of year ......... 13,320 12,087
Actual return on plan assets ........................... (1,793) 1,648
Benefits paid .......................................... (445) (415)
-------- --------
Fair value of plan assets at end of year ............... 11,082 13,320
-------- --------
Funded status .......................................... (2,135) 1,016
Unrecognized net transitional asset .................... -- (1)
Unrecognized prior service cost ........................ 882 745
Unrecognized net loss (gain) ........................... 884 (2,098)
Additional minimum liability ........................... (1,279) --
-------- ---------
Accrued benefit cost ................................... $ (1,648) $ (338)
======== =========
The actuarial assumptions used to compute the funded status of the plan
for 2001 and 2000 include a discount rate of 7.50% and an expected long-term
rate of return on assets of 9.0%.
In accordance with the provisions of SFAS 87, "Employer's Accounting for
Pensions," the Company recorded an additional minimum liability of $1.3 million
at December 31, 2001, representing the excess of the unfunded accumulated
benefit obligation over the accrued pension cost. The additional minimum
liability has been offset by an intangible asset to the extent of previously
unrecognized prior service cost, with the remainder of $0.4 million recorded as
a component of accumulated other comprehensive loss.
The Company also provides certain postretirement medical and life
insurance benefits for a portion of its non-union employees.
The components of net periodic postretirement benefit expense for the
years ended December 31, 2001, 2000 and 1999 are as follows:
2001 2000 1999
(thousands of dollars) -------- -------- -------
Service cost of benefits earned ........... $ 62 $ 60 $ 67
Interest cost on liability ................ 112 105 105
Net amortization and deferral ............. (15) (14) 2
----- ----- ----
Net postretirement benefit cost .......... $ 159 $ 151 $174
===== ===== ====
33
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The status of the Company's unfunded postretirement benefit obligation at
December 31, 2001 and 2000 follows:
2001 2000
(thousands of dollars) --------- ------------
Change in benefit obligation:
Benefit obligation at beginning of year ......... $1,553 $1,446
Service cost .................................... 62 60
Interest cost ................................... 112 105
Actuarial loss (gain) ........................... 109 (9)
Benefits paid ................................... (61) (49)
------ -------
Benefit obligation at end of year ............... 1,775 1,553
Unrecognized prior service cost ................. (46) (49)
Unrecognized net gain ........................... 339 443
------ -------
Accrued benefit cost ............................ $2,068 $1,947
====== =======
The assumed discount rate used to measure the benefit obligation was 7.00%
and 7.50% as of December 31, 2001 and 2000, respectively. Increases in health
care costs would not materially impact the benefit obligation or the annual
service and interest costs recognized as benefits under the medical plan
consist of a defined dollar monthly subsidy toward the retiree's purchase of
medical insurance for the majority of employees covered.
Through December 31, 2001, the Company had a deferred compensation plan
that permitted eligible employees to defer a specified portion of their
compensation. The deferred compensation earned rates of return as specified in
the plan. As of December 31, 2001 and 2000, the Company had accrued $2.2
million and $6.4 million, respectively, for its obligations under this plan.
Interest expense on this obligation was $0.2 million, $0.3 million and $0.7
million in 2001, 2000 and 1999, respectively. Effective January 1, 2002 the
deferred compensation plan has been terminated. Participants may elect to keep
their existing balances in the plan, and if so those balances will earn a rate
of return equal to the federal funds overnight repurchase rate.
To effectively fund the deferred compensation obligation, the Company had
purchased variable rate life insurance contracts. These insurance contracts
were surrendered in June 2001 and therefore the obligation at December 31, 2001
is unfunded. The cash surrender value of the contracts included in Other Assets
at December 31, 2000 was $6.6 million.
During 2001, certain participants in the Company's deferred compensation
plans agreed to forego balances in those plans in exchange for loans from the
Company in the same amounts. The loans, which were completed during 2001, bear
interest at the applicable federal rate and require the individuals to secure a
life insurance policy having the death benefit equivalent to the amount of the
loan payable to the Company. All accrued interest and principal on the loans
are payable upon the death of the participant and their spouse. The Company
recognized $4.1 million of pre-tax income during 2001 related to the discharge
of the deferred compensation obligations. These amounts are included in Special
Charges (Credits) and Reorganization Expenses on the Consolidated Statement of
Operations.
10. STOCK PLANS
The Company maintains the 1998 Long-Term Equity Incentive Plan that allows
for grants of stock options, restricted stock, stock equivalent units, stock
appreciation rights and other stock-related forms of incentive compensation. As
of December 31, 2001, there were 383,490 shares available for grant under this
long-term equity incentive plan.
34
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Effective September 24, 2001, the Company established the 2001 Stock
Option Plan for the purpose of granting options for the purchase of common
shares to the Company's executive officers and independent directors. Options
vest to, and are exercisable by, participants on the earlier of 1) the date the
Company's closing stock price equals or exceeds $17 per share or 2) the seventh
anniversary of the grant date. During September, 570,000 options were granted
to participants under this new plan. Because the options granted under this new
plan were still subject to stockholder approval at the time of grant, the
options resulted in a one-time charge of $2.4 million which was recorded in the
fourth quarter of 2001. The charge represents the difference between the
exercise price of the options of $10.95 (the fair value at the date of grant)
and the fair value of the Company's stock at the time of stockholder approval
on December 18, 2001 which was $15.20. This charge is included in Special
Charges (Credits) and Reorganization Expenses on the Consolidated Statement of
Operations. As of December 31, 2001, there were 80,000 shares available for
grant under the 2001 Stock Option Plan.
The Company also maintains the 1993 Stock Option Plan and the 1993 and
1996 Stock Option Plans for Nonemployee Directors whereby stock options are
granted to key employees and non-employee directors. As of December 31, 2001,
there were 222,042 shares available for grant under these stock option plans.
New stock option issuances are generally made under the 1998 and 2001 plans.
A summary of stock option activity for the years ended December 31, 2001
and 2000 is as follows:
2001 2000
---------------------------------------------- ----------------------------------------------
WEIGHTED WEIGHTED
AVG. AVG.
