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 September 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 October 31, 1995
- ----------------------------------- -------------------------------
Common Stock, par value $0.01 per 16,213,618
share
ROBERTSON-CECO CORPORATION
Form 10-Q
---------
For Quarter Ended September 30, 1995
------------------------------------
INDEX
=====
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets --
September 30, 1995 and December 31, 1994. . . . . . . 3
Condensed Consolidated Statements of Operations
And Retained Earnings (Deficit) -- Three and
Nine Months Ended September 30, 1995 and 1994 . . . . 5
Condensed Consolidated Statements of Cash Flows --
Nine Months Ended September 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 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)
September 30 December 31
1995 1994
------------ -----------
-- ASSETS --
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . $ 18,155 $ 7,890
Restricted cash . . . . . . . . . . . . . 325 2,478
Accounts and notes receivable, net. . . . 42,269 41,382
-------- --------
Inventories:
Work in process . . . . . . . . . . . . 7,520 6,211
Material and supplies . . . . . . . . . 10,814 11,614
-------- --------
Total inventories . . . . . . . . . . . 18,334 17,825
-------- --------
Net assets held for sale. . . . . . . . . - 4,664
Other current assets. . . . . . . . . . . 2,628 2,056
-------- --------
Total current assets. . . . . . . . . . 81,711 76,295
-------- --------
PROPERTY - at cost . . . . . . . . . . . . . 43,426 39,927
Less accumulated depreciation . . . . . . (19,621) (17,332)
-------- --------
Property, net . . . . . . . . . . . . . 23,805 22,595
-------- --------
ASSETS HELD FOR SALE . . . . . . . . . . . . 477 992
-------- --------
EXCESS OF COST OVER NET ASSETS OF
ACQUIRED BUSINESSES - NET. . . . . . . . 27,646 28,267
-------- --------
OTHER NON-CURRENT ASSETS . . . . . . . . . . 8,706 9,251
-------- --------
TOTAL ASSETS . . . . . . . . . . . . . . $142,345 $137,400
======== ========
See Notes to Condensed Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
-------------------------------------------------
(In thousands, except share data)
(Unaudited)
September 30 December 31
1995 1994
------------ -----------
-- LIABILITIES --
CURRENT LIABILITIES:
Loans payable and current portion of
long-term debt. . . . . . . . . . . . . .$ 958 $ 134
Accounts payable, principally trade . . . . 23,066 25,168
Insurance liabilities . . . . . . . . . . . 10,275 8,365
Other accrued liabilities . . . . . . . . . 42,509 32,802
--------- ---------
Total current liabilities . . . . . . . . . 76,808 66,469
LONG-TERM DEBT, less current portion . . . . . 42,208 43,421
LONG-TERM INSURANCE LIABILITIES. . . . . . . . 12,141 15,084
LONG-TERM PENSION LIABILITIES. . . . . . . . . 8,815 16,265
RESERVES AND OTHER LIABILITIES . . . . . . . . 27,149 31,854
--------- ---------
TOTAL LIABILITIES. . . . . . . . . . . . . . . 167,121 173,093
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, par value $0.01 per share . . 162 161
Capital surplus . . . . . . . . . . . . . . 172,417 172,089
Warrants. . . . . . . . . . . . . . . . . . 6,042 6,042
Retained earnings (deficit) . . . . . . . . (188,579) (199,279)
Excess of additional pension liability
over unrecognized prior service cost. . . (7,991) (7,991)
Deferred compensation . . . . . . . . . . . (610) (508)
Foreign currency translation
adjustments . . . . . . . . . . . . . . . (6,217) (6,207)
--------- ---------
Stockholders' equity (deficiency) . . . . (24,776) (35,693)
--------- ---------
TOTAL LIABILITIES AND STOCK-
HOLDERS' EQUITY (DEFICIENCY). . . . .$ 142,345 $ 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 Nine Months Ended
September 30 September 30
------------------ -------------------
1995 1994 1995 1994
-------- -------- --------- ---------
REVENUES:
Net product sales . . . . . . . .$ 77,136 $ 74,772 $212,049 $204,741
Construction and other services . 6,145 9,076 15,854 26,018
-------- -------- -------- --------
Total . . . . . . . . . . . . . 83,281 83,848 227,903 230,759
-------- -------- -------- --------
COSTS AND EXPENSES:
Product costs . . . . . . . . . . 62,071 61,507 173,815 174,195
Construction and other services . 5,858 8,391 15,766 24,217
