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 SEPTEMBER 30, 2001
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 0-5610
PAXAR CORPORATION
-----------------
(Exact name of registrant as specified in its charter)
NEW YORK 13-5670050
-------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105 CORPORATE PARK DRIVE, WHITE PLAINS, N.Y. 10604
--------------------------------------------------
(Address of principal executive offices)
(914) 697-6800
--------------
(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 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 CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. (November 6, 2001)
Common Stock, $0.10 par value: 41,876,124 shares
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
The financial statements included herein have been prepared by Paxar Corporation
(the "Company"), without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. While certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, the Company believes that the
disclosures made herein are adequate to make the information presented not
misleading. It is recommended that these condensed financial statements be read
in conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.
In the opinion of the Company, all adjustments, consisting only of normal
recurring accruals and adjustments necessary to present fairly the financial
information contained herein, have been included.
1
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2001 2000 2001 2000
---- ---- ---- ----
Sales $ 138.8 $ 158.4 $ 451.2 $ 486.3
Cost of sales 86.5 96.5 277.2 298.6
-------- -------- -------- --------
Gross profit 52.3 61.9 174.0 187.7
Selling, general and administrative expense 41.6 44.9 129.7 136.0
Amortization of intangibles 1.5 1.5 4.5 4.3
Restructuring and other charges 2.0 -- 8.6 --
-------- -------- -------- --------
Operating income 7.2 15.5 31.2 47.4
Gain on sale of IIMAK -- -- -- 50.3
Interest expense, net 2.5 2.4 7.2 7.3
-------- -------- -------- --------
Income before taxes 4.7 13.1 24.0 90.4
Taxes on income 0.8 3.4 6.1 22.3
-------- -------- -------- --------
Net income $ 3.9 $ 9.7 $ 17.9 $ 68.1
======== ======== ======== ========
Basic earnings per common share $ 0.09 $ 0.22 $ 0.42 $ 1.50
======== ======== ======== ========
Diluted earnings per common share $ 0.09 $ 0.22 $ 0.42 $ 1.49
======== ======== ======== ========
Average common shares outstanding:
Basic 41.9 43.4 42.2 45.3
======== ======== ======== ========
Diluted 42.6 43.9 42.8 45.7
======== ======== ======== ========
See Notes to Consolidated Financial Statements.
2
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)
SEPTEMBER 30, DECEMBER 31,
2001 2000
---- ----
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 69.4 $ 44.3
Receivables, less allowance of $8.9 in 2001 and $9.6 in 2000 98.1 108.9
Inventories 79.1 80.2
Other current assets 15.4 10.1
------ ------
Total current assets 262.0 243.5
Property, plant and equipment, at cost 248.8 254.8
Accumulated depreciation (103.1) (104.6)
------ ------
Net property, plant and equipment 145.7 150.2
Goodwill 179.0 187.1
Other assets 23.5 22.6
------ ------
$610.2 $603.4
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Due to banks $ 1.5 $ 0.9
Current maturities of long-term debt 0.2 0.1
Accounts payable and accrued liabilities 90.9 96.2
Accrued taxes on income 20.5 22.7
------ ------
Total current liabilities 113.1 119.9
Long-term debt 165.5 165.8
Deferred income taxes 6.4 5.5
Other liabilities 12.0 8.9
Shareholders' equity:
Preferred Stock, $0.01 par value, 5,000,000 shares authorized,
none issued and outstanding -- --
Common Stock, $0.10 par value, 200,000,000 shares authorized,
41,852,382 and 42,079,920 shares issued and outstanding in 2001
and 2000, respectively 4.2 4.2
Paid-in capital 40.5 45.2
Retained earnings 289.7 271.8
Accumulated other comprehensive loss (21.2) (17.9)
------ ------
Total shareholders' equity 313.2 303.3
------ ------
$610.2 $603.4
====== ======
See Notes to Consolidated Financial Statements.
