jarden 2001_ar

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jarden 2001_ar

  1. 1. alltrista report 2001 annual
  2. 2. corporate profile: Alltrista is a leading provider of niche consumer products used in home food preservation. Alltrista’s current consumer products business sells home canning and related products, primarily under the Ball®, Kerr® and Bernardin® brands. With the pending addition of the Foodsaver® line, the Company will be the market leader in home vacuum packaging systems and accessories. The Company also operates a materials based group, which is the largest producer of zinc strip in the U.S. and manufactures injection molded and industrial plastics. corporate strategy: It is the Company’s strategy to increase stockholder value by building a leading consumer products business focused on home food preservation, branded domestic consumables and related items. In pursuing this objective, the Company will seek to leverage its high market shares of niche markets to introduce new products to its customers. contents financial highlights inside front cover chairman’s letter 2 consumer products group 4 materials based group 7 financial statements 9 company information and operating locations inside back cover
  3. 3. financial highlights historical: 2001 2000 1999 (in millions, except per share data) Net sales $305.0 $357.4 $358.0 EBITDA* 32.7 40.7 58.5 Net income (loss) $ (85.4) $ 4.9 $ 29.2 Diluted earnings (loss) per share $(13.43) $ .77 $ 4.28 Diluted weighted average shares outstanding 6.4 6.4 6.8 *EBITDA is calculated as income (loss) before interest, taxes and minority interest plus (i) depreciation and amortization, (ii) special charges (credits) and reorganization expenses and (iii) loss (gain) on divestiture of assets and product lines. pro forma: 2001 2000 1999 (in millions, except per share data) Net sales $425.5 $390.2 $ 355.0 EBITDA* 70.3 62.3 64.2 Net income $ 20.3 $ 19.4 $ 19.8 Diluted earnings per share $ 3.18 $ 3.04 $ 2.92 Diluted weighted average shares outstanding 6.4 6.4 6.8 The unaudited pro forma financial information presented gives effect to the planned acquisition of Tilia and the related financing. In addition, it gives effect to the significant dispositions of businesses in 2001 and 1999 and the related federal tax refunds received in 2002. *EBITDA is calculated as income (loss) before interest, taxes and minority interest plus (i) depreciation and amortization, (ii) special charges (credits) and reorganization expenses and (iii) loss (gain) on divestiture of assets and product lines.
  4. 4. Dear Fellow Shareholders Many of you will be familiar with the saying, 2002. First and foremost, the sale “Our future is where our past is”. As a history of the thermoformed plastics businesses of Triangle, TriEnda and buff I believe this old adage is equally applicable Synergy World ended a misguided and very costly diversification from to businesses and their progression. the core strengths of Alltrista. The sale, which created a loss of $121.1 Since the management changes at your company million, removed a significant distraction and finan- in September 2001, we have pushed hard to return cial burden on the company. At the same time, the Alltrista to the fundamental tenets that historically sale produced a tax loss carry back in excess of gave it solid and consistent financial performance. $100.0 million that has enabled Alltrista to recover The “DNA” of Alltrista has been to excel as a market at least a portion of its lost capital through tax leader in multiple niche markets that are relatively savings and refunds. mature, thereby producing attractive margins and Simultaneously with the divestiture, we took steps to strong cash flow. By far the largest component improve the efficiency of our headquarter’s structure, of the continuing company has been Consumer closing our Indianapolis office and moving these Products, which manufactures branded consumables functions to our Rye, New York and Muncie, Indiana used for food preservation. The fundamental shift in 2 locations. These actions have netted approximately focus and direction that has taken place in your $3 million in cost savings. Alltrista company during 2001 is the renewed emphasis on the consumer products business that has consistently delivered steady returns for shareholders. In order to achieve this renewed focus, since home September 2001 the company has executed its stated canning objectives to produce a clear platform for growth in food preservation “During 2001, Alltrista repositioned its branded kitchen consumables growth strategy to focus on consumer products. This pyramid depicts the long term consumer consumer products products strategy.”