-------- -------- -------- --------
Cost of sales . . . . . . . . . 67,929 69,898 189,581 198,412
Selling, general and
administrative . . . . . . . . . 9,577 11,599 28,745 33,881
Restructuring expense . . . . . . - 2,078 - 3,125
-------- -------- -------- --------
Total . . . . . . . . . . . . . 77,506 83,575 218,326 235,418
-------- -------- -------- --------
OPERATING INCOME (LOSS). . . . . . 5,775 273 9,577 (4,659)
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense. . . . . . . . . (1,162) (1,250) (3,393) (3,540)
Loss on businesses sold/held
for sale. . . . . . . . . . . . - (9,800) - (9,800)
Other income (expense)-net. . . . 263 399 793 901
-------- -------- -------- --------
Total . . . . . . . . . . . . . (899) (10,651) (2,600) (12,439)
-------- -------- -------- --------
INCOME (LOSS) BEFORE PROVISION
FOR TAXES ON INCOME . . . . . . . 4,876 (10,378) 6,977 (17,098)
PROVISION FOR TAXES ON INCOME. . . 122 115 232 265
-------- -------- -------- --------
INCOME (LOSS) - CONTINUING
OPERATIONS. . . . . . . . . . . . 4,754 (10,493) 6,745 (17,363)
DISCONTINUED OPERATIONS:
Income (loss) from discontinued
operations . . . . . . . . . . . - (4,880) 505 (2,603)
Gain on sale of business
segment. . . . . . . . . . . . . - - 3,450 -
-------- -------- -------- --------
Income (loss) from discontinued
operations. . . . . . . . . . . . - (4,880) 3,955 (2,603)
-------- -------- -------- --------
NET INCOME (LOSS). . . . . . . . .$ 4,754 $(15,373) $ 10,700 $(19,966)
======== ======== ======== ========
See Notes to Condensed Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND RETAINED EARNINGS (DEFICIT) (CONTINUED)
------------------------------------------------------
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------------- ---------------------
1995 1994 1995 1994
-------- -------- --------- ---------
RETAINED EARNINGS (DEFICIT)
AT BEGINNING OF PERIOD. . . .$(193,333) $(182,112) $(199,279)$(177,519)
NET INCOME (LOSS). . . . . . . 4,754 (15,373) 10,700 (19,966)
--------- --------- --------- ---------
RETAINED EARNINGS (DEFICIT)
AT END OF PERIOD. . . . . . $(188,579) $(197,485) $(188,579)$(197,485)
========= ========= ========= =========
NET INCOME (LOSS) PER COMMON
SHARE:
Continuing Operations . . .$ .30 $ (.67) $ .42 $ (1.10)
Discontinued Operations . . - (.30) .25 (.17)
--------- --------- --------- ---------
NET INCOME (LOSS). . . . . . .$ .30 $ (.97) $ .67 $ (1.27)
========= ========= ========= =========
SHARES USED IN INCOME (LOSS)
PER SHARE CALCULATION . . . . 15,970 15,773 15,956 15,773
========= ========= ========= =========
See Notes to Condensed Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(In thousands)
(Unaudited)
Nine Months Ended
September 30
-----------------------
1995 1994
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss). . . . . . . . . . . . . . . $ 10,700 $(19,966)
Adjustments to reconcile net income (loss)
to net cash provided by (used for)
operating activities:
Depreciation and amortization . . . . . . . 3,012 3,963
Amortization of discount on debentures
and debt issuance costs . . . . . . . . . 927 936
Loss on sale of businesses sold/held
for sale. . . . . . . . . . . . . . . . . - 9,800
Gain on sale of business segment. . . . . . (3,450) -
Provisions for:
Bad debts and losses on erection
contracts . . . . . . . . . . . . . . . 559 2,443
Rectification and other costs . . . . . . 1,411 1,952
Restructuring expense . . . . . . . . . . - 3,125
Loss on discontinued operations . . . . . - 6,000
Changes in assets and liabilities,
net of divestitures:
(Increase) decrease in accounts and
notes receivable. . . . . . . . . . . . (1,465) (9,908)
(Increase) decrease in inventories. . . . (462) 1,054
(Increase) decrease in restricted cash. . 2,153 546
Increase (decrease) in accounts payable,
principally trade. . . . . . . . . . . (2,129) (8,188)
Increase (decrease) in other current
liabilities . . . . . . . . . . . . . . 8,882 (5,735)
Net changes in other assets and
liabilities . . . . . . . . . . . . . . (15,797) (3,358)
-------- --------
Net cash provided by (used for) operating
activities. . . . . . . . . . . . . . . . 4,341 (17,336)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . (3,715) (3,070)
Proceeds from sales of property, plant
