UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER30, 200029, 2001
ORX TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934COMMISSION FILE NUMBER 0-19687
SYNALLOY CORPORATION(Exact
(Exact name of registrant as specified in its charter)Delaware 57-0426694
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)incorporation or organization)
Croft Industrial Park, P.O. Box 5627, Spartanburg, South Carolina 29304(Address
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 585-3605Securities registered pursuant to Section 12(b) of the Act : Name of each exchange on which
To Section 12(b) of the Act registered:registered :
NoneNasdaq National Market SystemNone
Title of ClassSecurities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Par Value
(Title
(Title of Class)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 periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Based on the closing price of
March 1, 2001,February 28, 2002, the aggregate market value of common stock held by non-affiliates of the registrant was$32.1$24.6 million.The number of common shares outstanding of the registrant's common stock as of
March 1, 2001February 28, 2002 was5,964,368.5,964,304.
Documents Incorporated By ReferencePortions of the proxy statement for the annual shareholders' meeting are incorporated by reference into Part III.
Synalloy Corporation, a Delaware Corporation ("the Company"), was incorporated in 1958 as the successor to a chemical manufacturing business founded in 1945. Its charter is perpetual. The name was changed on July 31, 1967 from Blackman Uhler Industries, Inc. On June 3, 1988, the state of incorporation was changed from South Carolina to Delaware. The Company's executive offices are located at Croft Industrial Park, Spartanburg, South Carolina.
Metals
Segment-ThisSegment-- This segment is comprised of a wholly-ownedcompany,subsidiary, Synalloy Metals, Inc. which owns 100 percent of Bristol Metals, L.P.,("Bristol") located in Bristol, Tennessee.Bristol manufactures welded pipe, primarily from stainless steel, but also from other corrosion-resistant metals. Pipe is produced in sizes from
one- halfone-half inch to 60 inches in diameter and wall thickness up to three-quarters inch. Sixteen-inch and smaller pipe is made on equipment that forms and welds the pipe in a continuous process. Pipe larger than sixteen inches is formed on presses or rolls and welded on batch welding equipment. Pipe is normally produced in standard 20-foot lengths. However, Bristol has unusual capabilities in the production of long length pipe without circumferential welds. This can reduce installation cost for the customer. Lengths up to 60 feet can be produced in sizes up to sixteen inches in diameter. In larger sizes Bristol has a unique ability among domestic producers to make 48-foot lengths in sizes up to 30 inches.A significant amount of the pipe produced is further processed into piping systems that conform to engineered drawings furnished by the customers. This allows the customer to take advantage of the high quality and efficiency of Bristol's fabrication shop instead of performing all of the welding on the construction site. The pipe fabricating shop can make one and one-half diameter cold bends on one-half inch through eight-inch stainless pipe with thicknesses up through schedule 40. Most of the piping systems are produced from pipe manufactured by Bristol.
Bristol also has the capability of producing carbon piping systems from pipe purchased from outside suppliers since Bristol does not manufacture carbon pipe. Carbon pipe fabrication enhances the stainless fabrication business by allowing Bristol to quote inquiries that require both types of piping systems. Bristol can also produce pressure vessels and reactors, tanks and other processing equipment.
We have just recently installed a new large batch-type furnace and certified our welders on chrome piping systems. This allows us to effectively enter the growing power plant market segment.
In order to establish stronger business relationships, only a few raw material suppliers are used. Three suppliers furnish more than two-thirds of total dollar purchases of raw materials. However, raw materials are readily available from a number of different sources and the Company anticipates no difficulties in obtaining its requirements.
This segment's products are used principally by customers requiring materials that are corrosion-resistant or suitable for high-purity processes. The largest users are the chemical, petrochemical and pulp and paper industries with some other important industry users being mining, power generation, waste water treatment, brewery, food processing, petroleum and pharmaceutical.
In the first half of 2000, management closed the Whiting Metals facility which produced pressure vessels and reactors, tanks and other processing equipment. Most of the equipment was transferred to Bristol giving it the ability to manufacture similar products.Chemicals
Segment-ThisSegment-- This segment is comprised of two product groups: The Colors Group and the Specialty Chemicals Group. The segment includes three operating companies: Blackman Uhler Chemical Company (BU), a division of theCompany;Company, Manufacturers Soap and Chemical Company, which owns 100 percent of Manufacturers Chemicals, L.P. (MC) and Organic Pigments Corporation (OP), all wholly-owned by the Company. BU has a plant in Spartanburg, South Carolina which is fully licensed for chemical manufacture and maintains a permitted waste treatment system. MC is located in Cleveland, Tennessee and Dalton, Georgia and is fully licensed for chemical manufacture. OP is located in Greensboro, North Carolina.This segment'sThe Colors Group's principal
businesses arebusiness is the manufacture and sale of dyes and pigments ("colors") to the textileindustry,andspecialty chemical products to the textile, chemical, paper and metalscarpet industries.At the end of 1999, the Chemicals Segment was reorganized into two product groups to generate benefits from the natural synergy between the different plants within the product groups. The Colors Group includesBU produces dyes and pigment press cakesproducedat the Spartanburg plant and pigments are produced at OP in Greensboro.The Specialty Chemicals Group includes MC in Cleveland, Tennessee and the specialty chemicalsDyes are producedin the Spartanburg plant. The Colors Group produces dyesin both liquid and powder form, and pigments primarily as a specially formulated paste. Dyes fix themselves to textile fibers by a particular reaction or penetration into the yarn fiber, whereas pigments are normally applied as a surface coating during a printing operation. Dyeing of textile fabrics in solid colors is primarily accomplished by the use of dyes. Pigment colors are uniquely suitable for printing of multi-colored patterns. Raw materials used to manufacture colors consist chiefly of organic intermediates and inorganic chemicals which are purchased from manufacturers in the United States, Europe and Asia. Currently, raw materials are readily available and management does not anticipate any difficulty inobtainingobta ining adequate supplies.In the mid 1980s, management decided to better utilize its excellent reputation for sales and technical service by expanding its efforts to sell reactive dyes. These dyes are used for coloring cotton and rayon. The Company purchases finished and crude products that are either sold as is, or converted to liquid form for the convenience of customers. These dyes represented about
2728 percent of the Colors Group's sales in2000.2001. The Company has a distributorship agreement with a companysupplyingthat supplies about9289 percent of theseproducts.products to the Company. The supplier has been the principal source of these products since 1985. Although the Company believes that this supplier will continue to be a source of these products in the future, there is no assurance of this. Loss of this supplier would have a materially adverse short-term effect on the Company's sales and net income. However, management believes that if the agreement with this supplier is not continued in the future, other suppliers could be found to replace most of the products.In 1994, BU acquired a sulphur dye business and began the manufacture of sulphur dyes. These dyes are used to dye denim, fleece garments, knits, work clothes, men's casual wear, and a variety of cotton and
cotton- polyestercotton-polyester blends.In 1998, the Company purchased OP which manufactures aqueous pigment dispersions sold to the textile industry and used in printing inks for use on paper and in paints for the industrial coatings industry. The combination of OP's and BU's pigment operations makes the Company one of the largest suppliers of pigments to the domestic textile market. The addition of OP also provides the ability to produce higher solid and finer particle size dispersions allowing the Colors Group to diversify into non-textile applications.
In 1999, the Colors Group
started to developbegan development of an additional product line for the dyeing of cotton - vat dyes. During 2000, the vat dyes were successfully introduced and the product line has been expanded. Vat dyes are used for industrial uniform fabrics (work wear) as well as other apparel fabrics and industrial fabrics that require excellent wash fastness. The addition of vat dyes gives BU product lines for the dyeing of cotton as broad as any other dyestuff supplier. BU now supplies azoic dyes (napthols, salts, bases, and rapidogen dyes for printing), reactive dyes, sulfur dyes and vat dyes for cotton and other cellulosic fibers.In, 1998, the Company purchased the common stock of OP. OP manufactures aqueous pigment dispersions sold to the textile industry and used in printing inks for use on paper and in paints for the industrial coatings industry. The combination of OP's and BU's pigment operations makes the Company one of the largest suppliers of pigments to the domestic textile market. The addition of OP also provides the ability to produce higher solid and finer particle size dispersions allowing the Colors Group to diversify into non-textile applications.The Specialty Chemicals Group includes MC in Cleveland, Tennessee and Dalton, Georgia and specialty chemicals produced in the BU Spartanburg plant. The Group is a producer of specialty chemicals for the textile, carpet, chemical, paper, metals, photographic, pharmaceutical, agricultural and fiber
industries at its BU plant.industries. The Company has been focusing on specialty chemicals as a primary growth area over the past several years. Facilities and equipment at the BU plant provide toll and custom manufacturing of organic chemicals using reactions that include nitrations, hydrogenation, distillation, diazotizations, methylation and custom drying. These chemicals are used in a wide array of products including sun screens, UV absorbers for plastics, Cetane improver for diesel fuel, absorbers for gaseous pollutants, herbicides and intermediates for colors.In 1996,In1996, the Company purchased MC which produces defoamers, surfactants, dye assists, softening agents, polymers and specialty lubricants for the textile, paper, chemical and metals industries.
