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, 1999
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 I.R.S. Employer
of incorporation or organization) Identification No.
5000 Executive Parkway, Ste. 425, San Ramon, California 94583
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 925-543-7599
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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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The aggregate market value of the voting stock held by non-affiliates of
the Registrant was $43,910,550 based upon the closing sales price of
Registrant's common stock on the New York Stock Exchange on March 9, 2000. (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
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. [ ]
As of March 9, 2000, 16,096,550 shares of common stock of the Registrant
were outstanding.
Portions of the Registrant's definitive proxy statement for Registrant's
2000 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.
1
ROBERTSON-CECO CORPORATION
Table of Contents
PART I
Page
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Item 1. Business....................................................... 3
Item 2. Properties..................................................... 5
Item 3. Legal Proceedings.............................................. 5
Item 4. Submission of Matters to a Vote of Security Holders............ 6
Item 4.1 Executive Officers of the Registrant........................... 6
PART II
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Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.......................................... 7
Item 6. Selected Financial Data........................................ 8
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 10
Item 7A. Quantitative and Qualitative Discussions about Market Risk..... 13
Item 8. Financial Statements and Supplementary Data.................... 14
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure....................... 32
PART III
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Item 10. Directors and Executive Officers of the Registrant............. 33
Item 11. Executive Compensation......................................... 33
Item 12. Security Ownership of Certain Beneficial Owners and Management. 33
Item 13. Certain Relationships and Related Transactions................. 33
PART IV
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Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.......................................... 34
Signatures..................................................... 35
2
ITEM 1. BUSINESS
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THE COMPANY
Robertson-Ceco Corporation (the "Company") was formed on November 8,
1990 by the merger (the "Combination") of H. H. Robertson, Inc. ("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 acquirer.
After the Combination, the Company and its subsidiaries operated in
four business segments: (1) the Metal Buildings Group, which operated primarily
in North America and is engaged in the manufacture, sale and installation of
custom-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
During 1991, management 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, certain
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. During the fourth quarter of 1994, the Company
sold its remaining U.S. Building Products operation and the Cupples Products
Division, which manufactured curtainwall systems, and commenced a plan to sell
or dispose of its remaining European Building Products operations. In 1995, the
Company sold its subsidiaries located in Holland and Spain and sold the Concrete
Construction Group to a company which is controlled by the Company's Chief
Executive Officer. In 1996, the Company sold its subsidiary located in Norway
and its Building Products operations located in Australia, Northeast Asia and
Southeast Asia. The Canadian Building Products business was closed in 1998.
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 Financial Statements 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 and financial restructuring actions have
been taken during the period 1993 to the present, including downsizing the
corporate office, closing or selling metal building plants and redistributing
manufacturing operations and equipment from closed operations, consolidating and
improving capacity and cost control, reducing work force levels, and redefining
management and operating policies.
METAL BUILDINGS GROUP
Today, the operations of the Company consist solely of the Metal
Buildings Group. The Metal Buildings Group consists of three custom-engineered
metal building operations: Ceco Building Systems, Star Building Systems, and H.
H. Robertson Building Systems (Canada). Custom-engineered metal buildings
account for a significant portion of the market for nonresidential low-rise
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 which generally is lower in cost than other
construction and faster from concept to job completion.
3
The Company's metal building systems are manufactured at six U.S.
plants with one located in each of California, Mississippi, North Carolina and
Tennessee (began operations in March 2000) and two in Iowa. The Company has one
plant outside of the U.S. located in Ontario, Canada. The buildings are
primarily sold through builder/dealer networks located throughout the United
States and Canada. In addition to sales in North America, the Company sells its
buildings to the Asian market. Buildings are distributed to the Asian market
through a network of domestic and international builders.
The principal materials used in the manufacture of custom-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 builder/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 and 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 times of increased construction activity, the Company has a need
for increased working capital which is funded by available cash. Since the
Company operates in the industrial and commercial building sectors, primarily in
North America, the Company's results are heavily influenced by the growth in
such economies, interest rates and credit available to builders, developers and
the ultimate 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.
The Company's business is 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 custom-engineered metal buildings are for
specific projects, and the Company maintains a minimum inventory of finished
products. Shipments of custom-engineered metal buildings are generally made
directly from the manufacturing plant to the building sites. Most raw materials
are 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 customers.
Due to the wide availability of necessary raw materials and relatively
short delivery lead times, the Company is generally 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 quotes 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, and the Company
may not experience similar declines in material costs.
Backlog is determined based upon receipt of a contract or purchase
order from the customer. The Company reduces its backlog upon recognition of
revenue. At December 31, 1999, the backlog of unfilled orders believed to be
firm was approximately $91.9 million compared with $69.3 million at December 31,
1998. The December 31, 1999 backlog is expected to be executed in 2000.
4
PATENTS
The Company owns a number of patents with varying expiration dates
extending beyond the year 2000. None of these patents are believed to be a major
factor in the competitive position of the Company.
EMPLOYEES
At December 31, 1999, the Company employed approximately 1,550 persons
and was a party to collective bargaining agreements with labor unions covering
approximately 177 employees. Work stoppages are a possibility in connection with
the negotiation of collective bargaining agreements, although the Company
believes that its employee relations are generally satisfactory.
ITEM 2. PROPERTIES
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The Company owns and operates seven manufacturing plants. The
manufacturing plant in Elizabethton, Tennessee began operating in March, 2000.
The listing below identifies the locations of those 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 1999.
Monticello, Iowa Manufacturing Plant
Lockeford, California Manufacturing Plant
Mt. Pleasant, Iowa Manufacturing Plant
Rocky Mount, North Carolina Manufacturing Plant
Columbus, Mississippi Manufacturing Plant
Elizabethton, Tennessee 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 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.
ENVIRONMENTAL MATTERS
The Company's current and prior manufacturing activities use materials
classified as hazardous substances and 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, (c) the protection of the environment and (d) the training
of Company personnel. 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.
5
In prior years, the Company completed its investigation of two owned
disposal sites in Beaver County, Pennsylvania formerly used by Robertson to
dispose of plant wastes from a former Building Products manufacturing facility.
The Company has completed its remedial efforts at one site and has substantialy
completed the remediation of the second site. During 1999, the Company and the
Pennsylvania Department of Environmental Protection ("PDEP") reached agreement
to remediate a third site in Allegheny County, Pennsylvania with PDEP agreeing
to share in the cost of remediation of that site. The Company reached this
agreement to avoid the potential costs of protracted litigation related to the
site. Investigation of the site and development of a remediation plan are
expected to be completed in 2000.
The Company has recorded reserves in amounts which it considers to be
adequate to cover the costs which may be incurred in relation to these and other
environmental matters. However, no assurance can be given that discovery of new
facts and the application of the legal and regulatory requirements to those
facts would not change the Company's estimate of costs it could be required to
pay in any particular situation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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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
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The following table sets forth certain information regarding the
executive officers of the Company as of March 26, 2000.
Name Age Position
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Andrew G. C. Sage, II 74 Chairman
Michael E. Heisley, Sr. 63 Chief Executive Officer
E.A. Roskovensky 54 President and Chief Operating Officer
Ronald D. Stevens 56 Executive Vice President, Chief Financial
Officer and Secretary
Mr. Andrew G. C. Sage, II is Chairman (since July 1993) of the Company.
He is also President of Sage Capital Corporation ("Sage Capital"), a general
business and financial management corporation specializing in business
restructuring and problem solving. Mr. Sage is a director of American
Superconductor Corporation, Tom's Foods, Inc. and WorldPort Communications, Inc.
Mr. Heisley is Chief Executive Officer (since December 1993) of the
Company. Mr. Heisley is Chairman of the following companies: Davis Wire
Corporation, a manufacturer of steel wire, and Tom's Foods, Inc., a manufacturer
and distributor of snack foods. Mr. Heisley is Chief Executive Officer of The
Heico Companies, L.L.C. He is also a director of Tom's Foods, Inc. and WorldPort
Communications, Inc.