SHARES OPTION PRICE PRICE RANGE SHARES OPTION PRICE PRICE RANGE
------------ -------------- ------------------ ------------ -------------- ------------------
Outstanding at beginning of
year .............................. 306,170 $ 18.27 $ 10.89-$27.94 276,110 $ 18.81 $ 10.89-$27.94
New options granted ................ 666,000 11.06 10.95-15.09 80,750 16.54 12.50-23.75
Exercised .......................... (15,355) 10.89 10.89-10.89 (20,890) 12.38 10.89-19.63
Canceled ........................... (33,843) 19.62 13.00-27.94 (29,800) 23.53 19.63-27.94
------- -------- ---------------- ------- -------- ----------------
Outstanding at end of year ......... 922,972 13.14 10.95-27.94 306,170 18.27 10.89-27.94
Exercisable at end of year ......... 242,543 $ 18.37 $ 12.50-$27.94 213,650 $ 18.70 $ 10.89-$27.94
Significant option groups outstanding at December 31, 2001 and related
weighted average price and life information follows:
OPTIONS WEIGHTED AVERAGE OPTIONS WEIGHTED AVERAGE WEIGHTED AVERAGE
EXERCISE PRICE OUTSTANDING EXERISE PRICE EXERCISABLE EXERCISE PRICE REMAINING LIFE (YEARS)
- ---------------------- ------------- ------------------ ------------- ------------------ -----------------------
$22.25-$27.94......... 52,576 $ 23.95 43,893 $ 23.70 4.36
18.75-21.50 .......... 108,894 20.89 106,148 20.92 3.65
10.95-15.09 .......... 761,502 11.29 92,502 12.91 8.69
Had compensation cost for the Company's stock option plans been determined
based on the fair value at the grant dates for awards under those plans, the
Company's net income and earnings per share would have been reduced to the pro
forma amounts indicated.
35
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2001 2000 1999
(thousands of dollars, except per share amounts) ------------- ----------- ------------
Net income (loss)
As reported ..................................... $ (85,429) $ 4,922 $ 29,192
Pro forma ....................................... (85,724) 4,624 28,899
Basic earnings (loss) per share
As reported ..................................... $ (13.43) $ 0.78 $ 4.34
Pro forma ....................................... (13.47) 0.73 4.29
Diluted earnings (loss) per share
As reported ..................................... $ (13.43) $ 0.77 $ 4.28
Pro forma ....................................... (13.47) 0.72 4.24
The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 2001, 2000 and 1999,
respectively: no dividend yield for all years, expected volatility of 37, 36
and 25 percent, risk-free interest rates of 4.8, 5.1 and 5.4 percent and
expected lives of 7.5 years for all periods. The average fair value of each
option granted in 2001, 2000 and 1999 was $5.77, $8.26 and $8.62, respectively.
The Company also grants restricted stock to key employees. The company
granted 500, 3,250 and 6,950 shares in 2001, 2000 and 1999, respectively.
The Company also maintains an employee stock purchase plan whereby the
Company matches 20% of each participating employee's monthly payroll deduction,
up to $500. The Company thereby contributed $59,000, $144,000 and $166,000 to
the plan in 2001, 2000 and 1999, respectively.
11. LEASE COMMITMENTS
The Company has commitments under operating leases, certain of which
extend through 2008. These commitments total $2.7 million in 2002, $2.6 million
in 2003, $2.3 million in 2004, $1.6 million in 2005, $0.6 million in 2006 and
$0.4 million in total for all later years. Total lease expense was $4.8 million
in 2001, $4.1 million in 2000 and $3.5 million in 1999.
12. CONTINGENCIES
The Company is involved in various legal disputes in the ordinary course
of business. In addition, the Environmental Protection Agency has designated
the Company as a potentially responsible party, along with numerous other
companies, for the clean up of several hazardous waste sites. Based on
currently available information, the Company does not believe that the
disposition of any of the legal or environmental disputes the Company is
currently involved in will have a material adverse effect upon the financial
condition, results of operations, cash flows or competitive position of the
Company. It is possible, that as additional information becomes available, the
impact on the Company of an adverse determination could have a different
effect.
13. NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standard 133 (SFAS
133), Accounting for Derivative Instruments and Hedging Activities, on January
1, 2001. The statement requires the Company to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be adjusted
to fair value through income. If the derivative is a hedge, depending on the
nature of the hedge, changes in the fair value of derivatives will either be
offset against the change in fair value of the hedged assets, liabilities, or
firm commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. Hedge ineffectiveness, the
amount by which the change in the value of a hedge does not exactly offset the
change in the value of the hedged item, will be immediately recognized in
earnings. The adoption of SFAS 133 on January 1, 2001 did not have a material
impact on the Company's results of operations or financial position.
36
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In July 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards No. 141, Business Combinations,
and No. 142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill (and
intangible assets deemed to have indefinite lives) will no longer be amortized
but will be subject to annual impairment tests in accordance with the
Statements. Other intangible assets will continue to be amortized over their
useful lives. The Company will apply the new rules on accounting for goodwill
and other intangible assets beginning in the first quarter of 2002. During
2002, the Company will perform the first of the required impairment tests of
goodwill and indefinite lived intangible assets, but does not anticipate a
material impact on its results of operations or financial position.
In June 2001, the FASB issued Statement of Financial Accounting Standard
No. 143 (SFAS 143), Accounting for Asset Retirement Obligations, effective for
fiscal years beginning after June 15, 2002. This standard requires entities to
record the fair value of a liability for an asset retirement obligation in the
period in which it is incurred. SFAS 143 is effective for the Company beginning
with the first quarter of 2003, and its adoption is not expected to have a
material impact on the Company's results of operations or financial position.
In August 2001, the FASB issued Statement of Financial Accounting Standard
No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived
Assets, effective for fiscal years beginning after December 15, 2001. This
standard supercedes SFAS 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, and provides a single
accounting model for long-lived assets to be disposed of. The new standard also
supersedes the provisions of APB Opinion 30 with regard to reporting the
effects of a disposal of a segment of a business and requires expected future
operating losses from discontinued operations to be displayed in discontinued
operations in the period(s) in which the losses are incurred. SFAS 144 is
effective for the Company beginning with the first quarter of 2002, and its
adoption is not expected to have a material impact on the Company's results of
operations or financial position.
