SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual report ("Report") pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1995 (FEE
REQUIRED)
Commission file number 1-10659
ROBERTSON-CECO CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 36-3479146
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
222 Berkeley Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 424-5500
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, par value, $0.01 per share New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
The aggregate market value of the voting stock held by non-affiliates of
the Registrant was $40,334,132 based upon the closing sales price of
Registrant's common stock on the New York Stock Exchange on March 15, 1996.
(The value of shares of common stock held by executive officers and directors
of the Registrant and their affiliates has been excluded.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [X]
As of March 15, 1996, 16,188,618 shares of common stock of the
Registrant were outstanding.
Portions of the Registrant's definitive proxy statement for Registrant's
1995 annual meeting of stockholders to be filed with the Commission not later
than 120 days after the end of Registrant's fiscal year covered by this report
("Report") are incorporated by reference into Part III.
ROBERTSON-CECO CORPORATION
Table of Contents
PART I
Page
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Item 1. Business . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . 6
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote of Security Holders . 7
Item 4.1 Executive Officers of the Registrant . . . . . . . 7
PART II
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Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters. . . . . . . . . . . . . . . 9
Item 6. Selected Financial Data. . . . . . . . . . . . . . 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . 12
Item 8. Financial Statements and Supplementary Data. . . . 17
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . 43
PART III
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Item 10. Directors and Executive Officers of the Registrant. . 44
Item 11. Executive Compensation . . . . . . . . . . . . . . 44
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . 44
Item 13. Certain Relationships and Related Transactions . . 44
PART IV
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ITEM 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K. . . . . . . . . . . . . . . 45
Signatures . . . . . . . . . . . . . . . . . . . . 46
ITEM 1. BUSINESS
--------
THE COMPANY
Robertson-Ceco Corporation (the "Company") was formed on November 8,
1990 by the merger (the "Combination") of H. H. Robertson ("Robertson") and
Ceco Industries, Inc. ("Ceco Industries") with and into The Ceco Corporation
("Ceco"), a wholly-owned subsidiary of Ceco Industries, with Ceco continuing
as the surviving corporation under the name Robertson-Ceco Corporation. The
Combination was accounted for using the purchase method, with Robertson deemed
the acquiror.
After the Combination of Robertson and Ceco in November of 1990, the
Company and its subsidiaries operated in four business segments: (1) the
Metal Buildings Group, which operates primarily in North America and is
engaged in the manufacture, sale and installation of pre-engineered metal
buildings for commercial and industrial users; (2) the Building Products
Group, which operated on a worldwide basis and was engaged in the manufacture,
sale and installation of non-residential building components, including wall,
roof and floor systems; (3) the Door Products Group which operated primarily
throughout the United States and was engaged in the manufacture and
distribution of metal, wood and fiberglass doors and frames for commercial and
residential markets; and (4) the Concrete Construction Group, which operated
throughout the United States and was engaged in the provision of
subcontracting services for forming poured-in-place, reinforced concrete
structures.
DIVESTITURES
As a result of the significant, negative impact on operations and the
resulting liquidity crisis caused by the severe and prolonged recession in the
worldwide commercial and residential construction markets which occurred
during the latter part of the 1980s and early 1990s, and the unlikelihood that
a turnaround in the economy or in the Company's operations would occur in the
near future, during 1991 the management of the Company began to develop and
implement a series of restructuring actions designed to improve the Company's
operational performance and liquidity. In connection with these restructuring
initiatives, during the first quarter of 1992, the Company sold its Door
Products Group and certain of its domestic Building Products businesses, and
its Building Products subsidiary located in South Africa.
In November 1993, the Company sold its Building Products subsidiary
located in the United Kingdom (the "U.K. Subsidiary"). During the fourth
quarter of 1994, the Company sold its remaining U.S. Building Products
operation, the Cupples Products Division (the "Cupples Division") which
manufactured curtainwall systems, to a newly formed Company owned by a member
of the Company's Board of Directors, and commenced a plan to sell or dispose
of its remaining European Building Products operations. The sale of the
Cupples Division was completed December 27, 1994 and, during 1995, the Company
sold its subsidiaries located in Holland and Spain. After the above sales,
the Company has one remaining operating Building Products subsidiary in Europe
(the "Norway Subsidiary"), the sale of which is currently being negotiated.
On March 3, 1995, the Company sold its Concrete Construction business
("the Concrete Construction Group"), to an entity owned by a company which is
controlled by the Company's Chief Executive Officer. Additionally, in the
fourth quarter of 1995, the Company made the decision to divest its remaining
Building Products operations, which are located in Australia, Northeast Asia
and Southeast Asia (together the "Asia/Pacific Building Products Operations")
and in Canada (the "Canadian Building Products Operations"). The decision to
divest of the Asia/Pacific and the Canadian Building Products Operations,
along with the sale of the Norway Subsidiary, represents the Company's
complete exit from the Building Products business.
For accounting purposes, the Door Products Group, Concrete Construction
Group and the Building Products Group were each considered separate business
segments. Accordingly, the Company's Consolidated Statements of Operations
were reclassified to reflect these businesses as discontinued operations.
In addition to the sale of and exit from the businesses discussed above,
a series of other operational restructuring actions were taken during the past
several years, including downsizing the corporate office, closing excess metal
building plants and redistributing manufacturing operations and equipment from
closed operations, consolidating and improving capacity and cost effectiveness
at the remaining plants, reduction of work force levels and redefining
management and operating policies. Furthermore, significant financial
restructuring actions have been completed by the Company. (See "Managements
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's consolidated financial statements and notes thereto for the
year ended December 31, 1995.)
METAL BUILDINGS GROUP
The ongoing operations of the Company now consist of the Metal Buildings
Group. The Metal Buildings Group consists of three pre-engineered metal
building companies: Ceco Building Systems, Star Building Systems, and H. H.
Robertson Building Systems (Canada). Pre-engineered metal buildings have
traditionally accounted for a significant portion of the nonresidential low-
rise market for buildings under 150,000 sq. ft. in size that are built in
North America. Historically aimed at the one-story small to medium building
market, the use of the product is expanding to large (up to 1 million sq.
ft.), more complex, and multi-story (up to 4 floors) buildings. The product
provides the customer with a custom designed building at generally a lower
cost than conventional construction and is generally faster to job completion
from concept.
The Company's metal building systems are manufactured at five U.S.
plants located in California, Iowa (two separate plant locations), Mississippi
and North Carolina, and at one plant which is located in Ontario, Canada. The
buildings are primarily sold through builder/dealers located throughout the
United States and Canada. In addition to sales in North America, in recent
years the Company has been selling its buildings to the Asian market. Sales
to the Asian market are made both through local unaffiliated dealers and by
Company salespersons.
The principal materials used in the manufacture of pre-engineered metal
buildings are hot and cold rolled steel products that are readily available
from many sources. The buildings consist of three components: primary
structural steel, secondary structural steel and cladding. The buildings are
erected by the dealer network supplemented by subcontractors and, in certain
cases, by Company erection crews.
The Company considers all aspects of its business to be highly
competitive. The Company faces competition from many other manufacturers.
Price, delivery and service are the primary competitive features in this
market. The Company's business is both seasonal and cyclical in nature and,
as a consequence, has certain working capital needs which are characteristic
of the metal buildings industry. At a time of increased construction
activity, the Company has a need for increased working capital which
traditionally has been funded principally by available cash and short-term
bank borrowings. Since the Company operates in the industrial and commercial
building sectors, primarily in North America, its results are heavily
influenced by the growth in such economies, interest rates and credit
available to builders, developers and owners of the Company's buildings.
SEASONALITY
The Company operates in the industrial and commercial building sectors
with substantially all of the Company's revenues concentrated in North
America. As a result, the Company considers its business to be seasonal in
nature and operating results are affected, in part, by the severity of weather
conditions.
CUSTOMERS
The Company serves a wide variety of customers, virtually all of which
are in the construction industry. There is no dependence upon a single
customer, group of related customers or a few large customers.
INVENTORY AND BACKLOG
Virtually all sales of pre-engineered metal buildings are for specific
projects, and the Company maintains a minimum inventory of finished products.
Shipments of pre-engineered metal buildings are generally made directly from
the manufacturing plant to the building sites. Raw materials are largely
comprised of steel-related materials which are susceptible to price increases,
especially during periods of strong economic growth. Historically, the
Company and the companies with which it competes, have been successful in
passing on such price increases to purchasers.
Due to the wide availability of the necessary raw materials and the
relatively short delivery lead times, the Company generally has been able to
minimize its risk with respect to price increases in the raw materials used to
manufacture its products. To the extent that the Company has quoted a
fixed-price sales contract and has not locked in the related cost of the raw
materials, the Company is at risk for price increases in such raw materials.
Additionally, during times of declining demand, selling prices tend to be
adversely affected during which time the Company may not experience similar
declines in material costs.
Backlog is determined primarily based upon receipt of a contract or
purchase order from the customer. The Company reduces its backlog upon
recognition of revenue. At December 31, 1995, the backlog of unfilled orders
believed to be firm for the Company's Metal Buildings Group was approximately
$63.1 million compared with a corresponding Metal Buildings Group backlog of
approximately $76.4 million at December 31, 1994. Substantially all of the
December 31, 1995 backlog is expected to be executed in 1996.
PATENTS
The Company owns a number of patents with varying expiration dates
extending beyond the year 2000. None of these patents is believed to be a
major factor in the competitive position of the Company.
ENVIRONMENTAL CONTROLS
The Company's manufacturing activities have generated and continue to
generate materials classified as hazardous wastes. The Company devotes
considerable resources to compliance with legal and regulatory requirements
relating to (a) the use of these materials, (b) the proper disposal of such
materials classified as hazardous wastes and (c) the protection of the
environment. These requirements include clean-ups at various sites. The
Company's policy is to accrue environmental and clean-up related costs of a
non-capital nature when it is probable that a liability has been incurred and
such liability can be reasonably estimated. However, no assurance can be given
that any future discovery of new facts and the application of the legal and
regulatory requirements to those facts would not be material and would not
change the Company's estimate of costs it could be required to pay in any
particular situation (See "ENVIRONMENTAL MATTERS").
EMPLOYEES
At December 31, 1995, the Company employed approximately 1,429 persons
(excluding 235 employees at the Company's discontinued Building Products Group
operations) and was a party to collective bargaining agreements with labor
unions covering approximately 158 employees. Work stoppages are generally a
possibility in connection with the negotiation of collective bargaining
agreements, although the Company believes that its employee relations are
satisfactory.
FOREIGN OPERATIONS
The Company's on-going Metal Buildings operations include a subsidiary
in Canada, where one of its manufacturing plants is located. For the year
ended December 31, 1995, the foreign operations of the Metal Buildings Group
accounted for 6.0% of the Company's revenues before inter-area eliminations,
and at December 31, 1995, foreign operations of the Metal Buildings Group
accounted for 3.5% of the Company's total assets (before adjustments and
eliminations, excluding businesses held for sale). The Company's foreign
investments and businesses result in several risks to the Company's financial
condition and results of operations, including potential losses through
currency exchange rate fluctuations, potential difficulties in collecting
receivables due to differing laws and legal systems which may favor local
entities, expropriation of assets, restrictions upon the repatriation of
capital and profits, and foreign governmental regulations discriminating
against non-domestic companies.
ITEM 2. PROPERTIES
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The Company owns and operates six manufacturing plants which produce the
products and materials sold by its Metal Building business. The listing below
identifies the locations of those manufacturing facilities. The productive
capacities of these plants are considered adequate to serve the Company's
business needs at a volume at least equal to that achieved in 1995. All of
the Company's manufacturing facilities are pledged as collateral in connection
with the Company's credit facilities.
Monticello, Iowa Manufacturing Plant
Lockeford, California Manufacturing Plant
Mt. Pleasant, Iowa Manufacturing Plant
Rocky Mount, North Carolina Manufacturing Plant
Columbus, Mississippi Manufacturing Plant
Hamilton, Ontario, Canada Manufacturing Plant
ITEM 3. LEGAL PROCEEDINGS
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LAWSUITS
There are various proceedings pending against or involving the Company
which are ordinary or routine given the nature of the Company's existing and
prior businesses. 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 upon the consolidated
financial condition or results of operations of the Company.
During 1995, the Company resolved and settled disputed claims related to
a Building Products construction contract and a pre-engineered metal building
project (see Note 13 of the Notes to the Consolidated Financial Statements).
The outcome of these settlements did not have a material adverse effect on the
consolidated financial condition or results of operations of the Company as of
and for the year ended December 31, 1995.
ENVIRONMENTAL MATTERS
The Company has completed its investigation of two owned disposal sites
in Beaver County, Pennsylvania formerly used by Robertson to dispose of plant
wastes from the Company's former Ambridge, Pennsylvania Building Products
manufacturing facility. The Company has submitted its reports of findings to
the Pennsylvania Department of Environmental Protection ("PDEP") and has
submitted work plans for remedial activities for both sites to the PDEP for
its consideration and approval. The Company also is in the process of
negotiating a Consent Order and Agreement to memorialize an agreed upon
approach to remediate these sites. In another matter, the Company received
approval for a work plan from the Illinois Environmental Protection Agency
("IEPA) for the closure of an owned hazardous waste storage facility for
electric arc furnace dust generated from Ceco's former LeMont, Illinois, steel
mill facility. Environmental closure at this site is substantially complete.
A closure unit has been constructed and a post-closure groundwater monitoring
well system was installed and is currently in operation.
The Company has recorded reserves in amounts which it considers to be
adequate to cover the probable and reasonably estimable costs which may be
incurred in relation to these matters. However, no guarantee can be made that
the relevant governmental authorities will accept the remediation plans or
actions proposed by the Company or the position taken by the Company as to its
legal responsibilities and therefore that more costly remediation efforts will
not be required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
During the fourth quarter of the fiscal year covered by this report no
matter was submitted to a vote of security holders.
ITEM 4.1. EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
The following table sets forth certain information regarding the
executive officers of the Company as of March 15, 1996.
Name Age Position
- ---- --- --------
Andrew G. C. Sage, II 70 Chairman
Michael E. Heisley 59 Chief Executive Officer and Vice
Chairman
E.A. Roskovensky 50 President and Chief Operating
Officer
John C. Sills 40 Executive Vice President and Chief
Financial Officer
Mr. Andrew G. C. Sage, II is Chairman (since July 1993) of the Company.
Mr. Sage also served as President (from November 1992 until July 1993) and
Chief Executive Officer (from November 1992 until December 1993) of the
Company. Mr. Sage is also President of Sage Capital Corporation ("Sage
Capital"), a general business and financial management corporation
specializing in business restructuring and problem solving. Prior to the
formation of Sage Capital in 1989, Mr. Sage was a consultant to and/or a
director of Heico, Inc., Pettibone Corporation and USIF Real Estate. Mr. Sage
is a director of Computervision Corporation, Fluid Condition Products and
Tom's Foods, Inc.
Mr. Heisley is Chief Executive Officer and Vice Chairman (since December
1993) of the Company. Mr. Heisley is Chairman of the following companies:
Davis Wire Corporation (since 1991), a manufacturer of steel wire; Tom's
Foods, Inc. (since 1993), a manufacturer and distributor of snack foods; and
Nutri/System, L.P. (since 1993), a national weight maintenance company. He is
also a Chairman of the Executive Committee of Pettibone Corporation (since
1988), a diversified manufacturing company and a director of Envirodyne, Inc.
(since 1994).
Mr. Roskovensky is President and Chief Operating Officer (since November
1994) of the Company. Prior to being elected President, Mr. Roskovensky
served the Company as President of the Company's Metal Buildings Group (from
February 1994). He is also the President and Chief Executive Officer of Davis
Wire Corporation (from 1991), a manufacturer of steel wire. Prior to 1991,
Mr. Roskovensky was the President of USS - POSCO Industries (from 1986 to
1990), a steel mill joint venture company between USX Corporation and Pohang
Iron & Steel of the Republic of Korea.
Mr. Sills is Executive Vice President and Chief Financial Officer (since
November 1994) of the Company. Prior to being elected Chief Financial Officer,
Mr. Sills was Vice President and Controller of the Company (from May 1992 to
November 1994). Prior to joining the Company, Mr. Sills was employed at Price
Waterhouse (from 1981 through 1992), a public accounting firm.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
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- --
COMMON STOCK
The Company's Common Stock is listed for trading on the New York Stock
Exchange ("NYSE") under the symbol "RHH". The following table sets forth the
high and low sale prices per share of the Common Stock as reported on the NYSE
Composite Transaction Reporting System during the calendar periods indicated.