The CompanyMC also manufactures chelating agents and water treatment chemicals. Manufacturing capabilities include a wide range of chemical reactions and mixing and blending applications. MC's products are sold to direct users in a variety of manufacturing areas, directly to other chemical companies in the form of intermediates or as finished products for resale, and as contract manufacturing where the customer provides formula specifications and, in some cases, raw materials.The addition of MC complements the existing specialty chemicals area expanding its capacity and capabilities.In June 2000, MC acquired the assets of a manufacturer of sulfated fats and oils. The manufacturing equipment for these products was moved to the Cleveland, Tennessee plant where both capacity and chilling capabilities were increased. These products are used as lubricants, wetting agents, detergents and emulsifiers in a variety of chemical formulations. The addition of these capabilities and processes broadens the range of sulfated products already manufactured at MC.
In July 2001, the Company completed an asset purchase of Global Chemical Resources (Dalton) located in Dalton, Georgia. Dalton manufactures and resells chemical specialties and heavy chemicals and blends and resells dyestuffs to the carpet and rug industries, selected textile mills and the wire drawing industry. The manufacture of liquid products was immediately transferred to the Cleveland plant, and the remaining warehousing and dye blending operation along with the shade matching lab and sales offices were moved to a leased facility in Dalton. The purchase included a licensing agreement with Ecology Works to market Dustmitex exclusively to the carpet, rug and upholstery manufacturing industries. In addition, Dalton will market the chemical specialties produced at other Specialty Chemicals Group locations.
The Chemicals Segment maintains
seveneight laboratories for applied research and quality control which are staffed by approximately 33 employees.In 2000, management made the decision to close the Augusta, Georgia plant.
Most of the products produced in Augusta are being transferred to the Spartanburg facility. Management expects the closure to reduce negative operating variances and, accordingly, enhance future earnings.In thethirdfourth quarter of 2001, the Companyexpects to completecompleted the installation of hydrogenation and distillation equipment at its Spartanburg plant whichwill completecompleted the transfer of products produced in Augusta to Spartanburg.Metals
Segment-TheSegment-- The Metals Segment utilizes separate sales organizations for its different product groups. Stainless steel pipe is sold nationwide under the Brismet trade name through authorized stocking distributors with over 200 warehouse locations throughout the country. In addition, large quantity orders are shipped directly from Bristol's plant to end-user customers. Producing sales and providing service to the distributors and end-user customers arethreethe Vice President of Sales, four outside sales employees,fourthree independent manufacturers' representativesthe manager ofand six inside salesand five inside salesemployees.The President also spends about 50 percent of his time in sales related matters.Piping systems are sold nationwide under the Bristol Piping Systems trade name by three outside sales employees. They are under the direction of the Vice President in charge of piping systems who spends over half of his time in sales and service to customers. Piping systems are marketed to engineering firms and construction companies or directly to project owners. Orders are normally received as a result of competitive bids submitted in response to inquiries and bid proposals.
Chemicals
Segment-EightSegment-- Seven full-time outside sales employees and five manufacturers' representatives market colors to the textile industry nationwide. In addition,boththePresidentsPresident of BUand OPand the market development manager of BU devote a substantial part of their time to sales. Specialty chemicals are sold directly to various industries nationwide bysevennine full-time outside sales employees andfivefour manufacturers' representatives. In addition, the President, market development manager and another employee of MC and BU's Vice President of Research and Development devote a substantial part of their time to sales.Metals
Segment-WeldedSegment-- Welded stainless steel pipe is the largest sales volume product of the Metals Segment. Although information is not publicly available regarding the sales of most other producers of this product, management believes that the Company is one of the largest domesticproducerproducers of such pipe. This commodity product is highly competitive with ten known domestic producers and imports from many different countries. The largest sales volume among the specialized products comes from fabricatinglight- walllight-wall stainless piping systems. Management believes the Company is one of the largestproducerproducers of such systems.Chemicals
Segment-About fiveSegment-- About six percent of the colors sales represent niche products for which the Company is the only producer. Another approximately3430 percent of these sales represent products of which the Company is an important producer with an estimated 20 to 30 percent market share. The Company has five percent or less of the market for the remainder of its dye products. The Company is the sole producer of certain specialty chemicals manufactured for other companies under processing agreements. However, the Company's sales of specialty products are insignificant compared to the overall market for specialty chemicals. The market for most of the products is highly competitive and many competitors have substantially greater resources than does the Company.Environmental expenditures that relate to an existing condition caused by past operations and that do not contribute to future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or cleanups are probable and the costs of these assessments and/or cleanups can be reasonably estimated. See Note I to Consolidated Financial Statements for further discussion.
Research and Development Activities
The Company spent approximately $701,000 in 2001, $840,000 in 2000 and $798,000 in 1999
and $882,000 in 1998on research and development programs in its Chemicals Segment.FifteenFourteen individuals,1312 of whom are graduate chemists, are engaged primarily in research and development of new products and processes, the improvement of existing products and processes, and the development of new applications for existing products.Seasonal Nature of
Thethe BusinessThe annual requirements of certain specialty chemicals are produced over a period of a few months as requested by the customers. Accordingly, the sales of these products may vary significantly from one quarter to another.
The addition of MC has made quarterly sales of specialties more consistent. However, in total, sales and net income in any given quarter may not be representative of other quarters.The Chemicals Segment operates primarily on the basis of delivering products soon after orders are received. Accordingly, backlogs are not a factor in this business. The same applies to commodity pipe sales in the Metals Segment. However, backlogs are important in the piping systems products because they are produced only after orders are received, generally as the result of competitive bidding. Order backlogs for these products were $3,700,000, $9,200,000
$15,900,000and$19,200,000$15,900,000 at the 2001, 20001999and19981999 respective year ends.As of December
30, 2000,29, 2001, the Company had510472 employees. The Company considers relations with employees to be satisfactory. The number of employees of the Company represented by unions at the Bristol, Tennessee facility is195.186. They are represented by two locals affiliated with the AFL-CIO and one local affiliated with the Teamsters.ContractsCollective bargaining contracts will expire in February 2004, December 2004 and March 2005.The Company operates the major plants and facilities described herein, all of which are well maintained and in good condition. All facilities throughout the Company are adequately insured. The buildings are of various types of construction including brick, steel, concrete, concrete block and sheet metal. All have adequate transportation facilities for both raw materials and finished products. The Company owns all of these plants and
facilities.
Corporate headquarters; Chemical | |||
Manufacturing of stainless steel pipe and stainless steel and carbon piping systems | |||
(1) Leased facility.
(2) Plant closed in 2001
Item 3:3 Legal Proceedings
For a discussion of legal proceedings, see Note O to Consolidated Financial Statements.
Item 4:4 Submission of Matters to a Vote of Security Holders
No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders through the solicitation of proxies or otherwise.
PART II
Item 5:5 Market for the Registrant's Common Stock and Related Security Holder Matters
The Company had 1,1541,120 common shareholders of record at December 30,
2000.29, 2001. The Company's common stock trades on the Nasdaq National Market tierSystem of The Nasdaq Stock Market under the symbol SYNC. On October 26, 2001, the Company's Board of Directors voted to suspend the cash dividend until such time as the Company's earnings return to an acceptable level. Future dividend payments, are dependentif any, will depend on earnings, capital requirements and financial conditions. The prices shown below are the last reported sales prices on The Nasdaq National Market System.
Item 6 5/8 $ 0.05
2 8 1/16 6 3/8 0.05 8 5/8 6 3/4 0.05
3 7 1/2 5 3/4 0.05 8 3/4 6 1/2 0.05
4 6 1/4 4 1/2 0.05 8 6 1/4 0.05
Management's Discussion and Analysis of Financial Condition and Results of Operations discusses the Company's consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments based on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or co nditions. Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of the Company's consolidated financial statements.
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. A significant portion of the Company's accounts receivable in the Colors Group are from domestic customers in the textile industry, which has been in a steady decline over the last several years. If the financial condition of these or any other customers of the Company were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
The Company writes down its inventory for estimated obsolescence or unmarketable inventory in an amount equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and current market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.
As with the accounts receivable, a significant portion of the Company's inventories in the Colors Group are used by domestic customers in the textile industry. In addition, most of the key raw materials are imported from Asian countries causing the Company to maintain significant amounts of inventory for certain products in order to adequately service the Colors Group's customers. If the financial condition of these customers were to deteriorate, resulting in the elimination or reduction of their demand for our products, additional inventory write-downs may be required.
As noted in Note I to Consolidated Financial Statements, the Company has accrued $2,785,000 in environmental remediation costs which, in management's best estimate, will satisfy anticipated costs of known remediation requirements as outlined in Note I. As a result of the evolving nature of the environmental regulations, the difficulty in estimating the extent and remedy of environmental contamination, and the availability and application of technology, the estimated costs for future environmental compliance and remediation are subject to uncertainties and it is not possible to predict the amount or timing of future costs of environmental matters which may subsequently be determined. Subject to the difficulty in estimating future environmental costs, the Company believes that the likelihood of material losses in excess of the amounts recorded is remote. However, any changes, including regulatory changes, may require the Company to record additional remediation reserves.
