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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996; OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 0-23752
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OVERHEAD DOOR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INDIANA 35-0564120
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
6750 LBJ FREEWAY 75240
DALLAS, TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICE)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: 972-233-6611
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant is not readily determinable as the Registrant's voting stock is not
publicly traded.
As of March 24, 1997, the Registrant had 1,000 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
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ITEM 1. BUSINESS
Overhead Door Corporation was incorporated under the laws of the State of
Indiana in 1923, as a successor to a company which began in 1921, when its
founders invented the overhead sectional garage door. All references to the
"Company" refer to Overhead Door Corporation and its subsidiaries unless
otherwise indicated by the context.
All the outstanding common stock of the Company is owned beneficially and of
record by Overhead Door Incorporated (the "Parent") which was incorporated
under laws of the State of Indiana in 1989, and which, through a wholly owned
subsidiary, acquired the Company pursuant to a cash tender offer made in 1989.
In 1990, the subsidiary was merged with the Company, with the Company being
the surviving corporation. The tender offer and merger are herein called the
"1990 Acquisition".
In August 1994, the Company acquired GMI Holdings, Inc. ("Genie"). After
such acquisition (the "Genie Acquisition"), Genie has been operating as a
wholly owned subsidiary of the Company. See Note C to the Consolidated
Financial Statements of the Company.
In July 1996, all of the outstanding common stock of the Parent was acquired
by Sanwa Shutter Corporation, Tokyo, Japan ("Sanwa") (the "Sanwa
Acquisition"). Sanwa USA Inc. ("Sanwa USA"), a newly formed Delaware
corporation which is wholly owned by Sanwa, now holds all of the common stock
of Parent. The financial activities of the Company prior to July 18, 1996 are
referred to as those of the "Predecessor" and after July 18, 1996 are referred
to as those of the "Successor". See Note B to the Consolidated Financial
Statements.
OPERATING GROUPS
The Company operates through two separate groups: the Door Systems Group,
which represented 83% of the Company's 1996 net sales and the Vehicular and
Other Products Group, which represented 17% of the Company's 1996 net sales.
The Company believes that slightly less than one-half of its 1996 net sales
were for commercial and industrial uses, including warehouses, distribution
centers, manufacturing facilities, truck doors and loading dock equipment,
approximately 39% were ultimately for residential replacement uses and
approximately 15% were for new residential construction.
In 1996, classes of products which accounted for at least 10% of the
Company's total net sales from the Door Systems Group were as follows:
residential garage doors 17%, residential operators 28% and commercial
sectional doors 11%. These percentages for 1996 are consistent with those for
1995 and 1994 (on a pro forma basis for the Genie Acquisition) except that the
amount represented by residential door operators in the product mix increased
in 1994 and 1995 as a result of the Genie Acquisition.
No class of products accounted for at least 10% of the Company's total net
sales in the Vehicular and Other Products Group for 1996 or 1995. In 1994
upward-acting truck doors accounted for 11%.
The table below sets forth net sales and operating income (before corporate
and interest expense) for the Company's two operating groups for the last
three years:
SUCCESSOR PREDECESSOR
------------ -----------------------------------
JULY 18 TO JANUARY 1
DECEMBER 31, TO JULY 17, YEAR ENDED DECEMBER 31,
1996 1996 1995 1994
------------ ----------- ----------- -----------
(IN THOUSANDS)
Net Sales
Door Systems Group.......... $245,742 $230,628 $448,183 $352,346
Vehicular and Other Products
Group...................... 44,664 50,993 102,844 84,789
-------- -------- ----------- -----------
Total..................... $290,406 $281,621 $551,027 $437,135
======== ======== =========== ===========
Operating Income (before cor-
porate and interest expense)
Door Systems Group.......... $ 20,788 $ 16,408 $ 44,536 $ 38,107
Vehicular and Other Products
Group...................... 1,742 1,699 6,140 8,904
-------- -------- ----------- -----------
Total..................... $ 22,530 $ 18,107 $ 50,676 $ 47,011
======== ======== =========== ===========
1
DOOR SYSTEMS GROUP
The Door Systems Group manufactures and markets its products under three
separate brand names: (i) under its Overhead Door(TM) brand name, the Company
manufactures and markets upward acting sectional and rolling doors, electrical
door operators and radio remote controls, (ii) under its Genie(R) brand name,
electrical door operators, radio remote controls and residential garage doors,
and (iii) under its Horton Automatics brand name, automatic sliding, swinging
and revolving doors. The Door Systems Group's products are used in new
commercial, industrial and residential construction as well as in replacement
applications in existing structures.
Products--Overhead Door. Commercial and industrial doors, other than doors
manufactured by the Horton Automatics division, may be either sectional or
rolling steel doors. Upward acting sectional doors consist of a series of
hinged horizontal sections, which are track-mounted and spring counter-
balanced. Sections are constructed of structural members of steel, aluminum or
wood covered or inset with panels of light gauge steel, aluminum, wood, hard
board or glass often backed or filled with insulation. A rolling steel door
consists of a vertical curtain which, to open, coils around a spring-loaded
cylinder. Rolling steel doors employ a curtain consisting of interconnected
horizontal metal slats or lattice work. The Company fabricates most of its own
components from semi-finished raw materials, although similar components are
obtainable from outside suppliers.
Commercial and industrial sectional doors are used in new construction and
are also used as replacement products in existing structures. Applications
include warehouses, distribution centers, other commercial and industrial
buildings and shipping/receiving areas in suburban shopping malls. The
Company's Thermacore(R) foam insulated steel panels are used primarily in the
Company's upward acting sectional doors. These panels consist of an inner and
outer steel skin joined together with an adhesive thermal barrier at the top
and bottom edges. The interior of each panel is filled with an expanded
polyurethane foam which adheres to both metal skins and creates a rigid and
very efficient insulated panel.
Rolling steel doors are typically used in commercial and industrial
applications where headroom constraints exist. Typical applications are fire
doors and service doors, particularly in areas of industrial activity. Similar
doors are designed and manufactured by the Company for light-duty commercial
and mini-warehouse applications. The Door Systems Group also manufactures
rolling grilles which are used in shopping malls, store fronts and similar
applications.
In late 1995, the Company began the manufacture and sale of high speed
traffic doors. These doors have high speed rolling fabric curtains and are
used in commercial and industrial facilities.
Residential garage doors are typically sectional doors made with steel,
insulated steel panels or wood sections. In 1997, the Company plans to
introduce a residential garage door constructed of vinyl extrusions.
Residential garage doors are sold for use in new construction and as
replacements for existing doors.
Products--Genie. The Company, through Genie, manufactures a complete line of
residential and commercial electric operators which are marketed under the
Overhead Door and Genie brand names. Electric operators automatically open and
close doors. Radio remote controls are devices used to transmit signals to
activate garage door openers and, optionally, lights and interior appliances.
The Door Systems Group's 1996 net sales of garage door openers are divided
approximately 91% to 9% between the residential and commercial markets,
respectively. Commercial electric operators and radio controls can be sold as
a package or sold separately. Residential electric operators have integrated
controls. Late in 1995, the Company added a rolling code security feature to
its residential electric operators which combats unauthorized access from code
theft.
Products--Horton Automatics. The Horton Automatics division manufactures
automatic entrances (automatic sliding, automatic swinging and revolving
aluminum pedestrian doors), typically used in consumer convenience
applications such as supermarkets, airports, hotels, hospitals and office
buildings.
2
Manufacturing. Overhead doors and electric operators are engineered
products, which can be produced or modified for customer specific
requirements. The Door Systems Group facilities shown on page 8 are comprised
of product assembly facilities, plants that manufacture specific product
components and distribution facilities. While a substantial portion of the
Company's door products are produced in volume quantities, a significant
percentage of sales in the commercial segment are customized for specific
applications, and the Company's manufacturing facilities have been designed to
accommodate a large number of customer-specific design variations.
The Company has initiated a comprehensive integrated systems project that
involves implementation of third party software that will include perpetual
inventory systems and costed bills of materials that will replace and
supplement the current method of using estimated material cost rates and the
results from physical inventories taken frequently throughout the year. When
this system has been completely implemented, all current operational and
financial systems will have been transferred to new software. Until this new
system is in effect, the Company will continue to cost materials using its
current method.
Sales and Distribution. The Door Systems Group's sectional and rolling
doors, operators and related products have traditionally been sold through a
network of approximately 378 independent distributors doing business in the
United States as "Overhead Door Company of (name of locality)." These
distributors have been the Company's primary customers for its Overhead Door
products and provide installation and repair services to end-users. The size,
geographic distribution and common name identity of this network distinguish
the Company from its competitors, as does the broad line of products
manufactured and distributed by the Company through this network. The Company
also serves some major national accounts through a centralized sales effort.
In addition, the Company has Company-owned distributorships in areas where the
Company had been underrepresented or where the Company had not previously
realized acceptable market penetration. The relationship between the Door
Systems Group and the Overhead Door distributors is documented in a
Distributor Agreement which grants to the distributor the non-exclusive
license to use the Company's 60-year old ribbon trademark subject to certain
specific obligations on the part of the distributor. No single customer of the
Door Systems Group accounted for 10% or more of the Company's consolidated net
sales in 1996.
The Company's Genie product line is distributed through a retail network
which includes the leading home improvement centers, major wholesale clubs and
many hardware cooperatives. The retail network is extremely important to
Genie's current sales and future business plans. Genie's largest home
improvement center customer accounts for approximately 27% of Genie's sales,
although no customer accounts for 10% or more of the Company's consolidated
net sales. In the professionally installed segment, Genie products are
distributed through a network of approximately 5,000 independent professional
garage door dealers.
The Company's Horton Automatics product line is distributed through a
network of approximately 103 independent local installing distributors located
throughout the United States and approximately 62 in foreign countries.
Distributors are typically automatic door specialists, and in many cases
Horton products account for the majority of the sales of the distributor.
Horton's primary customers are commercial contractors. The Company has also
entered into direct agreements to supply major national customers, although
such agreements are not presently material to the Company's business taken as
a whole.
Competition. The Door Systems Group competes in four markets: new commercial
construction, new residential construction, replacement commercial and
replacement residential. Door competition is highly fragmented and often
occurs on a regional basis. Competitive intensity varies by region, and often
times a specialized product offers a unique competitive challenge on a
regional basis. The Company believes that the Door Systems Group is a leader
in the commercial operators market and is also a leader in the highly
competitive residential operator market. Its principal competitors in the door
market include Clopay, Windsor and Wayne-Dalton. Its principal competitors in
the commercial operator market include Link and John Green. In the residential
operator market, its principal competitors are Chamberlain and Stanley.
3
Horton competes in the domestic market for automatic pedestrian entrances on
the basis of product quality and having a broader product line in the United
States than any of its competitors. Principal competitors include Stanley and
Besam.
Raw Materials. Most of the products manufactured for the Door Systems Group
are made from steel, aluminum and to a lesser extent wood. Wood is purchased
from a wide variety of regional suppliers, and the Company operates its own
wood processing operation in Salem, Oregon. Most vendor prices are now
negotiated on a corporate-wide basis to take advantage of volume purchases
that offer the best discount level. The Company has contractual agreements
covering pricing and/or volume on its large purchases such as steel, aluminum,
hardboard, tubing and springwire. Most of these contracts are one year in
duration. In general, the Door Systems Group is not dependent on any single
major material supplier and has enjoyed long standing relationships with many
of its suppliers.
Backlog. As of December 31, 1996, the Company's order backlog in the Door
Systems Group was $9.5 million, compared to $12.6 million as of December 31,
1995. Orders are typically filled one week to six weeks after receipt. Due to
the Company's seasonality of sales, backlog quantities are generally lower in
the fourth quarter and do not necessarily reflect the volume of future sales.
VEHICULAR AND OTHER PRODUCTS GROUP
The Vehicular and Other Products Group consists of three businesses: TODCO,
including its Engineered Products Division ("EPD"), W.B. McGuire and wet/dry
utility vacuums. In 1996, this group accounted for 17% of the Company's net
sales.
TODCO
The TODCO division manufactures upward acting sectional doors, outward
swinging doors and walk ramps for trucks and trailers sold under the TODCO (R)
trademark. The manufacture and sale of outward swinging doors for trucks and
trailers was begun during 1995. Through EPD, TODCO also manufactures a variety
of laminated panels and sanitary partitions for industrial use as well as
watersealed doors used in naval construction. TODCO places primary emphasis on
engineering and design, high overall product quality and providing after-
market service and support to its customers.
Manufacturing. The TODCO Division has five facilities which manufacture
upward acting sectional doors, outward swinging doors and laminated panels.
Sales and Distribution. TODCO's truck and trailer doors are sold directly to
truck body and trailer manufacturers and to end users through a national
network of sales people, who are responsible for all products. EPD submits
contract bids for most sales through its own sales people.
TODCO has cultivated long-term relationships with many of the nation's
largest truck and trailer companies. While TODCO is the principal supplier to
several customers, no single customer of the Vehicular and Other Products
Group represented more than 10% of the Company's consolidated net sales in
1996. Approximately 20-30% of TODCO's door sales typically go to the
replacement market. These sales generally carry higher margins than sales to
the original equipment market.
Competition. The total truck and trailer door market is divided between
upward acting sectional doors and outward swinging doors. Upward acting doors
have several operational advantages, including ease of operation, ability to
operate within docking space constraints and security. On the other hand,
outward-swinging doors are desirable for long-haul, full trailer loads where
access to cargo is infrequently needed. TODCO is the leading manufacturer of
upward acting sectional doors, with a greater than 50% market share. TODCO has
a small share of the outward swinging door market, having just begun to market
this product late in 1995. The Company's principal competitors in the truck
door market are Whiting and Newcourt. The Company believes that EPD's
competitors are generally smaller companies.
4
Raw Materials. TODCO's principal raw materials are plywood, steel, aluminum
and hardware. TODCO is not dependent on any supplier for any raw material
purchases, except that it has one primary plywood supplier. TODCO has enjoyed
satisfactory relations with its principal vendors for many years.
McGuire
The McGuire division manufactures and distributes a line of loading dock
equipment and dock levelers, truck restraint devices, specialized traffic and
strip doors, seals, shelters and bumpers. Loading dock equipment is sold
through approximately 318 independent distributors, consisting of
approximately 247 Door Systems Group distributors and independent
representatives as well as approximately 71 distributors which handle material
handling products exclusively. McGuire has a small market share in a
competitive market in which the major market share holders are Rite-Hite and
Kelly. The industry in which McGuire participates is mature and is trending
toward increased safety equipment. McGuire's purchases are not concentrated
with any single supplier. The McGuire manufacturing facility is located in
Hudson, New York.
Wet/Dry Utility Vacuums
Under the Genie brand name, the Company manufactures and distributes a line
of five to twenty-gallon wet/dry utility vacuums to the retail market for
home, shop and light commercial uses. The vacuums feature rugged plastic tanks
and washable reusable filters.
Backlog. As of December 31, 1996, the Vehicular and Other Products Group's
order backlog was $8.9 million, compared to $11.3 million as of December 31,
1995. Orders are typically filled two to six weeks after receipt, except
orders for laminated panels which have longer lead times and which accounts
for approximately $4.0 million of the backlog as of December 31, 1996 and
1995.
