UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ x ] Quarterly report under Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1995
-------------
OR
[ ] Transition report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number 1-10659
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ROBERTSON-CECO CORPORATION
- ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3479146
---------------------------------- --------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
222 Berkeley Street, Boston, Massachusetts 02116
- ------------------------------------------ --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-424-5500
------------
Indicate by check mark whether 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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 31, 1995
- --------------------------------------- ----------------------------
Common Stock, par value $0.01 per share 16,098,618
ROBERTSON-CECO CORPORATION
Form 10-Q
---------
For Quarter Ended June 30, 1995
-------------------------------
INDEX
=====
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets --
June 30, 1995 and December 31, 1994 . . . . . . . . . 3
Condensed Consolidated Statements of Operations
And Retained Earnings (Deficit) -- Three and
Six Months Ended June 30, 1995 and 1994 . . . . . . . 5
Condensed Consolidated Statements of Cash Flows --
Six Months Ended June 30, 1995 and 1994 . . . . . . . 7
Notes to Condensed Consolidated Financial
Statements. . . . . . . . . . . . . . . . . . . . . . 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . .13
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . .25
Item 4. Submission of Matters to a Vote of Security
Stockholders. . . . . . . . . . . . . . . . . . . . .25
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . .25
Signatures. .. . . . . . . . . . . . . . . . . . . . . . . . . . .26
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . . .27
ITEM 1. FINANCIAL STATEMENTS
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(In thousands, except share data)
(Unaudited)
June 30 December 31
1995 1994
----------- -----------
-- ASSETS --
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . $ 12,020 $ 7,890
Restricted cash . . . . . . . . . . . . . 431 2,478
Accounts and notes receivable, net. . . . 43,171 41,382
-------- --------
Inventories:
Work in process . . . . . . . . . . . . 8,952 6,211
Material and supplies . . . . . . . . . 10,042 11,614
-------- --------
Total inventories . . . . . . . . . . . 18,994 17,825
-------- --------
Net assets held for sale. . . . . . . . . - 4,664
Other current assets. . . . . . . . . . . 2,002 2,056
-------- --------
Total current assets. . . . . . . . . . 76,618 76,295
-------- --------
PROPERTY - at cost . . . . . . . . . . . . . 42,140 39,927
Less accumulated depreciation . . . . . . (18,600) (17,332)
-------- --------
Property, net . . . . . . . . . . . . . 23,540 22,595
-------- --------
ASSETS HELD FOR SALE . . . . . . . . . . . . 735 992
-------- --------
EXCESS OF COST OVER NET ASSETS OF
ACQUIRED BUSINESSES - NET. . . . . . . . 27,853 28,267
-------- --------
OTHER NON-CURRENT ASSETS . . . . . . . . . . 9,088 9,251
-------- --------
TOTAL ASSETS . . . . . . . . . . . . . . $137,834 $137,400
======== ========
See Notes to Condensed Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
-------------------------------------------------
(In thousands, except share data)
(Unaudited)
June 30 December 31
1995 1994
----------- -----------
-- LIABILITIES --
CURRENT LIABILITIES:
Loans payable and current portion of
long-term debt. . . . . . . . . . . . . $ 604 $ 134
Accounts payable, principally trade . . . 22,816 25,168
Insurance liabilities . . . . . . . . . . 10,616 8,365
Other accrued liabilities . . . . . . . . 37,468 32,802
--------- ---------
Total current liabilities . . . . . . . . 71,504 66,469
LONG-TERM DEBT, less current portion . . . . 42,122 43,421
LONG-TERM INSURANCE LIABILITIES. . . . . . . 13,019 15,084
LONG-TERM PENSION LIABILITIES. . . . . . . . 13,914 16,265
RESERVES AND OTHER LIABILITIES . . . . . . . 27,323 31,854
--------- ---------
TOTAL LIABILITIES. . . . . . . . . . . . . . 167,882 173,093
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, par value $0.01 per share . 161 161
Capital surplus . . . . . . . . . . . . . 172,031 172,089
Warrants. . . . . . . . . . . . . . . . . 6,042 6,042
Retained earnings (deficit) . . . . . . . (193,333) (199,279)
Excess of additional pension liability
over unrecognized prior service cost. . (7,991) (7,991)
Deferred compensation . . . . . . . . . . (423) (508)
Foreign currency translation
adjustments . . . . . . . . . . . . . . (6,535) (6,207)
--------- ---------
Stockholders' equity (deficiency) . . . (30,048) (35,693)
--------- ---------
TOTAL LIABILITIES AND STOCK-
HOLDERS' EQUITY (DEFICIENCY). . . . $ 137,834 $ 137,400
========= =========
See Notes to Condensed Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND RETAINED EARNINGS (DEFICIT)
------------------------------------------
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------ -------------------
1995 1994 1995 1994
-------- -------- --------- ---------
REVENUES:
Net product sales . . . . . . . $ 70,659 $ 73,151 $134,913 $129,969
Construction and other
services . . . . . . . . . . . 4,244 11,270 9,709 16,942
-------- -------- -------- --------
Total . . . . . . . . . . . . 74,903 84,421 144,622 146,911