3
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
(UNAUDITED)
NINE MONTHS ENDED
-----------------
SEPTEMBER 30, 2001 SEPTEMBER 30, 2000
------------------ ------------------
OPERATING ACTIVITIES:
Net income $ 17.9 $ 68.1
------ ------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 24.5 26.1
Deferred income taxes 0.1 (0.9)
Gain on sale of IIMAK, net of tax -- (40.3)
Changes in assets and liabilities, net of businesses acquired or divested:
Receivables 10.8 0.5
Inventories 2.1 (4.0)
Other current assets (4.5) 3.7
Accounts payable and accrued liabilities (6.1) (19.9)
Taxes on income (2.2) 7.4
Other 0.5 0.4
------ ------
25.2 (27.0)
------ ------
Net cash provided by operating activities 43.1 41.1
------ ------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (16.9) (18.9)
Acquisitions, net of cash acquired (2.7) (52.5)
Divestiture -- 119.8
Other 6.4 3.0
------ ------
Net cash (used in)/provided by investing activities (13.2) 51.4
------ ------
FINANCING ACTIVITIES:
Increase/(decrease) in short-term debt 0.6 (33.0)
Additions to long-term debt 12.4 35.8
Reductions in long-term debt (12.7) (35.1)
Purchase of common stock (8.3) (46.5)
Proceeds from exercise of stock options/stock purchase plan 3.7 1.7
------ ------
Net cash used in financing activities (4.3) (77.1)
------ ------
OTHER ACTIVITIES:
Effect of exchange rate changes on cash (0.5) (0.9)
------ ------
Increase in cash 25.1 14.5
Cash and cash equivalents at beginning of period 44.3 32.2
------ ------
Cash and cash equivalents at end of period $ 69.4 $ 46.7
====== ======
See Notes to Consolidated Financial Statements.
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN MILLIONS, EXCEPT PER SHARE DATA)
NOTE 1: GENERAL
The accounting policies followed during interim periods are in conformity with
accounting principles generally accepted in the United States and are consistent
with those applied for annual periods as described in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000. Other than balance
sheet amounts as of December 31, 2000, all amounts contained herein are
unaudited.
Reclassifications:
Certain reclassifications have been made to prior year amounts to conform to the
current year presentation.
NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that
all business combinations initiated after June 30, 2001 be accounted for using
the purchase method, thus eliminating the use of the pooling-of-interests
accounting for business combinations. SFAS No. 142 changes the accounting for
goodwill from an amortization method to an impairment-only approach, whereby
goodwill is assessed annually for impairment and more frequent assessments are
conducted if circumstances indicate a possible impairment. Additionally, SFAS
No. 142 will require all acquired intangible assets be separately recognized if
the benefit of the intangible asset is obtained through contractual or other
legal rights, or if the intangible asset can be sold, transferred, licensed,
rented, or exchanged, regardless of the acquirer's intent to do so. Whereas SFAS
No. 141 is effective for all business combinations initiated after June 2001,
SFAS No. 142 requires companies to continue to amortize goodwill existing at
June 30, 2001 through the end of 2001, ceasing goodwill amortization on January
1, 2002.
Amortization charges for the nine-month period ended September 2001 were $4.5.
The Company is currently evaluating other impacts of adopting SFAS No. 142 and
has not yet quantified the impact on its consolidated financial position.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of." The provisions of this statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001. The
Company has not yet determined the impact, if any, this new standard will have
on its reported results of operations, financial position and cash flow.
NOTE 3: FINANCIAL INSTRUMENTS
The Company adopted the provisions of SFAS Nos. 133 - Accounting for Derivative
Instruments and Hedging Activities and 138 - Accounting for Certain Derivative
Instruments and Certain Hedging Activities - on January 1, 2001. These standards
establish new accounting and disclosure requirements for most derivative
instruments and hedge transactions involving derivatives. The cumulative effects
of adopting these standards on net income and other comprehensive income were
not material to net income and other comprehensive income for the nine months
ended September 30, 2001 and shareholders' equity at January 1, 2001.
All financial instruments of the Company with the exception of hedge agreements
are carried at cost, which approximates fair value.