  5. 5. Chairman’s Letter Martin E. Franklin Chairman and Chief Executive Officer In a further step to solidify the platform of Alltrista for the future, in December 2001 we sought and received overwhelming shareholder support for a number of corporate initiatives designed to enhance our ability to present a more attractive company to investors. These initiatives included moving the company’s state of incorporation from Indiana to Delaware, increasing the authorized share capital and creating and amending stock option plans to attract and motivate your management team. I am pleased to report that despite all of the distractions and strategic initiatives during 2001, Looking forward into 2002, we were delighted the core remaining businesses of Alltrista turned in to announce the proposed acquisition of Tilia solid financial results. All of these businesses were International, Inc. This acquisition, if completed, will profitable with healthy operating margins, a fact not only bring us leadership in home vacuum pack- that is a testament to the resilience of our businesses aging systems, but will bring our consumer products in tough economic environments. concentration to over 72% of sales. We will greatly 3 benefit from the strong leadership at Tilia and they As you will see in this 2001 Annual Report, the Alltrista will be a welcome complement to our team. renewed focus on Consumer Products will serve as the foundation for future growth. That is not to I look forward to providing a more detailed descrip- imply that our Materials Based Group will not tion of the enlarged group when reporting on our continue to receive attention and be an integral part progress for 2002. of the company over the long term, but merely will not be where we will seek external growth. Yours sincerely, Your management and employees are delighted to be past the turmoil of 2001. Morale in the company is high, enhanced by the renewed support and approval from Wall Street and our Martin E. Franklin larger shareholders. Chairman and Chief Executive Officer
  6. 6. consumer products group lltrista is a leading provider of niche consumer A products used in home food preservation. With the planned acquisition of Tilia, the Consumer Products Group will consist of Alltrista Consumer Products, the leading provider of home canning and related products in North America and Tilia, the lead- ing provider of home vacuum packaging systems for household use in the United States. Alltrista consumer products currently tin-plated steel sheet. Sales have been aided in manufactures, markets and distributes recent years by trends such as increased health a broad line of home food preserva- consciousness and organic eating habits. In addition, tion and preparation products that the industry is characterized by a stable demand include Ball®, Kerr ® and Bernardin® home can- pattern and historically has not been negatively ning jars as well as jar closures and related impacted by underlying macroeconomic conditions. food products (including fruit pectin, Fruit-Fresh® We market our products through approximately brand fruit protector, pickle mixes and tomato 1,800 grocery, mass merchant, hardware, and special- 4 mixes). We believe that over half of all U.S. house- ty retail customers. Some of our large customers holds use our canning supplies. We purchase glass include Albertson’s, Kroger, SuperValu, True-Serve Alltrista jars under a long-term supply agreement and manu- and Wal-Mart Stores. facture our own jar closures principally from decorated Tapper Jars and Natural Fruit Pectin Products
  7. 7. “Alltrista’s success results in part from our strong consumer products brands that are respected for quality and longevity in the marketplace.” –Jack Metz President, Alltrista Consumer Products
  8. 8. consumer products group (continued) ilia is the leading provider of vacuum packaging T systems for household use under the FoodSaver ® brand. Vacuum packaging is the process of removing air from a container to create a vacuum and then sealing the container so that air cannot re-enter. The patented FoodSaver ® longer than traditional storage systems and reduces vacuum packaging system is expenditures to replace spoiled food. Tilia introduced superior to more conventional its original FoodSaver ® product through infomercials means of food packaging, including freezer and and has since expanded its distribution methods to storage bags and plastic containers, in preventing include primarily retail customers such as Costco dehydration, rancidity, mold, freezer burn and Wholesale Corp., Kohl’s Corporation, Sears, Roebuck hardening of food. The FoodSaver allows consumers and Co., Target Corporation and Wal-Mart Stores, Inc. ® to extend the shelf-life of food three to five times 6 Alltrista FoodSaver® Professional II The FoodSaver® Jar Sealer fits FoodSaver® Canisters, Bags, regular Ball®, Kerr®, or Bernardin® Bottle Stoppers and Universal Lids mason jars.
  9. 9. materials based group ur objective for the Materials Based Group is O to grow organically while maintaining the strong cash flow characteristics of the three businesses: zinc strip, Unimark injection molded plastics, and industrial plastics. Alltrista Zinc Products is the largest zinc casting Industrial Plastics manufactures thermoformed and rolling facility in the United States. We are the white goods in our Fort Smith, Arkansas facility sole source supplier of copper plated zinc penny primarily for Whirlpool Corporation, with whom we blanks to both the United States Mint and the Royal enjoy a business relationship spanning over 25 years. Canadian Mint and are currently exploring opportu- We also extrude sheet (the formation of plastic sheet nities with several other countries. In addition, we from resin granules) for our internal products and manufacture a line of industrial zinc items used in other manufacturers. In addition, we produce plastic the plumbing, automotive, electrical component and tables for original equipment manufacturers and have European architectural markets, and the Lifejacket® a proprietary line of tables selling under the Vision™ anti-corrosion system. brand that are primarily sold to hospitality and institutional markets. Unimark Plastics is a plastic injection molding operation which manufactures precision custom injection molded components in three plants for 7 major companies in the healthcare and consumer Alltrista products industries including CIBA Vision Corporation, Johnson & Johnson, Meridian Diagnostics, Inc., Scotts Company and Winchester. We also own Yorker® Closures, a proprietary product line of plastic closures. Products for the healthcare industry include such items as intravenous harness components and surgical devices. Products for manufacturers of consumer goods primarily include packaging and sport shooting ammunition components. Injection molded healthcare poducts -Unimark
  10. 10. materials based group (continued) Zinc strip raw material Injection molded consumer Thermoformed inner door liner products for Whirlpool refrigerator Unimark Industrial Plastics Zinc Our materials based group enjoys long- standing relationships with its customers predicated on innovative technology, low- cost high quality production and consistent customer service.
