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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 JUNE 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. (August 7, 2001)
Common Stock, $0.10 par value: 42,301,534 shares
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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.
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PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- -------------------------
2001 2000 2001 2000
--------- --------- --------- ---------
Sales $ 157.1 $ 167.7 $ 312.4 $ 327.9
Cost of sales 94.2 103.0 190.7 202.1
--------- --------- --------- ---------
Gross profit 62.9 64.7 121.7 125.8
Selling, general and administrative expense 43.1 46.6 88.0 91.1
Amortization of intangibles 1.5 1.5 3.0 2.8
Restructuring and other charges 6.6 -- 6.6 --
--------- --------- --------- ---------
Operating income 11.7 16.6 24.1 31.9
Gain on sale of IIMAK -- -- -- 50.3
Interest expense, net 2.3 2.0 4.7 4.9
--------- --------- --------- ---------
Income before taxes 9.4 14.6 19.4 77.3
Taxes on income 2.6 4.8 5.4 18.9
--------- --------- --------- ---------
Net income $ 6.8 $ 9.8 $ 14.0 $ 58.4
========= ========= ========= =========
Basic earnings per common share $ 0.16 $ 0.22 $ 0.33 $ 1.27
========= ========= ========= =========
Diluted earnings per common share $ 0.16 $ 0.21 $ 0.33 $ 1.26
========= ========= ========= =========
Average common shares outstanding:
Basic 42.2 45.4 42.2 46.0
========= ========= ========= =========
Diluted 42.8 45.9 42.8 46.5
========= ========= ========= =========
See Notes to Consolidated Financial Statements
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PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE AMOUNTS)
JUNE 30, DECEMBER 31,
2001 2000
---- ----
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 75.3 $ 44.3
Receivables, less allowance of $8.4 in 2001 and $9.6 in 2000 104.9 108.9
Inventories 72.9 80.2
Other current assets 17.1 10.1
--------- ---------
Total current assets 270.2 243.5
Property, plant and equipment, at cost 247.0 254.8
Accumulated depreciation (106.1) (104.6)
--------- ---------
Net property, plant and equipment 140.9 150.2
Goodwill 178.8 187.1
Other assets 22.8 22.6
--------- ---------
$ 612.7 $ 603.4
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Due to banks $ 1.6 $ 0.9
Current maturities of long-term debt 0.2 0.1
Accounts payable and accrued liabilities 89.6 96.2
Accrued taxes on income 22.5 22.7
--------- ---------
Total current liabilities 113.9 119.9
Long-term debt 172.4 165.8
Deferred income taxes 5.4 5.5
Other liabilities 8.0 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,
42,365,776 and 42,079,920 shares issued and outstanding in 2001
and 2000, respectively 4.2 4.2
Paid-in capital 47.5 45.2
Retained earnings 285.8 271.8
Accumulated other comprehensive loss (24.5) (17.9)
--------- ---------
Total shareholders' equity 313.0 303.3
--------- ---------
$ 612.7 $ 603.4
========= =========
See Notes to Consolidated Financial Statements
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PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
UNAUDITED
SIX MONTHS ENDED
JUNE 30, 2001 JUNE 30, 2000
------------- -------------
OPERATING ACTIVITIES:
Net income $ 14.0 $ 58.4
--------- ---------
Adjustments to reconcile net income to net cash provided by (used in)
operations:
Depreciation and amortization 16.9 15.9
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 4.1 (2.2)
Inventories 7.2 (0.9)
Other current assets (7.2) 2.1
Accounts payable and accrued liabilities (6.7) (12.1)
Taxes on income (0.3) 5.3
Other (2.8) 0.4
--------- ---------
11.3 (32.7)
--------- ---------
Net cash provided by operating activities 25.3 25.7
--------- ---------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (11.3) (11.6)
Acquisitions, net of cash acquired 1.3 (51.2)
Acquisition related, divestiture -- 120.0
Other 6.5 (1.6)
--------- ---------
Net cash (used in)/provided by investing activities (3.5) 55.6
--------- ---------
FINANCING ACTIVITIES:
Increase/(decrease) in short-term debt 0.7 (43.2)
Additions to long-term debt 12.1 23.5
Reductions in long-term debt (5.4) (23.6)
Purchase of common stock -- (26.9)
Proceeds from exercise of stock options/stock purchase
plan 2.3 1.1
--------- ---------
Net cash provided by (used in) financing activities 9.7 (69.1)
--------- ---------
OTHER ACTIVITIES:
Effect of exchange rate changes on cash (0.5) (0.7)
--------- ---------
Increase in cash 31.0 11.5
Cash and cash equivalents at beginning of period 44.3 32.2
--------- ---------
Cash and cash equivalents at end of period $ 75.3 $ 43.7
========= =========
See Notes to Consolidated Financial Statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)
NOTE 1: GENERAL
The accounting policies followed during interim periods are in conformity with
generally accepted accounting principles 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: FINANCIAL INSTRUMENTS
The Company adopted the provisions of Statements of Financial Accounting
Standards ("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 six months ended June 30, 2001 and
stockholders' 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 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 stockholders' 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 June 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 Currency Translation Account at June 30, 2001
and January 1, 2001 were not material.