The Company's policy and objective is to manage exposure to variations in
foreign currency rates by entering into hedge agreements when appropriate,
specifically nondeliverable and for-delivery forward contracts. Hedge agreements
are used to offset the effects of currency variations on net investment in
foreign subsidiaries and transactional gains and losses arising from foreign
currency monetary assets and liabilities. The Company formally designates and
documents the hedging relationship and risk management objective and strategy
for undertaking the hedge. The documentation also includes identification of the
hedging instrument, the item being hedged, the nature
5
of the risk being hedged, as well as how the hedging instrument's effectiveness
in offsetting the exposure to changes in the hedged item's fair value
attributable to the hedged risk will be assessed.
The Company's policy is to record changes in fair value of hedges of net
investments in foreign subsidiaries in the currency translation account as a
component of shareholders' equity to offset the concurrent gains and losses
recorded in the currency translation account associated with the underlying
investment. Changes in fair value associated with hedges of foreign currency
monetary obligations are recorded in income during the reporting period, when
gains and losses associated with the hedged item are also recorded.
All derivatives have high correlation with the underlying exposure and are
highly effective in offsetting underlying currency movements. Accordingly,
changes in derivative fair values are expected to be offset by changes in value
of the underlying exposures. Gains or losses associated with settlement of
derivative positions when the underlying transaction occurs are recognized in
the income statement or recorded as part of the underlying asset or liability,
as appropriate in the circumstances.
The fair value of outstanding foreign exchange contracts at September 30, 2001
and January 1, 2001 for delivery of various currencies at various future dates
during the next year, the changes in fair value during the quarter recorded in
income and the amounts recorded in the currency translation account at September
30, 2001 and January 1, 2001 were not material.
NOTE 4: DIVESTITURE
On March 9, 2000, the Company sold 92.5% of its International Imaging Materials,
Inc. ("IIMAK") subsidiary for a total consideration of $127.5, which consisted
of $120 in cash and $7.5 of IIMAK preferred stock.
NOTE 5: INVENTORIES
The components of inventories are set forth below:
SEPTEMBER 30, 2001 DECEMBER 31, 2000
------------------ -----------------
Raw materials $37.8 $35.2
Work-in-Process 8.4 8.7
Finished goods 32.9 36.3
----- -----
$79.1 $80.2
===== =====
NOTE 6: LONG-TERM DEBT
A summary of long-term debt is set forth below:
SEPTEMBER 30, 2001 DECEMBER 31, 2000
------------------ -----------------
6.74% Senior Notes $150.0 $150.0
Economic Development Revenue Bonds due 2011 and 2019 13.0 13.0
Other 2.7 2.9
------ ------
165.7 165.9
Less current maturities 0.2 0.1
------ ------
$165.5 $165.8
====== ======
NOTE 7: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
A summary of accounts payable and accrued liabilities is set forth below:
SEPTEMBER 30, 2001 DECEMBER 31, 2000
------------------ -----------------
Accounts payable $31.1 $34.2
Accrued payroll costs 20.5 20.9
Other accrued liabilities 39.3 41.1
----- -----
$90.9 $96.2
===== =====
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NOTE 8: SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes and interest, net of interest income received:
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------
2001 2000
---- ----
Income Taxes $ 7.9 $ 3.9
Interest $ 9.8 $ 9.4
NOTE 9: COMPREHENSIVE INCOME
Comprehensive income for the periods presented below includes foreign currency
translation items. There was no tax expense or tax benefit associated with the
foreign currency translation items.