  11. 11. alltrista corporation Report of Independent Auditors Board of Directors and Stockholders 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. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements 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. Indianapolis, Indiana January 23, 2002, Except for Note 19, as to which the date is March 27, 2002 9 Alltrista
  12. 12. 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) $ 0.78 $ 4.50 Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (13.43) $ 0.78 $ 4.34 Diluted earnings (loss) per share: Income (loss) from continuing operations. . . . . . . . . . . . . . . . . $ (13.43) $ 0.77 $ 4.44 Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (13.43) $ 0.77 $ 4.28 10 Weighted average shares outstanding: Alltrista 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.
  13. 13. 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 11 Other noncurrent liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,260 9,957 Alltrista 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.
  14. 14. 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 12 Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,707) (13,637) (16,628) Alltrista 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.
  15. 15. alltrista corporation Consolidated Statements of Changes in Stockholders’ Equity (in thousands) Accumulated Other Comprehensive Loss Common Stock Treasury Stock Additional Cumulative Interest Minimum Paid-in Retained Translation Rate Pension Shares Amount Shares Amount Capital Earnings Adjustment Swap Liability Balance, December 31, 1998 . . . 7,967 $ 40,494 (1,203)$(29,021) $ — $ 84,039 $(619) $ — $ — Net income . . . . . . . . . . . . . .. — — — — — 29,192 — — — 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 . . . . . . . . . . . . .. — — — — — — 200 — — Purchase of common stock . . .. — — (144) (3,146) — — — — — Balance, December 31, 1999 . . . 7,965 39,952 (1,229) (29,739) — 113,231 (419) — — Net income . . . . . . . . . . . . . .. — — — — — 4,922 — — — 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 . . . . . . . . . . . . .. — — — — — — (559) — — Purchase of common stock . . .. — — (452) (10,485) — — — — — Balance, December 31, 2000 . . . 7,963 40,017 (1,622) (38,971) — 118,153 (978) — — Net loss . . . . . . . . . . . . . . . . . . — — — — — (85,429) — — — 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) — — 41,789 — — — — Cumulative translation adjustment . . . . . . . . . . . . . . — — — — — — (424) — — 13 Translation adjustment recorded to net income due Alltrista to liquidation of investment in foreign subsidiary . . . . . . . — — — — — — 461 — — Interest rate swap unrealized loss . . . . . . . . . . . . . . . . . . . . — — — — — — — (524) — Minimum pension liability . . . . — — — — — — — — (397) Balance, December 31, 2001 . . . 7,963 $ 64 (1,565)$(37,586) $41,789 $ 32,724 $(941) $(524) $(397) The accompanying notes are an integral part of the consolidated financial statements.
  16. 16. alltrista corporation Consolidated Statements of Comprehensive Income (in thousands) 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 14 Alltrista The accompanying notes are an integral part of the consolidated financial statements.
  17. 17. Notes to Consolidated Financial Statements 1. Significant Accounting Policies Cash and Cash Equivalents Cash equivalents include financial invest- Basis of Presentation ments with a maturity of three months or less when purchased. These consolidated financial statements have been prepared in accordance with gener- Inventories ally accepted accounting principles. The con- Inventories are stated at the lower of cost, solidated financial statements include the ac- determined on the first-in, first-out method, or counts of Alltrista Corporation and its market. subsidiaries (the ‘‘Company’’). All significant intercompany transactions and balances have Property, Plant and Equipment been eliminated upon consolidation. Certain reclassifications have been made in the Com- Property, plant and equipment are recorded pany’s financial statements of prior years to at cost. Maintenance and repair costs are conform to the current year presentation. These charged to expense as incurred, and expendi- reclassifications have no impact on previously tures that extend the useful lives of the assets reported net income. are capitalized. The Company reviews prop- erty, plant and equipment for impairment The businesses comprising the Company whenever events or circumstances indicate that have interests in consumer and materials based carrying amounts may not be recoverable products. See Business Segment Information through future undiscounted cash flows, ex- (Note 4). cluding interest cost. Use of Estimates Depreciation Preparation of the consolidated financial Depreciation is provided on the straight- statements requires estimates and assumptions line method in amounts sufficient to amortize that affect amounts reported and disclosed in the cost of the assets over their estimated useful the financial statements and related notes. Ac- lives (buildings – 30 to 50 years; machinery and tual results could differ from those estimates. equipment – 5 to 15 years). Goodwill Revenue Recognition Goodwill represents the excess of the pur- Revenue from the sale of products is prima- chase prices of acquired businesses over the rily recognized at the time product is shipped estimated fair values of the net assets acquired. 