The current liquidity ratio at 20002001 year end was 2.4:2.2:1 down from the previous
year end ratios of 2.5:2.4:1 and 3.7:2.5:1 in 19992000 and 1998,1999, respectively. Working capital decreased $2,518,000$4,342,000 to $25,483,000.$21,141,000 from the previous year end. Cash flows from operations totaling $1,569,000,$10,095,000, were derived primarily from declines in inventories and accounts receivable of $5,007,000 and $2,904,000, respectively, and from earnings totaling $5,333,000$3,060,000 before depreciation and amortization expense of $4,069,000 and loss from the write-off and sale of equipment of
$2,348,000. Cash flows were negatively impacted by decreases in
accounts payable and accrued expenses of $4,834,000 and income taxes
payable of $1,486,000, offset by a$3,378,000. The decrease in accounts receivable
of $3,114,000. The decrease in accounts receivables and payables resulted from the decline in sales experienced in the fourth quarter of 20002001 compared to the same quarter of 1999.last year, while the decline in inventories came primarily from planned reductions in the Metals Segment. Cash flows were used
along with $5,146,000 net proceeds from short-term borrowings to fund capital expenditures of $3,382,000, purchase 326,693 shares$6,437,000, to acquire assets of the Company's Common StockGlobal Chemical Resources, for $1,951,000,$2,818,000 (see Note Q to Consolidated Financial Statements), and to pay dividends of $1,234,000.$895,000. The Company uses a secured $9 million bank line of credit to finance much of its current operations. This line of credit expires on May 1, 2002. The Company also has a $10 million bank revolving line of credit with the same lender, which expires May 31, 2003. Both loans are secured by the first lien on accounts receivable and inventory. The Company is in the process of negotiating replacement financing for both loans and, based on discussions with potential replacement lenders, expects to have replacement financing available by May 1, 2002. The Company does not, however, have a written commitment for such financing. The Company anticipates that such financing will be at higher rates of interest than those charged on the existing loans. Other terms of the expected replacement credit facilities will be negotiated with the lender or lenders, and some of such terms may be less favorable to the Company than those in the existing loans. The Company expects that cash flows from 20012002 operations and available borrowings will be sufficient to make debt payments, and fund estimated capital expenditures of $5,500,000$3,991,000, and meet normal operating requirements.
Metals Segment -Segment-- The following table summarizes operating results and backlogs for the three years indicated. Reference should be made to Note R to Consolidated Financial Statements.
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Dollar sales for the year were down 29 percent as the result of 18 percent lower unit volumes coupled with a 13 percent average decline in sales prices. A change in product mix, with a lower percentage of sales coming from higher-priced fabricated piping systems, led to about half of the fall in average selling prices. The other half of the reduction in sales resulted from lower prices for raw materials and the generally competitive market conditions. The unit volume decline was more than accounted for during the first half of the year when 2001 was characterized by weak markets and some inventory liquidation while the first six months of 2000 set record highs in unit volumes as the result of significant inventory building by our customers ahead of price increases. Operating income for 2001 was down 71 percent from the prior year level. During most of 2000, our selling prices were in an uptrend and end use demand was enhanced by inventory building during the first half of the yea r. These generally favorable conditions, together with substantial inventory profits from the rising prices, produced good profit margins. Unfortunately, 2001 was the mirror image of 2000. Our selling prices trended downward during all of 2001, leading to substantial inventory losses. We estimate that raw material costs charged to cost of goods sold were approximately $2,500,000 more than our replacement costs during the year. In addition, reduced demand led to more intense competition, which put further pressure on profit margins.
Selling and administrative expense decreased $701,000, or 16 percent. However, it increased as a percent of sales to eight percent from seven percent compared to last year. The significant decline in sales in 2001 compared to 2000 was greater than the corresponding decline in sales commissions and other selling and administrative costs over the same periods.
For information related to environmental matters, see Note to Consolidated Financial Statements.
While sales for the Metals Segment increased only one percent for the year, operating income before special and environmental charges was up a more robust 63 percent. Unit volumes were down 12 percent so the dollar sales increase came from a 15 percent increase in average sales prices. The big improvement in gross profits resulted from the higher prices and strong markets for stainless pipe in the first half of the year when our distributors were building inventories ahead of anticipated price increases. The last half of 2000 suffered from a reversal to a mode of inventory liquidation among our distributors as prices began to trend downward. Selling and administrative expenses declined $111,000, or two percent, and improved slightly as a percent of sales compared with last year1999 primarily from the elimination of administration costs incurred at the Camden facility, which was closed in the first half of 2000. See Note B to Consolidated Financial Statements.
The special charge was recorded in the first quarter for the costs of closing the process equipment plant in Camden, South Carolina. In addition, $57,000 was added to the reserve for environmental remediation in the fourth quarter. For information related to environmental matters, see Note I to Consolidated Financial Statements.
Comparison of 1999 to 1998
Sales increased 19 percent producing the $4,009,000 increase in
operating income to $5,418,000. After six consecutive quarters of
declines in unit volume growth compared to the same quarter the
previous year, the final three quarters of 1999 experienced
significant increases resulting in a 22 percent increase in unit
volumes over 1998.
Chemicals Segment-- The unit volume increase came primarily from
commodity stainless pipe sales resulting from improved demand in the
United States coupled with an increase in demand world-wide and a
reduction of imports following anti-dumping judgments on stainless
steel. The most important development in the metals segment during
1999 was the reversal of the relentless downtrend in stainless
commodity pipe prices that had been evident since late 1995. When
prices bottomed in the second quarter, they were barely half of the
level reached in 1995. Average prices gained eight percent in the
fourth quarter ending the year with a nine percent decline for the
year compared to last year. The fourth quarter increase came from
the Company's ability to pass along price increases incurred from
its stainless steel suppliers. Piping systems and process equipment
sales also improved significantly as unit volumes increased nine
percent in 1999 over the prior year. Gross profits in 1999 almost
doubled to $10,013,000 compared to 1998 as a result of the increase
in unit volume offset somewhat by the selling price decline.
Selling and administrative expenses were seven percent of sales,
consistent with last year. Higher sales commissions, profit-based
incentives and an increase in reserves for uncollectible accounts
accounted for the 20 percent increase over the prior year.
For information related to environmental matters, see Note I to
Consolidated Financial Statements.
Chemicals Segment-The following tables summarize operating results for the three years indicated. Reference should be made to Note R to Consolidated Financial Statements.
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The eleven percent decline in Colors Group sales in 2001 resulted from the relentless and well-chronicled downsizing of the domestic textile industry that has been evident since 1995. Cost cutting efforts moderated the operating loss so that it was only two percent worse than a year earlier before the special charges in 2000 outlined in the table above and in the Comparison of 2000 to 1999 below. The textile industry downsizing has been faster and of greater magnitude than almost anyone forecast. This has made it impossible for us to cut costs and downsize our own Colors Group operations fast enough to maintain profitability. The majority of the decline in sales and operating loss came in the fourth quarter, as sales for the fourth quarter of 2001 declined $937,000 from the fourth quarter last year. Of the $812,000 loss experienced for 2001, $695,000 occurred in the fourth quarter. The fourth quarter results are discussed below in Current Conditions and Outlook.
Sales in the Specialty Chemicals Group were down three percent because of generally weak economic conditions and some business lost because of the closure of the Augusta, Georgia plant. On the other hand, sales from the acquisition of Global Chemical Resources in July of 2001 helped minimize the decline. The operating loss for 2001 was an improvement of 57 percent from the prior year loss before special charges outlined in the table above and in the Comparison of 2000 to 1999 below. The reduced loss resulted from closing the Augusta plant. The weak economy, which appeared to decline steadily over the last half of 2001, caused sales to reduce to levels causing the Group to incur significant negative manufacturing variances at both of its plants. This was offset somewhat at the MC Cleveland plant in the second half of 2001, when the manufacture of liquid products by the Dalton plant was transferred to Cleveland in July providing more through-put and improving efficiency. Most of th e loss, $553,000 of the $743,000 loss for 2001, occurred in the fourth quarter and is discussed further in Current Conditions and Outlook.
Selling and administrative expense increased $42,000, or one percent, and increased as a percent of sales primarily from an increase in salary expense.
For information related to environmental matters, see Note I to Consolidated Financial Statements.
The Chemicals Segment experienced a sales decline of seven percent for the year and an operating loss of $2,541,000 before deducting special charges totaling $3,554,000 and $1,708,000 in environmental remediation costs.
Sales were down nine percent in the Colors Group. The decline in sales resulted from a continuation of the trends that have been evident since 1995 of reduced unit volume demand and lower sales prices. Lower unit volume is the result of the downsizing in the domestic textile industry in response to cheap imports that have continued to capture a larger share of the market. Lower dye prices are primarily the result of increasing amounts of cheap imports from China and India and the intensely competitive market conditions. The lower gross profit margins were due to the same factors that affected sales plus expected losses on our new line of vat dyes during the initial year of introduction. The losses suffered from the development of our new line of vat dyes was an expected result of our strategy to provide all of the major dyes for coloring cotton which is the number one fiber used by the domestic textile industry.
