UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly report under Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1997
OR
[ ] Transition report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number 1-10659
ROBERTSON-CECO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3479146
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.
5000 Executive Parkway, Ste. 425, San Ramon, California 94583
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 510-358-0330
Indicate by check mark whether registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 4, 1997
Common Stock, par value $0.01 per share 16,111,550
ROBERTSON-CECO CORPORATION
Form 10-Q
For Quarter Ended June 30, 1997
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets --
June 30, 1997 and December 31, 1996 . . . .
Condensed Consolidated Statements of Operations --
Three and Six Months Ended June 30, 1997 and 1996
Condensed Consolidated Statements of Cash Flows --
Six Months Ended June 1997 and 1996 . . . .
Notes to Condensed Consolidated Financial
Statements . . . . . . . . . . . . . . . .
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . .
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings . . . . . . . . . . . . .
Item 4. Submission of Matters to a Vote of Security
Stockholders . . . . . . . . . . . . . . . . .
Item 6. Exhibits and Reports on Form 8-K . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . .
Exhibit Index . . . . . . . . . . . . . . . . . . . . . .
ITEM 1. FINANCIAL STATEMENTS
ROBERTSON-CECO CORPORATION
(In thousands)
(Unaudited)
June 30 December 31
1997 1996
-- ASSETS--
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . $ 13,830 $ 12,225
Accounts and notes receivable, net . . . . . . . . 24,046 22,385
Inventories:
Work in process . . . . . . . . . . . . . . . 5,974 6,750
Material and supplies . . . . . . . . . . . . 8,587 9,067
Total inventories . . . . . . . . . . . . . . 14,561 15,817
Deferred taxes, current . . . . . . . . . . . . . 6,720 6,067
Other current assets . . . . . . . . . . . . . . . 751 810
Total current assets . . . . . . . . . . . . . 59,908 57,304
PROPERTY - at cost . . . . . . . . . . . . . . . . . . 46,349 43,101
Less accumulated depreciation . . . . . . . . . . (21,734) (20,147)
Property, net . . . . . . . . . . . . . . . . 24,615 22,954
DEFERRED TAXES . . . . . . . . . . . . . . . . . . . . 15,804 23,837
EXCESS OF COST OVER NET ASSETS OF
ACQUIRED BUSINESSES - NET . . . . . . . . . . . . 26,197 26,611
OTHER NON-CURRENT ASSETS . . . . . . . . . . . . . . . 1,493 1,514
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . $ 128,017 $ 132,220
See Notes to Condensed Consolidated Financial Statements
ITEM 1. FINANCIAL STATEMENTS
ROBERTSON-CECO CORPORATION
(In thousands, except per share data)
(Unaudited)
June 30 December 31
1997 1996
--LIABILITIES --
CURRENT LIABILITIES:
Current portion of long-term debt . . . . . . . . $ 5,000 $ 7,455
Accounts payable, principally trade . . . . . . . 16,136 12,578
Insurance liabilities . . . . . . . . . . . . . . 5,918 6,094
Other accrued liabilities . . . . . . . . . . . . 18,181 28,574
Total current liabilities . . . . . . . . . . . . 45,235 54,701
LONG-TERM DEBT, less current portion . . . . . . . . . 12,500 20,000
LONG-TERM INSURANCE LIABILITIES . . . . . . . . . . . . 7,689 8,349
LONG-TERM PENSION LIABILITIES . . . . . . . . . . . . . 1,860 2,231
RESERVES AND OTHER LIABILITIES . . . . . . . . . . . . 22,471 20,695
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . 89,755 105,976
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01 per share . . . . . 161 161
Capital surplus . . . . . . . . . . . . . . . . . 178,256 178,256
Retained earnings (deficit) . . . . . . . . . . . (139,464) (151,527)
Deferred compensation . . . . . . . . . . . . . . (179) (195)
Foreign currency translation adjustments . . . . . (512) (451)
Stockholders' equity . . . . . . . . . . . . . 38,262 26,244
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY . . . . . . . . . $ 128,017 $ 132,220
See Notes to Condensed Consolidated Financial Statements
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
NET REVENUES . . . . . . . . . . . . . . . $ 69,716 $ 63,876 $ 129,714 $120,848