15 to customers. The Company allows customers Goodwill is amortized on a straight-line basis to return defective or damaged products as well Alltrista over periods not to exceed 20 years. The Com- as certain other products for credit, replace- pany evaluates these assets for impairment ment, or exchange. Revenue is recognized as whenever events or circumstances indicate that the net amount to be received after deducting carrying amounts may not be recoverable estimated amounts for product returns, dis- through future undiscounted cash flows, ex- counts, and allowances. The Company pro- cluding interest costs. If facts and circum- vides credit, in the normal course of business, stances suggest that a subsidiary’s net assets are to its customers. The Company also maintains impaired, the Company assesses the fair value an allowance for doubtful customer accounts of the underlying business and reduces good- and charges actual losses when incurred to this will to an amount that results in the book value allowance. of the operation approximating fair value. Freight Costs Taxes on Income Freight costs on goods shipped to custom- Deferred taxes are provided for differences ers are included in Cost of Sales. between the financial statement and tax bases
  18. 18. of assets and liabilities using enacted tax rates. Option Plan, however, the Company did recog- The Company established a valuation allow- nize a one-time charge of compensation cost ance against a portion of the net tax benefit because of stockholder approval of the plan associated with all carryforwards and tempo- subsequent to the grant date (see Note 10). rary differences at December 31, 2001, as it is 2. Acquisitions and Divestitures more likely than not that these will not be fully utilized in the available carryforward period. Effective November 26, 2001, the Com- pany sold the assets of its Triangle, TriEnda and Fair Value and Credit Risk of Synergy World plastic thermoforming opera- Financial Instruments tions to Wilbert, Inc. for $21.0 million in cash, a $1.85 million noninterest-bearing one-year The carrying values of cash and cash note as well as the assumption of certain iden- equivalents, accounts receivable, notes pay- tified liabilities. The Company recorded a pre- able, accounts payable and accrued liabilities tax loss of $121.1 million in 2001 related to the approximate their fair market value due to the sale. The amount of goodwill included in the short-term maturities of these instruments. The loss on the sale was $82.0 million. The proceeds fair market value of long-term debt was esti- from the sale were used to pay down the Com- mated using rates currently available to the pany’s term debt. Company for debt with similar terms and ma- turities. As a result of the sale, the Company also recovered in January 2002 approximately The Company enters into interest rate $15.7 million of federal income taxes paid in swaps to manage interest rate exposures. The 1999 and 2000 by utilizing the carryback of a Company designates the interest rate swaps as tax net operating loss generated in 2001. hedges of underlying debt. Interest expense is $15.0 million of the proceeds related to this adjusted to include the payment made or re- recovery of income taxes was also used to pay ceived under the swap agreements. The fair down the Company’s term debt. The tax net market value of the swap agreements was esti- operating loss not utilized during the allowable mated based on the current market value of carryback period will be available to offset tax- similar instruments. able income in future periods. (See Note 19.) Financial instruments that potentially sub- The combined net sales of the thermo- ject the Company to credit risk consist prima- formed business sold included in the Compa- rily of trade receivables and interest-bearing ny’s historical results were $63.8 million in investments. Trade receivable credit risk is lim- 2001 (through the date of sale), $100.3 million ited due to the diversity of the Company’s in 2000 and $70.7 million in 1999. Operating customers and the Company’s ongoing credit earnings (losses) associated with this business review procedures. Collateral for trade receiv- were $(12.0) million in 2001, $(8.4) million in ables is generally not required. The Company 16 2000 and $2.8 million in 1999. places its interest-bearing cash equivalents with major financial institutions and limits the Alltrista Effective November 1, 2001, the Company amount of credit exposure to any one financial sold its majority interest in Microlin, LLC for institution. $1,000 in cash plus contingent consideration based upon future performance through De- Stock Options cember 31, 2012 and the cancellation of future funding requirements. The Company recorded The Company accounts for the issuance of a pre-tax loss of $1.4 million in 2001 related to stock options under the provisions of Account- the sale. ing Principles Board Opinion No. 25, ‘‘Account- ing for Stock Issued to Employees.’’ Generally for On June 1, 2000, the Company acquired the Company’s stock option plans, no compen- the net assets of Synergy World, a St. Louis, sation cost is recognized in the consolidated Missouri-based designer and marketer of por- statement of operations because the exercise table restrooms sold to equipment rental com- price of the Company’s stock options equals panies, waste services companies and diversi- the market price of the underlying stock on the fied sanitation firms, for $6.9 million in cash date of grant. Under the Company’s 2001 Stock plus acquisition costs. The transaction was ac-