-------- -------- -------- --------
COSTS AND EXPENSES:
Product costs . . . . . . . . . 57,858 61,587 111,744 112,688
Construction and other
services . . . . . . . . . . . 4,509 10,264 9,908 15,826
-------- -------- -------- --------
Cost of sales . . . . . . . . 62,367 71,851 121,652 128,514
Selling, general and
administrative . . . . . . . . 10,154 11,692 19,168 22,282
Restructuring expense . . . . . - 147 - 1,047
-------- -------- -------- --------
Total . . . . . . . . . . . . 72,521 83,690 140,820 151,843
-------- -------- -------- --------
OPERATING INCOME (LOSS). . . . . 2,382 731 3,802 (4,932)
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense. . . . . . . . (1,115) (1,162) (2,231) (2,290)
Other income (expense)-net. . . 211 213 530 502
-------- -------- -------- --------
Total . . . . . . . . . . . . (904) (949) (1,701) (1,788)
-------- -------- -------- --------
INCOME (LOSS) BEFORE PROVISION
FOR TAXES ON INCOME . . . . . . 1,478 (218) 2,101 (6,720)
PROVISION FOR TAXES ON INCOME. . 59 90 110 150
-------- -------- -------- --------
INCOME (LOSS) - CONTINUING
OPERATIONS. . . . . . . . . . . 1,419 (308) 1,991 (6,870)
DISCONTINUED OPERATIONS:
Income from discontinued
operations . . . . . . . . . . - 1,226 505 2,277
Gain on sale of business
segment. . . . . . . . . . . . - - 3,450 -
-------- -------- -------- --------
Income from discontinued
operations. . . . . . . . . . . - 1,226 3,955 2,277
-------- -------- -------- --------
NET INCOME (LOSS). . . . . . . . $ 1,419 $ 918 $ 5,946 $ (4,593)
======== ======== ======== ========
See Notes to Condensed Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND RETAINED EARNINGS (DEFICIT) (CONTINUED)
------------------------------------------------------
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------- ---------------------
1995 1994 1995 1994
-------- -------- --------- ---------
RETAINED EARNINGS (DEFICIT)
AT BEGINNING OF PERIOD. . . .$(194,752) $(183,030) $(199,279)$(177,519)
NET INCOME (LOSS). . . . . . . 1,419 918 5,946 (4,593)
--------- --------- --------- ---------
RETAINED EARNINGS (DEFICIT)
AT END OF PERIOD. . . . . . $(193,333) $(182,112) $(193,333)$(182,112)
========= ========= ========= =========
NET INCOME (LOSS) PER COMMON
SHARE:
Continuing Operations . . .$ .09 $ (.02) $ .12 $ (.44)
Discontinued Operations . . - .08 .25 .15
--------- --------- --------- ---------
NET INCOME (LOSS). . . . . . .$ .09 $ .06 $ .37 $ (.29)
========= ========= ========= =========
SHARES USED IN INCOME (LOSS)
PER SHARE CALCULATION . . . . 16,097 16,229 16,110 15,773
========= ========= ========= =========
See Notes to Condensed Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(In thousands)
(Unaudited)
Six Months Ended
June 30
------------------------
1995 1994
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss). . . . . . . . . . . . . . $ 5,946 $ (4,593)
Adjustments to reconcile net income (loss)
to net cash provided by (used for)
operating activities:
Depreciation and amortization . . . . . . 2,001 2,651
Amortization of discount on debentures
and debt issuance costs . . . . . . . . 618 619
Gain on sale of business segment. . . . . (3,450) -
Provisions for:
Bad debts and losses on erection
contracts . . . . . . . . . . . . . . 378 1,894
Rectification and other costs . . . . . 728 1,224
Restructuring expense . . . . . . . . . - 1,047
Changes in assets and liabilities,
net of divestitures:
(Increase) decrease in accounts and
notes receivable. . . . . . . . . . . (2,748) (8,329)
(Increase) decrease in inventories. . . (1,407) 3,020
(Increase) decrease in restricted
cash. . . . . . . . . . . . . . . . . 2,047 (134)
Increase (decrease) in accounts
payable, principally trade . . . . . (2,126) (8,680)
Increase (decrease) in other current
liabilities . . . . . . . . . . . . . 5,167 (4,317)
Net changes in other assets and
liabilities . . . . . . . . . . . . . (9,234) (3,335)
-------- --------
Net cash provided by (used for)
operating activities. . . . . . . . . . (2,080) (18,933)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . (2,748) (1,923)
Proceeds from sales of property, plant
and equipment. . . . . . . . . . . . . . . 183 210
Proceeds from sales of businesses. . . . . . 8,000 -
Proceeds from assets held for sale . . . . . 251 3,014
-------- --------
Net cash provided by (used for)
investing activities. . . . . . . . . . $ 5,686 $ 1,301
-------- --------
See Notes to Condensed Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
-----------------------------------------------------------
(In thousands)
(Unaudited)
Six Months Ended
June 30
------------------------
1995 1994
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (payments on) short-
term borrowings. . . . . . . . . . . . . . $ 511 $ 2,600
Proceeds from long-term borrowings . . . . . 130 -
Payments on long-term borrowings . . . . . . (75) (150)
-------- --------
Net cash provided by (used for)
financing activities. . . . . . . . . . 566 2,450
-------- --------
Effect of foreign exchange rate changes
on cash . . . . . . . . . . . . . . . . . (42) 127
-------- --------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . 4,130 (15,055)
Cash and cash equivalents - beginning
of period . . . . . . . . . . . . . . . 7,890 15,666
-------- --------
Cash and cash equivalents - end of
period. . . . . . . . . . . . . . . . . $ 12,020 $ 611
======== ========
SUPPLEMENTAL CASH FLOW DATA:
Cash payments made for:
Interest. . . . . . . . . . . . . . . . $ 1,518 $ 3,396
======== ========
Income taxes. . . . . . . . . . . . . . $ 8 $ 3
======== ========
See Notes to Condensed Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- ----------------------------------------------------------------
1. BASIS OF PRESENTATION
---------------------
In the opinion of Robertson-Ceco Corporation (the "Company"),
the accompanying unaudited Condensed Consolidated Financial
Statements contain all adjustments necessary to present fairly
the financial position as of June 30, 1995, and the results of
operations and cash flows for the periods presented. All
adjustments recorded during the period consisted of normal
recurring adjustments. The Condensed Consolidated Statement
of Operations for the three and six months ended June 30, 1994
has been reclassified to reflect the sale of the Concrete
Construction Division as a discontinued operation (Note 2).
Certain other previously reported amounts have been
reclassified to conform to the 1995 presentation.
2. DISPOSITIONS
------------
On December 27, 1994, the Company sold the business and assets
of its remaining U.S. Building Products operation, the Cupples
Products Division (the "Cupples Division"), which manufactures
curtainwall systems. The operating results and cash flows for
the Cupples Division are included in the accompanying
Condensed Consolidated Financial Statements for the three and
six months ended June 30, 1994. During the three and six
months ended June 30, 1994, the Cupples Division recorded
revenues of $2,900,000 and $5,500,000, respectively, and
losses from continuing operations of $1,100,000 and
$3,200,000, respectively.
During the third quarter of 1994, the Company decided to sell
or dispose of its three remaining European Building Products
subsidiaries (the "European Operations") which were located in
Spain, Holland and Norway. On June 27, 1995, the Company sold
its subsidiary located in Holland, and on July 31, 1995, the
Company sold its subsidiary located in Spain. The Company is
currently negotiating the sale of its subsidiary located in
Norway. These transactions are not expected to have a
material effect on the Company's Consolidated Financial
Statements. For purposes of the June 30, 1995 and December
31, 1994 Condensed Consolidated Balance Sheets, the assets and
liabilities of the then remaining European Operations are
netted and presented within other liabilities. The operating
results and cash flows of the European Operations are included
in the accompanying Condensed Consolidated Financial
Statements for the three and six months ended June 30, 1994
and excluded for the three and six months ended June 30, 1995.
The European operations recorded revenues of $7,200,000 and
$11,000,000, during the three and six months ended June 30,
1994, respectively, and losses from continuing operations of
$300,000 and $1,000,000 during the three and six months ended
June 30, 1994, respectively.
On March 3, 1995, the Company sold the business and assets of
its Concrete Construction Division (the "Concrete Division")
to Ceco Concrete Construction Corp., a newly formed company
owned by an entity controlled by the Company's Chief Executive
Officer. The Concrete Division represented one of the
Company's business segments and accordingly, the results of
operations for all periods presented have been reclassified to
reflect the Concrete Division as a discontinued operation.
The Concrete Division recorded revenues and income of
$11,100,000 and $505,000, respectively, during the period from
January 1, 1995 through March 3, 1995. During the three
months ended June 30, 1994, the Concrete Division recorded
revenues and income of $16,700,000 and $1,200,000,
respectively. During the six months ended June 30, 1994, the
Concrete Division recorded revenues and income of $30,200,000
and $2,300,000, respectively. For purposes of the December
31, 1994 Condensed Consolidated Balance Sheet, the assets and
liabilities of the Concrete Division were netted and
classified as assets held for sale - current.
3. OTHER CURRENT LIABILITIES
-------------------------
Other current liabilities consisted of the following:
June 30 December 31
1995 1994
--------- -----------
(Thousands)
Payroll and related benefits. . . . .$15,346 $11,778
Warranty and backcharge reserves. . . 3,278 3,367
Deferred revenues . . . . . . . . . . 2,622 1,778
Reserves for restructuring. . . . . . 1,554 2,460
Accrued interest . . . . . . . . . . 3,416 1,804
Other . . . . . . . . . . . . . . . . 11,252 11,615
------- -------
Total . . . . . . . . . . . . . . . .$37,468 $32,802
======= =======
4. COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company filed suit in state court in Iowa against the
owner, general contractor and a subcontractor seeking payment
of amounts owed to the Company and other damages in connection
with a pre-engineered metal building project in Anchorage,
Alaska. The general contractor subsequently filed suit in
state court in Alaska against a number of parties, including
the Company and its surety, alleging against the Company
breach of contract, breach of implied warranties,
misrepresentation and negligence in connection with the
fabrication of the building and seeking damages in excess of
$10.0 million. The Company believes that it is entitled to
payment under its contract and that it has meritorious
defenses against the claims of the general contractor.
