UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For Quarterly Period Ended June 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 000-16496
Constar International Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 13-1889304 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification Number) | |
| One Crown Way, Philadelphia, PA | 19154 | |
| (Address of principal executive offices) | (Zip Code) | |
(215) 552-3700
(Registrant’s telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No ¨
As of August 6, 2004, 12,620,501 shares of the Registrant’s Common Stock were outstanding.
| Page Number | ||||
| PART I – FINANCIAL INFORMATION |
||||
| Item 1. |
||||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 | ||
| Item 3. |
29 | |||
| Item 4. |
30 | |||
| PART II – OTHER INFORMATION |
||||
| Item 1. |
31 | |||
| Item 4. |
31 | |||
| Item 6. |
32 | |||
| 33 | ||||
PART I – FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
| June 30, 2004 |
December 31, 2003 | |||||
| Assets | ||||||
| Current Assets | ||||||
| Cash and cash equivalents |
$ | 13,910 | $ | 16,478 | ||
| Accounts receivable, net |
97,517 | 66,979 | ||||
| Inventories, net (Note 3) |
84,649 | 82,368 | ||||
| Prepaid expenses and other current assets |
12,278 | 13,642 | ||||
| Total current assets |
208,354 | 179,467 | ||||
| Property plant and equipment, net |
211,220 | 223,925 | ||||
| Goodwill (Note 4) |
148,813 | 148,813 | ||||
| Other assets |
24,008 | 26,136 | ||||
| Total assets |
$ | 592,395 | $ | 578,341 | ||
| Liabilities, Minority Interests and Stockholders’ Equity | ||||||
| Current Liabilities | ||||||
| Short-term debt (Note 5) |
$ | 1,248 | $ | 1,248 | ||
| Accounts payable and accrued liabilities |
132,965 | 118,900 | ||||
| Income taxes payable |
1,926 | 2,146 | ||||
| Total current liabilities |
136,139 | 122,294 | ||||
| Long-term debt, net of current portion (Note 5) |
407,139 | 396,170 | ||||
| Pension and post-retirement liabilities |
10,187 | 8,267 | ||||
| Deferred income taxes |
11,029 | 10,944 | ||||
| Other liabilities |
5,137 | 5,567 | ||||
| Total liabilities |
569,631 | 543,242 | ||||
| Commitments and contingent liabilities (Note 11) |
||||||
| Minority interests |
2,266 | 2,285 | ||||
| Stockholders’ equity |
20,498 | 32,814 | ||||
| Total liabilities, minority interests and stockholders’ equity |
$ | 592,395 | $ | 578,341 | ||
The accompanying notes are an integral part of these consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net customer sales |
$ | 224,774 | $ | 202,651 | $ | 415,519 | $ | 371,084 | ||||||||
| Net affiliate sales |
1,310 | 783 | 2,303 | 1,141 | ||||||||||||
| Net sales | 226,084 | 203,434 | 417,822 | 372,225 | ||||||||||||
| Cost of products sold, excluding depreciation |
199,010 | 180,894 | 368,450 | 323,626 | ||||||||||||
| Depreciation |
13,179 | 14,031 | 26,077 | 28,033 | ||||||||||||
| Gross profit | 13,895 | 8,509 | 23,295 | 20,566 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling and administrative expenses |
5,980 | 5,201 | 12,257 | 9,960 | ||||||||||||
| Research and technology expenses |
1,143 | 1,282 | 2,517 | 2,701 | ||||||||||||
| Interest expense |
9,988 | 8,877 | 19,970 | 17,312 | ||||||||||||
| Foreign exchange adjustments |
361 | (872 | ) | 407 | (825 | ) | ||||||||||
| Goodwill impairment loss |
183,000 | 183,000 | ||||||||||||||
| Other (income) expenses, net |
(241 | ) | 166 | 513 | 77 | |||||||||||
| Total operating expenses |
17,231 | 197,654 | 35,664 | 212,225 | ||||||||||||
| Loss before taxes and minority interest | (3,336 | ) | (189,145 | ) | (12,369 | ) | (191,659 | ) | ||||||||
| Provision for income taxes |
(564 | ) | 2,314 | (448 | ) | 2,924 | ||||||||||
| Minority interests |
14 | (147 | ) | 19 | (74 | ) | ||||||||||
| Net loss | $ | (3,886 | ) | $ | (186,978 | ) | $ | (12,798 | ) | $ | (188,809 | ) | ||||
| Per common share data: |
||||||||||||||||
| Basic and diluted: | ||||||||||||||||
| Net loss |
$ | (0.32 | ) | $ | (15.58 | ) | $ | (1.07 | ) | $ | (15.73 | ) | ||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic and diluted |
12,000 | 12,000 | 12,000 | 12,000 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| Six months ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities | ||||||||
| Net loss |
$ | (12,798 | ) | $ | (188,809 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Goodwill impairment loss |
183,000 | |||||||
| Depreciation and amortization |
27,437 | 28,860 | ||||||
| Deferred income taxes |
(90 | ) | (4,081 | ) | ||||
| Change in other assets and liabilities, net |
(12,076 | ) | 5,505 | |||||
| Net cash provided by operating activities |
2,473 | 24,475 | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of property, plant and equipment |
(16,034 | ) | (25,169 | ) | ||||
| Proceeds from sale of property, plant and equipment |
71 | 148 | ||||||
| Net cash used in investing activities |
(15,963 | ) | (25,021 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from debt |
1,502 | |||||||
| Repayment of Term B Loan |
(624 | ) | (750 | ) | ||||
| Proceeds from Revolver Loan |
31,500 | 51,000 | ||||||
| Repayments of Revolver Loan |
(20,000 | ) | (65,000 | ) | ||||
| Net cash provided by (used in) financing activities |
10,876 | (13,248 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents |
46 | 170 | ||||||
| Net change in cash and cash equivalents |
(2,568 | ) | (13,624 | ) | ||||
| Cash and cash equivalents at beginning of period |
16,478 | 20,913 | ||||||
| Cash and cash equivalents at end of period |
$ | 13,910 | $ | 7,289 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(unaudited)
(in thousands)
| Comprehensive Income (Loss) |
Common Stock |
Additional Paid-In- Capital |
Accumulated Other Comprehensive Income (Loss) |
Unearned Compensation |
Retained Earnings |
Total |
||||||||||||||||||||
| Balance, December 31, 2003 |
$ | 120 | $ | 275,070 | $ | (18,300 | ) | $ | (1,852 | ) | $ | (222,224 | ) | $ | 32,814 | |||||||||||
| Net loss |
$ | (8,912 | ) | (8,912 | ) | (8,912 | ) | |||||||||||||||||||
| Translation adjustments |
764 | 764 | 764 | |||||||||||||||||||||||
| Comprehensive loss |
$ | (8,148 | ) | |||||||||||||||||||||||
| Issuance of restricted stock |
835 | (835 | ) | — | ||||||||||||||||||||||
| Earned compensation on restricted stock |
168 | 168 | ||||||||||||||||||||||||
| < | ||||||||||||||||||||||||||