FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) SECURITIES EXCHANGE
ACT OF 1934
Commission File No. 0-10894
ARNOLD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2200465
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
625 South Fifth Avenue, Lebanon, Pennsylvania 17042
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (717) 274-2521
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, 1.00 Par Value
(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 period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
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]
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 26, 1999, computed by reference to the
immediately preceding closing sale price of such stock (3/25/99), was
$372,451,890.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at March 26, 1999
Common Stock 24,830,126
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Stockholders for the year ended
December 31, 1998, and Registrant's definitive proxy statement for the Annual
Meeting of Stockholders to be held on May 5, 1999, are incorporated into
Parts II and III, respectively, as set forth herein.
The total number of pages included in this report, including the cover
page, is 53. The exhibit index is located on sequentially numbered page 21.
PART I
Item 1. BUSINESS
Arnold Industries, Inc. (hereinafter sometimes referred to as "Arnold
Industries" or the "Company") was incorporated on February 1, 1982, under the
laws of the Commonwealth of Pennsylvania at the direction of the Board of
Directors of New Penn Motor Express, Inc. to become a holding company and to
effect a reorganization pursuant to which, through requisite stockholder
approval, New Penn Motor Express, Inc. became a wholly owned subsidiary of
Arnold Industries as of March 31, 1982. The Company is engaged in the
trucking and warehousing businesses.
The Company's business activities are currently conducted by two (2)
operating subsidiaries and a non-operating, investment management subsidiary.
New Penn Motor Express, Inc. ("New Penn") is a less-than-truckload ("LTL")
transportation company. Arnold Transportation Services, Inc. ("Arnold
Transportation") provides truckload ("TL") service and, under the name Arnold
Logistics, warehousing and warehouse-related trucking service. Maris, Inc.
("Maris") is a non-operating, investment management subsidiary incorporated in
the State of Delaware.
In 1998, New Penn, the Company's LTL carrier, contributed approximately
fifty percent (50%) of the Company's Operating Revenue. The Company's TL
carrier operations contributed approximately forty-three percent (43%), and
Arnold Logistics, its warehousing and related trucking operations, contributed
approximately seven percent (7%).
NEW PENN MOTOR EXPRESS, INC.
New Penn maintains general offices in Lebanon, Pennsylvania, and
transports commodities by motor vehicle on a less-than-truckload basis,
operating primarily in interstate commerce in New England and the Middle
Atlantic states. The southeastern United States, Indiana, Ohio and Quebec and
Ontario, Canada, are serviced through correspondent agreements with certain
other high-service carriers in each area. Certain areas in Canada, including
Montreal, are now serviced directly by New Penn. Puerto Rico is serviced by
correspondent land service in conjunction with correspondent ocean service.
Commodities transported include paper products, food products, textiles,
building products, metal products, pharmaceuticals, office equipment and
supplies, and wearing apparel.
New Penn operates from twenty-three (23) terminals at which it receives,
consolidates and distributes freight. It utilizes a correspondent's terminal
facility in Puerto Rico.
Rates and Regulations
In common with other interstate motor carriers, New Penn is subject to
limited Federal economic regulation of its operations, including the
territories it serves and the commodities it carries.
The ICC Termination Act of 1995, effective January 1, 1997, abolished
the Interstate Commerce Commission ("ICC") and the traditional economic
regulatory scheme administered by that agency, and replaced it with signifi-
cantly lessened economic regulation administered by the Federal Highway
Administration ("FHWA").
To the extent rates and charges assessed by New Penn for interstate
transportation are published on behalf of New Penn by regional tariff bureaus,
such collectively published rates and charges are exempt from the anti-trust
laws. However, price competition is now widespread, and such bureau-published
rates are of relatively little influence today.
As a result of the changes to the Federal law, neither interstate rates
nor intrastate rates are filed with any regulatory agencies of the Federal
government. Changes in rates and charges may now be effected without
regulatory approval.
The FHWA has jurisdiction over the qualification and the maximum hours
of service of drivers, insurance and the general safety of operations and
motor carrier equipment.
New Penn's operations are subject to limited regulation by the states
through which it operates.
