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, 1998
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: 925-358-0330
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 10, 1998
Common Stock, par value $0.01 per share 16,111,550
ROBERTSON-CECO CORPORATION
Form 10-Q
For Quarter Ended June 30, 1998
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets --
June 30, 1998 and December 31, 1997 . . . . 3
Condensed Consolidated Statements of Operations --
Three and Six Months Ended June 30, 1998 and 1997 . 5
Condensed Consolidated Statements of Cash Flows --
Six Months Ended June 30, 1998 and 1997 . . 7
Notes to Condensed Consolidated Financial
Statements . . . . . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . 12
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings . . . . . . . . . . . . . 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . 16
Signatures . . . . . . . . . . . . . . . . . . . . . . . 19
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . 20
ITEM 1. FINANCIAL STATEMENTS
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
(In thousands)
(Unaudited)
June 30 December 31
1998 1997
-- ASSETS--
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . $ 24,756 $ 19,461
Accounts and notes receivable, net . . . . . . . . 30,297 28,249
Inventories:
Work in process . . . . . . . . . . . . . . . 6,070 5,327
Material and supplies . . . . . . . . . . . . 8,401 8,375
Total inventories . . . . . . . . . . . . . . 14,471 13,702
Deferred taxes, current . . . . . . . . . . . . . 10,002 15,688
Other current assets . . . . . . . . . . . . . . . 1,067 557
Total current assets . . . . . . . . . . . . . 80,593 77,657
PROPERTY - at cost . . . . . . . . . . . . . . . . . . 51,106 49,408
Less accumulated depreciation . . . . . . . . . . (24,422) (22,902)
Property, net . . . . . . . . . . . . . . . . 26,684 26,506
DEFERRED TAXES . . . . . . . . . . . . . . . . . . . . 12,443 12,329
EXCESS OF COST OVER NET ASSETS OF
ACQUIRED BUSINESSES - NET . . . . . . . . . . . . 25,369 25,783
OTHER NON-CURRENT ASSETS . . . . . . . . . . . . . . . 1,154 1,269
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . $ 146,243 $ 143,544
See Notes to Condensed Consolidated Financial Statements
ITEM 1. FINANCIAL STATEMENTS
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
(In thousands, except per share data)
(Unaudited)
June 30 December 31
1998 1997
--LIABILITIES --
CURRENT LIABILITIES:
Current portion of long-term debt . . . . . . . . $ 4,500 $ 5,000
Accounts payable, principally trade . . . . . . . 12,441 13,209
Accrued payroll and benefits . . . . . . . . . . . 6,222 7,525
Other accrued liabilities . . . . . . . . . . . . 13,111 16,796
Total current liabilities . . . . . . . . . . . . 36,274 42,530
LONG-TERM DEBT, less current portion . . . . . . . . . 8,000 10,000
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . 5,861 5,891
OTHER LONG-TERM LIABILITIES . . . . . . . . . . . . . . 36,566 35,377
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . 86,701 93,798
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $0.01 per share . . . . . 161 161
Capital surplus . . . . . . . . . . . . . . . . . 178,256 178,256
Retained earnings (deficit) . . . . . . . . . . . (118,146) (128,173)
Deferred compensation . . . . . . . . . . . . . . (144) (160)
Accumulated other comprehensive income . . . . . . (585) (338)
Stockholders' equity . . . . . . . . . . . . . 59,542 49,746
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY . . . . . . . . . $146,243 $143,544
See Notes to Condensed Consolidated Financial Statements
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
NET REVENUES . . . . . . . . . . . . . . . . $ 74,217 $ 69,716 $ 136,706 $129,714
COSTS OF SALES . . . . . . . . . . 58,221 56,255 109,048 105,314
GROSS PROFIT . . . . . . . . . . . . . . . . 15,996 13,461 27,658 24,400
SELLING, GENERAL AND
ADMINISTRATIVE . . . . . . . . . . . . . 5,875 6,127 11,764 11,647
OPERATING INCOME . . . . . . . . . . . . . . 10,121 7,334 15,894 12,753
OTHER INCOME (EXPENSE):
Interest expense . . . . . . . . . . . . (306) (433) (647) (906)
Other income - net . . . . . . . . . . 442 230 758 339
136 (203) 111 (567)
INCOME BEFORE INCOME TAXES . . . . . . . . . 10,257 7,131 16,005 12,186
INCOME TAXES . . . . . . . . . . . . . . . . 3,738 2,796 5,978 4,691
INCOME BEFORE EXTRAORDINARY
ITEM . . . . . . . . . . . . . . . . . . 6,519 4,335 10,027 7,495