Although selling and administrative expense declined $392,000, consistent with the decline in sales, the poor gross profit performance resulted in the Colors Group having a $795,000 operating loss before the special and environmental charges. The special charge was an inventory charge recorded to cover price decreases and off-standard raw materials. The environmental charges resulted from a revised estimate of the ultimate cost of sites remediation primarily at the Augusta plant that is scheduled for closingclosed in 2001. For information related to environmental matters, see Note I to Consolidated Financial Statements.
The Specialty Chemicals Group sales were down five percent for the year. The operating loss before special charges of $1,746,000 for the year was caused by losses at the Augusta plant of $2,105,000. Excluding Augusta, operating income before the special charges was $359,000 for the year,2000, which represents a decrease from the prior
period1999 of $1,690,000. The significant decrease was primarily the result of higher raw material and utility costs, resulting from higher oil prices, which could not be passed on to our customers because of competitive conditions. Also contributing to the decreased profitability were modestly higher labor and overhead costs and a less favorable product mix.
The special charges include a $2,324,000 write-off of fixed assets largely related to the discontinuance of a contract processing agreement covering a herbicide intermediate. The write-off amount was recorded net of a note receivable totaling $1,029,000 which will reimburse the Company for part of the capital cost, and will beis being received in equal payments through June 2003. Most of the equipment was at the Augusta plant and management had originally planned to move it to the Spartanburg plant. However, in December 2000, an agreement was reached to cancel the project. During the second quarter of 2001 we expect to discontinuediscontinued production at the Augusta plant after completing our product supply obligations. A $610,000 provision has beenwas recorded to cover the costs related to the shut- down. During the first quarter of 2000, the Company recorded a charge of $65,000 for cleaning up a chemical spill. Closing the Augusta plant positions the Company to better utilize its remaining facilities, which is expected to enhance future profitability. See Note B to Consolidated Financial Statements.
Selling and administrative expense in 2000 increased $95,000, or four percent, and one percent of sales compared to 1999 primarily from increases in salary expense and corporate cost allocations.
Comparison of 1999 to 1998
The Chemicals Segment experienced a sales decline of two percent for
the year and operating income fell significantly to $726,000 from
1998's total of $1,402,000 before deducting a $1,378,000 special
charge for environmental remediation costs. Colors sales were down
six percent. Without the acquisition of Organic Pigments on July 1,
1998, total Chemicals Segment sales would have declined 11 percent
and colors sales would have been down 22 percent. The decline
resulted from the continued downsizing of the domestic textile
industry, weak domestic demand and lower selling prices. Sales of
specialty chemicals improved three percent because of higher demand
from several toll projects during 1999 compared to 1998. This modest
increase is well below the growth rate that the Company expects from
these products. Unprecedented problems with the start up of a
herbicide intermediate under a processing agreement led to a
significant commitment of time and resources in 1999 with negligible
related revenues. The combination of weaker pricing and demand for
color products, low level of capacity utilization in both colors and
specialty chemicals, and to a lesser extent, the startup problems
mentioned above contributed to the decline in gross profits.
Selling and administrative expenses increased six percent over the
prior year because of having a full year of expense from the Organic
acquisition compared to six months last year, and an increase in
reserves for uncollectible accounts.
For information related to environmental matters, see Note I to
Consolidated Financial Statements.
allocations
Unallocated Income and Expense
Reference should be made to Note R to Consolidated Financial Statements for the schedule of these items.
Corporate expense declined $283,000, or 24 percent to $877,000. The decline resulted primarily from two factors. Included in the special adjustments for 2000 is an unexpected $158,000 payment made under a contract related to a pre 1973 employment matter recorded in the first quarter of 2000. In addition, $103,000 in outside consulting costs was expensed during 2000 related to the installation of a new data processing system. Other expense, net declined $625,000 as interest expense decreased $266,000 from decreases in borrowings and interest rates under the lines of credit with a bank. The Company also recognized gains from the sale of its Whiting plant in Camden, South Carolina of $143,000, and $68,000 from the partial sale of one of its investments. Interest income increased $143,000 primarily from interest received under a Metals Segment's contract with a customer.
The $255,000 increase, or 28 percent increase in corporate expenses in 2000 resulted primarily from two factors. Included in the special charges is an unexpected $158,000 payment made under a contract related to a pre 1973 employment matter recorded in the first quarter of 2000. In addition, $103,000 in outside consulting costs was amortized during 2000 related to the installation of a new data processing system currently being installed. Other expense, net increased $468,000 as interest expense increased $411,000 from increases in borrowings and interest rates under the lines of credit with a bank. Interest income also declined $67,000 due to the Company having lower amounts of funds invested in 2000 compared to 1999.
Comparison of 1999 to 1998
The 13 percent increase in corporate expenses resulted from salary
increases and higher profit-based incentives. Interest expense
offset by interest income was higher in 1999, as borrowings
increased under the line of credit with a bank, and interest income
declined. The Company had borrowings under the line of credit
throughout 1999 compared to having cash invested most of 1998.
Current Conditions and Outlook
The Metals SegmentSegment's unit volumes were up seven percent for the fourth quarter of 2001 from a year earlier, but dollar sales of $10,902,000 were down 24 percent from last year's comparable period total of $14,402,000, as the result of 29 percent lower average selling prices. Most of the sales price decline came from the change in product mix to a much smaller proportion of piping systems with commodity pipe prices down a more modest seven percent. Operating income of $471,000 in 2001's fourth quarter declined 79 percent from $2,303,000 achieved a year earlier. In addition to the factors affecting the year as mentioned in the year to year comparison, the fourth quarter was negatively impacted by very low sales and profits from our piping systems products. The stainless steel pipe and fabricated piping systems businesses are inherently cyclical. Since 1987, we have produced an outstanding average return on capital employed with very high returns during the cyclically strong per iods and adequate returns during the weak part of the cycle. Management believes we are well positioned to continue this trend. However, our objective is to develop new product offerings and diversify our business so that earnings will be less volatile while continuing to produce an above average return on capital.
Colors Group sales in the fourth quarter were down 25of 2001 fared even worse than the first three quarters with a 17 percent decline to $4,689,000 from a year earlier to $14,403,000 with unit volumes down 32 percent
while sales prices were up nine percent. Operating income before the
environmental charge totaled $2,303,000 showing a smaller 15 percent
decline. On a sequential basis, the fourth quarter showed good
improvement with sales up eight percent and operating income more
than double the third quarter level when inventory destocking was
most intense. Because the backlog of $9,200,000 is down 42 percent
from a year earlier, the piping systems division will have to book a
sufficient amount of new business in order$5,626,000 for the division to
achieve the same level of sales and profits from these products in
2001 as it did in 2000. Domestic economic conditions have a direct
impact on the demand for commodity pipe and piping systems.
Currently, there are indications that the domestic economy may be
deteriorating which could negatively impact demand and the segment's
results in 2001. However, we believe our 2000 performance was
significantly better than any domestic competitor and that we are
positioned to remain the largest and most profitable domestic
stainless pipe producer.
Sales were up two percent in the Colors Group to $5,626,000 in the
fourth quarter from a year earlier. However, Colors suffered an
operating loss before the special charges of $572,000 for the
quarter compared to a $23,000 loss in the same quarterperiod last year. The continued profit decline was the result of the conditions
outlined in the Chemicals Segment discussions. As stated previously,
the losses suffered from the development of our new line of vat dyes
was an expected result of our strategy to provide all of the major
dyes for coloring cotton which is the number one fiber used by the
domestic textile industry. We now supply our customers with vat,
sulfur, reactive and azoic dyes as well as pigments. No competitor
furnishes such a complete range of products for coloring cotton
fibers. We augment these products with a line of disperse dyes used
to color polyester, the second largest fiber used by the domestic
textile industry. This positions us well to maximize the volume we
can generate from the shrinking number of domestic textile
producers.
The Specialty Chemicals Group sales were down six percent for the
fourth quarter because of the general slowdown in the chemical
industry. The operating loss before the special charges of $565,000$695,000 for the fourth quarter was caused21 percent worse than last quarter's loss of $572,000 in 2000 before that year's special charges of $2,263,000. The last two months of the year were especially weak with sales far below the year's monthly average. This led to volume related losses that resulted in the final quarter producing the bulk of 2001's operating loss. As previously stated, the textile industry downsizing has been faster and of greater magnitude than almost anyone forecast. We are continuing to cut costs and downsize our own Colors Group operations in an effort to achieve profitability and generate cash flows from reduced working capital. We believe we ended the year with a smaller, more efficient operation that should be able to compete effectively if the domestic indu stry stabilizes. We have developed a modest amount of non-textile business for our pigment colors and are attempting to grow this business aggressively.