Under the terms of the Company's current credit facility, the Company is
restricted from paying cash dividends on its Common Stock. The Company did
not pay cash dividends on its Common Stock during the periods set forth below.
High Low
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Calendar 1994
First Quarter. . . . . . . . . . . $ 4 - $ 2 7/8
Second Quarter . . . . . . . . . . 3 1/8 2 3/8
Third Quarter. . . . . . . . . . . 4 - 2 1/2
Fourth Quarter . . . . . . . . . . 4 - 3 -
Calendar 1995
First Quarter. . . . . . . . . . . $ 3 1/2 $ 2 3/4
Second Quarter . . . . . . . . . . 3 1/8 2 1/4
Third Quarter. . . . . . . . . . . 3 3/4 2 1/2
Fourth Quarter . . . . . . . . . . 7 1/8 3 5/8
There were approximately 2,570 holders of record of the Company's Common
Stock as of March 15, 1996. Included in the number of stockholders of record
are stockholders who held shares in "nominee" or "street" name. The closing
price per share of the Company's Common Stock on March 15, 1996, as reported
under the NYSE Composite Transaction Reporting System was $6-1/2.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
Set forth below are historical financial data concerning the Company at
December 31, 1991, 1992, 1993, 1994 and 1995 and for each of the five years in
the period ended December 31, 1995. These data have been derived from the
audited consolidated financial statements of the Company for such periods,
some of which are presented elsewhere herein. The following information should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Company's consolidated financial
statements and the notes thereto appearing elsewhere in this Report.
Statements of Operations Data (a):
(In thousands, except share data)
Year Ended December 31
--------------------------------------------------
1991 1992 1993(b) 1994 1995
--------- -------- -------- -------- --------
Net revenues . . . . $ 200,017 $187,465 $218,338 $251,584 $264,983
--------- -------- -------- -------- --------
Costs and expenses:
Cost of sales. . . 174,139 162,918 188,892 213,948 218,285
Selling, general and
administrative . 37,166 38,310 32,982 31,910 30,844
Restructuring. . . 14,742 2,798 - 2,075 -
--------- -------- -------- -------- --------
Total costs and
expenses . . . . 226,047 204,026 221,874 247,933 249,129
--------- -------- -------- -------- --------
Operating income (loss). . . .(26,030)(16,561) (3,536) 3,651 15,854
Interest expense . . (16,832)(12,628) (9,545) (4,164) (4,335)
Other income (expense),
net . . . . . . . (95) 806 498 346 828
--------- -------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes . . (42,957)(28,383) (12,583) (167) 12,347
Income taxes . . . . - - - - -
--------- -------- -------- -------- --------
Income (loss) from
continuing operations . . . .(42,957)(28,383) (12,583) (167) 12,347
Income (loss) from
discontinued operations
(e) . . . . . . . .(81,845)(42,762) (12,520)(21,593) (15,888)
Extraordinary gain on debt
exchange. . . . . . - - 5,367 - -
Cumulative effect of
accounting change (c) . . . . - - (1,200) - -
--------- -------- -------- -------- --------
Net income (loss). . $(124,802) $(71,145) $(20,936) $(21,760) $ (3,541)
========= ======== ======== ======== ========
Earnings (loss) per common
share(d):
Continuing operations. . . . $ (49.24)$ (32.43) $ (2.04) $ (.01) $ .77
Discontinued operations
(e) . . .. . . . . (93.20) (48.57) (2.01) (1.37) (.99)
Extraordinary item - - .86 - -
Cumulative effect of
accounting change
(c). . .. . . . . - - (.20) - -
--------- -------- -------- -------- --------
Net income (loss) per
common share . . $ (142.44) $ (81.00) $ (3.39) $ (1.38) $ (.22)
========= ======== ======== ======== ========
Weighted average number
of common shares
outstanding (d) . 878 880 6,217 15,808 16,007
======== ======== ======== ======== ========
Cash dividends declared
per common share. . - - - - -
======== ======== ======== ======== ========
Balance Sheet Data (a)(b):
(Thousands)
December 31
--------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
Working capital surplus
(deficiency) . . . $ 51,377 $(101,200) $ 4,708 $ 9,826 $ 88
Total assets . . . . 422,937 232,370 181,823 137,400 108,478
Long-term debt (current
portion) . . . . 65,964 67,420 390 134 -
Long-term debt (excluding
current portion) . 69,897 1,426 45,084 43,421 40,530
Stockholders' equity
(deficiency) . . . 39,874 (34,189) (16,663) (35,693)(29,994)
(a) The consolidated statements of operations are reclassified to reflect
the operating results of the Door Products Group (which measurement
date was considered to be December 1991, and which sale was consummated
in February 1992), the Concrete Construction Group (which measurement
date was considered to be December 1994 and which sale was consummated
in March 1995) and the Building Products Group (which measurement date
was considered to be December 1995 and execution of plans to exit the
remaining businesses are in progress), as discontinued operations.
Accordingly, the income and expense amounts of such business segments
prior to the respective measurement dates are reclassified as a single
line item within discontinued operations. For purposes of the
consolidated balance sheets, the net assets and liabilities of such
business segments, including any loss provisions, were recorded net as
of the measurement dates in the respective consolidated balance sheets.
(b) The consolidated financial information as of and for the year ended
December 31, 1993, and for periods subsequent thereto, include the
effects of the Company's Exchange Offer which was consummated on July
14, 1993. As a result of a default under the indenture, the amount of
long-term debt (current portion) at December 31, 1992 includes
$63,347,000 related to the Company's 15.5% Discount Subordinated
Debentures due 2000. Additionally, in connection with the Company's
Exchange Offer, all future interest costs for the Company's 12% Senior
Subordinated Notes are capitalized and, as a result, the Company does
not record any interest expense related to the 12% Senior Subordinated
Notes (see Note 9 of the Notes to Consolidated Financial Statements).
(c) In the fourth quarter of 1993, the Company adopted Statement of
Accounting Standards No. 112 "Employers' Accounting for Post Employment
Benefits". (See Note 17 of the Notes to Consolidated Financial
Statements.)
(d) On July 23, 1993, a 1 for 16.5 reverse split of the Company's common
stock became effective. All common stock share amounts and per share
data are restated to reflect the reverse split.
(e) Losses from discontinued operations are reported net of income tax
expense (benefit) of $2,030,000, $1,205,000, $9,000, $256,000, and
$(400,000), during each of the years ended December 31, 1991, 1992,
1993, 1994 and 1995, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994
Revenue for the year ended December 31, 1995 was $265.0 million, an
increase of $13.4 million or 5.3% compared to 1994. The increase in revenue
is primarily a result of improved market conditions in the United States and
Canada. Additionally, revenues were affected by favorable weather conditions
during the first quarter of 1995.
The Company's gross margin percentage was 17.6% in 1995 compared to
15.0% in 1994. The improvement in the gross margin percentage is largely due
to efficiencies resulting from higher levels of revenue, generally higher
selling prices for the Company's products, and actions taken by the Company to
reduce overhead. Selling, general and administrative expenses decreased by
$1.1 million in 1995 compared to 1994. The decrease in selling, general and
administrative expenses is primarily a result of maintaining the same level of
overall selling costs despite increased levels of revenue, savings resulting
from headcount and other cost reduction initiatives associated primarily with
finance and administrative functions implemented in prior years, and lower
costs associated with the Company's post retirement medical programs,
partially offset by higher costs associated with implementation of new
information systems and decentralization initiatives.
Operating income during the year ended December 31, 1995 was $15.9
million, compared to $3.7 million during the same period in 1994. The
increase in operating income is primarily the result of higher revenues,
improved gross margins and lower selling, general and administrative
expenses. Additionally, during 1994, the Company recorded provisions for
restructuring of $2.1 million related to severances and other overhead
reduction measures taken during 1994.
Interest expense for the year ended December 31, 1995 was $4.3 million
compared to $4.2 million in 1994, an increase of $.1 million.
Other income (expenses) - net for the year ended December 31, 1995 was
$.8 million as compared to $.3 million in 1994. The increase in other income
is primarily the result of higher interest income.
For the year ended December 31, 1995, income from continuing operations
was $12.3 million compared with a loss of $.2 million in 1994.
As a result primarily of the utilization of deferred tax assets, the
Company was not required to record a provision for income taxes in 1995 or
1994. At December 31, 1995, the Company had domestic net operating loss
carryforwards of approximately $33.4 million for tax reporting purposes, which
are available to offset future income without limitation and which expire in
the years 2008 through 2010. In the event that the Company experiences a
"Change in Ownership," as defined in Section 382 of the Internal Revenue Code,
the Company's ability to utilize its unused tax loss carryforwards which
existed prior to the change in ownership would be limited. (See Note 12 of
the Notes to Consolidated Financial Statements.)
At December 31, 1995, the backlog of unfilled orders believed to be
firm for the Company's Metal Buildings Group was approximately $63.1 million
compared to a corresponding Metal Buildings Group backlog of approximately
$76.4 million at December 31, 1994. Substantially all of the December 31,
1995 backlog is expected to be executed in 1996.
YEAR ENDED DECEMBER 31, 1994 COMPARED WITH YEAR ENDED DECEMBER 31, 1993
Revenue for the year ended December 31, 1994 was $251.6 million, an
increase of $33.2 million or 15.2% compared to 1993. The increase in revenue
reflects primarily improved market conditions in the United States and Canada.
The Company's gross margin percentage was 15.0% in 1994 compared to
13.5% in 1993. The improvement in the gross margin percentage is primarily a
result of efficiencies associated with higher revenue levels. Selling,
general and administrative expenses decreased by $1.1 million in 1994 compared
to the same period in 1993. The decrease in selling, general and
administrative cost is primarily due to measures taken by the Company in 1994
to reduce finance and administration expenses.
Operating income was $3.7 million in 1994, an increase of $7.2 million
compared to the same period in 1993. The increase in operating income is due
to the increase in gross profit, resulting primarily from higher revenues,
reductions in selling, general and administrative expenses, offset in part by
provisions for restructuring associated with severances and other overhead
reduction measures taken in 1994.
Interest expense for the year ended December 31, 1994 was $4.2 million
compared to $9.5 million in 1993, a decrease of $5.4 million. The decrease in
interest expense in 1994 is primarily due to the completion of the Exchange
Offer (see Note 9 of the Notes to Consolidated Financial Statements) which
became effective July 14, 1993. On a pro forma basis, assuming the Exchange
Offer had occurred on January 1, 1993, interest expense in 1993 would have
been reduced by $6.5 million. Exclusive of the effect of the Exchange Offer,
the increase in interest expense in 1994 over 1993 is primarily the result of
the higher costs associated with the Company's new credit facility which was
entered into in April of 1993.
Other income (expenses) - net for the year ended December 31, 1994 was
$.3 million in 1994 compared to $.5 million in 1993.
For the year ended December 31, 1994, losses from continuing operations
were $.2 million compared with $12.6 million in 1993.
RESULTS OF DISCONTINUED OPERATIONS
In November 1993, the Company sold its Building Products subsidiary
located in the United Kingdom. During the fourth quarter of 1994, the Company
sold its remaining U.S. Building Products operation, the Cupples Products
Division (the "Cupples Division") which manufactured curtainwall systems, to a
newly formed Company owned by a member of the Company's Board of Directors,
and commenced a plan to sell or dispose of its remaining European Building
Products operations. The sale of the Cupples Division was completed December
27, 1994 and, during 1995, the Company sold its subsidiaries located in
Holland and Spain. After the above sales, the Company has one remaining
operating Building Products subsidiary in Europe (the "Norway Subsidiary"),
the sale of which is currently being negotiated.
On March 3, 1995, the Company sold its Concrete Construction Group to
an entity owned by a company which is controlled by the Company's Chief
Executive Officer. In the fourth quarter of 1995, the Company developed a
plan to divest of its remaining Building Products operations which are located
in the Asia/Pacific region and in Canada. The decision to divest of the
Asia/Pacific and the Canadian Building Products Operations, along with the
sale of the Norway Subsidiary, represents the Company's complete exit from the
Building Products business. In connection with the Company's sale of its
Concrete Construction Group, the Company recorded a gain of $3.5 million in
the first quarter of 1995 and, in connection with the Company's plan to exit
its remaining Building Products Operations, the Company recorded a loss of
$19.5 million in the fourth quarter of 1995.
For accounting purposes, the Concrete Construction Group and Building
Products Group were each considered a separate business segment and,
accordingly, the Company's Consolidated Statements of Operations were
reclassified to reflect these businesses as discontinued operations.
The following table summarizes the revenues, income/(loss) from
discontinued operations and gains/(losses) from the sale/disposal of the above
business segments during the three years ended December 31, 1993, 1994 and
1995:
Years Ended December 31
------------------------------
1993 1994 1995
---- ---- ----
Revenues
Building Products Group .$ 97,319 $ 60,186 $ 48,431
Concrete Construction Group . . . 64,249 69,686 11,088
-------- -------- --------
Total . . . . . . .$161,568 $129,872 $ 59,519
======== ======== ========
Discontinued operations
Income (loss) from discontinued
operations:
Building Products Group . . . . $ (4,952)$ (7,382) $ (388)
Concrete Construction
Group . . . . . . . . . 4,632 5,189 505
Fixed Price Custom
Curtainwall . . . . . (2,500) (8,000) -
-------- -------- --------
Total . . . . . . . . (2,820) (10,193) 117
-------- -------- --------
Gain (loss) on sale/disposal of
business segments:
Building Products Group . . . . (9,700) (11,400) (19,455)
Concrete Construction
Group . . . . . . . . - - 3,450
-------- -------- --------
Total . . . . . . . . (9,700) (11,400) (16,005)
-------- -------- --------
$(12,520)$(21,593)$(15,888)
======== ======== ========
Charges recorded during 1993 and 1994 related to the Fixed Price Custom
Curtainwall business reflect primarily the settlement of contract disputes,
litigation and rectification costs associated with this former business which
was exited in 1988.
ACCOUNTING CHANGES
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
("FAS 121"). The Company believes that the adoption of FAS 121 will not have
a material impact on the Company's financial statements. In October 1995, the
FASB issued Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation," ("FAS 123"). The Company has elected to adopt
the requirements of FAS 123 in 1996 through disclosure only.
LITIGATION AND ENVIRONMENTAL
During 1995, the Company resolved and settled disputed claims related
to a Building Products construction contract and a pre-engineered metal
building project. The outcome of these settlements did not have a material
adverse effect on the consolidated financial condition or results of
operations of the Company (see Note 13 of the Notes to Consolidated Financial
Statements).
There are various proceedings pending against or involving the Company
which are ordinary or routine given the nature of the Company's existing and
prior businesses. The Company has recorded a liability related to litigation
where it is both probable that a loss has been incurred and that 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 Balance Sheet or Statement 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 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 year ended December 31, 1995, the Company used approximately
$1.4 million of cash to fund its operating activities. Included in this
amount is $9.9 million utilized to fund the Company's defined benefit pension
plans. 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. In December 1995, prior to receiving any
notification from the IRS as to the outcome of the Company's Waiver
Application, the Company made contributions totalling $9.6 million to the two
plans, thereby satisfying all past due contributions. The remaining uses of
operating cash during 1995 reflect primarily the funding of trailing
liabilities associated with sold and closed businesses, improvement in the
aging of vendor payables and settlement of workers' compensation, general
liability and legal claims, offset by cash generated primarily by the
Company's Metal Buildings operations. During the first quarter of 1995, the
Company entered into an agreement (the "Federal Agreement") (see Note 13 of
the Notes to Consolidated Financial Statements), with one of its surety's with
respect to certain litigation related to a former Fixed Price Custom
Curtainwall project whereby the Company agreed to pay the surety $250,000 per
quarter until December 2001. The Federal Agreement further provides that in
the event certain changes in the ownership or management of the Company
occurs, then all amounts outstanding, which were $6 million at December 31,
1995, would become immediately due and payable.
In addition, during the year ended December 31, 1995, the Company spent
approximately $5.5 million on capital expenditures, most of which were
directed toward implementing new design and information systems and upgrading
and improving manufacturing equipment. Cash proceeds from sales of property,
plant and equipment, and assets held for sale were $.3 million and $.5
million, respectively, for the year ended December 31, 1995. Cash provided by
financing activities during the year consisted of short-term borrowings by the
Asia/Pacific Operations of $1.2 million which were used to assist in funding
local working capital requirements and operating losses. Beginning in
November of 1995, the Company's 12% Senior Subordinated Notes went cash pay,
and in connection therewith, the Company paid $1.4 million with respect to the
November interest payments (see Note 9 of the Notes to Consolidated Financial
Statements). On March 3, 1995 the Company sold the business and assets of its
Concrete Division. Upon the closing of the sale, the Company received
approximately $8.0 million of cash, after adjustments. The decision to sell
the Concrete Construction Group was based upon the Company's current liquidity
and the projected liquidity needs required to fund the Concrete business'
bonding needs.