There are various other proceedings pending against or
involving the Company which are ordinary or routine given the
nature of the Company's business. The Company has recorded a
liability related to litigation where it is both probable that
a loss will be incurred and the amount of the loss can be
reasonably estimated. While the outcome of the Company's legal
proceedings cannot at this time be predicted with certainty,
management does not expect that these matters will have a
material adverse effect on the consolidated financial
condition or results of operations of the Company.
The Company has been identified as a potentially responsible
party by various federal and state authorities for clean-up at
various waste disposal sites. While it is often difficult to
reasonably quantify future environmental related expenditures,
the Company has engaged various third parties to perform
feasibility studies and assist in estimating the cost of
investigation and remediation. The Company's policy is to
accrue environmental and clean-up related costs of a
non-capital nature when it is both probable that a liability
has been incurred and that the amount can be reasonably
estimated. Based upon currently available information,
including the reports of third parties, management does not
believe that the reasonably possible loss in excess of the
amounts accrued would be material to the consolidated
financial statements.
In connection with the settlement of a construction contract
dispute, on March 3, 1995 the Company entered into an
agreement which provides that (i) at least 30% of the
ownership of the common stock of the Company must be held
jointly by the current Chairman of the Company, who currently
controls approximately 34% of the outstanding common stock and
the current Chief Executive Officer and Vice Chairman of the
Company, who currently controls approximately 21% of the
outstanding common stock and (ii) either or both must continue
as chief executive officer and/or chairman of the Company. In
the event such common stock ownership and executive officers
are not maintained, the Company will be required to make
immediate payment of the remaining unpaid settlement amount
which was $6,500,000 at June 30, 1995, rather than the
scheduled $250,000 quarterly payments.
On a worldwide basis at June 30, 1995, excluding the European
Operations, the Company had outstanding performance and
financial bonds in the aggregate amount of $28,225,000, which
generally provide a guarantee as to the Company's performance
under contracts and other commitments. Certain of such bonds
are collateralized in part by letter of credit programs and
certain of such bonds are issued under foreign credit
facilities.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Dispositions
- ------------
On December 27, 1994, the Company sold the business and assets of
its remaining U.S. Building Products operation, the Cupples
Products Division (the "Cupples Division"). The operating results
and cash flows for the Cupples Division are included in the
accompanying Condensed Consolidated Financial Statements for the
three and six months ended June 30, 1994.
During the third quarter of 1994, the Company decided to sell or
dispose of its three remaining European Building Products
subsidiaries (the "European Operations") which were located in
Spain, Holland and Norway. On June 27, 1995, the Company sold its
subsidiary located in Holland, and on July 31, 1995, the Company
sold its subsidiary located in Spain. The Company is currently
negotiating the sale of its subsidiary located in Norway. These
transactions are not expected to have a material effect on the
Company's Consolidated Financial Statements. The operating results
and cash flows of the then remaining European Operations are
included in the accompanying Condensed Consolidated Financial
Statements for the three and six months ended June 30, 1994 and
excluded for the three and six months ended June 30, 1995.
On March 3, 1995, the Company sold the business and assets of its
Concrete Construction Division (the "Concrete Division") to Ceco
Concrete Construction Corp., a newly formed company owned by an
entity controlled by the Company's Chief Executive Officer. The
Concrete Division represented one of the Company's business
segments and, accordingly, the results of operations for all
periods presented have been reclassified to reflect the Concrete
Division as a discontinued operation.
As a result of the sales and dispositions noted above, the
Company's ongoing businesses currently include the Metal Buildings
Group, which has sales and operations primarily throughout North
America and, to a lesser extent, the Far East, and its Building
Products Group, which has sales and operations primarily throughout
the Asia/Pacific region and, to a lesser extent, Canada (the above
hereinafter referred to as the "Continuing Businesses"). See Note
2 of Notes to Condensed Consolidated Financial Statements for
additional financial information with respect to businesses which
have been sold or are held for sale. The Company considers its
businesses to be seasonal in nature and operating results are
affected, in part, by the severity of weather conditions.
Overview of Results of Operations
- ---------------------------------
Revenues for the second quarter of 1995 of $74.9 million decreased
$9.5 million or 11.3% from the second quarter of 1994. During the
six months ended June 30, 1995, revenues were $144.6 million, a
decrease of $2.3 million or 1.6% compared to the same period in
1994. The decrease in revenues reflects the exclusion of the
Cupples Division and the European Operations from the 1995
operating results, offset in part by higher revenues at the
Company's Metal Buildings Group. The Company's gross margin
percentage was approximately 16.7% in the second quarter of 1995
compared to 14.9% in 1994. On a year-to-date basis, the gross
margin percentage was 15.9% in 1995 compared with 12.5% in 1994.
