1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[Mark One]
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From ________ To ________
Commission File Number 33-11634
TRANS-RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2729497
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 West 57th Street, New York, New York 10019
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 888-3044
-------------
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO
--- ---
At November 10, 1995, there were outstanding 3,000 shares of common stock, par
value of $.01 per share, all which were owned by TPR Investment Associates,
Inc., a privately-held Delaware corporation.
2
Form 10-Q
TRANS-RESOURCES, INC.
Form 10-Q Index
September 30, 1995
Page
PART I Number
------ ------
Item 1. - Financial Statements (Unaudited):
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Stockholder's Equity . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . 6
Notes to Unaudited Consolidated Financial Statements . . . . . . . . . . . 7
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PART II
-------
Item 1. - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 6. - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 15
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2
3
Form 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Month Period Nine Month Period
Ended September 30, Ended September 30,
------------------- -------------------
1995 1994 1995 1994
------- ------- --------- ---------
(000's)
REVENUES . . . . . . . . . . . . . . . . . . . . . . $87,871 $76,324 $287,602 $251,319
COST AND EXPENSES:
Cost of goods sold . . . . . . . . . . . . . . . 74,466 60,153 241,439 199,092
General and administrative . . . . . . . . . . . 10,749 9,435 30,962 28,967
------- ------- --------- ---------
OPERATING INCOME . . . . . . . . . . . . . . . . . . 2,656 6,736 15,201 23,260
Interest expense . . . . . . . . . . . . . . . . (8,853) (7,266) (25,599) (21,634)
Interest and other income - net . . . . . . . . 2,188 (783) 6,211 14,468
------- ------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES . . . . . . . . . . (4,009) (1,313) (4,187) 16,094
INCOME TAX PROVISION (BENEFIT):
Current . . . . . . . . . . . . . . . . . . . . (935) 1,216 1,200 6,162
Deferred . . . . . . . . . . . . . . . . . . . (63) (212) (125) 6,583
------- ------- --------- ---------
(998) 1,004 1,075 12,745
------- ------- --------- ---------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . $(3,011) $(2,317) $ (5,262) $ 3,349
======= ======= ========= =========
See notes to unaudited consolidated financial statements.
3
4
Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1995 1994
------------- ------------
(Unaudited)
(000's)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 22,030 $ 15,571
Accounts receivable . . . . . . . . . . . . . . . . . . . . 71,858 66,106
Inventories:
Finished products . . . . . . . . . . . . . . . . . . . 39,639 33,747
Raw materials . . . . . . . . . . . . . . . . . . . . . 18,001 17,566
Other current assets . . . . . . . . . . . . . . . . . . . . 18,766 168,200
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 21,948 18,852
-------- --------
Total Current Assets . . . . . . . . . . . . . . . . . . 192,242 320,042
PROPERTY, PLANT AND EQUIPMENT - NET . . . . . . . . . . . . . . . 221,373 202,085
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 30,599 28,827
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $444,214 $550,954
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt . . . . . . . . . . . . $ 57,114 $124,465
Short-term debt . . . . . . . . . . . . . . . . . . . . . . 30,098 33,521
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 40,490 57,077
Accrued expenses and other current liabilities . . . . . . . 29,870 38,685
-------- --------
Total Current Liabilities . . . . . . . . . . . . . . . 157,572 253,748
-------- --------
LONG-TERM DEBT-NET:
Senior indebtedness, notes payable and other obligations . . 123,503 102,059
Senior subordinated indebtedness - net . . . . . . . . . . . 114,057 140,385
Junior subordinated debentures - net . . . . . . . . . . . . 8,178 7,981
-------- --------
Long-Term Debt - net . . . . . . . . . . . . . . . . . . 245,738 250,425
-------- --------
OTHER LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . 26,313 26,231
-------- --------
STOCKHOLDER'S EQUITY:
Preferred stock, $1.00 par value, 100,000 shares
authorized, issued and outstanding . . . . . . . . . . . 7,960 7,960
Common stock, $.01 par value, 3,000 shares authorized,
issued and outstanding . . . . . . . . . . . . . . . . . - -
Additional paid-in capital . . . . . . . . . . . . . . . . . 505 505
Retained earnings . . . . . . . . . . . . . . . . . . . . . 6,675 13,432
Cumulative translation adjustment . . . . . . . . . . . . . (591) (360)
Unrealized gains (losses) on marketable securities . . . . . 42 (987)
-------- --------
Total Stockholder's Equity . . . . . . . . . . . . . . . 14,591 20,550
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $444,214 $550,954
======== ========
See notes to unaudited consolidated financial statements.