14. DERIVATIVE FINANCIAL INSTRUMENTS
The Company's derivative activities are initiated within the guidelines of
documented corporate risk-management policies and do not create additional risk
because gains and losses on derivative contracts offset losses and gains on the
assets, liabilities and transactions being hedged. As derivative contracts are
initiated, the Company designates the instruments individually as either a fair
value hedge or a cash flow hedge. Management reviews the correlation and
effectiveness of its derivatives on a periodic basis.
The Company uses interest rate swaps to manage a portion of its exposure
to short-term interest rate variations with respect to the London Interbank
Offered Rate on its term debt obligations. The Company has designated the
interest rate swaps as cash flow hedges. Gains and losses related to the
effective portion of the interest rate swaps are reported as a component of
other comprehensive income and reclassified into earnings in the same period
the hedged transaction affects earnings. Because the terms of the swaps exactly
match the terms of the underlying debt, the swaps are perfectly effective. The
interest rate swap agreements expire in March 2002.
15. RELATED PARTY TRANSACTIONS
On May 7, 2001, the Company entered into a letter of intent (the "Letter")
with Marlin Partners II, LP (Marlin), Catterton Partners, L.P. and Alpha
Private Equity Group (collectively, the "Other Investors") for the acquisition
by Marlin and the Other Investors of all of the issued and outstanding common
stock of the Company. At the time, Marlin was a related party due to its
ownership of approximately 10 percent of the issued and outstanding common
stock of the Company. Mr. Martin Franklin and Mr. Ian Ashken, the Company's
current Chairman and CEO, and Vice Chairman and CFO,
37
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
respectively, were the managing partners of Marlin. According to the terms of
the Letter, Marlin was reimbursed approximately $480,000 of expenses related to
the contemplated transaction. On June 24, 2001, Messrs. Franklin and Ashken
became Directors of the Company and on September 24, 2001, Messrs. Franklin and
Ashken became executive officers of the Company.
16. EARNINGS PER SHARE
Basic earnings per share are computed by dividing net income by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share are calculated based on the weighted average number of
outstanding common shares plus the dilutive effect of stock options as if they
were exercised. Due to the net loss for 2001, the effect of the potential
exercise of stock options was not considered in the diluted earnings per share
calculation for that year since it would be antidilutive.
A computation of earnings per share is as follows for the years ended
December 31:
2001 2000 1999
(thousands, except per share amounts) -------------- ----------- ----------
Income (loss) from continuing operations ......................... $ (85,429) $ 4,922 $ 30,307
Discontinued operations .......................................... -- -- (87)
Extraordinary loss from early extinguishment of debt ............. -- -- (1,028)
---------- ------- --------
Net income (loss) ................................................ $ (85,429) $ 4,922 $ 29,192
========== ======= ========
Weighted average shares outstanding .............................. 6,363 6,338 6,734
Additional shares assuming conversion of stock options ........... -- 45 85
---------- ------- --------
Weighted average shares outstanding assuming conversion .......... 6,363 6,383 6,819
========== ======= ========
Basic earnings (loss) per share:
Income (loss) from continuing operations ......................... $ (13.43) $ .78 $ 4.50
Discontinued operations .......................................... -- -- ( .01)
Extraordinary loss from early extinguishment of debt ............. -- -- ( .15)
---------- ------- --------
Net income (loss) ................................................ $ (13.43) $ .78 $ 4.34
========== ======= ========
Diluted earnings (loss) per share -- assuming conversion:
Income (loss) from continuing operations ......................... $ (13.43) $ .77 $ 4.44
Discontinued operations .......................................... -- -- ( .01)
Extraordinary loss from early extinguishment of debt ............. -- -- ( .15)
---------- ------- --------
Net income (loss) ................................................ $ (13.43) $ .77 $ 4.28
========== ======= ========
17. QUARTERLY STOCK PRICES (UNAUDITED)
Quarterly sales prices for the Company's common stock, as reported on the
composite tape, were as follows:
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- ----------- ----------- -----------
2001
- ----
High ......... $ 15.13 $ 16.15 $ 13.03 $ 16.05
Low .......... $ 12.30 $ 11.64 $ 10.70 $ 11.30
------- ------- ------- -------
2000
- ----
High ......... $ 25.00 $ 25.50 $ 23.50 $ 20.94
Low .......... $ 21.00 $ 20.00 $ 20.75 $ 10.00
------- ------- ------- -------
38
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
18. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Summarized quarterly results of operations for 2001, 2000 and 1999 were as
follows:
FIRST SECOND
QUARTER QUARTER
(thousands of dollars, except per share amounts) --------------- ---------------
2001
- ----
Net sales ........................................ $ 69,027 $ 90,598
-------- ----------
Gross profit ..................................... 14,935 24,677
-------- ----------
Net income (loss) from continuing
operations ...................................... (238)(1) 5,111(2)
-------- ------------
Net income (loss) ................................ (238) 5,111
-------- ------------
Basic earnings (loss) per share:
Income (loss) from continuing
operations .................................... $ (.04) $ .80
-------- ------------
Net income (loss) ............................... $ (.04) $ .80
-------- ------------
Diluted earnings (loss) per share:
Income (loss) from continuing
operations .................................... $ (.04) $ .80
-------- ------------
Net income (loss) ............................... $ (.04) $ .80
-------- ------------
2000
- ----
Net sales ........................................ $ 84,455 $ 114,998
-------- ------------
Gross profit ..................................... 18,808 30,824
-------- ------------
Net income (loss) from continuing
operations ...................................... 444 6,210(5)
-------- ------------
Net income (loss) ................................ 444 6,210
-------- ------------
Basic earnings (loss) per share:
Income (loss) from continuing
operations .................................... $ .07 $ .99
-------- ------------
Net income (loss) ............................... $ .07 $ .99