The improvement in the Company's gross margin percentage is
primarily due to the exclusion of the Cupples Division from the
1995 operating results and higher margins at the Company's Metal
Buildings Group resulting from improved selling prices and
efficiencies associated with higher volumes.
Selling, general and administrative expenses decreased by $1.5
million in the second quarter of 1995 compared to the same quarter
of 1994 and during the six months ended June 30, 1995, selling,
general and administrative expenses decreased by $3.1 million,
compared to the same period in 1994. The decrease in selling,
general and administrative expenses is primarily a result of
excluding the Cupples Division and European Operations from the
1995 operating results, offset in part by higher post-retirement
medical expenses at Corporate associated with certain benefit
curtailment charges.
During the three and six months ended June 30, 1994, the Company
recorded restructuring charges of $.1 million and $1.0 million,
respectively, reflecting primarily severances associated with
workforce reductions at the Cupples Division.
Interest expense for the quarters ended June 30, 1995 and June 30,
1994 was $1.1 million and $1.2 million, respectively. Year-to-date
interest expense was $2.2 million in 1995 compared to $2.3 million
in 1994.
Other income (expense) - net for each of the quarters ended June
30, 1995 and June 30, 1994 totalled $.2 million. On a year-to-date
basis, other income (expense) - net was $.5 million during 1995 and
1994.
Income from continuing operations was $1.4 million during the
second quarter of 1995 compared to a loss of $.3 million during the
same period of 1994. On a year-to-date basis, income from
continuing operations was $2.0 million in 1995, compared to a loss
of $6.9 million in 1994.
Net income (loss) during the three and six month periods ended June
30, 1995 was $1.4 million and $5.9 million, respectively, compared
with $.9 million and $(4.6) million, respectively, during the three
and six months ended June 30, 1994. Year-to-date net income during
1995 includes income from the discontinued Concrete Division of $.5
million and a $3.5 million gain resulting from the sale of the
Concrete Division. Net income for the three and six months ended
June 30, 1994 includes income from the discontinued Concrete
Division of $1.2 million and $2.3 million, respectively.
The financial information presented in the tables below includes
certain financial information concerning the Company's operations
as it is presented in the Condensed Consolidated Financial
Statements of the Company and provides certain unaudited pro forma
information relating to the Company's Continuing Businesses.
Adjustments for Businesses Sold/Held for Sale reflect the exclusion
of the operating results for the periods indicated of the Company's
businesses which have been sold or are currently in the process of
sale or disposal. Results of the Concrete Division are excluded,
as this business is accounted for as a discontinued operation. The
pro forma operating results are not necessarily indicative of what
the Company's actual results would have been had such transactions
occurred at the beginning of the periods presented and are not
necessarily indicative of the financial condition or results of
operations for any future period or date.
Quarter Ended Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Revenue:
Metal Buildings. . . . . $66,418 $ 66,124 $127,345 $116,631
Building Products. . . . 8,485 19,326 17,277 31,309
Intersegment
Eliminations . . . . . - (1,029) - (1,029)
------- -------- -------- --------
As Reported. . . . . . . 74,903 84,421 144,622 146,911
Businesses Sold/Held
for Sale. . . . . . . . - (10,105) - (16,494)
------- -------- -------- --------
Pro Forma Continuing
Businesses. . . . . . . $74,903 $ 74,316 $144,622 $130,417
======= ======== ======== ========
Quarter Ended Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Cost of Sales:
Metal Buildings. . . . . $54,463 $ 55,794 $105,885 $101,381
Building Products. . . . 7,904 17,086 15,767 28,162
Intersegement
Eliminations. . . . . . - (1,029) - (1,029)
------- -------- -------- --------
As Reported. . . . . . . 62,367 71,851 121,652 128,514
Businesses Sold/Held
for Sale. . . . . . . . - (9,343) - (15,695)
------- -------- -------- --------
Pro Forma Continuing
Businesses. . . . . . . $62,367 $ 62,508 $121,652 $112,819
======= ======== ======== ========
Quarter Ended Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Selling, General and
Administrative Expense:
Metal Buildings. . . . . $ 5,862 $ 5,706 $11,293 $10,473
Building Products. . . . 1,442 3,421 3,017 6,758
Corporate. . . . . . . . 2,850 2,565 4,858 5,051
------- ------- ------- -------
As Reported. . . . . . . 10,154 11,692 19,168 22,282
Businesses Sold/Held
for Sale. . . . . . . . - (1,871) - (3,808)
------- ------- ------- -------
Pro Forma Continuing
Businesses. . . . . . . $10,154 $ 9,821 $19,168 $18,474
======= ======= ======= =======
Quarter Ended Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Restructuring Expense:
Metal Buildings. . . . . $ - $ - $ - $ -
Building Products. . . . - 147 - 1,047
Corporate. . . . . . . . - - - -
------- ------- ------- -------
As Reported. . . . . . . - 147 - 1,047
Businesses Sold/Held
for Sale. . . . . . . . - - - (900)
------- ------- ------- -------
Pro Forma Continuing
Businesses. . . . . . . $ - $ 147 $ - $ 147
======= ======= ======= =======
Quarter Ended Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Operating Income:
Metal Buildings. . . . . $ 6,093 $ 4,624 $10,167 $ 4,777