  19. 19. counted for as a purchase with the purchase income taxes were received at the beginning of price allocated to the assets purchased and li- each period, and assumes a 35.0% effective abilities assumed based on their estimated fair income tax rate for all periods. values as of the date of acquisition. These assets (in thousands, except per were sold effective November 26, 2001. share amounts) 2001 2000 On December 21, 1999, the Company ac- Net sales . . . . . . . . . . . . . . . . . . $241,679 $257,995 quired a 51 percent equity interest in Microlin, Earnings before interest, LLC (‘‘Microlin’’), a developer of proprietary taxes and minority battery technology. The initial cash outlay for interest . . . . . . . . . . . . . . . . . 20,530 26,676 this investment was $1.5 million, with an agree- Net income . . . . . . . . . . . . . . . 7,260 11,251 ment to fund working capital needs over the Diluted earnings per share . . $ 1.14 $ 1.76 next several years. This investment was sold effective November 1, 2001. The Company’s pro forma net income ad- justed to reflect the elimination of all special Effective May 24, 1999, the Company sold charges (credits) and reorganization expenses, its plastic packaging product line, which pro- all losses on divestitures of assets, and the write- duced coextruded high-barrier plastic sheet and off of debt issuance and amendment costs containers for the food processing industry, for would have been $12.0 million, or $1.88 per $28.7 million in cash. This transaction resulted share, for 2001 and $11.4 million, or $1.78 per in a gain of $19.7 million. Proceeds from the share, for 2000. sale were used for debt repayment. The Com- pany’s sales from this product line were $13.0 million in 1999. 4. Business Segment Information Effective April 25, 1999, the Company ac- Following the sale of the Triangle, TriEnda quired the net assets of Triangle Plastics, Inc. and Synergy World plastic thermoforming as- and its TriEnda subsidiary (‘‘Triangle Plastics’’), sets and the third quarter 2001 appointment of a manufacturer of heavy gauge industrial ther- new executive management, the Company re- moformed parts for original equipment manu- organized its business segments to reflect the facturers in the heavy trucking, agricultural, new business and management strategy. Prior portable toilet, recreational and construction periods have been reclassified to conform to markets, and producer of plastic thermoformed the current segment definitions. products for material handling applications, The Company is now organized into two for $148.0 million in cash plus acquisition costs. distinct segments: Consumer Products and Ma- The transaction was accounted for as a pur- terials Based Group. The Company’s operating chase with the purchase price allocated to the segments are managed by the Company’s Chief assets purchased and liabilities assumed based Executive Officer and, with respect to the Con- on their estimated fair values as of the date of 17 sumer Products segment, the division presi- acquisition. These assets were sold effective No- dent for consumer products as well. They are vember 26, 2001. Alltrista responsible for the segments’ performance and are also part of the Company’s operating 3. Pro Forma Financial Information decision-making group. The following unaudited pro forma finan- The Consumer Products segment markets cial information presents a summary of consoli- a line of home food preservation products un- dated results of the Company as if the sale of der Ball , Kerr and Bernardin brands. Prod- the assets of the Triangle, TriEnda and Synergy ucts include home canning jars which are World plastic thermoforming operations (as de- sourced from major commercial glass container scribed in Note 2 above) had occurred at the manufacturers, home canning metal closures, beginning of each period presented. The pro and related food products, which are distrib- forma financial information also reflects the uted through a wide variety of retail outlets. sale of the Company’s interest in Microlin that became effective November 1, 2001. The pro The Materials Based Group provides cast forma information assumes the proceeds from zinc strip and fabricated zinc products prima- the sale of thermoformed assets and recovery of rily for zinc coinage and industrial applica-
  20. 20. (in thousands) 2001 2000 1999 tions, produces injection molded plastic prod- ucts used in medical, pharmaceutical and Depreciation and amortization: consumer products, and manufactures indus- Consumer products . . . $ 3,202 $ 3,264 $ 2,505 trial thermoformed plastic parts for appliances. Materials based group . 15,395 17,813 14,372 This segment also included through Novem- Corporate . . . . . . . . . . 200 234 820 ber 26, 2001, the plastic thermoforming opera- Total depreciation tions of Triangle, TriEnda and Synergy World and amortization. . $18,797 $21,311 $17,697 (see Note 2) which produced industrial thermo- formed plastic parts for manufactured housing, (1) Effective November 26, 2001, the Company sold the recreational vehicles, heavy trucking, agricul- assets of its Triangle, TriEnda and Synergy World plas- ture equipment, portable restrooms, recre- tic thermoforming operations. ational and construction products. (2) Corporate assets primarily include cash and cash equivalents, amounts relating to benefit plans, de- Net sales, operating earnings, assets em- ferred tax assets and corporate facilities and equip- ployed in operations, capital expenditures, and ment. depreciation and amortization by segment are (3) Includes the net sales of Triangle Plastics effective April 25, 1999. summarized as follows: (4) Effective May 24, 1999, the Company sold its plastic packaging product line. (in thousands) 2001 2000 1999 The Company’s major customers are lo- Net sales: cated within the United States and Canada. Net Consumer products . . . $ 120,644 $120,381 $133,074 sales of the Company’s products in Canada, Materials based group(1)(3)(4). . . . . . 