COSTS OF SALES . . . . . . . . . . . . . . 56,255 49,899 105,314 95,980
GROSS PROFIT . . . . . . . . . . . . . . . 13,461 13,977 24,400 24,868
SELLING, GENERAL AND
ADMINISTRATIVE . . . . . . . . . . . . 6,127 6,412 11,647 13,203
OPERATING INCOME . . . . . . . . . . . . . 7,334 7,565 12,753 11,665
OTHER INCOME (EXPENSE):
Interest expense . . . . . . . . . . . (433) (981) (906) (2,023)
Other income - net . . . . . . . . . . 230 136 339 365
(203) (845) (567) (1,658)
INCOME BEFORE INCOME TAXES . . . . . . . . 7,131 6,720 12,186 10,007
INCOME TAXES . . . . . . . . . . . . . . . 2,796 175 4,691 200
INCOME BEFORE EXTRAORDINARY
ITEM . . . . . . . . . . . . . . . . . 4,335 6,545 7,495 9,807
EXTRAORDINARY GAIN ON DEBT
REDEMPTION . . . . . . . . . . . . . . - - 4,568 -
NET INCOME . . . . . . . . . . . . . . . . $ 4,335 $ 6,545 $ 12,063 $ 9,807
See Notes to Condensed Consolidated Financial Statements
ROBERTSON-CECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
RETAINED EARNINGS (DEFICIT)
AT BEGINNING OF PERIOD . . . . . . . . $ (143,799) $ (199,558) $ (151,527) $ (202,820)
NET INCOME 4,335 6,545 12,063 9,807
RETAINED EARNINGS (DEFICIT)
AT END OF PERIOD . . . . . . . $ (139,464) $ (193,013) $ (139,464) $ (193,013)
INCOME PER COMMON SHARE:
Income before Extraordinary Item . . . $ .27 $ .41 $ .47 $ .61
Extraordinary Item . . . . . . . . . . $ - $ - $ .28 $ -
NET INCOME . . . . . . . . . . . . . . . . $ .27 $ .41 $ .75 $ .61
SHARES USED IN INCOME
PER SHARE CALCULATION . . . . . . . . . 16,087 16,117 16,087 16,120
See Notes to Condensed Consolidated Financial Statements
ROBERTSON-CECO CORPORATION
(In thousands)
(Unaudited)
Six Months Ended
June 30
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before extraordinary item . . . . . . . . . . . . . . $ 7,495 $ 9,807
Adjustments to reconcile income before extraordinary
item to net cash provided by (used for)
operating activities:
Depreciation and amortization . . . . . . . . . . . . . 2,230 2,852
Deferred income taxes . . . . . . . . . . . . . . . . . 4,469 -
Changes in assets and liabilities, net of divestitures:
Increase in accounts and notes receivable . . . . . (1,868) (2,838)
Decrease in inventories . . . . . . . . . . . . . . 1,256 988
Increase (decrease) in accounts payable . . . . . . 3,558 (3,534)
Net changes in other assets and liabilities . . . . (1,780) (2,507)
NET CASH PROVIDED BY OPERATING
ACTIVITIES . . . . . . . . . . . . . . . . . . . . . 15,360 4,768
NET CASH PROVIDED BY (USED FOR)
DISCONTINUED OPERATIONS . . . . . . . . . . . . . . 242 (3,110)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net . . . . . . . . . . . . . . . . . . (3,428) (2,042)
NET CASH USED FOR INVESTING ACTIVITIES $ (3,428) $ (2,042)
See Notes to Condensed Consolidated Financial Statements
ROBERTSON-CECO CORPORATION
(In thousands)
(Unaudited)
Six Months Ended
June 30
1997 1996
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term borrowings . . . . . . . . . . . . . . $ (10,231) $ -
Payment of capitalized interest on 12% Notes . . . . . . . . (338) (1,354)
NET CASH USED FOR FINANCING ACTIVITIES . . . . . . . . . (10,569) (1,354)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . 1,605 (1,738)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . 12,225 9,668
CASH AND CASH EQUIVALENTS -
END OF PERIOD . . . . . . . . . . . . . . . . . . . $ 13,830 $ 7,930
SUPPLEMENTAL CASH FLOW DATA:
Cash payments made for:
Interest . . . . . . . . . . . . . . . . . . . . . . $ 1,216 $ 2,424
Income taxes . . . . . . . . . . . . . . . . . . . . $ - $ -
See Notes to Condensed Consolidated Financial Statements
ROBERTSON-CECO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
In the opinion of Robertson-Ceco Corporation (the "Company"), the
accompanying unaudited Condensed Consolidated Financial Statements
contain all adjustments necessary to present fairly the financial
position as of June 30, 1997 and the results of operations and cash
flows for the periods presented. All adjustments recorded during the
period consisted of normal recurring adjustments. Certain other
previously reported amounts have been reclassified to conform to the
1997 presentation.