RESEARCH AND DEVELOPMENT
The Company maintains a research and development facility in Dallas which is
devoted primarily to door products. The Company also has an engineering group
in Alliance, Ohio devoted to operator products and employs research and
development personnel at several other plant locations. Total research and
development expenditures for operations, excluding tooling and industrial
engineering, were $6.1 million in 1996, $5.8 million in 1995 and $4.6 million
in 1994. This effort functionally supports product development and
enhancements of existing products through design engineering and production
testing. Manufacturing support is provided in quality control, product
documentation and manufacturing equipment processes. In addition, distribution
and architectural support is provided for product specifications, technical
field assistance and building code compliance.
PATENTS AND TRADEMARKS
The Company holds many domestic patents, patent applications, licenses and
foreign patents. In the aggregate, although these patents are valuable, they
are not believed to be material to the Company. The Company also has a number
of registered and nonregistered trade names and trademarks for its products,
which trade names and trademarks, especially the Overhead Door, Genie, TODCO,
Horton Automatics, and McGuire trade names, are considered to be important to
its business.
ENVIRONMENTAL REGULATIONS
The Company's operations are subject to numerous existing and proposed laws
and governmental regulations designed to protect the environment, including
those regulating waste emissions and disposal. The Company's capital
expenditures for environmental control facilities were not material in 1996.
Although the Company is unable to predict what legislation and regulations may
be adopted in the future with respect to
5
environmental protection, the Company's compliance with existing legislation
and regulations is not expected to require material capital expenditures for
1997.
The Company has been determined by the United States Environmental
Protection Agency (the "EPA") to be a potentially responsible party concerning
a Superfund third-party waste disposal site near Syracuse, New York. This
determination was made because of alleged disposal at the site of certain
waste material generated by a manufacturing operation that formerly had been
operated by the Company near the site, which ceased operations in 1982. In
December 1989, the Company and two other potentially responsible parties
entered into an administrative order on consent with the EPA to perform a
Remedial Investigation and Feasibility Study ("RI/FS") at the site. The EPA
subsequently issued an administrative order to four additional companies and
one individual requiring them to participate with the three consenting
companies in the implementation of the RI/FS. Two of these additional
companies have entered into an agreement with the three consenting companies
to so participate. In 1992, the participating companies brought a lawsuit
against 13 nonparticipating companies in the United States District Court,
Northern District of New York. The suit seeks to have each of the defendants
declared to be jointly and severally liable with the plaintiffs for all past
and future expenses. Two defendants have been voluntarily dismissed by the
plaintiffs, and two new defendants were subsequently added. One defendant has
filed for Chapter 11 bankruptcy protection. The RI/FS has been submitted to
the EPA, but has not yet been accepted by the EPA.
A preliminary engineering investigation prepared in 1987 for the State of
New York estimated that the cost of remediation efforts at this site could
range from $24 million to $29 million. However, this estimate is nine years
old, was based only on a preliminary investigation and made certain
assumptions about the nature and extent of the remediation required. Until the
EPA issues a Record of Decision ("ROD") for the site, it is not possible to
know what, if any, activities the EPA may attempt to require at the site or
which companies may be named as potentially responsible parties in connection
with any such requirements. Five parties have participated in the
implementation of the RI/FS but the ultimate number of companies that may be
jointly and severally liable could be between five and eighteen and the
portion of any liability for which any one party may be responsible is not
necessarily a pro rata amount. How any liability is ultimately allocated
cannot now be determined.
Due to all the foregoing uncertainties, it is not possible at this time to
determine what the Company's future liability (if any) in connection with this
site will be. However, with the limited information currently available, the
Company estimates that its liability at this site could be between $1.5
million and $6.0 million depending on the type and scope of the remediation,
the number of responsible parties and how the liability is shared. Any such
liability to the Company would probably be payable over three to five years.
For the foregoing reasons, the Company has created a reserve for environmental
liabilities for the site of $1.5 million. This reserve may need to be changed
from time to time as more information becomes available, and there can be no
assurance that the current reserve will be adequate for the intended purpose.
After consideration of this reserve, the above stated estimated liability is
not expected to have a material adverse effect on the Company's results of
operations, financial position or liquidity.
Two of Genie's manufacturing sites, Shenandoah, Virginia and Alliance, Ohio
have been contaminated with solvents and other materials, as a result of the
former operations at these facilities. Hazardous materials management
practices have been substantially modified in order to prevent or eliminate
any additional contamination. Pursuant to the terms of a 1990 asset purchase
agreement (the "Asset Purchase Agreement") between Genie and North American
Philips Corporation ("NAPC"), NAPC, the former owner of Genie, agreed to
investigate and remediate any pre-closing contamination at these sites. NAPC
also agreed to fully indemnify Genie for all environmental liabilities arising
out of such pre-closing contamination, including third-party lawsuits.
At the Shenandoah facility, the contamination has affected the soils and
groundwater, both on site and on adjacent properties. The contamination also
has allegedly affected a public water supply well for the City of Shenandoah.
NAPC, without admitting liability, voluntarily drilled a new well recently for
the city to replace the
6
contaminated well. At the Alliance facility, NAPC has identified soil and
shallow groundwater contamination, all of which appears to be confined to the
Alliance site.
In accordance with the terms of the Asset Purchase Agreement, NAPC continues
to fulfill its obligations, at its own expense, for site investigation. The
Company expects that NAPC will develop remediation plans for each site in
1997. The Company has not expended any funds, nor does it expect to expend
any, for investigation and remediation at these sites because of NAPC's
contractual assumption of liability.
EMPLOYEES
The Company had approximately 1,072 salaried and 3,379 hourly employees at
December 31, 1996. Employees at most of the manufacturing facilities are
represented by collective bargaining agreements that are typically three years
in duration. There are several unions, although each facility is independently
organized. Typically three or four contracts are subject to renewal in any
given year. The Company utilizes temporary employees to meet any surges in
demand. The Company's relations with its employees have generally been
satisfactory, and the Company expects such relations to continue in the
foreseeable future.
SEASONALITY
Markets for the Company's building related products are traditionally
seasonal, with peak activity in the second half of the year, due to the
installation of doors in the later stages of the building season. The Company
maintains a revolving credit facility to meet seasonal variations in its
working capital requirements. To some extent this seasonality is mitigated by
certain other product offerings of the Company.
EXPORT SALES
The Company's export sales are not material.
7
ITEM 2. PROPERTIES
The Company's principal facilities, and the amount of space each contains,
are shown below. All plants are owned by the Company unless otherwise
indicated. Plant space is devoted primarily to manufacturing and storage of
raw materials and work-in-process inventory, with some space used for holding
and distributing finished goods and for general office purposes. With some
exceptions, the plants operate on two shifts. The Company believes that its
existing plants and equipment, including planned and anticipated future
improvements, are adequate to meet anticipated future demands for the
Company's products.
LOCATION PRINCIPAL PRODUCTS SIZE
- -------- ------------------ ----
(THOUSANDS SQ. FT.)
DOOR SYSTEMS GROUP
- ------------------
Athens, GA................ Door systems manufacturing 225
Grand Island, NE.......... Door systems manufacturing 124
Lewistown, PA............. Door systems manufacturing 376
Hartford City, IN......... Door panel manufacturing 297
Covington, KY............. Door hardware manufacturing 127
Williamsport, PA.......... Door panel manufacturing 150
Salem, OR................. Wood door panel manufacturing 70
Muncie, IN (leased)....... Vinyl door panel manufacturing 50
Rancho Cucamonga, CA Door systems distribution 25
(leased).................. center
Dallas, TX (leased)....... Door systems distribution 162
center
Farmers Branch, TX Research & development 18
(leased)..................
Corpus Christi, TX........ Automatic pedestrian entrances 100
Telford, U.K. (leased).... Automatic pedestrian entrances 22
Baltic, OH................ Door systems manufacturing 60
Shenandoah, VA............ Manufacturing and electronics 65
Akron, OH (leased)........ Warehouse 207
Alliance, OH (leased)..... Door systems manufacturing 43
Alliance, OH.............. Door systems manufacturing and 230
offices
VEHICULAR AND OTHER PROD-
UCTS GROUP
- -------------------------
Fresno, CA (leased) ...... Vehicular doors 22
Marion, OH................ Vehicular doors 82
Upper Sandusky, OH........ Vehicular doors 47
Sandusky, OH (leased)..... Swinging vehicular doors 20
Cattaraugus, NY........... Laminated panels 97
Hudson, NY................ Loading dock equipment 104
GENERAL & ADMINISTRATIVE
- ------------------------
Dallas, TX (leased)....... Corporate offices 33
Farmers Branch, TX Computer center and corporate 17
(leased).................. office
8
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in five lawsuits in which the plaintiffs seek
damages for personal injuries alleged to have been incurred in handling
"Jifflox" converter dollies previously manufactured by the Company. These
converter dollies are used to connect truck trailers in tandem. As a result of
a separate product line divestiture and the resultant closing of the
manufacturing facility where that product and the Jifflox converter dollies
were manufactured, Jifflox production was discontinued in the second quarter
of 1987. The plaintiffs are truck drivers or truck yard employees who allege
they have suffered personal injuries in moving a Jifflox dolly. The lawsuits
allege various theories of liability, including negligence, warranty, failure
to warn and strict liability. The lawsuits allege that Jifflox dollies are
defectively designed so as to preclude safe maneuvering in truck yards or that
they are too heavy or that they do not contain adequate warnings against
misuse. Unspecified damages are claimed. The Company denies liability in each
of the lawsuits.
The Company is a defendant in a number of lawsuits in which damages are
sought for property damage alleged to have been caused or contributed to by
aluminum windows manufactured by Premier Products, a former division of the
Company which was divested in 1989. At December 31, 1996, 46 such cases were
pending, all of which are venued in state courts in California. The cases
typically involved multi-family residences. The general contractor and all
subcontractors who were originally involved in the construction of these
residences, including the Company, are typically joined as defendants or
cross-defendants. The suits allege various theories of liability, including
negligence and contract under California's ten year construction defect
statute of limitations. The Company denies liability in each of the lawsuits.
The Company filed a Complaint for Declaratory Judgment in August 1995, in
the United States District Court for the Northern District of Texas against
The Chamberlain Group, Inc. The Complaint requests a declaratory judgment that
a line of residential garage door openers which the Company has recently
introduced does not infringe a particular patent owned by Chamberlain.
Chamberlain has filed a counterclaim against the Company alleging that such
openers do infringe its patent and that such infringement is willful. An
injunction and unspecified damages are requested.
In addition, the Company and certain subsidiaries are defendants in various
other legal proceedings arising in the ordinary course of business.
Although the results of any litigation cannot be predicted with certainty,
management believes that the outcome of pending litigation, when considered in
conjunction with self-insurance reserves established therefor (see Note J to
the Consolidated Financial Statements of the Company), will not have a
material adverse effect on the Company's results of operations, financial
position or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Not Applicable.
9
ITEM 6. SELECTED FINANCIAL DATA
Set forth below is the selected financial data of the Company, which are
derived from the financial statements of the Company which were audited by
Ernst & Young LLP, independent auditors.
The information presented below should be read in conjunction with, and is
qualified by, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Company's Consolidated Financial Statements and
related notes.
SUCCESSOR PREDECESSOR
------------ --------------------------------------------------
JULY 18 TO JANUARY 1 YEAR ENDED DECEMBER 31,
DECEMBER 31, TO JULY 17, --------------------------------------
1996 1996 1995 1994 1993 1992
------------ ----------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
STATEMENT OF OPERATIONS
DATA:
Net sales.............. $290,406 $281,621 $551,027 $437,135 $313,208 $285,225
Gross profit........... 59,598 54,995 110,491 94,496 57,620 48,383
Operating income (loss)
(a)................... 16,817 (22,737) 39,769 32,960 18,302 4,799
Interest (expense) (a). (9,619) (32,808) (28,713) (19,586) (13,307) (9,765)
Other income (expense),
net................... (1,388) (1,713) (1,479) (120) 309 813
-------- -------- -------- -------- -------- --------
Income (loss) before
income taxes,
extraordinary items
and change in
accounting principle . 5,810 (57,258) 9,577 13,254 5,304 (4,153)
Income tax provision
(benefit)............. 4,432 (21,855) 5,647 6,160 3,103 1,741
-------- -------- -------- -------- -------- --------
Income (loss) before
extraordinary items
and change in
accounting principle.. 1,378 (35,403) 3,930 7,094 2,201 (5,894)
Extraordinary items,
net of taxes (b)...... -- -- -- (255) (1,825) --
Cumulative effect of
change in accounting
principle (b)......... -- -- -- -- 762 --
-------- -------- -------- -------- -------- --------
Net income (loss)...... $ 1,378 $(35,403) $ 3,930 $ 6,839 $ 1,138 $ (5,894)
======== ======== ======== ======== ======== ========
Income (loss) per
common share before
extraordinary items
and change in
accounting principle.. $ 1,378 $(35,403) $ 3,930 $ 7,094 $ 2,201 $ (5,894)
Net income (loss) per
common share.......... $ 1,378 $(35,403) $ 3,930 $ 6,839 $ 1,138 $ (5,894)
======== ======== ======== ======== ======== ========
Weighted average common
shares outstanding.... 1,000 1,000 1,000 1,000 1,000 1,000
======== ======== ======== ======== ======== ========
STATEMENT OF FINANCIAL
CONDITION DATA (AT
PERIOD END):
Total assets........... $846,260 $475,430 $482,754 $227,415 $221,823
Total debt:
Bank term loans....... 116,000 110,535 135,135 -- 80,625
Bank revolving credit
loans................ 28,350 29,000 29,000 18,000 25,000
12.25% Senior Notes
Due 2000............. 90,006 85,000 85,000 85,000 --
Other................. 3 272 174 857 1,586
-------- -------- -------- -------- --------
234,359 224,807 249,309 103,857 107,211
Shareholder's equity... 474,501 101,282 97,008 43,319 42,250
- --------
(a) In July, 1996 in connection with the acquisition of the Company's Parent
by Sanwa Shutter Corporation, the Company cancelled certain outstanding
common stock options and warrants resulting in compensation expense of
$35.6 million and interest expense of $18.3 million.
10
(b) In 1993, the Company incurred an extraordinary charge of $1.8 million,
which is net of a tax benefit of $1.1 million, resulting from the write-
off of prepaid interest and other capitalized loan fees related to the
issuance by the Company of $85 million in unsecured senior notes and the
repayment of bank term loans. In addition, for such period, as a result of
a change in accounting principle to adopt Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes," the Company
recorded a cumulative benefit relating to periods prior to 1993 of $0.8
million. A new senior secured Revolving Credit Facility was executed in
the third quarter of 1994 and prepaid interest and new capitalized loan
fees relating to the previous secured revolving credit facility were
written off resulting in an extraordinary charge to income of $0.3
million, which is net of a tax benefit of $0.2 million.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company's historic operating results have been significantly affected by
economic cycles, particularly as they have affected the level of commercial,
industrial and residential construction activity. The Company's operating
results will continue to be cyclical in nature. Management believes, however,
that ongoing strategies to reduce costs, develop new products, strengthen
relationships with distributors, develop new distribution channels and
increase penetration of the replacement market have positioned the Company to
more effectively compete during fluctuations in the overall economic
environment. In addition, a substantial portion of Genie sales are to the
residential replacement market, and therefore may also reduce the Company's
exposure to economic cycles. Demand for the Company's commercial products
generally lags demand for residential products during economic cycles.