and equipment. . . . . . . . . . . . . . . . 188 1,768
Proceeds from sales of businesses. . . . . . . 8,000 -
Proceeds from assets held for sale . . . . . . 515 3,597
-------- --------
Net cash provided by (used for)
investing activities. . . . . . . . . . . $ 4,988 $ 2,295
-------- --------
See Notes to Condensed Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
-----------------------------------------------------------
(In thousands)
(Unaudited)
Nine Months Ended
September 30
------------------------
1995 1994
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from (payments on) short-
term borrowings. . . . . . . . . . . . . . . $ 840 $ 2,529
Proceeds from long-term borrowings . . . . . . 219 -
Payments on long-term borrowings . . . . . . . (139) (868)
-------- --------
Net cash provided by (used for)
financing activities. . . . . . . . . . . 920 1,661
-------- --------
Effect of foreign exchange rate changes
on cash . . . . . . . . . . . . . . . . . . 16 207
-------- --------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . 10,265 (13,173)
Cash and cash equivalents - beginning
of period . . . . . . . . . . . . . . . . 7,890 15,666
-------- --------
Cash and cash equivalents - end of
period. . . . . . . . . . . . . . . . . . $ 18,155 $ 2,493
======== ========
SUPPLEMENTAL CASH FLOW DATA:
Cash payments made for:
Interest. . . . . . . . . . . . . . . . . $ 2,238 $ 3,862
======== ========
Income taxes. . . . . . . . . . . . . . . $ 11 $ 5
======== ========
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 September 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 nine
months ended September 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
nine months ended September 30, 1994. During the three and
nine months ended September 30, 1994, the Cupples Division
recorded revenues of $2,800,000 and $8,300,000, respectively,
and losses from continuing operations of $5,100,000 and
$8,300,000 respectively. The losses from continuing
operations for the three and nine months ended September 30,
1994 include a $4,800,000 loss recorded on the sale of the
Cupples Division.
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 September 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 nine
months ended September 30, 1994 and excluded for the three and
nine months ended September 30, 1995. The European operations
recorded revenues of $5,000,000 and $16,100,000, during the
three and nine months ended September 30, 1994, respectively.
The European Operations recorded losses from continuing
operations, including a $5,000,000 loss on sale of businesses
sold/held for sale, of $5,300,000 and $6,300,000 during the
three and nine months ended September 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 September 30, 1994, the Concrete Division
recorded revenues and income of $18,800,000 and $1,100,000,
respectively. During the nine months ended September 30,
1994, the Concrete Division recorded revenues and income of
$49,000,000 and $3,400,000, 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:
September 30 December 31
1995 1994
------------ -----------
(Thousands)
Payroll and related benefits. . . . $ 6,628 $ 6,751
Pension liabilities . . . . . . . . 13,993 5,027
Warranty and backcharge
reserves . . . . . . . . . . . . . 3,287 3,367
Deferred revenues . . . . . . . . . 2,584 1,778
Reserves for restructuring. . . . . 1,672 2,460
Accrued interest . . . . . . . . . 3,744 1,804
Other . . . . . . . . . . . . . . . 10,601 11,615
------- -------
Total . . . . . . . . . . . . . . . $42,509 $32,802
======= =======
4. COMMITMENTS AND CONTINGENCIES
-----------------------------
In the third quarter of 1995, the Company resolved and settled
disputed claims related to a pre-engineered metal building
project in Anchorage, Alaska. The outcome of these
settlements did not have a material adverse effect on the
consolidated financial condition or results of operations of
the Company.
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 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 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 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 $6,250,000 at September 30, 1995, rather than the
scheduled $250,000 quarterly payments.