4
5
Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
Nine Month Period Ended September 30, 1995
(Unaudited)
ADDITIONAL CUMULATIVE UNREALIZED
PREFERRED COMMON PAID-IN RETAINED TRANSLATION GAINS(LOSSES)
STOCK STOCK CAPITAL EARNINGS ADJUSTMENT ON SECURITIES TOTAL
--------- ------ ---------- -------- ----------- ------------- ------
(000'S)
BALANCE, January 1, 1995 . . . . . $7,960 $ - $505 $13,432 $(360) $(987) $20,550
Activity for the nine month
period ended September 30, 1995:
Net loss . . . . . . . . . . . . . (5,262) (5,262)
Dividends paid . . . . . . . . . . (1,495) (1,495)
Net change during period . . . . . (231) 1,029 798
------ ---- ---- ------- ----- ----- -------
BALANCE, September 30, 1995 . . . . $7,960 $ - $505 $ 6,675 $(591) $ 42 $14,591
====== ==== ==== ======= ===== ===== =======
See notes to unaudited consolidated financial statements.
5
6
Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Month Period
Ended September 30,
-------------------------
1995 1994
-------- ---------
(000's)
OPERATING ACTIVITIES AND WORKING CAPITAL
MANAGEMENT:
Operations:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . $ (5,262) $ 3,349
Items not requiring (providing) cash:
Depreciation and amortization . . . . . . . . . . . . . . 16,224 16,391
Deferred taxes and other - net . . . . . . . . . . . . . . 1,009 5,448
-------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 11,971 25,188
Working capital management:
Accounts receivable and other current assets . . . . . . . . . 19,809 (19,125)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . (2,440) 11,633
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . (3,075) (106)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . (18,646) 11,870
Accrued expenses and other current liabilities . . . . . . . . (13,925) 4,849
-------- ---------
Cash provided (used) by operations and working
capital management . . . . . . . . . . . . . . . . . . (6,306) 34,309
-------- ---------
INVESTMENT ACTIVITIES:
Additions to property, plant and equipment . . . . . . . . . . . . (31,661) (68,675)
Purchases of marketable securities and other short-term investments (4,371) (120,935)
Sales of marketable securities and other short-term investments . 132,406 29,625
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,916) 2,572
-------- ---------
Cash provided (used) by investment activities . . . . . . 92,458 (157,413)
FINANCING ACTIVITIES:
Decrease in short-term debt . . . . . . . . . . . . . . . . . . . (3,823) (1,014)
Increase in long-term debt . . . . . . . . . . . . . . . . . . . . 42,892 165,716
Repurchases, payments and current maturities of long-term debt . . (117,267) (36,438)
Distributions to stockholder . . . . . . . . . . . . . . . . . . . (1,495) (225)
-------- ---------
Cash provided (used) by financing activities . . . . . . . (79,693) 128,039
-------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . 6,459 4,935
CASH AND CASH EQUIVALENTS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . 15,571 25,742
-------- ---------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,030 $ 30,677
======== =========
See notes to unaudited consolidated financial statements.
