-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JU3gafLn4AMzPYgb10bNsU9vNy7S67dKmqwiNgnZ9gQIhIeUTvsi66+e9VbxP09M TBCYwnl5iulEjUXec1wY5w== 0000950132-02-000124.txt : 20020514 0000950132-02-000124.hdr.sgml : 20020514 ACCESSION NUMBER: 0000950132-02-000124 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALGON CARBON CORPORATION CENTRAL INDEX KEY: 0000812701 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 250530110 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10776 FILM NUMBER: 02645770 BUSINESS ADDRESS: STREET 1: P O BOX 717 STREET 2: 400 CALGON CARBON DR CITY: PITTSBURGH STATE: PA ZIP: 15230-0717 BUSINESS PHONE: 4127876700 MAIL ADDRESS: STREET 1: P.O. BOX 717 CITY: PITTSBURGH STATE: PA ZIP: 15230-0717 10-Q 1 d10q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2002 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 1-15903 CALGON CARBON CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 25-0530110 - --------------------------------- ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 717, Pittsburgh, PA 15230-0717 --------------------------------------- (Address of principal executive offices) (Zip Code) (412) 787-6700 ------------------------------------------------------------ (Registrant's telephone number, including area code) ------------------------------------------------------------ (Former name, former address and former fiscal year if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ______ ----- Applicable only to issuers involved in bankruptcy proceedings during the preceding five years: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes_____ No ______ Applicable only to corporate issuers: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at May 1, 2002 - ------------------------------ -------------------------- Common Stock, $.01 par value 38,917,758 shares CALGON CARBON CORPORATION SEC FORM 10-Q QUARTER ENDED March 31, 2002 The Quarterly Report on Form 10-Q contains historical information and forward- looking statements. Statements looking forward in time are included in this Form 10-Q pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may cause the Company's actual results in the future to differ from performance suggested herein. A specific example of such uncertainties includes references to reductions in working capital. In the context of forward-looking information provided in this Form 10-Q and in other reports, please refer to the discussion of risk factors detailed in, as well as the other information contained in the Company's filings with the Securities and Exchange Commission. I N D E X --------- PART 1 - FINANCIAL INFORMATION - ------ --------------------- Item 1. Financial Statements Page ------ ---- Introduction to the Financial Statements...................... 2 Consolidated Statements of Income and Retained Earnings............................................. 3 Consolidated Balance Sheets................................... 4 Consolidated Statements of Cash Flows......................... 5 Selected Notes to Financial Statements........................ 6 Item 2. Management's Discussion and Analysis of Results ------ ----------------------------------------------- of Operations and Financial Condition......................... 11 ------------------------------------- PART II - OTHER INFORMATION - ------- ----------------- Item 1. Legal Proceedings............................................. 14 ------ ----------------- Item 6. Exhibits and Reports on Form 8-K.............................. 14 ------ -------------------------------- SIGNATURES .............................................................. 15 - ---------- 1 PART I - FINANCIAL INFORMATION ------------------------------ Item 1. Financial Statements - ------- -------------------- INTRODUCTION TO THE FINANCIAL STATEMENTS ---------------------------------------- The unaudited interim consolidated financial statements included herein have been prepared by Calgon Carbon Corporation (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. Management of the Company believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the Company's audited consolidated financial statements and the notes included therein for the year ended December 31, 2001 filed with the Securities and Exchange Commission by the Company in Form 10-K. In management's opinion, the unaudited interim consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, which are necessary for a fair presentation, in all material respects, of financial results for the interim periods presented. Operating results for the first three months of 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. 2 CALGON CARBON CORPORATION CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS ------------------------------------------------------- (Dollars in Thousands Except Share and Per Share Data) (Unaudited) Three Months Ended March 31, -------------------------------- 2002 2001 ------------ ----------- Net sales............................ $ 63,136 $ 66,918 ------------ ----------- Cost of products sold (excluding depreciation)........... 43,543 43,376 Depreciation and amortization........ 4,614 5,007 Selling, general and administrative expenses............ 10,864 11,505 Research and development expenses........................... 1,042 1,293 ------------ ----------- 60,063 61,181 ------------ ----------- Income from operations............... 