NOTE 3: 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 included $120
in cash and $7.5 of IIMAK preferred stock.
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NOTE 4: INVENTORIES
The components of inventories are set forth below:
JUNE 30, 2001 DECEMBER 31, 2000
------------- -----------------
Raw materials $ 32.6 $ 35.2
Work-in-Process 8.2 8.7
Finished goods 32.1 36.3
-------------- --------------
$ 72.9 $ 80.2
============== ==============
NOTE 5: LONG TERM DEBT
A summary of long-term debt is set forth below:
JUNE 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 9.6 2.9
-------------- --------------
172.6 165.9
Less current maturities 0.2 0.1
-------------- --------------
$ 172.4 $ 165.8
============== ==============
NOTE 6: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
A summary of accounts payable and accrued liabilities is set forth below:
JUNE 30, 2001 DECEMBER 31, 2000
------------- -----------------
Accounts payable $ 29.3 $ 34.2
Accrued payroll costs 18.4 20.9
Other accrued liabilities 41.9 41.1
-------------- --------------
$ 89.6 $ 96.2
============== ==============
NOTE 7: SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes and interest, net of interest income received:
FOR THE SIX MONTHS ENDED JUNE 30,
2001 2000
----------- -----------
Interest $ 4.7 $ 4.9
Income Taxes $ 4.9 $ 3.7
NOTE 8: 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 SIX MONTHS ENDED JUNE 30,
2001 2000
------------ ------------
Net income $ 14.0 $ 58.4
Foreign currency translation adjustments (6.6) (3.7)
------------ ------------
Comprehensive income $ 7.4 $ 54.7
============ ============
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NOTE 9: EARNINGS PER COMMON SHARE
The reconciliation of basic and diluted per-share computation is as follows:
FOR THE SIX MONTHS ENDED JUNE 30,
2001 2000
----------- -----------
Average common shares (basic) 42.2 46.0
Options and warrants 0.6 0.5
----------- -----------
Adjusted average common shares (diluted) 42.8 46.5
=========== ===========
NOTE 10: RESTRUCTURING AND OTHER SPECIAL CHARGES
During second quarter 2001, the Company recorded a $6.6 (pre-tax)
restructuring and other charge as a result of several strategic initiatives.
Included in the charge is $2.8 pertaining to severance for 45 management and
administrative personnel and 181 manufacturing positions as well as $3.8 of
other costs 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, $0.4 of severance was unpaid at June 30, 2001, to be paid during
the remainder of 2001.
Following is a reconciliation of amounts payable under severance agreements
in January 1 and June 30, 2001:
BEGINNING BALANCE ENDING BALANCE
JANUARY 1, 2001 EXPENSES PAYMENTS JUNE 30, 2001
--------------- -------- -------- ---------------
Severance $0.7 $2.8 $0.5 $3.0
NOTE 11: BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" and Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets."