6
7
Form 10-Q
TRANS-RESOURCES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation and Other Matters
The consolidated financial statements of Trans-Resources, Inc. (the
"Company") include the Company and its direct and indirect subsidiaries, after
elimination of intercompany accounts and transactions. Effective March 31, 1995,
the Company acquired the assets of Na-Churs Plant Food Company ("Na-Churs"), a
company headquartered in Ohio and engaged in the specialty plant nutrient
business. The Company's principal subsidiaries are Cedar Chemical Corporation
("Cedar"), and Cedar's two wholly-owned subsidiaries, New Mexico Potash
Corporation and Vicksburg Chemical Company ("Vicksburg"); Na-Churs; Eddy Potash,
Inc.; and Haifa Chemicals Ltd., an Israeli corporation ("HCL"), and HCL's
wholly-owned subsidiary, Haifa Chemicals South Ltd. The Company is a
wholly-owned subsidiary of TPR Investment Associates, Inc., a privately-held
corporation. Certain prior period amounts have been reclassified to conform to
the manner of presentation in the current period.
In the opinion of management, the unaudited consolidated financial
statements for the nine month periods ended September 30, 1995 and 1994,
respectively, include all adjustments, which comprise only normal recurring
accruals, necessary for a fair presentation of the results for such periods. The
results of operations for the nine month period ended September 30, 1995 are not
necessarily indicative of results that may be expected for any other interim
period or the full fiscal year. It is suggested that these unaudited
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 (the "Form 10-K") which has
been filed with the Securities and Exchange Commission.
7
8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of revenues and the
percentage dollar change of those items as compared to the prior period, certain
items appearing in the unaudited consolidated financial statements of the
Company.
Percentage Period Percentage Period
of Revenues to of Revenues to
----------- Period ----------- Period
Three Month Changes Nine Month Changes
Period Ended ------- Period Ended -------
September 30, Increase September 30, Increase
------------- -------------
1995 1994 (Decrease) 1995 1994 (Decrease)
---- ---- ---------- ---- ---- ----------
Revenues . . . . . . . . . . . . . . . . 100.0% 100.0% 15.1% 100.0% 100.0% 14.4%
Costs and expenses:
Cost of goods sold . . . . . . . . . 84.7 78.8 23.8 84.0 79.2 21.3
General and administrative expense . 12.3 12.4 13.9 10.7 11.5 6.9
----- ----- ----- -----
Operating income . . . . . . . . . . . . 3.0 8.8 (60.6) 5.3 9.3 (34.7)
Interest expense . . . . . . . . . . (10.1) (9.5) 21.8 (8.9) (8.6) 18.3
Interest and other income - net . . 2.5 (1.0) 379.4 2.1 5.7 (57.1)
----- ----- ----- -----
Income (loss) before income taxes . . . . (4.6) (1.7) (205.3) (1.5) 6.4 (126.0)
Income tax provision (benefit) . . . . . (1.2) 1.3 (199.4) .3 5.1 (91.6)
----- ----- ----- -----
Net income (loss) . . . . . . . . . . . . (3.4)% (3.0)% (30.0)% (1.8)% 1.3% (257.1)%
----- ----- ----- -----
8
9
Form 10-Q
RESULTS OF OPERATIONS
Three month period ended September 30, 1995 compared with the three month period
ended September 30, 1994:
Revenues increased by 15.1% to $87,871,000 in 1995 from $76,324,000 in 1994,
an increase of $11,547,000, resulting from increased sales of specialty plant
nutrients and industrial chemicals ($11,500,000) (including $2,400,000 relating
to the acquisition of Na-Churs) and organic chemicals ($2,400,000), which were
partially offset by lower sales of potash ($2,400,000).