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------
2001 2000
---- ----
Net income $17.9 $68.1
Foreign currency translation adjustments (3.3) (10.7)
---- -----
Comprehensive income $14.6 $57.4
===== =====
NOTE 10: EARNINGS PER COMMON SHARE
The reconciliation of basic and diluted per-share computation is as follows:
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------
2001 2000
---- ----
Average common shares (basic) 42.2 45.3
Options and warrants 0.6 0.4
---- ----
Adjusted average common shares (diluted) 42.8 45.7
==== ====
NOTE 11: RESTRUCTURING AND OTHER SPECIAL CHARGES
The Company recorded $2.0 and $8.6 (pre-tax) restructuring and other charges for
the three and nine months ended September 30, 2001 as a result of several
strategic initiatives. Of the total restructuring and other charges for the nine
months ended September 30, 2001, the charges pertaining to severance for 94
management and administrative personnel and 284 manufacturing positions amounted
to $4.1. The remaining $4.5 represented various other charges associated with
these initiatives.
During 2000, the Company recorded a $1.0 (pre-tax) integration/restructuring and
other charge pertaining to severance for 9 selling and administrative personnel
and 30 manufacturing positions and other costs associated with the
discontinuance of supplies manufacturing in Canada, announced in December 2000.
Of this amount, $0.3 of severance was unpaid at September 30, 2001 and will be
paid during the remainder of 2001.
Following is a reconciliation of amounts payable under severance agreements as
of January 1, 2001 and September 30, 2001:
BEGINNING BALANCE ENDING BALANCE
JANUARY 1, 2001 EXPENSES PAYMENTS SEPTEMBER 30, 2001
--------------- -------- -------- ------------------
Severance $ 0.7 $ 4.1 $ 2.9 $ 1.9
7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
ALL AMOUNTS IN THE FOLLOWING DISCUSSION ARE STATED IN MILLIONS, EXCEPT EMPLOYEE
AND PER SHARE DATA.
OPERATING RESULTS
The following table shows each element of the income statement as a percent of
sales for the periods indicated:
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
------------- -------------
2001 2000 2001 2000
---- ---- ---- ----
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 62.3 60.9 61.4 61.4
------ ------ ------ ------
Gross profit 37.7 39.1 38.6 38.6
Selling, general and administrative expense 30.0 28.3 28.8 28.0
Amortization of intangibles 1.1 1.0 1.0 0.9
Restructuring and other special charges 1.4 -- 1.9 --
------ ------ ------ ------
Operating income 5.2 9.8 6.9 9.7
Gain on sale of IIMAK -- -- -- 10.4
Interest expense, net 1.8 1.5 1.6 1.5
------ ------ ------ ------
Income before taxes 3.4 8.3 5.3 18.6
Taxes on income 0.6 2.2 1.3 4.6
------ ------ ------ ------
Net income 2.8% 6.1% 4.0% 14.0%
====== ====== ====== ======
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 2000
Previously, the Company reported segment financial information for Apparel
Identification and Labeling Solutions. Management believes that such reporting
is no longer appropriate for the following reasons: (1) there has been a steady
convergence and there now exists a commonality of customers for the products of
the former segments; and (2) the operations of the former segments have been
integrated or are in the process of being integrated under common management
structures.
Sales were down to $138.8 and $451.2 for the three and nine months ended
September 30, 2001 compared with $158.4 and $486.3 for the three and nine months
ended September 30, 2000. Sales from North America decreased 18% to $71.3 for
the three months ended September 30, 2001 and 16% to $229.9 for the nine months
ended September 30, 2001, offset somewhat by sales growth in Asia of 8% for the
nine months ended September 30, 2001.
Cost of sales for the three and nine months ended September 30, 2001 decreased
to $86.5 and $277.2 compared with $96.5 and $298.6 for the three and nine months
ended September 30, 2000. As a percent of sales, such cost increased to 62.3%
for the three months ended September 30, 2001 compared with 60.9% for the three
months ended September 30, 2000 and were 61.4% for the nine months ended
September 30, 2001 and 2000, respectively.
Gross profit was $52.3 for the three months ended September 30, 2001 compared
with $61.9 for the three months ended September 30, 2000. The gross profit
margin was 37.7% for the three months ended September 30, 2001 compared with
39.1% for the three months ended September 30, 2000. During the nine months
ended September 30, 2001, gross profit decreased to $174.0 compared with $187.7
for the nine months ended September 30, 2000. The gross profit margin was 38.6%
for the nine months ended September 30, 2001 and 2000, respectively. During the
nine months ended September 30, 2000, gross profit was negatively impacted by
$2.5 due to the recording of the Bornemann & Bick ("B&B") inventories acquired
at fair value. Excluding this impact, the gross profit margin for the nine
months ended September 30, 2000 would have been 39.1%.