-------- ------------
Diluted earnings (loss) per share:
Income (loss) from continuing
operations .................................... $ .07 $ .98
-------- ------------
Net income (loss) ............................... $ .07 $ .98
-------- ------------
1999
- ----
Net sales ........................................ $ 53,411 $ 113,653
-------- ------------
Gross profit ..................................... 12,318 33,678
-------- ------------
Net income from continuing operations............. 1,963 20,364(8)
-------- ------------
Net income (loss) ................................ 2,099 19,336
-------- ------------
Basic earnings (loss) per share:
Income from continuing operations ............... $ .29 $ 3.03
-------- ------------
Net income (loss) ............................... $ .31 $ 2.88
-------- ------------
Diluted earnings (loss) per share:
Income from continuing operations ............... $ .29 $ 2.99
-------- ------------
Net income (loss) ............................... $ .31 $ 2.84
-------- ------------
THIRD FOURTH
QUARTER QUARTER TOTAL
(thousands of dollars, except per share amounts) ------------------ ----------------- -------------
2001
- ----
Net sales ........................................ $ 90,477 $ 54,876 $ 304,978
----------- ---------- ---------
Gross profit ..................................... 22,178 9,512 71,302
----------- ---------- ---------
Net income (loss) from continuing
operations ...................................... (83,032)(3) (7,270)(4) (85,429)
----------- ---------- ---------
Net income (loss) ................................ (83,032) (7,270) (85,429)
----------- ---------- ---------
Basic earnings (loss) per share:
Income (loss) from continuing
operations .................................... $ (13.04) $ (1.14) $ (13.43)
----------- ---------- ----------
Net income (loss) ............................... $ (13.04) $ (1.14) $ (13.43)
----------- ---------- ----------
Diluted earnings (loss) per share:
Income (loss) from continuing
operations .................................... $ (13.04) $ (1.14) $ (13.43)
----------- ---------- ----------
Net income (loss) ............................... $ (13.04) $ (1.14) $ (13.43)
----------- ---------- ----------
2000
- ----
Net sales ........................................ $ 97,096 $ 60,807 $ 357,356
----------- ---------- ----------
Gross profit ..................................... 23,123 9,030 81,785
----------- ---------- ----------
Net income (loss) from continuing
operations ...................................... 1,641(6) (3,373)(7) 4,922
------------- ---------- ----------
Net income (loss) ................................ 1,641 (3,373) 4,922
------------- ---------- ----------
Basic earnings (loss) per share:
Income (loss) from continuing
operations .................................... $ .26 $ (.53) $ .78
------------- ---------- ----------
Net income (loss) ............................... $ .26 $ (.53) $ .78
------------- ---------- ----------
Diluted earnings (loss) per share:
Income (loss) from continuing
operations .................................... $ .26 $ (.53) $ .77
------------- ---------- ----------
Net income (loss) ............................... $ .26 $ (.53) $ .77
------------- ---------- ----------
1999
- ----
Net sales ........................................ $ 112,768 $ 78,199 $ 358,031
------------- ---------- ----------
Gross profit ..................................... 33,817 20,910 100,723
------------- ---------- ----------
Net income from continuing operations............. 7,813 167(9) 30,307
------------- ------------ ----------
Net income (loss) ................................ 7,813 (56) 29,192
------------- ------------ ----------
Basic earnings (loss) per share:
Income from continuing operations ............... $ 1.16 $ .02 $ 4.50
------------- ------------ ----------
Net income (loss) ............................... $ 1.16 $ (.01) $ 4.34
------------- ------------ ----------
Diluted earnings (loss) per share:
Income from continuing operations ............... $ 1.14 $ .02 $ 4.44
------------- ------------ ----------
Net income (loss) ............................... $ 1.14 $ (.01) $ 4.28
------------- ------------ ----------
39
ALLTRISTA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
- ----------
(1) Includes $1.3 million of income (net of tax) related to the discharge of
deferred compensation obligations.
(2) Includes $1.5 million of income (net of tax) related to the discharge of
deferred compensation obligations, a $0.7 million gain (net of tax)
related to an insurance recovery associated with a property casualty and
$0.9 million of costs (net of tax) associated with the Company's
evaluation of its strategic options.
(3) Includes an $81.2 million loss (net of tax) related to the sale of
thermoforming assets, $1.8 million of separation costs (net of tax)
related to the management reorganization and $0.9 million of costs (net
of tax) associated with the exit of facilities.
(4) Includes $1.5 million of costs (net of tax) associated with corporate
restructuring, a $1.6 million charge (net of tax) for stock option
compensation, $1.0 million of costs (net of tax) associated with the
write-off of debt issuance and amendment costs, an additional $0.9
million loss (net of tax) related to the sale of thermoforming assets and
a $0.9 million loss (net of tax) related to the sale of the Company's
interest in Microlin, LLC.
(5) Includes $1.1 million of income (net of tax) associated with the
reduction in long-term performance-based compensation.
(6) Includes $1.5 million of costs (net of tax) related to litigation.
(7) Includes $0.6 million of income (net of tax) related to litigation.
(8) Includes a $12.2 million gain (net of tax) on the sale of the Company's
plastic packaging product line.
(9) Includes $1.4 million of costs (net of tax) associated with the exit of a
plastics thermoforming facility.
Note: Earnings per share calculations for each quarter are based on the
weighted average number of shares outstanding for each period, and the sum of
the quarterly amounts may not necessarily equal the annual earnings per share
amounts.
NOTE 19. SUBSEQUENT EVENT
On March 9, 2002, The Job Creation and Workers Assistance Act of 2002 was
enacted which provides, in part, for the carryback of 2001 net operating losses
for five years instead of the previous two year period. As a result, the
company filed for an additional refund of $22.8 million, of which $22.2 million
was received on March 22, 2002. At December 31, 2001, the federal net operating
losses were recorded as a deferred tax asset with a valuation allowance of
$11.7 million. This valuation allowance will be reversed in the first quarter
of 2002 resulting in a deferred tax benefit.