Mr. Roskovensky is President and Chief Operating Officer (since
November 1994) of the Company. He is also the President and Chief Executive
Officer of Davis Wire Corporation, a manufacturer of steel wire, and a director
of QuadraMED Corporation.
Mr. Stevens is Executive Vice President and Chief Financial Officer
(since October 1996) and Secretary (since February 1999) of the Company. Prior
to being elected Chief Financial Officer, Mr. Stevens was a Principal/Owner of
Productivity Consulting Group, Inc.
6
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
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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's ability
to pay cash dividends is restricted. The Company did not pay cash dividends on
its Common Stock during the periods set forth below.
High Low
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Calendar 1999
First Quarter ........................ $ 8 7/16 $ 7 1/4
Second Quarter ........................ 11 7 1/4
Third Quarter ........................ 9 15/16 7 3/4
Fourth Quarter ........................ 10 7
Calendar 1998
First Quarter ........................ $ 11 $ 8 1/4
Second Quarter ........................ 11 9 3/16
Third Quarter ........................ 10 3/16 8 1/8
Fourth Quarter ........................ 8 5/8 7 1/4
There were approximately 1,703 holders of record of the Company's
Common Stock as of March 9, 2000. 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 9, 2000, as
reported under the NYSE Composite Transaction Reporting System, was $9-11/16.
7
ITEM 6. SELECTED FINANCIAL DATA
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Set forth below is historical financial data for each of the five years
in the period ended December 31, 1999. This data has 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.
Operations Data (a):
(In thousands, except per share data)
Year Ended December 31
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1995 1996 1997 1998 1999
------------ ------------ ----------- ------------- ---------
Net revenues ......................... $ 264,983 $ 255,893 $ 288,151 $ 294,802 $ 285,808
Cost of sales .......................... 218,285 201,478 233,284 234,913 224,239
---------- ---------- ---------- --------- ----------
Gross profit .......................... $ 46,698 $ 54,415 $ 54,867 $ 59,889 $ 61,569
Selling, general and
administrative expenses............. 30,844 27,549 24,126 24,651 26,468
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Operating income ..................... $ 15,854 $ 26,866 $ 30,741 $ 35,238 $ 35,101
Interest expense ...................... (4,335) (4,166) (1,659) (1,062) (141)
Other income, net .................... 828 841 904 1,990 2,164
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Income from continuing
operations before provision (credit)
for income taxes....................... $ 12,347 $ 23,541 $ 29,986 $ 36,166 $ 37,124
Provision (credit) for income taxes (b). - (29,067) 11,200 13,647 14,374
-------------- ---------- ---------- ---------- ----------
Income from continuing operations
before extraordinary items ........ $ 12,347 $ 52,608 $ 18,786 $ 22,519 $ 22,750
Gain (loss) on discontinued
operations (c)........................ (15,888) - - - 8,993
Extraordinary gain (loss) on debt....... - (1,315) 4,568 - -
----------- ---------- ---------- ---------- ----------
Net income (loss) ..................... $ (3,541) $ 51,293 $ 23,354 $ 22,519 $ 31,743
========== ========== ========== ========== ==========
Basic/Diluted earnings (loss) per common share:
Continuing operations .............. $ .77 $ 3.28 $ 1.17 $ 1.40 $ 1.42
Discontinued operations (c) .......... (.99) - - - .56
Extraordinary item ................... - (.08) .28 - -
------------ ---------- --------- --------- -------
Net income (loss) per
common share ..................... $ (.22) $ 3.20 $ 1.45 $ 1.40 $ 1.98
============= ========== ========== ========= =========
Weighted average number of
common shares outstanding ............. 15,932 16,017 16,056 16,060 16,063
=========== ========== ========== ========== ==========
Cash dividends declared per
common share ....................... - - - - -
========== =========== ========== ========== ==========
8
Balance Sheet Data (a):
(In thousands)
December 31
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1995 1996 1997 1998 1999
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Working capital ........... ........... $ 88 $ 2,603 $ 35,127 $ 51,063 $ 75,617
Total assets ....................... 108,479 138,132 137,653 144,161 178,237
Long-term debt (current portion)....... - 7,455 5,000 - -
Long-term debt (excluding
current portion)...................... 40,530 20,000 10,000 - -
Stockholders' equity (deficiency)....... (29,994) 26,244 49,746 71,972 104,460
=========== ========== ========== ========= =========
(a) The Consolidated Statements of Income are reclassified to reflect the
operating results of the Concrete Construction Group (measurement date
was December 1994) and the Building Products Group (measurement date
was December 1995) as discontinued operations. Accordingly, the income
and expense amounts of such business segments prior to the respective
measurement dates are classified as a single line item within
discontinued operations. For purposes of the Consolidated Balance
Sheets, the net of the segments' assets and liabilities, including any
loss provisions, were reflected as a net amount as of the measurement
dates.
(b) In the third quarter of 1996, the Company recorded tax assets of $31
million, or $1.93 per share, reflecting future benefits of the
Company's net operating loss carryforwards and other tax timing
differences. Had 1996 been reported with a full tax provision, income
from continuing operations before extraordinary items would have been
approximately $14.4 million, or $.89 per share.
(c) Gains (losses) from discontinued operations are reported net of income
tax expense (benefit) of $(0.4) million and $3.3 million in 1995 and
1999, respectively. See Note 3 to the Consolidated Financial
Statements herein.
9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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RESULTS OF OPERATIONS:
YEAR ENDED DECEMBER 31, 1999 COMPARED TO DECEMBER 31, 1998
Revenues for 1999 were $285.8 million compared to $294.8 million in
1998, a 3.1% decrease. The Company entered fiscal year 1999 with a low backlog
as incoming orders in the last few months of 1998 were lower than normal. Low
orders continued during the first few months of 1999 as the builder network
delayed placing new orders while they worked off their own backlogs.
Consequently, revenues in the first two quarters fell significantly behind the
prior year. Orders increased during the remainder of 1999 resulting in the
highest year end backlog. However, order fulfillment during the rest of the year
could not make up the shortfall experienced earlier as the drafting and
engineering departments at all locations were working at or near capacity.
Furthermore, hurricanes in the East reduced construction activity and forced the
North Carolina facility to shut down for a few days which also contributed to
reduced volumes. Approximately $3.0 million of revenues were delayed due to the
weather conditions. As a result of these factors, the revenue shortfall was not
erased in the second half of the year. Geographically, the South and Southeast
experienced increases between years, while the other regions were either flat or
somewhat below 1998 revenue levels.
Despite the decline in revenues, gross profit was $1.7 million higher
in 1999 than in 1998. Gross margin increased to 21.5% in 1999 compared to 20.3%
in 1998. Material cost as a percent of revenues was approximately 2.8% less than
experienced in 1998. This was a result of the mix of buildings produced, stable
steel prices and reduced discounts to customers. Partially offsetting these
favorable events were startup costs for the Tennessee plant, additional
drafting, engineering and customer service staffing needed to handle expected
volume increases and increased systems costs related to back office functions.
Selling, general and administrative ("S, G & A") costs increased by
$1.8 million in 1999, or from 8.4% of revenues in 1998 to 9.3% of revenues in
1999. Selling costs increased as the Company added sales personnel in most
locations to improve volumes and support the new plant. Several financial system
upgrades were installed in 1999 to improve internal efficiencies and to assure
Year 2000 compliance, and outside programmers and other resources were utilized
to complete these projects in a timely manner. Costs were incurred to recruit
new personnel and relocate employees from the West Coast to Oklahoma City to
improve functionality.
Operating margin increased to 12.3% in 1999 compared to 12.0% in 1998.
The improvement in gross margin, primarily related to favorable material costs,
offset investments in systems and employees made in 1999.