3,073 5,737 Interest income...................... 111 25 Interest expense..................... (624) (1,109) Other income (expense)--net.......... (378) (924) ------------ ----------- Income before income taxes and minority interest.............. 2,182 3,729 Provision for income taxes........... 786 1,342 ------------ ----------- Income before minority interest........................... 1,396 2,387 Minority interest.................... - (53) ------------ ----------- Net income........................... 1,396 2,334 Common stock dividends............... (1,167) (1,940) Retained earnings, beginning of period.......................... 143,172 142,959 ------------ ----------- Retained earnings, end of period............................. $ 143,401 $ 143,353 ============ =========== Net income per common share (basic and diluted).......... $ .04 $ .06 ============ =========== Weighted average shares outstanding Basic.............................. 38,889,052 38,801,509 ============ =========== Diluted............................ 39,175,626 38,958,537 ============ =========== The accompanying notes are an integral part of these financial statements. 3 CALGON CARBON CORPORATION CONSOLIDATED BALANCE SHEETS --------------------------- (Dollars in Thousands except share data) (Unaudited)
March 31, December 31, 2002 2001 -------- ------------ ASSETS Current assets: Cash and cash equivalents................................ $ 4,972 $ 3,567 Receivables (net of allowance of $2,706 and $2,624)...... 49,199 44,233 Revenue recognized in excess of billings on uncompleted contracts............................................. 6,896 10,623 Inventories (net of allowance of $454 and $453).......... 43,601 42,104 Other current assets..................................... 4,259 4,008 -------- -------- Total current assets.................................. 108,927 104,535 Property, plant and equipment, net......................... 141,538 143,661 Intangibles................................................ 3,457 3,551 Goodwill................................................... 70,127 70,064 Other assets............................................... 10,143 9,903 -------- -------- Total assets.......................................... $334,192 $331,714 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt.......................................... $ - $ 8,762 Long-term debt due within one year....................... 2,143 1,275 Accounts payable and accrued liabilities................. 22,723 24,976 Billings in excess of revenue recognized on uncompleted contracts............................................. 2,420 2,370 Restructuring reserve.................................... 1,235 1,480 Payroll and benefits payable............................. 7,820 6,989 Accrued income taxes..................................... 3,330 1,890 -------- -------- Total current liabilities............................. 39,671 47,742 Long-term debt............................................. 64,702 54,360 Deferred income taxes...................................... 32,001 32,021 Other liabilities.......................................... 14,229 13,782 -------- -------- Total liabilities..................................... 150,603 147,905 -------- -------- Commitments and contingencies.............................. - - -------- -------- Shareholders' equity: Common shares, $.01 par value, 100,000,000 shares authorized, 41,676,566 and 41,643,492 shares issued... 417 416 Additional paid-in capital............................... 64,037 63,813 Retained earnings........................................ 143,401 143,172 Accumulated other comprehensive income................... 2,864 3,538 -------- -------- 210,719 210,939 Treasury stock, at cost, 2,787,458 shares................ (27,130) (27,130) -------- -------- Total shareholders' equity............................ 183,589 183,809 -------- -------- Total liabilities and shareholders' equity............ $334,192 $331,714 ======== ========
The accompanying notes are an integral part of these financial statements. 4 CALGON CARBON CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Dollars in Thousands) (Unaudited)
Three Months Ended March 31, ------------------- 2002 2001 ------- ------- Cash flows from operating activities - ------------------------------------ Net income....................................................... $ 1,396 $ 2,334 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.................................. 4,614 5,007 Employee benefit plan provisions............................... 766 630 Changes in assets and liabilities - net of effects from purchase of the minority interest in Calgon Far East Co. Ltd. and exchange rate: Increase in receivables................................... (5,299) (2,820) Increase in inventories................................... (1,836) (5,797) Decrease (increase) in other current assets............... 3,451 (1,200) Decrease in restructuring reserve......................... (222) (656) Increase in accounts payable and accruals............................................. 301 222 Increase in long-term deferred income taxes (net)....................................... 297 498 Other items - net.............................................. (403) 129 ------- ------- Net cash provided by (used in) operating activities.......... 