On July 18, 1996, all of the outstanding common stock of Overhead Door
Incorporated, a privately held Indiana corporation ("ODI"), the Company's
parent, was acquired (the "Sanwa Acquisition") by Sanwa Shutter Corporation,
of Tokyo, Japan ("Sanwa"). Sanwa USA Inc. ("Sanwa USA"), a newly formed
Delaware corporation which is wholly owned by Sanwa, now holds all of the
common stock of ODI. The total consideration paid or assumed was approximately
$710 million, including $470 million in cash to acquire ODI's common stock,
cancel options and warrants, and to redeem its preferred stock.
Net Sales. The Company's net sales are a function of unit volumes and
selling price realization. Over the last three years the Company has realized
net selling price increases as economic conditions permitted, although there
can be no assurances that this trend will continue.
Cost and Expenses. The Company's fixed costs are associated primarily with
its manufacturing plants (including certain labor costs) and, to some extent,
corporate administrative expenses. The Company's variable costs include
material purchases, marketing and advertising and direct labor. The primary
raw materials used in the manufacture of the Company's products include steel,
copper, aluminum and wood. These materials are subject to commodity price
variances, although the Company experienced no significant cost increases in
1996. Labor costs at most of the manufacturing facilities are a result of
employees who are represented by collective bargaining agreements that are
typically three years in duration. While the Company's relations with its
employees have generally been, and are expected to continue to be
satisfactory, a work stoppage or significant cost increases at one of the key
plants could adversely effect the Company's performance. The Company attempts
to mitigate the impact of cost increases on profitability through volume
purchasing, manufacturing efficiencies and price increases. There can be no
assurance that such offsets will continue to be available to the Company in
the future.
Seasonality. The markets for the Company's residential and commercial
products are seasonal in nature. Because of the underlying seasonality of the
building construction industry and the fact that doors are installed in the
latter stages of construction, the Company's sales historically have been
higher in the third and fourth quarters than in the first two quarters. The
seasonal nature of the Company's markets is reflected by the percentage of
full year revenues earned in the second half of the year, approximately 53% in
1996 and 1995 and 55% in 1994 (on a pro forma basis). Accordingly, the Company
displays increasing gross profit percentages from the first to fourth
quarters. As larger volumes are normally experienced in the latter half of the
year, it is not uncommon that the first quarter gross profit percentage is
lower than the prior full year. The Company has no reason to believe that the
seasonal nature of the Company's business will change in the foreseeable
future. No assurance, however, can be made that this historical pattern will
continue.
11
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, the percentage
relationship to net sales of certain items included in the Company's
statements of operations. The following discussion of results of operations is
based solely on historical operating results of the Company and does not
include discussions of the Company's pro forma results.
SUCCESSOR PREDECESSOR
------------ --------------------------
JULY 18 TO JANUARY 1 YEAR ENDED
DECEMBER 31, TO JULY 17, DECEMBER 31,
1996 1996 1995 1994
------------ ----------- ------ ------
Net sales............................. 100.0% 100.0% 100.0% 100.0%
Gross profit.......................... 20.5 19.5 20.1 21.6
Selling, general and administrative
expense.............................. 10.9 12.2 10.4 10.7
Research and development.............. 1.0 1.2 1.1 1.0
Amortization.......................... 2.8 1.5 1.4 1.0
Other expense(a)...................... -- 12.7 -- 1.4
----- ----- ------ ------
Operating income (loss)............... 5.8 (8.1) 7.2 7.5
Interest (expense).................... (3.3) (11.6) (5.2) (4.5)
Other income (expense), net........... (0.5) (0.6) (0.3) --
----- ----- ------ ------
Income (loss) before income taxes and
extraordinary item................... 2.0 (20.3) 1.7 3.0
Income tax expense (benefit).......... 1.5 (7.7) 1.0 1.4
Extraordinary item.................... -- -- -- --
----- ----- ------ ------
Net income (loss)..................... 0.5% (12.6)% 0.7% 1.6%
===== ===== ====== ======
- --------
(a) Includes compensation expense in 1996 and provision for plant closing in
1994.
1996 COMPARED TO 1995
The following discussion of 1996 reflects the results of operations for the
combined Predecessor period and Successor period.
Net Sales. Net sales in 1996 increased by $21.0 million (3.8%) from $551.0
million in 1995 to $572.0 million in 1996. Net sales increases of door
products of $17.5 million (7.0%), door openers of $6.5 million (3.2%) and
automatic pedestrian entrances of $8.0 million (20.3%) were partially offset
by lower sales of vehicular products and loading dock equipment of $11.0
million (14.4%). Higher unit sales of residential and commercial doors,
commercial operators, and automatic slide and swing doors accounted for most
of the increase.
Gross Profit. Gross profit increased by $4.1 million (3.7%) to $114.6
million in 1996 from $110.5 million in 1995. Gross profit as a percentage of
net sales decreased slightly to 20.0% in 1996 as compared to 20.1% in 1995.
Operating Income. Operating income was $39.8 million in 1995 as compared to
an operating loss in 1996 of $5.9 million. Prior to the Sanwa Acquisition,
$35.6 million was paid to certain officers and employees for the cancellation
of stock options and warrants and was recorded as compensation expense in
1996. Also as a result of the Sanwa Acquisition, $4.7 million of additional
amortization of intangible assets was incurred subsequent to the Acquisition
date. Excluding this compensation expense and amortization expense, operating
income was $34.5 million in 1996 as compared to $39.8 million in 1995. The
decrease of $5.3 million was due mainly to higher selling and marketing
expenses including increased advertising expenditures.
Interest Expense. Interest expense increased from $28.7 million in 1995 to
$42.4 million in 1996. Interest expense for 1996 includes $18.3 million
related to the payment for cancellation of stock options held by one of the
participating banks in the Company's former bank credit facilities. Excluding
this expense, interest expense decreased $4.6 million (16.0%) in 1996
primarily due to the decrease in effective interest rates on the Company's
revolving credit facilities to 8.3% in 1996 from 9.1% in 1995.
12
Other Expense. Other expense increased to $3.1 in 1996 from $1.5 million in
1995. The increase in 1996 is due to higher expenses related to previously
divested product line operations.
Income Taxes. Income tax expense was $5.6 million in 1995 as compared to a
tax benefit in 1996 of $17.4 million. The 1996 tax benefit is a result of the
operating loss discussed above.
Net Income. The net loss for 1996 was $34.0 million compared to net income
of $3.9 million in 1995.
1995 COMPARED TO 1994
Net Sales. Net sales in 1995 increased by $113.9 million (26.1%) from $437.1
million in 1994 to $551.0 million in 1995. Of this increase, $84.6 million is
attributable to the Genie Acquisition (see Note C to the Consolidated
Financial Statements). The balance of the increase, $29.3 million, represents
an 8.0% increase over the prior year. Net sales of upward acting doors in 1995
increased 9.7% from 1994. Approximately one-half of this growth was
attributable to price increases, with the balance attributed to an increase in
unit sales which reflects continued strong commercial and industrial sales.
Although total residential market activity declined 7%, the Company's
residential door sales were approximately equal to 1994 levels due to a new
home builder program and the Company's overall position in this segment. Net
sales of automatic pedestrian entrances increased 12% in 1995 versus 1994
across all major product lines. In the Vehicular and Other Products Group,
vehicular net sales increased 1% compared to 1994 while loading dock equipment
net sales increased 41% over 1994 with increases in all major categories.
Gross Profit. Gross profit increased by $16.0 million (16.9%) from $94.5
million in 1994 to $110.5 million in 1995. Genie contributed virtually all of
this increase. As a percentage of net sales, gross profit was 20.1% in 1995
compared to 21.6% in 1994. The decline in gross profit margin is mainly due to
higher material prices of approximately 5% across all segments of the company.
The most significant increases were experienced in aluminum, packaging
materials, and steel. Selling price increases implemented in late 1994 and
mid-1995 helped to offset material purchase price increases.
Operating Income. Operating income increased in 1995 to $39.8 million, an
increase of $6.8 million (20.6%) from $33.0 million in 1994. After excluding
$10.1 million in 1994 for one-time charges related to a plant closing and
vesting of warrants, operating income declined $3.3 million (7.7%). In 1995,
operating income includes charges for depreciation and amortization of
goodwill and other intangibles related to the 1990 Acquisition and the Genie
Acquisition of $11.3 million. In 1994 these charges were $7.8 million.
Selling, general and administrative expenses declined as a percentage of net
sales to 11.3% in 1995 from 11.9% in 1994. A $4.1 million charge for the
vesting of stock warrants in 1994 that was not repeated in 1995 is the most
significant factor for the decline.
Interest Expense. Interest expense increased from $19.6 million in 1994 to
$28.7 million in 1995 as a result of higher average outstanding debt balances
during 1995. These higher average balances were attributable to indebtedness
incurred in connection with the Genie Acquisition in August 1994.
Other Income (Expense). Other expense of $1.5 million in 1995 compares
unfavorably to the $0.1 million recorded in 1994 due mainly to costs
associated with a previously divested business.
Income Taxes. The provision for income taxes of $5.6 million in 1995
compares to a provision of $6.2 million in 1994. The decrease is due to lower
taxable income in 1995.
Net Income. Net income for 1995 was $3.9 million compared to $6.8 million in
1994.
13
FINANCIAL CONDITION AND LIQUIDITY
In connection with the Sanwa Acquisition in July 1996 and in accordance with
purchase accounting, the Company recorded all identifiable assets and
liabilities at fair value and recorded $344.6 million as cost in excess of net
assets of businesses acquired. The carrying value of the 12.25% Senior
Unsecured Notes was adjusted to a fair value of $91.4 million as compared to
the carrying cost prior to the Sanwa Acquisition of $85.0 million. This $6.4
million adjustment is being amortized to reduce interest expense.
Subsequent to the Sanwa Acquisition, the Company refinanced its outstanding
bank debt with a term note (the "Term Note") in the original amount of $122.0
million and a revolving credit facility (the "Revolving Credit Facility")
providing borrowings up to $53.0 million. The Company uses the Revolving
Credit Facility to help fund seasonal cash flow requirements. The outstanding
balance of the Revolving Credit Facility at December 31, 1996 was $28.4
million. Availability under the Revolving Credit Facility at December 31, 1996
was approximately $19.5 million, with $5.1 million outstanding in letters of
credit. Due to the seasonal nature of the Company's business, borrowings to
fund working capital needs generally increase beginning late in the second
quarter and begin to decline late in the fourth quarter. Annual maturities for
the Company's total debt outstanding as of December 31, 1996 are as follows:
1997, $28.0 million; 1998, $35.3 million; 1999, $35.0 million; 2000, $107.7
million; and 2001, $28.4 million.
Capital expenditures were $5.7 million, $6.3 million, and $4.1 million in
1996, 1995 and 1994, respectively. Expenditures in these years were primarily
for non-discretionary maintenance, safety items and the implementation of cost
reduction programs. Management believes that future required expenditures for
non-discretionary capital spending will be approximately $3.0 million
annually. Capital commitments as of December 31, 1996, totalled $1.5 million.
The Company expects to spend approximately $11.0 million in total capital
expenditures in 1997. The increased capital expenditures for 1997 are required
for manufacturing equipment for new products as well as upgrading equipment
and machinery. Discretionary capital expenditures are evaluated on a project-
by-project rate of return, and are anticipated to be funded from operating
cash flow.
Earnings before interest, taxes, depreciation and amortization were $12.7
million, $55.7 million, and $45.3 million for 1996, 1995 and 1994,
respectively. Excluding the one-time compensation expense for the payment due
to cancellation of options and warrants of $35.6 million, earnings before
interest, taxes, depreciation and amortization for 1996 were $48.3 million.
The Company believes that the cash flow generated by its operations together
with borrowings under the Revolving Credit Facility should be sufficient to
fund all its cash needs during the next twelve months.
Inflation
The effect of inflation on the Company's operations has moderated over the
last several years. The Company uses the LIFO method of accounting for
substantially all its inventories to represent current costs more accurately.
Environmental Expense
The Company has been determined by the EPA to be a potentially responsible
party ("PRP") concerning a Superfund third party waste disposal site near
Syracuse, New York. See "Business--Environmental Regulations." A Remedial
Investigation and Feasibility Study ("RI/FS") has been submitted to the EPA,
but has not yet been accepted by the EPA. Until the EPA issues a Record of
Decision ("ROD") for the site, it is not possible to know what, if any,
activities the EPA may attempt to require at the site or which companies may
be named as potentially responsible parties in connection with any such
requirements. Five parties have participated in the implementation of the
RI/FS but the ultimate number of companies that may be jointly and severally
liable could be between five and eighteen and the portion of any liability for
which any one party may be responsible is not necessarily a pro rata amount.
How any liability is ultimately allocated cannot now be determined.
14
Due to all the foregoing uncertainties, it is not possible at this time to
determine what the Company's future liability (if any) in connection with this
site will be. However, with the limited information currently available, the
Company estimates that its liability at this site could be between $1.5
million and $6.0 million depending on the type and scope of the remediation,
the number of responsible parties and how the liability is shared. Any such
liability to the Company would probably be payable over three to five years.
For the foregoing reasons, the Company created a reserve in prior years for
environmental liabilities for the site of $1.5 million. This reserve may need
to be changed from time to time as more information becomes available, and
there can be no assurance that the current reserve will be adequate for the
intended purpose. After consideration of this reserve, the above stated
estimated liability is not expected to have a material adverse effect on the
Company's results of operations, financial position or liquidity.