Cost of goods sold as a percentage of revenues increased during the period
(84.7% in 1995 compared with 78.8% in 1994), primarily due to certain raw
material and utility cost increases, which were partially offset by increases in
the selling prices of the Company's products, and, to a lesser extent, the
customary costs associated with the initial run-in periods of the Company's
newly-constructed manufacturing facilities. As a result of the foregoing, gross
profit was $13,405,000 in 1995 compared with $16,171,000 in 1994 (15.3% of
revenues in 1995 compared with 21.2% of revenues in 1994), a decrease of
$2,766,000. General and administrative expense increased to $10,749,000 in 1995
from $9,435,000 in 1994 (12.3% of revenues in 1995 compared with 12.4% of
revenues in 1994).
As a result of the matters described above, the Company's operating income
decreased by $4,080,000 to $2,656,000 in 1995 as compared with $6,736,000 in
1994.
Interest expense increased by $1,587,000 ($8,853,000 in 1995 compared with
$7,266,000 in 1994) primarily as a result of interest on the long-term debt that
financed the construction of the K3 Plant (as defined below). Interest and other
income - net increased in 1995 by $2,971,000, principally as the result of the
net adjustments relating to the marking-to-market of forward exchange contracts
which do not qualify as hedges.
As a result of the above factors, loss before income taxes increased by
$2,696,000 in 1995. The Company's provisions for income taxes are impacted by
the mix between domestic and foreign earnings and vary from the U.S. Federal
statutory rate principally due to the impact of foreign operations and certain
losses for which there is no current tax benefit. In addition, during the 1995
period HCL recorded a $1,100,000 tax refund related to prior years.
9
10
Nine month period ended September 30, 1995 compared with the nine month period
ended September 30, 1994:
Revenues increased by 14.4% to $287,602,000 in 1995 from $251,319,000 in
1994, an increase of $36,283,000, resulting from increased sales of specialty
plant nutrients and industrial chemicals ($38,300,000) (including $9,600,000
relating to the acquisition of Na-Churs) and organic chemicals ($2,700,000),
which were partially offset by lower potash sales ($4,700,000).
Cost of goods sold as a percentage of revenues increased during the period
(84.0% in 1995 compared with 79.2% in 1994), primarily due to certain raw
material and utility cost increases, which were partially offset by increases in
the selling prices of the Company's products, and, to a lesser extent, the
customary costs associated with the initial run-in periods of the Company's
newly-constructed manufacturing facilities. As a result of the foregoing, gross
profit was $46,163,000 in 1995 compared with $52,227,000 in 1994 (16.0% of
revenues in 1995 compared with 20.8% of revenues in 1994), a decrease of
$6,064,000. General and administrative expense increased to $30,962,000 in 1995
from $28,967,000 in 1994 but declined as a percentage of revenues (10.7% of
revenues in 1995 compared with 11.5% of revenues in 1994). Pursuant to an
agreement during the 1995 period, the Company recorded a $750,000 reimbursement
of certain general and administrative expenses incurred in prior years on behalf
of an entity in which the Company has an investment.
As a result of the matters described above, the Company's operating income
decreased by $8,059,000 to $15,201,000 in 1995 as compared with $23,260,000 in
1994.
Interest expense increased by $3,965,000 ($25,599,000 in 1995 compared with
$21,634,000 in 1994) primarily as a result of interest on the long-term debt
that financed the construction of the K3 Plant. Interest and other income - net
decreased in 1995 by $8,257,000, principally as the result of the 1994 period
including a gain of approximately $18,100,000 relating to the February 1994 fire
at HCL as compared to a $1,700,000 gain in the 1995 period relating to such
fire, with the remainder of the decrease in the 1995 period being partially
offset primarily by (i) the net adjustments relating to the marking-to-market of
forward exchange contracts which do not qualify as hedges and (ii) interest
income related to a prior year's tax refund.
As a result of the above factors, income before income taxes decreased by
$20,281,000 in 1995. The Company's provisions for income taxes are impacted by
the mix between domestic and foreign earnings and vary from the U.S. Federal
statutory rate principally due to the impact of foreign operations and certain
10
11
losses for which there is no current tax benefit. In addition, during the 1995
period HCL recorded a $1,100,000 tax refund related to prior years.