Certificates
The authorized routes, territories and commodities to be transported for
all property carriers by motor vehicle (except carriers of exempt commodities)
are determined by operating authorities issued, in the case of interstate
operations, by FHWA (formerly by the ICC), and, in the case of intrastate
operations, by regulatory agencies of the individual states. Operating
authorities relating to the operations of New Penn have been issued to it by
the respective regulatory agencies having jurisdiction. Recent legislation
has greatly eased or in many cases eliminated the requirements for obtaining
interstate and intrastate operating authority.
Employees and Employee Relations
New Penn has approximately fourteen hundred and sixty (1,460) full-time
employees (including its officers). Most of the hourly paid employees are
covered by contracts with the International Brotherhood of Teamsters,
Chauffeurs, Warehousemen, and Helpers of America (Teamsters) effective
April 1, 1998, through March 31, 2003.
Most labor contracts in the unionized trucking industry are negotiated
on an industry-wide basis for three to five year periods and contain uniform
wage rates, fringe benefits and other working conditions applicable to all
covered motor carriers, including competitors of New Penn, subject to local
differences established in riders to the national contracts. New Penn
anticipates stable labor relations with its unionized employees during the
next four (4) years.
New Penn employs a sales staff of approximately sixty-five (65) people,
augmented by sales and related efforts of its four (4) regional managers and
twenty-two (22) terminal managers, together with various other marketing and
sales staff, to solicit new business and to handle service programs with
existing customers.
Competition
The motor carrier industry is highly competitive, particularly as a
result of deregulation of Interstate Commerce Commission operating authori-
ties. New Penn competes primarily with other motor common carriers, motor
contract carriers, private transportation and railroads. A very substantial
number of motor carriers operate within the same areas served by New Penn.
Some of the competing carriers are larger than New Penn in terms of revenues,
tonnage handled and net worth. Furthermore, as a result of deregulation, even
more carriers may begin to operate in interstate and intrastate commerce in
the same geographical territory in which New Penn is currently operating.
New Penn believes the competitive position of a transportation company
depends upon rates as well as consistency and dependability of service. Price
cutting in the trucking industry has become intense. Profitability depends
upon New Penn's ability to maximize utilization of revenue equipment and to
minimize handling costs.
ARNOLD TRANSPORTATION SERVICES, INC.
Arnold Transportation changed its name from Lebarnold, Inc. on May 31,
1997. Arnold Transportation has two primary operating divisions: the TL
carrier division and the warehousing and related trucking division. The
warehousing and related trucking division operates under the trade name of
Arnold Logistics.
Arnold Transportation operates as a "core carrier" within the TL
industry. Many manufacturers in the United States continue to reduce the
number of regional carriers that they utilize and are concentrating their
transportation business in a smaller number of "core carriers." Carriers must
be able to transport goods across inter-regional boundaries if they are to
compete for the business of these manufacturers. The Company created Arnold
Transportation as a core carrier at the end of 1997 by integrating the
operations of three regional TL carriers previously operated as independent
units. Integration has had the added benefit of reducing duplicative expenses
in the areas of dispatch, record-keeping, administration, etc.
Arnold Transportation's trucking division has 48-state authority to
serve the general public, although its basic business, that of truckload
carriage, is conducted east of the Mississippi and in the southwest. The main
operating location for this division has been relocated from Camp Hill,
Pennsylvania, to Jacksonville, Florida, with other terminals located in
Pennsylvania, North Carolina, Georgia, Texas and Oklahoma. Arnold
Transportation also conducts operations from a customer's location in Ohio,
and a leased facility in New York. Most services are being performed in
company-owned equipment with company drivers, although in 1992 Arnold
Transportation began utilizing owner-operators to complement its fleet.
Arnold Logistics serves the assembly, distribution and warehousing needs
of its customers primarily from sixteen (16) separate warehouse buildings in
six (6) operating locations with a total capacity of approximately 3,100,000
square feet. These facilities are located in Camp Hill, Mountville,
Mechanicsburg, and Lancaster, Pennsylvania, and Fort Worth and Arlington,
Texas. Arnold Logistics also maintains approximately 320,000 square feet of
warehouse in Wilmington, North Carolina, presently leased to a third party.