15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
PAGE
----
Independent Auditors' Report............................................ 17
Consolidated Statements of Operations--For the period from July 18, 1996
to December 31, 1996 (Successor), the period from January 1, 1996 to
July 17, 1996 (Predecessor), the year ended December 31, 1995 (Prede-
cessor), and the year ended December 31, 1994 (Predecessor)............ 18
Consolidated Statements of Financial Condition--December 31, 1996
(Successor) and December 31, 1995 (Predecessor)........................ 19
Consolidated Statements of Shareholder's Equity--For the period from
July 18, 1996 to December 31, 1996 (Successor), the period from January
1, 1996 to July 17, 1996 (Predecessor), the year ended December 31,
1995 (Predecessor), and the year ended December 31, 1994 (Predecessor). 20
Consolidated Statements of Cash Flows--For the period from July 18, 1996
to December 31, 1996 (Successor), the period from January 1, 1996 to
July 17, 1996 (Predecessor), the year ended December 31, 1995 (Prede-
cessor), and the year ended December 31, 1994 (Predecessor)............ 21
Notes to Consolidated Financial Statements.............................. 22
16
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Shareholder
Overhead Door Corporation
We have audited the accompanying consolidated statements of financial
condition of Overhead Door Corporation and subsidiaries as of December 31,
1996 (Successor) and 1995 (Predecessor), and the related consolidated
statements of operations, shareholder's equity, and cash flows for the period
from July 18, 1996 to December 31, 1996 (Successor), the period from January
1, 1996 to July 17, 1996 (Predecessor), and each of the two years in the
period ended December 31, 1995 (Predecessor). Our audit also included the
financial statement schedule listed in the Index at Item 14(a). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Overhead Door Corporation and subsidiaries at December 31, 1996 (Successor)
and 1995 (Predecessor), and the consolidated results of their operations and
their cash flows for the period from July 18, 1996 to December 31, 1996
(Successor), the period from January 1, 1996 to July 17, 1996 (Predecessor),
and each of the two years in the period ended December 31, 1995 (Predecessor),
in conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Ernst & Young LLP
Dallas, Texas
February 25, 1997
17
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SUCCESSOR PREDECESSOR
------------ ------------------------------------
JULY 18 TO JANUARY 1
DECEMBER 31, TO JULY 17, YEAR ENDED DECEMBER 31,
1996 1996 1995 1994
------------ ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net Sales................... $290,406 $281,621 $ 551,027 $ 437,135
Costs and Expenses
Cost of products sold..... 230,808 226,626 440,536 342,639
Selling, general and
administrative........... 31,690 34,473 57,114 46,723
Research and development.. 2,893 3,254 5,783 4,557
Compensation paid for
cancellation of options
and warrants............. -- 35,640 -- --
Amortization.............. 8,198 4,365 7,825 4,256
Plant closing............. -- -- -- 6,000
-------- -------- ----------- -----------
Total Costs and
Expenses............... 273,589 304,358 511,258 404,175
-------- -------- ----------- -----------
Operating Income (Loss)..... 16,817 (22,737) 39,769 32,960
Interest (Expense).......... (9,619) (32,808) (28,713) (19,586)
Other Income (Expense), Net. (1,388) (1,713) (1,479) (120)
-------- -------- ----------- -----------
Income (Loss) Before Income
Taxes...................... 5,810 (57,258) 9,577 13,254
Income Tax Expense
(Benefit).................. 4,432 (21,855) 5,647 6,160
-------- -------- ----------- -----------
Income (Loss) Before
Extraordinary Item......... 1,378 (35,403) 3,930 7,094
Extraordinary Item, Net of
Income Taxes............... -- -- -- (255)
-------- -------- ----------- -----------
Net Income (Loss)........... $ 1,378 $(35,403) $ 3,930 $ 6,839
======== ======== =========== ===========
Income (Loss) Per Common
Share:
Before Extraordinary Item. $ 1,378 $(35,403) $ 3,930 $ 7,094
Extraordinary Item, Net of
Income Taxes............. -- -- -- (255)
-------- -------- ----------- -----------
Net Income (Loss)......... $ 1,378 $(35,403) $ 3,930 $ 6,839
======== ======== =========== ===========
See Notes to Consolidated Financial Statements
18
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE DATA)
SUCCESSOR PREDECESSOR
--------- -----------
DECEMBER 31,
1996 1995
--------- -----------
ASSETS
Current Assets
Cash and cash equivalents.............................. $ 2,276 $ 2,604
Notes and accounts receivable, less allowances
(1996--$7,482; 1995--$5,824).......................... 88,670 90,914
Inventories, net....................................... 81,019 81,037
Prepayments and other current assets................... 26,407 7,569
-------- --------
Total Current Assets................................. 198,372 182,124
Property, Plant and Equipment
Land................................................... 4,044 4,111
Buildings.............................................. 40,138 43,983
Machinery and equipment................................ 43,706 66,757
Construction in progress............................... 4,491 2,458
Accumulated depreciation............................... (4,134) (43,862)
-------- --------
Total Property, Plant and Equipment.................. 88,245 73,447
Intangibles and Other Assets
Cost in excess of net assets of businesses acquired,
less accumulated amortization (1996--$5,598; 1995--
$11,559).............................................. 486,200 150,454
Trademarks, less accumulated amortization (1996--$508;
1995--$1,271)......................................... 44,261 35,729
Other assets........................................... 29,182 33,676
-------- --------
Total Intangibles and Other Assets................... 559,643 219,859
-------- --------
Total Assets....................................... $846,260 $475,430
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable....................................... $ 52,441 $ 71,815
Accrued interest....................................... 4,909 4,917
Self insurance reserves................................ 7,350 6,947
Other accrued liabilities.............................. 17,144 18,544
Current maturities of long-term debt................... 28,023 15,077
-------- --------
Total Current Liabilities............................ 109,867 117,300
Long-term Debt, Less Current Maturities.................. 206,336 209,730
Deferred Income Taxes.................................... 44,763 35,287
Self Insurance Reserves.................................. 5,803 7,186
Other Long-term Liabilities.............................. 4,990 4,645
-------- --------
Total Noncurrent Liabilities......................... 261,892 256,848
Shareholder's Equity
Common stock, par value $1 per share; 1,000 shares
authorized and outstanding............................ 1 1
Additional capital..................................... 472,860 100,492
Currency translation adjustment........................ 262 (575)
Retained earnings...................................... 1,378 1,364
-------- --------
Total Shareholder's Equity........................... 474,501 101,282
-------- --------
Total Liabilities and Shareholder's Equity......... $846,260 $475,430
======== ========
See Notes to Consolidated Financial Statements
19
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
NUMBER RETAINED CURRENCY
OF COMMON ADDITIONAL EARNINGS TRANSLATION
SHARES STOCK CAPITAL (DEFICIT) ADJUSTMENT TOTAL
------- ------ ---------- --------- ----------- --------
Predecessor
- -----------
Balance at January 1,
1994................... 1,000 $ 1 $ 53,320 $ (9,405) $(597) $ 43,319
Net Income.............. -- -- -- 6,839 -- 6,839
Additional capital
contribution........... -- -- 46,779 -- -- 46,779
Currency translation
adjustment............. -- -- -- -- 71 71
----- --- -------- -------- ----- --------
Balance at December 31,
1994................... 1,000 1 100,099 (2,566) (526) 97,008
Net Income.............. -- -- -- 3,930 -- 3,930
Additional capital
contribution........... -- -- 393 -- -- 393
Currency translation
adjustment............. -- -- -- -- (49) (49)
----- --- -------- -------- ----- --------
Balance at December 31,
1995................... 1,000 1 100,492 1,364 (575) 101,282
Net Loss................ -- -- -- (35,403) -- (35,403)
Retire parent company
preferred stock........ -- -- (33,646) -- -- (33,646)
Cancel stock options and
warrants............... -- -- (38,023) -- -- (38,023)
Currency translation
adjustment............. -- -- -- -- (2) (2)
----- --- -------- -------- ----- --------
Balance at July 17,
1996................... 1,000 1 28,823 (34,039) (577) (5,792)
Purchase accounting
adjustments:
Retire predecessor
equity................. -- (1) (28,823) 34,039 577 5,792
Issue successor equity.. -- 1 472,860 -- -- 472,861
Successor
- ---------
----- --- -------- -------- ----- --------
Balance at July 18,
1996................... 1,000 1 472,860 -- -- 472,861
Net Income.............. -- -- -- 1,378 -- 1,378
Currency translation
adjustment............. -- -- -- -- 262 262
----- --- -------- -------- ----- --------
Balance at December 31,
1996................... 1,000 $ 1 $472,860 $ 1,378 $ 262 $474,501
===== === ======== ======== ===== ========
20
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
SUCCESSOR PREDECESSOR PREDECESSOR
------------ ----------- ------------------------
JULY 18 TO JANUARY 1
DECEMBER 31, TO JULY 17, YEAR ENDED DECEMBER 31,
1996 1996 1995 1994
------------ ----------- ----------- -----------
OPERATING ACTIVITIES
Income (Loss) Before
Extraordinary Item....... $ 1,378 $(35,403) $ 3,930 $ 7,094
Adjustments to reconcile
income (loss) to net cash
provided by operating
activities:
Depreciation............ 3,691 5,485 9,622 8,188
Amortization............ 8,198 4,365 7,825 4,256
Amortization of bond
premium................ (1,369) -- -- --
Provision for losses on
notes and accounts
receivable............. 635 316 735 716
(Gain) loss on sale of
property, plant and
equipment.............. (18) 28 (1) 102
Compensation paid for
cancellation of options
and warrants........... -- 35,640 -- --
Interest expense paid
for cancellation of
options and warrants... -- 18,307 -- --
Compensation expense
related to vesting of
parent company
warrants............... -- -- -- 4,064
Changes in operating
assets and liabilities:
Decrease (increase) in
notes and accounts
receivable........... (13,647) 11,990 (7,991) (13,733)
Decrease (increase) in
inventories.......... 7,660 (7,060) (5,657) (7,236)
Decrease (increase) in
prepayments and other
current assets....... 1,680 (11,892) 3,566 (2,566)
Increase (decrease) in
accounts payable..... 1,098 (22,419) 22,850 (1,181)
Increase (decrease) in
accrued liabilities.. 1,286 (2,390) (6,202) 13,022
(Decrease) in other
long-term
liabilities.......... (1,011) (420) (933) (1,443)
Increase (decrease) in
deferred income
taxes................ 4,433 (9,101) (256) (3,182)
-------- -------- ----------- -----------
Net Cash Flows Provided By
(Used For) Operating
Activities................. 14,014 (12,554) 27,488 8,101
INVESTING ACTIVITIES
Proceeds from sale of a
business................. -- 998 -- --
Proceeds from sales of
property, plant and
equipment................ 1,757 3 2,023 745
Expenditures for property,
plant and equipment...... (3,413) (2,251) (6,306) (4,071)
Increase in other assets.. (2,672) (755) (920) (4,554)
Acquisition of a business,
net of cash acquired..... -- -- -- (176,162)
-------- -------- ----------- -----------
Net Cash Flows Used For
Investing Activities....... (4,328) (2,005) (5,203) (184,042)
FINANCING ACTIVITIES
Retire Term Loan Facility
......................... (106,785) -- -- --
Proceeds from Sanwa USA
Term Note................ 122,000 -- -- --
Net proceeds (payments)
from long-term borrowings
on revolver.............. (17,650) 17,000 -- 11,000
Proceeds from other long-
term borrowings.......... -- -- 150 145,000
Principal payments on
long-term debt........... (6,197) (3,822) (24,652) (10,548)
Debt Issue Costs.......... -- -- -- (9,152)
Net contribution
(distribution) of
capital.................. -- -- 393 42,300
-------- -------- ----------- -----------
Net Cash Flows Provided By
(Used For) Financing
Activities................. (8,632) 13,178 (24,109) 178,600
EFFECT OF EXCHANGE RATE
CHANGES ON CASH............ 262 (263) (49) 71
-------- -------- ----------- -----------
Increase (Decrease) in Cash
and Cash Equivalents....... 1,316 (1,644) (1,873) 2,730
CASH AND CASH EQUIVALENTS
Beginning of period....... 960 2,604 4,477 1,747
-------- -------- ----------- -----------
End of period............. $ 2,276 $ 960 $ 2,604 $ 4,477
======== ======== =========== ===========
See Notes to Consolidated Financial Statements
21
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE A. BUSINESS & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Overhead Door Corporation and its subsidiaries (the "Company") manufacture a
complete line of door systems and related products including upward acting
sectional and rolling doors and door operators, residential garage door
openers, upward acting sectional doors for trucks and trailers and automatic
entrances such as automatic swinging, sliding and revolving doors. The
Company's sales are primarily for commercial and industrial uses, including
warehouses, distribution centers, manufacturing facilities, truck doors and
loading dock equipment; and residential replacement uses and new residential
construction. The Company's products are distributed nationwide through a
network of independent distributors and a retail distribution network, which
includes the leading home centers, major wholesale clubs and many hardware
cooperatives.
The consolidated financial statements include the accounts of Overhead Door
Corporation and its consolidated subsidiaries. All significant intercompany
accounts and transactions have been eliminated. Overhead Door Incorporated
(the Parent) is a non-operating company whose only asset is its ownership of
100% of the outstanding common stock of Overhead Door Corporation (Overhead
Door). See Note B for the acquisition of the Parent as of July 18, 1996. The
accompanying financial statements subsequent to July 17, 1996 ("Successor"
financial statements) reflect the new basis of assets and liabilities acquired
as of July 18, 1996 including additional goodwill and the indebtedness
incurred to finance the acquisition. Financial statements for the periods
prior to July 18, 1996 ("Predecessor" financial statements) reflect the basis
of assets and liabilities of the previous owners of the Company. The following
significant accounting policies were applied in both the Successor and
Predecessor financial statements.
Cash and cash equivalents include cash on hand and highly liquid investments
with original maturities of three months or less.
Inventories are stated at the lower of cost, using the last-in, first-out
method, or market.
Property, plant and equipment is stated on the basis of cost, which includes
interest cost incurred on significant capital expenditures during
construction. For financial reporting purposes, depreciation is computed using
the straight-line method over the estimated useful lives of the related
assets. For buildings the estimated useful life is from 20 to 40 years. For
machinery and equipment the estimated useful life is from 3 to 8 years.
The excess of cost over the fair value of net assets acquired ("goodwill")
generally is amortized on a straight-line basis over 40 years. The carrying
value of goodwill is reviewed at each balance sheet date to determine if the
facts and circumstances suggest that it may be impaired. If this review
indicates that goodwill will not be recoverable, as determined based on the
undiscounted cash flows of the entity acquired over the remaining amortization
period, the Company's carrying value of the goodwill would be reduced by the
estimated shortfall of cash flows. Amortization includes goodwill and
trademarks amortized over 40 years; organizational fees and expenses, patents,
and customer lists amortized over 10 years; and the value of the acquired work
force amortized over 8 years.
The financial position and results of operations of foreign subsidiaries are
measured using the local currency as the functional currency. Revenues and
expenses of these subsidiaries have been translated at average exchange rates.
Assets and liabilities have been translated at current exchange rates, and the
related translation adjustments are being deferred as a separate component of
Shareholder's Equity.
Deferred income taxes are determined using the liability method, which gives
consideration to the future tax consequences associated with differences
between the financial accounting and tax basis of assets and liabilities. This
method also gives immediate effect to changes in income tax laws.
The Company recognizes sales revenue at the time products are shipped. Net
sales represents the sales price to the customer, net of returns and
allowances and unrecovered outbound freight costs. Returns historically have
been less than 2.5% of gross sales.
22
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE A. BUSINESS & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income per common share is based on the 1,000 shares of common stock that
have been outstanding during all periods.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results inevitably will differ from those estimates
and such differences may be material to the financial statements.
Certain amounts in prior years' financial statements have been reclassified
to conform to the current year's presentation when applicable.
NOTE B. SANWA ACQUISITION
On July 18, 1996, all of the outstanding common stock of Overhead Door
Incorporated, a privately held Indiana corporation ("ODI"), the Company's
parent, was acquired (the "Sanwa Acquisition") by Sanwa Shutter Corporation,
of Tokyo, Japan ("Sanwa"). Sanwa USA Inc. ("Sanwa USA"), a newly formed
Delaware corporation which is wholly owned by Sanwa, now holds all of the
common stock of ODI. The total consideration paid or assumed was approximately
$710 million, including $470 million in cash to acquire ODI's common stock,
cancel options and warrants, and to redeem its preferred stock.