Income before taxes increased from $36.2 million in 1998 to $37.1
million in 1999, or from 12.3% of revenues to 13.0% of revenues, respectively.
The Company had slightly higher interest income as a result of higher cash
balances. Interest expense decreased $.9 million as all long-term debt was paid
off in September 1998.
The Company's overall tax rate increased to 38.7% in 1999 compared to
37.7% in 1998. The increase results from lower Canadian income on which no taxes
have been provided due to loss carryforwards which are recognized as realized in
the Company's tax returns.
Income from continuing operations was $22.8 million, or $1.42 per
share, in 1999 compared to $22.5 million, or $1.40 per share, in 1998.
Net income in 1999 of $31.7 million included a gain on discontinued
operations of $9.0 million, or $.56 per share. See Note 3 to the Consolidated
Financial Statements herein for additional information.
10
At December 31, 1999, the backlog of unfilled orders believed to be
firm was approximately $91.3 million compared to $69.3 million at the end of
1998.
YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997
Revenues for 1998 were $294.8 million compared to $288.2 million a
year ago, a 2.3% increase. The Company entered 1998 with a strong backlog, and
order inflow continued at an excellent level throughout most of the year
reflecting continued good industry conditions. Weather conditions in the winter
months delayed shipments until later in the year. Beginning late in the second
quarter and throughout the third quarter, the Company was operating at or near
capacity at most plants preventing shipments from catching up with the losses
due to delays earlier in the year. Fourth quarter volumes were higher than
normal as our deliveries continued their catch up from earlier. Revenue gains
were experienced in each market of the business except the West Coast and
Canada. A slowdown in the Canadian economy caused revenues in this location to
decline approximately 7% from 1997. Tariffs in the Far East continued to reduce
the amount of export business for the West Coast operation, and the California
construction economy was still catching up with growth rates experienced in the
rest of the Company's regions.
Favorable revenue mix and lower discounts to customers caused gross
margins to increase from 19.0% in 1997 to 20.3% in 1998. In 1997, the Company
had higher revenue from products that are supplied to customers but manufactured
by others, which generally provide lower margins to the Company, but are
necessary to meet competitive demands. In 1997, there were also higher revenues
from erection and subcontract activities where the margins are not as high.
Operating margins improved from 10.7% in 1997 to 12.0% in 1998. S, G &
A costs remained steady at 8.3% of revenues in 1997 and 1998.
Income before taxes further improved in 1998 from 1997 as a result of
reduced interest expense and increased interest income. Interest expense
declined $.6 million from 1997 due to lower interest rates in 1998 combined with
lower debt balances as the term loan was paid in full in September 1998. The
Company experienced higher interest income reflecting higher average cash
balances.
For the year, income before taxes was $36.2 million compared to $30.0
million in 1997. This represented a 20.6% increase between years resulting from
favorable revenue mix, lower discounts to customers, increased interest revenue,
and reduced borrowing expenses. Pretax income increased to 12.3% of revenues
compared to 10.4% in 1997. The effective tax rate was somewhat higher because of
lower Canadian income on which no tax has been recognized due to past operating
losses.
Net income in 1997 included an extraordinary item related to the debt
refinancing. The Company recorded a $4.6 million credit eliminating the
previously recorded accrued interest on the 12% debentures that were redeemed in
January 1997.
At December 31, 1998 the backlog of unfilled orders believed to be
firm was approximately $69.3 million compared to $72.7 million at December 31,
1997.
11
LITIGATION AND ENVIRONMENTAL
There are various proceedings pending against or involving the Company
which are ordinary or routine given the nature of the Company's existing or
prior businesses. The Company has recorded liabilities for litigation where it
is both probable that a loss has been incurred and the amount of the loss can be
reasonably estimated. While the outcome of these proceedings cannot be predicted
with certainty, management does not expect resolution of these matters will have
a material adverse effect on the Company's Consolidated Financial Statements.
The Company has been identified as a potentially responsible party by
Federal and state authorities for clean-up at various waste disposal sites. The
Company has engaged appropriate third parties to perform feasibility studies and
assist in estimating the cost of investigation and remediation. Although it is
difficult to quantify future environmental expenditures, the Company has accrued
environmental and clean-up costs of a non-capital nature when it is both
probable that a loss has been incurred and the amounts can be reasonably
estimated. As of December 31, 1999, the Company has reserves for environmental
matters of approximately $5.4 million. Based upon currently available
information, including the reports from third parties, management does not
believe ultimate expenditures for these matters will materially exceed the
amounts accrued.
With respect to environmental clean-up matters, the Company claimed
coverage under its insurance policies for past and future clean-up costs related
to certain sites for which the Company believed it was entitled to defense and
indemnification under those insurance policies. The insurer refused to admit or
deny coverage. As a result, the Company filed a complaint against the insurer
seeking to recover past and future clean-up costs at those certain sites. During
1999, the Company reached an agreement with that insurance carrier which
resulted in a lump sum payment to the Company in exchange for a release to the
insurance carrier of any further liability related to most of such liabilities.
By agreement, the amount of the settlement is confidential. A portion of the
amount received was added to the Company's environmental reserves with the
remainder included in the gain on discontinued operations recorded in 1999.
LIQUIDITY AND CAPITAL RESOURCES
During 1999, the Company generated approximately $25.9 million in cash
from its operating activities compared to $41.8 million in 1998. Inventories
were built up during the last couple months of 1999 in order to have sufficient
stocks available to work off the backlog and to hedge against future price
changes. Receivables increased slightly as volumes toward the latter part of
1999 were strong comparatively. Deposits of approximately $3.0 million were made
for equipment for the new Tennessee plant for which the Company will be
reimbursed once lease terms for that equipment are finalized. State income taxes
paid of $1.9 million also reduced cash generated during 1999.
Capital expenditures totaled $18.8 million, up significantly from the
$5.1 million spent in 1998. The increase partially represents the new Tennessee
plant building and equipment purchases for this plant. In addition, major
expenditures were made at existing plants as the Company continues its
modernization/productivity improvement program.
Discontinued operations generated cash flow in 1999 due to the receipt
of a Canadian pension surplus and settlement of the Company's claim against one
of the Company's environmental insurance carriers. (See Note 3 to the
Consolidated Financial Statements herein.) These amounts were offset by
expenditures for environmental cleanup and resolution of worker's compensation
and general liability cases related to discontinued operations. The amount and
timing of such expenditures are dependent on several factors including
construction activity at cleanup sites and the ability to settle litigation and
claims on favorable terms. Management will continue to pursue settlement of
these matters where favorable resolution can be accomplished.
12
Available cash was $47.5 million at the end of 1999. The Company has
additional liquidity available of $15.0 million under a revolving credit
agreement. Outstanding letters of credit were reduced by $3.7 million in 1999 to
$4.7 million at December 31, 1999. Outstanding performance bonds totaled $3.8
million at December 31, 1999.
YEAR 2000
The "Year 2000" issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Specifically,
computational errors are a known risk with respect to dates after December 31,
1999. The Company assessed its computer equipment and business computer systems
as well as its manufacturing equipment and facilities with embedded systems in
preparation for the Year 2000. Modifications to the Company's business computer
systems found to
be necessary during the above assessments were completed, as expected, prior to
year-end. Expenditures for this assessment and modification process approximated
$3.4 million.
No detrimental Year 2000 issues were experienced by the Company on
January 1, 2000, nor have any residual issues been experienced to date. No
internal systems or equipment malfunctioned, nor were any vendors or suppliers
unable to deliver goods or services.
This is a Year 2000 Readiness Disclosure Statement within the meaning
of the Year 2000 Information and Readiness Disclosure Act (P.L.105 - 271).
"SAFE HARBOR" PROVISIONS
The Company may from time to time make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission and its reports to stockholders. This Annual
Report on Form 10-K contains forward-looking statements made in good faith by
the Company pursuant to these "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. In connection with these "safe harbor"
provisions, the Company identifies important factors that could cause actual
results to differ materially from those contained in any forward-looking
statements made by or on behalf of the Company. Any such statement is qualified
by reference to the following cautionary statements.