Building Products. . . . (861) (1,328) (1,507) (4,658)
Corporate. . . . . . . . (2,850) (2,565) (4,858) (5,051)
------- ------- ------- -------
As Reported. . . . . . . 2,382 731 3,802 (4,932)
Businesses Sold/Held
for Sale. . . . . . . . - 1,109 - 3,909
------- ------- ------- -------
Pro Forma Continuing
Businesses. . . . . . . $ 2,382 $ 1,840 $ 3,802 $(1,023)
======= ======= ======= =======
Quarter Ended Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Interest Expense:
As Reported. . . . . . . $ 1,115 $ 1,162 $ 2,231 $ 2,290
Businesses Sold/Held
for Sale. . . . . . . . - (111) - (194)
------- ------- ------- -------
Pro Forma Continuing
Businesses. . . . . . . $ 1,115 $ 1,051 $ 2,231 $ 2,096
======= ======= ======= =======
Quarter Ended Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Income (Loss) from
Continuing Operations:
Metal Buildings. . . . . $ 6,078 $ 4,724 $10,333 $ 5,039
Building Products. . . . (841) (1,491) (1,447) (4,916)
Corporate (including
domestic interest
expense). . . . . . . . (3,818) (3,541) (6,895) (6,993)
------- ------- ------- -------
As Reported. . . . . . . 1,419 (308) 1,991 (6,870)
Businesses Sold/Held
for Sale. . . . . . . . - 1,343 - 4,169
------- ------- ------- -------
Pro Forma Continuing
Businesses. . . . . . . $ 1,419 $ 1,035 $ 1,991 $(2,701)
======= ======= ======= =======
The following sections highlight the Company's operating results on
a segment basis and provide information on non-operating income and
expenses.
Metal Buildings Group
- ---------------------
Metal Buildings Group revenues increased by $.3 million or .4% in
the second quarter of 1995 compared to the same period in 1994.
During the first six months of 1995, revenues at the Metal
Buildings Group increased by $10.7 million or 9.2% compared to the
same period in 1994. The year-to-date increase in revenue reflects
primarily improved market conditions in the U.S. and favorable
weather conditions in the first quarter of 1995 compared to the
first quarter of 1994. Operating income at the Metal Buildings
Group was $6.1 million during the second quarter of 1995, compared
to $4.6 million during the second quarter of 1994, an increase of
$1.5 million or 31.8%. On a year-to-date basis, Metal Buildings
Group operating income was $10.2 million and $4.8 million during
1995 and 1994, respectively, an increase of $5.4 million. The
increase in operating profits during the second quarter resulted
from cost reduction programs which have been initiated and improved
selling prices resulting from strong market demand. On a year-to-
date basis, operating profits were favorably affected by higher
revenues and favorable weather conditions experienced in the first
quarter, offset in part by higher selling, general and
administrative costs associated with higher sales volumes and costs
associated with the implementation of new information systems and
decentralization initiatives currently in process.
Building Products Group
- -----------------------
Building Products Group revenues decreased by $10.8 million or
56.1% in the second quarter of 1995 compared to the same period in
1994. On a year-to-date basis, 1995 revenues decreased by $14.0
million or 44.8% compared to the same period of 1994. The
decreases in revenue are primarily a result of excluding the
revenues of the Cupples Division and European Operations from the
Company's 1995 operating results. The Cupples Division and
European Operations recorded combined revenues of $10.1 million and
$16.5 million, respectively, during the three and six months ended
June 30, 1994. Excluding the effect of the Cupples Division and
European Operations, revenues in the quarter ended June 30, 1995
decreased $.7 million from the comparable period of 1994. This
decrease is due to lower revenue levels at the Company's
Asia/Pacific operations, offset in part by higher revenues at the
Company's Canadian operations. On a year-to-date basis, excluding
the effect of the Cupples Division and European Operations,
revenues during the six months ended June 30, 1995 increased $2.5
million from the comparable period of 1994. This increase is
primarily due to higher revenue levels at the Company's Canadian
operations.
For the quarter ended June 30, 1995, the Building Products Group
recorded an operating loss of $.9 million compared with an
operating loss of $1.3 million in the second quarter of 1994. On
a year-to-date basis, the operating losses were $1.5 million and
$4.7 million in 1995 and 1994, respectively. The operating losses
for the three and six months ended June 30, 1994 include
restructuring charges of $.1 million and $1.0 million,
respectively, related primarily to workforce reductions at the
Company's former Cupples Division. The operating losses in the
three and six months ended June 30, 1994 include operating losses
of the Cupples Division and European Operations totalling $1.1
million and $3.9 million, respectively. Excluding the effect of
the operating losses of the Cupples Division and the European
Operations, second quarter operating losses were $.9 million in
1995 compared to $.2 million in 1994. On a year-to-date basis,
excluding the Cupples Division and European Operations, the
Building Products Group incurred operating losses of $1.5 million
and $.7 million during 1995 and 1994, respectively. The increase
in operating losses during 1995 is primarily due to lower revenues
and margins at the Company's Asia/Pacific operations which are
primarily attributable to lower than anticipated bookings due to
both heavy competition and delays in the awarding of anticipated
projects.