On a worldwide basis at September 30, 1995, excluding the
European Operations, the Company had outstanding performance
and financial bonds in the aggregate amount of $28,239,000
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 nine months ended September 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 nine months ended September 30, 1994
and excluded for the three and nine months ended September 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 third quarter of 1995 of $83.3 million decreased
$.6 million or .7% from the third quarter of 1994. During the nine
months ended September 30, 1995, revenues were $227.9 million, a
decrease of $2.9 million or 1.2% 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 and remaining Building Products
Operations. The Company's gross margin percentage was
approximately 18.4% in the third quarter of 1995 compared to 16.6%
in 1994. On a year-to-date basis, the gross margin percentage was
16.8% in 1995 compared with 14.0% in 1994. The improvement in the
Company's gross margin percentage is primarily due to the exclusion
of the Cupples Division and European Operations 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 $2.0
million in the third quarter of 1995 compared to the same quarter
of 1994. The decrease in selling, general and administrative
expenses during the third quarter of 1995 compared to the third
quarter of 1994 is a result of excluding the Cupples Division and
European Operations from the 1995 operating results, as well as
headcount and other cost reduction measures taken at the Corporate
office. During the nine months ended September 30, 1995, selling,
general and administrative expenses decreased by $5.1 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 and lower costs at the Company's Corporate
office, offset in part by higher post-retirement medical expenses
at Corporate associated with certain benefit curtailment charges
and higher selling, general and administrative costs at the
Company's Metal Buildings Group resulting from higher revenue
levels, implementation of new information systems and
decentralization initiatives.
During the three and nine months ended September 30, 1994, the
Company recorded restructuring charges of $2.1 million and $3.1
million, respectively, reflecting primarily severances associated
with workforce reductions at the Cupples Division and Corporate
office.
During the third quarter of 1994, the Company recorded a charge of
$9.8 million to loss on businesses sold/held for sale in connection
with its plan to sell its Cupples Division and its European
Operations.
Interest expense for the quarter ended September 30, 1995 was $1.2
million compared to $1.3 million for the quarter ended September
30, 1994. Year-to-date interest expense was $3.4 million in 1995
compared to $3.5 million in 1994.
Other income (expense) - net for the third quarter of 1995 was $.3
million compared to $.4 million during the third quarter of 1994.
On a year-to-date basis, other income (expense) - net was $.8
million during 1995 and $.9 million in 1994.
Income from continuing operations was $4.8 million during the third
quarter of 1995 compared to a loss of $10.5 million during the same
period of 1994. On a year-to-date basis, income from continuing
operations was $6.7 million in 1995, compared to a loss of $17.4
million in 1994.
Net income (loss) during the three and nine month periods ended
September 30, 1995 was $4.8 million and $10.7 million,
respectively, compared with losses of $15.4 million and $20.0
million during the three and nine months ended September 30, 1994,
respectively. 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 nine months ended September 30, 1994
includes income from the discontinued Concrete Division of $1.1
million and $3.4 million, respectively. Additionally, during the
third quarter of 1994, the Company recorded a charge to
discontinued operations of $6.0 million reflecting estimated
provisions for, and the costs associated with, rectification work
and the resolution of claims and disputes related to the Company's
discontinued custom curtainwall operations.
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 Nine Months Ended
September 30 September 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Revenue:
Metal Buildings. . . . . $70,620 $ 67,201 $197,965 $183,832
Building Products. . . . 12,661 16,983 29,938 48,292
Intersegment
Eliminations . . . . . - (336) - (1,365)
------- -------- -------- --------
As Reported. . . . . . . 83,281 83,848 227,903 230,759
Businesses Sold/Held
for Sale. . . . . . . . - (7,841) - (24,335)
------- -------- -------- --------
Pro Forma Continuing
Businesses. . . . . . . $83,281 $ 76,007 $227,903 $206,424
======= ======== ======== ========
Quarter Ended Nine Months Ended
September 30 September 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Cost of Sales:
Metal Buildings. . . . . $57,098 $55,458 $162,983 $156,839
Building Products. . . . 10,831 14,776 26,598 42,938
Intersegement