The Sanwa Acquisition was accounted for by the purchase method of accounting
and the excess of the purchase price over the fair value of the net assets
acquired is included in cost in excess of net assets of businesses acquired in
the consolidated statements of financial condition. The Company refinanced its
outstanding bank debt of approximately $154 million including accrued
interest. Sanwa USA loaned to the Company the amounts necessary to fully repay
and terminate the credit agreement which had represented all of the Company's
outstanding bank debt, in accordance with the terms of a new bridge loan
agreement between Sanwa USA and the Company (See Note F).
Prior to the Sanwa Acquisition, the Company paid $35.6 million to certain
employees and officers for the cancellation of outstanding ODI common stock
options and warrants. This charge is included in the statement of operations
as compensation expense for the Predecessor period. Additionally, a
participating financial institution in the Company's previously outstanding
credit facilities was paid $18.3 million for the cancellation of ODI common
stock warrants. This charge is included in interest expense in the statement
of operations for the Predecessor period.
In 1996, the Company paid Sanwa USA approximately $439,000 and an affiliate
of Bessemer Holdings, the previous owner, $454,000, for general corporate
consulting and financial advising services.
The following unaudited pro forma summary presents the results of operations
assuming the Sanwa Acquisition had occurred on January 1, 1995 for the years
ended December 31, 1996 and 1995. This summary does not purport to be
indicative of what actual results of operations would have been had the Sanwa
Acquisition been made as of that date or of results of operations for future
periods. Actual statements of operations have given effect to the Sanwa
Acquisition from its effective date.
PRO FORMA YEAR ENDED
DECEMBER 31,
----------------------
1996 1995
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Net Sales......................................... $572,027 $551,027
========== ==========
Net Income (Loss)................................. $ (3,239) $ 877
========== ==========
Net Income (Loss) per Common Share................ $ (3,239) $ 877
========== ==========
23
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE B. SANWA ACQUISITION (CONTINUED)
The cancellation of stock options and warrants which resulted in a charge to
compensation expense of $35.6 million and interest expense of $18.3 million in
1996 is assumed to have occurred prior to the Sanwa Acquisition and has been
excluded. The proforma net income (loss) is effected by increased goodwill
amortization which is not deductible for income tax purposes.
NOTE C. GENIE ACQUISITION
On August 18, 1994, the Company acquired all of the capital stock of GMI
Holdings, Inc. (d/b/a The Genie Company) ("Genie") from Brynwood Partners II
L.P. (the "Genie Acquisition"). The aggregate consideration paid by the
Company in the Genie Acquisition was approximately $183.0 million, consisting
of a cash payment of approximately $181.3 million (the "Purchase Price") and
the exchange for certain outstanding management options to acquire Genie
shares, of options valued at approximately $1.7 million to acquire shares of
the Parent. The intrinsic value in these options was recorded as a cost of the
Genie Acquisition by a credit to additional capital. In addition, the Company
paid $11.0 million in transaction fees and expenses including approximately
$2.0 million in advisory fees to an affiliate of the former principal
shareholder of the Parent. The Genie Acquisition has been accounted for by the
purchase method of accounting and the excess of the purchase price over the
fair value of the net assets acquired is included in cost in excess of net
assets of businesses acquired in the consolidated statements of financial
condition. Genie manufactures and distributes automatic garage door operators
and wet/dry vacuum cleaners primarily to retailers and professional installers
throughout the U.S. and Europe. Genie is now a direct subsidiary of Overhead
Door and the consolidated financial statements of the Company include the
accounts and operations of Genie since August 18, 1994.
The following unaudited pro forma summary presents the results of operations
assuming the Genie Acquisition had occurred on January 1, 1994 for the year
ended December 31, 1994. This summary does not purport to be indicative of
what actual results of operations would have been had the Genie Acquisition
been made on that date or of results of operations for future periods. Actual
statements of operations of Overhead Door and Genie have been combined from
the effective date of the Genie Acquisition.
PRO FORMA
YEAR ENDED
DECEMBER 31, 1994
(PREDECESSOR)
-----------------
(IN THOUSANDS,
EXCEPT
PER SHARE DATA)
Net Sales............................................... $524,199
========
Net Income.............................................. $ 7,557
========
Net Income per Common Share............................. $ 7,557
========
The 1994 pro forma summary excludes certain non-recurring transaction
related expenses for a plant closing, final Genie employee bonuses and the
extraordinary write-off of debt issue costs in connection with debt
refinancing.
Concurrent with the closing of the Genie Acquisition, the Company and
Chemical Bank entered into a credit facility consisting of a $145.0 million
senior term loan facility, the full amount of which was drawn down at the
closing of the Genie Acquisition and was utilized to pay a portion of the
Purchase Price, and a $75.0 million senior secured revolving credit facility
used to refinance $28.0 million of the Company's previous revolving credit
facility and provide $5.0 million towards the Genie Acquisition. In addition,
the Parent issued
24
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE C. GENIE ACQUISITION (CONTINUED)
common stock, redeemable preferred stock and warrants to its principal
shareholder and an affiliate, for an aggregate cash purchase price of $42.3
million, the proceeds of which the Parent contributed to the Company. The
commercial debt facilities and the sale of stock and warrants provided the
Company with the funds necessary to complete the Genie Acquisition and pay
related fees and expenses.
NOTE D. ADVERTISING COSTS
The Company expenses advertising costs as incurred. The total amount charged
to advertising expense for the years ended December 31, 1996, 1995 and 1994
totaled $12.9 million, $10.7 million and $7.6 million, respectively.
NOTE E. EXTRAORDINARY ITEM
As noted in Note C, a senior secured revolving credit facility was executed
in the third quarter of 1994. Prepaid interest and capitalized loan fees
relating to the previous secured revolving credit facility were written off
resulting in an extraordinary charge to income of $0.3 million, which is net
of a tax benefit of $0.2 million.
NOTE F. FINANCING OBLIGATIONS
Long-term debt consists of the following at December 31:
SUCCESSOR PREDECESSOR
1996 1995
--------- -----------
(IN THOUSANDS)
Unsecured Senior Notes bearing interest at 12.25% on
the original face amount, due on February 1, 2000,
redeemable at the option of the Company in whole or
in part on or after February 1998.................... $ 90,006 $ 85,000
Revolving Credit Facility ($75.0 million facility)
bearing interest at a variable rate.................. -- 29,000
Term Loan Facility (original amount of $145.0 million)
bearing interest at a variable rate.................. -- 110,535
Sakura Revolving Credit Facility ($53.0 million
facility) bearing interest at 35 basis points above
the applicable Federal Funds rate (6.0% at December
31, 1996), maturing on September 28, 2001............ 28,350 --
Sanwa USA Term Note (original amount $122.0 million)
bearing interest at a fixed rate of 8.2% during 1996,
and 7.5% thereafter, maturing on September 30, 2000.. 116,000 --
Industrial Revenue Bonds bearing interest at 7%,
repayable in monthly installments through March 1997. 3 272
-------- --------
Total long-term debt................................ 234,359 224,807
Less current maturities............................. 28,023 15,077
-------- --------
Total noncurrent maturities of long-term debt..... $206,336 $209,730
======== ========
The carrying amount of the Unsecured Senior Notes was adjusted as of July
18, 1996 to their fair market value as a result of the Sanwa Acquisition (see
Note B) by adding a premium ($5.0 million unamortized at December 31, 1996)
which results in an effective interest rate of 11.5% in the statement of
operations subsequent to July 17, 1996.
25
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE F. FINANCING OBLIGATIONS (CONTINUED)
In connection with the Sanwa Acquisition, the Company borrowed approximately
$154.0 million from Sanwa USA under a bridge loan agreement to repay the
outstanding balances, plus accrued interest, on the Revolving Credit Facility,
and the Term Loan Facility. On October 31, 1996, the Company refinanced the
bridge term loan with a term note facility with Sanwa USA in the amount of
$122.0 million (the "Sanwa USA Term Note") and a revolving credit facility for
$53.0 million with the Sakura Bank, Ltd., (the "Sakura Revolving Credit
Facility"). The Sanwa USA Term Note and the Sakura Revolving Credit Facility
are senior to the Unsecured Senior Notes.
The Sakura Revolving Credit Facility requires principal and interest
payments at the maturity of each loan advanced, not to exceed 364 days. This
facility is guaranteed by Sanwa. The annual effective interest rate on the
revolving credit facilities outstanding during 1996 and 1995 was 8.3% and
9.1%, respectively.
The Sanwa USA Term Note requires scheduled principal repayments on the last
day of each calendar quarter until maturity on September 30, 2000. The annual
effective interest rate on the term loan facilities outstanding during 1996
and 1995 was 8.2% and 8.8%, respectively. Effective January 1, 1997, the Sanwa
USA Term Note fixed rate is 7.5%.
At December 31, 1996, annual debt maturities are as follows:
(IN THOUSANDS)
1997.......................... $ 28,023
1998.......................... 35,251
1999.......................... 35,000
2000.......................... 107,735
2001.......................... 28,350
Thereafter.................... -
--------
$234,359
========
The above maturity schedule assumes that the total outstanding balance of
the Sakura Revolving Credit Facility is repaid on its maturity date in 2001.
Total interest paid in 1996, 1995 and 1994 was $24.1 million, $28.4 million
and $28.1 million, respectively. The 1994 amount includes $9.5 million of
prepaid interest and $1.2 million of rate cap fees which were being amortized
over periods of 1 to 5 years. The 1996 amount excludes $18.3 million paid for
the cancellation of common stock warrants (see Note B).
NOTE G. INVENTORIES
Inventories are classified as follows at December 31:
SUCCESSOR PREDECESSOR
1996 1995
--------- -----------
(IN THOUSANDS)
At current cost:
Raw materials........................................ $33,245 $38,420
Work in process...................................... 14,356 18,330
Finished goods....................................... 32,908 29,475
------- -------
80,509 86,225
Difference between current cost and LIFO cost.......... 510 (5,188)
------- -------
Inventories, net....................................... $81,019 $81,037
======= =======
Current cost of inventories is determined using the first-in, first-out
(FIFO) method of inventory accounting, which approximates current cost.
26
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE H. INCOME TAXES
The income tax provision (benefit) includes Federal and state income taxes
currently payable or recoverable and the effect of temporary differences in
recognizing income and expenses for financial reporting and tax purposes.
Federal and state income tax provisions (benefits) are as follows:
SUCCESSOR PREDECESSOR
------------ ---------------------------
JULY 18 TO JANUARY 1 YEAR ENDED
DECEMBER 31, TO JULY 17, DECEMBER 31,
1996 1996 1995 1994
------------ ----------- ------ -------
Federal income taxes--current...... $ -- $(10,968) $4,783 $ 8,251
Federal income taxes--deferred..... 3,733 (9,169) (26) (2,723)
State income taxes--current........ -- -- 896 1,073
State income taxes--deferred....... 699 (1,718) (6) (441)
------ -------- ------ -------
$4,432 $(21,855) $5,647 $ 6,160
====== ======== ====== =======
The principal differences between the U.S. Federal income tax rate and the
Company's effective income tax rate are as follows:
SUCCESSOR PREDECESSOR
------------ ---------------------------
JULY 18 TO JANUARY 1 YEAR ENDED
DECEMBER 31, TO JULY 17, DECEMBER 31,
1996 1996 1995 1994
------------ ----------- ------ ------
Federal income tax rate on pretax
income.......................... 35.0 % (35.0)% 35.0 % 35.0 %
State income taxes, net of
federal benefit................. 7.8 (3.9) 6.1 4.8
Amortization of intangibles...... 33.7 1.4 15.0 6.3
Nondeductible travel and
entertainment................... 0.8 0.1 1.0 0.6
Foreign (earnings)losses......... (1.1) (0.7) 1.9 0.4
Other items--net................. -- -- -- (0.6)
---- ----- ------ ------
76.2 % (38.1)% 59.0 % 46.5 %
==== ===== ====== ======
27
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE H. INCOME TAXES (CONTINUED)
Significant components of the Company's deferred tax liabilities and assets
representing the difference between the financial reporting and income tax
basis of assets and liabilities on the statement of financial condition are as
follows at December 31:
SUCCESSOR PREDECESSOR
1996 1995
--------- -----------
(IN THOUSANDS)
Deferred tax liabilities:
Intangible assets................................... $(24,945) $(19,301)
Property, plant, and equipment...................... (22,900) (16,503)
Inventory........................................... (4,576) (4,062)
Prepaid organization costs.......................... -- (1,499)
Safe harbor lease................................... (460) (1,368)
Other............................................... (3,288) (3,487)
-------- --------
Total deferred tax liabilities.................... (56,169) (46,220)
Deferred tax assets:
Self insurance reserves............................. 5,488 5,494
Net operating loss carryforward..................... 5,363 --
Accounts receivable allowances...................... 2,317 1,064
Reserve for common stock investment................. 2,271 2,271
Bond premium........................................ 1,952 --
Tax credit carryforward............................. 1,813 --
Acquisition costs................................... 1,170 --
Pension accruals.................................... 816 1,371
Compensation expense relating to vesting of parent
company warrants................................... -- 972
Plant closing accrual............................... 227 742
Other............................................... 5,283 5,625
-------- --------
Total deferred tax assets......................... 26,700 17,539
Valuation allowance for deferred assets............. (2,271) (2,271)
-------- --------
Net deferred tax assets........................... 24,429 15,268
-------- --------
Net deferred tax liabilities.......................... $(31,740) $(30,952)
======== ========
Amount included in prepayments and other current
assets............................................... $ 13,023 $ 4,335
Noncurrent deferred income tax liabilities............ (44,763) (35,287)
-------- --------
Net deferred tax liabilities.......................... $(31,740) $(30,952)
======== ========
The Company must report taxable income amounts relating to the "safe harbor"
lease, totaling $1.2 million during 1997.
28
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE H. INCOME TAXES (CONTINUED)
At December 31, 1996 the Company has net operating loss carryforwards of
approximately $12.0 million for income tax purposes that expire in 2010. In
addition, at December 31, 1996, the Company has general business tax credit
carryforwards of $0.5 million that expire in years 1997 through 2006 and
minimum tax credits of $1.3 million that carry forward indefinitely.
Net cash disbursements (receipts) for Federal and state income taxes for the
years ended December 31, 1996, 1995 and 1994 were $(0.1) million, $0.8 million
and $11.5 million, respectively.
NOTE I. LEASE COMMITMENTS
Rent expense for 1996, 1995 and 1994 was $6.9 million, $6.7 million and $5.6
million, respectively.
Future minimum rental commitments on all noncancelable operating leases at
December 31, 1996 are:
BUILDINGS EQUIPMENT
--------- ---------
(IN THOUSANDS)
1997......................... $ 2,441 $1,661
1998......................... 2,221 1,108
1999......................... 1,355 565
2000......................... 922 476
2001......................... 922 274
Thereafter................... 3,776 218
------- ------
$11,637 $4,302
======= ======
NOTE J. LITIGATION AND OTHER CONTINGENCIES
The Company is a defendant in five lawsuits in which the plaintiffs seek
damages for personal injuries alleged to have been incurred in handling
"Jifflox" converter dollies previously manufactured by the Company. These
converter dollies are used to connect truck trailers in tandem. As a result of
a separate product line divestiture and the resultant closing of the
manufacturing facility where that product and the Jifflox converter dollies
were manufactured, Jifflox production was discontinued in the second quarter
of 1987. The plaintiffs are truck drivers or truck yard employees who allege
they have suffered personal injuries in moving a Jifflox dolly. The lawsuits
allege various theories of liability, including negligence, warranty, failure
to warn and strict liability. The lawsuits allege that Jifflox dollies are
defectively designed so as to preclude safe maneuvering in truck yards or that
they are too heavy or that they do not contain adequate warnings against
misuse. Unspecified damages are claimed. The Company denies liability in each
of the lawsuits.