2. TAXES ON INCOME
During the third quarter 1996, the Company reduced the deferred tax
asset valuation allowance from $43,000,000 to $12,000,000, resulting in
a $31,000,000 credit to income taxes. Under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," the Company
is required to recognize the portion of its deferred tax asset which it
believes will more likely than not be realized. Management believes
that the Company will be able to realize the unreserved portion of its
deferred tax asset through future earnings. Accordingly, beginning in
the third quarter of 1996, the Company began recognizing income tax
expense at appropriate rates on its pre-tax income. However, cash
payments for Federal income taxes are not expected to be made until the
end of fiscal year 1998. 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, amounts and timing of payments related to
its trailing liabilities, or other events which might affect the
realization of the Company's deferred tax asset.
3. DISPOSITIONS
On September 30, 1996, the Company sold its Asia/Pacific Building
Products operation for approximately $1,600,000. Pursuant to the terms
of the sale, for a period of one year, the Company will be required to
maintain the $2,000,000 letter of credit, which was in place at
September 30, 1996, in support of the Asia/Pacific Building Products
Operation's credit facility. The Buyer is obligated to reimburse the
Company for any amounts drawn on the letter of credit. Additionally,
the Company remains liable to indemnify the Buyer for certain
liabilities of the sold business. In connection with the sale, the
Company agreed to continue to supply products to the Asia/Pacific
Building Products operation at a fixed margin for a period of two years.
Income generated by discontinued Building Products Operations was
considered in the original provisions recorded for their disposal.
Income generated by discontinued Building Products operations during the
three months and six months ended June 30, 1996 was approximately
$230,000, on revenues of $14,952,000, and $544,000, on revenues of
$31,290,000, respectively. These amounts were considered in the
original provisions recorded for their disposal in 1995. For the three
and six months ended June 30, 1997, operating results for Building
Products were not material.
4. OTHER CURRENT LIABILITIES
Other current liabilities consisted of the following:
June 30 December 31
1997 1996
(Thousands)
Payroll and related benefits . . . . . . . . . . . . . . $ 4,655 $ 6,163
Warranty and backcharge
reserves . . . . . . . . . . . . . . . . . . . . . 3,480 3,704
Deferred revenues . . . . . . . . . . . . . . . . . . . 847 1,271
Capitalized future interest
payments, current portion . . . . . . . . . . . . . - 8,113
Other . . . . . . . . . . . . . . . . . . . 9,199 9,323
$ 18,181 $ 28,574
5. DEBT
On December 31, 1996, the Company prepaid its existing term loan with
Foothill Capital Corporation ("Foothill"), and the credit agreement with
Foothill was terminated.
Also on December 31, 1996, the Company entered into a new 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 $20,000,000, due June 30, 2001. The lenders also agreed to provide a
revolving credit and letter of credit facility of $25,000,000 maturing
December 31, 2001. Up to $20,000,000 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 June 30,
1997, the borrowing base was approximately $25.8 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. The Credit Agreement contains certain financial covenants
restricting dividend payments, repurchase of stock and the issuance of
additional debt, amongst other matters. The Company is in compliance
with the provisions of the Credit Agreement.