3,065 (1,653) ------- ------- Cash flows from investing activities - ------------------------------------ Purchase of the minority interest in Calgon Far East Co. Ltd... - (3,400) Property, plant and equipment expenditures..................... (3,585) (1,926) Proceeds from disposals of equipment........................... 612 47 ------- ------- Net cash used in investing activities........................ (2,973) (5,279) ------- ------- Cash flows from financing activities - ------------------------------------ Net proceeds from borrowings................................... 2,795 8,173 Common stock dividends......................................... (1,167) (1,940) ------- ------- Net cash provided by financing activities.................. 1,628 6,233 ------- ------- Effect of exchange rate changes on cash.......................... (315) (119) ------- ------- Increase (decrease) in cash and cash equivalents................ 1,405 (818) Cash and cash equivalents, beginning of period...................................................... 3,567 4,334 ------- ------- Cash and cash equivalents, end of period......................... $ 4,972 $ 3,516 ======= =======
The accompanying notes are an integral part of these financial statements. 5 CALGON CARBON CORPORATION SELECTED NOTES TO FINANCIAL STATEMENTS -------------------------------------- (Dollars in Thousands) (Unaudited) 1. Inventories: March 31, 2002 December 31, 2001 -------------- ----------------- Raw materials $ 8,209 $ 7,575 Finished goods 35,392 34,529 ---------- --------- $ 43,601 $ 42,104 ========== ========= 2. Supplemental Cash Flow Information: Three Months Ended March 31, --------------------------------- 2002 2001 ---------- ---------- Cash (paid) received during the period for: Interest $ (609) $ (1,145) ========== ========= Income taxes refunded - net $ 100 $ 1,562 ========== ========= Bank debt: Borrowings $ 16,335 $ 8,456 Repayments (13,540) (283) ---------- --------- Net proceeds from bank debt $ 2,795 $ 8,173 ========== ========= 3. Common stock dividends of $.03 per common share were declared during the quarter ended March 31, 2002. Common stock dividends declared during the quarter ended March 31, 2001 were $.05 per common share. Common stock dividends in the amount of $.03 per common share were declared on April 23, 2002. 4. Comprehensive income: Three Months Ended March 31, --------------------------------- 2002 2001 ---------- ---------- Net income $ 1,396 $ 2,334 Other comprehensive loss net of tax (benefit) of ($19) and ($59), respectively (674) (1,956) ---------- --------- Comprehensive income $ 722 $ 378 ========== ========= The only matter contributing to the other comprehensive loss was the foreign currency translation adjustment. 6 5. Segment Information: The Company has four reportable segments: Activated Carbon, Service, Engineered Solutions and Consumer. These reportable segments are comprised of strategic business units which offer different products and services. The Company evaluates segment performance based primarily on economic profit (as defined by the Company) and operating income. The Activated Carbon segment manufactures granular activated carbon for use in applications to remove organic compounds from liquids, gases, water and air. The Service segment consists of reactivation of spent carbon and the leasing, monitoring and maintenance of mobile carbon adsorption equipment. The Engineered Solutions segment provides solutions to customers' air and water process problems through the design, fabrication and operation of systems that utilize the Company's enabling technologies: carbon adsorption, ultraviolet light and advanced ion exchange separation. The Consumer segment brings the Company's industrial purification technologies directly to the consumer in the form of products and services including charcoal products. Three Months Ended March 31, ------------------- 2002 2001 ------- ------- Net Sales Activated Carbon $27,318 $29,248 Service 21,673 21,815 Engineered Solutions 9,196 11,379 Consumer 4,949 4,476 ------- ------- $63,136 $66,918 ======= ======= Income (loss) from operations before depreciation and amortization Activated Carbon $ 3,735 $ 4,526 Service 4,572 5,616 Engineered Solutions (338) 1,354 Consumer (282) (752) ------- ------- 7,687 10,744 Depreciation and amortization Activated Carbon 2,476 2,372 Service 1,657 1,583 Engineered Solutions 206 774 Consumer 275 278 ------- ------- 4,614 5,007 ------- ------- Income from operations after depreciation and amortization $ 3,073 $ 5,737 ======= ======= 7 Three Months Ended March 31, ----------------------------- 2002 2001 -------- -------- Reconciling items: Interest income 111 25 Interest expense (624) (1,109) Other expense - net (378) (924) -------- -------- Consolidated income before income taxes and minority interest $ 2,182 $ 3,729 ======== ======== March 31, 2002 December 31, 2001 -------------- ----------------- Total Assets Activated Carbon $130,257 $134,161 Service 86,545 90,953 Engineered Solutions 97,095 90,706 Consumer 20,295 15,894 -------- -------- $334,192 $331,714 ======== ======== 6. Derivative Instruments The Company accounts for its derivative instruments under Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended. This standard requires recognition of all derivatives as either assets or liabilities at fair value and may, as amended, result in additional volatility in both current period earnings and other comprehensive income as a result of recording recognized and unrecognized gains and losses resulting from changes in the fair value of derivative instruments. As of March 31, 2002, the Company held one derivative instrument, which was not designated as a hedge under SFAS No. 133. The result of marking that instrument to market was recorded in the Company's first quarter 2002 earnings as required. 