Aided by losses at the Dalton, Georgia acquisition, fourth quarter sales in the Specialty Chemicals Group totaling $4,808,000, and the operating loss of $553,000 were about the same as last year's fourth quarter amounts of $4,797,000 and $565,000, respectively, before that year's special charges of $2,934,000. However, excluding Augusta, plant of
$736,000. Excluding Augusta,the Group had operating income before charges wasof $171,000 in the fourth quarter which represents a $434,000 decrease
fromof 2000 before the special charges. Without Dalton, the MC Cleveland plant experienced weaker sales in November and December coupled with increased operating costs. Due to the timing of certain toll contracts, the mix of products produced at the BU Spartanburg plant in the fourth quarter generated lower revenues and profit margins. The combination of both of these factors caused the $736,000 decline in profitability compared to the fourth quarter of 1999. The causeslast year. Since 1987 we have been focused on developing specialty chemical business to reduce our dependence on textile colors. We have been suc cessful in building this part of the declines in sales
and profits are consistent with those outlined previously. MostChemicals Segment as evidenced by the approximate equal size of the products producedtwo Groups at the Augusta plant are being transferred to
the Spartanburg facility. Management expects the closure to reduce
operating variances and, accordingly, enhance future earnings.year-end. In the thirdfourth quarter of 2001, we completed the Company expects to complete the
installationconstruction of our hydrogenation and distillation equipmentproject at its
Spartanburg plant which will completeand began product production at the transfer of products
produced in Augusta to Spartanburg.
During the last half of 2000, management reviewed all of our
businesses with the goal of eliminating any positions not essential
to current activities. At February 28, 2001 our employee count had
been reduced to 470, which was down 24 percent from the January 2000
level of 622. Closingend of the Augustayear. We are attempting to increase and complement our contract manufacturing at BU with these and other products to increase sales, leveling out production at this plant will soon resultand increasing efficiency. The acquisition of Dalton expands this Group's capabilities and markets and should allow us to add products at the BU plant as well as increase through-put in further reductions. the Cleveland plant. We believe specialty chemicals have good growth potential as economic conditions improve.
Management currently has an increasedis continuing its emphasis on reducing the capital utilized by each of thenon-performing business units. We expect to generate substantialare focusing on generating cash flowflows from these efforts during
the first half of 2001, primarily from inventory reductions.that will allow us to seek other opportunities to generate returns acceptable to investors. We recognize that any business that cannot produce profits at least equal to the cost of capital should be rationalized in some manner. The Company looked at several acquisition opportunities in 2000 but
was unable to find a related business at an acceptable price. We will continue examining acquisition opportunitiescurrent operations as well as acquisition opportunities considering any transaction that is deemed advantageous to the long-
termlong-term interest of our shareholders.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995
The statements contained in this
This Annual Report on Form 10-K includes and incorporates by reference "forward-looking statements" within the meaning of the securities laws. All statements that are not historical facts may be forwardare "forward looking statements." The forward
lookingwords "estimate," "project," "intend," "expect," "believe," "anticipate" and similar expressions identify forward-looking statements. The forward-looking statements are subject to certain risks and uncertainties, including without limitation those identified below, which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of their
dates.statements. The following factors could cause actual results to differ materially from historical results or those anticipated: adverse economic conditions, the impact of competitive products and pricing, product demand and acceptance risks, raw material and other increased costs, customer delays or difficulties in the productionpro duction of products, unavailability of debt financing on acceptable terms and exposure to increased market interest rate risk, inability to comply with covenants and ratios required by our debt financing arrangements and other risks detailed from time to time in Synalloy's Securities and Exchange Commission filings. Synalloy Corporation assumes no obligation to update the information included in this Annual Report on Form 10-K.
Item 7a:7a Quantitative and Qualitative Disclosures About Market Risks
The Company is exposed to market risks from adverse changes in interest rates. In this regard, changes in U. S. interest rates affect the interest earned on the Company's cash and cash equivalents as well as interest paid on its indebtedness. As a policy, the Company does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. The Company is exposed to changes in interest rates primarily as a result of its borrowing activities used to maintain liquidity and fund business operations. There have been no significant changes in the Company's risk exposures from the prior year.
Fair value of the Company's debt obligation,obligations, which approximated the recorded value, consisted of:
At December 30, 2000,
$8,230,000
In addition, the Company's investments in equity securities, which are recorded at their fair value of $885,000 in 2001 and $1,078,000 in 2000, and
$1,039,000 in 1999, are subject to market risk related to equity pricing changes. Management believes that substantial fluctuations in equity prices and the resulting changes in the Company's investmentinvestments would not have a material adverse impact on the Company.
Item 8:8 Financial Statements and Supplementary Data
The Company's consolidated financial statements, related notes, report of management and report of the independent auditors follow on subsequent pages of this report.
(Years ended December 29, 2001, December 30, 2000 and January 1, 2000) | |||
Other (income) and expense | |||
See accompanying notes to financial statements
CONSOLIDATED BALANCE SHEETS
(Years ended December 29, 2001, December 30, 2000 and January 1, 2000) | |||
Accounts receivable, less allowance for doubtful | |||
(Years ended December 29, 2001, December 30, 2000 and January 1, 2000) | |||
Notes payable (Note F) | |||
Shareholders' equity (Notes H, K and L) | |||
| |||
See accompanying notes to financial statements
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Balance at January 2, 1999 | ||||||
Comprehensive income: | 44,659,887 | |||||
Balance at December 30, 2000 | ||||||
See accompanying notes to financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Years ended December 29, 2001, December 30, 2000 and January 1, 2000) | |||
Operating activities |
|
|
|
Investing activities | |||
Financing activities | |||
See accompanying notes to financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Principles of Consolidation:Consolidation. The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-
owned.wholly-owned. All significant intercompany transactions have been eliminated.
Reclassification. For comparative purposes, certain amounts in the 2000 and 1999 financial statements have been reclassified to conform with the 2001 presentation.
Use of Estimates:Estimates. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Accounting Period:Period. The Company's fiscal year is the 52- or 53-week period ending the Saturday nearest to December 31. Fiscal year 2001 ended on December 29, 2001, 2000 ended on December 30, 2000 and 1999 ended on January 1, 2000 and fiscal year 1998 ended
on January 2, 1999.2000. All three fiscal years included 52 weeks.
Revenue Recognition:Recognition. Revenue from product sales is recognized at the time ownership of goods transfers to the customer and the earnings process is complete. Shipping costs of approximately $1,640,000, $2,099,000 2,184,000 and 2,039,000$2,184,000 in 2001, 2000 1999 and 1998,1999, respectively, are recorded as a reduction of sales.
Inventories:
Inventories. Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method. The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and current market conditions.
Long-Lived Assets:Assets. Property, plant and equipment are stated at cost. Depreciation is provided on the straight-line method over the estimated useful life of the assets.
Intangibles arising from acquisitions represent the excess of cost over fair value of net assets of businesses acquired. The excess cost is amortized using the straight-line method over periods of 15 to 40 years. The costs of software licenses are amortized over their expected useful lives using the straight-line method. Debt expenses are amortized over the periods of the underlying debt agreements using the straight-line method.
In June 2001, the FASB issued Statements of Financial Accounting Standards SFAS No. 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets." Under the new rules, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually for impairment. Separate intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives. The amortization provisions of SFAS 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, the Company will apply the new accounting rules beginning December 30, 2001. We are currently assessing the impact SFAS 141 and 142 will have on our Consolidated Financial Statements. Application of the non amortization provisions of the statement is expected to result in an increase in net income of $110,000 per year.
The Company continually reviews the recoverability of the carrying value of long-lived assets. The Company also reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. When the future undiscounted cash flows of the operation to which the assets relate do not exceed the carrying value of the asset, the assets are written down to fair value.
Cash Equivalents:Equivalents. The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Concentrations of Credit Risk:Risk. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of trade accounts receivablesreceivable and cash surrender value of life insurance.
Substantially all of the Company's accounts receivable are due from companies located throughout the United States. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. Receivables are generally due within 30 to 45 days.
The cash surrender value of life insurance is maintained with one insurance company. The Company performs a periodic evaluation of the relative credit standing of this company as it relates to the insurance industry.
Research and Development Expense:Expense. The Company incurred research and development expense of approximately $701,000, $840,000 and $798,000 in 2001, 2000 and $882,000 in the
2000, 1999, and 1998, respectively.
Fair Value of Financial Instruments:Instruments. The carrying amounts reported in the balance sheet for cash and cash equivalents, cash surrender value of life insurance, investments and borrowings under the Company's short-term line of credit and long-term debt approximate their fair values.
Stock Options:Options. The Company accounts for and will continue to account for stock options under Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees." See Note L.
Comprehensive Income. Comprehensive income is comprised of net income plus other comprehensive income which, under existing accounting standards, consists of unrealized gains and losses on certain investments in equity securities. Comprehensive income is reported by the Company in the Consolidated Statements of Shareholders' Equity.
Derivatives: In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which is required to be adopted in years beginning after June
15, 2000. Because the Company does not currently engage in any derivative
or hedging activities, the adoption of the new statement will have no
effect on earnings or the financial position of the Company.