185,437 238,047 225,584 including home food preservation products, Intercompany . . . . . . . (1,103) (1,072) (627) coinage and thermoformed plastic parts were Total net sales. . . . . . $ 304,978 $357,356 $358,031 $26.8 million, $35.3 million and $35.7 million in 2001, 2000 and 1999, respectively. Long- Operating earnings (loss): lived assets located outside the United States Consumer products . . . $ 13,291 $ 10,362 $ 17,091 and net sales outside of the United States and Materials based group . 1,801 9,928 21,467 Canada are not material. Intercompany . . . . . . . 13 39 (69) Unallocated corporate expenses . . . . . . . . . (6,146) (1,347) (7) 5. Inventories Gain (loss) on divestitures of assets Inventories were comprised of the follow- and product lines(1)(4) . . . . . . . . (122,887) — 19,678 ing at December 31: Earnings (loss) before interest, taxes and (in thousands) 2001 2000 minority interest . . (113,928) 18,982 58,160 Raw materials and supplies. . . . $ 5,563 $14,311 Interest expense, net . . . . (11,791) (11,917) (8,395) Work in process . . . . . . . . . . . . . . 4,746 10,253 Income (loss) before taxes and minority Finished goods . . . . . . . . . . . . . . . 16,685 27,984 18 interest. . . . . . . . . . . . . . $(125,719) $ 7,065 $ 49,765 Total inventories . . . . . . . . . $26,994 $52,548 Alltrista Assets employed in operations: Consumer products . . . $ 51,301 $ 60,713 $ 71,625 6. Debt and Interest Materials based group(1). . . . . . . . . . 55,152 231,956 232,619 In November 2001, the Company entered into an agreement with its lenders to amend Total assets employed in certain provisions of its term loan and revolv- operations. . . . . . . 106,453 292,669 304,244 ing credit facilities. The amendment reduced Corporate(2) . . . . . . . . 54,850 16,070 34,507 the revolving credit facility from $50 million to Total assets . . . . . . . . $ 161,303 $308,739 $338,751 $40 million, shortened the facility termination date by one year, accelerated the required prin- Capital expenditures: Consumer products . . . $ 633 $ 1,314 $ 5,477 cipal payments to conform with the shortened Materials based group . 9,067 12,036 10,893 term of the facility, modified certain financial Corporate . . . . . . . . . . 7 287 258 covenants, and required that the proceeds from the sale of the thermoforming assets and Total capital expenditures . . . . . $ 9,707 $ 13,637 $ 16,628 $15 million from the recovery of income taxes
  21. 21. associated with the net operating loss carry- The Company financed the 1999 acquisi- back be used to prepay term debt. tion of Triangle Plastics with a $250.0 million credit facility consisting of a six-year $150.0 mil- In December 2001, the Company applied lion term loan and a $100.0 million revolving the $21.0 million of proceeds from the sale of credit facility with all borrowings scheduled to the thermoformed assets to the outstanding mature on March 31, 2005. The agreement term loan balance. In January 2002, the Com- contains certain guarantees and financial cov- pany applied $15.0 million of proceeds from enants including minimum net worth require- the income tax refund related to the thermo- ments, minimum fixed charge coverage ratios formed sale to further pay down the term loan. and maximum financial leverage ratios. The term loan, as amended and reflecting As part of the financing in 1999, the Com- the payments mentioned above, requires quar- terly payments of principal of $3.1 million pany paid off $25.7 million of existing debt. through the first quarter of 2003, with quar- The Company incurred a $1.7 million pretax terly payments of $11.2 million for the remain- ($1.0 million after-tax) prepayment charge in der of the term (through March 31, 2004). connection with the payoff. The charge is re- Interest on the term loan is based upon fixed ported as an extraordinary loss on the Consoli- increments over the adjusted London Inter- dated Statements of Operations. bank Offered Rate or the agent bank’s alternate In May 1999, the Company entered into a borrowing rate as defined in the agreement. three-year interest rate swap with an initial The Company’s weighted average interest rate notional value of $90.0 million. The swap ef- on the term loan outstanding borrowings at fectively fixed the interest rate on approxi- December 31, 2001 was 4.3%, exclusive of the mately 60% of the Company’s term debt at a effects of the interest rate swap (see below). As maximum rate of 7.98% for the three-year pe- of December 31, 2001 and 2000, the outstand- ing balances of the term loan were $75.5 mil- riod. Adjusted for the application of proceeds lion and $120.0 million, respectively. from the sale of thermoformed assets and from the related income tax refund, the swap now Because the interest rates applicable to the covers 100% of the Company’s term debt. The term loan are based on floating rates identified fair market value of the swap as of Decem- by reference to market rates, the fair market ber 31, 2001 and 2000 was approximately value of the long-term debt as of December 31, $(524,000) and $45,000, respectively. 2001 and 2000 approximates its carrying value. As of December 31, 2001, maturities on Interest on borrowings under the revolv- long-term debt over the next five years, were ing credit facility are based upon fixed incre- $19.1 million in 2002, $43.5 million in 2003, ments over the adjusted London Interbank Of- $12.9 million in 2004, and none for 2005 and fered Rate or the agent bank’s alternate 2006. Maturities on long-term debt over the borrowing rate as defined in the agreement. 