7. Contingencies On December 31, 1996, the Company purchased the common stock of Advanced Separation Technologies Incorporated (AST) from Progress Capital Holdings, Inc. and Potomac Capital Investment Corporation. On January 12, 1998, the Company filed a claim for unspecified damages in the United States District Court in the Western District of Pennsylvania alleging among other things that Progress Capital Holdings and Potomac Capital Investment Corporation materially breached various AST financial and operational representations and warranties included in the Stock Purchase Agreement. Based upon information obtained since the acquisition and corroborated in the course of pre-trial discovery, the Company believes that it has a reasonable basis for this claim and intends to vigorously pursue reimbursement for damages sustained. Neither the Company nor its counsel can predict with certainty the amount, if any, of recovery that will be obtained from the defendants in this matter. Accordingly, the Company has not recorded a receivable for this gain contingency pending further developments in the litigation. This case is expected to be presented to the trial court by the end of 2002. The Company is also currently a party in two cases involving alleged infringement of its U.S. patent No. 6,129,893 ("893 patent") for the method of preventing cryptosporidium infection in drinking water. In the first case, Wedeco Ideal Horizons, Inc. (Wedeco) has filed suit against the Company seeking a declaratory judgment that it does not infringe the Company's "893 patent". This matter is currently pending in the United States District Court for the District of New Jersey. In the second case, the Company has pending litigation against the Town of Ontario, NY and Robert Wykle, et al. in the United States District Court for the Western District of New York alleging that the defendant is practicing the method claimed within the "893 patent" without a license. Neither the Company nor its counsel can predict with any certainty the outcome of the two matters. 8 The Company is involved in various legal proceedings, lawsuits, and claims, including employment, product warranty, and environmental matters of a nature considered normal to its business. It is the Company's policy to accrue for amounts related to these legal matters if it is probable that a liability has been incurred and an amount is reasonably estimable. Management believes, after consulting with counsel, that the ultimate liabilities, if any, resulting from such lawsuits and claims will not materially affect the consolidated results, liquidity or financial position of the Company. 8. Goodwill Amortization & Intangible Assets In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 142, "Goodwill and Other Intangible Assets." This standard requires that goodwill and intangible assets with indefinite useful lives should not be amortized but should be tested for impairment at least annually. This new standard also prescribes guidelines for new disclosure requirements. The Company has adopted SFAS No. 142 as of January 1, 2002, as required. In accordance with SFAS No. 142 the Company has assessed the useful lives of its intangible assets during the first quarter of 2002 and concluded that it holds no indefinite lived intangibles. As a result, no impairment test was required and no transition adjustment was recorded. The following is the categorization of the Company's intangible assets as of March 31, 2002: Gross Carrying Accumulated Amount Amortization -------------- ------------- Amortized Intangible Assets: Patents $1,142 $(183) Unpatented Technology 2,875 (377) ------ ----- Total $4,017 $(560) ====== ===== For the quarter ended March 31, 2002 the Company recognized $68 thousand of amortization expense. The Company expects amortization expense to be recognized during the next five years as follows: Estimated Amortization Expense: ------------------------------- For the year ended 12/31/02 $246 For the year ended 12/31/03 $243 For the year ended 12/31/04 $243 For the year ended 12/31/05 $243 For the year ended 12/31/06 $243 The Company has identified its reporting segments for purposes of assigning its goodwill and other net assets in order to perform the initial transitional goodwill impairment test that is required. The Company is currently in the process of performing the initial impairment test and expects that test to be completed by June 30, 2002. Management is presently unable to assess whether the Company will have any goodwill impairment as a result of that test. 9 The carrying amounts of goodwill by segment as of March 31, 2002 and December 31, 2001 are as follows: Activated Engineered Carbon Service Solutions Consumer Segment Segment Segment Segment --------- ------- ---------- -------- Carrying value of goodwill $ 2,015 $ - $ 68,052 $ 60 The