On January 24, 2002, Martin E. Franklin, Chairman and Chief Executive
Officer, and Ian G.H. Ashken, Vice Chairman, Chief Financial Officer and
Secretary, received loans from the Company in the amounts of $3.3 million and
$1.6 million, respectively. The purpose of these loans, which are due on
January 23, 2007, is to exercise non-qualified stock options granted under the
Company's 2001 Stock Option Plan.
40
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
No disclosure required under Item 9.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding executive officers is included in Part I of this
Form 10-K as permitted by General Instruction G (3).
Information regarding directors required by Item 10 appearing under the
caption "Director Nominees and Continuing Directors" of the Company's proxy
statement for the 2002 Annual Meeting of Stockholders is incorporated herein by
reference. The proxy statement is expected to be filed with the Commission on
or about April 15, 2002.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 appearing under the caption "Executive
Compensation" of the Company's proxy statement for the 2002 Annual Meeting of
Stockholders is incorporated herein by reference. The proxy statement is
expected to be filed with the Commission on or about April 15, 2002.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 appearing under the captions "Voting
Securities and Principal Stockholders" and "Security Ownership by Management
and Directors" of the Company's proxy statement for the 2002 Annual Meeting of
Stockholders is incorporated herein by reference. The proxy statement is
expected to be filed with the Commission on or about April 15, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 appearing under the caption "Certain
Relationships and Related Transactions" of the Company's proxy statement for
the 2002 Annual Meeting of Stockholders is incorporated herein by reference.
The proxy statement is expected to be filed with the Commission on or about
April 15, 2002.
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) FINANCIAL STATEMENTS
LOCATION
IN 10-K
---------
Consolidated statements of operations -- Years ended December 31, 2001, 2000 and 1999 Item 8
Consolidated balance sheets -- December 31, 2001 and 2000 ............................ Item 8
Consolidated statements of cash flows -- Years ended December 31, 2001 2000 and 1999 . Item 8
Consolidated statements of changes in stockholders' equity -- Years ended December 31,
2001, 2000 and 1999 ................................................................. Item 8
Consolidated statements of comprehensive income -- Years ended December 31, 2001, 2000
and 1999 ............................................................................ Item 8
Notes to consolidated financial statements ........................................... Item 8
Report of independent auditors ....................................................... Item 8
41
(2) FINANCIAL STATEMENT SCHEDULE:
See Schedule II of this Form 10-K.
(3) EXHIBITS:
Copies of exhibits incorporated by reference can be obtained from the SEC
and are located in SEC File No. 0-21052.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------------- -----------------------------------------------------------------------------------------------------------
2.1 Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda Corporation, Quoin
Corporation, Alltrista Corporation and Wilbert, Inc., dated October 15, 2001 (filed as Exhibit 10.7 to the
Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed
November 14, 2001).
2.2 Amendment to Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda
Corporation, Quoin Corporation, Alltrista Corporation and Wilbert, Inc., dated November 29, 2001
(filed as Exhibit 10-2 to the Company's Report on Form 8-K, Filing No. 0-21052, and incorporated herein
by reference, filed December 14, 2001).
2.3 Agreement and Plan of Merger between Alltrista Corporation and Alltrista Reincorporation MergerSub,
Inc. (filed as Exhibit A to the Company's Definitive Proxy Statement, Filing No. 0-21052, and
incorporated herein by reference, filed November 26, 2001).
*3.1 Restated Certificate of Incorporation.
3.2 Bylaws of Alltrista Corporation (filed as Exhibit C to the Company's Definitive Proxy Statement, Filing
No. 0-21052, and incorporated herein by reference, filed November 26, 2001).
4.1 Form of Rights Agreement (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q, Filing
No. 0-21052, and incorporated herein by reference, filed May 12, 1999).
4.2 Amendment to Rights Agreement, dated as of July 19, 2001, between the Company and EquiServe Trust
Company, N.A. as successor in interest to The First Chicago Trust Company of New York as Rights
Agent (filed as Exhibit 4.1 to the Company's Form 8-K, Filing No. 0-21052, and incorporated herein by
reference, filed August 21, 2001).
4.3 Amendment to Rights Agreement, dated as of December 14, 2001, between the Company and
EquiServe Trust Company, N.A. as successor in interest to the First Chicago Trust Company of New
York as Rights Agent (filed as Exhibit 1 to the Company's Form 8-A/A, Filing No. 0-21052, and
incorporated herein by reference, filed January 9, 2002).
#10.1 Form of Alltrista Corporation 1993 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.2
to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by
reference, filed March 17, 1993).
#10.2 Form of Alltrista Corporation 1993 Stock Option Plan (filed as Exhibit 10.3 to the Company's
Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed
March 17, 1993).
#10.3 Form of Alltrista Corporation 1996 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.4
to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by
reference, filed March 27, 1997).
#10.4 Form of Alltrista Corporation 1993 Restricted Stock Plan (filed as Exhibit 10.4 to the Company's
Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed
March 17, 1993.
10.5 Form of Change of Control Agreement (filed as Exhibit 10.6 to the Company's Annual Report on Form
10-K, Filing No. 0-21052, and is incorporated herein by reference, filed March 29, 1999).
10.6 Form of Amendment to Change of Control Agreement, effective June 21, 2001 (filed as Exhibit 10.16 to
the Company's Report on Form 10-Q, Filing No. 0-21052, and is incorporated herein by reference, filed
August 10, 2001).
42
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- --------------- ---------------------------------------------------------------------------------------------------------
*10.7 List of Alltrista Corporation officers party to Exhibit 10.5 and Exhibit 10.6.
10.8 Form of Distribution Agreement between Ball Corporation and Alltrista Corporation (filed as Exhibit
10.7 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein
by reference, filed March 17, 1993).
10.9 Form of Tax Sharing and Indemnification Agreement between Ball Corporation and Alltrista Corporation
(filed as Exhibit 10.10 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and
incorporated herein by reference, filed March 17, 1993).
10.10 Form of Indemnification Agreement (filed as Exhibit 10.13 to the Company's Registration Statement on
Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993).