As a result, primarily of the above, unrestricted cash and cash
equivalents increased by $1.8 million during 1995.
The Company's primary sources of liquidity include available cash and
cash equivalents and credit which is provided under the Company's existing
credit facility with Foothill Capital Corporation (the "Credit Facility").
Availability under the Credit Facility is based on a percentage of eligible
(as defined in the Credit Facility and subject to certain restrictions)
accounts receivable and inventory, plus a base amount (which base amount is
reduced by $166,667 per month and is subject to reduction in the case of sales
of certain property, plant and equipment), plus the amount provided by the
Company as cash collateral, if any (each together the "Borrowing Base"). At
December 31, 1995, the Borrowing Base was estimated to be $33.7 million
(including $1.6 million related to the Canadian Building Products Operation
which in connection with the Company's plan to exit the Building Products
business is pending disposition). At December 31, 1995, the Borrowing Base
was used to support a $5.0 million term loan note which is required to be
outstanding pursuant to the terms of the Credit Facility, and $25.5 million of
outstanding letters of credit (which are used primarily to support insurance
programs, bonding programs, and certain foreign credit facilities). The
Company had unused availability under the facility of $3.2 million at December
31, 1995. The letters of credit which are supporting foreign credit
facilities include a $2.0 million letter of credit supporting the Company's
Asia/Pacific Building Product's banking facility and a $1.9 million letter of
credit supporting the Company's former U.K. Building Products Subsidiary. The
letter of credit supporting the U.K. Subsidiary was drawn on February 26, 1996
by the bank, resulting in the Company having to fund the face amount of the
letter of credit. The Company is currently evaluating its alternatives with
respect to recovering the letter of credit amount from the former U.K.
Subsidiary; however, there is no assurance that the Company's attempts at
recovery will be successful.
OUTLOOK. During 1995, the management of the Company and the Board of
Directors determined that the best strategy for the Company was to operate
solely as a Metal Buildings business. This decision was based in part on the
operating success which the Company has achieved with its existing Metal
Building businesses, along with the long-term view of the value of the Metal
Building business and the cash and liquidity demands which would be required
to fund the ongoing operations of the non-Metal Buildings businesses. The
Company anticipates that demands on its liquidity and credit resources will
continue to be significant during 1996 and the next several years primarily as
a result of funding requirements associated with the trailing liabilities of
sold and discontinued businesses and financing costs. The Company expects to
meet these requirements through a number of sources, including operating cash
generated by the Company's Metal Buildings Group, available cash which was
$9.7 million at December 31, 1995, and availability under credit facilities.
During the first quarter of 1996, the Company reduced its letters of credit
which were outstanding at December 31, 1995 by $7.1 million, including the
reduction from the U.K. Subsidiary letter of credit, which was drawn in the
first quarter with the remainder reflecting primarily reductions in the
collateral required to support insurance programs and bonding programs. The
Company's liquidity projections are predicated on estimates as to the amount
and timing of the payment of the Company's trailing liabilities and
expectations regarding the operating performance of the Company's operations.
In the event the Company experiences significant differences as to the amount
and timing of the payment of the Company's trailing liabilities and/or the
actual operating results of the Company's operations, the Company may be
required to seek additional capital through new credit facilities,
modification of existing credit facilities, or through a possible debt or
equity offering, or a combination of the above. There can be no assurance,
however, that such additional capital would be available to the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
ROBERTSON-CECO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
For the Years Ended December 31
-------------------------------
1993 1994 1995
---- ---- ----
NET REVENUES . . . . . . . . . . . . $218,338 $251,584 $264,983
-------- -------- --------
COSTS AND EXPENSES
Cost of sales. . . . . . . . . . . 188,892 213,948 218,285
Selling, general and administrative. . . . . 32,982 31,910 30,844
Restructuring. . . . . . . . . . . - 2,075 -
-------- -------- --------
Total . . . . . . . . . . . . . 221,874 247,933 249,129
-------- -------- --------
OPERATING INCOME (LOSS). . . . . . . (3,536) 3,651 15,854
-------- -------- --------
OTHER INCOME (EXPENSE)
Interest expense . . . . . . . . . (9,545) (4,164) (4,335)
Other income (expense) - net . . . 498 346 828
-------- -------- --------
Total . . . . . . . . . . . . . (9,047) (3,818) (3,507)
-------- -------- --------
Income(loss) from continuing operations
before provision for taxes on income . . .(12,583) (167) 12,347
Provision for taxes on income. . . - - -
-------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS . . .(12,583) (167) 12,347
-------- -------- --------
DISCONTINUED OPERATIONS
Income (loss) from discontinued
operations . . . . . . . . . . . (2,820) (10,193) 117
Loss on sale/disposal of business
segments . . . . . . . . . . . . (9,700) (11,400)(16,005)
-------- -------- --------
Income (losses) from discontinued
operations . . . . . . . . . . . (12,520) (21,593)(15,888)
-------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE. . .(25,103) (21,760) (3,541)
-------- -------- --------
Extraordinary gain on debt exchange. . . . . 5,367 - -
-------- -------- --------
Cumulative effect of accounting change . . . (1,200) - -
-------- -------- --------
NET INCOME (LOSS). . . . . . . . . . $(20,936) $(21,760) $ (3,541)
======== ======== ========
EARNINGS (LOSS) PER COMMON SHARE
Continuing operations. . . . . . . $ (2.04) $ (.01) $ .77
Discontinued operations. . . . . . (2.01) (1.37) (.99)
Extraordinary item . . . . . . . . .86 - -
Cumulative effect of accounting change . . . (.20) - -
-------- -------- --------
NET INCOME (LOSS). . . . . . . . . . $ (3.39) $ (1.38) $ (.22)
======== ======== ========
Weighted average number of common shares
outstanding . . . . . . . . . . 6,217 15,808 16,007
======== ======== ========
See Notes to Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31
---------------------
1994 1995
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents. . . . . . . . . . $ 7,890 $ 9,668
Restricted cash. . . . . . . . . . . . . . .2,478 209
Accounts and notes receivable, less allowance
for doubtful accounts: 1994, $1,143; 1995,
$1,302 . . . . . . . . . . . . . . . . . . 41,382 25,261
Inventories. . . . . . . . . . . . . . . . . 17,825 13,488
Businesses held for sale, net. . . . . . . .4,664 4,000
Other current assets . . . . . . . . . . . . 2,056 1,871
-------- --------
Total current assets. . . . . . . . . . . 76,295 54,497
-------- --------
PROPERTY - AT COST
Land and land improvements . . . . . . . . .1,698 1,654
Buildings and building equipment . . . . . . 10,202 9,925
Machinery and equipment. . . . . . . . . . . 24,288 25,760
Construction in progress . . . . . . . . . .3,739 2,293
-------- --------
Total . . . . . . . . . . . . . . . . . . 39,927 39,632
Less accumulated depreciation. . . . . . . . . (17,332) (17,389)
-------- --------
Property - net. . . . . . . . . . . . . . 22,595 22,243
-------- --------
EXCESS OF COST OVER NET ASSETS OF ACQUIRED
BUSINESSES, LESS ACCUMULATED AMORTIZATION:
1994, $4,257; 1995, $5,085 . . . . . . . . . 28,267 27,439
-------- --------
OTHER NON-CURRENT ASSETS . . . . . . . . . . . 10,243 4,300
-------- --------
Total assets. . . . . . . . . . . . . . . $137,400 $108,479
======== ========
See Notes to Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31
-----------------------
1994 1995
---- ----
LIABILITIES
CURRENT LIABILITIES
Current portion of long-term debt. . . . $ 134 $ -
Accounts payable, principally trade. . . 25,168 18,085
Insurance liabilities. . . . . . . . . . 8,365 8,243
Other accrued liabilities. . . . . . . . 32,802 28,081
--------- ---------
Total current liabilities . . . . . . 66,469 54,409
--------- ---------
LONG-TERM DEBT, LESS CURRENT PORTION . . . 43,421 40,530
--------- ---------
LONG-TERM INSURANCE LIABILITIES. . . . . . 15,084 10,744
--------- ---------
LONG-TERM PENSION LIABILITIES. . . . . . . 16,265 6,907
--------- ---------
RESERVES AND OTHER LONG-TERM LIABILITIES . 31,854 25,883
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY)
COMMON STOCK
Par value per share $.01
Authorized shares: 30,000,000
Issued shares: 1994 - 16,134,566;
1995 - 16,188,618. . . . . . . . . . . . 161 162
CAPITAL SURPLUS. . . . . . . . . . . . . . 172,089 172,350
WARRANTS . . . . 6,042 6,042
RETAINED EARNINGS (DEFICIT). . . . . . . . (199,279) (202,820)
EXCESS OF ADDITIONAL PENSION LIABILITY OVER
UNRECOGNIZED PRIOR SERVICE COST. . . . . (7,991) (5,001)
DEFERRED COMPENSATION. . . . . . . . . . . (508) (398)
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS . (6,207) (329)
--------- ---------
Stockholders' equity (deficiency). . . . (35,693) (29,994)
--------- ---------
Total liabilities and stockholders'
equity (deficiency). . . . . . . . $ 137,400 $ 108,479
========= =========
See Notes to Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Years Ended December 31
-------------------------------
1993 1994 1995
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss). . . . . . . . . . . . . $(20,936) $(21,760) $ (3,541)
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization. . . . . . 6,694 5,353 4,691
Amortization of discount on debentures and
capitalized debt issuance costs . . . 1,008 1,251 1,274
Cumulative effect of accounting change . 1,200 - -
Extraordinary gain on debt exchange. . . (5,367) - -
Loss on sale/disposal of business segment. . . . 9,700 11,400 16,005
Provisions for:
Bad debts and losses on erection contracts . . 2,658 3,539 780
Rectification and other costs. . . . . 4,203 4,035 2,962
Restructuring expense. . . . . . . . . - 3,420 -
Discontinued operations. . . . . . . . 2,500 8,000 -
Changes in assets and liabilities, net of
divestitures:
(Increase) decrease in accounts and notes
receivable. . . . . . . . . . . . . . 2,698 (8,930) (300)
(Increase) decrease in inventories . . 2,765 2,024 (2,152)
(Increase) decrease in restricted cash . . . . 20,824 660 2,269
Increase (decrease) in accounts payable,
principally trade . . . . . . . . . . 2,672 (5,200) (2,247)
Net changes in other assets and liabilities. . (29,962)(15,229) (21,177)
-------- -------- --------
NET CASH PROVIDED BY (USED FOR) OPERATING
ACTIVITIES. . . . . . . . . . . . . . . 657 (11,437) (1,436)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures . . . . . . . . . . . (5,503) (4,991) (5,468)
Proceeds from sales of property, plant and
equipment . . . . . . . . . . . . . . . . 2,986 1,701 348
Proceeds from sales of businesses. . . . . - 807 8,000
Proceeds from sales of assets held for sale. . . . 1,563 3,764 515
-------- -------- --------
NET CASH PROVIDED BY (USED FOR) INVESTING
ACTIVITIES . . . . . . . . . . . . . . (954) 1,281 3,395
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (payments) proceeds on short-term borrowings . (624) 2,242 1,186
Proceeds from long-term debt borrowings. . 5,000 - -
Payments on long-term debt borrowings. . . (2,283) (80) -
Payments of capitalized interest on 12% Notes. . . - - (1,352)
Proceeds from common stock issued. . . . . 7,000 - -
-------- -------- --------
NET CASH PROVIDED BY (USED FOR) FINANCING
ACTIVITIES. . . . . . . . . . . . . . . 9,093 2,162 (166)
-------- -------- --------
Effect of foreign exchange rate changes on cash. . (350) 218 (15)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS. . . . . . . . . . . . 8,446 (7,776) 1,778
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD. 7,220 15,666 7,890
-------- -------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD. . . . $ 15,666 $ 7,890 $ 9,668
======== ======== ========
SUPPLEMENTAL CASH FLOW DATA
Cash payments made for:
Interest . . . . . . . . . . . . . . . . $ 2,301 $ 5,789 $ 4,550
======== ======== ========
Income taxes . . . . . . . . . . . . . . $ 627 $ 191 $ 16
======== ======== ========
See Notes to Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(In thousands except share data)
Cumulative
Convertible
Preferred Common Capital
Stock Stock Surplus Warrants
----------- ------ --------- --------
BALANCE DECEMBER 31, 1992. . $ 5 $145 $129,128 $6,042
Net loss for the year. . . .
Dividends payable on
preferred stock,
$.23 per share . . . . . . (112)
Stock issued to directors
(5,635 shares) . . . . . . 25
Exchange Offer . . . . . . . (5) (35) 31,022
Conversion of Facility Note
(1,374,292 shares) . . . . 14 4,107
Stock issued (3,333,333 shares). . . . 33 6,967
Change in excess of additional
pension liability over
unrecognized prior
service cost . . . . . . .
Issuances under employee
plans, net . . . . . . . . 6 1,545
Foreign currency translation
adjustments for the year .
Writedown from sale of the
U.K. Subsidiary. . . . . .
---- ---- -------- ------
BALANCE DECEMBER 31, 1993. . - 163 172,682 6,042
Net loss for the year. . . .
Change in excess of additional
pension liability over
unrecognized prior service
cost . . . . . . . . . . .
Forfeitures under employee
plans, net . . . . . . . . (2) (593)
Amortization of deferred
compensation . . . . . . .
Foreign currency translation
adjustments for the year .
Writedown from pending sale/
disposition of European
Operations . . . . . . . .
---- ---- -------- ------
BALANCE DECEMBER 31, 1994 - 161 172,089 6,042
Net loss for the year. . . .
Change in excess of additional
pension liability over
unrecognized prior service
cost . . . . . . . . . . .
Issuances under employee
plans, net . . . . . . . . 1 261
Amortization of deferred
compensation . . . . . . .
Foreign currency translation
adjustments for the year .
Writedown from pending sale/
disposition of Asia/Pacific
and Canadian Building
Products Operations . . .
---- ---- -------- ------
BALANCE DECEMBER 31, 1995. . $ - $162 $172,350 $6,042
==== ==== ======== ======
See Notes to Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(In thousands except share data)
Excess of
Additional
Pension
Liability Foreign
Retained Over Unrecog- Deferred Currency
Earnings nized Prior Compen- Translation
(Deficit) Service Cost sation Adjustments
----------- ------------- --------- -----------
BALANCE DECEMBER 31, 1992. . . . . $(156,583)$(1,711) $ - $(11,215)
Net loss for the year. . (20,936)
Dividends payable on
preferred stock,
$.23 per share . . . .
Stock issued to directors
(5,635 shares) . . . .
Exchange Offer . . . . .
Conversion of Facility Note
(1,374,292 shares) . .
Stock issued (3,333,333 shares)
Change in excess of additional
pension liability over
unrecognized prior
service cost . . . . . (6,428)
Issuances under employee
plans, net . . . . . . (1,551)
Foreign currency translation
adjustments for the year . . . . (1,705)
Writedown from sale of the
U.K. Subsidiary. . . . 4,579
--------- ------- ------- --------
BALANCE DECEMBER 31, 1993. . . . . (177,519) (8,139) (1,551) (8,341)
Net loss for the year. . (21,760)
Change in excess of additional
pension liability over
unrecognized prior service
cost . . . . . . . . . 148
Forfeitures under employee
plans, net . . . . . . 569
Amortization of deferred
compensation . . . . . 474
Foreign currency translation
adjustments for the year . . . . 896
Writedown from pending sale/
disposition of European
Operations . . . . . . 1,238
--------- ------- ------- --------
BALANCE DECEMBER 31, 1994. . . . . (199,279) (7,991) (508) (6,207)
Net loss for the year. . (3,541)
Change in excess of additional
pension liability over
unrecognized prior service
cost . . . . . . . . . 2,990
Issuances under employee
plans, net . . . . . . (254)
Amortization of deferred
compensation . . . . . 364
Foreign currency translation
adjustments for the year . . . . (47)
Writedown from pending sale/
disposition of Asia/Pacific
and Canadian Building
Products Operations . 5,925
--------- ------- ------- --------
BALANCE DECEMBER 31, 1995. . . . . $(202,280)$(5,001) $ (398) $ (329)
========= ======= ======= ========
See Notes to Consolidated Financial Statements.