Arnold Transportation has approximately thirteen hundred eight (1,380)
employees (including its officers).
General
Truckload carriers no longer file tariff rates with the ICC. Arnold
Transportation's trucking operations are, in general, subject to limited
regulation and competitive factors similar to that experienced by New Penn.
Arnold Transportation is not subject to collective bargaining with its
labor force.
Item 2. PROPERTIES
Headquarters. Arnold Industries and New Penn maintain executive and
general offices at 625 South Fifth Avenue, Lebanon, Pennsylvania 17042.
Arnold Transportation maintains its principal office at 9523 Florida Mining
Boulevard, Jacksonville, Florida 32257. Arnold Transportation operates
regional centers at 4410 Industrial Park Road, Camp Hill, Pennsylvania 17011,
and at 3375 High Prairie Avenue, Grand Prairie, Texas 75050. The companies
own their principal offices and regional centers.
Facilities. New Penn maintains general commodities terminal facilities
in twenty-three (23) cities situated in seven (7) states and Quebec province
of Canada. On December 31, 1998, eighteen (18) of the terminals were owned by
the Company or its subsidiaries and five (5) were leased from unrelated
parties. The terminals owned are located as follows: Southington, CT;
Elkridge, MD; Billerica, MA; South Kearny, NJ; Trenton, NJ; Albany, NY;
Newburgh, NY, Cheektowaga, NY; Maspeth (Long Island), NY; Rochester, NY; Camp
Hill, PA; Lancaster, PA; Cinnaminson, NJ; Neville Island, PA; Reading, PA;
Dunmore, PA; Milton, PA; and Cranston, RI. Leases for terminal facilities in
Springfield, MA; Syracuse, NY; Altoona, PA; Portland, ME; and Stanhope,
Quebec, expire from time to time over the next several years. Management
believes the leases will be renewed or replaced by other leases in the normal
course of business. New Penn also operates through a correspondent located in
Cantano, Puerto Rico.
In the mid-Atlantic region, Arnold Transportation owns and operates
trucking terminals in Camp Hill, Pennsylvania, and Charlotte, North Carolina.
It also leases facilities in Selkirk, New York (near Albany), Dayton, Ohio,
and St. Louis, Missouri, which it will renew or replace in the normal course
of business. In the mid-Atlantic region, Arnold Transportation also owns and,
through Arnold Logistics, operates twelve (12) warehouse buildings in three
(3) locations, Camp Hill, Mechanicsburg, and Lancaster, Pennsylvania, totaling
approximately 2,300,000 square feet. Arnold Transportation also leases
approximately 300,000 square feet of additional warehouse space for Arnold
Logistics' use in Mountville, Pennsylvania. Management believes that the
lease will be renewed or replaced in the normal course of business. In 1982,
Arnold Transportation acquired, from an unrelated third party, 90 acres near
Wilmington, North Carolina, on which are located approximately 320,000 square
feet of warehouse space. This facility is presently leased to an unrelated
third party and is not operated by Arnold Logistics.
In the southeast, Arnold Transportation maintains five (5) terminals
and/or drop lots to support its operations. These are located in Jacksonville
and Jasper, Florida; Albany, Atlanta and Austelle, Georgia. The terminals in
Jacksonville, Jasper, Albany and Austelle are owned by Arnold Transportation.
The Atlanta facility is leased from an unrelated third party. Management
believes the lease will be renewed or replaced in the normal course of
business.
In the southwest, Arnold Transportation maintains five (5) terminal
and/or drop-off locations in, respectively, Grand Prairie, Houston, Paris and
Waco, Texas, and Muskogee, Oklahoma. Arnold Transportation owns its
facilities in Grand Prairie, Houston and Paris, Texas, and Muskogee, Oklahoma.