10.11 List of Directors and Executive Officers party to Exhibit 10.10 (filed as Exhibit 10.10 to the Company's
Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 31,
1996).
#10.12 Alltrista Corporation 1998 Long Term Equity Incentive Plan as amended and restated as of November 8,
2001 (filed as Annex A to the Company's Preliminary Proxy Statement, Filing No. 0-21052, and
incorporated herein by reference, filed November 13, 2001).
#10.13 Alltrista Corporation 2001 Stock Option Plan effective September 24, 2001 (filed as Annex B to the
Company's Preliminary Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed
November 13, 2001).
#10.14 Form of Alltrista Corporation 1999 Economic Value Added and Growth Incentive Compensation Plan
for Key Members of Management (filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K,
Filing No. 0-21052, and incorporated herein by reference, filed March 30, 2000).
#10.15 Amendment to the Alltrista Corporation Economic Value Added and Growth Incentive Compensation
Plan for Key Members of Management (filed as Exhibit 10.2 to the Company's Annual Report on Form
10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001).
#10.16 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on
February 1, 2001 (filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K, Filing No.
0-21052, and incorporated herein by reference, filed March 27, 2001).
#10.17 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees,
effective June 21, 2001 (filed as Exhibit 10.3 to the Company's Report on Form 10-Q, Filing No. 0-21052,
and incorporated herein by reference, filed August 10, 2001).
#10.18 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on
February 1, 2001 (filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K, Filing No.
0-21052, and incorporated herein by reference, filed March 27, 2001).
#10.19 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan, effective June 21, 2001
(filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated
herein by reference, filed August 10, 2001).
#10.20 Alltrista Corporation 1997 Deferred Compensation Plan for Directors as Amended on February 1, 2001
(filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and
incorporated herein by reference, filed March 27, 2001).
#10.21 Amendment to the Alltrista Corporation 1997 Deferred Compensation Plan for Directors, effective
June 21, 2001 (filed as Exhibit 10.4 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed August 10, 2001).
#10.22 Alltrista Corporation Excess Savings and Retirement Plan as Amended on February 1, 2001(filed as
Exhibit 10.16 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated
herein by reference, filed March 27, 2001).
#10.23 Amendment to the Alltrista Corporation Excess Savings and Retirement Plan, effective June 21, 2001
(filed as Exhibit 10.5 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated
herein by reference, filed August 10, 2001).
43
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ----------------- --------------------------------------------------------------------------------------------------------
+10.24 Agreement to Forego Compensation between Kevin D. Bower and Alltrista Corporation, effective
March 31, 2001 (filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed May 15, 2001).
+10.25 Agreement to Forego Compensation between Jerry T. McDowell and Alltrista Corporation, effective
May 25, 2001 (filed as Exhibit 10.6 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed August 10, 2001).
+10.26 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective
March 31, 2001 (filed as Exhibit 10.1 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed May 15, 2001).
+10.27 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective
May 31, 2001 (filed as Exhibit 10.7 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed August 10, 2001).
+10.28 Loan Agreement between Thomas B. Clark and Alltrista Corporation, effective May 31, 2001 (filed as
Exhibit 10.8 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by
reference, filed August 10, 2001).
+10.29 Promissory Note between Alltrista Corporation, and Thomas B. and Karen A. Clark, effective May 31,
2001 (filed as Exhibit 10.9 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated
herein by reference, filed August 10, 2001).
+10.30 Loan Agreement between Kevin D. Bower and Alltrista Corporation, effective May 31, 2001 (filed as
Exhibit 10.10 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by
reference, filed August 10, 2001).
+10.31 Promissory Note between Alltrista Corporation, and Kevin D. and Maureen C. Bower, effective May 31,
2001 (filed as Exhibit 10.11 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated
herein by reference, filed August 10, 2001).
+10.32 Loan Agreement between Jerry T. McDowell and Alltrista Corporation, effective May 31, 2001 (filed as
Exhibit 10.12 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by
reference, filed August 10, 2001).
+10.33 Promissory Note between Alltrista Corporation, and Jerry T. and Gayleen M. McDowell, effective
May 31, 2001 (filed as Exhibit 10.13 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed August 10, 2001).
*+10.34 Employment Agreement between the Company and Martin E. Franklin, effective January 1, 2002.
*+10.35 Employment Agreement between the Company and Ian G.H. Ashken, effective January 1, 2002.
*+10.36 Employment Agreement between the Company and J. David Tolbert, effective January 1, 2002.
*+10.37 Promissory Note, dated January 24, 2002, by Martin E. Franklin in favor of Alltrista Corporation.
*+10.38 Promissory Note, dated January 24, 2002, by Ian G.H. Ashken in favor of Alltrista Corporation.
*10.39 Alltrista Corporation 2002 Executive Loan Program.
*21.1 Subsidiaries of Alltrista Corporation.
*23.1 Consent of Independent Auditors.
- ----------
* Filed herewith
+ This Exhibit represents a management contract.
# This Exhibit represents a compensatory plan.
(B) REPORTS ON FORM 8-K
In a Form 8-K (Commission File Number 0-21052) filed October 17, 2001, the
Company filed two press releases dated October 15, 2001. The Company's first
release announced that it had signed a
44
definitive agreement with Wilbert, Inc. to sell its Triangle, TriEnda and
Synergy World plastic thermoforming businesses. The Company's second release
announced the Company's decision to close its Indianapolis headquarters, the
Company's intent to renegotiate its current financing arrangements, the
Company's withdrawal of its previously announced earnings guidance for 2001 and
the Company's termination of its agreement with Bear Stearns & Co., Inc. to
pursue a review of the Company's strategic options.
In a Form 8-K (Commission File Number 0-21052) filed December 14, 2001,
the Company filed a press release issued December 3, 2001 announcing that it
had completed the sale of substantially all of the assets of its Triangle,
TriEnda and Synergy World plastic thermoforming operations to Wilbert, Inc. The
report also included pro forma financial information related to the sale.