following is the Company's net income adjusted to exclude goodwill amortization expense (net of tax) for the quarters ended March 31, 2002 and 2001. For the Quarter Ended March 31, --------------------- 2002 2001 ------ ------ NET INCOME: Reported net income $1,396 $2,334 Add back goodwill amortization, net of tax - 317 ------ ------ Adjusted net income $1,396 $2,651 ====== ====== BASIC AND DILUTED EARNINGS PER SHARE: Reported net income $ 0.04 $ 0.06 Goodwill amortization, net of tax - 0.01 ------ ------ Adjusted net income $ 0.04 $ 0.07 ====== ====== 9. New Accounting Pronouncements In July 2001, the FASB issued SFAS No. 141, "Business Combinations" which requires that all business combinations initiated after June 30, 2001 be accounted for under the purchase method. The Company has adopted SFAS No. 141 as of January 1, 2002 as required with no resulting impact on the Company's financial statements. The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Management has not yet evaluated the impact of the adoption of SFAS No. 143 on the Company's financial statements. The Company plans to adopt SFAS No. 143 on January 1, 2003 as required. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years. The Company has adopted SFAS No. 144 as of January 1, 2002 as required with no resulting impact on the Company's financial statements. 10 Item 2. Management's Discussion and Analysis of Results of Operations and - ------- ----------------------------------------------------------------- Financial Condition ------------------- This discussion should be read in connection with the information contained in the Consolidated Financial Statements and Selected Notes to Financial Statements. Results of Operations - --------------------- Consolidated net sales for the quarter ended March 31, 2002 decreased by $3.8 million or 5.7% (an analysis of sales by segment can be found in Note 5 of Selected Notes to Financial Statements). Net sales for the activated carbon segment decreased by $1.9 million or 6.6% versus the quarter ended March 31, 2001. The decline was primarily the result of lower sales volume and the adverse impact of foreign currency translation. Net sales for the service segment for the quarter ended March 31, 2002 were consistent with the similar 2001 period. Revenues associated with the engineered solutions segment decreased by $2.2 million or 19.2% primarily due to a decrease in new orders during the latter part of 2001 and early part of 2002. Sales to the consumer segment for the quarter ended March 31, 2002 increased by $0.5 million or 10.6% compared to the quarter ended March 31, 2001. The reasons for the increase were due to higher sales of carbon cloth and the Company's new consumer products partially offset by the adverse impact of foreign currency translation. The total adverse impact of foreign currency translation on consolidated net sales for the quarter ended March 31, 2002 was $1.3 million. Gross profit, before depreciation, as a percentage of net sales was 31.0% for the quarter ended March 31, 2002 compared to 35.2% for the similar 2001 period. The 4.2 percentage-point decline was due to a combination of production inefficiencies resulting in higher product costs and competitive pricing in the Company's Activated Carbon and Service segments. The depreciation and amortization decrease of $0.4 million during the quarter ended March 31, 2002 versus the quarter ended March 31, 2001 was related primarily to the Company ceasing to amortize goodwill due to the implementation of Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" as of January 1, 2002. Combined, selling, general and administrative expenses and research and development expenses for the quarter ended March 31, 2002 were below the comparable 2001 quarter by $0.9 million or 7.0%. This decrease represents the Company's commitment to manage controllable costs during a period of lower sales demand. Other expense for the quarter ended March 31, 2002 decreased by $0.5 million or 59.1% as compared to March 31, 2001 due to year over year favorability of charges associated with marking derivative instruments to market. Interest expense for the quarter ended March 31, 2002 was below the quarter ended March 31, 2001 by $0.5 million or 43.7%. The decrease in interest expense was primarily the result of the combination of lower interest rates and a lower average level of borrowings during the comparable periods. Financial Condition - ------------------- Working Capital and Liquidity ----------------------------- Cash flows generated from operating activities were $3.1 million for the period ended March 31, 2002 versus cash used in operations of $1.7 million for the comparable 2001 period. The $4.8 million increase represents a decrease in operating working capital (exclusive of debt) in 2002 versus the comparable period in 2001 partially offset by lower earnings and depreciation and amortization in 2002. Common stock dividends paid during the quarter ended March 31, 2002 represented $.03 per common share versus dividends paid of $.05 per common share for the quarter ended March 31, 2001. Total debt at March 31, 2002 was $66.8 million, an increase of $2.4 million from December 31, 2001. The additional borrowings were used primarily to fund capital expenditures. 