CAPITAL RESOURCES AND LIQUIDITY
The Company's consolidated working capital at September 30, 1995 and
December 31, 1994 was $34,670,000 and $66,294,000, respectively.
Operations for the nine month periods ended September 30, 1995 and 1994,
after adding back non-cash items, provided cash of $12,000,000 and $25,200,000,
respectively. During such periods other changes in working capital provided
(used) cash of ($18,300,000) and $9,100,000, respectively, resulting in net cash
being provided (used) by operating activities and working capital management of
($6,300,000) and $34,300,000, respectively.
Investment activities during the nine month periods ended September 30, 1995
and 1994 provided (used) cash of $92,500,000 and ($157,400,000), respectively.
Such amounts include additions to property, plant and equipment in 1995 and 1994
of $31,700,000 and $68,700,000, respectively, purchases of marketable securities
and short-term investments of $4,400,000 and $120,900,000, respectively, and
sales of marketable securities and other short-term investments of $132,400,000
and $29,600,000, respectively. The 1995 and 1994 property additions principally
relate to (i) the construction of the K3 plant, (ii) the replacement of the HCL
production unit damaged in the fire in February, 1994 and (iii) the construction
of a potassium carbonate manufacturing facility (see "Capital Expenditures"
below). The 1994 purchases and the 1995 sales of marketable securities and other
short-term investments principally relate to the purchase in 1994 and the
liquidation in 1995 of the pledged certificates of deposit ("CD's") described
below.
Financing activities during the nine month periods ended September 30, 1995
and 1994 provided (used) cash of ($79,700,000) and $128,000,000 respectively,
(principally relating to the increase of certain long-term debt in 1994 and the
prepayment of such debt in 1995, which is described below).
On June 30, 1994, the Company entered into a Loan Agreement with a bank and
borrowed $40,000,000 (repayable quarterly over a four year period) and utilized
a portion of the proceeds to prepay approximately $19,000,000 then owed to such
bank. Pursuant to the Loan Agreement, the Company also borrowed an additional
$100,000,000, repayable in January, 1996. Under certain specified circumstances
prior to such date, the Company could have converted such loan into a term loan
maturing five years from the date of conversion. The Company pledged CD's with
an aggregate principal amount of $100,000,000 as collateral for such loan (such
CD's are included in "other current assets" in the accompanying December 31,
1994
11
12
Consolidated Balance Sheet). On January 5, 1995, the Company liquidated the
pledged CD's and prepaid the $100,000,000 loan.
As of September 30, 1995, the Company had outstanding long-term debt
(excluding current maturities) of $245,738,000. The Company's primary source of
liquidity is cash flow generated from operations and certain revolving loan
commitments. See Note G of Notes to Consolidated Financial Statements in the
Form 10-K regarding additional information concerning the Company's long-term
debt obligations.
Approximately 90% of HCL's sales are made outside of Israel in various
currencies, of which approximately 34% are in U.S. dollars, with the remainder
principally in Western European currencies. In order to mitigate the impact of
currency fluctuations against the U.S. dollar, the Company has a policy of
hedging a significant portion of its foreign sales denominated in Western
European currencies by entering into forward exchange contracts. A portion of
these contracts qualify as hedges pursuant to Statement of Financial Accounting
Standards No. 52 and accordingly, unrealized gains and losses arising therefrom
are deferred and accounted for in the subsequent year as part of sales.
Unrealized gains and losses for the remainder of the forward exchange contracts
are recognized in income currently. If the Company had not followed such a
policy of entering into forward exchange contracts in order to hedge its foreign
sales, and instead recognized income based on the then prevailing foreign
currency rates, the Company's income before income taxes for the nine month
periods ended September 30, 1995 and 1994 would have increased by approximately
$10,300,000 in each period.