The Company's business operates in a highly competitive market and is
subject to changes in general economic conditions, raw material pricing,
competition, changes in customer preferences, foreign exchange rate
fluctuations, the degree of acceptance of new product introductions, the
uncertainties of litigation, as well as other risks and uncertainties detailed
from time to time in the Company's Securities and Exchange Commission filings.
Developments in any of these areas could cause the Company's results to
differ materially from results that have been or may be projected by or on
behalf of the Company.
The Company cautions that the foregoing list of important factors is
not inclusive. The Company does not undertake to update any forward-looking
statement that may be made from time to time by or on behalf of the Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCUSSIONS ABOUT MARKET RISK
----------------------------------------------------------
Not Applicable
13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
ROBERTSON-CECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Years Ended December 31
-------------------------------------------
1997 1998 1999
------------ ---------- ---------
NET REVENUES ........................................................... $288,151 $294,802 $285,808
COST OF SALES .......................................................... 233,284 234,913 224,239
--------- --------- ---------
GROSS PROFIT ........................................................... 54,867 59,889 61,569
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ........................... 24,126 24,651 26,468
--------- --------- ---------
OPERATING INCOME ........................................................ 30,741 35,238 35,101
OTHER INCOME (EXPENSE):
Interest expense .................................................. (1,659) (1,062) (141)
Other income - net ................................................ 904 1,990 2,164
--------- --------- ---------
(755) 928 2,023
--------- --------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE
PROVISION FOR INCOME TAXES ........................................ 29,986 36,166 37,124
PROVISION FOR INCOME TAXES 11,200 13,647 14,374
--------- --------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE
EXTRAORDINARY ITEM ................................................ 18,786 22,519 22,750
GAIN ON DISCONTINUED OPERATIONS, NET OF TAXES............................ - - 8,993
--------- --------- ---------
INCOME BEFORE EXTRAORDINARY ITEM......................................... 18,786 22,519 31,743
EXTRAORDINARY GAIN ON DEBT REDEMPTION ,
NET OF TAXES........................................................ 4,568 - -
---------- --------- ---------
NET INCOME .......................................................... $ 23,354 $ 22,519 $ 31,743
============ ============= ==========
BASIC/DILUTED EARNINGS PER COMMON SHARE:
INCOME FROM CONTINUING OPERATIONS BEFORE
EXTRAORDINARY ITEM.................................................. $ 1.17 $ 1.40 $ 1.42
GAIN ON DISCONTINUED OPERATIONS, NET..................................... - - .56
EXTRAORDINARY GAIN ON DEBT REDEMPTION, NET ............................. .28 - -
---------- ---------- -----
NET INCOME .......................................................... $ 1.45 $ 1.40 $ 1.98
============ ============= ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING ................................................... 16,056 16,060 16,063
========= ========= =========
14
ROBERTSON-CECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31
1998 1999
------------- --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................................................... $ 38,203 $ 47,527
Accounts and notes receivable, less allowance
for doubtful accounts: 1998, $1,795; 1999, $1,910 ........................... 29,878 30,987
Inventories .................................................................... 11,518 19,731
Deferred taxes, current ........................................................ 4,476 5,884
Other current assets ........................................................... 621 4,254
-------- ---------
Total current assets ....................................................... 84,696 108,383
-------- ---------
PROPERTY, PLANT AND EQUIPMENT - AT COST:
Land .......................................................................... 1,654 1,781
Buildings and improvements ..................................................... 11,550 12,075
Machinery and equipment ........................................................ 38,309 39,084
Construction in progress ....................................................... 1,596 15,020
-------- ---------
53,109 67,960
Less accumulated depreciation .................................................. (25,900) (26,691)
-------- ---------
Property, plant and equipment - net ......................................... 27,209 41,269
-------- ---------
EXCESS OF COST OVER NET ASSETS OF ACQUIRED
BUSINESSES, LESS ACCUMULATED AMORTIZATION:
1998, $7,569; 1999, $8,397 ..................................................... 24,955 24,127
NET DEFERRED TAXES, NON-CURRENT ..................................................... 6,543 2,849
OTHER NON-CURRENT ASSETS ............................................................ 758 1,609
-------- ---------
Total assets ............................................................... $144,161 $178,237
======== ========
See Notes to Consolidated Financial Statements.
15
ROBERTSON-CECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
December 31
-------------------------
1998 1999
------------ --------
LIABILITIES
CURRENT LIABILITIES:
Accounts payable ............................................................. $ 11,340 $ 11,788
Accrued payroll and benefits ................................................. 8,137 8,282
Other accrued liabilities .................................................... 14,156 12,696
---------- ----------
Total current liabilities ................................................ 33,633 32,766
LONG-TERM LIABILITIES ............................................................. 38,556 41,011
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
COMMON STOCK
Par value per share $.01
Authorized shares: 30,000,000
Issued and outstanding shares: 1998 - 16,096,550; 1999 - 16,096,550 ......... 161 161
CAPITAL SURPLUS ................................................................... 178,233 178,233
ACCUMULATED DEFICIT ............................................................... (105,654) (73,911)
DEFERRED COMPENSATION ............................................................. (105) (74)
ACCUMULATED OTHER COMPREHENSIVE INCOME ............................................ (663) 51
----------- ----------
Stockholders' equity ......................................................... 71,972 104,460
---------- ----------
Total liabilities and stockholders' equity ............................... $ 144,161 $ 178,237
========= =========
See Notes to Consolidated Financial Statements.
16
ROBERTSON-CECO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Years Ended December 31
-------------------------------------------
1997 1998 1999
------------ ---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations before extraordinary item ................... $ 18,786 $ 22,519 $ 22,750
Adjustments to reconcile income from continuing operations before
extraordinary item to net cash provided by operating activities:
Depreciation ............................................................ 3,660 4,152 4,562
Amortization ............................................................ 933 1,071 852
Changes in assets and liabilities:
Increase in accounts and notes receivable .............................. (5,864) (1,629) (1,109)
(Increase) decrease in inventories ..................................... 2,115 2,184 (8,213)
Decrease in deferred tax assets ....................................... 11,200 13,647 13,072
Increase (decrease) in accounts payable ................................ 631 (1,869) 448
Net changes in other assets and liabilities ............................ (974) 1,736 (6,442)
---------- -------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES ................................ 30,487 41,811 25,920
---------- -------- ---------
NET CASH PROVIDED BY (USED FOR)
DISCONTINUED OPERATIONS ................................................ (2,915) (2,935) 2,200
---------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .......................................................... (7,267) (5,134) (18,796)
---------- -------- ---------
NET CASH USED FOR INVESTING ACTIVITIES ................................... (7,267) (5,134) (18,796)
---------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings ............................................ 20,000 - -
Payments on long-term debt .................................................... (32,731) (15,000) -
Payments of capitalized interest on 12% Notes ................................. (338) - -
---------- --------- ---------
NET CASH USED FOR FINANCING ACTIVITIES ................................... (13,069) (15,000) -
---------- -------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS ............................... 7,236 18,742 9,324
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD .......................... 12,225 19,461 38,203
---------- -------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD ................................ $ 19,461 $ 38,203 $ 47,527
========== ======== =========
SUPPLEMENTAL CASH FLOW DATA Cash payments made for:
Interest .................................................................. $ 1,936 $ 882 $ 114
========== ======== =========
Income taxes ............................................................. $ - $ - $ 1,993
========== ======== =========
See Notes to Consolidated Financial Statements
17
ROBERTSON-CECO CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
Accumulated
Retained Other
Common Capital Earnings Deferred Comprehensive
Stock Surplus (Deficit) Compensation Income
BALANCE DECEMBER 31, 1996 $ 161 $ 178,256 $ (151,527) $ (195) $ (451)
Net income .................................... 23,354
Amortization of deferred compensation.......... 35
Foreign currency translation adjustments ...... 113
--------- ----------- ------------ --------- --------
BALANCE DECEMBER 31, 1997 161 178,256 (128,173) (160) (338)
Net income .................................... 22,519
Issuances (forfeitures) under employee
plans, net................................... (23) 23
Amortization of deferred compensation ......... 32
Foreign currency translation adjustments ...... (325)
--------- ----------- ------------ --------- --------
BALANCE DECEMBER 31, 1998 161 178,233 (105,654) (105) (663)
Net income .................................. 31,743
Amortization of deferred compensation.......... 31
Foreign currency translation adjustments ...... 714
--------- ----------- ------------ --------- --------
BALANCE DECEMBER 31, 1999 $ 161 $ 178,233 $ (73,911) $ (74) $ 51
========= =========== ============ ========= ========
See Notes to Consolidated Financial Statements.