11 The Company expects that cash from operating activities plus cash balances and available external financing will be sufficient to meet its requirements. The Company has a $113.4 million credit facility consisting of an $86.8 million five-year revolving credit facility expiring in May 2004 and a $26.6 million 364-day revolving credit facility expiring in May 2002. The Company is uncertain that the commitment under the 364-day revolving credit facility will be renewed. In order to preserve the full $113.4 million commitment of the credit facility, the Company can and currently intends to exercise its option of borrowing up to $26.6 million under the 364-day line before its May 2002 expiration. Upon lapse of the 364-day facility which is currently anticipated to be May 2002, the then outstanding borrowings will mature in May 2004 to coincide with the expiration of the long-term portion of the credit facility. Included in this facility is a letter of credit subfacility which may not exceed $30.0 million. At March 31, 2002 there were no borrowings under the 364-day revolving credit agreement. The weighted average interest rate on the outstanding balance under this credit facility was 2.43% at March 31, 2002. In January 2001, the Company entered into an interest rate swap that fixes $10.0 million of its outstanding variable rate U.S. credit facility at 5.48%. The arrangement expires in January 2003. Restructuring of Operations - --------------------------- The Company currently has two separate restructuring plans requiring continued cash outlays as of the period ended March 31, 2002. The latter of the two initiatives was undertaken during the fourth quarter of 1999 while the former commenced in the third quarter of 1998. The details of both restructuring plans are outlined below. During the fourth quarter of 1999, the Company adopted a strategy aimed at lowering costs to serve the activated carbon markets, investing to grow its service and solutions businesses and repositioning its proven technologies to bring more value to consumers. In order to achieve these goals, the Company has been reorganized as a globally integrated business with emphasis on providing services and solutions to customer problems. The implementation was begun in December 1999 and is essentially complete except for contractual cash outlays for employee severance payments to be made in 2002 and other contractual cash outlays, primarily lease obligations, through the second quarter of 2006. In the third quarter of 1998, the Company initiated a worldwide plan to reduce costs and realign the organization structure. The implementation was begun in September 1998 and is essentially completed with the exception of some minor contractual cash outlays that will continue through 2002. The restructuring reserve activity for the three months ended March 31, 2002 was: Balance Balance 1-1-02 Payments 3-31-02 ------- -------- ------- ($000) 1999 Plan - --------- Employee severance and termination benefit costs $ 247 $(154) $ 93 Other costs 1,101 (81) 1,020 ------- ----- -------- 1,348 (235) 1,113 ------- ----- -------- 1998 Plan - --------- Employee severance and termination benefit costs 95 - 95 Other costs 37 (10) 27 ------- ----- -------- 132 (10) 122 ------- ----- -------- Total reserves $ 1,480 $(245) $ 1,235 ======= ===== ======== Management believes the reserve balances are adequate. 12 Capital Expenditures and Investments - ------------------------------------ Capital expenditures for property, plant and equipment totaled $3.6 million for the quarter ended March 31, 2002 compared to expenditures of $1.9 million for the same period in 2001. The increase is the result of the Company's continuing investment in the construction of a carbon facility in the People's Republic of China. Capital expenditures for 2002 are projected to be approximately $27.5 million which includes the establishment of a new Center of Excellence in the Gulf Coast region of the United States in addition to the construction of the aforementioned carbon facility. Employee Relations - ------------------ During the first quarter, the Company came to terms on two labor agreements covering approximately 230 of the Company's hourly employees. The agreements reached with the United Steelworkers of America cover the Company's Pittsburgh, Pennsylvania, and Catlettsburg, Kentucky employees and expire in February 2005 and March 2005, respectively. New Accounting Pronouncements - ----------------------------- The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Management has not yet evaluated the impact of the adoption of SFAS No. 143 on the Company's financial statements. The Company plans to adopt SFAS No. 143 on January 1, 2003 as required. 13 PART II - OTHER INFORMATION --------------------------- Item 1. Legal Proceedings - ------ ----------------- See Note 7 to the unaudited interim Consolidated Financial Statements contained herein. Item 6. Exhibits and Reports on Form 8-K - ------ -------------------------------- (c) Exhibits None (d) Reports on Form 8-K There were no reports on Form 8-K filed for the quarter ended March 31, 2002. 14 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CALGON CARBON CORPORATION ------------------------- (REGISTRANT) Date: May 10, 2002 /s/ William E. Cann ---------------------------- William E. Cann Senior Vice President, Chief Financial Officer 15 -----END PRIVACY-ENHANCED MESSAGE-----