In December 1996, the Company called for redemption on January 15, 1997,
the amounts outstanding on the 12% Senior Subordinated Notes ("12%
Notes") and the 15.5% Subordinated Debentures ("15.5% Debentures"). The
12% Notes and 15.5% Debentures were redeemed on that date utilizing
proceeds from borrowing under the new term loan in the Credit Agreement
plus available cash. Accordingly, $20,000,000 of the Company's long-
term debt at December 31, 1996 was classified as long-term with the
remainder reflected in current liabilities. The total amount of future
interest payments on the 12% Notes, most of which the Company was not
required to pay when the 12% Notes were redeemed, was also reflected as
a current liability at December 31, 1996. Accordingly, in connection
with the redemption of the 12% Notes and 15.5% Debentures in January,
the Company recorded a gain of $4.6 million, net of taxes of $2.9
million, in the first quarter of 1997.
As of June 30, 1997, the Company had outstanding letters of credit of
approximately $10.4 million used principally to support insurance and
bonding programs.
6. COMMITMENTS AND CONTINGENCIES
On March 3, 1995, the Company and its surety, Federal Insurance Company
("Federal"), entered into an agreement (the "Federal Agreement") under
which Federal agreed to hold the Company harmless from certain claims
pending in connection with one of the Company's former Fixed Price
Custom Curtainwall projects. Under the terms of the Federal Agreement,
Federal assumed control of the litigation and will also be the
beneficiary of any affirmative claim which the Company may receive. As
consideration for Federal's obligations, the Company assigned to Federal
the $3,000,000 interest bearing promissory note received from the
Company's sale of the Construction Group (the "Concrete Note"), and
agreed to pay Federal $1,000,000 per year, in equal quarterly
installments, for seven years without interest commencing March 24,
1995. As security for the payment obligations to Federal, the Company
granted to Federal a security interest in all of the Company's assets
and the purchaser delivered a financial guarantee insurance policy
securing payment of the Concrete Note. The Federal Agreement provides
that (i) at least 30% of the ownership of the common stock of the
Company must be held jointly by the current Chairman of the Company, who
currently controls approximately 1.6% of the outstanding common stock,
and the current Chief Executive Officer and Vice Chairman of the
Company, who currently controls approximately 55.9% of the outstanding
common stock, and (ii) either or both must continue as chief executive
officer and/or chairman of the Company. In the event such common stock
ownership and executive officers are not maintained, the Company will be
required to make immediate payment of the remaining unpaid settlement
amount which was $4,500,000 at June 30, 1997.
There are various other proceedings pending against or involving the
Company which are ordinary or routine given the nature of the Company's
business. The Company has recorded a liability related to litigation
where it is both probable that a loss will be incurred and the amount of
the loss can be reasonably estimated.
The Company continues to be liable for liabilities associated with sold
or discontinued businesses (see Note 3) prior to the sale or disposition
including, in certain instances, liabilities arising from Company self-
insurance programs, unfunded pension liabilities, warranty and
rectification claims, severance obligations, environmental clean-up
matters, and unresolved litigation arising in the normal course of the
former business activities. 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 that the ultimate
outcome of such matters will have a material effect on the consolidated
financial statements.
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 June 30, 1997, the Company has recorded reserves of
approximately $7 million, representing management's and the third
parties' best estimate 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 that additional costs that could be incurred
would have a material effect on the consolidated financial statements.
With respect to the environmental clean-up matters, the Company has
claimed coverage under its insurance policies for past and future clean-
up costs related to certain sites for which the Company believes it is
indemnified under its insurance policies. The insurer has refused to
admit or deny coverage under the Company's policies. As a result, the
Company has filed a complaint against the insurer seeking to recover the
past and future clean-up costs. It is not currently possible to predict
the amount or timing of proceeds, if any, from the ultimate resolution
of this matter.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues for the second quarter of 1997 were $69.7 million, an increase of
$5.8 million, or 9.1%, compared to the second quarter of 1996. On a year-to-
date basis, revenues were $129.7 million in 1997, compared to $120.8 million
in 1996, an increase of $8.9 million, or 7.3%. The increase in quarterly and
year-to-date revenue is due to increased volume during both quarters of 1997,
offset by a slight deterioration in prices realized in 1997 for the Company's
products. The metal buildings' market continues to be fairly strong in 1997.