18
ROBERTSON-CECO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1998 AND 1999
1. NATURE OF BUSINESS
Robertson-Ceco Corporation (the "Company"), owns and operates three
custom-engineered metal building operations: Ceco Building Systems, Star
Building Systems, and H. H. Robertson Building Systems (Canada). The Company's
custom-engineered metal buildings are manufactured at plants in California, Iowa
(two separate plant locations), Mississippi, North Carolina, Tennessee (as of
March 2000) and Ontario, Canada. The buildings are sold primarily through
builder networks located throughout the United States and Canada in the
industrial and commercial building market. The buildings are erected by the
builder network supplemented by subcontractors and, in certain cases, Company
erection crews.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation
---------------------
The Consolidated Financial Statements include the accounts of the Company
and all subsidiaries. Intercompany balances and transactions have been
eliminated. Certain previously reported amounts have been reclassified to
conform to the 1999 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,
disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses during the reporting period. Actual results may differ
from these estimates.
Comprehensive Income
--------------------
Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS No. 130") was issued in June 1997 with adoption
required for fiscal years beginning after December 31, 1997. SFAS No. 130
requires the presentation of an additional income measure (termed comprehensive
income), which adjusts traditional net income for certain items reflected as
direct charges to equity. Other comprehensive income for the Company consists of
foreign currency adjustments of $0.7 million in 1999.
Foreign Currency Translation
----------------------------
Asset and liability accounts of foreign subsidiaries 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. Foreign currency gains and
losses resulting from transactions are not material.
19
Inventories
-----------
Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
Property, Plant and Equipment
-----------------------------
Property, plant and equipment 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 income tax purposes, assets are generally
depreciated using accelerated methods.
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
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.
Warranty costs are accrued at the time of revenue recognition.
Insurance Liabilities
---------------------
The Company is self-insured in the U.S. for certain coverages subject to
specific retention levels. Insurance liabilities consist of estimated
liabilities incurred but not yet paid.
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 business. Such
costs are being amortized on a straight-line basis over a period of 40 years.
Management periodically reviews the carrying value to determine whether facts
and circumstances exist which would indicate that the assets are impaired.
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.
20
Earnings per Common Share
-------------------------
Basic earnings per share is based on the weighted average outstanding
shares of the Company's common stock. Diluted earnings per share includes the
dilutive effect of outstanding restricted stock if the effect is not
anti-dilutive.
3. GAIN ON DISCONTINUED OPERATIONS
During the third quarter of 1999, the Company recorded a gain on
discontinued operations in the amount of $12.3 million before income taxes of
$3.3 million. Included in the gain is a cash recovery related to the Company's
Canadian defined benefit pension plan. The plan was terminated and the excess
pension assets were distributed to the Company and the participants. During the
same quarter the Company reached an agreement with one of its environmental
insurance carriers related to environmental liabilities which arose from certain
activities of the former H.H. Robertson Company. Included in the gain is that
portion of the settlement related to various past expenditures for those
environmental liabilities. The remaining portion of the settlement was added to
the Company's environmental reserves to cover costs yet to be incurred. By
agreement, the terms of the settlement are confidential. Also, the Company
reevaluated various reserves for warranty, worker's compensation, general
liability and other contingencies related to sold or discontinued businesses and
adjusted the reserves downward to more accurately reflect the Company's
continuing exposure for these matters.
4. CASH AND RELATED MATTERS
Cash and cash equivalents consisted of the following:
December 31
---------------------
1998 1999
---------- -------
(thousands)
Cash ....................................... $ - $ -
Time deposits ............................... 38,203 47,527
--------- ----------
$ 38,203 $ 47,527
======== =========
5. ACCOUNTS RECEIVABLE
The Company grants credit to its customers, substantially all of which
are involved in the construction industry. Accounts receivable included unbilled
retainages of $0.5 million and $0.8 million, at December 31, 1998 and 1999,
respectively. There were no retainages due beyond one year at December 31, 1999.
6. INVENTORIES
Inventories consisted of the following:
December 31
-----------------------
1998 1999
------- --------
(thousands)
Work in process ............................ $ 4,121 $ 5,526
Materials and supplies ..................... 7,397 14,205
--------- --------
$11,518 $19,731
At December 31, 1998 and 1999, all inventories were valued on the LIFO
method. The FIFO value of these inventories was approximately $0.1 million
greater and $0.9 million less than their LIFO value at December 31, 1998 and
1999, respectively.
21
7. OTHER LIABILITIES
December 31
---------------------
1998 1999
-------- ------
(thousands)
Other accrued liabilities consisted of the following:
Reserves related to sold or discontinued businesses -
Insurance liabilities......................................... $ 928 $ 760
Environmental .............................................. 1,750 1,750
Warranty claim settlement .................................. 1,000 1,000
Other ....................................................... 845 447
---------- -----------
4,523 3,957
---------- ----------
Warranty and backcharges .................................... 2,607 2,299
Deferred revenue................................................ 500 308
Other ......................................................... 6,526 6,132
---------- ----------
$ 14,156 $ 12,696
======== ========
December 31
---------------------
1998 1999
-------- ------
(thousands)
Long-term liabilities consisted of the following:
Reserves related to sold or discontinued businesses -
Insurance liabilities......................................... $ 6,225 $ 3,908
Environmental .............................................. 3,572 3,625
Warranty claim settlement .................................. 2,000 1,000
Dispositions.................................................. 3,973 2,151
Other ........................................................ 4,915 2,460
----------- ----------
20,685 13,144
---------- ---------
Warranty and backcharges .................................... 2,399 2,293
Other ......................................................... 15,472 25,574
---------- ---------
$ 38,556 $ 41,011
========= ========
See Note 12 regarding contingencies.
8. DEBT
On December 31, 1996, the Company entered into a credit agreement
("Credit Agreement") with a group of banks. Under the terms of the Credit
Agreement, the lenders agreed to provide a term loan of up to $20 million, due
June 30, 2001, which was paid in full in September 1998. At that date, the
Company also reduced the amount available under the revolving credit and letter
of credit facility from $25 million to $15 million maturing December 31, 2001.
Up to $12 million of the revolving credit facility can be used to support
outstanding letters of credit. Interest on the loans under the Credit Agreement
is based on the prime or the Eurodollar rate plus a factor which depends on the
Company's ratio of debt to earnings before taxes, interest, depreciation and
amortization. In addition, the Company pays a commitment fee on the unused
amounts of the credit facility. Availability under the revolving credit facility
is based on eligible accounts receivable and inventory. As of December 31, 1999,
the borrowing base was approximately $28.5 million. As collateral under the
Credit Agreement, the Company has granted the lenders a security interest in all
of the assets of the Company and its Restricted Subsidiaries, as defined. The
Credit Agreement contains certain financial covenants restricting dividend
payments, repurchase of stock and issuance of additional debt, amongst other
matters. Under the terms of the Company's debt agreement, $50.7 million was
available for dividends or repurchase of stock at December 31, 1999. The Company
is in compliance with the provisions of the Credit Agreement.