The Company is a defendant in a number of lawsuits in which damages are
sought for property damage alleged to have been caused or contributed to by
aluminum windows manufactured by Premier Products, a former division of the
Company which was divested in 1989. At December 31, 1996, 46 such cases were
pending, all of which are venued in state courts in California. The cases
typically involved multi-family residences. The general contractor and all
subcontractors who were originally involved in the construction of these
residences, including the Company, are typically joined as defendants or
cross-defendants. The suits allege various theories of liability, including
negligence and contract under California's ten year construction defect
statute of limitations. The Company denies liability in each of the lawsuits.
The Company filed a Complaint for Declaratory Judgment in August 1995, in
the United States District Court for the Northern District of Texas against
The Chamberlain Group, Inc. The Complaint requests a declaratory judgment that
a line of residential garage door openers which the Company has recently
introduced does not infringe a particular patent owned by Chamberlain.
Chamberlain has filed a counterclaim against the Company alleging that such
openers do infringe its patent and that such infringement is willful. An
injunction and unspecified damages are requested.
29
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE J. LITIGATION AND OTHER CONTINGENCIES (CONTINUED)
In addition, the Company is a defendant in various other legal proceedings
arising in the ordinary course of business.
The Company is self-insured with respect to a portion of its potential
losses relating to product and general liability and workers' compensation
claims. The Company is responsible for the first $0.5 million of loss related
to each product or general liability claim and the first $0.3 million of loss
related to each worker's compensation claim. Third-party insurance, up to
$50.0 million, is maintained for losses in excess of these amounts. The
Company maintains reserves for anticipated self insurance losses.
Although the results of any litigation or claim cannot be predicted with
certainty, management believes that the outcome of pending litigation and
claims, when considered in conjunction with self insurance reserves
established therefore ($13.2 million at December 31, 1996 and $14.1 million at
December 31, 1995) will not have a material adverse effect on the Company's
results of operations or financial condition.
The Company has been determined by the United States Environmental
Protection Agency (the "EPA") to be a potentially responsible party concerning
a Superfund third-party waste disposal site near Syracuse, New York. This
determination was made because of alleged disposal at the site of certain
waste material generated by a manufacturing operation that formerly had been
operated by the Company near the site. In December 1989, the Company and two
other potentially responsible parties entered into an administrative order on
consent with the EPA to perform a Remedial Investigation and Feasibility Study
(RI/FS) at the site. The EPA subsequently issued an administrative order to
four additional companies and one individual requiring them to participate
with the three consenting companies in the implementation of the RI/FS. Two of
these additional companies have entered into an agreement with the three
consenting companies to so participate. In 1992, the participating companies
brought a lawsuit against 13 nonparticipating companies in the United States
District Court, Northern District of New York. The suit seeks to have each of
the defendants declared to be jointly and severally liable with the plaintiffs
for all past and future expenses. Two defendants have been voluntarily
dismissed by the plaintiffs, and two new defendants were subsequently added.
One defendant has filed for Chapter 11 bankruptcy protection. The RI/FS has
been submitted to the EPA, but has not yet been accepted by the EPA.
A preliminary engineering investigation prepared in 1987 for the State of
New York estimated that the cost of remediation efforts at this site could
range from $24 million to $29 million. However, this estimate, which is nine
years old, was based only on a preliminary investigation and made certain
assumptions about the nature and extent of the remediation required. Until the
EPA issues a Record of Decision for this site, it is not possible to know
what, if any, activities the EPA may attempt to require at the site or which
companies may be named as potentially responsible parties in connection with
any such requirements. Five parties have participated in the implementation of
the RI/FS but the ultimate number of companies that may be jointly and
severally liable could be between five and 18 and the portion of any liability
for which any one party may be responsible is not necessarily a pro rata
amount. How any liability is ultimately allocated cannot now be determined.
Due to all the foregoing uncertainties, it is not possible at this time to
determine what the Company's future liability (if any) in connection with this
site will be. However, with the limited information currently available, the
Company estimates that its liability at this site could be between $1.5
million and $6.0 million depending on the type and scope of the remediation,
the number of responsible parties and how the liability is shared. Any such
liability to the Company would probably be payable over three to five years.
For the foregoing reasons, the Company created a reserve in prior years for
environmental liabilities for the site of $1.5 million. This reserve may need
to be changed from time to time as more information becomes available, and
there can be no assurance that the existing reserves will be adequate for the
intended purpose. After consideration of this reserve, the above stated
estimated liability is not expected to have a material adverse effect on the
Company's results of operations, financial condition or liquidity.
30
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE J. LITIGATION AND OTHER CONTINGENCIES (CONTINUED)
Genie's manufacturing sites at Shenandoah, Virginia and Alliance, Ohio have
been contaminated as a result of the former operations at these facilities.
Pursuant to the terms of a 1990 asset purchase agreement between Genie and
North American Philips Corporation ("NAPC"), NAPC, a former owner of Genie,
agreed to investigate and remediate any pre-closing contamination at these
sites. NAPC also agreed to fully indemnify Genie for all environmental
liabilities arising out of such pre-closing contamination, including third
party lawsuits. The Company has not expended any funds, nor does it expect to
expend any, for investigation and remediation at these sites because of NAPC's
contractual assumptions of liability.
As of December 31, 1996 and December 31, 1995, accounts receivable from
companies in the construction industry totaled $82.2 million and $81.6
million, respectively. The Company extends credit and requires collateral, if
necessary, based on the evaluation of each customer's financial condition.
Credit losses are provided for in the financial statements.
NOTE K. RETIREMENT BENEFITS
The Company has established retirement plans for substantially all
employees. Certain salaried and hourly employees are covered by defined
benefit plans and others are covered by the defined contribution plan. The
benefits for certain defined benefit plans are based on years of service and
the employees' compensation during the last five years of employment. For
other defined benefit plans, benefits are based on age at retirement and years
of credited service. For the defined contribution plan, the Company makes
quarterly contributions based on each participant's compensated hours during a
quarter at a rate defined in each location's adoption agreement. Defined
contribution participants vest at 20% after completion of three years of
service and thereafter at 20% per year until fully vested in seven years.
Participants in the defined benefit plans are vested after five years of
service.
The Company's funding policy is to contribute annually the maximum amount
that can be deducted for federal income tax purposes. Contributions are
intended to provide not only for benefits attributed to service to date but
also for those expected to be earned in the future.
Net pension expense for defined contribution plans for the years ended
December 31, 1996, 1995 and 1994 totaled $2.0 million, $1.5 million and $1.0
million, respectively. A summary of the components of net periodic pension
expense for the defined benefit plans is as follows for the years ended
December 31:
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
Service cost--benefits earned during the period.. $ 1,505 $ 1,020 $ 1,045
Interest cost on projected benefit obligation.... 1,746 1,590 1,448
Actual gain on plan assets....................... (1,820) (2,292) (18)
Net amortization and deferral.................... 221 1,037 (1,469)
------- ------- -------
Net periodic pension expense for defined benefit
plans........................................... $ 1,652 $ 1,355 $ 1,006
======= ======= =======
Assumptions used in accounting for the defined benefit plans at December 31
were:
1996 1995 1994
---------- ---------- ----------
Weighted-average discount rate.......... 7.50% 7.25% 8.00%
Rate of increase in compensation levels. 6.00% 6.00% 6.00%
Expected long-term rate of return on
assets................................. 8.00%-8.50% 8.00%-8.50% 8.00%-8.50%
31
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE K. RETIREMENT BENEFITS (CONTINUD)
The following table sets forth the funded status and amounts recognized in
the consolidated statements of financial condition of the Company's defined
benefit pension plans, whose accumulated benefits exceed assets as of December
31:
1996 1995
-------- --------
(IN THOUSANDS)
Actuarial present value of accumulated plan benefits:
Accumulated benefit obligation:
Vested................................................ $(19,640) $(18,624)
Nonvested............................................. (1,736) (1,761)
-------- --------
$(21,376) $(20,385)
======== ========
Projected benefit obligation for service rendered to
date................................................... $(25,615) $(23,852)
Net assets available for benefits....................... 23,462 19,321
-------- --------
Projected benefit obligation in excess of plan assets... (2,153) (4,531)
Unrecognized net (gain) loss............................ (1,025) 853
Prior service cost not yet recognized in net periodic
pension expense........................................ 143 129
Unrecognized net asset at the beginning of the year..... -- (543)
Adjustment to recognize minimum liability............... (169) (198)
-------- --------
Net pension liability recognized in the consolidated
statements of financial condition...................... $ (3,204) $ (4,290)
======== ========
The Company's assumed weighted average discount rate at December 31, 1996
increased to 7.50% from 7.25% at December 31, 1995. The increase in the
assumed weighted average discount rate resulted in a decrease in the
calculated projected benefit obligation at December 31, 1996 of $0.8 million.
The majority of the plans' assets for 1996 and 1995 were invested in listed
stocks, bonds and an insurance contract, with the remainder invested in mutual
funds.
NOTE L. EMPLOYEE BENEFITS
The Company has an employee savings plan that provides deferred income tax
treatment for contributions in accordance with Internal Revenue Code Section
401(k). All full-time salaried and hourly employees (excluding those
represented by a bargaining agreement) who are at least 20 years of age and
have been employed with the Company at least six months are eligible to
participate in the plan. Under the Overhead Door plan, eligible participating
employees may elect to contribute up to 12% of their salaries to a trust for
investment in a fixed income fund or two equity funds. The Board of Directors
determines annually the Company's contribution, which vests at 20% per year.
The Company contributed an amount equal to 40% in each of 1996, 1995 and 1994
of the first 6% of compensation contributed by participants. Under the
separate Genie plan, which was terminated in December, 1995, eligible
employees could elect to contribute up to 15% of their salaries to a trust for
investment in various combinations of a fixed income fund and four equity
funds. The Company contributed 3% of the compensation of all participants and
up to an additional 50% of the first 6% of compensation contributed by the
participants. The Company's contribution expense for employees totaled $0.8
million, $1.0 million and $0.7 million in 1996, 1995 and 1994, respectively.
The expense includes Genie from the date of acquisition.
NOTE M. FAIR VALUES OF FINANCIAL STATEMENTS
At December 31, 1996 and 1995, fair values of the Company's investments in
cash and cash equivalents and notes receivable and in its obligations under
debt agreements approximate, in all material respects, the carrying amounts
reported in the consolidated statements of financial condition.
32
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE N. PLANT CLOSING
The Company recorded a $6.0 million liability during December 1994 for the
closing of a facility that manufactured residential and commercial operators.
Consolidation into other Genie facilities was completed in April 1995. This
charge for the plant closing consisted of employee severance for 65 salaried
and 229 hourly employees ($1.6 million), write-offs of discontinued products
and vendor cancellation charges ($1.6 million), write-down of building,
machinery and equipment to liquidation values ($2.5 million), and other
miscellaneous items. The cash portion of these expenses approximates $2.5
million and was incurred in 1995. The building was sold in 1996.
NOTE O. SEGMENTS OF BUSINESS
The Company operates in two principal business segments: Door Systems Group
and Vehicular and Other Products Group.
The Door Systems Group consists of upward acting sectional doors for
residential and commercial use, rolling steel doors and grilles for commercial
use, door operators and controls, and automatic pedestrian doors.
The Vehicular and Other Products Group consists of upward acting doors for
trucks and trailers, laminated panels, industrial traffic doors, loading dock
equipment, and wet/dry utility vacuums.
Operating profit is derived from net sales, less operating expenses,
excluding corporate and interest expenses. Identifiable assets for each
segment include both assets directly identified with those operations and an
allocable share of jointly used assets.
In 1996, residential door openers, commercial sectional doors and
residential doors accounted for approximately 28%, 11% and 17% respectively of
consolidated net sales.
While no customer of the Company accounts for 10% or more of consolidated
sales, the home center customers of Genie are extremely important to the
current sales and the future business strategies of Genie and the Door Systems
Group. Foreign operations and export sales are not material to the
consolidated financial statements.
33
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE O. SEGMENTS OF BUSINESS (CONTINUED)
Segment data is as follows:
SUCCESSOR PREDECESSOR
------------ ------------------------------------
JULY 18 TO JANUARY 1
DECEMBER 31, TO JULY 17, YEAR ENDED DECEMBER 31,
1996 1996 1995 1994
------------ ----------- ----------- -----------
(IN THOUSANDS)
Net Sales
Door Systems Group......... $245,742 $230,628 $448,183 $352,346
Vehicular and Other Prod-
ucts Group................ 44,664 50,993 102,844 84,789
-------- -------- ----------- -----------
Total.................... $290,406 $281,621 $551,027 $437,135
======== ======== =========== ===========
Operating Profit
Door Systems Group......... $ 20,788 $ 16,408 $ 44,536 $ 38,107
Vehicular and Other Prod-
ucts Group................ 1,742 1,699 6,140 8,904
-------- -------- ----------- -----------
22,530 18,107 50,676 47,011
Corporate Expense.......... (7,101) (42,557) (12,386) (14,171)
Interest Expense........... (9,619) (32,808) (28,713) (19,586)
-------- -------- ----------- -----------
Income (Loss) Before In-
come Taxes.............. $ 5,810 $(57,258) $ 9,577 $ 13,254
======== ======== =========== ===========
Depreciation and Amortiza-
tion Expense
Door Systems Group......... $ 9,118 $ 8,013 $ 14,469 $ 9,529
Vehicular and Other Prod-
ucts Group................ 1,853 1,123 2,054 1,780
Corporate Office........... 918 714 924 1,135
-------- -------- ----------- -----------
Total.................... $ 11,889 $ 9,850 $ 17,447 $ 12,444
======== ======== =========== ===========
Capital Expenditures
Door Systems Group......... $ 2,167 $ 1,960 $ 5,186 $ 3,336
Vehicular and Other Prod-
ucts Group................ 199 141 913 565
Corporate Office........... 1,047 150 207 170
-------- -------- ----------- -----------
Total.................... $ 3,413 $ 2,251 $ 6,306 $ 4,071
======== ======== =========== ===========
SUCCESSOR PREDECESSOR
------------ ------------------------
DECEMBER 31, DECEMBER 31,
1996 1995 1994
------------ ----------- -----------
(IN THOUSANDS)
Identifiable Assets
Door Systems Group......... $622,444 $409,580 $404,751
Vehicular and Other Prod-
ucts Group................ 125,397 42,550 43,351
Corporate Office........... 98,419 23,300 34,652
-------- ----------- -----------
Total.................... $846,260 $475,430 $482,754
======== =========== ===========
34
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE P. SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
PREDECESSOR SUCCESSOR
------------------------------- -------------------------
THREE MONTHS
THREE MONTHS ENDED JULY 1 TO JULY 18 TO ENDED
MARCH 31 JUNE 30 JULY 17 SEPTEMBER 30 DECEMBER 31
--------- --------- --------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1996
- ----
Net Sales............... $ 126,242 $ 139,758 $ 15,621 $127,696 $162,710
Gross Profit............ 24,437 29,518 1,040 25,564 34,034
Net Income (Loss)....... $ (943) $ 1,419 $(35,879)(a) $ 416 $ 962
========= ========= ======== ======== ========
Net Income (Loss) Per
Common Share (b)....... $ (943) $ 1,419 $(35,879) $ 416 $ 962
========= ========= ======== ======== ========
THREE MONTHS ENDED
--------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
--------- --------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1995
- ----
Net Sales............... $ 126,174 $132,025 $137,872 $154,956
Gross Profit............ 24,211 25,260 27,749 33,271
Net Income (Loss)....... $ (958) $ (395) $ 1,190 $ 4,093
========= ======== ======== ========
Net Income (Loss) Per
Common Share (b)....... $ (958) $ (395) $ 1,190 $ 4,093
========= ======== ======== ========
- --------
(a) Includes a $53.9 million charge, partially offset by a tax benefit of
approximately $21.0 million for compensation and interest expense related
to the payment for the cancellation of stock options and warrants prior to
the Sanwa Acquisition (see Note B).