Selling, general and administrative expense ("SG&A") was $41.6 and $129.7 for
the three and nine months ended September 30, 2001 compared with $44.9 and
$136.0 for the three and nine months ended September 30, 2000. As
8
a percent of sales, SG&A was 30.0% and 28.8% for the three and nine months ended
September 30, 2001 compared with 28.3% and 28.0% for the three and nine months
ended September 30, 2000.
During the second quarter 2001, the Company undertook specific actions to
enhance revenue growth, increase capital efficiency and lower operating costs.
For the nine months ended September 30, 2001, the Company recorded $8.6 ($0.15
per share) of restructuring and other charges. The restructuring and other
charges consisted of $4.1 of severance and $4.5 of other costs associated with
these initiatives. As a result of these strategic initiatives, the Company will
report a restructuring charge of approximately $11-12 ($0.18-$0.20 per share) in
2001 to cover severance costs for approximately 500 employees, asset write-offs
and other associated costs. The remaining amounts will be reported as incurred
in the fourth quarter.
Operating income was $7.2 and $31.2 for the three and nine months ended
September 30, 2001 compared with $15.5 and $47.4 for the three and nine months
ended September 30, 2000. The operating margins were 5.2% and 6.9% for the three
and nine months ended September 30, 2001 compared 9.8% and 9.7% for the three
and nine months ended September 30, 2000.
On March 9, 2000 the Company sold 92.5% of International Imaging Materials, Inc.
("IIMAK"), its thermal transfer ribbons business, for a total consideration of
$127.5, which consisted of $120.0 in cash and $7.5 of IIMAK preferred stock. The
sale resulted in a gain of $50.3 ($40.3 net of taxes).
Interest expense, net, was $2.5 and $7.2 (1.8% and 1.6% of sales) for the three
and nine months ended September 30, 2001 compared with $2.4 and $7.3 (1.5% of
sales for both) for the three and nine months ended September 30, 2000.
Income before taxes was $4.7 and $24.0 (3.4% and 5.3% of sales) for the three
and nine months ended September 30, 2001 compared with $13.1 and $90.4 (8.3% and
18.6% of sales) for the three and nine months ended September 30, 2000.
The effective income tax rate was 17% and 25% for the three and nine months
ended September 30, 2001 compared with 26% and 25% for the three and nine months
ended September 30, 2000. Excluding the net gain on the sale of IIMAK in the
amount of $40.3, the effective tax rate for the nine months ended September 30,
2000 would have been 31%.
Net income for the three and nine months ended September 30, 2001 was $3.9 and
$17.9 (2.8% and 4.0% of sales) compared with $9.7 and $68.1 (6.1% and 14.0% of
sales) for the three and nine months ended September 30, 2000. Excluding
restructuring and other charges in 2001, and in 2000, the $2.5 million charge to
cost of sales for revaluation of B&B finished goods inventory upon acquisition
by the Company, as well as the gain on sale of IIMAK, net income for the three
and nine months ended September 30, 2001 was $5.5 and $24.2 (4.0% and 5.4% of
sales) compared with $9.7 and $29.5 (6.1% of sales for both) for the three and
nine months ended September 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
The table below presents summary cash flow information for the periods
indicated:
Nine Months Ended
-----------------
September 30, 2001 September 30, 2000
------------------ ------------------
Net cash provided by operating activities $43.1 $41.1
Net cash (used in)/provided by investing activities (13.2) 51.4
Net cash used in financing activities (4.3) (77.1)
----- -----
Total change in cash (a) $25.6 $15.4
===== =====
(a) Before exchange rate effects.
9
OPERATING ACTIVITIES
Cash provided by operating activities continues to be the Company's primary
source of funds to finance operating needs and internal growth opportunities.