22
On January 15, 1997, the amounts outstanding on the Senior Subordinated
Notes and Subordinated Debentures were redeemed utilizing proceeds from
borrowing under the term loan in the Credit Agreement plus available cash. In
connection with the redemption of the Notes and Debentures, the Company recorded
a gain of $4.6 million, net of taxes of $2.9 million.
At December 31, 1999, the Company had outstanding performance and
financial bonds of $3.8 million, which generally provide a guarantee as to the
Company's performance under contracts and other commitments. As of December 31,
1999, the Company had outstanding letters of credit of $4.7 million used
principally to support insurance and bonding programs. The outstanding letters
of credit were reduced to $2.7 million subsequent to year end.
9. RENTAL AND LEASE INFORMATION
The Company leases certain facilities and equipment under operating
leases. Total rental expense was $721,000, $695,000 and $717,000 for 1997, 1998
and 1999, respectively.
Future estimated minimum rental commitments under operating leases at
December 31, 1999 are as follows (thousands):
2000 ..................................... $ 1,880
2001 ..................................... 1,833
2002 ..................................... 1,749
2003 ..................................... 1,910
2004 ..................................... 1,606
2005 and after.............................. 1,602
-----------
$ 10,580
===========
In December 1999, the Company entered into a lease agreement for
substantially all of the equipment for its new Tennessee plant. The lease
commitment provides for a maximum spending of $14.0 million and has a lease term
of six years. The Company expects to spend $13.2 million for such equipment.
Included in the table above are the estimated rent payments for equipment in
place at December 31, 1999 under this lease.
10. FAIR VALUE OF 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 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 value
for cash and cash equivalents approximates carrying value at December 31, 1999
due to the relatively short maturity of these financial instruments.
23
11. TAXES ON INCOME
Year Ended December 31
----------------------------------
1997 1998 1999
------------ ----------- -------
(thousands)
Income from continuing operations before
provision for income taxes:
Domestic ............................... $ 27,733 $ 34,496 $ 35,893
Foreign ................................ 2,253 1,670 1,231
---------- ---------- ---------
$ 29,986 $ 36,166 $ 37,124
========== ========== =========
Provision for income taxes:
Current taxes:
Federal .................................. $ - $ - $ -
State...................................... - 398 2,019
Foreign .................................. - - -
---------- ---------- ---------
- 398 2,019
---------- ---------- ---------
Deferred Taxes:
Federal .................................. 9,472 11,513 12,183
State...................................... 1,728 1,736 172
Foreign .................................. - - -
---------- ---------- ---------
11,200 13,249 12,355
---------- ---------- ---------
Total provision for income taxes ........... $ 11,200 $ 13,647 $ 14,374
========== ========= =========
A reconciliation between taxes computed at the U.S. statutory Federal
income tax rate and the provision for income taxes reported in the Consolidated
Statements of Income follows:
Year Ended December 31
----------------------------------
1997 1998 1999
----------- ---------- -------
(thousands)
Tax provision at U.S. statutory rate................. $ 10,495 $ 12,658 $ 12,993
Net operating loss benefit........................... (788) (585) (431)
Research and development tax credit carryforward..... - (183) -
State taxes ......................................... 1,123 1,387 1,383
Other non-deductible expenses ...................... 370 370 429
---------- ------------ -----------
Provision for income taxes ......................... $ 11,200 $ 13,647 $ 14,374
========== ============ ===========
24
The following is a summary of the significant components of the Company's net
deferred tax asset at December 31, 1998 and 1999:
1998 1999
-------- ---------
(thousands)
Deferred tax assets:
Insurance liabilities.............................................. $ 4,724 $ 3,532
Pension liabilities................................................ 379 -
Warranties and backcharges ........................................ 2,491 2,290
Other expenses not currently deductible ........................... 8,380 6,292
Operating loss carryforwards ..................................... 2,936 559
Limited operating loss carryforwards .............................. 11,350 787
Tax credit carryforwards........................................... - 1,861
--------- ---------
Total tax assets .................................................... 30,260 15,321
--------- ---------
Deferred tax liabilities:
Accelerated depreciation ......................................... (3,997) (4,089)
LIFO inventory ................................................... (1,833) (1,689)
Prepaid pension.................................................... - (251)
---------- ---------
Total tax liabilities................................................ (5,830) (6,029)
---------- ---------
Deferred tax asset valuation allowance .............................. (12,667) ( 559)
--------- ---------
Net deferred tax asset............................................... $ 11,763 $ 8,733
========== ==========
Management believes that the Company will be able to realize the
remaining unreserved portion of its deferred tax asset through future earnings.
Management will continue to evaluate the level of its deferred tax valuation
allowance at each balance sheet date and adjust the valuation reserve as
warranted by changes in the Company's expected future profitability or other
events. Deferred tax asset and valuation allowance amounts for 1998 have been
adjusted to reflect facts that became available in 1999 related to the Company's
limited loss carryforwards.
At December 31, 1999, the Company had U.S. tax net operating loss
carryforwards of approximately $98 million. Use of the loss 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 carryforward may be restricted to an
aggregate potential availability of $2.3 million.
At December 31, 1999, the Company had a net operating loss carryforward
at its Canadian subsidiary of approximately $1.6 million which expires in 2000.
A valuation allowance has been recorded for the entire amount of the deferred
tax assets attributable to the Canadian net operating loss and other Canadian
temporary differences.
12. COMMITMENTS AND CONTINGENCIES
There are various proceedings pending against or involving the Company
which are ordinary or routine given the nature of the Company's business. The
Company has recorded a liability related to litigation where it is both probable
that a loss has been incurred and the amount of the loss can be reasonably
estimated.
The Company continues to be liable for obligations associated with sold
or discontinued businesses prior to their sale or disposition including
liabilities arising from Company self-insurance programs, unfunded pensions,
warranty and rectification claims, environmental clean-up matters, and
unresolved litigation. Management 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. However,
based upon currently available information, management does not expect the
ultimate resolution of such matters will have a material adverse effect on the
Consolidated Financial Statements.
25
The Company has been identified as a potentially responsible party by
various state and Federal authorities for clean-up and monitoring costs at waste
disposal sites related to discontinued operations. Due to various factors, it is
difficult to estimate future environmental related expenditures. The Company has
engaged third parties to perform feasibility studies and assist in estimating
the cost of investigation and remediation. At December 31, 1999, the Company had
recorded reserves of approximately $5.4 million, representing the best estimate
of management and the third parties of future costs to be incurred. The majority
of these expenditures are expected to be incurred in the next five years.
Although unexpected events could have an impact on these estimates, management
does not believe ultimate expenditures for these matters will materially exceed
the amounts accrued.
With respect to the environmental clean-up matters, the Company claimed
coverage under its insurance policies for past and future clean-up costs related
to certain sites for which the Company believed it was entitled to defense and
indemnification under the policies. The insurer refused to admit or deny
coverage. As a result, the Company filed a complaint against the insurer seeking
to recover the past and future clean-up costs. During the third quarter of 1999,
the Company reached a settlement with its insurance carrier. (See Note 3 to the
Consolidated Financial Statements herein.)
13. LONG-TERM INCENTIVE PLAN
The Company's Long-Term Incentive Plan, (the "Incentive Plan"), as
amended and restated, 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 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 Incentive Plan, subject to appropriate adjustment in certain events.
Shares issued pursuant to the Incentive Plan may be authorized and unissued
shares or shares held in treasury. Awards may be granted under the Incentive
Plan through March 19, 2001, unless the plan is terminated earlier by action of
the Board of Directors. At December 31, 1999, there were 1,080,000 shares under
the Long-Term Incentive Plan available for grant.
During 1998, 15,000 restricted shares were forfeited. At December 31,
1999, 31,000 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, a
component of stockholders' equity. Deferred compensation expense is amortized
over the period benefited.