Backlog of Orders
- -----------------
At June 30, 1995, the backlog of unfilled orders believed to be
firm for the Company's ongoing businesses was approximately $112.6
million. On a comparable basis, adjusted for the sale of the
Concrete Division, the Cupples Division and the European
Operations, which had a combined backlog at June 30, 1994 of
approximately $76.2 million, the order backlog was approximately
$105.3 million at June 30, 1994.
Litigation
- ----------
The Company filed suit in state court in Iowa against the owner,
general contractor and a subcontractor seeking payment of amounts
owed to the Company and other damages in connection with a pre-
engineered metal building project in Anchorage, Alaska. The
general contractor subsequently filed suit in state court in Alaska
against a number of parties, including the Company and its surety,
alleging against the Company breach of contract, breach of implied
warranties, misrepresentation and negligence in connection with the
fabrication of the building and seeking damages in excess of $10.0
million. The Company believes that it is entitled to payment under
its contract and that it has meritorious defenses against the
claims of the general contractor.
There are various other proceedings pending against or involving
the Company which are ordinary or routine given the nature of the
Company's business. The Company has recorded a liability related to
litigation where it is both probable that a loss has been incurred
and the amount of the loss can be reasonably estimated. While the
outcome of the above matters cannot at this time be predicted with
certainty, management does not expect that these matters will have
a material adverse effect on the consolidated financial condition
or results of operations of the Company.
Environmental Matters
- ---------------------
The Company has been identified as a potentially responsible party
by various federal and state authorities for clean-up at various
waste disposal sites. While it is often extremely difficult to
reasonably quantify future environmental related expenditures, the
Company has engaged various third parties to perform feasibility
studies and assist in estimating the cost of investigation and
remediation. The Company's policy is to accrue environmental and
clean-up related costs of a non-capital nature when it is both
probable that a liability has been incurred and that the amount can
be reasonably estimated. Based upon currently available
information, including the reports of third parties, management
does not believe that the reasonably possible loss in excess of the
amounts accrued would be material to the consolidated financial
statements.
Liquidity and Capital Resources
- -------------------------------
During the six months ended June 30, 1995, the Company used
approximately $4.1 million of cash, including amounts which were
previously restricted, to fund its operating activities. The uses
of operating cash during the first six months of 1995 reflect
primarily the funding of working capital requirements,
restructuring initiatives, financing expenses and trailing
liabilities associated primarily with sold and discontinued
businesses.
In connection with the sale of the Concrete Division, on March 3,
1995 the Company received approximately $8.0 million of cash
proceeds. In addition, during the first six months of 1995, the
Company spent approximately $2.7 million on capital expenditures,
most of which were directed toward upgrading and improving
manufacturing equipment and information systems at the Company's
Metal Buildings Group. Cash provided by financing activities
during the period consisted primarily of short-term borrowings at
the Asia/Pacific operations of $.5 million which was provided under
credit facilities to assist in funding local working capital
requirements and operating losses. As a result, primarily of the
above, unrestricted cash and cash equivalents increased by $4.1
million during the period from December 31, 1994 to June 30, 1995.
At June 30, 1995, the Company had $12.0 million of unrestricted
cash and cash equivalents which consisted of $1.5 million of cash
and short-term investments located at foreign subsidiaries which is
available to fund local working capital requirements and $10.5
million of cash located in the U.S. which is available for general
business purposes.
The Company maintains a credit facility (the "Credit Facility")
with Foothill Capital Corporation which incorporates both the
Company's U.S. and Canadian operations, and which, under its terms,
has maximum availability of $45.0 million and expires on May 18,
1999. Availability under the Credit Facility is based on a
percentage of eligible (as defined and subject to certain
restrictions) accounts receivable and inventory, plus a base amount
(which base amount is reduced by $.2 million per month and is
subject to reduction in the case of sales of certain property,
plant and equipment, including assets held for sale), plus the
amount provided by the Company as cash collateral, if any, less the
amount of $5.0 million required to be outstanding under a term loan
(each together the "Borrowing Base"). At June 30, 1995, the
Borrowing Base was estimated to be $34.2 million which was used to
support the $5.0 million term loan and $28.4 million of outstanding
letters of credit and related guarantees which were used to support
primarily the Company's insurance programs, bonding programs,
trailing liabilities and certain foreign credit facilities. At
June 30, 1995, the Company had approximately $.8 million of
availability under the Credit Facility.
At June 30, 1995, the Asia/Pacific operations had outstanding
borrowings under its lines of credit of $.5 million and had issued
bank guarantees amounting to $1.7 million under its credit
facility. The Asia/Pacific operation's credit facility expired on
June 30, 1995, at which time a one month extension to the term of
the credit facility was granted by the lender. In July 1995, the
Asia/Pacific operation received a one year commitment from a new
bank for a facility consisting of an overdraft line of $1 million
and a bank guarantee line of $3.5 million. The new credit facility
is expected to be funded in the third quarter of 1995, and the
Company anticipates that the Asia/Pacific operation's current
lender will continue to provide financing to the operation until
the new credit facility is funded.