The net cash provided by operating activities was $43.1 for the nine months
ended September 30, 2001 compared with $41.1 for the nine months ended September
30, 2000.
Depreciation and amortization was $24.5 for the nine months ended September 30,
2001 compared with $26.1 for the nine months ended September 30, 2000.
INVESTING ACTIVITIES
Capital expenditures for the nine months ended September 30, 2001 were $16.9
compared with $18.9 for the nine months ended September 30, 2000. All new
capital projects are carefully analyzed and, other than projects for employee
safety and environmental improvement, are required to make a positive
contribution on a net present value basis, generating an advantageous internal
rate of return on invested capital. The Company anticipates that capital
expenditures will be approximately $27 for the year ending December 31, 2001.
On May 18, 2000, the Company acquired the B&B group of companies for
approximately $51.2. The B&B companies manufacture apparel identification
products. The acquisition has been accounted for as a purchase with assets and
liabilities assumed recorded at their estimated fair values at the date of
acquisition. The $31.7 excess of the purchase price and transaction cost over
the fair value of net assets acquired was recorded as goodwill.
On March 9, 2000 the Company sold 92.5% of IIMAK, its thermal transfer ribbons
business, for a total consideration of $127.5, which consisted of $120.0 in cash
and $7.5 of IIMAK preferred stock.
The Company intends to continue its growth, in part by acquisitions of other
complementary or related businesses that would be of important strategic value.
FINANCING ACTIVITIES
The table below sets forth the components of total capital for the periods
indicated:
September 30, 2001 December 31, 2000
------------------ -----------------
Due to banks $ 1.5 $ 0.9
Current maturities of long-term debt 0.2 0.1
Long-term debt 165.5 165.8
------ ------
Total debt $167.2 $166.8
Shareholders' equity 313.2 303.3
------ ------
Total capital $480.4 $470.1
====== ======
Total debt as a percent of total capital 34.8% 35.5%
====== ======
At September 30, 2001, total debt as a percent of total capital was 34.8%
compared with 35.5% at December 31, 2000.
10
CAUTIONARY STATEMENT PURSUANT TO "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
Except for historical information, the Company's reports to the Securities and
Exchange Commission on Form 10-K and Form 10-Q and periodic press releases, as
well as other public documents and statements, contain "forward-looking
statements" within the meaning of the federal securities laws. Forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those expressed or implied by the statements,
regarding, among others:
- rate of migration of garment manufacturing industry moving
from the United States and Western Europe
- worldwide economic and other business conditions that could
affect demand for the Company's products in the United States
or international markets
- the mix of products sold and the profit margins thereon
- order cancellation or reduced bookings by customers or
distributors
- competitive product offerings and pricing actions
- the availability and pricing of key raw materials
- productivity improvements in manufacturing
Readers are cautioned not to place undue reliance on forward-looking statements.
The Company undertakes no obligation to republish or revise forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrences of unanticipated events.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company experiences market risk relative to interest rates. A 10% change in
interest rates affecting the Company's floating rate debt instruments would have
an insignificant impact on the Company's pretax earnings and cash flows over the
next fiscal year. Such a move in interest rates would have no effect on the fair
value of the Company's floating rate debt instruments.
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits.
10.1 Agreement, dated as of August 10, 2001, by and between Paxar
Corporation and Paul Griswold.
10.2 Agreement, dated as of September 1, 2001, by and between Paxar
Corporation and Victor Hershaft.
b) Reports on Form 8-K
Current Report on Form 8-K, dated July 11, 2001, reporting under Item 5
that the Registrant had entered into an Employment Agreement and a
Stock Repurchase Agreement with Arthur Hershaft, its Chairman, and that
Paul Griswold, its President, would become its Chief Executive Officer
effective August 10, 2001.
11
PAXAR CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Paxar Corporation
-----------------
Registrant
By: /s/ Jack Plaxe
-------------------
Senior Vice President and
Chief Financial Officer
(Principal Accounting Officer)
November 13, 2001
------------------
Date
12