EXTRAORDINARY GAIN ON DEBT
REDEMPTION . . . . . . . . . . . . . . . - - - 4,568
NET INCOME . . . . . . . . . . . . . . . . . $ 6,519 $ 4,335 $ 10,027 $ 12,063
See Notes to Condensed Consolidated Financial Statements
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
RETAINED EARNINGS (DEFICIT)
AT BEGINNING OF PERIOD . . . . . . . . $ (124,665) $ (143,799) $ (128,173) $(151,527)
NET INCOME . . . . . . . . . . . . . . . . 6,519 4,335 10,027 12,063
RETAINED EARNINGS (DEFICIT)
AT END OF PERIOD . . . . . . . $ (118,146) $ (139,464) $ (118,146) $(139,464)
BASIC/DILUTED INCOME PER
COMMON SHARE:
Income before Extraordinary Item . . . $ .41 $ .27 $ .62 $ .47
Extraordinary Item . . . . . . . . . . $ - $ - $ - $ .28
NET INCOME $ .41 $ .27 $ .62 $ .75
SHARES USED IN INCOME
PER SHARE CALCULATION . . . . . . . . 16,060 16,056 16,060 16,056
See Notes to Condensed Consolidated Financial Statements
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
(In thousands)
(Unaudited)
Six Months Ended
June 30
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Income before extraordinary item . . . . . . . . . . . . . . $ 10,027 $ 7,495
Adjustments to reconcile income before extraordinary
item to net cash provided by (used for)
operating activities:
Depreciation and amortization . . . . . . . . . . . . . 2,498 2,230
Deferred income taxes . . . . . . . . . . . . . . . . . 5,978 4,469
Changes in assets and liabilities:
Increase in accounts and notes receivable . . . . . (2,048) (1,661)
(Increase) decrease in inventories . . . . . . . . . (769) 1,256
Increase (decrease) in accounts payable . . . . . . (768) 3,558
Net changes in other assets and liabilities . . . . (3,449) (1,987)
NET CASH PROVIDED BY OPERATING
ACTIVITIES . . . . . . . . . . . . . . . . . . . . . 11,469 15,360
NET CASH PROVIDED BY (USED FOR)
DISCONTINUED OPERATIONS . . . . . . . . . . . . . . (1,376) 242
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . . . . . (2,298) (3,428)
NET CASH USED FOR INVESTING ACTIVITIES (2,298) (3,428)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term borrowings . . . . . . . . . . . . . . (2,500) (10,569)
NET CASH USED FOR FINANCING ACTIVITIES . . . . . . . . . (2,500) (10,569)
NET INCREASE IN CASH AND CASH
EQUIVALENTS . . . . . . . . . . . . . . . . . . . . 5,295 1,605
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . 19,461 12,225
CASH AND CASH EQUIVALENTS -
END OF PERIOD . . . . . . . . . . . . . . . . . . . $ 24,756 $ 13,830
SUPPLEMENTAL CASH FLOW DATA:
Cash payments made for:
Interest . . . . . . . . . . . . . . . . . . . . . . $ 606 $ 1,216
Income taxes . . . . . . . . . . . . . . . . . . . . $ - $ -
See Notes to Condensed Consolidated Financial Statements
ROBERTSON-CECO CORPORATION AND SUBSIDIARIES
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, 1998 and the results of operations and cash flows for the periods
presented. All adjustments recorded during the period consisted of normal
recurring adjustments. Certain previously reported amounts have been
reclassified to conform to the 1998 presentation.
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 that previously were only reflected as direct charges to equity (such
as minimum pension liabilities and foreign currency translation
adjustments). The dollar amount of the Company's adjustments required by
SFAS No. 130 is not significant so there is not a significant difference
between "traditional" net income and comprehensive income for the three and
six months ended June 30, 1998 and 1997.
2. TAXES ON INCOME
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. 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 retained 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 ("Asia/Pacific") for approximately $1,600,000. Pursuant to the
terms of the sale, for a period of one year, the Company was required to
maintain a $2,000,000 letter of credit, which was in place at September 30,
1996, in support of the Asia/Pacific credit facility. The letter of credit
has been extended to September 30, 1998. The Buyer is obligated to
reimburse the Company for any amounts drawn on the letter of credit.
Additionally, the Company has indemnified the Buyer for certain liabilities
of the sold business. In connection with the sale, the Company agreed to
continue to supply products to Asia/Pacific at a fixed margin for a period
of two years.