ROBERTSON-CECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1994 AND 1995
1. NATURE OF BUSINESS
Robertson-Ceco Corporation (the "Company"), owns and operates three pre-
engineered metal building companies: Ceco Building Systems, Star Building
Systems, and H. H. Robertson Building Systems (Canada). The Company's pre-
engineered metal buildings are manufactured at plants in California, Iowa (two
separate plant locations), Mississippi, North Carolina, and in Ontario,
Canada. The buildings are sold primarily through builder/dealers located
throughout the United States and Canada to the industrial and commercial
building market. The buildings are erected by the dealer network supplemented
by subcontractors and, in certain cases, by Company erection crews.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the Company
and all majority-owned subsidiaries. All significant intercompany balances
and transactions have been eliminated. Certain previously reported amounts
have been reclassified to conform to the 1995 presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from these estimates.
Foreign Currency Translation
Asset and liability accounts of foreign subsidiaries and affiliates are
translated into U.S. dollars at current exchange rates. Income and expense
accounts are translated at average rates. Any unrealized gains or losses
arising from the translation are charged or credited to the foreign currency
translation adjustments account included in stockholders' equity (deficiency).
Foreign currency gains and losses resulting from transactions, except for
intercompany debt of a long-term investment nature, are included in other
income (expense)-net and amounted to $(382,000), $(27,000) and $22,000,
respectively for the years ended December 31, 1993, 1994 and 1995.
Financial Instruments
The Company sometimes enters into foreign exchange contracts as hedges
against exposure to fluctuations in exchange rates associated with certain
transactions denominated in foreign currencies, principally receivables.
Market value gains or losses on these contracts are included in the results of
operations and generally offset gains or losses on the related transactions.
The terms of the Company's forward contracts are generally less than one year.
Gains and losses on these contracts are deferred and recognized as adjustments
of carrying amounts when the hedged transaction occurs. Deferred gains or
losses at December 31, 1995 are not significant.
Inventories
Inventories are valued at the lower of cost or market. Cost is
determined using the last-in, first-out ("LIFO") method for certain
inventories and the first-in, first-out ("FIFO") method for other inventories.
Property
Property is stated at cost. Depreciation is computed for financial
statement purposes by applying the straight-line method over the estimated
lives of the property. For federal income tax purposes, assets are generally
depreciated using accelerated methods. Amortization of assets under capital
leases is included with depreciation expense.
Estimated useful lives used in computing depreciation for financial
statement purposes are as follows:
Land improvements. . . . . . . . . . . 10-25 years
Buildings and building equipment . . . 25-33 years
Machinery and equipment. . . . . . . . 3-16 years
Income Taxes
The provision for income taxes is based on earnings reported in the
financial statements. Deferred tax assets, when considered realizable, and
deferred tax liabilities are recorded to reflect temporary differences between
the tax bases of assets and liabilities for financial reporting and tax
purposes.
Revenue
Revenue from product sales is recognized generally upon passage of title
or acceptance at a job site. Revenue from construction services is
recognized generally using the percentage-of-completion method which
recognizes income ratably over the period during which contract costs are
incurred. A provision for loss on construction services in progress is made
at the time a loss is determinable.
Insurance Liabilities
The Company is self-insured in the U.S. for certain health insurance,
worker's compensation, general liability and automotive liability, subject to
specific retention levels. Insurance liabilities consist of estimated
liabilities incurred but not yet paid.
Deferred Revenues
Billings in excess of revenues earned on construction contracts are
reflected in other accrued liabilities as deferred revenues. Revenues earned
in excess of billings are included in accounts receivable as unbilled
receivables.
Excess of Cost Over Net Assets of Acquired Businesses
The excess of cost over the net assets of acquired businesses relates to
the Company's acquisitions of its Ceco and Star metal buildings businesses.
Such costs are being amortized on a straight-line basis over a period of 40
years. The Company periodically reviews the carrying value of its excess of
cost over net assets of acquired businesses to determine whether facts and
circumstances exist which would indicate that the assets are impaired. No
such determination has been made to date.
Cash and Cash Equivalents
As used in the consolidated statements of cash flows, cash equivalents
represent those short-term investments that can be easily converted into cash
and that have original maturities of three months or less.
Earnings (Loss) per Common Share
Earnings (loss) per common share is based on the weighted average number
of common shares and common share equivalents outstanding during each period.
Warrants to purchase common stock, outstanding stock options and restricted
stock are included in the earnings (loss) weighted average share computations
if the effect is not antidilutive. Earnings (loss) used in the computation,
is earnings (loss), less dividends paid or payable on preferred stock. On
July 23, 1993, a 1 for 16.5 reverse split (the "Reverse Split") of the
Company's common stock became effective. The Reverse Split followed the
issuance as of July 14, 1993 of 10,178,842 shares, after giving effect to the
Reverse Split, in exchange for $63,734,000 principal amount of the Company's
15.5% Subordinated Debentures due 2000 and 500,000 shares of the Company's
Preferred Stock pursuant to an exchange offer (the "Exchange Offer") for such
debentures and preferred stock consummated on that date (see Note 9). All
common stock share amounts and per share data presented herein are restated to
reflect the Reverse Split.
3. DIVESTITURES
On November 9, 1993, the Company sold, for no cash consideration, its
Building Products subsidiary located in the United Kingdom (the "U.K.
Subsidiary"). After completion of the sale of the U.K. Subsidiary, the
Company remains contingently liable under a Company letter of credit which had
an outstanding value of $1,922,000 at December 31, 1995 and which secures the
former subsidiary's banking line; under an equipment lease which had an
outstanding balance of approximately $2,065,000 at December 31, 1995; and
under certain performance guarantees which arose prior to the sale. On
February 26, 1996, the bank exercised its right to draw upon the letter of
credit and the Company paid $1,908,000 to the bank. The Company is currently
evaluating its alternatives with respect to recovering the letter of credit
amount from the former U.K. Subsidiary; however, there is no assurance that
the Company's attempts at recovery will be successful.
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 manufactured curtainwall systems, to a newly formed
company owned by a member of the Company's Board of Directors, for $800,000
cash and the assumption of certain liabilities by the purchaser. Pursuant to
the terms of the sale agreement, the Company transferred certain contingent
future rights to receive up to $900,000 of the proceeds, if any, relating to a
curtainwall project which was in progress (see Note 15).
During the third quarter of 1994, the Company decided to sell or dispose
of its remaining European Building Products operations (the "European
Operations"). The Company sold its subsidiaries located in Holland and Spain
in 1995. After the above sales, the Company has one remaining operating
subsidiary located in Europe (the "Norway Subsidiary") the sale of which is
currently being negotiated.
On March 3, 1995, the Company sold the business and assets of its
Concrete Construction business (the "Concrete Construction Group") to Ceco
Concrete Construction Corp., ("Ceco Concrete"), a newly formed company owned
by an entity controlled by the Company's Chief Executive Officer. The
consideration consisted of $11,500,000 of cash, adjusted to reflect an as of
sale date of October 1, 1994, a $3,000,000 interest bearing promissory note
payable in three equal annual installments, with interest at 7% (the "Concrete
Note"), and the assumption of certain liabilities by the purchaser. Upon the
closing of the sale, the Company received $8,000,000 of cash, after
adjustments. For purposes of the December 31, 1994 Consolidated Balance
Sheet, the assets and liabilities of the Concrete Construction Group were
netted and classified as assets held for sale - current.
During the fourth quarter of 1995, the Company decided to divest of its
remaining Building Products operations which are located in Australia,
Northeast Asia and Southeast Asia (the "Asia/Pacific Building Products
Operations") and in Canada (the "Canadian Building Products Operations"). In
connection therewith, during the fourth quarter of 1995, the Company recorded
a charge of $19,455,000, which included the write-off of $5,925,000 of foreign
currency translation adjustment, to reduce the carrying value of the
operations to their estimated net realizable value.
The decision to divest the Asia/Pacific and the Canadian Building
Products Operations, along with the sale of the Norway Subsidiary, represents
the Company's complete exit from the Building Products business. For
accounting purposes, the Concrete Construction Group and the Building Products
Group were each considered a separate business segment. Accordingly, the
Company's Consolidated Statements of Operations are reclassified to reflect
these businesses as discontinued operations. For purposes of the December 31,
1995 Consolidated Balance Sheet, the assets and liabilities of the
Asia/Pacific and Canadian Building Products Operations are netted and
classified as assets held for sale - current. The components of net assets
held for sale - current are as follows:
December 31
1995
-----------
(Thousands)
Accounts and notes receivable, net . . . $ 15,439
Inventories. . . . . . . . . . . . . . . 6,446
Property, net. . . . . . . . . . . . . . 1,924
Prepaid pensions . . . . . . . . . . . . 5,527
Other assets . . . . . . . . . . . . . . 2,784
Loans payable and debt . . . . . . . . . (1,544)
Accounts payable . . . . . . . . . . . . (4,767)
Other liabilities. . . . . . . . . . . . (8,279)
Provisions to reduce net assets to estimated
net realizable value . . . . . . . . . (13,530)
--------
$ 4,000
========
During 1988, the Company adopted a formal plan to discontinue its fixed-
price custom curtainwall operations. During 1989, the existing contracts
related to the discontinued operation were substantially physically completed;
however, several of the contracts have been the subject of various disputes
and litigation relating to performance, scope of work and other contract
issues. The charges recorded in 1993 and 1994 relate to costs incurred to
provide for the settlement of contract disputes, litigation and rectification
costs. Such provisions are made when it is probable that a loss has been
incurred and the amount of the loss can be estimated.
The following table summarizes the revenues and income/(losses) of the
Company's businesses which have been accounted for as discontinued operations.
Income (loss) from discontinued operations are net of tax expense/(benefit) of
$9,000, $256,000 and $(400,000) during 1993, 1994 and 1995, respectively.
Years Ended December 31
-------------------------------
1993 1994 1995
---- ---- ----
(Thousands)
Revenues
Building Products Group. . . . . $ 97,319 $ 60,186 $ 48,431
Concrete Construction Group. . . 64,249 69,686 11,088
-------- -------- --------
Total. . . . . . . . . . . . $161,568 $129,872 $ 59,519
======== ======== ========
Discontinued operations
Income (loss) from discontinued
operations
Building Products Group. . . $(4,952)$ (7,382)$ (388)
Concrete Construction Group. 4,632 5,189 505
Fixed price custom curtainwall. . . . (2,500) (8,000) -
------- -------- --------
Total . . . . . . . . . $(2,820)$(10,193)$ 117
======= ======== ========
Gain (loss) on sale/disposal of business
segment
Building Products Group. . . . . $(9,700)$(11,400)$(19,455)
Concrete Construction Group. . . - - 3,450
------- -------- --------
Total. . . . . . . . . . . . $(9,700)$(11,400)$(16,005)
======= ======== ========
4. RESTRUCTURING ACTIONS
In connection with its restructuring initiatives, the Company recorded
restructuring charges of $2,075,000 in 1994. The 1994 restructuring charges
relate primarily to the downsizing of operations and the termination of
approximately thirty-six employees, substantially all of whom had been
terminated as of December 31, 1994.
The amounts accrued and charged against the restructuring liabilities
during each of the years ended December 31, 1994 and 1995 are as follows:
Reclassi-
1995 fication of
Balance Provision Businesses Balance
Dec. 31 and 1995 Sold/Held Dec. 31
1994 Adjustments Charges For Sale 1995
------- ------------------ ----------- -------
(Thousands)
Employee terminations . . . $2,404 $ (511) $(1,251) $ (93) $ 549
Other. . . . . . . . 198 600 (541) 734 991
------ ------ ------- ----- ------
$2,602 $ 89 $(1,792) $ 641 $1,540
====== ====== ======= ===== ======
Reclassi-
1994 fication of
Balance Provision Businesses Balance
Dec. 31 and 1994 Sold/Held Dec. 31
1993 Adjustments Charges For Sale 1994
------- ------------------ ----------- -------
(Thousands)
Employee terminations . . . $3,351 $3,498 $(3,811) $(634) $2,404
Other. . . . . . . . 1,882 (78) (1,497) (109) 198
------ ------ ------- ----- ------
$5,233 $3,420 $(5,308) $(743) $2,602
====== ====== ======= ===== ======
5. CASH AND RELATED MATTERS
Cash and cash equivalents consisted of the following:
December 31
------------------
1994 1995
---- ----
(Thousands)
Cash . . . . . . . . . . . . . . . . . . . $ 4,984 $ 241
Time deposits. . . . . . . . . . . . . . . 2,906 9,427
------- -------
Total. . . . . . . . . . . . . . . . . $ 7,890 $ 9,668
======= =======
On January 20, 1995, the Company entered into a settlement with respect
to certain unresolved items pertaining to the sale of certain businesses.
Under the terms of the settlement agreement, the Company received $1,668,000
of previously restricted cash and paid $375,000 to settle certain legal
claims.
6. ACCOUNTS RECEIVABLE
The Company grants credit to its customers, substantially all of which
are involved in the construction industry. At December 31, 1994 and 1995, the
Company's accounts receivable due from customers located outside of the United
States totaled $16,019,000 and $4,018,000, respectively. Accounts receivable
included unbilled retainages of $654,000 and $465,000, respectively, at
December 31, 1994 and 1995. There were no retainages due beyond one year at
December 31, 1995.
7. INVENTORIES
Inventories consisted of the following:
December 31
------------------
1994 1995
---- ----
(Thousands)
Work in process. . . . . . . . . . . . . . $ 6,211 $ 4,880
Materials and supplies . . . . . . . . . . 11,614 8,608
------- -------
Total. . . . . . . . . . . . . . . . . $17,825 $13,488
======= =======
At December 31, 1994 and 1995, approximately 85% and 100%, respectively,
of inventories were valued on the LIFO method. The LIFO value for those
inventories approximated their FIFO value at December 31, 1994 and 1995.
8. OTHER ACCRUED LIABILITIES
Other accrued liabilities consisted of the following:
December 31
------------------
1994 1995
---- ----
(Thousands)
Payroll and related benefits . . . . . . . $11,778 $10,378
Warranty and backcharge reserves . . . . . 3,367 3,854
Deferred revenues. . . . . . . . . . . . . 1,778 1,450
Reserves for restructuring . . . . . . . . 2,460 753
Accrued interest . . . . . . . . . . . . . 1,804 2,821
Other. . . . . . . . . . . . . . . . . . . 11,615 8,825
------- -------
Total. . . . . . . . . . . . . . . . . $32,802 $28,081
======= =======
9. DEBT
Long-term debt consisted of the following:
December 31
------------------
1994 1995
---- ----
(Thousands)
Foothill Term Loan Note. . . . . . . . . . $ 5,000 $ 5,000
12% Senior Subordinated Notes due November 1999:
Face amount . . . . . . . . . . . . 21,260 22,535
Capitalized future interest payments . . . 13,444 10,817
15.5% Discount Subordinated Debentures due
November 2000. . . . . . . . . . . . . . 4,845 4,882
Debt of foreign subsidiaries with interest from
6.4% to 11% due 1995 to 1998 . . . . . . 358 -
------- -------
Total. . . . . . . . . . . . . . . . . 44,907 43,234
Less current portion of principal. . . 134 -
Less current portion of capitalized interest
payable. . . . . . . . . . . . . . . 1,352 2,704
------- -------
Long-term debt . . . . . . . . . . . . $43,421 $40,530
======= =======
The aggregate maturities of long-term debt, including future cash
interest payments on capitalized interest, at December 31, 1995 were as
follows:
(Thousands)
1996 . . . . . . . . . . . . . . . . . $ 2,704
1997 . . . . . . . . . . . . . . . . . 2,704
1998 . . . . . . . . . . . . . . . . . 2,704
1999 . . . . . . . . . . . . . . . . . 30,240
2000 . . . . . . . . . . . . . . . . . 5,196
-------
Total maturities of long-term debt . 43,548
-------
Less unamortized discount on 15.5%
Discount Subordinated Debentures . 314
-------
Total carrying value of long-term debt. . . $43,234
=======
In connection with the Exchange Offer, all future interest payments on
the Company's 12% Senior Subordinated Notes were capitalized. For purposes of
determining the debt maturities of the 12% Senior Subordinated Notes,
capitalized future interest payments are considered maturities of long-term
debt when currently due.
On April 12, 1993, the Company entered into a credit agreement with
Foothill Capital Corporation ("Foothill"). Under the terms of the credit
agreement, Foothill agreed to provide the Company with a term loan and a
revolving line of credit of up to a maximum amount of $35,000,000. On May 18,
1994, the Company entered into an amendment to its existing agreement with
Foothill (such amended agreement being hereinafter referred to as the "Credit
Facility"), which under its terms, amended the Company's existing credit
facility by increasing the Company's maximum availability under the facility
by $10,000,000 to $45,000,000, incorporated certain receivables, inventory and
property, plant and equipment of the Company's Canadian Building Products
Operations and Canadian Metal Buildings business into the definition of the
Borrowing Base, and extended the term of the Credit Facility to May 18, 1999.