The Waco facility is under lease with an unrelated party, which will expire or
be renewed over the next several years. Management believes the lease will be
renewed or replaced in the normal course of business. Arnold Transportation
also owns two warehouses totaling approximately 150,000 square feet in the
Fort Worth, Texas area, which are managed by Arnold Logistics. Additional
warehouse space consisting of 25,000 and 248,000 square feet is under lease in
Fort Worth and Arlington, Texas, respectively, which leases will be renewed or
replaced in the normal course of business.
Item 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business of the Company, to which the
Company or its subsidiaries are party or to which any of their property is
subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
PART II
Item 5. MARKET INFORMATION
There is incorporated herein by reference the information appearing
under the captions "Quarterly Performance" and "Price Range Common Stock" on
page 18 of the Registrant's Annual Report to Stockholders for the year ended
December 31, 1998. It is anticipated that comparable cash dividends will
continue to be paid in the future.
The number of holders of record of the Company's common stock as of
March 26, 1999, was approximately 1,535. However, the Company believes there
are substantially more beneficial owners of Company stock than reflected by
the number of record holders.
The Registrant's common stock is traded in the over-the-counter market
on the NASDAQ National Market System under the symbol "AIND." Prices shown
are the actual high and low close for the periods given. The closing price of
the Company's common stock on March 25, 1999, was $15.00.
Item 6. SELECTED FINANCIAL DATA
There is incorporated herein by reference the information appearing
under the caption "Eleven-Year Financial Summary" on pages 22 and 23 of the
Registrant's Annual Report to Stockholders for the year ended December 31,
1998.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
There is incorporated herein by reference the information appearing
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 19 through 21 of the Registrant's Annual
Report to Stockholders for the year ended December 31, 1998.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INHERENT IN DERIVATIVE FINANCIAL INSTRUMENTS
Neither the Company nor any of its subsidiaries, including Maris, Inc.,
own derivative financial instruments. Accordingly, the Company has no
exposure to sudden changes in the financial and commodities markets and the
impact that those changes may have on the value of market risk sensitive
derivative securities. Maris, Inc., however, does own certain market risk
sensitive instruments, including money market funds, time deposits, tax-free
bonds and other like instruments. The Company believes that the risk inherent
in owning these types of investments is no greater than the market risk of
owning any security traded on various exchanges in the United States and
elsewhere.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of Arnold Industries,
Inc. and its subsidiaries, included on pages 9 through 16 of the Registrant's
Annual Report to Stockholders for the year ended December 31, 1998, are
incorporated by reference herein:
Consolidated Balance Sheets - December 31, 1998 and 1997.
Consolidated Statements of Income - Years Ended December 31, 1998, 1997
and 1996.
Consolidated Statements of Stockholders' Equity - Years Ended
December 31, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows - Years Ended December 31, 1998,
1997 and 1996.
Notes to Consolidated Financial Statements.
Also, there is incorporated herein by reference the "Report of Indepen-
dent Accountants" and information appearing under the caption "Quarterly
Performance" on pages 17 and 18, respectively, of the Registrant's Annual
Report to Stockholders for the year ended December 31, 1998.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is incorporated herein by reference the information appearing
under the captions "Directors" and "Executive Officers" in the Registrant's
definitive proxy statement for the Annual Meeting of Stockholders on May 5,
1999.
There have been no events under the bankruptcy act, no criminal proceed-
ings and no judgments or injunctions during the past five (5) years which
would be material to an evaluation of any Director or Executive Officer.
Item 11. EXECUTIVE COMPENSATION
There is incorporated herein by reference the information appearing
under the captions "Executive Officers", "Executive Compensation and Other
Benefits", "Performance Graph," "Report on Executive Compensation" and
"Compensation Committee Interlocks and Insider Participation" in the Regis-
trant's definitive proxy statement for the Annual Meeting of Stockholders on
May 5, 1999.
No other remuneration payments are proposed to be made in the future,
directly or indirectly, by or on behalf of Arnold Industries and its subsid-
iaries, pursuant to any plan or arrangement, to any Director or Executive
Officer of the Company except as disclosed above.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is incorporated herein by reference the information appearing
under the caption "Security Ownership of Directors, Officers and Certain
Beneficial Owners" in the Registrant's definitive proxy statement for the
Annual Meeting of Stockholders on May 5, 1999.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is incorporated herein by reference the information appearing
under the caption "Certain Transactions" in the Registrant's definitive proxy
statement for the Annual Meeting of Stockholders on May 5, 1999.