(b) Quarterly income (loss) per common share amounts are computed on the basis
of the weighted average number of common shares outstanding for each
quarter.
NOTE Q. EQUITY
During 1994, the Parent vested certain warrants to purchase common stock of
the Parent held by certain current and former officers of the Company
resulting in compensation expense of approximately $4.1 million. This expense
has been included in the Company's statements of operations with an offset to
additional capital and accrued compensation.
35
OVERHEAD DOOR CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
COL. A COL. B COL. C COL. D COL. E
------ ---------- --------------------------------- ------------ --------------
ADDITIONS
---------------------------------
BALANCE AT CHARGED TO OTHER
BEGINNING CHARGED TO COSTS ACCOUNTS-- DEDUCTIONS-- BALANCE AT END
DESCRIPTION OF PERIOD AND EXPENSES DESCRIBE DESCRIBE OF PERIOD
----------- ---------- ---------------- ---------------- ------------ --------------
(IN THOUSANDS)
July 18, 1996 to Decem-
ber 31, 1996
Allowance for doubtful
trade receivables.... $8,035 $ 635 (1) $ -- $1,188(4) $7,482
Allowance for valua-
tion of long-term re-
ceivables............ 328 -- -- -- 328
------ ----- ------ ------ ------
$8,363 $ 635 $ -- $1,188 $7,810
====== ===== ====== ====== ======
Purchase Accounting
Allowance for doubtful
trade receivables.... $5,485 $ -- $2,550 (2) $ -- $8,035
Allowance for valua-
tion of long-term re-
ceivables............ 328 -- -- -- 328
------ ----- ------ ------ ------
$5,813 $ -- $2,550 $ -- $8,363
====== ===== ====== ====== ======
Period Ended July 17,
1996
Allowance for doubtful
trade receivables.... $5,824 $ 316 (1) $ -- $ 655(4) $5,485
Allowance for valua-
tion of long-term re-
ceivables............ 424 -- -- 96(4) 328
------ ----- ------ ------ ------
$6,248 $ 316 $ -- $ 751 $5,813
====== ===== ====== ====== ======
Year Ended December 31,
1995
Allowance for doubtful
trade receivables.... $5,047 $ 735 (1) $ 254 (3) $ 212(4) $5,824
Allowance for valua-
tion of long-term re-
ceivables............ 678 -- (254)(3) -- 424
------ ----- ------ ------ ------
$5,725 $ 735 $ 0 $ 212 $6,248
====== ===== ====== ====== ======
Year Ended December 31,
1994
Allowance for doubtful
trade receivables.... $3,065 $ 916 (1) $2,160 (3) $1,094(4) $5,047
Allowance for valua-
tion of long-term re-
ceivables............ 1,555 (200)(1) (330)(3) 347(4) 678
------ ----- ------ ------ ------
$4,620 $ 716 $1,830 $1,441 $5,725
====== ===== ====== ====== ======
- --------
(1) Amounts charged to selling, general and administrative expense.
(2) In connection with the Sanwa Acquisition, the Company increased its
allowance for doubtful trade receivables through a purchase accounting
adjustment.
(3) Account reclassifications and Genie acquisition in 1994.
(4) Amounts charged off less recoveries.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
36
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company's directors and the executive officers are as follows (ages as
of December 31, 1996):
NAME AGE TITLE
---- --- -----
Brian J. Bolton.................. 58 Chief Executive Officer and Chairman of
the Board
Fred S. Grunewald................ 46 President, Chief Operating Officer
James F. Brum.................... 53 Executive Vice President--Finance and
Chief Financial Officer
C. Michael Budd.................. 50 Senior Vice President--Sales
John Venema...................... 44 Senior Vice President--Marketing and
Market Development
John C. Macaulay................. 53 Vice President and Controller
Keith W. Brockman................ 52 Vice President and Treasurer
Vice President--General Counsel and
William A. Schochet.............. 43 Secretary
Robert P. Thompson............... 47 President--Horton Automatics
Daniel C. Rengert................ 52 President--Vehicular Products
Toshitaka Takayama............... 57 Director
Kiyoshi Hashimoto................ 59 Director
Toshio Shimomura................. 55 Director
Brian J. Bolton joined the Company as Executive Vice President, Chief
Operating Officer and a director in 1987. He became Chief Executive Officer in
1990, and became Chairman of the Board in 1994. Prior to joining the Company,
he had since 1979 been President and Chief Operating Officer of Aircondex,
Inc., a manufacturer serving the refrigeration and air conditioning
industries. Mr. Bolton had previously served with the Company from 1973 to
1979, holding several positions including, finally, that of Senior Vice
President of ten operating divisions and had responsibility for corporate
purchasing and marketing. Mr. Bolton is a Director, and the First Vice
President of Door Access Systems Manufacturers Association, is a Director of
the American Fitness Association, and is a member of the Policy Advisory Board
of Harvard University's Joint Center for Housing Studies.
Fred S. Grunewald joined the Company as President and Chief Operating
Officer in January 1996. Prior to joining the Company, Mr. Grunewald had
served as President of Rubbermaid Inc. Home Products Division from April, 1994
to May, 1995. Before that he was Vice President, Marketing, Engineering and
Quality at Black & Decker Household Products. He had served in several
capacities at Black & Decker becoming a General Manager in June, 1991 and a
Vice President from February, 1992 to February, 1994.
James F. Brum joined the Company as Executive Vice President--Finance and
Chief Financial Officer in December, 1994. Prior to joining the Company, Mr.
Brum was Executive Vice President--Finance and Chief Financial Officer of
AAF--McQuay, Inc., a privately owned international manufacturer of commercial
heating and air conditioning products and commercial and residential air
filtration, from May, 1994 to November, 1994. From October, 1987 to May, 1994,
Mr. Brum held the same position with Snyder General Corporation, the
predecessor company to AAF--McQuay, Inc.
C. Michael Budd was appointed Senior Vice President, Sales for the Company
in March, 1995. Mr. Budd had joined Genie in October, 1992 as Vice President
Sales, and became Senior Vice President Sales and Marketing of Genie in
January, 1995. Previously he had been President and Chief Executive Officer of
Mel Pearson & Co., a Manufacturer Representative Agency serving the consumer
goods industry from 1979.
John Venema joined the Company as Senior Vice President--Marketing and
Market Development in March, 1996. Prior to joining the Company, Mr. Venema
had been with Black & Decker, serving in several capacities between February,
1992 and March, 1996, including, finally, that of Vice President Housewares
for the Eastern Hemisphere Group.
John C. Macaulay joined the Company as Vice President and Controller in
October, 1995. Previously, Mr. Macaulay had been Vice President, Controller
and Assistant Treasurer of Pillowtex, Inc. since April, 1994. In
37
1992 he was promoted to Vice President and Controller of INDRESCO Inc., a
manufacturer of mining and industrial equipment formerly a part of Dresser
Industries, Inc. From 1984 until that time he served as Director of Operations
Analysis of Dresser Industries, Inc.
Keith W. Brockman joined the Company as a Controller in 1978. He became the
Company's Chief Accounting Officer in 1981, and a Vice President in 1982. In
1995, he was elected Treasurer. He is a certified public accountant.
William A. Schochet joined the Company as Counsel in 1984 and became Vice
President--General Counsel and Secretary in 1990. Mr. Schochet had previously
been counsel to Diamond Shamrock Corporation.
Daniel C. Rengert joined the Company in 1966. He became Vice President and
General Manager of the TODCO division in 1981 and its President in 1992. He
has held many positions during his tenure with the Company, including Field
Sales Manager, General Sales Manager and General Manager, all at the TODCO
division.
Robert P. Thompson joined the Company in August, 1995 as the President of
Horton Automatics. Mr. Thompson had previously been Vice President Marketing
and Sales for Stanley Access Technologies Division of The Stanley Works since
March, 1991.
Toshitaka Takayama became a director of the Company in July, 1996. Mr.
Takayama has been President of Sanwa Shutter Corporation, Tokyo, Japan, since
1981, and in addition has been President of Sanwa USA Inc. since its formation
in 1996.
Kiyoshi Hashimoto became a director of the Company in July, 1996. Mr.
Hashimoto has served Sanwa Shutter Corporation, Tokyo, Japan, in several
capacities since 1986, beginning as Director, then as Managing Director in
1992 and as Senior Managing Director since 1994. Mr. Hashimoto has also been
Secretary of Sanwa USA Inc. since its formation in 1996.
Toshio Shimomura became a director of the Company in July, 1996. Mr.
Shimomura has served Sanwa Shutter Corporation, Tokyo, Japan, as Director
since 1990 and as Managing Director since 1996. Mr. Shimomura has also been
Treasurer of Sanwa USA Inc. since its formation in 1996.
38
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by the Chief
Executive Officer and the four other most highly paid executives for services
rendered in 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
LONG- TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ ---------------------- ----------
SECURITIES
RESTRICTED UNDERLYING
STOCK OPTIONS LTIP ALL OTHER
NAME AND PRINCIPAL OTHER AWARDS /SARS PAYOUTS COMPENSATION
POSITION YEAR SALARY BONUS COMPENSATION ($) (#) ($) ($)
- ------------------ ---- -------- -------- ------------ ---------- ----------- ---------- ------------
Brian J. Bolton 1996 $887,170 $ -- $ -- $-- -- $ -- $ 3,600
Chief Executive 1995 510,498 -- -- -- -- -- 3,600
Officer 1994 497,556 250,000 -- -- 200,000 1,285,358(1) 3,600
Fred S. Grunewald 1996 $325,508 $ -- $120,679(2) $-- 400,000 $ -- $ 3,600
President and 1995 -- -- -- -- -- -- --
Chief Operating 1994 -- -- -- -- -- -- --
Officer
Howard R. Simmons 1996 $206,250 $ -- $ -- $-- -- $ -- $72,350(3)
Executive Vice 1995 270,411 -- -- -- -- -- 3,600
President-- 1994 259,248 105,000 -- -- 125,000 535,550(1) 3,600
Operations
James F. Brum 1996 $214,900 $ -- $ -- $-- -- $ -- $ 3,600
Executive Vice 1995 205,835 -- -- -- -- -- 2,520
President-- 1994 15,256 50,000 -- -- 100,000 -- --
Finance and Chief
Financial Officer
C. Michael Budd 1996 $195,833 $ -- $ 32,702(4) $-- -- $ -- $ 3,600
Senior Vice 1995 177,500 -- 94,326(4) -- -- -- 4,296
President--Sales 1994 45,375(5) 60,000(5) -- -- 125,000 -- 907
Robert P. Thompson 1996 $152,500 $ 60,000 $ 77,338(6) $-- -- $ -- $ 2,760
President-- 1995 62,500 -- -- -- 50,000 -- --
Horton Automatics 1994 -- -- -- -- -- -- --
- --------
(1) Attributable to the vesting of certain warrants to purchase shares of the
Parent's Common Stock held by Messrs. Bolton and Simmons.
(2) Includes moving expenses of $115,316.
(3) Mr. Simmons retired September 30, 1996. Amount includes $68,750 for his
salary continued through December 31, 1996 on a consulting basis.
(4) Includes moving expenses of $19,970 in 1996 and $66,160 in 1995.
(5) Mr. Budd's 1994 compensation is for the period from August 18, 1994, the
date of the Genie Acquisition, to December 31, 1994. Mr. Budd's 1994
compensation by Genie prior to August 18, 1994 is not included.
(6) Including moving expenses of $69,468.
Mr. Bolton's salary is established by his employment contract--See
Employment Contracts, below. The Executive Compensation Committee or Board of
Directors do not annually establish the salary of the Chief Executive Officer.
39
Aggregate Option Exercise and Fiscal Year-End Option Values Table. Shown
below is information with respect to the payment for cancellation of
outstanding options held by the named executive officers in connection with
the purchase of the Parent's stock by Sanwa.
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996
-------------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ------------- -------------- ----------- -------------
Brian J. Bolton......... 329,381 $4,713,344 -- -- -- --
Fred S. Grunewald....... 400,000 $4,152,680 -- -- -- --
Howard R. Simmons....... 235,471 $2,444,587 -- -- -- --
James F. Brum........... 100,000 $1,038,170 -- -- -- --
C. Michael Budd......... 216,860 $3,049,638 -- -- -- --
Robert P. Thompson...... 50,000 $ 519,085 -- -- -- --
Long-Term Incentive Plan ("LTIP") Awards. Mr. Grunewald was granted options
to purchase 400,000 shares in January, 1996 in connection with his employment
agreement.
DIRECTOR COMPENSATION
The Company does not pay directors fees to its directors.
COMPENSATION PLANS
Money Accumulation Plan. Pursuant to the terms of this Plan, all full time
salaried, hourly nonunion, and certain union employees of the Company who are
at least 20 years old and have been employed with the Company for at least six
months are eligible to participate. Participants are entitled to direct that
up to 12% of their salary or wages, subject to limits imposed by law, be
withheld and invested on their behalf by the Plan's Trustee in one or more of
four investment options. The Company has established the Plan under Section
401(k) of the Internal Revenue Code of 1986, as amended. Income taxes on
amounts contributed to the Plan by employees or by the Company are deferred
until withdrawal. For 1996, the Company contributed 40 cents for each one
dollar contributed to the Plan by each participant, up to the first six
percent of the employee's pay. The Company's contributions for future Plan
years are determined by the Company's Board of Directors. The amounts
contributed by the Company are subject to certain vesting requirements based
on the participating employee's length of service computed from the employee's
date of employment. Employees with up to one year of service with the Company
are 20% vested; more than one year of service, 40%; more than two years of
service, 60%; and more than three years of service, 80%. Employees with more
than four years of service are fully vested as to the amounts contributed by
the Company.