19 The agreement also requires the payment of next five years, as adjusted to reflect the appli- Alltrista commitment fees on the unused balance. As of cation of the $15 million of proceeds from the December 31, 2001, $9.4 million of borrowings income tax refund as mentioned above, are were outstanding under this agreement with a $27.4 million in 2002, $36.8 million in 2003, weighted average interest rate of 4.7%. As of $11.2 million in 2004, and none for 2005 and December 31, 2000, $16.0 million of borrow- 2006. ings were outstanding with a weighted average Interest paid on the Company’s borrow- interest rate of 8.1%. ings during the years ended December 31, 2001, In February 2001, the Company entered 2000 and 1999 was $9.5 million, $11.4 million into an agreement with its lenders to amend and $8.3 million, respectively. certain provisions of its term loan and revolv- ing credit facilities. The amendment reduced 7. Special Charges (Credits) and the revolving credit facility to $50.0 million, Reorganization Expenses provided for the Company’s accounts receiv- The Company incurred net special charges able and inventory to be pledged as collateral, (credits) and reorganization expenses of and modified certain financial covenants.
  22. 22. $5.0 million, $0.4 million and $2.3 million for During September 2001, options were 2001, 2000 and 1999, respectively. These granted to participants under the Company’s amounts are comprised of the following (in 2001 Stock Option Plan. Because the options millions): granted under this new plan were still subject to stockholder approval at the time of grant, 2001 2000 1999 the options resulted in a one-time charge of Costs to evaluate strategic $2.4 million which was recorded in the fourth options . . . . . . . . . . . . . . . . . $ 1.4 $ 0.6 $ — quarter of 2001 (see Note 10) following stock- Discharge of deferred holder approval of the 2001 Stock Option Plan compensation on December 18, 2001. obligations . . . . . . . . . . . . . . (4.1) — — Separation costs for former During the fourth quarter of 2001, the officers. . . . . . . . . . . . . . . . . . 2.6 — — Company incurred corporate restructuring Stock option compensation. 2.4 — — costs in the amount of $2.3 million. These Corporate restructuring include costs related to the transitioning of the costs . . . . . . . . . . . . . . . . . . . . 2.3 — — corporate office function from Indianapolis, Costs to exit facilities . . . . . . 0.8 — 2.3 Indiana to Rye, New York and Muncie, Indiana, Reduction of long-term costs to reincorporate in Delaware and to hold performance-based a special meeting of stockholders, and other compensation . . . . . . . . . . . — (1.6) — costs including professional fees. Of this Litigation charges . . . . . . . . . . — 1.4 — amount, $1.8 million remained unpaid as of Items related to divested December 31, 2001. thermoforming operations . . . . . . . . . . . . . . (0.4) — — In August 2001, the Company announced that it would be consolidating its home can- $ 5.0 $ 0.4 $2.3 ning metal closure production from its Bernar- din Ltd. Toronto, Ontario facility into its Mun- During 2001, certain participants in the cie, Indiana manufacturing operation. The total Company’s deferred compensation plans cost to exit the Toronto facility was $0.8 mil- agreed to forego balances in those plans in lion and includes a $0.3 million loss on the sale exchange for loans from the Company in the and disposal of equipment, and $0.5 million of same amounts. The loans, which were com- employee severance costs. Of the $0.5 million pleted during 2001, bear interest at the appli- accrued liability established for severance costs, cable federal rate and require the individuals to approximately $0.4 million had been expended secure a life insurance policy having the death through December 31, 2001. The Company benefit equivalent to the amount of the loan will continue to distribute its products in payable to the Company. All accrued interest Canada through Bernardin, Ltd. and principal on the loans are payable upon During 2001, items recognized related to the death of the participant and their spouse. 20 the divested thermoforming operations in- The Company recognized $4.1 million of pre- Alltrista cluded a pre-tax gain of $1.0 million in connec- tax income during 2001 related to the dis- tion with an insurance recovery associated with charge of the deferred compensation obliga- a property casualty. Also in August 2001, the tions. Company announced that it had vacated its On September 25, 2001, the Company an- former Triangle Plastics facility in Indepen- nounced the departure from the Company of dence, Iowa and integrated personnel and ca- Thomas B. Clark, Chairman, President and pabilities into its other operating and distribu- Chief Executive Officer, and Kevin D. Bower, tion facilities in the area. The total cost to exit Senior Vice President and Chief Financial Of- this Iowa facility was $0.6 million and includes ficer. The Board announced the appointment $0.4 million in future lease obligations and an of Martin E. Franklin as Chairman and Chief additional $0.2 million of costs related to the Executive Officer and Ian G.H. Ashken as Vice leased facility. Chairman, Chief Financial Officer and Secre- During 2000, the Company recorded a pre- tary. Separation costs associated with this man- tax gain of $1.6 million related to a reduction agement reorganization were approximately in long-term performance-based compensa- $2.6 million.