4. OTHER LIABILITIES
Other accrued liabilities consisted of the following:
June 30 December 31
1998 1997
(Thousands)
Insurance liabilities . . . . . . . . . . . . . . . . . $ 1,528 $ 3,560
Warranty and backcharge
reserves . . . . . . . . . . . . . . . . . . . . 3,276 3,738
Deferred revenues . . . . . . . . . . . . . . . . . . 575 524
Accrued interest . . . . . . . . . . . . . . . . . . 60 60
Other . . . . . . . . . . . . . . . . . . . . . . . . 7,672 8,914
$ 13,111 $ 16,796
Other long-term liabilities consisted of the following:
Reserves Related to Sold or Discontinued Business -
Insurance liabilities . . . . . . . . . . . . . . . . $ 5,867 $ 3,453
Environmental . . . . . . . . . . . . . . . . . . . . 4,517 4,792
Federal Agreement settlement . . . . . . . . . . . . 2,500 3,000
Dispositions . . . . . . . . . . . . . . . . . . . . 5,808 5,315
Other . . . . . . . . . . . . . . . . . . . . . . . 11,322 11,904
$ 30,014 $ 28,464
Warranty and backcharges . . . . . . . . . . . . . . . 1,754 1,745
All Other . . . . . . . . . . . . . . . . . . . . . . . 4,798 5,168
$ 36,566 $ 35,377
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, 1998, the borrowing base was approximately $31.7
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. Under the terms of the
Company's debt agreement, $22.9 million was available for dividends or
repurchase of stock at June 30, 1998. 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, 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, 1998, the Company had outstanding letters of credit of
approximately $10.2 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 of the Company, who
currently controls approximately 65.4% 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
$3,500,000 at June 30, 1998.
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, 1998, the Company has recorded reserves of approximately $6.3
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 1998 were $74.2 million, an increase of $4.5
million, or 6.5%, when compared to the second quarter of 1997. For the six
months ended June 30, 1998, revenues were $136.7 million compared to $129.7
million in 1997, an increase of $7 million, or 5.4%. Poor weather conditions
earlier in the year are still having a negative impact on some locations.
Nevertheless, sales were still favorable compared to 1997 as a result of good
industry conditions combined with stronger pricing. Favorable sales and lower
discounts to customers experienced in the 1998 winter and spring months has
positively impacted margins as well. The Company's gross profit increased $2.5
million and $3.3 million for the three and six months ended June 30, 1998,
respectively, from the same periods in 1997. The gross margin increased from
19.3% in the second quarter of 1997 to 21.6% in 1998. For the six months, the
gross margin increased from 18.8% in 1997 to 20.2% in 1998.
Selling, general and administrative expenses ("S,G & A") decreased $.3 million
in the second quarter of 1998 compared to the second quarter of 1997. Lower
legal, retiree and bad debt expenses were incurred for the quarter. Year-to-
date S,G & A expenses have increased $.1 million in 1998 from the same six month
period ended 1997. Most of this increase is due to adding temporary resources
to complete several high priority systems projects partially offset with the
Company's continued efforts to reduce S,G & A costs as a percentage of revenue.
The combination of increased margin and favorable selling, general and
administrative expenses as a percentage of revenues resulted in operating income
of $10.1 million for the three months ended June 30, 1998, compared to $7.3
million in 1997, a 38.0% increase. For the six months ended June 30, 1998
operating income was $15.9 million compared to $12.8 million for the same period
ended 1997, a 24.6% increase.
Interest expense declined $.1 million for the three months ended June 30, 1998
from the prior year to $.3 million. For the six months ended June 30, 1998
interest expense declined $.3 million from the same period ended 1997 to $.6
million. The Company had both lower average borrowings and lower interest rates
during the 1998 period. Other income-net consists almost entirely of interest
income and increased $.2 million and $.4 million for the three and six months
ended June 30, 1998, respectively, from the same periods ended 1997. This
increase is the direct result of higher average cash balances between years.
Income before extraordinary item was $6.5 million, $.41 per share, during the
three months ended June 30, 1998 compared to $4.3 million, $.27 per share, in
the same period in 1997. For the six months ended June 30, 1998 and 1997,
income before extraordinary item was $10.0 million and $7.5 million, or $.62 per
share and $.47 per share, respectively. Increased customer demand, better
pricing, lower interest costs and higher interest income all contributed to the
1998 favorable results compared to last year.
Net income was $6.5 million, $.41 per share, for the three months ended June 30,
1998 as compared to $4.3 million, $.27 per share, in the 1997 period. For the
six months ended June 30, 1998, net income was $10.0 million, $.62 per share, as
compared to $12.1 million, $.75 per share, for the same period ended 1997. The
1997 amount includes a $4.6 million, $.28 per share, extraordinary gain, net of
income taxes, representing the reduction in accrued interest on the Company's
12% Notes when these notes were redeemed in January 1997.