Item 14. YEAR 2000 COMPLIANCE
The Company continues its on-going project to assure Year 2000 ("Y2K")
readiness. Y2K readiness involves assuring that all essential functions of
the Company, including activities that are not directly computer dependant,
will remain operative upon arrival of the Year 2000. Assuring Y2K readiness
involves: (i) assessing which activities are impacted by date-dependent
software programs and chips, (ii) making any necessary corrections and/or
replacements to affected software and chips, and (iii) testing the corrections
and/or replacements to evidence that software and chips recognize the Year
2000 date and function properly. Each of the three phases outlined above must
be successfully completed before a particular system will be deemed Y2K ready.
The Company's project to correct and/or replace internal information
technology ("IT") software is now 100% complete. Internal IT software is
software that the Company produces internally, using its own technicians and
programmers, to perform such carrier and warehousing functions as billing,
accounts receivable aging, payables, payroll, inventory control, dispatch,
etc. The Company's internal IT software operates on an IBM AS 400 mainframe
computer, and all such software, including software servicing the Company's
three principal business units, New Penn Motor Express, Arnold Transportation
Services and Arnold Logistics, has been assessed, corrected and/or replaced
and tested successfully for Y2K compliance.
The cost of the Company's program to correct and/or replace non-
compliant internal IT software was $1,650,000. Those costs have already been
incurred and paid from operating revenues of the Company's three principal
business units. No other projects or capital expenditures were deferred or
canceled due to the diversion of resources to Y2K compliance. Approximately
70% of the cost of the Company's internal program was incurred for services of
third-party consultants and replacement of software. The remaining 30% of the
cost was incurred for services of employees of the Company or its subsidiaries
who devoted time to assuring Y2K readiness.
The Company continues to monitor and assess the progress of third
parties upon whom the Company relies for externally produced, date-dependant
software, including, but not limited to, non-IT software, communications
software, fueling cards, satellite-based on-board computers, diagnostic
repair programs used at Company repair facilities, microfilm indexing, etc.
Many such externally produced software programs are non-IT systems and impact
the actual carriage of freight or storage of goods by the Company's operating
units. The Company is also monitoring the progress of suppliers of basic
materials such as fuel, parts, tires, etc., as well as that of significant
customers upon whose continued business the Company relies for revenues.
These monitoring efforts have revealed areas of concern with respect to Y2K
readiness of the Company's vendors, suppliers and customers. To the extent
reasonably practicable, the Company is taking steps to assure timely
compliance or the availability of alternate software, services and supplies.
The cost of maintaining and completing the external Y2K project, including
correction and/or replacement costs and testing, is anticipated to be
$150,000. The additional cost will be funded entirely from operating revenues
of the Company.
The Company faces the risk of disruptions to service if significant
vendors, suppliers and/or customers do not become Y2K compliant in a timely
manner. Failure by vendors and suppliers to become compliant would result in
the loss of systems controlling dispatch, billing and payroll, among other
essential functions of the Company. The Company does not believe that these
risks will come to fruition because of the efforts to date to become Y2K
compliant.
The Company is developing contingency plans to acquire electricity, fuel
and essential parts from other vendors in the event of a Y2K malfunction by a
prime supplier. Plans include purchase and retention of higher levels of
inventory for items such as tires and spare parts. As necessary, electricity
will be available at most Company facilities, at least temporarily, though the
use of generators that the Company routinely maintains for power outages. The
Company has no contingency plans for loss of revenues from shippers who do not
become Y2K compliant.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) The following consolidated financial statements of the registrant
and its subsidiaries, included on pages 9 to 16 in the Registrant's
Annual Report to Stockholders for the year ended December 31, 1998 and
the report of independent accountants on page 17 of such report are
incorporated herein by reference in Item 8:
Financial statements:
Consolidated Balance Sheets - December 31, 1998 and 1997
Consolidated Statements of Income - Years Ended December 31, 1998,
1997 and 1996
Consolidated Statements of Stockholders' Equity - Years Ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows - Years ended December 31,
1998, 1997 and 1996
Notes to Consolidated Financial Statements
Independent Accountants' Report
Selected Quarterly Financial Data - Years Ended December 31, 1998 and
1997:
Quarterly performance data, included on page 18 in the
Registrant's Annual Report to Stockholders for the year ended
December 31, 1998, is incorporated herein by reference.