  23. 23. tion. Also during 2000, the Company reached Approximately $103 million of net operat- settlements in legal disputes incurring $1.4 mil- ing loss carryforwards remain at December 31, lion in net settlement and legal expenses. 2001. Their use is limited to future taxable income of the Company. The carryforwards During 1999, the Company incurred expire in 2021. The Company established a $2.3 million in costs associated with the exit of valuation allowance against a portion of the a plastic thermoforming facility. net tax benefit associated with all carryfor- wards and temporary differences at Decem- 8. Taxes on Income ber 31, 2001, as it is more likely than not that these will not be fully utilized in the available The components of the provision for in- carryforward period. (See Note 19.) come taxes attributable to continuing opera- tions were as follows for the years ended The difference between the federal statu- December 31: tory income tax rate and the Company’s effec- tive income tax rate as a percentage of income (thousands of dollars) 2001 2000 1999 from continuing operations is reconciled as Current income tax expense (benefit): follows: U.S. federal. . . . . . . . . . . . $(13,978) $ (166) $19,233 Foreign . . . . . . . . . . . . . . 1,163 462 960 2001 2000 1999 State and local . . . . . . . . . (500) (59) 2,880 Federal statutory tax rate . . . 35.0% 35.0% 35.0% Total . . . . . . . . . . . . . . . (13,315) 237 23,073 Increase (decrease) in rates Deferred income tax expense (benefit): resulting from: U.S. federal. . . . . . . . . . . . (33,707) 1,135 (3,635) State and local taxes, net . 3.3 1.0 3.0 State and local . . . . . . . . . (4,962) 187 (580) Foreign . . . . . . . . . . . . . . . . (0.9) (2.2) 1.2 Total . . . . . . . . . . . . . . . (38,669) 1,322 (4,215) Valuation allowance . . . . . (4.3) — — Income tax benefit applied to goodwill. . . . . . . . . . . . 11,541 843 600 Other . . . . . . . . . . . . . . . . . (0.9) 0.2 (0.1) Total income tax provision Effective income tax rate . . . 32.2% 34.0% 39.1% (benefit) . . . . . . . . . . . . . . $(40,443) $2,402 $19,458 Foreign pre-tax income was $0.9 million, In 1999, the income tax expense or benefit $2.5 million and $1.0 million in 2001, 2000 from discontinued operations differed from an and 1999, respectively. expense or benefit calculated using the federal statutory tax rate primarily due to state income Deferred tax liabilities (assets) are com- prised of the following at December 31: taxes and the amortization of intangible assets. Total income tax payments made by the (thousands of dollars) 2001 2000 Company during the years ended December 31, Property, equipment and 21 2001, 2000 and 1999 were $1.0 million, intangibles . . . . . . . . . . . . . . $ 9,430 $17,559 Alltrista $1.7 million and $23.2 million, respectively. Other . . . . . . . . . . . . . . . . . . . . . 2,314 346 Gross deferred tax 9. Retirement and Other Employee liabilities . . . . . . . . . . . . . . 11,744 17,905 Benefit Plans Net operating loss. . . . . . . . . . (39,909) — The Company has multiple defined contri- Accounts receivable bution retirement plans that qualify under sec- allowances . . . . . . . . . . . . . . (388) (580) tion 401(k) of the Internal Revenue Code. The Inventory valuation. . . . . . . . (1,730) (1,312) Company’s contributions to these retirement Compensation and benefits. (4,010) (5,352) plans were $1.5 million, $1.5 million and Other . . . . . . . . . . . . . . . . . . . . . (1,351) (2,214) $1.9 million, respectively, in the years ended Gross deferred tax assets . . (47,388) (9,458) December 31, 2001, 2000 and 1999. Valuation allowance . . . . . . . 5,395 — The Company also maintains a defined Net deferred tax liability benefit pension plan for certain of its hourly (asset). . . . . . . . . . . . . . . . . . . $(30,249) $ 8,447 employees. The components of net periodic

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