14. RETIREMENT BENEFITS
Defined Benefit Plan
--------------------
The Company amended its U.S. defined benefit pension plan, effective
January 1, 1995, so that active salaried employees ceased 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 were not part
of a collective bargaining agreement ceased to accrue future plan benefits.
Benefits which are provided under the Company's defined benefit pension plan are
primarily based on years of service and the employee's compensation. Plan assets
of the Company's defined benefit plan are invested in broadly diversified
portfolios of government obligations, mutual funds, stocks, bonds and fixed
income securities.
Currently, the Company's funding policy is to make payments to its
defined benefit plan as required by minimum funding standards of the Internal
Revenue Code.
26
Net pension income of the defined benefit pension plan was:
Year Ended December 31
----------------------------------
1997 1998 1999
-------- ----- -------
(thousands)
Service cost-benefits earned during the year .............. $ 26 $ - $ -
Interest cost on projected benefit obligation ............. 3,724 3,613 3,678
Expected return on assets .................................. (4,429) (4,393) (4,372)
Net amortization and deferral ............................. 47 47 47
---------- ----------- ------------
Net pension income ......................................... $ (632) $ (733) $ (647)
========== ========= ==========
The following table reconciles the Company's benefit obligation for the
defined benefit pension plan from the beginning of the year to the end of the
year:
1998 1999
------- ------
(thousands)
Benefit obligation at beginning of year .......... $ 51,328 $ 50,440
Interest cost .................................... 3,613
3,678
Actuarial loss ................................... 2,166 1,077
Benefits paid .................................... (6,667) (5,298)
-------- --------
Benefit obligation at end of year ................ $ 50,440 $ 49,897
======== ========
The following table reconciles the change in plan assets of the
Company's defined benefit pension plan from the beginning of the year to the end
of the year:
1998 1999
------- ------
(thousands)
Fair value of assets at beginning of year ........ $ 51,274 $ 51,091
Actual return on plan assets .................... 6,484 5,137
Benefits paid .................................... (6,667) (5,298)
-------- --------
Fair value of assets at end of year .............. $ 51,091 $ 50,930
======== ========
The following table sets forth the funded status and statement of
financial position of the Company's defined benefit pension plan:
1998 1999
------- ------
(thousands)
Fair value of assets at end of year ............ $ 51,091 $ 50,930
Benefit obligation at end of year .............. 50,440 49,897
-------- --------
Funded status .................................. 651 1,033
Unrecognized actuarial gain .................... (536) (224)
Unrecognized prior service cost ................ 105 75
Unrecognized net obligation .................... 68 51
-------- --------
Net prepaid benefit cost ....................... $ 288 $ 935
======== ========
27
Actuarial assumptions used for the Company's defined benefit pension
plan were as follows:
Year Ended December 31
----------------------------------
1997 1998 1999
-------- ------ -------
(thousands)
Assumed discount rate ........................... 7.25% 7.0% 7.75%
Expected rate of return on plan assets .......... 9.0% 9.0% 9.0%
Defined Contribution Plan
-------------------------
Certain U.S. salaried and 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 currently. Plan
assets of the defined contribution plan are invested in a variety of fixed
income and equity funds. Expense related to the Company's defined contribution
plan was:
Year Ended December 31
-----------------------------------
1997 1998 1999
--------- ------ -------
(thousands)
$ 1,067 $ 1,134 $ 1,301
======= ======== ========
Postretirement Medical and Life Insurance Plans
-----------------------------------------------
The Company sponsors postretirement medical and life insurance plans that
cover a closed group of eligible retirees and their dependents. 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
----------------------
1998 1999
----------- ------
(thousands)
Accumulated Postretirement Benefit Obligation ("APBO"):
Retired employees .................................................... $ 1,231 $ 415
========= ========
Unfunded accumulated benefit obligation in
excess of plan assets .............................................. $ (1,231) $ (415)
Unrecognized gain .................................................... (3,830) (3,395)
Unrecognized transition obligation ................................... 4,389 3,657
--------- ----------
Accrued postretirement benefit cost ................................. $ (672) $ (153)
========= ==========
Weighted average discount rate used in determination of APBO ......... 7.0% 7.75%
========= ========
28
The following table reconciles the Company's benefit obligation for
postretirement medical and life insurance plans from the beginning of the year
to the end of the year:
1998 1999
------- --------
(thousands)
Benefit obligation at beginning of year ........................ $ 1,704 $ 1,231
Interest cost ................................................... 102 47
Actuarial gain ................................................. - 209
Benefits paid.................................................... (575) (406)
Settlement....................................................... - (666)
-------- --------
Benefit obligation at end of year ............................... $ 1,231 $ 415
======== ========
Net periodic postretirement benefit cost for 1997, 1998 and 1999 included
the following components:
Year Ended December 31
--------------------------------
1997 1998 1999
-------- ----- -------
(thousands)
Interest cost ................................................. $ 133 $ 102 $ 47
Amortization of net obligation ................................ 776 813 732
Recognized actuarial gain ..................................... (330) (333) (226)
-------- -------- -------
Postretirement benefit cost...................................... $ 579 $ 582 $ 553
======== ====== =======
Weighted average discount rate used in
determination of APBO ........................................ 7.25% 7.0% 7.75%
======= ======== =======
The medical trend rate assumption has an immaterial impact on results.
15. RELATED PARTY TRANSACTIONS
The Company paid $240,000 during each of the years ended 1997, 1998 and
1999, to an affiliated company of the Company's Chief Executive Officer for
manufacturing and certain other consulting services.
16. BUYOUT PROPOSAL
On December 8, 1999, the Company received a proposal from The Heico
Companies, L.L.C. ("Heico") for the acquisition by Heico of all of the
outstanding common stock not now owned by Heico or any of its affiliates. Heico
and its affiliates currently own 11,156,363 shares of Company common stock,
69.3% of all outstanding common shares.
The Board of Directors of the Company appointed an independent director
as a special committee to consider and respond to the Heico proposal. The
special committee engaged an independent financial advisor and independent legal
counsel to assist it in evaluating the Heico proposal. Discussions between this
special committee and Heico are continuing.
On December 9, 1999, a class action lawsuit was filed in the Court of
Chancery of the State of Delaware alleging, inter alia, breach of fiduciary
duties on the part of the directors of the Company. On December 10, 1999, a
similar class action lawsuit was filed in the Superior Court of the State of
California. The Company believes these suits are without merit and intends to
vigorously defend against them.
29
17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial data is summarized as follows (in thousands, except
per share data):
First Second Third Fourth
----- ------ ----- ------
1999 (a)
Revenue .......................................... $ 59,864 $ 67,635 $ 78,169 $ 80,140
Cost of sales .................................... 48,284 53,323 60,588 62,044
Income from continuing operations ................ 3,728 5,473 6,752 6,797
Gain on discontinued operations .................. - - 8,993 -
Net income ....................................... 3,728 5,473 15,745 6,797
Income per share from continuing operations ...... $ .23 $ .34 $ .42 $ .42
Net income per common share ...................... $ .23 $ .34 $ .98 $ .42
=========== ========== =========== ==========
1998
Revenue .......................................... $ 62,488 $ 74,217 $ 78,281 $ 79,816
Cost of sales .................................... 50,827 58,221 61,808 64,057
Net income ....................................... 3,508 6,519 6,285 6,207
Net income per common share ...................... $ .22 $ .41 $ .39 $ .39
=========== ========== =========== ==========
(a) In September 1999 the Company recorded a net gain on discontinued
operations of $9.0 million, or $.56 per share. This gain represents reserve
adjustments and other issues related to discontinued operations which are
nonrecurring.
(See Note 3 to the Consolidated Financial Statement herein.)