In 2000, the Company recognized pretax charges of $5,829,000 for the costs of actions designed primarily to reposition the Company for improved productivity and future profitability. Pretax charges of $5,253,000 were recorded in the fourth quarter and $576,000 in the first quarter, reducing net income by $3,778,000, or $.62 per share for the year. The Company closed its Whiting Metals fabrication plant in Camden, South Carolina, in the first quarter of 2000, and is in the process of closingclosed its Augusta, Georgia chemicals processing plant estimated to be completed in the secondthird quarter of 2001. The rationalization of manufacturing capacity and elimination and consolidation of certain product lines should position the Company to get improvedimprove utilization ofat its remaining facilities. During the
last half of 2000, management reviewed all of the Company's businesses with
the goal of eliminating any positions not essential to current activities.
At December 30, 2000, the employee count has been reduced to 510, which was
down 18 percent from the January 2000 level of 622. Closing of the Augusta
plant will result in further reductions.
In the Specialty Chemicals Group, a pretax charge of $2,324,000 was recorded to write-off fixed assets largely related to the discontinuance of a contract processing agreement covering a herbicide intermediate. The write-off amount was recorded net of a note receivable totaling $1,029,000 which will reimburseis reimbursing the Company for part of the capital cost, and will beis being received in equal payments through June 2003. Most of the equipment was at the Augusta plant and management had originally planned to move it to the Spartanburg, South Carolina plant. However, in December 2000, an agreement was reached to cancel the project. During the second quarter of 2001 the Company expects to discontinuediscontinued production at the Augusta plant after completing its product supply obligations. Most of the remaining products produced at the Augusta plant are beingwere transferred to the Spartanburg facility. A $610,000 provision has beenwas recorded in 2000 to cover the costs related to the closure of the Augusta plant. No additional co sts were incurred during 2001.
The Colors Group recorded an inventory charge of $555,000 in the fourth quarter of 2000 to cover price decreases and off-standard raw materials. During the first quarter of 2000, the Specialties ChemicalSpecialty Chemicals Group recorded a charge of $65,000 for cleaning up a chemical spill. In the Metals Segment, a pretax charge of $352,000 was recorded in the first quarter of 2000 for the costs of closing the Whiting plant. Certain equipment was moved to the Bristol, Tennessee plant giving the Bristol plant similar capabilities in the manufacture of process equipment.
The Colors Group and Metals Segment recorded pretax charges of $1,708,000 and $57,000, respectively, for environmental remediation costs in the fourth quarter of 2000 including $1,148,000 at the Augusta plant, which is beinghas been closed. See Note I for further discussions of the environmental charges.
All of the pretax charges were recorded in cost of goods sold except for a one-time unexpected $158,000 payment made by the Company under a contract related to a pre 1973 employment matter which was recorded in corporate administrative costs in the first quarter of 2000.
The following table summarizes the impact of the items detailed above on the Company's statement of operations:
Operating income (loss) | |||
Net (loss) income per share | |||
At December 30, 2000,29, 2001, investments in equity securities consist of the following:
The unrealized appreciation of the investments are recorded as other comprehensive income included in shareholders' equity, net of deferred income taxes.
All the Company's investments are classified as available for sale.
During 2001, the Company received $245,000 from the sale of a portion of its SpanAmerica investment realizing a pre-tax gain of $68,000.
Property, plant and equipment consist of the following:
Deferred charges consist of the following:
On December 28, 2001, the Company entered into a new Credit Agreement with its bank. Under the terms of the Agreement, maximum borrowings under the line of credit facility are $9,000,000. Borrowings under the line of credit cannot exceed the lesser of the maximum commitment or the borrowing base as defined in the Agreement. The Company has available a line of credit totaling $9,000,000, of which
$8,230,000 was$7,186,000 outstanding at year end. The line expires on July 29, 2001May 1, 2002 and bears interest at the bank's overnight cost of funds plus .75an additional 1.00 percent (7.52to 3.20 percent calculated each quarter based on a fixed charge coverage ratio calculation. (4.64 percent at December 30, 2000)29, 2001). Available borrowings at December 29, 2001 was $9,000,000. The line has no compensating balance requirement. Borrowings under the line of credit are subject to the deed of
trust and security agreement outlined in Note H. Average short-term borrowings outstanding during fiscal 2001, 2000 and 1999 were $4,966,000, $6,029,000 and 1998 were $6,029,000,
2,546,000 and $61,000 with weighted average interest rates of 5.47 percent, 7.24 percent and 6.23 percent, respectively.
Borrowings under the Credit Agreement are collateralized by accounts receivable and 5.56 percent, respectively.
Note G: Accrued Expenses
Accrued expenses consistinventory of the following:
Accrued expenses consist of the following:
Long-term debt consists of the following:
Secured commercial note payable with interest payable on the dates and at rates provided by credit agreement, as amended. |
The Company receivedhas a waiver.
$10,000,000 revolving line of credit expiring May 31, 2003. Interest is payable quarterly on the outstanding balance at LIBOR plus an additional 1.00 percent to 3.20 percent calculated quarterly based on a fixed charge coverage ratio calculation. The rate at December 29, 2001 was 4.58 percent. Borrowings are subject to the same Credit Agreement outlined in Note F.
The Company made interest payments of $957,000 in 2001, $1,235,000 in 2000 and $678,000 in 1999
and $664,000 in 1998.1999. Interest expense of approximately $27,000 was capitalized in 1999. The approximate aggregate amount of all long-term debt
maturities for the next five years is as follows: 2002 - $10,000,000.
At December 30, 2000,29, 2001, the Company has accrued $3,312,000$2,785,000 in remediation costs which, in management's best estimate, will satisfy anticipated costs of known remediation requirements as outlined below. Expenditures related to costs currently accrued are not discounted to their present values and are expected to be made over the next sevenfive to teneight years. As a result of the evolving nature of the environmental regulations, the difficulty in estimating the extent and remedy of environmental contamination, and the availability and application of technology, the estimated costs for future environmental compliance and remediation are subject to uncertainties and it is not possible to predict the amount or timing of future costs of environmental matters which may subsequently be determined. Subject to the difficulty in estimating future environmental costs, the Company believes that the likelihood of material losses in excess of the amounts recorded is remote.
Prior to 1987, the Company utilized certain products at its chemical facilities that are currently classified as hazardous waste. Testing of the groundwater in the areas of the treatment impoundments at these facilities disclosed the presence of certain contaminants. In addition, several solid waste management units ("SWMUs") at the plant sites have been identified. During 1994, the Company completed a reevaluation of its remediation plans including RCRA Facility Investigations which have been submitted for regulatory approval. In 1998 the Company completed an RCRA Facility Investigation at its Spartanburg plant site, and based on the results, completed a Corrective Measures Study in 2000. A Corrective Measures Plan specifying remediation procedures to be performed has beenwas submitted in 2000 for regulatory approval. The Company recorded a special charge of $560,000 in 2000 and has $1,468,000$1,304,000 accrued at December 30, 2000,29, 2001, to accrue for additional estimated future remedial, cleanup and monitoring costs.
At the Augusta plant site, the Company submitted in 2000 results of a Phase II Monitoring Plan for regulatory approval. UponAfter receiving approval, a Risk Assessment and Corrective Measures Plan will bewas developed and submitted for regulatory approval. A Closure and Post-Closure Care Plan was submitted and approved in 20002001 for the closure of the surface impoundment. Based on the anticipated results of the studies performed at the site, the Company recorded a special charge of $1,148,000 in the fourth quarter of 2000 and has $1,742,000$1,398,000 accrued at December 30, 200029, 2001 for additional estimated future remedial, cleanup and monitoring costs.
The Company has identified and evaluated two SWMUs at its plant in Bristol, Tennessee that revealed residual groundwater contamination. An Interim Corrective Measures Plan was submitted for regulatory approval in December 2000 to address the final area of contamination identified. The Company accrued $61,000 in the fourth quarter of 1998 and an additional $57,000 in the fourth quarter of 2000, of which $102,000$83,000 remains accrued at December 30, 2000,29, 2001, to provide for estimated future remedial and cleanup costs.
The Company has been designated, along with others, as a potentially responsible party under the Comprehensive Environmental Response, Compensation, and Liability Act, or comparable state statutes, at three waste disposal sites. It is impossible to determine the ultimate costs related to these sites due to several factors such as the unknown magnitude of possible contamination, the unknown timing and extent of the corrective actions which may be required, and the determination of the Company's liability in proportion to other responsible parties. However, in management's opinion, these environmental matters should not have a material adverse effect upon the consolidated results of operations or financial position of the Company.
The Company does not anticipate any insurance recoveries to offset the environmental remediation costs it has incurred. Due to the uncertainty regarding court and regulatory decisions, and possible future legislation or rulings regarding the environment, many insurers will not cover environmental impairment risks, particularly in the chemical industry. Hence, the Company has been unable to obtain this coverage at an affordable price.
The Company has a deferred compensation agreement with ana former officer which
allows the officer to defer all or a portionand current Board of any annual incentive
payable to the officer.Directors' member. Amounts deferred arebecome payable upon certain events including retirement, death or termination of the officer, or a change in control of the Company. Interest accrues on amounts deferred, net of estimated income tax benefits deferred by the Company until payments are made, at rates consistent with other invested retirement funds held by the Company in accordance with the agreement. No incentivecompensation was deferred in 2001, 2000 1999 and 1998.1999. The Company made a $300,000 payment in 2001. At December 30, 2000,29, 2001, the amounts deferred totaled $809,000,$530,000, including accrued interest earned in 20002001 of $42,000.
