CNST » Topics » Section 5.3 Capital Expenditures

This excerpt taken from the CNST 10-Q filed May 15, 2009.

Capital Expenditures

Based on information currently available, we estimate 2009 capital spending to be approximately $20 million compared to 2008 capital spending of $25.3 million. The Company’s ability to make capital expenditures is limited by the financial covenants contained in its DIP Credit Facility. These financial covenants impose maximum capital expenditures per annum of $24 million in 2009, $28 million in 2010 and $22 million in 2011. These covenants allow for the carry-forward of a certain amount of spending below the covenant levels in previous periods beginning with 2009.

These excerpts taken from the CNST 10-K filed Mar 31, 2009.

Capital Expenditures

Capital expenditures decreased to $25.3 million in 2008 from $31.1 million in 2007. New capital investments for 2008 included the following:

 

   

Purchase of new molds and refurbishment of existing molds for new customer awards;

 

   

Acquisition of new equipment for productivity improvement and capacity expansion primarily in custom products;

 

   

Costs associated with implementing restructuring plans;

 

   

Cost of equipment moves to support the Company’s ongoing Best Cost Producer program; and

 

   

Maintenance and upgrade of facilities.

The Company’s ability to make capital expenditures is limited by the financial covenants contained in its DIP Credit Facility. These financial covenants impose maximum capital expenditures per annum of $32 million in 2008, $24 million in 2009, $28 million in 2010 and $22 million in 2011. These covenants allow for the carry-forward of a certain amount of spending below the covenant levels in previous periods beginning with 2009.

Equipment suppliers to the Company’s industry have continually made improvements in output and performance at lower capital cost per unit of output. Subject to demand for the capacity, the Company seeks to maintain and improve its competitive cost position by acquiring equipment that has the optimum operating and capital cost per unit of output for the applicable opportunity on each occasion that the Company increases capacity. Constar believes that it is advantaged by opportunities that exist to deploy existing high speed equipment in some of the newly converting specialty custom applications, enhancing both operating efficiency and capital efficiency throughout its system.

Capital
Expenditures

Capital expenditures decreased to $25.3 million in 2008 from $31.1 million in 2007. New capital investments for 2008
included the following:

 







  

Purchase of new molds and refurbishment of existing molds for new customer awards;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

Acquisition of new equipment for productivity improvement and capacity expansion primarily in custom products;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

Costs associated with implementing restructuring plans;

 







  

Cost of equipment moves to support the Company’s ongoing Best Cost Producer program; and

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

Maintenance and upgrade of facilities.

SIZE="2">The Company’s ability to make capital expenditures is limited by the financial covenants contained in its DIP Credit Facility. These financial covenants impose maximum capital expenditures per annum of $32 million in 2008, $24 million
in 2009, $28 million in 2010 and $22 million in 2011. These covenants allow for the carry-forward of a certain amount of spending below the covenant levels in previous periods beginning with 2009.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Equipment suppliers to the Company’s industry have continually made improvements in output and performance at lower capital cost per unit of output.
Subject to demand for the capacity, the Company seeks to maintain and improve its competitive cost position by acquiring equipment that has the optimum operating and capital cost per unit of output for the applicable opportunity on each occasion
that the Company increases capacity. Constar believes that it is advantaged by opportunities that exist to deploy existing high speed equipment in some of the newly converting specialty custom applications, enhancing both operating efficiency and
capital efficiency throughout its system.

This excerpt taken from the CNST 8-K filed Jan 6, 2009.

Section 5.3 Capital Expenditures

The Borrower shall not make or incur, or permit to be made or incurred, Capital Expenditures during each of the Fiscal Years set forth below to be, in the aggregate, in excess of the maximum amount set forth below for such Fiscal Year:

 

FISCAL YEAR

   MAXIMUM CAPITAL
EXPENDITURES

2008

   $ 32,000,000

2009

   $ 24,000,000

2010

   $ 28,000,000

2011

   $ 22,000,000

provided, however, that to the extent that actual Capital Expenditures for the Fiscal Year ended December 31, 2009 or any such Fiscal Year thereafter shall be less than the maximum amount set

 

76


CREDIT AGREEMENT

CONSTAR INTERNATIONAL INC.

 

forth above for such Fiscal Year (without giving effect to any carryover permitted by this proviso), 75% of the difference between said stated maximum amount and the amount of such actual Capital Expenditures shall, in addition, be available for Capital Expenditures in the next succeeding Fiscal Year.

These excerpts taken from the CNST 10-K filed Mar 31, 2008.

Capital Expenditures

Capital expenditures increased to $31.1 million from $23.5 million in 2006. New capital investments for 2007 included the following:

 

   

Purchase of new molds and refurbishment of existing molds for new customer awards;

 

   

Acquisition of new equipment for productivity improvement and capacity expansion primarily in custom products;

 

   

Cost of equipment moves to support the Company’s ongoing Best Cost Producer program; and

 

   

Maintenance and upgrade of facilities.