30
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Robertson-Ceco Corporation:
We have audited the accompanying consolidated balance sheets of Robertson-Ceco
Corporation, a Delaware Corporation, and subsidiaries as of December 31, 1999
and 1998, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1999. 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 in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Robertson-Ceco Corporation and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supporting schedules are the responsibility of
the Company's management and are presented for purposes of complying with the
Securities and Exchange Commissions rules and are not a required part of the
basic financial statements. These schedules have been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
Arthur Andersen LLP
San Francisco, California
February 4, 2000
31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
32
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 16, 2000, 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 6 of this Report under the heading "EXECUTIVE OFFICERS
OF THE REGISTRANT".
ITEM 11. EXECUTIVE COMPENSATION
----------------------
Information concerning executive compensation, other than the report of the
compensation committee and the performance graph, 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 16,
2000, 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 16, 2000, 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 16, 2000, to be filed pursuant
to Regulation 14A.
33
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:
(a)1. Consolidated Financial Statements of Robertson-Ceco
Corporation.
Consolidated Statements of Income for the three
years ended December 31, 1999. 14
Consolidated Balance Sheets at December 31, 1998 and
1999. 15
Consolidated Statements of Cash Flows for the three
years ended December 31, 1999. 17
Consolidated Statements of Stockholders' Equity
for the three years ended December 31, 1999. 18
Notes to Consolidated Financial Statements, including
Selected Quarterly Financial Data as required by Item
302 of Regulation S-K. 19
Report of Independent Public Accountants 31
(a)2. Financial Statement Schedules for the Three Years
Ended December 31, 1999.
SCHEDULE II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not
applicable or not required. 36
(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 38.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the
twelve months ended December 31, 1999.
34
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 San
Ramon, California, on this 29th day of March 2000.
ROBERTSON-CECO CORPORATION
By /s/ Patrick G. McNulty
---------------------------
Patrick G. McNulty
Corporate Controller
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
29th day of March 2000. Each person whose signature appears below hereby
authorizes each of Andrew G. C. Sage, II, Elmer A. Roskovensky and Ronald D.
Stevens 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, Sr. /s/ Andrew G. C. Sage, II
- ----------------------------- --------------------------------
Michael E. Heisley, Sr. Andrew G. C. Sage, II
Chief Executive Officer and Director Chairman and Director
(Principal Executive Officer)
/s/ Elmer A. Roskovensky /s/ Ronald D. Stevens
- ----------------------------- --------------------------------
Elmer A. Roskovensky Ronald D. Stevens
President and Chief Operating Officer Executive Vice President, Chief
and Director Financial Officer and Secretary
/s/ Frank A. Benevento II /s/ Stanley G. Berman
- ----------------------------- --------------------------------
Frank A. Benevento Stanley G. Berman
Director Director
/s/ Gregg C. Sage /s/ Stanley H. Meadows
- ----------------------------- --------------------------------
Gregg C. Sage Stanley H. Meadows
Director Director
/s/ Patrick G. McNulty /s/ Michael E. Heisley, Jr.
- ----------------------------- --------------------------------
Patrick G. McNulty Michael E. Heisley, Jr.
Corporate Controller Director
35
ROBERTSON-CECO CORPORATION SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Thousands)
- ------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------------------------------------------
BALANCE ADDITIONS BALANCE
AT CHARGED TO CHARGED TO AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1999:
Deducted from Asset Accounts:
Allowance for
Doubtful Accounts............... $ 1,795 $ 384 $ - $ 269 (a) $ 1,910
========= ======== ======== ========= =========
Not Deducted from Asset Accounts:.... 1,000 (b)
Reserves for Discontinued 1,000 (c)
Operations (e)(g) ............. $ 4,254 $- $ - $ 254 (d) $ 2,000
========= ======== ======== ========= =========
(1,639)(d)
Insurance liabilities - current . $ 3,251 $ 7,238 $ - $ 9,271 (b) $ 2,857
========= ======= ======== ========= =========
1,000 (c)
Insurance liabilities - long-term $ 9,592 $- $ - $ 1,639 (d) $ 6,953
========= ======= ======== ========= =========
(2,493) (d)
Other-current (f)................. $ 4,870 $ 2,472 $ - $ 5,196 (b) $ 4,639
========= ======= ======== ========= =========
(1,350)(c)
Other-noncurrent (g) ............ $ 8,445 $- $ - $ 1,610 (d) $ 8,185
========= ======= ======== ========= =========
YEAR ENDED DECEMBER 31, 1998:
Deducted from Asset Accounts:
Allowance for
Doubtful Accounts ............ $ 1,690 $ 220 $ - $ 115 (a) $ 1,795
========== ======= ======== ========= =========
Not Deducted from Asset Accounts:
Reserves for Discontinued
Operations (e)(g) $ 5,272 $- $ - $ 1,018 (b) $ 4,254
========== ======= ======== ========= =========
2,419 (d)
Insurance liabilities - current. $ 5,754 $ 7,808 $ - $ 7,892 (b) $ 3,251
========= ======= ======== ========= =========
Insurance liabilities - long-term $ 7,331 $ (158) $ - $ (2,419)(d) $ 9,592
========= ======== ======== ========= =========
(800)(d)
Other-current (f) ................ $ 5,602 $ 2,150 $ - $ 3,682 (b) $ 4,870
========= ======== ======== ========= =========
Other-noncurrent (g) ............. $ 9,245 $- $ - $ 800 (d) $ 8,445
========= ======= ======== ========= =========
36
ROBERTSON-CECO CORPORATION SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Thousands)
- ------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------------------------------------------
BALANCE ADDITIONS BALANCE
AT CHARGED TO CHARGED TO AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997:
Deducted from Asset
Accounts:
Allowance for
Doubtful Accounts ............ $ 1,881 $ 450 $ - $ 641 (a) $ 1,690
========= ======== ========== ========= =========
Not Deducted from Asset Accounts:
Reserves for Discontinued
Operations (e)(g).............. $ 6,273 $ - $ - $ 1,001 (b) $ 5,272
========= ======== ========== ========= =========
(1,225)(d)
Insurance liabilities - current $ 6,094 $ 6,525 $ - $ 8,090 (b) $ 5,754
========= ======== ========== ========= =========
1,225 (d)
Insurance liabilities - long-term $ 8,349 $ - $ - $ (207)(b) $ 7,331
========= ======== ========== ========= =========
(1,328)(d)
Other-current (f)................ $ 5,473 $ 1,881 $ - $ 3,080 (b) $ 5,602
========= ======== ========== ========= =========
Other-noncurrent (g) ............ $ 10,573 $ - $ - $ 1,328 (d) $ 9,245
========= ======== ========== ========= =========
NOTES:
(a) Accounts receivable written off as uncollectable.
(b) Represents charges to the accounts for their intended purposes.
(c) Reversed excess reserve to income. (See Note 3).
(d) Represents transfer of reserves.
(e) Represents reserves for businesses sold/held for sale.
(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
"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.
37
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 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 ..........................................................
4.2 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 .........................................................
10.1 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 .........................................................
10.3 Registration Rights Agreement dated May 17, 1993 by
and among the Registrant and Sage RHH referred to
in Exhibit 4.2 above .............................................
10.4 Registration Rights Agreement dated December 14,
1993 by and among the Registrant and Heico
Acquisitions, Inc. referred to in Exhibit 4.3 above .............
10.7 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 10-K for the year ended
December 31, 1994 (File No. 1-10659) and
incorporated herein by reference thereto ........................
10.9 Credit agreement dated December 31, 1996 (as
amended) by and between the Registrant and the
various financial institutions and Bank of America
as agent for the lenders as filed as Exhibit 2.1 to
the Registrants Report on Form 10-K for the year
ended December 31, 1997 (File No. 1-10659) and
incorporated herein by reference thereto ........................
11 Statement re: Computation of Earnings Per Common Share ........39
21 List of subsidiaries of Registrant ............................41
23.1 Consent of Arthur Andersen LLP ................................42
27 Financial Data Schedule
38