Salaried Employees Retirement Plan. Under the Retirement Plan, salaried
employees, after meeting eligibility and vesting requirements, are entitled to
receive a pension at normal retirement date (age 65). The Plan requires a
minimum of 5 years of service before any benefits vest to the participant. The
amount of this pension is determined by multiplying the retiree's years of
benefit service with the Company (limited to 30) times 1% times the retiree's
annual average compensation, plus 0.65% of the annual average compensation in
excess of his social security covered compensation times the number of years
of benefit service. The annual average compensation is the highest total
compensation received during any five consecutive years during the last ten
years preceding retirement, divided by five. The annual amounts payable at
salaried retirement for employees with various years of service and final
average salary may be gauged by the following table.
40
FINAL AVERAGE SALARY RETIREMENT BENEFITS BY YEARS OF SERVICE
-------------------- ---------------------------------------------------
10 15 20 25 30 35
------- ------- ------- ------- ------- -------
$125,000................. $18,720 $28,080 $37,440 $46,801 $56,161 $56,161
150,000................. 22,845 34,268 45,690 57,113 68,536 68,536
175,000................. 26,970 40,455 53,940 67,426 80,911 80,911
200,000................. 31,095 46,643 62,190 77,738 93,286 93,286
225,000................. 35,220 52,830 70,440 88,051 105,661 105,661
250,000................. 39,345 59,018 78,690 98,363 118,036 118,036
300,000................. 47,595 71,393 95,190 118,988 142,786* 142,786*
400,000................. 64,095 96,143 128,190* 160,238* 192,286* 192,286*
450,000................. 72,345 108,518 144,690* 180,863* 217,036* 217,036*
500,000................. 80,595 120,893 161,190* 201,488* 241,786* 241,786*
550,000................. 88,845 133,268* 177,690* 222,113* 266,536* 266,536*
600,000................. 97,095 145,643* 194,190* 242,738* 291,286* 291,286*
- --------
* Qualified plans benefits and compensation are currently capped for 1997 by
regulations of the Internal Revenue Service at $125,000 and $160,000,
respectively, subject to an inflation adjustment factor. When the cap is
raised the benefits payable under the Retirement Plan will increase to the
level of the new cap, or the amount otherwise payable under the Retirement
Plan, whichever amount is lower.
Mr. Bolton has credit for 16 years of service; Mr. Simmons has credit for 6
years of service. Currently, Messrs. Grunewald, Brum, Budd and Thompson are
not vested under this Plan.
Supplemental Executive Retirement Plan. On February 14, 1985, the Company's
Board of Directors adopted the Supplemental Executive Retirement Plan (the
"Supplemental Plan"). The Supplemental Plan is intended to supplement the
benefits payable under the Company's qualified plan described above.
The Supplemental Plan is a non-qualified, partially-funded retirement plan,
participants in which are selected by the Board of Directors. The maximum
annual benefit will be equal to 55% of the participant's final average annual
salary and bonus (highest three of the last five calendar years), less
payments under the Company's qualified plan (the Retirement Plan described
above) and the estimated primary Social Security benefit, proportionally
reduced for fewer than 21 years (or 15 years in the case of the Chief
Executive Officer) of credited service. In no event may the annual benefit
payable to a single participant under the Retirement Plan and the Supplemental
Plan exceed $250,000.
The following officer of the Company is the participant in the Supplemental
Plan, and has the years of credited service under the Supplemental Plan shown
following his name: Mr. Bolton--16. Previous participants in the Plan have
retired from the Company.
41
The following table shows the estimated annual benefits payable upon normal
retirement for participants in the specified remuneration and years of service
classifications under the qualified plan and the Supplemental Plan.
Qualified and Non-Qualified Plans Combined
(Excluding Chief Executive Officer)
FINAL RETIREMENT BENEFITS BY YEARS OF SERVICE
AVERAGE -----------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- ------------ -------- -------- -------- -------- -------- --------
$125,000................ $ 33,750 $ 50,625 $ 67,500 $ 68,750 $ 68,750 $ 68,750
150,000................ 40,500 60,750 81,000 82,500 82,500 82,500
175,000................ 47,250 70,875 94,500 96,250 96,250 96,250
200,000................ 54,000 81,000 108,000 110,000 110,000 110,000
225,000................ 60,750 91,125 121,500 123,750 123,750 123,750
250,000................ 67,500 101,250 135,000 137,500 137,500 137,500
300,000................ 81,000 121,500 162,000 165,000 165,000 165,000
400,000................ 108,000 162,000 216,000 220,000 220,000 220,000
450,000................ 121,500 182,250 243,000 247,500 247,500 247,500
500,000................ 135,000 202,500 250,000 250,000 250,000 250,000
550,000................ 148,500 222,750 250,000 250,000 250,000 250,000
600,000................ 162,000 243,000 250,000 250,000 250,000 250,000
Qualified and Non-Qualified Plans Combined
(Chief Executive Officer)
FINAL RETIREMENT BENEFITS BY YEARS OF SERVICE
AVERAGE -----------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- ------------ -------- -------- -------- -------- -------- --------
$125,000................ $ 46,250 $ 68,750 $ 68,750 $ 68,750 $ 68,750 $ 68,750
150,000................ 55,500 82,500 82,500 82,500 82,500 82,500
175,000................ 64,750 96,250 96,250 96,250 96,250 96,250
200,000................ 74,000 110,000 110,000 110,000 110,000 110,000
225,000................ 83,250 123,750 123,750 123,750 123,750 123,750
250,000................ 92,500 137,500 137,500 137,500 137,500 137,500
300,000................ 111,000 165,000 165,000 165,000 165,000 165,000
400,000................ 148,000 220,000 220,000 220,000 220,000 220,000
450,000................ 166,500 247,500 247,500 247,500 247,500 247,500
500,000................ 185,000 250,000 250,000 250,000 250,000 250,000
550,000................ 203,500 250,000 250,000 250,000 250,000 250,000
600,000................ 222,000 250,000 250,000 250,000 250,000 250,000
The rate at which a participant's benefits accrue for each year of service is
2.7% per year for all participants except the Chief Executive Officer. The
benefits for the Chief Executive Officer accrue at the rate of 3.7% per year.
The differences in the rates of benefit accrual between a Chief Executive
Officer and other participants results in vesting occurring in the periods of
time illustrated in the following table.
PERCENTAGE OF FINAL SALARY
YEARS VESTED
OF -------------------------------
SERVICE CEO OTHERS
------- --------------- ---------------
5..................................... 18.5% 13.5%
10..................................... 37.0% 27.0%
15..................................... 55.0% (maximum) 40.5%
20..................................... 55.0% (maximum) 54.0%
21..................................... 55.0% (maximum) 55.0% (maximum)
42
Employment Contracts. Messrs. Bolton, Grunewald, Budd, Venema, Thompson,
Macaulay and Schochet have entered into employment contracts with the Company.
These employment contracts, unless earlier terminated, will remain in effect
until the following respective dates: July 17, 2001, December 31, 1997, July
17, 1999, March 26, 1998, August 31, 1998, October 31, 1997 and July 17, 1998.
Messrs. Bolton and Grunewald are entitled pursuant to their employment
contracts to an annual salary increase based on the percentage increase in the
consumer price index for the immediately preceding calendar year, as published
by the U.S. Department of Labor. The salaries of Messrs. Budd, Venema,
Thompson, Macaulay and Schochet are set in accordance with the Company's usual
salary review procedures. All of the employment contracts provide that the
employee is also eligible to participate in the Company's bonus plan. In
addition, all of the employment contracts provide that the employee is
entitled to receive certain fringe benefits in accordance with the Company's
standard practices for executives, including pension and insurance programs,
automobile allowances and club memberships. If Mr. Bolton is terminated
without cause or dies or becomes incapacitated, the Company is obligated to
pay his remaining contractual salary for the longer of the remainder of the
term or 36 months, in a lump sum, to continue coverage under the Company's
non-cash benefit plans and, to credit him with additional years of service for
purposes of benefit plans. If Mr. Grunewald is terminated without cause, the
Company is obligated to pay his remaining contractual salary over the term of
the contract, but in no event less than twelve months. If any of the other
employees are terminated without cause, the Company is obligated to pay their
remaining contractual salary over the term of the contract and, in the case of
Messrs. Thompson and Macaulay their pro rata contractual salary for an
additional three months if the contract is terminated during the final three
months of its term. In each case, the Company is also required to continue
coverage under the Company's non-cash benefit plans for a period of 12 months
after termination. All the above described employment contracts contain
certain covenants regarding confidentiality and noncompetition after
termination of employment.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of the outstanding Common Stock of the Company, the only outstanding
voting stock of the Company, is owned beneficially and of record by the
Parent. All outstanding stock of the Parent is owned beneficially and of
record by Sanwa USA.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1996, the Company paid Sanwa USA approximately $439,000 for general
corporate consulting and financial advising services.
The Company and Sanwa USA are parties to a Loan Agreement dated as of
October 31, 1996 whereby Sanwa USA has loaned the Company $122.0 million which
is being repaid through September 30, 2000 in quarterly installments with
interest at 7 1/2%.
It is the policy of the Company that all transactions between the Company
and any of its affiliates, which relate to the operation of the business, will
be on terms no less favorable to the Company than could have reasonably been
obtained in arm's-length transactions with independent third parties.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following consolidated financial statements of the Company are stated on
pages 18 through 35.
Consolidated Statements of Operations for the period from July 18, 1996
to December 31, 1996 (Successor), the period from January 1, 1996 to
July 17, 1996 (Predecessor), the year ended December 31, 1995
(Predecessor), and the year ended December 31, 1994 (Predecessor).
Consolidated Statements of Financial Condition at December 31, 1996
(Successor) and December 31, 1995 (Predecessor)
43
Consolidated Statements of Shareholder's Equity for the period from
July 18, 1996 to December 31, 1996 (Successor), the period from January
1, 1996 to July 17, 1996 (Predecessor), the year ended December 31,
1995 (Predecessor), and the year ended December 31, 1994 (Predecessor).
Consolidated Statements of Cash Flows for the period from July 18, 1996
to December 31, 1996 (Successor), the period from January 1, 1996 to
July 17, 1996 (Predecessor), the year ended December 31, 1995
(Predecessor), and the year ended December 31, 1994 (Predecessor).
Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedule
The following consolidated financial statement schedule of the Company is
included herein at the page indicated in parentheses:
Schedule II--Valuation and Qualifying Accounts (page 36)
All other schedules for which provision is made in the applicable accounting
regulation of the Securities Exchange Act of 1934 are not required under the
related instructions or are inapplicable, and therefore have been omitted.
(b) Reports on Form 8-K
None
(c) Exhibits
The exhibits as shown in "Index of Exhibits" (pages 46-47) are filed as a
part of this Report.
44
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 DALLAS, TEXAS
ON THE 13TH DAY OF MARCH, 1997.
Overhead Door Corporation
/s/ Brian J. Bolton
By __________________________________
Brian J. Bolton
Chairman and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT, IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Brian J. Bolton Chairman and Chief Executive March 13, 1997
____________________________________ Officer
Brian J. Bolton
/s/ James F. Brum Executive Vice President-- March 25, 1997
____________________________________ Finance and Chief Financial
James F. Brum Officer (Principal Financial
Officer)
/s/ John C. Macaulay Vice President and March 25, 1997
____________________________________ Controller (Principal
John C. Macaulay Accounting Officer)
/s/ Toshitaka Takayama Director March 15, 1997
____________________________________
Toshitaka Takayama
/s/ Kiyoshi Hashimoto Director March 15, 1997
____________________________________
Kiyoshi Hashimoto
/s/ Toshio Shimomura - Director March 15, 1997
____________________________________
Toshio Shimomura
45
INDEX OF EXHIBITS
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
3.1 --Restated Articles of Incorporation of the Company.
Incorporated by reference to Exhibit 3.1 of Amendment No. 6 to
Registration Statement No. 33-51716.
3.2 --Restated By-Laws of the Company. Incorporated by reference to
Exhibit 3.2 of Amendment No. 6 to Registration Statement No.
33-51716.
10.1 --Form of Indenture, dated as of February 1, 1993, between the
Company and United States Trust Company of New York, as
trustee. Incorporated by reference to Exhibit 4.1 of Amendment
No. 6 to Registration Statement No. 33-51716.
10.2 --Stock Purchase Agreement between Overhead Door Corporation
and Brynwood Partners II L.P. dated June 28, 1994.
Incorporated by reference to Exhibit 10.2 of the Company's
Form 10-Q for the quarter ended September 30, 1994.
10.3 --Overhead Door Corporation Supplemental Benefits Plan
(restated as of August 18, 1994). Incorporated by reference to
Exhibit 10.3 of the Company's Form 10-Q for the quarter ended
September 30, 1994.
10.4 --Asset Purchase Agreement dated August 17, 1990, between North
American Philips Corporation and GMI Holdings, Inc.
Incorporated by reference to Exhibit 10.24 of Amended No. 6 to
the Parent's Registration Statement No. 33-75058.
10.5 --Employment Agreement with Robert P. Thompson. Incorporated by
reference to Exhibit 10.1 of the Company's Form 10-Q for the
quarter ended June 30,1995.
10.6 --Employment Agreement with John C. Macaulay. Incorporated by
reference to Exhibit 10.1 of the Company's Form 10-Q for the
quarter ended September 30, 1995.
10.7 --Employment Agreement with Fred S. Grunewald. Incorporated by
reference to Exhibit 10.24 of the Company's Form 10-K for the
year ended December 31, 1995.
10.8 --Overhead Door Corporation Money Accumulation Plan (as Revised
and Restated Effective January 1, 1989), including Amendment
No. 1 dated December 8, 1995. Incorporated by reference to
Exhibit 10.25 of the Company's Form 10-K for the year ended
December 31, 1995.
10.9 --Overhead Door Corporation Salaried Employees Pension Plan (as
Revised and Restated Effective January 1, 1989), including
Amendment No. 1 dated December 8, 1995. Incorporated by
reference to Exhibit 10.26 of the Company's Form 10-K for the
year ended December 31, 1995.
10.10 --Overhead Door Corporation Retirement Plan For Hourly
Employees (as Revised and Restated Effective January 1, 1989),
including Amendment No. 1 dated December 8, 1995. Incorporated
by reference to Exhibit 10.27 of the Company's Form 10-K for
the year ended December 31, 1995.
10.11 --Employment Agreement with John Venema. Incorporated by
reference to Exhibit 10.1 of the Company's Form 10-Q for the
quarter ended March 31, 1996.
10.12 --Credit Agreement dated as of October 31, 1996 among Overhead
Door Corporation and The Banks Parties Hereto and The Sakura
Bank, Limited as Agent Bank. Incorporated by reference to
Exhibit 10.1 of the Company's Form 10-Q for the quarter ended
September 30, 1996.
10.13 --Swingline Credit Agreement dated as of October 31, 1996
between Overhead Door Corporation and The Sakura Bank,
Limited. Incorporated by reference to Exhibit 10.2 of the
Company's Form 10-Q for the quarter ended September 30, 1996.
46
EXHIBIT
NO. DESCRIPTION PAGE
- ------- ----------- ----
10.14 --Amended and Restated Employment Agreement with Brian J. Bolton.
10.15 --Employment Agreement with C. Michael Budd.
10.16 --Employment Agreement with William A. Schochet.
10.17 --Loan Agreement dated as of October 31, 1996, between Sanwa USA Inc. and the Company.
21 --Subsidiaries of Registrant.
27 --Financial Data Schedule.
47