Eliminations. . . . . . - (336) - (1,365)
------- ------- -------- --------
As Reported. . . . . . . 67,929 69,898 189,581 198,412
Businesses Sold/Held
for Sale. . . . . . . . - (6,865) - (22,560)
------- ------- -------- --------
Pro Forma Continuing
Businesses. . . . . . . $67,929 $63,033 $189,581 $175,852
======= ======= ======== ========
Quarter Ended Nine Months Ended
September 30 September 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Selling, General and
Administrative Expense:
Metal Buildings. . . . . $ 6,261 $ 5,944 $17,554 $16,417
Building Products. . . . 1,521 2,997 4,538 9,755
Corporate. . . . . . . . 1,795 2,658 6,653 7,709
------- ------- ------- -------
As Reported. . . . . . . 9,577 11,599 28,745 33,881
Businesses Sold/Held
for Sale. . . . . . . . - (1,387) - (5,195)
------- ------- ------- -------
Pro Forma Continuing
Businesses. . . . . . . $ 9,577 $10,212 $28,745 $28,686
======= ======= ======= =======
Quarter Ended Nine Months Ended
September 30 September 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Restructuring Expense:
Metal Buildings. . . . . $ - $ - $ - $ -
Building Products. . . . - 3 - 1,050
Corporate. . . . . . . . - 2,075 - 2,075
------- ------- ------- -------
As Reported. . . . . . . - 2,078 - 3,125
Businesses Sold/Held
for Sale. . . . . . . . - - - (900)
------- ------- ------- -------
Pro Forma Continuing
Businesses. . . . . . . $ - $ 2,078 $ - $ 2,225
======= ======= ======= =======
Quarter Ended Nine Months Ended
September 30 September 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Operating Income:
Metal Buildings. . . . . $ 7,261 $ 5,799 $17,428 $10,576
Building Products. . . . 309 (793) (1,198) (5,451)
Corporate. . . . . . . . (1,795) (4,733) (6,653) (9,784)
------- ------- ------- -------
As Reported. . . . . . . 5,775 273 9,577 (4,659)
Businesses Sold/Held
for Sale. . . . . . . . - 411 - 4,320
------- ------- ------- -------
Pro Forma Continuing
Businesses. . . . . . . $ 5,775 $ 684 $ 9,577 $ (399)
======= ======= ======= =======
Quarter Ended Nine Months Ended
September 30 September 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Interest Expense:
As Reported. . . . . . . $ 1,162 $ 1,250 $ 3,393 $ 3,540
Businesses Sold/Held
for Sale. . . . . . . . - (145) - (339)
------- ------- ------- -------
Pro Forma Continuing
Businesses. . . . . . . $ 1,162 $ 1,105 $ 3,393 $ 3,201
======= ======= ======= =======
Quarter Ended Nine Months Ended
September 30 September 30
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands)
(Unaudited)
Income (Loss) from
Continuing Operations:
Metal Buildings. . . . . $ 7,297 $ 5,734 $17,630 $ 10,773
Building Products. . . . 326 (10,889) (1,121) (15,805)
Corporate (including
domestic interest
expense). . . . . . . . (2,869) (5,338) (9,764) (12,331)
------- -------- ------- --------
As Reported. . . . . . . 4,754 (10,493) 6,745 (17,363)
Businesses Sold/Held
for Sale. . . . . . . . - 10,445 - 14,614
------- -------- ------- --------
Pro Forma Continuing
Businesses. . . . . . . $ 4,754 $ (48) $ 6,745 $ (2,749)
======= ======== ======= ========
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 $3.4 million or 5.1% in
the third quarter of 1995 compared to the same period in 1994.
During the first nine months of 1995, revenues at the Metal
Buildings Group increased by $14.1 million or 7.7% compared to the
same period in 1994. The third quarter and year-to-date increase
in revenue reflects primarily improved market conditions in the
U.S. Additionally, year-to-date revenues were affected by
favorable weather conditions in the first quarter of 1995 compared
to the first quarter of 1994. Operating income at the Metal
Buildings Group was $7.3 million during the third quarter of 1995,
compared to $5.8 million during the third quarter of 1994, an
increase of $1.5 million or 25.2%. On a year-to-date basis, Metal
Buildings Group operating income was $17.4 million and $10.6
million during 1995 and 1994, respectively, an increase of $6.8
million or 64.8%. The increase in operating profits during the
third quarter resulted from higher revenue levels 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 $4.3 million or 25.4%
in the third quarter of 1995 compared to the same period in 1994.
On a year-to-date basis, 1995 revenues decreased by $18.4 million
or 38.0% 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 $7.8 million and $24.3 million during
the three and nine months ended September 30, 1994, respectively.
Excluding the effect of the Cupples Division and European
Operations, revenues during the quarter ended September 30, 1995
increased $3.5 million from the comparable period of 1994. On a
year-to-date basis, excluding the effect of the Cupples Division
and European Operations, revenues increased $6.0 million from the
comparable period of 1994. The increases in revenue, excluding the
Cupples Division and European Operations, on both a quarterly and
year-to-date basis are due to increased demand for the Company's
products in Canada and Asia.