$21,179.
The Company has deferred compensation agreements with certain former officers providing for payments for ten years in the event of pre-
retirementpre-retirement death or the longer of ten years or life beginning at age 65. The present value of such vested future payments, $544,000$545,000 at December 30,
2000,29, 2001, has been accrued.
On February 4, 1999, the Board of Directors adopted a new Shareholders' Rights Plan (the "Plan") to succeed the Shareholders' Rights Plan which expired on March 26, 1999. Under the terms of the Plan, which expires in March 2009, the Company declared a dividend distribution of one right for each outstanding share to holders of record at the close of business on March 26, 1999. Each Right entitles holders to purchase 2/10 of one share of Common Stock at a price of $25.00 per share. Initially, the Rights are not exercisable and will automatically trade with the Common Stock. Each right only becomes exercisable after a person or group acquires more than 15 percent of the Company's Common Stock, or announces a tender or exchange offer for more than 15 percent of the stock. At that time, each right holder, other than the acquiring person or group, may use the Right to purchase $25.00 worth of the Company's Common Stock at one-half of the then market price.
A summary of activity in the Company's stock option plans is as follows:
The following table summarizes information about stock options outstanding at December 30, 2000:
| Outstanding Stock Options | Exercisable Stock Options | |||||||||||
The Company grants to non-employee directors, officers and key employees options to purchase common stock of the Company under three Plans adopted in 1988, 1994 and 1998. Options were granted through January 28, 1998 under the 1988 Plan. Under the 1994 Plan options may be granted through April 29, 2004, and through April 30, 2008 under the 1998 Plan at a price not less than the fair value on the date of grant. Under the 1988 and 1998 Plans, options may be exercised beginning one year after date of grant at a rate of 20 percent annually on a cumulative basis. Under the 1994 Non-Employee Directors' Plan, options may be exercised at the date of grant. At the 2001, 2000 1999 and 19981999 respective year ends, 253,900, 237,850 186,800 and 150,900186,800 shares of the options outstanding were fully exercisable.
The Company has elected to apply the provisions of Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees," (APB No. 25) in the computation of compensation expense. Under APB No. 25's intrinsic value method, compensation expense is determined by computing the excess of the market price of the shares over the exercise price on the measurement date. For the Company's options, the intrinsic value on the measurement date (or grant date) is zero, and no compensation expense is recognized. FASB Statement No. 123 requires the Company to disclose pro forma net income and income per share as if a fair value based accounting method had been used in the computation of compensation expense. The fair value of the options computed under Statement 123 would be recognized over the vesting period of the options. The fair value for the Company's options granted subsequent to December 31, 1994 was estimated at the time the options were granted using the Black-Scholes optiono ption pricing model with the following weighted-average assumptions for 2001, 2000 1999 and 1998,1999, respectively: risk-free interest rate of five percent; dividend yield of two percent; volatility factors of the expected market price of the Company's Common Shares of .690, .703 .728 and .747;.728; and an expected life of the option of seven years. The weighted average fair values on the date of grant were $4.25,$3.54, $4.00 and $4.65 in 2001, 2000 and $7.26 in 2000, 1999, and 1998, respectively. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarilyne cessarily provide a reliable single measure of the fair value of its options. The effects of applying Statement 123 may not be representative of the effects on reported net income in future years.
For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The following is the pro forma information for 2001, 2000 1999 and 1998:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets are as follows at the respective year ends:
Deferred tax assets: | |||
Deferred tax liabilities: | |||
Significant components of the provision for income taxes are as follows:
The reconciliation of income tax computed at the U. S. federal statutory tax rates to income tax expense is:
Income tax payments of approximately $278,000, $1,728,000 $1,011,000 and $729,000$1,011,000 were made in 2001, 2000 and 1999, and 1998, respectively.
The Company has a 401(k) Employee Stock Ownership Plan covering all non-
unionnon-union employees. Employees may contribute to the Plan up to 20 percent of their salary with a maximum of $10,500 for 2000.2001. Contributions by the employees are invested in one or more funds at the direction of the employee; however, employee contributions cannot be invested in Company stock.
Contributions by the Company are made primarily in Synalloy stock. The Company contributes on behalf of each participant who is eligible a matching contribution equal to a percentage which is determined each year by the Board of Directors. For 20002001 the maximum was four percent. The matching contribution is allocated monthly. Matching contributions of approximately $342,000, $360,000 $357,000 and $354,000$357,000 were made for 2001, 2000 1999 and 1998,1999, respectively. The Company may also make a discretionary contribution, which shall be distributed to all eligible participants regardless of whether they contribute to the Plan. No discretionary contributions were made to the Plan in 2001, 2000 1999 and, 1998.
1999.
The Company also contributes to union-sponsored defined contribution retirement plans. Contributions relating to these plans were approximately $467,000, $433,000 and $512,000 for 2001, 2000 and $484,000 for 2000, 1999, and 1998, respectively.
The Company is from time to time subject to various claims, other possible legal actions for product liability and other damages, and other matters arising out of the normal conduct of the Company's business. Management believes that based on present information, it is unlikely that liability, if any, exists that would have a materially adverse effect on the consolidated operating results or financial position of the Company.
The following table sets forth the computation of basic and diluted earnings per share:
Denominator: | |||||||||
On August 21, 1998,July 16, 2001, the Company purchased the common stockcertain assets of Organic
Pigments Corporation with an effective date of July 1, 1998. Organic,Global Chemical Resources, located in Greensboro, North Carolina,Dalton Georgia. Dalton manufactures aqueous pigment
dispersions soldand resells chemical specialties and heavy chemicals and blends and resells dyestuffs to the carpet and rug industries, selected textile industrymills and used in printing inks for use
on paper.the wire drawing industry. Total cost of the acquisition was $3,472,000 including retirement
of $1,095,000 in bank debt and certain acquisition costs related to the
transaction.$2,818,000. The Company funded the acquisition with available cash. The acquisition was accounted for by the purchase method of accounting with the purchase price allocated to the underlying assets based on their respective fair values at the date of acquisition. Since the purchase price was approximately equal to the fair value of the net assets acquired, no goodwill was recorded. The Company's consolidated financial statements include the results of OrganicDalton from the July 1 effective date.date of acquisition. The acquisition did not have a material impact on 19982001 operations; therefore, no pro forma data has been presented.
The purchase agreement includes a contingent payment provision that
provides for additional payments to be made to Organic's shareholders over
a three-year period. The provision calls for payments to Organic's
shareholders up to $875,000, payable one-third per year for three years,
for a joint venture investment in a manufacturing plant in the Republic of
China based on the equity value of the investment after the three-year
period. Each payment is calculated for a one year period ending June 30 and
payable August 30 for each of the next three years.The Company has made two
payments of $292,000 each in August of 2000 and 1999, respectively.
Synalloy Corporation operates in two principal industry segments: metals and chemicals. The Company identifies such segments based on products and services. The Metals Segment consists of Bristol Metals, a wholly-owned subsidiary. The Chemicals Segment consists of Blackman Uhler Chemical Company, a division of the Company, Manufacturers Chemicals and Organic Pigments Corporation, wholly-owned subsidiaries.
During the first quarter of 2000, the Company completed the reorganization
of its Chemicals Segment, changing the Segment into two separately managed
operating groups - Colors and Specialty Chemicals. Previously, the Segment
had been managed by geographic location. The amounts presented for 1999 and
1998 have been restated to reflect the reorganization.
The Colors Group manufactures dyes, pigments and auxiliaries primarily for the textile industry.and carpet industries. The Specialty Chemicals Group manufacturers a wide variety of specialty chemicals for the textile, carpet, chemical, paper, metals, petroleum and pharmaceutical industries. The Metals Segment manufactures welded stainless steel pipe and highly specialized products, most of which are custom-
producedcustom-produced to individual orders, required for corrosive and high-purity processes used principally by the chemical, petrochemical and pulp and paper industries. Products include piping systems, fittings, tanks, pressure vessels and a variety of other components.
Operating profit is total revenue less operating expenses, excluding interest expense and income taxes. Identifiable assets (all of which are in the United States) are those assets used in operations by each segment. Centralized data processing and accounting expenses are allocated to the Metals Segment and Chemicals Segment based upon estimates of their percentage of usage. Corporate assets consist principally of cash, certain investments, and property and equipment. No single customer or agency (domestic or foreign) accounted for more than ten percent of revenues in 2001, 2000 1999 and 1998.
and1999.
The Company has a distributorship agreement with a company supplyingthat supplies about 89, 92 and 91 percent of the products that produced about 28, 27 and 18 percent of the Colors Group's sales in 2000.2001, 2000 and 1999, respectively. The supplier has been the principal source of these products since 1985. Although the Company believes that this supplier will continue to be a source of these products in the future, there is no assurance of this. Loss of this supplier would have a materially adverse short-term effect on the Company's sales and net income. However, management believes that if the agreement with this supplier is not continued in the future, other suppliers could be found to replace most of the products.