The Credit Facility requires that the Company borrow $5,000,000 under a
term loan and provides for issuances of commercial or standby letters of
credit or guarantees of payment with respect to such letters of credit in an
aggregate amount not to exceed $32,000,000 and/or additional borrowings, based
upon availability under the Borrowing Base. The $5,000,000 term loan is
evidenced by a term loan note (the "Term Loan Note") that bears interest which
is payable monthly at a rate equal to twenty-four percentage points above the
reference rate (the reference rate is equivalent to the prime rate at
designated institutions) on 50% of the Term Loan Note and at a rate of 3%
above the reference rate on the remaining 50% of the Term Loan Note. The
Credit Facility requires that the Company pay a monthly fee equal to 2.5% per
annum of the average letters of credit and letter of credit guarantees
outstanding, and a fee equal to .5% per annum of 61.11% of the average unused
line of credit. All other obligations under the Credit Facility bear interest
at the higher of three percent above the reference rate or nine percent per
annum. The Credit Facility also provides for the payment of penalties,
depending on the year, in the event the Credit Facility is terminated by the
Company, prior to the end of the term.
Availability under the Credit Facility is based on a percentage of
eligible (as defined in the Credit Facility and subject to certain
restrictions) accounts receivable and inventory, plus a base amount (which
base amount is reduced by $166,667 per month and is subject to reduction in
the case of sales of certain property, plant and equipment, plus the amount
provided by the Company as cash collateral, if any (each together the
"Borrowing Base"). At December 31, 1995, the Borrowing Base was estimated to
be $33,695,000, which included $1,625,000 of collateral related to the
Canadian Building Products Operation which is pending sale/disposition, and
was used to support the $5,000,000 Term Loan Note and $25,475,000 of
outstanding letters of credit which are primarily used to support insurance
programs, bonding programs, certain foreign credit facilities and other
financial guarantees. The Company had unused availability under the Credit
Facility of $3,219,000 at December 31, 1995.
As collateral for its obligations under the Credit Facility, the Company
granted to Foothill a continuing security interest in and lien on
substantially all of the Company's assets. The Credit Facility contains
certain financial covenants with respect to the Company's tangible net worth
and current ratio. In addition, there are covenants which prohibit the
Company from paying dividends on or acquiring any of its capital stock and
which either restrict or limit the Company's ability to take certain actions
involving other indebtedness, liens, mergers, acquisitions, consolidations,
dispositions, sales of assets, investments, capital expenditures, guarantees,
prepayment of debt, transactions with affiliates and other matters.
Upon entering into the original credit agreement with Foothill, the
Company was required to pay a $350,000 commitment fee, and to deliver a
facility note in an amount equal to $4,000,000 (the "Facility Note"). The
Facility Note, plus accrued interest, which combined were $4,123,000, were
paid in full on November 30, 1993 in a noncash transaction through the
issuance of 1,374,292 shares of the Company's common stock to Foothill. At
December 31, 1995, the Company has recorded $3,237,000 of capitalized debt
issuance costs related to the Credit Facility which is being amortized as
interest expense over the term of the facility.
At December 31, 1995, the Company's Asia/Pacific Building Products
Operations had outstanding short-term bank borrowings of $1,115,000,
outstanding long-term debt of $428,000, including the current portion, and
outstanding performance bonds and other guarantees amounting to $2,995,000,
which were supported by the local entities' assets and a $2,000,000 letter of
credit issued under the Credit Facility. The Company had no other short-term
borrowings during 1995.
At December 31, 1995, the Company had outstanding performance and
financial bonds of $26,404,000, which generally provide a guarantee as to the
Company's performance under contracts and other commitments and are
collateralized in part by letters of credit which are issued under the Credit
Facility. The outstanding bond amounts above include approximately
$20,419,000 of performance bonding related to businesses which were previously
sold or are pending disposition (see Note 3).
On July 14, 1993, the Company consummated its Exchange Offer. Under the
terms of the Exchange Offer, the 15.5% Subordinated Debenture holders other
than Sage RHH (see Note 15) who tendered their bonds each received $407.57 in
principal amount of the Company's 12% Senior Subordinated Notes due 1999, plus
111.4 shares of the Company's common stock for each $1,000 aggregate principal
amount of 15.5% Subordinated Debentures. Sage RHH, an investor which
controlled approximately 29% of the 15.5% Subordinated Debentures and 33.8% of
the Company's common stock at the time of the Exchange Offer received
approximately 260.4 shares of the Company's common stock for each $1,000
aggregate principal amount of 15.5% Subordinated Debentures tendered. The
Company's Preferred Stock holder received 54.8 shares of common stock for each
200 shares of Preferred Stock plus accrued but unpaid dividends, which in the
aggregate totaled $281,250 for all of the Preferred Stock. Pursuant to the
Exchange Offer, $63,734,000 principal amount of 15.5% Subordinated Debentures
plus accrued but unpaid interest of $17,128,000 were exchanged for an
aggregate of $17,850,000 principal amount of the Company's 12% Senior
Subordinated Notes and 10,041,812 shares of the Company's common stock, and
all 500,000 outstanding shares of the Preferred Stock were exchanged for an
aggregate of 137,030 shares of the Company's common stock.
Interest on the 12% Senior Subordinated Notes is payable semi-annually on
May 31 and November 30 of each year. Interest accruing on the 12% Senior
Subordinated Notes through and including May 31, 1995 was payable, at the
Company's option, in cash or additional 12% Senior Subordinated Notes and
after May 31, 1995 is payable in cash. The Company elected to pay all
interest which was due on the 12% Senior Subordinated Notes through and
including the May 31, 1995 payment in additional notes. The 12% Senior
Subordinated Notes will mature November 30, 1999, and are redeemable at the
Company's option, at any time in whole or from time to time in part, at the
principal amount thereof plus accrued interest to the redemption date.
Indebtedness under the 12% Senior Subordinated Notes is senior to the
Company's 15.5% Subordinated Debentures, and subordinate to the extent
provided in the indenture to all indebtedness under the Credit Facility and
any other indebtedness which by its terms provides that it shall be senior to
the 12% Senior Subordinated Notes.
During the third quarter of 1993, the Company recorded an extraordinary
gain of $5,367,000 from the exchange of the 15.5% Subordinated Debentures. In
accordance with SFAS No. 15, all future interest payments which are due on the
12% Senior Subordinated Notes are recorded as part of long-term debt, and, as
a result, the Company has deferred the related economic gain and does not
record any interest expense related to the 12% Senior Subordinated Notes in
its Consolidated Statement of Operations. On a proforma basis, assuming that
the Exchange Offer occurred at the beginning of the period, interest expense
for the year ended December 31, 1993 would have been reduced by $6,491,000.
10. RENTAL AND LEASE INFORMATION
The Company leases certain facilities and equipment under operating
leases. Total rental expense charged to the Consolidated Statements of
Operations for continuing operations on operating leases was $1,484,000,
$1,604,000 and $1,708,000 for 1993, 1994 and 1995, respectively.
Future minimum rental commitments under operating leases at December 31,
1995 are as follows:
(Thousands)
1996 . . . . . . . . . . . . . . . . . . . $1,664
1997 . . . . . . . . . . . . . . . . . . . 1,444
1998 . . . . . . . . . . . . . . . . . . . 1,083
1999 . . . . . . . . . . . . . . . . . . . 175
2000 . . . . . . . . . . . . . . . . . . . 25
------
Total . . . . . . . . . . . . . . . . $4,391
======
The above amounts do not include rental commitments of the Asia/Pacific
Building Products Operations, the Canadian Buildings Products Operations, or
rents payable under escalation clauses as the escalation amounts are not
determinable.
11. FINANCIAL INSTRUMENTS
The Company enters into various types of financial instruments in the
normal course of business. The estimated fair value of amounts are determined
based on available market information and, in certain cases, on assumptions
concerning the amount and timing of estimated future cash flows and assumed
discount rates reflecting varying degrees of perceived risk. Accordingly, the
fair values may not represent actual values of the financial instruments that
could have been realized as of year end or that will be realized in the
future. Fair values for cash and cash equivalents, restricted cash, and loans
payable approximate their carrying value at December 31, 1995 due to the
relatively short maturity of these financial instruments. The fair value of
long-term debt, including the current portion of long-term debt at December
31, 1995, was estimated to be $31,050,000 compared to their carrying value of
$43,234,000.
12. TAXES ON INCOME
Year Ended December 31
---------------------------------
1993 1994 1995
---- ---- ----
(Thousands)
Income (loss) from continuing
operations before provision for
taxes on income:
Domestic . . . . . . . . . . .$(12,866) $ (1,008)$ 11,184
Foreign. . . . . . . . . . . . 283 841 1,163
-------- -------- --------
Total. . . . . . . . . . . .$(12,583) $ (167)$ 12,347
======== ======== ========
A reconciliation between taxes computed at the U.S. statutory federal
income tax rate and the provision for taxes on income from continuing
operations reported in the Consolidated Statements of Operations follows:
Year Ended December 31
---------------------------------
1993 1994 1995
---- ---- ----
(Thousands)
Tax provision (credit) at U.S.
statutory rate. . . . . . . . . . $(4,404) $ (58)$ 4,321
Operating losses that could not be
offset against taxable income . . 4,186 - -
Differences between foreign and
domestic tax rates . . . . . . . 8 25 35
Net operating loss benefit . . . . (108) (320) (442)
Benefit attributable to reversal of
net temporary differences. . . . - (7)(4,272)
Other non-deductible expenses. . . 318 360 358
------- ------- -------
Provision for taxes on income. . . $ - $ - $ -
======= ======= =======
The following is a summary of the significant components of the Company's
net deferred tax liability at December 31, 1994 and 1995:
1994 1995
---- ----
(Thousands)
Deferred tax assets:
Insurance liabilities . . . . . . . . $ 8,196 $ 6,645
Interest on 12% Senior Subordinated Notes . . 5,372 3,786
Pension liabilities . . . . . . . . . 1,221 1,964
Warranties, backcharges and job loss
provisions . . . . . . . . . . . . . 3,489 2,861
Other expenses not currently deductible . . . 16,619 13,671
Operating loss carryforwards. . . . . 16,494 13,565
Limited operating loss carryforwards. 1,225 1,225
Unrealized loss on sale/disposal of
businesses . . . . . . . . . . . . . 2,114 7,330
-------- --------
Total tax assets . . . . . . . . . 54,730 51,047
-------- --------
Deferred tax liabilities:
Accelerated depreciation. . . . . . . (6,457) (3,465)
Other items . . . . . . . . . . . . . (3,128) (2,819)
-------- --------
Total tax liabilities. . . . . . . (9,585) (6,284)
-------- --------
Deferred tax asset valuation allowance . . (46,045) (45,213)
-------- --------
Net deferred tax liability . . . . $ (900) $ (450)
======== ========
During 1995, the valuation allowance decreased by $832,000. Due to the
Company's recent history of cumulative operating losses and the cyclical
nature of the Company's business, management believes that a full valuation
allowance is required in all tax jurisdictions. Included in the unlimited
loss carryforwards are deferred tax assets of $3,600,000 and $3,900,000
related to the Canadian operations net operating loss carryforwards for 1994
and 1995, respectively.
At December 31, 1995, the Company had U.S. net operating loss
carryforwards of $33,375,000 for tax reporting purposes which are available to
offset future income without limitation. The U.S. net operating loss
carryforwards are available for utilization until expiration in the years 2008
through 2010. In addition, the Company has U.S. tax net operating loss
carryforwards of $140,249,000, as well as a general business credit
carryforward of $1,000,000, that existed as of the date of the Exchange Offer,
which use is limited due to a "Change in Ownership," as defined in Section 382
of the Internal Revenue Code. The Company's ability to utilize such
carryforwards and credits is restricted to an aggregate potential availability
of $3,500,000, with an annual limitation of approximately $250,000 through the
year 2008. Additionally, these carryforwards can be used to offset income
generated by the sale of certain assets to the extent that the gain existed at
the time of the Exchange Offer. This amount and the Company's unlimited, U.S.
net operating loss carryforwards could be further limited should another
"Change in Ownership" occur.
Additionally, at December 31, 1995, the Company had net operating loss
carryforwards at its Canadian subsidiary of approximately $11,204,000 which
expire in the years 1998 through 2000 and net operating loss carryforwards at
its Asia/Pacific Building Products Operations of $4,767,000. In connection
with the planned disposition of the Asia/Pacific Building Products Operations,
the net operating loss carryforwards will be lost and, depending on the form
of the disposition of the Canadian Building Products Operation, the Canadian
net loss carryforwards may be lost. Undistributed earnings of the Canadian
operations at December 31, 1995, amounted to approximately $43,000. No
provision for income taxes has been made because the Company intends to invest
such earnings permanently. If the Company were to repatriate all
undistributed earnings, withholding taxes assessed in the local country would
not be material to the Consolidated Financial Statements at December 31, 1995.
13. CONTINGENT LIABILITIES AND COMMITMENTS
On March 3, 1995, the Company and its surety, Federal Insurance Company
("Federal"), entered into an agreement (the "Federal Agreement") under which
Federal agreed to hold the Company harmless from certain claims pending in
connection with one of the Company's former Fixed Price Custom Curtainwall
projects. Under the terms of the Federal Agreement, Federal assumed control
of the litigation and will also be the beneficiary of any affirmative claim
which the Company may receive. As consideration for Federal's obligations,
the Company assigned to Federal the $3,000,000 interest bearing promissory
note received from the Company's sale of the Construction Group, and agreed to
pay Federal $1,000,000 per year, in equal quarterly installments, for seven
years without interest commencing March 24, 1995. As security for the payment
obligations to Federal, the Company granted to Federal a security interest in
all of the Company's assets and the purchaser delivered a financial guarantee
insurance policy securing payment of the Concrete Note. The Federal Agreement
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 27% 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 $6,000,000 at December 31, 1995.
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 will be incurred and the amount of the loss can
be reasonably estimated.
The Company continues to be liable for significant trailing liabilities
which were associated with sold or discontinued businesses (see Note 3) prior
to the sale or disposition dates including, in certain instances, liabilities
arising from Company self-insurance programs, unfunded pension liabilities,
warranty and rectification claims, various severance obligations,
environmental clean-up matters, various Company guarantees with respect to
such businesses, and unresolved litigation arising in the normal course of the
former business activities. The management of the Company has made estimates
as to the amount and timing of the payment of such liabilities which are
reflected in the accompanying consolidated financial statements. Given the
subjective nature of many of these liabilities, their ultimate outcome cannot
be predicted with certainty. Based upon currently available information,
management does not expect that the ultimate outcome of such matters will be
materially different than what is currently recorded in the accompanying
consolidated financial statements.
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.
14. INCENTIVE PLANS, WARRANTS
Long-Term Incentive Plan
The Company's 1991 Long-Term Incentive Plan, (the "Long Term Incentive
Plan"), as amended and restated in 1993, provides for the grant of both cash-
based and stock-based awards to eligible employees of, and persons or entities
providing services to the Company and its subsidiaries and provides for one-
time, automatic stock awards to non-employee members of the Board of
Directors. Under the Long-Term Incentive Plan, the Company may provide awards
in the form of stock options, stock appreciation rights, restricted shares,
performance awards, and other stock based awards. Currently up to 1,400,000
shares of common stock are issuable under the Long-Term Incentive Plan,
subject to appropriate adjustment in certain events. Shares issued pursuant
to the Long-Term Incentive Plan may be authorized and unissued shares, or
shares held in treasury. Awards may be granted under the Long-Term Incentive
Plan through March 19, 2001, unless the plan is terminated earlier by action
of the Board of Directors. At December 31, 1995, there were 978,000 shares
under the Long-Term Incentive Plan which were available for grant.
On December 22, 1993, the Company granted awards (the "1993 Awards") of
564,000 restricted shares of the Company's common stock to certain executive
officers and key employees. The awards are designed to incentivize management
in a manner which would enhance shareholder value by tying vesting provisions
to achievement of performance targets representing increases in the average
market value of the Company's common stock. The accelerated vesting
provisions include comparison of future share prices to a pre-determined base
price (each measured on a 60-day average basis), cumulative market value
appreciation targets over a three year period, and a requirement of continued
employment with the Company except in certain specific circumstances. The
base price for the 1993 Awards was $3.41 per share. The 1993 Awards also
provide that if performance targets are not achieved by August 10, 1996, all
unvested shares not forfeited will vest automatically on August 10, 2003,
provided the holder is still an employee of the Company as defined in the
plan. The 1993 Awards provide for immediate vesting if a change in the
control of the Company occurs, as defined.