(2) The following financial statement schedules for the years 1998,
1997 and 1996 are submitted herewith:
Schedule II - Valuation and qualifying accounts
and reserves
Report of Independent Accountants
All other schedules are omitted because they are not required, inappli-
cable or the information is otherwise shown in the financial statements
or notes thereto.
(3) Exhibits included herein:
Exhibit 3 - Articles of Incorporation and Bylaws (Articles of
Incorporation of the Company, as amended, and Bylaws of the
Company (filed as Exhibits 3.1 and 3.2 to Registrant's Form 10-K
for the fiscal year ended December 31, 1989, and incorporated
herein by reference).
Exhibit 13 - 1998 Annual Report to Stockholders
Exhibit 21 - Subsidiaries of the Registrant
Exhibit 23.1 - Consent of PricewaterhouseCoopers LLP
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant during the last
quarter of the period covered by this report.
ARNOLD INDUSTRIES, INC. AND SUBSIDIARIES
Schedule II
Valuation and Qualifying Accounts and Reserves
for the years ended December 31, 1998, 1997 and 1996
Additions
Balance at Charged to Charged to
beginning costs and other Balance at
Description of period expenses accounts<FN1> Deductions end of year
<FN2>
Year ended December 31, 1998
Allowance for doubtful accounts $ 1,340,028 $ 536,367 $221,223 $ 913,471 $ 1,184,147
Estimated liability for claims $20,185,754 $13,494,337 - $17,887,178 $15,792,913
Year ended December 31, 1997
Allowance for doubtful accounts $ 1,724,106 $ 821, 238 $194,215 $ 1,399,531 $ 1,340,028
Estimated liability for claims $20,140,931 $14,935,706 - $14,890,883 $20,185,754
Year ended December 31, 1996
Allowance for doubtful accounts $ 1,108,051 $ 1,232,565 $ 94,245 $ 710,755 $ 1,724,106
Estimated liability for claims $15,235,791 $17,666,656 - $12,878,516 $20,140,931
<FN1> Recoveries
<FN2> Accounts deemed to be uncollectible and charged to allowance for
doubtful accounts and payments made for estimated liability for
claims.
</FN>
Report of Independent Accountants on
Financial Statement Schedules
To the Board of Directors
of Arnold Industries, Inc.
Our audits of the consolidated financial statements referred to in our report
dated March 5, 1999 appearing on page 17 of the 1998 Annual Report to
Shareholders of Arnold Industries, Inc. (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the financial statement schedule listed
in item 14(a)(2) of this Form 10-K. In our opinion, this financial statement
schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
PricewaterhouseCoopers LLP
One South Market Square
Harrisburg, Pennsylvania
March 5, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on March 31, 1999.
ARNOLD INDUSTRIES, INC.
By /s/ E. H. Arnold
E. H. Arnold, President
By /s/ Ronald E. Walborn
Ronald E. Walborn
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, the
report has been signed by the following persons in their capacities as indicated
below.
Name Date
/s/ E. H. Arnold March 31, 1999
E. H. Arnold
President and Director
/s/ Kenneth F. Leedy March 31, 1999
Kenneth F. Leedy
Executive Vice President and Director
/s/ Ronald E. Walborn March 31, 1999
Ronald E. Walborn
Treasurer and Director
/s/ Heath L. Allen March 31, 1999
Heath L. Allen
Secretary and Director
INDEX TO EXHIBITS
Sequential
Page No.
Exhibit 13 - 1998 Annual Report to Stockholders 21
Exhibit 21 - Subsidiaries of Registrant 49
Exhibit 23.1 - Consent of PricewaterhouseCoopers LLP 50
Exhibit 27 - Financial Data Schedule 51