In a Form 8-K (Commission File Number 0-21052) filed January 9, 2002, the
Company disclosed that on December 18, 2001, at a special meeting of
stockholders, the following proposals were approved: (i) to reincorporate the
Registrant in the State of Delaware; (ii) to increase the number of the
Registrant's shares of common stock authorized for issuance; (iii) to include a
provision in the certificate of incorporation of the Registrant following the
reincorporation eliminating liability for directors other than as required by
Delaware law; (iv) to amend and restate the Registrant's 1998 Long-Term Equity
Incentive Plan to increase the number of shares of common stock that may be
issued thereunder by 350,000 shares and to eliminate the annual automatic share
increase currently provided for in said plan; and (v) to adopt the Registrant's
2001 Stock Option Plan.
45
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.
ALLTRISTA CORPORATION
By: /s/ Martin E. Franklin
---------------------------------
Martin E. Franklin
Chairman and Chief Executive
Officer
March 21, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated below.
(1) Principal Executive Officer:
/s/ Martin E. Franklin Chairman and Chief Executive Officer
--------------------------------- March 21, 2002
Martin E. Franklin
(2) Principal Financial Accounting Officer:
/s/ Ian G. H. Ashken Vice Chairman, Chief Financial Officer and
--------------------------------- Company Secretary
Ian G.H. Ashken March 21, 2002
(3) Board of Directors:
/s/ Martin E. Franklin Chairman, President and Chief Executive Officer
--------------------------------- March 21, 2002
Martin E. Franklin
/s/ Ian G. H. Ashken Vice Chairman, Chief Financial Officer and
--------------------------------- Company Secretary
Ian G.H. Ashken March 21, 2002
/s/ Douglas W. Huemme Director
--------------------------------- March 21, 2002
Douglas W. Huemme
/s/ Richard L. Molen Director
--------------------------------- March 21, 2002
Richard L. Molen
/s/ Lynda Watkins Popwell Director
--------------------------------- March 21, 2002
Lynda Watkins Popwell
/s/ Patrick W. Rooney Director
--------------------------------- March 21, 2002
Patrick W. Rooney
/s/ David L. Swift Director
--------------------------------- March 21, 2002
David L. Swift
/s/ Robert L. Wood Director
--------------------------------- March 21, 2002
Robert L. Wood
46
SCHEDULE II
ALLTRISTA CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(THOUSANDS OF DOLLARS)
BALANCE AT CHARGES TO BALANCE AT
BEGINNING COSTS AND DEDUCTIONS END OF
OF PERIOD EXPENSE FROM RESERVES OTHER (1) (2) PERIOD
------------ ------------ --------------- --------------- -------------
Reserves against laccounts receivable:
2001 .............................. $ (1,517) $ (1,589) $ 1,933 $ 395 $ (778)
2000 .............................. $ (1,735) $ (746) $ 964 $ -- $ (1,517)
1999 .............................. $ (1,081) $ (578) $ 48 $ (124) $ (1,735)
- ----------
(1) Effective November 26, 2001, the Company sold the assets of its Triangle,
TriEnda and Synergy World thermoforming operations.
(2) Effective April 25, 1999, the Company acquired the net assets of Triangle
Plastics, Inc. and its TriEnda subsidiary.
47
ALLTRISTA CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2001
Copies of exhibits incorporated by reference can be obtained from the SEC
and are located in SEC File No. 0-21052.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- --------------- -----------------------------------------------------------------------------------------------------------
2.1 Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda Corporation, Quoin
Corporation, Alltrista Corporation and Wilbert, Inc., dated October 15, 2001 (filed as Exhibit 10.7 to the
Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed
November 14, 2001).
2.2 Amendment to Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda
Corporation, Quoin Corporation, Alltrista Corporation and Wilbert, Inc., dated November 29, 2001
(filed as Exhibit 10-2 to the Company's Report on Form 8-K, Filing No. 0-21052, and incorporated herein
by reference, filed December 14, 2001).
2.3 Agreement and Plan of Merger between Alltrista Corporation and Alltrista Reincorporation MergerSub,
Inc. (filed as Exhibit A to the Company's Definitive Proxy Statement, Filing No. 0-21052, and
incorporated herein by reference, filed November 26, 2001).
*3.1 Restated Certificate of Incorporation.
3.2 Bylaws of Alltrista Corporation (filed as Exhibit C to the Company's Definitive Proxy Statement, Filing
No. 0-21052, and incorporated herein by reference, filed November 26, 2001).
4.1 Form of Rights Agreement (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q, Filing
No. 0-21052, and incorporated herein by reference, filed May 12, 1999).
4.2 Amendment to Rights Agreement, dated as of July 19, 2001, between the Company and EquiServe Trust
Company, N.A. as successor in interest to The First Chicago Trust Company of New York as Rights
Agent (filed as Exhibit 4.1 to the Company's Form 8-K, Filing No. 0-21052, and incorporated herein by
reference, filed August 21, 2001).
4.3 Amendment to Rights Agreement, dated as of December 14, 2001, between the Company and
EquiServe Trust Company, N.A. as successor in interest to the First Chicago Trust Company of New
York as Rights Agent (filed as Exhibit 1 to the Company's Form 8-A/A, Filing No. 0-21052, and
incorporated herein by reference, filed January 9, 2002).
#10.1 Form of Alltrista Corporation 1993 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.2
to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by
reference, filed March 17, 1993).
#10.2 Form of Alltrista Corporation 1993 Stock Option Plan (filed as Exhibit 10.3 to the Company's
Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed
March 17, 1993).
#10.3 Form of Alltrista Corporation 1996 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.4
to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by
reference, filed March 27, 1997).
#10.4 Form of Alltrista Corporation 1993 Restricted Stock Plan (filed as Exhibit 10.4 to the Company's
Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed
March 17, 1993.
10.5 Form of Change of Control Agreement (filed as Exhibit 10.6 to the Company's Annual Report on Form
10-K, Filing No. 0-21052, and is incorporated herein by reference, filed March 29, 1999).