During 1994, 203,000 restricted shares from the 1993 Awards were
forfeited as a result of employee terminations and 140,000 restricted shares
of the 1993 Awards were vested pursuant to the provisions of an employment
agreement between the Company and a former president.
During 1995, 140,000 restricted shares were issued to the Company's
President and Chief Operating Officer, for which one-third of the shares
vested on the date of the grant, the second one-third vested on November 1,
1995, and the remaining one-third vests on November 1, 1996. Also during
1995, 2,052 shares were issued to a director and 88,000 restricted shares from
the 1993 Awards were forfeited as a result of employee terminations. At
December 31, 1995, 180,000 unvested restricted shares were outstanding.
The fair market value of the restricted shares, based on the market
price at the date of the grant, is recorded as deferred compensation, as a
component of stockholders' equity, and deferred compensation expense is
amortized over the period benefited.
Warrants
In connection with the merger of H.H. Robertson and Ceco Industries,
Inc. on November 8, 1990, the Company assumed 1,470,000 of outstanding
warrants of Ceco Industries. Each warrant, which is exercisable on or before
December 9, 1996, provides for the right to purchase one stock unit at a price
of $6.02 per unit, a unit being a fraction (as determined under the warrants)
of a share. The warrants currently provide the holders with the right to
acquire an aggregate of 90,249 shares of the Company's common stock at an
exercise price of $98.11 per share. The Company has reserved 90,249 shares of
its common stock for issuance upon exercise of the warrants. These warrants
are reflected in the accompanying Consolidated Balance Sheets at their fair
value at the date of merger.
15. RELATED PARTY TRANSACTIONS
On September 15, 1992, Mulligan Partnership ("Mulligan") sold 297,655
shares of the Company's common stock, representing approximately 33.8% of the
Company's then outstanding common stock, and $19,831,000 aggregate principal
amount of the Company's 15.5% Subordinated Debentures, representing
approximately 29% of the then outstanding principal amount of such 15.5%
Subordinated Debentures, to Sage Capital Corporation ("Sage Capital"), a
Wyoming corporation.
The rights of Frontera S.A., ("Frontera") an affiliate of Mulligan,
under a Stockholders Agreement dated as of June 8, 1990 among the Company,
Frontera and certain other stockholders, including the right to nominate
certain members of the Company's Board of Directors, terminated upon the sale
by Mulligan to Sage Capital. Mulligan assigned to Sage Capital, Mulligan's
rights under the terms of a registration rights agreement dated as of November
8, 1990 between the Company and Frontera.
On November 18, 1992, the Company elected the President of Sage Capital
as the Company's President and Chief Executive Officer and as a Director, and
elected the Managing Director of Sage Capital as a Director of the Company.
On December 30, 1992, Sage Capital transferred its shares of common stock and
the 15.5% Subordinated Debentures to Sage RHH, a partnership, with Sage
Capital retaining an 80% ownership in Sage RHH. As described in Note 9, Sage
RHH tendered all of its 15.5% Subordinated Debentures in connection with the
Exchange Offer.
On December 2, 1993, the Company and its wholly owned subsidiary
Robertson Espanola, S.A. ("Robertson Espanola") entered into an agreement (the
"RC Agreement") with RC Holdings, Inc. ("RC Holdings") (formerly Heico
Acquisitions, Inc.) which is indirectly controlled by the Company's Chief
Executive Officer. Pursuant to the RC Agreement, RC Holdings, through an
affiliate entity acquired 3,333,333 newly issued shares of the Company's
common stock and certain inventory and interests related to a project in
Madrid, Spain known as the Puerta de Europa project, for which the Company's
Cupples Division had been providing the curtainwall system, Robertson Espanola
had been providing certain project management and administrative services, and
the owner of the project had been placed in insolvency proceedings. The
shares issued represented approximately 21.4% of the then outstanding shares
of the Company after issuance of such shares. The Company received an
aggregate of $10,000,000 in cash for the shares and assets. The RC Agreement
also provides that, if RC Holdings is able to realize any proceeds in
connection with the Puerta de Europa project, all receipts in excess of
$5,000,000 plus expenses incurred for completion and collection, will be split
equally between RC Holdings and the Company (see Sale of Cupples Division
below). The RC Agreement provides that, until the earlier of (i) December 2,
1998, (ii) the date on which RC Holdings and its affiliates no longer hold 10%
of the Company's outstanding common stock or (iii) the date on which the
current President of RC Holdings ceases to be a controlling person with
respect to RC Holdings and its affiliates, the Board of Directors of the
Company shall not elect a chief executive officer without the prior written
consent of RC Holdings. On December 9, 1993, the Board of Directors appointed
the President and sole stockholder of RC Holdings as its chief executive
officer and vice chairman of the Board of Directors.
On August 1, 1994, the Company and Robertson Espanola entered into a
subcontract agreement with RC Holdings (the "RC Subcontract"). Pursuant to
the RC Subcontract, the Company and Robertson Espanola have undertaken to
acquire and supply certain materials for, and to coordinate the installation
of, the curtainwall system related to the above-mentioned Puerto de Europa
project. The Company and Robertson Espanola will be paid for certain costs
and expenses associated with the performance of the RC Subcontract. During
1994, the Company, including Robertson Espanola, charged RC Holdings for costs
and services performed pursuant to the RC Subcontract. Such amounts were not
significant. During the period January 1, 1995 through July 31, 1995 (the
date at which Robertson Espanola was sold to an unrelated third party),
Robertson Espanola charged RC Holdings $413,000 for cost and services provided
pursuant to the RC Subcontract.
On December 27, 1994, the Company sold the business and assets
(including up to $900,000 of the Company's share of the excess proceeds from
the above-mentioned Puerto de Europa project, if any, received by the Company
pursuant to the RC Agreement) of its remaining U.S. Building Products
operation, the Cupples Division, to Cupples Products, Inc. ("CPI"), a newly-
formed entity owned by a member of the Company's Board of Directors, for
$800,000 and the assumption of certain liabilities by the purchaser. The
transaction and the consideration therefore were negotiated with the purchaser
under the direction of a special committee of disinterested directors
appointed by the Board of Directors. The sale agreement provides that CPI
will provide certain services to the Company for certain fees, on an as-needed
basis, to assist in the resolution of certain legal proceedings and warranty
and rectification claims which arose prior to the sale date. Accordingly, the
Company anticipates that certain business relationships between the Company
and CPI will continue in the future. During 1995, the Company received
$500,000 from RC Holdings of the excess proceeds from the Puerto de Europa
project, which was in turn paid to CPI, net of $420,000 for amounts owed by
CPI to the Company (which amounts primarily related to payroll, payroll taxes
and sale date cutoff related items).
On March 3, 1995, the Company sold the business and assets of its
Concrete Construction Group to Ceco Concrete Construction Corp. ("Ceco
Concrete"), a newly-formed entity controlled by the Company's Chief Executive
Officer. The consideration consisted of $11,500,000 of cash, adjusted to
reflect an as of sale date of October 1, 1994, a $3,000,000 interest bearing
promissory note payable in three equal annual installments, with interest at
7%, and the assumption of certain liabilities by the purchaser. Upon the
closing of the sale, the Company received $8,000,000 of cash, after
adjustments. Additionally, an affiliate of the purchaser entered into an
indemnity agreement with the Company's surety with respect to the Concrete
Construction Group performance bonds which were outstanding at the date of the
sale. The transaction and the consideration therefore were negotiated under
the direction of a special committee of disinterested directors appointed by
the Board of Directors of the Company, who engaged the services of an
independent investment banker and were represented by an independent law firm.
During 1994, the Company agreed to pay $222,000 to a company affiliated
with the Company's Chief Executive Officer for the services of an individual
who served as President of the Company's Metal Buildings Group during the
period from February 1994 through November 3, 1994 and as President and Chief
Operating Officer of the Company from November 3, 1994 through December 31,
1995. The Company also agreed to pay to another affiliated company of the
Company's Chief Executive Officer $260,000 and $274,000, during 1994 and 1995,
respectively, for manufacturing and certain other consulting services.
Pursuant to a consulting agreement with Sage Capital, the Company paid
$517,000 and $200,000, respectively, in 1993 and 1994, for financial and
operational restructuring services. In connection with the sale of the
Cupples Division, the consulting agreement with Sage Capital was terminated.
The Company has employment agreements and severance payment plans with
respect to certain of its executive officers and certain other management
personnel. These agreements generally provide for salary continuation for a
specified number of months under certain circumstances. Certain of the
agreements provide the employees with certain additional rights after a change
of control of the Company, as defined, occurs.
16. RETIREMENT BENEFITS
Historically, the Company has provided retiree benefits to substantially
all of its U.S. and certain of its foreign employees under various defined
benefit pension plans. In connection with the Company's restructuring
initiatives, the Company amended its U.S. defined benefit pension plan,
effective January 1, 1995, so that active salary employees will cease to
accrue future benefits after that date. Additionally, effective April 1,
1996, the plan was further amended so that certain U.S. active hourly
employees who are not part of a collective bargaining agreement will cease to
accrue future plan benefits. As a result of the plan amendments pertaining to
the salary and hourly employees discussed above, the Company recorded
curtailment losses of $465,000 in 1994 and $300,000 in 1995, respectively.
Benefits which are provided under the Company's defined benefit pension
plans are primarily based on years of service and the employee's compensation.
Plan assets relative to the Company's defined benefit plans are invested in
broadly diversified portfolios of government obligations, mutual funds,
stocks, bonds and fixed income and equity securities.
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. In December of 1995, prior to receiving any
notification from the IRS as to the outcome of the Company's Waiver
Application, the Company made contributions totalling $9,610,000 to the two
plans, thereby satisfying all past due contributions. Currently, the
Company's funding policy is to make quarterly and annual installments to its
defined benefit plans, as required by minimum funding standards determined in
accordance with the Internal Revenue Code.
Defined Benefit Pension Plans
Net pension cost consisted of the following:
Year Ended December 31
-------------------------------
1993 1994 1995
---- ---- ----
(Thousands)
Service cost-benefits earned during the
year . . . . . . . . . . . . . .$ 926 $ 699 $ 241
Curtailment loss and special termination
benefits from sale of the Cupples
Division and termination of future
benefit accruals for salaried and
hourly employees . . . . . . . . . - 738 300
Interest cost on projected benefit
obligation . . . . . . . . . . . . 5,222 4,305 4,195
Actual return on assets. . . . . . . (5,536) 463 (8,622)
Net amortization and deferral. . . . 1,355 (3,642) 5,700
------- ------- -------
Net pension cost . . . . . . . . . .$ 1,967 $ 2,563 $ 1,814
======= ======= =======
The above net pension cost includes the pension expense related to
certain of the Company's former employees of the Cupples Division and Concrete
Construction Group, which are recorded as discontinued operations (see Note
3). The amount of net pension expense which was allocated to the Cupples
Division and Concrete Construction Group for the years ended 1993, 1994 and
1995 was $384,000, $365,000, and $70,000, respectively.
The following table sets forth the aggregate funded status of the
Company's defined benefit pension plans:
December 31
-----------------------
1994 1995
---- ----
(Thousands)
Actuarial present value of benefit obligation:
Vested benefit obligation. . . . . . . . . $ 52,440 $ 56,312
Non-vested benefit obligation. . . . . . . 3,027 893
-------- --------
Accumulated benefit obligation . . . . . . 55,467 57,205
Excess of projected benefit obligation over
accumulated benefit obligation . . . . . - -
-------- --------
Projected benefit obligation. . . . . . . . . 55,467 57,205
Plan assets at fair value . . . . . . . . . . 35,630 48,653
-------- --------
Projected benefit obligation in excess of plan
assets . . . . . . . . . . . . . . . . . .(19,837) (8,552)
Unrecognized net loss . . . . . . . . . . . . 8,296 5,195
Remaining unrecognized net transition obligation . . 253 121
Adjustment required to recognize minimum liability . (8,549) (5,316)
-------- --------
Net prepaid (accrued) pension cost recognized in the
Consolidated Balance Sheets . . . . . . . . $(19,837) $ (8,552)
======== ========
Actuarial assumptions used for the Company's defined benefit plans were
as follows:
Years Ended December 31
-------------------------------
1993 1994 1995
---- ---- ----
Assumed discount rate. . . . . . . 7.25% 8.25% 7.25%
Assumed rate of compensation increase . . 5.0 5.0 -
Expected rate of return on plan
assets. . . . . . . . . . . . . . 9.0 9.0 9.0
Additionally, certain U.S. salary employees and, beginning April 1, 1996,
certain hourly employees who are not part of a collective bargaining agreement
are covered by a defined contribution plan which provides for contributions
based primarily on compensation levels. The Company funds its contributions
to the defined contribution plan as accrued. Plan assets of defined
contribution plans are invested in bank funds. Expense related to the
Company's defined contribution plans included the following amounts:
Years Ended December 31
-------------------------------
1993 1994 1995
---- ---- ----
(Thousands)
U.S. defined contribution plan . .$ 604 $ 608 $ 655
====== ====== ======
17. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
The Company sponsors postretirement medical and life insurance plans that
cover a closed group of certain eligible retirees and dependents of eligible
retirees. None of the plans are funded, nor do they have any plan assets.
The following table sets forth the funded status reconciled with the
amount recognized in the Company's Consolidated Balance Sheets.
December 31,
----------------------
1994 1995
------- --------
(Thousands)
Accumulated Postretirement Benefit Obligation
("APBO"):
Retired employees . . . . . . . . . . . . $(18,891) $ (3,116)
======== ========
Unfunded accumulated benefit obligation in
excess of plan assets . . . . . . . . . $(18,891) $ (3,116)
Unrecognized net (gain)/loss. . . . . . . (117) (4,565)
Unrecognized transition obligation. . . . 18,465 7,238
-------- --------
Accrued postretirement benefit cost recognized
in the Consolidated Balance Sheets. . . $ (543) $ (443)
======== ========
Weighted average discount rate used in determina-
tion of APBO. . . . . . . . . . . . . . 8.25% 7.25%
======== ========
Net periodic postretirement benefit cost for 1993, 1994 and 1995 included
the following components:
Year Ended December 31,
----------------------------
1993 1994 1995
------ ------ ------
(Thousands)
Interest cost . . . . . . . . . . . $1,716 $1,413 $ 320
Net amortization and deferral . . . 1,567 1,542 1,541
------ ------ ------
Net periodic postretirement benefit cost. . $3,283 $2,955 $1,861
====== ====== ======
Weighted average discount rate used in
determination of APBO . . . . . . 8.25% 7.25% 8.25%
====== ====== ======
For measurement of the net periodic postretirement benefit cost and the
APBO, a 0% annual rate of increase in the per capita cost of covered health
care benefits was assumed for the year 1995-1996; the rate was assumed to
increase to 9.75% for the year 1996-1997, and then to decline uniformly to
5.75% by the year 2001-2002. The rate was assumed to be 5.25% for the year
2002-2003 and to remain at that level thereafter. During 1995, the Company
amended its plans to eliminate health care coverage for participants age 65
and over and redesigned existing plans to include, beginning during 1996,
various managed care health care programs and increased participant premiums.
Decreases in the APBO and in the net periodic postretirement benefit cost from
1994 to 1995 reflect these amendments. Due to the elimination of post-65
health coverage in 1995, the medical trend rate assumption has a limited
impact on results. For example, increasing the assumed health care cost trend
rate by one percentage point for all future years would increase the
accumulated postretirement benefit obligation at December 31, 1995 by $93,000
and the total of the service cost and interest cost components of net period
postretirement benefit cost for 1995 by $8,000.
In the fourth quarter of 1993, the Company adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits". This statement requires
an accrual method of recognizing postemployment benefits. The cumulative
effect of adopting SFAS No. 112 was $1,200,000, which principally reflects
long-term disability income benefits which arose when the Company's policy was
to self-insure such benefits. Prior to the adoption of SFAS No. 112, the
Company expensed the net cost of providing these benefits on a pay-as-you-go
basis. Amounts recognized in the prior and current years Consolidated
Statements of Operations, exclusive of the effect of adopting SFAS No. 112,
were not material.
18. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial data is summarized as follows:
First Second Third Fourth
----- ------ ----- ------
1995 (a)(b)
Revenue . . . . . . . . . . .$60,927 $66,418 $ 70,620 $ 67,018
Cost of sales . . . . . . . . 51,422 54,463 57,098 55,302
Income (loss) from continuing
operations. . . . . . . . . 1,178 2,260 4,473 4,436
Net income (loss) . . . . . . 4,527 1,419 4,754 (14,241)
Income (loss) per share from
continuing operations . . .$ .07 $ .14 $ .28 $ .28
Net income (loss) per common
share. . . . . . . . . . . .$ .28 $ .09 $ .30 $ (.89)
1994 (a)(c)
Revenue . . . . . . . . . . .$50,507 $66,124 $ 67,201 $ 67,752
Cost of sales . . . . . . . . 45,587 55,794 55,458 57,109
Income (loss) from continuing
operations. . . . . . . . . (3,137) 1,183 (29) 1,816
Net income (loss) . . . . . . (5,511) 918 (15,373) (1,794)
Income (loss) per share from
continuing operations . . .$ (.20) $ .08 $ - $ .11
Net income (loss) per common
share . . . . . . . . . . .$ (.35) $ .06 $ (.97) $ (.11)
(a) The quarterly financial data presented has been reclassified to reflect
the Building Products Group and the Concrete Construction Group as
discontinued operations.
(b) During the first quarter of 1995, the Company recorded a gain on
sale/disposal of business segment of $3,450,000 which related to the sale of
the Concrete Construction Group and, during the fourth quarter of 1995, the
Company recorded a $19,455,000 loss on sale/disposal of business segment to
write-down the carrying value of the Asia/Pacific and Canadian Building
Products Operations to their estimated net realizable values.
(c) During the third and fourth quarters of 1994, the Company recorded losses
on sale/disposal of business segment of $9,800,000 and $1,600,000,
respectively, to write-down the carrying values of the Cupples Division and
the European Operations to their estimated net realizable values.
Additionally, in the third and fourth quarters of 1994, the Company recorded
losses from discontinued operations of $6,000,000 and $2,000,000, respectively
for the settlement of certain litigation related to the discontinued fixed
price custom curtainwall operations. The Company recorded restructuring
charges of $2,075,000 in the third quarter of 1994.
Independent Auditors' Report
To the Board of Directors and
Stockholders of Robertson-Ceco Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, stockholders' equity (deficiency) and
of cash flows present fairly, in all material respects, the financial position
of Robertson-Ceco Corporation and its subsidiaries (the "Company") at December
31, 1995 and 1994, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
March 21, 1996
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
(a) Information concerning the Registrant's directors is incorporated by
reference to the section entitled "Election of Directors" in the
registrant's definitive proxy statement for the Annual Meeting of
Stockholders to be held on May 29, 1996, to be filed pursuant to
Regulation 14A.
(b) Information concerning executive officers of the Registrant is set
forth in Item 4.1 of Part I page 8 of this Report under the heading
"EXECUTIVE OFFICERS OF THE REGISTRANT".
ITEM 11. EXECUTIVE COMPENSATION
----------------------
Information concerning executive compensation is incorporated by reference
to the section entitled "Executive Compensation" in the registrant's
definitive proxy statement for the Annual Meeting of Stockholders to be held
on May 29, 1996, to be filed pursuant to Regulation 14A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
Information concerning security ownership of certain beneficial owners and
management is incorporated by reference to the section entitled "Security
Ownership" in the registrant's definitive proxy statement for the Annual
Meeting of Stockholders to be held on May 29, 1996, to be filed pursuant to
Regulation 14A.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Information concerning certain relationships and related transactions is
incorporated by reference to the section entitled "Certain Relationships and
Related Transactions" in the registrant's definitive proxy statement for the
Annual Meeting of Stockholders to be held on May 29, 1996, to be filed
pursuant to Regulation 14A.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
----------------------------------------------------------------
PAGE NO.
The following documents are filed as part of this Report
Report:
(a)1. Consolidated Financial Statements of Robertson-Ceco
Corporation. 27
Consolidated Statements of Operations for the three
years ended December 31, 1995. 27
Consolidated Balance Sheets at December 31, 1994 and
1995. 28
Consolidated Statements of Cash Flows for the three
years ended December 31, 1995. 30
Consolidated Statements of Stockholders' Equity (Defic-
iency) for the three years ended December 31, 1995. 31
Notes to Consolidated Financial Statements, including
Selected Quarterly Financial Data as required by Item
302 of Regulation S-K. 32
Independent Auditors' Reports.
Price Waterhouse LLP 58
(a)2. Financial Statement Schedules for the Three Years
Ended December 31, 1995.
SCHEDULE II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not
applicable or not required. 64
Report of Independent Accountants on Financial Schedules
Price Waterhouse LLP - as of and for the years ended
December 31, 1993, 1994 and 1995. 66
(a)3. List of Exhibits.
Exhibits filed or incorporated by reference in
connection with this Report are listed in the
Exhibit Index starting on page 67.
(b) Reports on Form 8-K
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of
Boston, The Commonwealth of Massachusetts, on this 29 day of March 1996.
ROBERTSON-CECO CORPORATION
By /s/ Thomas C. Baker
------------------------------
Controller and Assistant
Secretary
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons in the capacities and as of
the 29 day of March, 1996. Each person whose signature appears below hereby
authorizes each of Andrew G. C. Sage, II, Elmer A. Roskovensky and John C.
Sills and appoints each of them singly his or her attorney-in-fact, each with
full power of substitution, to execute in his name, place and stead, in any
and all capacities, any or all further amendments to this Report and to file
the same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, making such further changes in
this Report as the Company deems appropriate.
SIGNATURE
/s/ Michael E. Heisley /s/ Andrew G. C. Sage, II
- ---------------------------------- -------------------------------
Michael E. Heisley Andrew G. C. Sage, II
Chief Executive Officer and Director Chairman and Director
(Principal Executive Officer)
/s/ Elmer A. Roskovensky /s/ John C. Sills
- ---------------------------------- -------------------------------
Elmer A. Roskovensky John C. Sills
President and Chief Operating Officer Executive Vice President and
Chief
and Director Financial Officer
/s/ Frank A. Benevento /s/ Stanley G. Berman
- ---------------------------------- -------------------------------
Frank A. Benevento Stanley G. Berman
Director Director
/s/ Mary Heidi Hall Jones /s/ Kevin E. Lewis
- ---------------------------------- -------------------------------
Mary Heidi Hall Jones Kevin E. Lewis
Director Director
/s/ Leonids Rudins /s/ Gregg C. Sage
- ---------------------------------- -------------------------------
Leonids Rudins Gregg C. Sage
Director Director
/s/ Edwin L. Donegan, Jr. /s/ Thomas C. Baker
- ---------------------------------- -------------------------------
Edwin L. Donegan, Jr. Thomas C. Baker
Director Controller and Assistant
Secretary
(Principal Accounting Officer)
ROBERTSON-CECO CORPORATION SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Thousands)
===============================================================================
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------
ADDITIONS
BALANCE ----------------------- BALANCE
AT CHARGED TO CHARGED TO AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1995:
Deducted from Asset
Accounts:
Allowance for
Doubtful Accounts $ 1,143 $ 732 $ 87 (a) $ 500 (b)
160 (e) 1,302
======= ======= ======= ======= =======
Reserves for Disco-
tinued Operations
(g) . . . . . . $12,309 $ $ $ 4,696 (c) $ 7,613
======= ======= ======= ======= =======
Not Deducted from Asset
Accounts:
Insurance liabilities
- current . . . $ 8,365 $ 9,561 $ 5,975 $15,191 (c) $ 8,243
467 (d)
======= ======= ======= ======= =======
Insurance liabilities
- long-term . . $15,084 $ $ $ 4,340 (d) $10,744
======= ======= ======= ======= =======
Other-current (f) $ 6,827 $ 3,281 $ 2,373 $ 5,454 (c)
166 (d)
416 (e) 6,445 (h)
======= ======= ======= ======= =======
Other-noncurrent
(g) . . . . $11,028 $ $ 1,800 $ 1,304 (d) $
141 (e) 11,383
======= ======= ======= ======= =======
YEAR ENDED DECEMBER 31,
1994:
Deducted from Asset
Accounts:
Allowance for
Doubtful Accounts. $ 3,255 $ 692 $ 13 (a) $ 729 (b)
2,088 (e) $ 1,143
======= ======= ======= ======= =======
Reserves for Discon-
tinued Operations
(g) . . . . . . . $ 5,246 $ 8,000 $ 166 $ 1,103 (c) $12,309
======= ======= ======= ======= =======
Not Deducted from
Asset Accounts:
Insurance liabilities
- current . . . . $11,225 $14,908 $ 331 $18,099 (c) $ 8,365
======= ======= ======= ======= =======
Insurance liabilities
- long-term . . . $14,770 $ $ 332 $ 18 (d) $15,084
======= ======= ======= ======= =======
Other-current (f). $12,568 $ 8,397 $ 1,311 (d) $10,818 (c)
3,834 (e)
797 (d) $ 6,827 (h)
======= ======= ======= ======= =======
Other-noncurrent
(g) $13,616 $ $ 36 (d) $ 2,624 (d) $11,028
======= ======= ======= ======= =======
ROBERTSON-CECO CORPORATION SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Continued)
(Thousands)
=======================================================================================
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------
ADDITIONS
BALANCE ----------------------- BALANCE
AT CHARGED TO CHARGED TO AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- -------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1993:
Deducted from Asset
Accounts:
Allowance for
Doubtful Accounts. $ 4,653 $ 1,707 $ 57 (a) $ 2,887 (b)
76 (d) 351 (e) $ 3,255
======= ======= ======= ======= =======
Reserves for Discon-
tinued Operations
(g) . . . . . . . $ 4,938 $ 2,500 $ $ 2,192 (c) $ 5,246
======= ======= ======= ======= =======
Not Deducted from Asset
Accounts:
Insurance liabilities
- current . . . . $16,434 $11,884 $ 680 (d) $17,773 (c) $11,225
======= ======= ======= ======= =======
Insurance liabilities
- long-term . . . $11,990 $ 3,100 $ $ 320 (d) $14,770
======= ======= ======= ======= =======
Other-current (f). $30,967 $ 6,164 $ 83 (d) $23,635 (c)
221 (e)
790 (d) $12,568(h)
======= ======= ======= ======= =======
Other-noncurrent
(g) . . . . $22,652 $ 110 $ $ 9,064 (c)
82 (d) $13,616
======= ======= ======= ======= =======
NOTES:
(a) Represents recovery of accounts receivable previously written off as
uncollectible.
(b) Accounts receivable written off as uncollectible.
(c) Represents charges to the accounts for their intended purposes.
(d) Represents transfer of reserves.
(e) Represents reserves of sold/held for sale businesses.
(f) The reserves are included in the caption "Other Accrued Liabilities" in the
Consolidated Balance Sheets.
(g) Current reserves are included in the caption "Other Accrued Liabilities"
and non-current reserves are included in the Caption "Reserves and Other
Long-Term Liabilities" in the Consolidated Balance Sheets.
(h) The reserves include warranty and backcharge reserves, reserves for
restructuring, environmental and job loss reserves included in the
caption "Other Accrued Liabilities" in the Consolidated Balance Sheets.
See Notes to Consolidated Financial Statements.
Report of Independent Accountants on
Financial Statement Schedules
To the Board of Directors
of Robertson-Ceco Corporation
Our audits of the consolidated financial statements referred to in our report
dated March 21, 1996 appearing on page 42 of the 1995 Annual Report on Form
10-K of Robertson-Ceco Corporation also included an audit of the Financial
Statement Schedule which is as of and for the years ended December 31, 1993,
1994 and 1995 listed in Item 14(a) of this Form 10-K. In our opinion, this
Financial Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
March 28, 1996
Exhibit Index
Exhibit Sequential
No. Description Page No.
3.1 Registrant's Second Restated Certificate of Incorporation,
effective July 23, 1993, filed as Exhibit 3 to Registrant's
report on Form 8-K dated July 14, 1993 (File No. 1-10659),
and incorporated herein by reference thereto . . . . .
3.2 Bylaws of Registrant, effective November 8, 1990, and as
Amended on November 12, 1991, August 27, 1992 and December
16, 1993, filed as Exhibit 3.2 to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993
(File No. 1-10659), and incorporated herein by reference
thereto. . . . . . . . . . . . . . . . . . . . . . . .
4.1 Registrant's Second Restated Certificate of Incorporation,
effective July 23, 1993 referred to in Exhibit 3.1 above.
4.2 Bylaws of Registrant, effective November 8, 1990, and as
Amended on November 12, 1991, August 27, 1992 and December
16, 1993 referred to in Exhibit 3.2 above. . . . . . .
4.3 Indenture, dated December 9, 1986, by and between M C Co.
(a predecessor of Registrant) and Mellon Bank, N.A. relating
to Ceco Industries, Inc. 15.5% Discount Subordinated
Debentures Due 2000 filed as Exhibit 4(b) to Ceco Industries,
Inc.'s report on Form 10-K for the year ended December 31,
1986 (File No. 33-10181), and incorporated herein by
reference thereto. . . . . . . . . . . . . . . . . . .
4.4 First Supplemental Indenture, dated as of December 9, 1986
between M C Co. (a predecessor of Registrant) and Mellon
Bank, N.A. filed as Exhibit 4.5 to Registration Statement
of The Ceco Corporation on Form S-4, Registration No. 33-
37020, and incorporated herein by reference thereto. .
4.5 Second Supplemental Indenture, dated November 8, 1990, between
Registrant and Bank One, Columbus, N.A. (as successor Trustee
to Mellon Bank, N.A.) filed as Exhibit 4.6 to Registrant's
report on Form 8-K dated as of November 8, 1990 (File
No. 1-10659), and incorporated herein by reference thereto . .
4.6 Third Supplemental Indenture, dated July 14, 1993, between
Registrant and Bank One, Columbus, N.A. (as successor Trustee
to Mellon Bank, N.A.) filed as Exhibit 2 to registrant's
report on Form 8-K (File No. 1-10659) dated July 14, 1993,
and incorporated herein by reference thereto . . . . .
4.7 Amended and Restated Stockholders Agreement dated as of
July 12, 1990 by and among the principal stockholders of
Ceco Industries, Inc., H.H. Robertson Company and Registrant
(formerly known as The Ceco Corporation) filed as Exhibit 4.2
to Registration Statement of The Ceco Corporation on Form S-4,
Registration Statement No. 33-37020, and incorporated
herein by reference thereto. . . . . . . . . . . . . .
4.8 Stock Purchase Agreement and related Registration Rights
Agreement dated as of June 8, 1990 by and among H.H.
Robertson Company, Ceco Industries, Inc. and Frontera S.A.
filed as Exhibit 10(a) to Ceco Industries, Inc.'s report on
Form 8-K (File No. 33-10181), dated as of June 5, 1990, and
incorporated herein by reference thereto . . . . . . .
4.9 Agreement, dated as of June 8, 1990, by and among Frontera
S.A., First City Financial Corporation Ltd., Hornby Trading,
Inc., Frill Trading Inc., the principal stockholders of Ceco
Industries, Inc. and H.H. Robertson Company and related
letter agreement dated as of June 8, 1990, among the
principal stockholders of Ceco Industries, Inc., and Frontera
S.A. filed as Exhibit 28(b) to Ceco Industries, Inc.'s report
on Form 8-K (File No. 33-10181), dated as of June 5, 1990,
and incorporated herein by reference thereto . . . . .
4.10 Warrant Agreement, dated December 9, 1986, by and among
Registrant (formerly known as The Ceco Corporation), Ceco
Industries, Inc. (a predecessor of Registrant) and Continental
Illinois National Bank and Trust Company of Chicago (now
known as Continental Bank N.A.), filed as Exhibit 4(c) to
Ceco Industries, Inc.'s Form 10-K (File No. 33-10181), for
the year ended December 31, 1986, and incorporated herein
by reference thereto together with Supplement to Warrant
Agreement dated as of November 8, 1990 between Registrant
and Continental Bank, N.A. filed as Exhibit 4.6 to
Registrant's report on Form SE (File No. 1-10659), dated
November 16, 1990, and incorporated herein by reference
thereto. . . . . . . . . . . . . . . . . . . . . . . .
4.11 Registration Rights Agreement, dated December 9, 1986, by
and among Registrant (formerly known as The Ceco
Corporation), Ceco Industries, Inc., and the Purchasers
listed on the Signature Pages of the Purchase Agreement
dated December 9, 1986, between the Ceco Corporation, Ceco
Industries, Inc., and the Purchasers of the Subordinated
Notes of The Ceco Corporation and the Warrants of Ceco
Industries, Inc. filed as Exhibit 4(d) to Ceco Industries,
Inc.'s Form 10-K (File No. 33-10181), for the year ended
December 31, 1986, and incorporated herein by reference
thereto. . . . . . . . . . . . . . . . . . . . . . . .