Operating (loss) income | |||
Depreciation and amortization | |||
The following is a summary of quarterly operations for 2001, 2000 1999 and 1998:
1999:
| ||||
1999 |
|
|
The Company recorded special charges of $5,829,000 ($5,253,000 in the fourth quarter) in 2000 which reduced net income by $3,778,000 or $.62 per share ($3,405,000 or $.56 per share in the fourth quarter). See Notes B and I for further discussion.discussion
On March 6, 2002, the Company was notified by its bank, Wachovia Bank, N.A., that it would only renew the $9 million bank line of credit, which expires on May 1, 2002, through its subsidiary Congress Financial assuming an agreement could be negotiated with Congress. The Company recordedalso has a special charge$10 million line of $1,439,000 for environmental
remediation costscredit with Wachovia, and although it expires May 31, 2003, the Company expects the line to be renewed as part of any refinancing agreement. The Company is in the fourth quarterprocess of 1998 which reduced net incomenegotiating replacement financing for both loans and, based on discussions with potential replacement lenders, expects to have replacement financing available by $931,000May 1, 2002. However, due to the timing of the notification, the Company has not had sufficient time to obtain a written commitment for such financing. The Company anticipates that such financing will be at higher rates of interest than those charged on the existing loans. Other terms of the expected replacement credit facilities will be negotiated with the lender or $.14 per share. See Note I for further discussion.
lend ers, and some of such terms may be less favorable to the Company than those in the existing loans.
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles and have been audited by Ernst & Young LLP, Independent Auditors. Management of the Company assumes responsibility for the accuracy and reliability of the financial statements. In discharging such responsibility, management has established certain standards which are subject to continuous review and are monitored through the Company's financial management. The Board of Directors pursues its oversight role for the financial statements through its Audit Committee which consists of outside directors. The Audit Committee meets on a regular basis with representatives of management and Ernst & Young LLP.
Report Ofof Independent Auditors
Shareholders and Board of Directors
Synalloy Corporation
We have audited the accompanying consolidated balance sheets of Synalloy Corporation and subsidiaries as of December 29, 2001, December 30, 2000 and January 1, 2000, and
January 2, 1999, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended December 30, 2000.29, 2001. Our audits also included the financial statement schedule listed in the index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Synalloy Corporation and subsidiaries at December 29, 2001, December 30, 2000 and January 1, 2000, and
January 2, 1999 and the consolidated results of itstheir operations and itstheir cash flows for each of the three years in the period ended December 30, 2000,29, 2001, in conformity with accounting principles generally accepted accounting principles in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements and schedule taken as a whole, presents fairly in all material respects the information set forth therein.
Ernst & Young LLP
Greenville, South Carolina
February 9, 2001
PART II
15, 2002
except for Note T, as to which the date is March 6, 2002
Item 9:9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
PART III A definitive proxy statement, which will be filed with the Securities and
Exchange Commission pursuant to regulation 14A of the Securities Exchange
Act of 1934 within 120 days of the end of the registrant's fiscal year
ended December 30, 2000, is incorporated herein by reference.
Item 10:10 Directors and Executive Officers of the Registrant
Such information as required by the Securities and Exchange Commission in
Regulation S-K is contained in the Company's definitive Proxy Statement in
connection with its Annual Meeting to be held April 26, 2001.
Item 11: Executive Compensation
The information with respect to executive compensation and transactions is
hereby incorporated
Incorporated by reference fromto the information set forth under the captions "Election of Directors", "Executive Officers" and Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's definitive proxy statement to be filedused in connection with its Annual Meeting of Shareholder to be held April 25, 2002 (the "Proxy Statement").
Item 11 Executive Compensation
Incorporated by reference to the Securitiesinformation set forth under the caption "Remuneration of Directors and Exchange Commission pursuant
to Regulation 14A ofOfficers" in the Securities Exchange Act of 1934.
Proxy Statement.
Item 12:12 Security Ownership of Certain Beneficial Owners and Management
The information with respect to security ownership of certain beneficial
owners and management is hereby incorporated
Incorporated by reference fromto the Company's definitive proxy statement to be filed withinformation set forth under the Securitiescaption "Security Ownership of Certain Beneficial Owners and Exchange Commission pursuant to Regulation 14A ofManagement" in the Securities Exchange
Act of 1934.
Proxy Statement.
Item 13:13 Certain Relationships and Related Transactions
Item 14:14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
a. The following documents are filed as a part of this report:
1. Financial Statements: The following consolidated financial statements of Synalloy Corporation are included in Item 8:
Consolidated Statements of Operations for the years ended December 29, 2001, December 30, 2000 and January 1, 2000 and January 2, 1999
Consolidated Balance Sheets at December 29, 2001, December 30, 2000 and January 1, 2000 and January 2, 1999
Consolidated Statements of Shareholders' Equity for the years ended December 29, 2001, December 30, 2000 and January 1, 2000 and January 2, 1999
Consolidated Statements of Cash Flows for the years ended December 29, 2001, December 30, 2000 and January 1, 2000 and January 2, 1999
2. Financial Statements Schedules: The following consolidated financial statements schedule of Synalloy Corporation is included in Item 14(d).
Schedule II - Valuation and Qualifying Accounts for the years ended December 29, 2001, December 30, 2000 and January 1, 2000 and January 2, 1999
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions
or are inapplicable, and therefore have been omitted.
Year ended December 29, 2001 | ||||
Year ended December 30, 2000 | ||||
Year ended January 1, 2000 |
(1) Allowances, uncollected accounts and credit balances written off against reserve, net of recoveries.
(2) Includes a $25,000 allowance from the acquisition of Organic Pigments
Corporation in 1998.
Pursuant to the requirements of Section 13 or 15(d) 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.
SYNALLOY CORPORATION
Registrant
By /s/ Cheryl C. CarterRalph Matera March 27,2001
Cheryl C. Carter25, 2002
Ralph Matera Date
Corporate Secretary
Chief Executive Officer
By /s/ Gregory M. Bowie March 25, 2002
Gregory M. Bowie Date
Chief Financial Officer
SYNALLOY CORPORATION
Registrant
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
By /s/ James G. Lane, Jr. March 27, 2001
25, 2002
James G. Lane, Jr. Date
Chief Executive Officer and
Chairman of the Board
By /s/ Gregory M. Bowie March 27, 2001
Gregory M. Bowie Date
Vice President, Finance
By /s/ Glenn R. Oxner March 27, 2001
25, 2002
Glenn R. Oxner Date
Director
By /s/ Sibyl N. Fishburn March 27, 2001
25, 2002
Sibyl N. Fishburn Date
Director
By /s/ Carroll D. Vinson March 27, 2001
25, 2002
Carroll D. Vinson Date
Director
By /s/ Murray H. Wright March 25, 2002
Murray H. Wright Date
Director
Restated Certificate of Incorporation of Registrant, as amended, incorporated by reference to Registrant's Form 10-Q for the period ended March 31, 2001 (the "first quarter 2001 Form 10-Q") | |
Bylaws of Registrant, as amended, incorporated by reference to the first quarter 2001 Form 10-Q | |
Form of Common Stock Certificate, incorporated by reference to the first quarter 2001 Form 10-Q | |
Rights Agreement, dated as of February 4, 1999, as amended May 22, 2000, between registrant and American Stock Transfer and Trust Company (incorporated by reference to exhibits to Registrant's Form 8-K filed May 22, 2000 and Form 8-A filed March 29, 1999, incorporated by reference to the first quarter 2001 Form 10-Q | |
Synalloy Corporation 1988 Long-Term Incentive Stock Plan, incorporated by reference to the first quarter 2001 Form 10-Q | |
Synalloy Corporation Restated 1994 Non-Employee Directors' Stock Option Plan, incorporated by reference to the first quarter 2001 Form 10-Q | |
Synalloy Corporation 1998 Long-Term Incentive Stock Plan, incorporated by reference to the first quarter 2001 Form 10-Q | |
Restated Employment Agreement, dated January 1, 2001, between Registrant and | |
Employment Agreement, dated November 25, 1996, between Registrant and Ronald H. Braam, incorporated by reference to the first quarter 2001 Form 10-Q | |
Restated Salary Continuation Agreement, dated January 1, 2001, between Registrant and Ronald H. Braam, incorporated by reference to the first quarter 2001 Form 10-Q | |
Restated Deferred Compensation Agreement, dated December 14, 1995, between Registrant and James G. Lane, Jr., incorporated by reference to the first quarter 2001 Form 10-Q | |
Registrant's Subsidiary and Divisional Management Incentive Plan, incorporated by reference to the first quarter 2001 Form 10-Q | |
Employment Agreement, dated July 25, 2001, between Registrant and Ralph Matera, incorporated by reference to Registrant's Form 10-Q for the period ended June 30, 2001 | |
Credit Agreement, dated as of December 31, 2001, between Registrant and Wachovia Bank, N. A., and related documents | |
Subsidiaries of the Registrant |