During the past several years, the Company has incurred significant
losses from continuing operations. The combination of these
operating losses, along with the funding required for restructuring
activities, trailing liabilities associated with sold and
discontinued businesses and substantial financing expenses have
placed a significant strain on the Company's liquidity and credit
resources. To respond to this situation, the Company has developed
and is executing a strategy to maximize cash flow and preserve cash
by selling non-strategic businesses which consume significant
liquidity, implementing cost reduction programs, deferring payment
of certain cash obligations, aggressively managing trailing
liabilities associated with sold and discontinued businesses and
reducing letter of credit collateral requirements.
The Company anticipates that demands on its liquidity and credit
resources will continue to be significant during the remainder of
1995 and the next several years as a result of funding requirements
for restructuring programs, nonrecurring cash obligations and
trailing liabilities associated with sold and discontinued
businesses. Beginning in November of 1995, the Company will be
required to pay its interest obligation on its 12% Senior
Subordinated Notes in cash (such interest is currently payable
through the issuance of additional notes) which will require a
payment of $1.4 million semiannually.
Additionally, on January 13, 1995, the Company filed an Application
for Waiver of Minimum Funding Standard with the Internal Revenue
Service (the "IRS") for certain of its U.S. defined benefit pension
plans for the plan years 1994 and 1995. If the request to waive
these contributions is accepted, the Company's pension funding
requirements for the calendar year ended December 31, 1995 of
approximately $6,400,000 will be deferred and such contributions
may be made ratably over a future period, depending on the
instructions of the IRS. Currently, the Company has not been
notified by the IRS as to the status of its Application for Waiver
of Minimum Funding Standard, nor has the Company made any
contributions during the six months ended June 30, 1995 with
respect to such plans where a waiver has been requested. In the
event that the request to waive these contributions is denied, the
Company may be required to immediately fund its past due
contributions.
The Company currently expects to meet its cash requirements through
a number of sources, including operating cash generated by the
Company's Metal Buildings Group, available cash which was $12.0
million at June 30, 1995, and availability under the Credit
Facility and foreign credit facilities. The Company's liquidity
projections are predicated on estimates as to the amount and timing
of the payment of the Company's trailing liabilities, letter of
credit requirements and expectations regarding the operating
performance of the Company's Continuing Businesses. In the event
the Company experiences significant differences as to the amount
and timing of the payment of the Company's trailing liabilities,
letter of credit requirements and/or the actual operating results
and cash flows of the Company's Continuing Businesses, the Company
may be required to seek additional capital through the expansion of
existing credit facilities or through new credit facilities, or
through a possible debt or equity offering, or a combination of the
above. There can be no assurance that such additional capital
would be available to the Company.
PART II
OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
Information describing certain of the Company's legal
proceedings and environmental matters is included in Part
1, Item 1, in Note 4 to the "Notes to Condensed
Consolidated Financial Statements," and in Part 1, Item 2,
in Management's Discussion and Analysis of Financial
Condition and Results of Operations under the captions
"Litigation" and Environmental Matters," and is hereby
incorporated by reference.
Item 4. Submission of Matters to a Vote of Security Stockholders
The Company's Annual Meeting (the "Annual Meeting") of
Stockholders was held on May 2, 1995. The matter voted on
was fully described in the Company's Proxy Statement dated
April 4, 1995 (the "Proxy Statement"), as filed with the
Commission on April 4, 1995. At the Annual Meeting, the
matter of the election of four directors each to serve as
Class II director for a term of three years was voted
upon. Each of such four directors was elected as follows:
Stanley G. Berman (15,315,071 votes for and 219,754 votes
withheld), L. Edwin Donegan (15,314,760 votes for and
220,066 votes withheld), Michael E. Heisley (15,313,513
votes for and 221,312 votes withheld) and E.A. Roskovensky
(15,314,690 votes for and 220,135 votes withheld). There
were no abstentions or broker non-votes with respect to
the election of such directors. In addition, the terms of
office as director of each of Mary Heidi Hall Jones, Frank
A. Benevento, II, Kevin E. Lewis, Leonids Rudins, Andrew
G.C. Sage, II and Gregg C. Sage continued after the Annual
Meeting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10 - Amendment No. 6 to Loan and Security
Agreement dated April 21, 1995, between Registrant
and Foothill Capital Corporation.
(b) Exhibit 11 - Computation of Earnings (Loss) per
Common Share, filed herewith.
SIGNATU RES
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.
ROBERTSON-CECO CORPORATION
--------------------------
(Registrant)
By: /s/ Thomas C. Baker
-----------------------------
Thomas C. Baker
Corporate Controller
August 11, 1995
- ---------------
ROBERTSON-CECO CORPORATION
EXHIBIT INDEX
--------------------------
EXHIBIT 10 - Amendment No. Six to the Loan and Security Agreement
EXHIBIT 11 - Computation of Earnings (Loss) Per Common Share