Backlog of Orders
At June 30, 1998 the backlog of unfilled orders believed to be firm was
approximately $86.2 million compared to a backlog of $98.8 million at June 30,
1997 and $72.7 million at December 31, 1997.
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, 1998, the Company generated $11.5 million
of cash from its operating activities and generated $15.4 million during the
same period ended 1997. Operating cash flow in 1998 benefited from higher
income before extraordinary items, $2.5 million favorable from 1997, and a
favorable $6.0 million non-cash charge for income taxes as opposed to a $4.5
million non-cash charge for the six months ended 1997. These 1998 favorable
impacts on cash operating activities were partially offset by uses of cash
primarily associated with working capital requirements to support increased
sales and the Company's efforts to take advantage of early payment discounts.
During the six months ended June 30, 1998 the Company spent approximately $1.4
million related to discontinued operations and generated $.2 million during the
same period ended 1997. In June, 1998, the Company settled a large general
liability claim associated with one of the Company's discontinued operations.
In January, 1997 the Company was paid $.9 million in connection with a drawn
letter of credit associated with the Company's former U.K. subsidiary and the
sale of certain other rights.
The Company spent $2.3 million on capital expenditures during the first six
months of 1998 directed toward upgrading and improving manufacturing equipment
as compared to $3.4 million during the same period ended 1997.
In January 1997 the amounts outstanding on the 12% Notes and 15.5% Debentures
were redeemed 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 and 1998. See Note 5.
Cash and cash equivalents increased by $5.3 million during the first six months
ended June 30, 1998 and $1.6 million during the same period ended 1997. At June
30, 1998 and 1997 the Company had $24.8 million and $13.8 million of cash and
cash equivalents, respectively.
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, 1998, the Borrowing Base was estimated to be $31.7 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, as defined. The Company had unused availability under the Credit
Facility of $14.8 million at June 30, 1998. The Company's letters of credit
balance of approximately $10.2 million remains unchanged from March 31, 1998.
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, 1997, 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 19, 1998. 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 14,319,301 202,909
Michael E. Heisley 14,319,301 202,909
E.A. Roskovensky 14,319,301 202,909
Frank A. Benevento 14,318,889 203,321
Stanley G. Berman 14,319,301 202,909
Stanley H. Meadows 14,319,301 202,909
Gregg C. Sage 14,318,889 203,321
Michael E. Heisley, Jr. 14,318,889 203,321
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 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
Exhibit 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
Exhibit 10 - 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
Exhibit 10.2- Agreement by and among Registrant, Capella
Investments Limited and H. H. Robertson (U.K.)
Limited dated November 9, 1993, filed as Exhibit
2.1 to the Registrant's report on Form 8-K dated
November 22, 1993, and incorporated herein by
reference thereto
Exhibit 10.3- Registration Rights Agreement dated May 17, 1993
by and among the Registrant and Sage RHH referred
to in Exhibit 4.2 above
Exhibit 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
Exhibit 10.5- Asset Purchase Agreement, dated December 27, 1994
by and between Cupples Products, Inc. and the
Registrant filed as Exhibit 2.1 to Registrant's
Report on Form 8-K dated December 27, 1994 (File
No. 1-10659), and incorporated herein by reference
thereto
Exhibit 10.6- Agreement for Purchase and Sale of Assets dated
March 3, 1995 by and between the Registrant and
Ceco Concrete Construction Corp. filed as Exhibit
2.1 to Registrant's Report on Form 8-K dated
March 3, 1995 (File No. 1-10659), and incorporated
herein by reference thereto
Exhibit 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 hereinby reference thereto
Exhibit 10.8- Agreement for Purchase and Sale of Shares by and
among the Registrant Bruco International, Inc. and
H.H. Robertson Asia/Pacific Pte Ltd dated
September 27, 1996 filed as Exhibit 2 to
Registrants Report on FORM 10-K dated
September 30, 1996 (File NO. 1-10659) and
incorporated herein by reference thereto
Exhibit 10.9- Credit agreement dated December 31, 1996 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
Exhibit 10.10- Employment Agreement between Registrant and Ronald
D. Stevens dated October 7, 1996 filed as Exhibit
2.2 to Registrant's Report on Form 10-K for the
year ended December 31, 1997 (File No. 1-10659)
and incorporated herein by reference thereto
Exhibit 11 - Computation of Earnings per Common Share, filed
herewith
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
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
Corporate Controller
August 13, 1998
ROBERTSON-CECO CORPORATION
EXHIBIT INDEX
EXHIBIT 11 - Computation of Earnings Per Common Share
EXHIBIT 27 - Financial Data Schedule