However, additional industry capacity put in place in late 1996 and early
1997, has impacted prices. The Company's gross profit decreased as the gross
margin percentage declined to 19.3% in the second quarter of 1997 compared to
21.9% during the same period in 1996, and to 18.8% for the six months ended
1997 compared to 20.6% for the same period ended 1996. This decline in gross
margin results from competitive pricing pressure in the metal buildings'
market and increased steel costs.
Selling, general and administrative expenses decreased by $.3 million in the
second quarter of 1997 compared to the same quarter of 1996. On a year-to-
date basis selling, general and administrative expenses have decreased $1.6
million from the same six month period ended June 30, 1996. These reductions
reflect savings realized by the Company from continuing efforts to reduce
general and administrative costs and from reduced benefit costs related to
retirees. The decrease in gross profit dollars partially offset by reductions
in selling, general and administrative expenses resulted in operating income
of $7.3 million and $12.8 million during the three and six months ended June
30, 1997, respectively, compared to operating income of $7.6 million and
$11.7 million during the three and six months ended June 30, 1996,
respectively.
Interest expense for the three and six months ended June 30, 1997 was $.4
million and $.9 million, respectively, compared to $1.0 million and $2.0
million for the three and six months ended June 30, 1996, respectively. This
reduction results from the Company's refinancing of its long term debt in
late 1996 and early 1997 which resulted in lower total debt, substantially
reduced interest rates and lower debt issue cost amortization.
During the third quarter of 1996, the Company reduced the deferred tax asset
valuation allowance from $43,000,000 to $12,000,000, resulting in a
$31,000,000 credit to income taxes. Under SFAS No. 109, "Accounting for
Income Taxes", the Company is required to recognize the portion of its
deferred tax asset which it believes will more likely than not be realized.
Management believes that the Company will be able to realize the unreserved
portion of its deferred tax asset through future earnings. Accordingly,
beginning in the third quarter of 1996, the Company began recognizing income
tax expense at appropriate rates on its pre-tax income. However, cash
payments for Federal income taxes are not expected to be made until the end
of 1998. 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, amounts and timing of payments related to its trailing
liabilities, or other events which might affect the realization of the
Company's deferred tax asset.
Income before extraordinary item was $4.3 million and $7.5 million during the
three and six months ended June 30, 1997 compared to $6.5 million and $9.8
million for the same periods ended 1996, respectively. The increase in the
provision for income taxes between periods is the principal reason for these
declines.
Net income during the three and six months ended June 30, 1997 was $4.3
million and $12.1 million, respectively, compared with $6.5 million and $9.8
million, for the three and six months ended June 30, 1996, respectively. The
six months ended June 30, 1997 include a $4.6 million extraordinary credit,
net of income taxes, representing the reduction in accrued interest costs on
the Company's 12% Notes resulting from the redemption of these Notes in
January 1997.
Backlog of Orders
At June 30, 1997, the backlog of unfilled orders believed to be firm was
approximately $98.8 million compared to a backlog of $84.7 million at June
30, 1996 and $72.1 million at December 31, 1996.
Litigation
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. While the outcome of the Company's legal proceedings
cannot at this time be predicted with certainty, management does not expect
that these matters will have a material adverse effect on the consolidated
financial condition or results of operations of the Company.
Environmental Matters
The Company's current and prior manufacturing activities have generated and
continue to generate materials classified as hazardous wastes. The Company
devotes considerable resources to compliance with legal and regulatory
requirements relating to (a) the use of these materials, (b) the proper
disposal of such materials and (c) the protection of the environment. These
requirements include clean-ups at various sites. The Company's policy is to
accrue environmental and clean-up related costs of a non-capital nature when
it is probable that a liability has been incurred and such liability can be
reasonably estimated. However, no assurance can be given that 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. Based upon currently available
information, including the reports of third parties, management does not
believe resolution of these matters will have a material adverse effect on
the consolidated financial statements.