Statement 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. Statement No. 142
changes the accounting for goodwill from an amortization method to an
impairment-only approach, whereby goodwill is assessed annually for impairment,
more frequent assessments are conducted if circumstances indicate a possible
impairment. Additionally, Statement 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 Statement No. 141 is effective for all
business combinations initiated after June, 2001, Statement 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 six-month period ended June, 2001 were $3.0 million
with a similar charge expected for the last half of 2001. The Company is
currently evaluating other impacts of adopting Statement No. 142 and has not yet
quantified the impact on its consolidated financial position.
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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 SHARE 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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
2001 2000 2001 2000
--------- --------- --------- ---------
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 60.0 61.4 61.0 61.7
--------- --------- --------- ---------
Gross profit 40.0 38.6 39.0 38.3
Selling, general and administrative expense 27.4 27.8 28.2 27.8
Amortization of intangibles 1.0 0.9 1.0 0.8
Restructuring and other special charges 4.2 -- 2.1 --
--------- --------- --------- ---------
Operating income 7.4 9.9 7.7 9.7
Gain on sale of IIMAK -- -- -- 15.4
Interest expense, net 1.4 1.2 1.5 1.5
--------- --------- --------- ---------
Income before taxes 6.0 8.7 6.2 23.6
Taxes on income 1.7 2.9 1.7 5.8
--------- --------- --------- ---------
Net income 4.3% 5.8% 4.5% 17.8%
========= ========= ========= =========
THREE AND SIX MONTHS ENDED JUNE 30, 2001 COMPARED WITH THE THREE AND SIX MONTHS
ENDED JUNE 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 $157.1 and $312.4 for the three and six months ended June 30,
2001 compared to $167.7 and $327.9 for three and six months ended June 30, 2000.
Sales from North America decreased 12% to $77.1 for the three months ended June
30, 2001 and 15% to $158.6 for the six months ended June 30, 2001, offset
somewhat by sales growth in Asia and Europe of 12% and 6%, respectively, for the
six months ended June 30, 2001.
Cost of sales for the three and six months ended June 30, 2001 decreased to
$94.2 and $190.7 compared with $103.0 and $202.1 for the three and six months
ended June 30, 2000. As a percent of sales, such costs decreased to 60.0% and
61.0% for the three and six months ended June 30, 2001 compared with 61.4% and
61.7% for three and six months end June 30, 2000.
Gross profit was $62.9 for the three months ended June 30, 2001 compared with
$64.7 for the three months ended June 30, 2000. The gross profit margin was
40.0% for the three months ended June 30, 2001 compared with 38.6% for the three
months ended June 30, 2000. During the six months ended June 30, 2001 gross
profit decreased to $121.7 compared with $125.8 for the six months ended June
30, 2000. The gross profit margin was 39.0% for the six months ended June 30,
2001 compared with 38.3% for the six months ended June 30, 2000. During the
three and six months ended June 30, 2000, the gross profit was negatively
impacted by $2.5 due to the recording of the B&B inventories acquired at fair
value. Excluding this impact the gross profit for the three and six months ended
June 30, 2000 would have been 40% and 39%.
Selling, general and administrative expense ("SG&A") was $43.1 and $88.0 for the
three and six months ended June 30, 2001 compared with $46.6 and $91.1 for the
three and six months ended June 30, 2000. As a percent of sales, SG&A was 27.4%
and 28.2% for the three and six months ended June 30, 2001 compared with 27.8%
for both the three and six months ended June 30, 2000.
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In the second quarter 2001, the Company undertook specific actions to enhance
revenue growth, increase capital efficiency and lower operating costs. During
the six months ended June 30, 2001, the Company recorded $6.6 ($0.11 per share)
of restructuring and other charges. The charge includes severance of $2.8 and
$3.8 of other costs associated with these initiatives. As a result of these
several 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 300 employees, personnel and equipment relocations, asset
write-offs and other associated costs. The remaining amounts will be reported as
recognized in the third and fourth quarters.
Operating income was $11.7 and $24.1 for the three and six months ended June 30,
2001 compared with $16.6 and $31.9 for the three and six months ended June 30,
2000. The operating margins were 7.4% and 7.7% in the three and six months ended
June 30, 2001 compared with 9.9% and 9.7% in the three and six months ended June
30, 2000.