For the quarter ended September 30, 1995, the Building Products
Group recorded operating income of $.3 million compared with an
operating loss of $.8 million in the third quarter of 1994. On a
year-to-date basis, the operating losses were $1.2 million and $5.5
million in 1995 and 1994, respectively. The operating loss for the
nine months ended September 30, 1994 includes restructuring charges
of $1.0 million, related primarily to workforce reductions at the
Company's former Cupples Division. The operating losses during the
three and nine months ended September 30, 1994 include operating
losses of the Cupples Division and European Operations totalling
$.4 million and $4.3 million, respectively. Excluding the effect
of the operating losses of the Cupples Division and the European
Operations, third quarter operating income was $.3 million in 1995
compared to an operating loss of $.4 million in 1994. The increase
in operating income is primarily due to higher revenue levels at
the Company's Asia/Pacific and Canadian operations. On a year-to-
date basis, excluding the Cupples Division and European Operations,
the Building Products Group incurred operating losses of $1.2
million and $1.1 million during 1995 and 1994, respectively.
Backlog of Orders
- -----------------
At September 30, 1995, the backlog of unfilled orders believed to
be firm for the Company's ongoing businesses was approximately
$136.5 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 September 30, 1994 of
approximately $67.5 million, the order backlog was approximately
$110.6 million at September 30, 1994.
Litigation
- ----------
In the third quarter of 1995, the Company resolved and settled
disputed claims related to a pre-engineered metal building project
in Anchorage, Alaska. The outcome of these settlements did not
have a material adverse effect on the consolidated financial
condition or results of operations of the Company.
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 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.
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 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 nine months ended September 30, 1995, the Company
generated approximately $2.2 million of cash, excluding amounts
which were previously restricted, from its operating activities.
The operating cash flow during the nine months of 1995 reflects
primarily cash generated by the Company's Metal Buildings Group
offset in part by the funding of 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 nine months of 1995, the
Company spent approximately $3.7 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 $.8 million which was utilized to
fund local working capital requirements and operating losses.
As a result, primarily of the above, unrestricted cash and cash
equivalents increased by $10.3 million during the period from
December 31, 1994 to September 30, 1995. At September 30, 1995,
the Company had $18.2 million of unrestricted cash and cash
equivalents which consisted of $2.1 million of cash and short-term
investments located at foreign subsidiaries which is available to
fund local working capital requirements and $16.1 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 ("Foothill") 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 September 30, 1995, the
Borrowing Base was estimated to be $33.2 million which was used to
support the $5.0 million term loan and $28.2 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. The
Company may deposit and maintain additional cash collateral with
Foothill to the extent that such amounts are required to support
outstanding borrowings, letters of credit or letter of credit
guarantees. At September 30, 1995, no such deposits of additional
cash collateral were required.
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 was previously payable
through the issuance of additional notes) which will require a
payment of $1.4 million semiannually.
On January 13, 1995, the Company filed an Application for Waiver of
Minimum Funding Standard (the "Waiver Application") with the
Internal Revenue Service (the "IRS") for two of its U.S. defined
benefit pension plans for the plan years 1994 and 1995. If the
request to waive these contributions is accepted, certain of the
Company's pension funding requirements for the calendar year ended
December 31, 1995 will be deferred and such contributions will be
made over a future period, depending on the instructions of the
IRS. In the event that the request to waive these contributions is
denied, the Company may be required to immediately fund its past
due contributions. Regardless of the outcome of the Waiver
Application, the company estimates that it will be required to
contribute approximately $5.6 million to its plans in either the
fourth quarter of 1995 or the first quarter of 1996. Furthermore,
depending on the results of the Waiver Application, the Company
anticipates that it will be required to contribute between $4.3
million and $9.0 million of additional funds to its pension plans
during the remainder of 1995 and throughout 1996. Failure to make
the required contributions to the plans may result in the
imposition of liens on the assets of the Company. 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 nine months ended
September 30, 1995 with respect to such plans where a waiver has
been requested.
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 $18.2
million at September 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 6. Exhibits and Reports on Form 8-K
(a) 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
November 14, 1995
- -----------------
ROBERTSON-CECO CORPORATION
EXHIBIT INDEX
--------------------------
EXHIBIT 11 - Computation of Earnings (Loss) Per Common Share