Liquidity and Capital Resources
During the six months ended June 30, 1997, the Company generated
approximately $15.4 million of cash from its operating activities, compared
to $4.8 million for the same period ended 1996. Operating cash flow in 1997
increased due to higher operating income and timing differences on collection
of receivables and settlement of payables.
During the first quarter of 1996, the Company spent $1.9 million of cash in
connection with a drawn letter of credit which was associated with the
Company's former U.K. subsidiary. In January, 1997, the Company was paid $.9
million in connection with this drawn letter of credit and the sale of
certain other rights. Additional uses of cash towards discontinued
operations in the first six months of 1996 included contributions of $1.2
million to the Company's defined benefit pension plans. Effective June 30,
1996, the Company merged its three remaining defined benefit plans into a
single defined benefit plan to reduce the anticipated funding requirements
during the next several years and to reduce plan administrative expenses.
Accordingly, the Company has not made and does not expect to make any
payments to the pension plan in 1997.
The Company spent approximately $3.4 million on capital expenditures during
the first six months of 1997 directed toward upgrading and improving
manufacturing equipment.
In December, 1996, the Company called for redemption on January 15, 1997 the
amounts outstanding on the 12% Notes and 15.5% Debentures. The 12% Notes and
15.5% Debentures were redeemed on that date utilizing proceeds from borrowing
under the new term loan in the Credit Agreement plus available cash of $7.8
million. Additionally, per the terms of the new Credit Agreement, the
Company paid down $2.5 million of debt during the six months ended June 30,
1997. See Note 5.
At June 30, 1997, the Company had $13.8 million of unrestricted cash and cash
equivalents.
The Company maintains a credit facility (the "Credit Facility") which
supports both the Company's U.S. and Canadian operations, and which, under
its terms, has maximum availability of $45.0 million and expires on December
31, 2001. Availability under the $25 million revolving credit portion of the
Credit Facility is based on a percentage of eligible accounts receivable and
inventory. At June 30, 1997, the Borrowing Base was estimated to be $25.8
million. As collateral under the Credit Facility, the Company has granted the
lenders a security interest in all of the assets of the Company and its
Restricted Subsidiaries. The Company had unused availability under the
Credit Facility of $15.4 million at June 30, 1997. During the first six
months of 1997, the Company reduced its letters of credit by $6.6 million to
$10.4 million.
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
Quarterly Report contains forward-looking statements made in good faith by
the corporation 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, intense competition, changes in
consumer 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, which are more fully described in the
Company's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the year ended December 31, 1996, 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
exclusive. 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.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Information describing certain of the Company's legal proceedings and
environmental matters is included in Part 1, Item 1, in Note 6 to the
"Notes to Condensed Consolidated Financial Statements," and in Part
1, Item 2, in Management's Discussion and Analysis of Financial
Condition and Results of Operations under the captions "Litigation"
and "Environmental Matters," and is hereby incorporated by reference.
Item 4. Submission of Matters to a Vote of Security Stockholders
The Company's Annual Meeting (the "Annual Meeting") of Stockholders
was held on May 20, 1997. The only matter voted on was the election
of directors. Set forth below is the tabulation of the votes:
NAME FOR WITHHELD
Andrew G. C. Sage, II 14,290,742 7,456
Michael E. Heisley 14,292,036 6,161
E.A. Roskovensky 14,292,036 6,161
Frank A. Benevento, II 14,292,036 6,161
Stanley G. Berman 14,292,035 6,162
Stanley H. Meadows 14,292,036 6,161
Gregg C. Sage 14,292,036 6,161
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Earnings per Common Share, filed
herewith.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
On April 8, 1997, as amended on April 16, 1997, the company filed a report of
Form 8-K reporting the selection of Arthur Andersen LLP to serve as its
independent public accountants for fiscal year 1997 and, accordingly, the
dismissal of Price Waterhouse LLP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROBERTSON-CECO CORPORATION
------------------------------------------
(Registrant)
By: /s/ Patrick G. McNulty
-----------------------------
Patrick G. McNulty
Controller
August 11, 1997
ROBERTSON-CECO CORPORATION
EXHIBIT INDEX
EXHIBIT 11 - Computation of Earnings Per Common Share
EXHIBIT 27 - Financial Date Schedule