On March 9, 2000 the Company sold 92.5% of International Imaging Materials,
Inc., its thermal transfer ribbons business, for a total consideration of $127.5
- $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 $2.3 and $4.7 (1.4% and 1.5% of sales) for the three
and six months ended June 30, 2001 from $2.0 and $4.9 (1.2% and 1.5% of sales)
in the three and six months ended June 30,2000.
Income before taxes was $9.4 and $19.4 (6.0% and 6.2% of sales) for the three
and six months ended June 30, 2001 compared with $14.6 and $77.3 (8.7% and 23.6%
of sales) for the three and six months ended June 30, 2000.
The effective income tax rate was 28% for both the three and six months ended
June 30, 2001 compared with 33% and 24% for the three and six months ended June
30, 2000. Excluding the net gain on the sale of IIMAK in the amount of $40.3 the
effective tax rate for the six months ended June 30, 2000, would have been 33%.
Net income for the three and six months ended June 30, 2001 was $6.8 and $14.0
(4.3% and 4.5% of sales) compared with $9.8 and $58.4 (5.8% and 17.8% of sales)
for the three and six months ended June 30, 2000. Excluding restructuring and
other charges in 2001, and in 2000, the $2.5 million charge to cost of sales for
revaluation of Bornemann & Bick finished goods inventory upon acquisition by the
Company, as well as the gain on sale of IIMAK, net income for the three and six
months ended June 30, 2001 was $11.5 and $18.7 (7.3% and 6.0% of sales) compared
with $11.5 and $19.8 (6.9% and 6.0% of sales) for the three and six months ended
June 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
The table below presents summary cash flow information for the periods
indicated:
Six Months Ended
----------------
June 30, 2001 June 30, 2000
------------- -------------
Net cash provided by operating activities $ 25.3 $ 25.7
Net cash (used in)/provided by investing activities (3.5) 55.6
Net cash provided/(used in) by financing activities 9.7 (69.1)
-------------- --------------
Total change in cash (a) $ 31.5 $ 12.2
============== ==============
(a) Before exchange rate effects.
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 $25.3 for the six months ended
June 30, 2001, compared with $25.7 in 2000.
Depreciation and amortization was $16.9 for the six months ended June 30, 2001
compared with $15.9 for the six months ended June 30, 2000.
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INVESTING ACTIVITIES
During the first half of 2001 capital expenditures were $11.3 compared with
$11.6 in 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 $25 million for the year ending
December 31, 2001.
On May 18, 2000, the Company acquired the Bornemann & Bick ("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 International Imaging Materials,
Inc., its thermal transfer ribbons business, for a total consideration of $127.5
- $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:
June 30, 2001 December 31, 2000
------------- -----------------
Due to banks $ 1.6 $ 0.9
Current maturities of long-term debt 0.2 0.1
Long-term debt 172.4 165.8
--------- ---------
Total debt $ 174.2 $ 166.8
Shareholders' equity 313.0 303.3
--------- ---------
Total capital $ 487.2 $ 470.1
========= =========
Total debt as a percent of total capital 35.8% 35.5%
========= =========
The increase in debt resulted from a borrowing in Germany under the Company's
revolving credit agreement. At June 30, 2001, total debt as a percent of total
capital was 35.8% compared with 35.5% at December 31, 2000.
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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 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 26, 2001 the Company held its Annual Meeting of Shareholders to elect
five Directors to serve a two-year term and one Director to serve for a one-year
term and to ratify the appointment of Arthur Andersen LLP as its independent
public accountants for the year ending December 31, 2001. The nominees for
election to the Board of Directors received the following votes cast:
FOR ELECTION WITHHOLDING AUTHORITY
------------ ---------------------
Jack Becker 36,419,981 916,118
Leo Benatar 37,108,925 227,174
Paul J. Griswold 37,128,029 208,070
Victor Hershaft 37,125,389 210,710
David L. Kolb 37,124,084 212,015
David E. McKinney 37,119,017 217,082
Holders of 37,239,442 shares voted for the ratification of Arthur Andersen LLP
as the Company's independent public accountants for the year ending December 31,
2001, 47,247 were voted against, and there were 49,410 abstentions.
ITEM 6. REPORTS ON FORM 8-K
None
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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)
August 13, 2001
----------------------------------------
Date
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