10.6 Form of Amendment to Change of Control Agreement, effective June 21, 2001 (filed as Exhibit 10.16 to
the Company's Report on Form 10-Q, Filing No. 0-21052, and is incorporated herein by reference, filed
August 10, 2001).
*10.7 List of Alltrista Corporation officers party to Exhibit 10.5 and Exhibit 10.6.
48
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ----------- ---------------------------------------------------------------------------------------------------------
10.8 Form of Distribution Agreement between Ball Corporation and Alltrista Corporation (filed as Exhibit
10.7 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein
by reference, filed March 17, 1993).
10.9 Form of Tax Sharing and Indemnification Agreement between Ball Corporation and Alltrista Corporation
(filed as Exhibit 10.10 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and
incorporated herein by reference, filed March 17, 1993).
10.10 Form of Indemnification Agreement (filed as Exhibit 10.13 to the Company's Registration Statement on
Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993).
10.11 List of Directors and Executive Officers party to Exhibit 10.10 (filed as Exhibit 10.10 to the Company's
Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 31,
1996).
#10.12 Alltrista Corporation 1998 Long Term Equity Incentive Plan as amended and restated as of November 8,
2001 (filed as Annex A to the Company's Preliminary Proxy Statement, Filing No. 0-21052, and
incorporated herein by reference, filed November 13, 2001).
#10.13 Alltrista Corporation 2001 Stock Option Plan effective September 24, 2001 (filed as Annex B to the
Company's Preliminary Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed
November 13, 2001).
#10.14 Form of Alltrista Corporation 1999 Economic Value Added and Growth Incentive Compensation Plan
for Key Members of Management (filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K,
Filing No. 0-21052, and incorporated herein by reference, filed March 30, 2000).
#10.15 Amendment to the Alltrista Corporation Economic Value Added and Growth Incentive Compensation
Plan for Key Members of Management (filed as Exhibit 10.2 to the Company's Annual Report on Form
10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001).
#10.16 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on
February 1, 2001 (filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K, Filing No.
0-21052, and incorporated herein by reference, filed March 27, 2001).
#10.17 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees,
effective June 21, 2001 (filed as Exhibit 10.3 to the Company's Report on Form 10-Q, Filing No. 0-21052,
and incorporated herein by reference, filed August 10, 2001).
#10.18 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on
February 1, 2001 (filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K, Filing No.
0-21052, and incorporated herein by reference, filed March 27, 2001).
#10.19 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan, effective June 21, 2001
(filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated
herein by reference, filed August 10, 2001).
#10.20 Alltrista Corporation 1997 Deferred Compensation Plan for Directors as Amended on February 1, 2001
(filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and
incorporated herein by reference, filed March 27, 2001).
#10.21 Amendment to the Alltrista Corporation 1997 Deferred Compensation Plan for Directors, effective
June 21, 2001 (filed as Exhibit 10.4 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed August 10, 2001).
#10.22 Alltrista Corporation Excess Savings and Retirement Plan as Amended on February 1, 2001(filed as
Exhibit 10.16 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated
herein by reference, filed March 27, 2001).
#10.23 Amendment to the Alltrista Corporation Excess Savings and Retirement Plan, effective June 21, 2001
(filed as Exhibit 10.5 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated
herein by reference, filed August 10, 2001).
49
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ----------------- --------------------------------------------------------------------------------------------------------
+10.24 Agreement to Forego Compensation between Kevin D. Bower and Alltrista Corporation, effective
March 31, 2001 (filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed May 15, 2001).
+10.25 Agreement to Forego Compensation between Jerry T. McDowell and Alltrista Corporation, effective
May 25, 2001 (filed as Exhibit 10.6 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed August 10, 2001).
+10.26 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective
March 31, 2001 (filed as Exhibit 10.1 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed May 15, 2001).
+10.27 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective
May 31, 2001 (filed as Exhibit 10.7 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed August 10, 2001).
+10.28 Loan Agreement between Thomas B. Clark and Alltrista Corporation, effective May 31, 2001 (filed as
Exhibit 10.8 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by
reference, filed August 10, 2001).
+10.29 Promissory Note between Alltrista Corporation, and Thomas B. and Karen A. Clark, effective May 31,
2001 (filed as Exhibit 10.9 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated
herein by reference, filed August 10, 2001).
+10.30 Loan Agreement between Kevin D. Bower and Alltrista Corporation, effective May 31, 2001 (filed as
Exhibit 10.10 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by
reference, filed August 10, 2001).
+10.31 Promissory Note between Alltrista Corporation, and Kevin D. and Maureen C. Bower, effective May 31,
2001 (filed as Exhibit 10.11 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated
herein by reference, filed August 10, 2001).
+10.32 Loan Agreement between Jerry T. McDowell and Alltrista Corporation, effective May 31, 2001 (filed as
Exhibit 10.12 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by
reference, filed August 10, 2001).
+10.33 Promissory Note between Alltrista Corporation, and Jerry T. and Gayleen M. McDowell, effective
May 31, 2001 (filed as Exhibit 10.13 to the Company's Report on Form 10-Q, Filing No. 0-21052, and
incorporated herein by reference, filed August 10, 2001).
*+10.34 Employment Agreement between the Company and Martin E. Franklin, effective January 1, 2002.
*+10.35 Employment Agreement between the Company and Ian G.H. Ashken, effective January 1, 2002.
*+10.36 Employment Agreement between the Company and J. David Tolbert, effective January 1, 2002.
*+10.37 Promissory Note, dated January 24, 2002, by Martin E. Franklin in favor of Alltrista Corporation.
*+10.38 Promissory Note, dated January 24, 2002, by Ian G.H. Ashken in favor of Alltrista Corporation.
*10.39 Alltrista Corporation 2002 Executive Loan Program.
*21.1 Subsidiaries of Alltrista Corporation.
*23.1 Consent of Independent Auditors.
- ----------
* Filed herewith
+ This Exhibit represents a management contract.
# This Exhibit represents a compensatory plan.
Copies of exhibits incorporated by reference can be obtained from the SEC
and are located in SEC File No. 0-21052.
50