The Company’s ability to make capital expenditures is limited by the financial covenants contained in its Revolver Loan. These financial covenants impose maximum capital expenditures per annum of $47.5 million in 2007 and 2008. These covenants allow for the carry-forward of a certain amount of spending below the covenant levels in previous periods. In 2007, the Company spent $31.1 million, allowing $12.3 million to carry forward to 2008.

Equipment suppliers to the Company’s industry have continually made improvements in output and performance at lower capital cost per unit of output. Subject to demand for the capacity, the Company seeks to maintain and improve its competitive cost position by acquiring equipment that has the optimum operating and capital cost per unit of output for the applicable opportunity on each occasion that the Company increases capacity. Constar believes that it is advantaged by opportunities that exist to deploy existing high speed equipment in some of the newly converting specialty custom applications, enhancing both operating efficiency and capital efficiency throughout its system.

Capital Expenditures

Capital
expenditures increased to $31.1 million from $23.5 million in 2006. New capital investments for 2007 included the following:

 







  

Purchase of new molds and refurbishment of existing molds for new customer awards;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

Acquisition of new equipment for productivity improvement and capacity expansion primarily in custom products;

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

Cost of equipment moves to support the Company’s ongoing Best Cost Producer program; and

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







  

Maintenance and upgrade of facilities.

SIZE="2">The Company’s ability to make capital expenditures is limited by the financial covenants contained in its Revolver Loan. These financial covenants impose maximum capital expenditures per annum of $47.5 million in 2007 and 2008. These
covenants allow for the carry-forward of a certain amount of spending below the covenant levels in previous periods. In 2007, the Company spent $31.1 million, allowing $12.3 million to carry forward to 2008.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Equipment suppliers to the Company’s industry have continually made improvements in output and performance at lower capital cost per unit of output.
Subject to demand for the capacity, the Company seeks to maintain and improve its competitive cost position by acquiring equipment that has the optimum operating and capital cost per unit of output for the applicable opportunity on each occasion
that the Company increases capacity. Constar believes that it is advantaged by opportunities that exist to deploy existing high speed equipment in some of the newly converting specialty custom applications, enhancing both operating efficiency and
capital efficiency throughout its system.

This excerpt taken from the CNST 10-K filed Mar 29, 2007.

Capital Expenditures

Capital expenditures decreased $9.1 million, or 27.9%, to $23.5 million in 2006 from $32.6 million in 2005. New capital investments for 2006 included the following:

 

   

Acquisition of new equipment for productivity improvement and capacity expansion primarily in custom products;

 

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Maintenance and upgrade of facilities; and

 

   

Purchase of new molds and refurbishment of existing molds.

Capital expenditures increased $10.4 million, or 46.8% to $32.6 million in 2005 from $22.2 million in 2004.

The Company’s ability to make capital expenditures is limited by the financial covenants contained in its credit facility. These financial covenants impose maximum capital expenditures per annum of $47.5 million in 2007 and 2008. These covenants allow for the carry-forward of a certain amount of spending below the covenant levels in previous periods. In 2006 the Company spent $23.5 million, allowing $14.3 million to carry over to 2007.

Equipment suppliers to the Company’s industry have continually made improvements in output and performance at lower capital cost per unit of output. Subject to demand for the capacity, the Company seeks to maintain and improve its competitive cost position by acquiring equipment that has the optimum operating and capital cost per unit of output for the applicable opportunity on each occasion that the Company increases capacity. Constar believes that it is advantaged by opportunities that exist to deploy existing high speed equipment in some of the newly converting specialty custom applications, enhancing both operating efficiency and capital efficiency throughout its system.

This excerpt taken from the CNST 10-K filed Mar 29, 2006.

Capital Expenditures

 

Capital expenditures increased $10.4 million, or 47.1%, to $32.6 million in 2005 from $22.2 million in 2004.

 

New capital investments for 2005 included the following:

 

    Acquisition of new equipment for productivity improvement and capacity expansion primarily in custom products; and

 

    Purchase of new molds and refurbishment of existing molds

 

Capital expenditures decreased $24.9 million, or 52.9%, to $22.2 million in 2004 from $47.1 million in 2003.

 

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Table of Contents

Constar’s ability to make capital expenditures is limited by the financial covenants contained in its new credit facility. These financial covenants impose maximum capital expenditures of $42.5 million in 2006, $47.5 million in 2007 and $47.5 million in 2008. These covenants allow for the carry forward of a certain amount of spending below the covenant levels in previous periods. In 2005 Constar spent $32.6 million, allowing $12.4 million to carry over to 2006.