4.12 Registration Rights Agreement dated May 17, 1993 by and
among the Registrant and Sage RHH filed as Exhibit 10.27
to the Registrant's Registration Statement on Form S-4,
Registration Statement No. 33-58818, and incorporated
herein by reference thereto. . . . . . . . . . . . . .
4.13 Registration Rights Agreement dated November 23, 1993 by
and among the Registrant and Foothill Capital Corporation filed
as Exhibit 4.13 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 (File No. 1-10659),
and incorporated herein by reference thereto . . . . .
4.14 Registration Rights Agreement dated December 14, 1993 by
and among the Registrant and Heico Acquisitions, Inc. filed
as Exhibit 4.14 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 (File No. 1-10659),
and incorporated herein by reference thereto . . . . .
4.15 Indenture dated as of July 14, 1993 among the Registrant
and IBJ Schroder Bank and Trust Company, Trustee, relating
to the Registrant's 10-12% Senior Subordinated Notes due
1999 together with specimen certificate therefor filed as
Exhibit 1 to the Registrant's report on Form 8-K dated
July 14, 1993 (File No. 10659), and incorporated herein
by reference thereto . . . . . . . . . . . . . . . . .
4.16 Specimen certificate for Common Stock, par value $.01 per
share, of Registrant filed as Exhibit 4.9 to the
Registration Statement of The Ceco Corporation on Form S-4,
Registration No. 33-37020, and incorporated herein by
reference thereto. . . . . . . . . . . . . . . . . . .
10.1 Borrower Security Agreement dated as of November 8, 1990 by
Registrant in favor of Wells Fargo Bank, N.A., as Agent,
filed as Exhibit 10.6 to Registrant's report on Form 10-K
for the year ended December 31, 1990 (File No. 1-10659),
and incorporated herein by reference thereto . . . . .
10.2 Subsidiary Security Agreement dated as of November 8, 1990
among Ceco Dallas Co., Ceco Houston Co., Ceco San Antonio
Co., M C Durham Co., M C Wathena Co., M C Windsor Co.,
Meyerland Co., R.P.M. Erectors, Inc. and Quantum
Constructors, Inc. in favor of Wells Fargo Bank, N.A., as
Agent, filed as Exhibit 10.7 to Registrant's report on Form
10-K for the year ended December 31, 1990 (File No. 1-
10659), and incorporated herein by reference thereto .
10.3 Subsidiary Guarantee dated as of November 8, 1990 among Ceco
Dallas Co., Ceco Houston Co., Ceco San Antonio Co., M C
Durham Co., M C Wathena Co., M C Windsor Co., Meyerland Co.,
R.P.M. Erectors and Quantum Constructors, Inc. in favor of
Wells Fargo Bank, N.A. as Agent, filed as Exhibit 10.8 to
Registrant's report on Form 10-K for the year ended
December 31, 1990 (File No. 1-10659), and incorporated
herein by reference thereto. . . . . . . . . . . . . .
10.4 1976 Option Plan of H.H. Robertson Company (a predecessor of
Registrant), as adopted and approved by H.H. Robertson
Company's shareholders on May 2, 1978 and on May 6, 1980 and
as further amended by H.H. Robertson Company's Board of
Directors on August 11, 1981, February 9, 1982 and
September 14, 1982, filed as Exhibit 10.5 to the report of
H.H. Robertson Company on Form 10-K for the fiscal year ended
December 31, 1987 (File No. 1-5697), and incorporated herein
by reference thereto . . . . . . . . . . . . . . . . .
10.5 1986 Stock Option Plan of H.H. Robertson Company (a
predecessor of Registrant), as adopted and approved by H.H.
Robertson Company's shareholders on May 6, 1986, as amended
by H.H. Robertson Company's Board of Directors on March 24,
1987 and as further amended by H.H. Robertson Company's
Board of Directors on February 22, 1989, filed as Exhibit
19 to the report of H.H. Robertson Company on Form 10-Q of
H.H. Robertson Company for the quarter ended September 30,
1989, (File No. 1-5697), and incorporated herein by
reference thereto. . . . . . . . . . . . . . . . . . .
10.6 Text of Executive Separation Plan of H.H. Robertson Company
(a predecessor of Registrant) effective May 1, 1989, filed
as Exhibit 19 to H.H. Robertson Company's report on Form
10-Q for the quarter ended June 30, 1989 (File No. 1-5697),
and incorporated herein by reference thereto . . . . .
10.7 Agreement and Purchase of Sale of Assets by and between
United Dominion Industries, Inc., and Robertson-Ceco
Corporation dated December 20, 1991, with letter amendment
dated January 24, 1992, filed as Exhibit 2.1 to Registrant's
report on Form 8-K dated as of February 3, 1992 (File No.
1-10659), and incorporated herein by reference thereto
10.8 Loan and Security Agreement dated as of April 12, 1993 between
the Registrant and Foothill Capital Corporation, filed as
Exhibit 10.15 to the Registrant's Registration Statement on
Form S-4, Registration Statement No. 33-58818, and incorporated
herein by reference thereto, together with Amendment No. 1 to
Loan and Security Agreement dated April 30, 1993 between the
Registrant and Foothill Capital Corporation, filed as Exhibit
10.16 to Registrant's Registration Statement on Form S-4,
Registration Statement No. 33-58818, and incorporated herein
by reference thereto . . . . . . . . . . . . . . . . .
10.9 Amendment No. 2 to Loan and Security Agreement dated April 20,
1994, between Registrant and Foothill Capital Corporation
filed as Exhibit 10.9 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 (File No. 1-10659)
and incorporated herein by reference thereto . . . . .
10.10 Amendment No. 3 to Loan and Security Agreement dated May 1994
between Registrant and Foothill Capital Corporation filed as
Exhibit 10.10 to Registrant's Annual Report on Form 10-K for
for the year ended December 31, 1994 (File No. 1-10659)
and incorporated herein by reference thereto . . . . .
10.11 Amendment No. 4 to Loan and Security Agreement dated December
15, 1994 between Registrant and Foothill Capital Corporation
filed as Exhibit 10.11 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 (File No. 1-10659)
and incorporated herein by reference thereto . . . . .
10.12 Amendment No. 5 to Loan and Security Agreement dated as of
January 31, 1995 between Registrant and Foothill Capital
Corporation filed as Exhibit 10.12 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994
(File No. 1-10659)and incorporated herein by reference thereto
10.13 Amendment No. 6 to Loan and Security Agreement dated as of
April 21, 1995 between Registrant and Foothill Capital
Corporation filed as Exhibit 10 to Registrant's Quarterly
Report on Form 10-Q dated June 30, 1995 (File No. 1-10659)
and incorporated herein by reference thereto . . . . .
10.14 Consulting and Services Agreement dated as of September 15,
1992 between Registrant and Sage Capital Corporation, filed
as Exhibit 10.17 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992 (File No. 1-10659), and
incorporated herein by reference thereto, together with Amended
and Restated Consulting and Services Agreement dated as of
July 15, 1993 between Registrant and Sage Capital Corporation,
filed as Exhibit 10.13 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1993 (File No. 1-10659)
and incorporated herein by reference thereto . . . . .
10.15 Continuing Guaranty dated as of April 30, 1993 between M C
Durham Co. & Foothill Capital Corporation, filed as Exhibit
10.19 to the Registrant's Registration Statement on Form S-4,
Registration Statement No. 33-58818, and incorporated herein
by reference thereto . . . . . . . . . . . . . . . . .
10.16 Continuing Guaranty dated as of April 30, 1993 between
Ceco-San Antonio Co. and Foothill Capital Corporation, filed
as Exhibit 10.20 to the Registrant's Registration Statement
on Form S-4, Registration Statement No. 33-58818, and
incorporated herein by reference thereto . . . . . . .
10.17 Continuing Guaranty dated as of April 30, 1993 between
Meyerland Co. and Foothill Capital Corporation, filed as
Exhibit 10.21 to the Registrant's Registration Statement on
Form S-4, Registration Statement No. 33-58818, and
incorporated herein by reference thereto . . . . . . .
10.18 Security Agreement - Stock Pledge (Domestic Subsidiaries)
dated as of April 30, 1993 between the Registrant and Foothill
Capital Corporation, filed as Exhibit 10.22 to the Registrant's
Registration Statement on Form S-4, Registration Statement
No. 33-58818, and incorporated herein by reference thereto . .
10.19 Security Agreement - Stock Pledge (Foreign Subsidiaries)
dated as of April 30, 1993 between the Registrant and Foothill
Capital Corporation, filed as Exhibit 10.23 to the Registrant's
Registration Statement on Form S-4, Registration Statement
No. 33-58818, and incorporated herein by reference thereto . .
10.20 Intercreditor Agreement dated as of April 30, 1993 among the
Registrant, Foothill Capital Corporation and Wells Fargo
Bank, N.A., filed as Exhibit 10.24 to the Registrant's
Registration Statement on Form S-4, Registration Statement
No. 33-58818, and incorporated herein by reference thereto . .
10.21 Intercreditor Agreement dated as of March 3, 1995 among
Foothill Capital Corporation, Wells Fargo Bank, N.A., Federal
Insurance Company and the Registrant filed as Exhibit 10.20
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-10659) and incorporated
herein by reference thereto. . . . . . . . . . . . . .
10.22 Intercreditor Agreement dated as of November 18, 1993 among
Foothill Capital Corporation, Acstar Insurance Company and the
Registrant, together with Amendment to Intercreditor Agree-
ment dated as of April 17, 1994 filed as Exhibit 10.21 to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 1-10659) and incorporated herein
by reference thereto . . . . . . . . . . . . . . . . .
10.23 Intercreditor Agreement dated as of April 30, 1993 among
Foothill Capital Corporation, Reliance Insurance Co., United
Pacific Insurance Company, Planet Insurance Company and the
Registrant, filed as Exhibit 10.25 to the Registrant's
Registration Statement on Form S-4, Registration Statement
No. 33-58818, and incorporated herein by reference thereto . .
10.24 Asset Purchase and Stock Subscription Agreement among Heico
Acquisitions, Inc., Registrant and Robertson Espanola, S.A.
dated December 2, 1993, filed as Exhibit 28 to Registrant's
report on Form 8-K dated December 14, 1993 (File No.
1-10659), and incorporated herein by reference thereto
10.25 Employment Agreement between Registrant and Denis N. Maiorani
dated July 15, 1993 filed as Exhibit 10.22 to Registrant's
Annual Report on Form 10-K for the year ended December 31,
1993 (File No. 1-10659), and incorporated herein by reference
thereto. . . . . . . . . . . . . . . . . . . . . . . .
10.26 Employment Agreement between Registrant and Andrew G. C.
Sage, II dated July 15, 1993 filed as Exhibit 10.23 to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993 (File No. 1-10659), and incorporated herein
by reference thereto . . . . . . . . . . . . . . . . .
10.27 Agreement Regarding Debtor in Possession Financing and Use of
Cash Collateral dated as of April 30, 1993 among the
Registrant, Foothill Capital Corporation and Wells Fargo
Bank, N.A., filed as Exhibit 10.28 to Registrant's report on
Form 8-K dated December 14, 1993 (File No. 1-10659), and
incorporated herein by reference thereto . . . . . . .
10.28 Letter of Credit Agreement by and among Registrant, Wells Fargo
Bank, N.A. and Foothill Capital Corporation dated as of April 30,
1993, filed as Exhibit 10.29 to Registrant's report on Form
8-K dated December 14, 1993 (File No. 1-10659), and
incorporated herein by reference thereto . . . . . . .
10.29 Amended and Restated 1991 Long Term Incentive Plan, filed as
Exhibit 4.1 to Registrant's Form S-8 Registration Statement
No. 33-51665 dated December 22, 1993, and incorporated
herein by reference thereto. . . . . . . . . . . . . .
10.30 Agreement by and among Registrant, Capella Investments
Limited and H. H. Robertson (U.K.) Limited dated November 9,
1993, filed as Exhibit 2.1 to the Registrant's report on
Form 8-K dated November 22, 1993, and incorporated herein
by reference thereto . . . . . . . . . . . . . . . . .
10.31 Indenture, dated December 9, 1986, by and between M C Co.
(a predecessor of Registrant) and Mellon Bank, N.A. relating
to Ceco Industries, Inc. 15.5% Discount Subordinated
Debentures Due 2000 referred to in Exhibit 4.3 above, together
First Supplemental Indenture, dated as of December 9, 1986
referred to in Exhibit 4.4 above, Second Supplement Indenture,
dated November 8, 1990, referred to in Exhibit 4.5 above, and
Third Supplemental Indenture, dated July 14, 1993, referred to
in Exhibit 4.6 above . . . . . . . . . . . . . . . . .
10.32 Amended and Restated Stockholders Agreement dated as of
July 12, 1990 by and among the principal stockholders of
Ceco Industries, Inc., H.H. Robertson Company and Registrant
(formerly known as The Ceco Corporation) referred to in
Exhibit 4.7 above. . . . . . . . . . . . . . . . . . .
10.33 Stock Purchase Agreement and related Registration Rights
Agreement dated as of June 8, 1990 by and among H.H.
Robertson Company, Ceco Industries, Inc. and Frontera S.A.
referred to in Exhibit 4.8 above . . . . . . . . . . .
10.34 Agreement, dated as of June 8, 1990, by and among Frontera
S.A., First City Financial Corporation Ltd., Hornby Trading
Inc., Frill Trading Inc., the principal stockholders of
Ceco Industries, Inc. and H.H. Robertson Company and related
letter agreement dated as of June 8, 1990, among the
principal stockholders of Ceco Industries, Inc., and Frontera
S.A. referred to in Exhibit 4.9 above. . . . . . . . .
10.35 Warrant Agreement, dated December 9, 1986, by and among
Registrant (formerly known as The Ceco Corporation), Ceco
Industries, Inc. (a predecessor of Registrant) and
Continental Illinois National Bank and Trust Company of
Chicago (now known as Continental Bank N.A.) , together with
Supplement to Warrant Agreement dated as of November 8, 1990
referred to in Exhibit 4.10 above. . . . . . . . . . .
10.36 Registration Rights Agreement, dated December 9, 1986, by
and among Registrant (formerly known as The Ceco
Corporation), Ceco Industries, Inc., and the Purchasers
listed on the Signature Pages of the Purchase Agreement
dated December 9, 1986, between the Ceco Corporation,
Ceco Industries, Inc., and the Purchasers of the Subordinated
Notes of The Ceco Corporation and the Warrants of Ceco
Industries, Inc. referred to in Exhibit 4.11 above . .
10.37 Registration Rights Agreement dated May 17, 1993 by and among
the Registrant and Sage RHH referred to in Exhibit 4.12 above.
10.38 Registration Rights Agreement dated November 23, 1993 by and
among the Registrant and Foothill Capital Corporation
referred to in Exhibit 4.13 above. . . . . . . . . . .
10.39 Registration Rights Agreement dated December 14, 1993 by and
among the Registrant and Heico Acquisitions, Inc. referred
to in Exhibit 4.14 above . . . . . . . . . . . . . . .
10.40 Indenture dated as of July 14, 1993 among the Registrant and
IBJ Schroder Bank and Trust Company, Trustee, relating to the
Registrant's 10-12% Senior Subordinated Notes due 1999
together with specimen certificate therefor referred to in
Exhibit 4.15 above . . . . . . . . . . . . . . . . . .
10.41 Specimen certificate for Common Stock, par value $.01 per
share, of Registrant referred to in Exhibit 4.16 above
10.42 Asset Purchase Agreement, dated December 27, 1994 by and
between Cupples Products, Inc. and the Registrant filed as
Exhibit 2.1 to Registrant's Report on Form 8-K dated December
27, 1994 (File No. 1-10659), and incorporated herein by
reference thereto. . . . . . . . . . . . . . . . . . .
10.43 Agreement for Purchase and Sale of Assets dated March 3, 1995
by and between the Registrant and Ceco Concrete Construction
Corp. filed as Exhibit 2.1 to Registrant's Report on Form 8-K
dated March 3, 1995 (File No. 1-10659), and incorporated
herein by reference thereto. . . . . . . . . . . . . .
10.44 Settlement Agreement dated March 3, 1995 by and between the
Registrant and Federal Insurance Company filed as Exhibit 10.43
to Registrant's Annual Report on Form 0-K for the year ended
December 31, 1994 (File No. 1-10659) and incorporated herein by
reference thereto. . . . . . . . . . . . . . . . . . .
11 Statement re Computation of Earnings (Loss) Per Common Share . 57
21 List of subsidiaries of Registrant . . . . . . . . . . 59
23.1 Consent of Price Waterhouse LLP. . . . . . . . . . . . 60