 

Equipment suppliers to the Company’s industry have continually made improvements in output and performance at lower capital cost per unit of output. Subject to demand for the capacity, the Company seeks to maintain and improve its competitive cost position by acquiring state of the art equipment that has the lowest operating and capital cost per unit of output on each occasion that the Company increases capacity. Constar believes that it is advantaged by opportunities that exist to deploy existing high speed equipment in some of the newly converting specialty custom applications, enhancing both operating efficiency and capital efficiency throughout its system.

 

This excerpt taken from the CNST 10-K filed Mar 31, 2005.

Capital Expenditures

 

Capital expenditures decreased $24.9 million, or 52.9%, to $22.2 million in 2004 from $47.1 million in 2003.

 

New capital investments for 2004 included the following:

 

    Acquisition of new equipment for productivity improvement and capacity expansion primarily in conventional products; and

 

    Purchase of new molds.

 

Capital expenditures increased $17.1 million, or 57.0%, to $47.1 million in 2003 from $30.0 million in 2002.

 

In order to serve its existing customers, and to participate in the conversion to PET from glass or aluminum that the Company expects in both the custom and conventional PET markets, Constar will require significantly greater rates of capital investment over the coming years than in the past. Generally, the Company intends to purchase new equipment only after entering into long-term customer contracts that justify additional capacity. A single high speed production unit costs approximately $10 million and investments may occur in increments of two, three or more production units. It is Constar’s experience from previous large-scale conversions to PET bottles that whole product lines generally convert at once in conjunction with regional or national marketing campaigns. The Company’s customers require an ability to meet timelines for commitment of capacity expansion and implementation of project plans. Additionally, because of the large volumes controlled by the major consumer product companies that are its customers, many of the capacity investments the Company makes may be fully or largely committed to agreements with only one customer each.

 

Constar’s ability to make capital expenditures is limited by the financial covenants contained in its new Credit Agreement. These financial covenants impose maximum capital expenditures of $45.0 million in 2005, $42.5 million in 2006, $47.5 million in 2007 and $47.5 million in 2008. These covenants allow for the carry forward of a certain amount of spending below the covenant levels in previous periods.

 

Equipment suppliers to the Company’s industry have continually made improvements in output and performance at lower capital cost per unit of output. Subject to demand for the capacity, the Company seeks to

 

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maintain and improve its competitive cost position by acquiring state of the art equipment that has the lowest operating and capital cost per unit of output on each occasion that the Company increases capacity. Constar believes that it is advantaged by opportunities that exist to deploy existing high speed equipment in some of the newly converting specialty custom applications, enhancing both operating efficiency and capital efficiency throughout its system.

 

This excerpt taken from the CNST 8-K filed Feb 2, 2005.

Capital Expenditures

 

For the nine months ending September 30, 2004, capital expenditures decreased by $18.1 million to $19.1 million as compared to the nine months ending September 30, 2003. This reduction was primarily related to reduced spending within the conventional business.

 

Capital expenditures increased $17.1 million, or 57.0%, to $47.1 million in 2003 from $30.0 million in 2002.

 

New capital investments for 2003 included the following:

 

    Acquisition of new equipment for productivity improvement and capacity expansion primarily in conventional products; and

 

    Purchase of new molds.

 

Capital expenditures increased $6.5 million, or 27.7%, to $30.0 million in 2002 from $23.5 million in 2001.

 

New capital investments for 2002 included the following:

 

    Acquisition of new equipment for productivity improvement and capacity expansion; and

 

    Purchase of new molds.

 

In order to serve our existing customers, and to participate in the conversion to PET from glass or aluminum that we expect in both the custom and conventional PET markets, we will require significantly greater rates of capital investment over the coming years than in the past. Generally, we intend to purchase new equipment only after entering into long-term customer contracts that justify additional capacity. A single high speed production unit costs approximately $10.0 million and investments may occur in increments of two, three or more production units. It is our experience from previous large-scale conversions to PET bottles that whole product lines generally convert at once in conjunction with regional or national marketing campaigns. Our customers require an ability to meet timelines for commitment of capacity expansion and implementation of project plans. Additionally, because of the large volumes controlled by the major consumer product companies that are our customers, many of the capacity investments we make may be fully or largely committed to agreements with only one customer each.

 

Our ability to make capital expenditures will be limited by the covenants expected to be contained in our new credit facility. These covenants are expected to be based on annual spending limits and allow for the carry forward of 75% of any spending below covenant levels into future periods. Capital expenditure limits are expected to be $45.0 million in 2005, $42.5 million in 2006, $47.5 million in 2007 and $47.5 million in 2008.

 

Equipment suppliers to our industry have continually made improvements in output and performance at lower capital cost per unit of output. Subject to demand for the capacity, we seek to maintain and improve our competitive cost position by acquiring state of the art equipment that has the lowest operating and capital cost per unit of output on each occasion that we increase capacity. We believe that we are advantaged by opportunities that exist to deploy existing high speed equipment in some of the newly converting specialty custom applications, enhancing both operating efficiency and capital efficiency throughout our system.

 

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