The principal purpose of the Company's hedging program (which is for other
than trading purposes) is to mitigate the impact of fluctuations against the
U.S. dollar, as well as to protect against significant adverse changes in
exchange rates. Accordingly, the gains and losses recognized relating to the
hedging program in any particular period and the impact on revenues had the
Company not had such a program are not necessarily indicative of its
effectiveness.
CAPITAL EXPENDITURES
During 1995 (excluding the K3 Plant and the reconstruction of the HCL
production unit damaged by fire in February 1994) the Company invested
approximately $16,000,000 in capital expenditures. During 1993 the Company
commenced construction of a new facility in Israel ("the K3 Plant"), with
initial capacity to produce approximately 100,000 metric tons of potassium
nitrate annually. The Company has recently completed the construction of the K3
Plant and the reconstruction of the damaged HCL production unit.
12
13
The total costs incurred in connection with the construction of the K3 plant
was approximately $100,000,000. Since the Company has received approximately
$34,000,000 in Israeli Government grants related to the K3 plant, the Company's
accompanying consolidated balance sheet includes the K3 plant at a cost, net of
grants, of approximately $66,000,000.
The Company currently anticipates that capital expenditures for the year
ending December 31, 1995 (excluding the K3 Plant and the reconstruction of the
damaged production unit) will aggregate approximately $19,000,000. The Company's
capital expenditures will be used primarily for increasing certain production
capacity and efficiency, product diversification, safety and for ecological
matters. The Company expects to be able to finance its capital expenditures from
internally generated funds, borrowings from traditional lending sources and,
where applicable, Israeli Government grants and entitlements.
INFLATION
Inasmuch as only approximately $45,000,000 of HCL's annual operating costs
are denominated in New Israeli Shekels ("NIS"), HCL is exposed to inflation in
Israel to a limited extent. The combination of price increases coupled with
devaluation of the NIS have in the past generally enabled HCL to avoid a
material adverse impact from inflation in Israel. However, HCL's earnings
increase or decrease to the extent that the rate of future NIS devaluation
differs from the rate of Israeli inflation. For the years ended December 31,
1993 and 1994, the inflation rate of the NIS as compared to the U.S. Dollar
exceeded the devaluation rate in Israel by 3.2% and 13.4%, respectively.
ENVIRONMENTAL MATTERS
See Item 1 - "Business - Environmental Matters" and Note N of Notes to
Consolidated Financial Statements included in the Company's Form 10-K for
information regarding environmental matters relating to the Company's various
facilities.
13
14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously disclosed (most recently in the Form 10-K), on or about
December 20, 1991, Peter N. Zachary together with fifteen other persons,
claiming to be shareholders of Sylvan Learning Centers, Inc., The Enstar Group,
Inc., Kinder-Care, Inc. and Kinder- Care Learning Centers, Inc., filed a
complaint in the Circuit Court for Montgomery County, Alabama against certain
former indirect stockholders and directors of the Company, and against TPR
Investment Associates, Inc., ("Associates") (which is a former parent
corporation of the Company), Trans-Pacific (the former name of the Company) and
various other named persons and entities and certain unnamed entities. During
October 1995 the Company entered into a settlement agreement with plaintiffs
providing for dismissal of the action and releases to the Company, Associates
and Trans-Pacific and payment by the Company of a nominal amount to plaintiffs.
On or shortly after October 24, 1995 numerous law suits were filed in two
Louisiana State Courts and in the United States District Court for the Eastern
District of Louisiana in connection with the release of what is alleged to have
been nitrogen tetroxide from a railcar owned by and located at Gaylord Chemical
Company's ("Gaylord") facility in Bogalusa, Louisiana on October 23 and 24,
1995. Vicksburg had sold the nitrogen tetroxide to Gaylord. Virtually all of the
suits are class actions and allege generally that the classes of defendants
within the vicinity of the Gaylord facility have received injuries due to the
release and will require future medical monitoring, have fear of contracting
serious diseases, desire reimbursement for medical costs and, in several
instances, seek reimbursement for evacuation expenses, including response costs
under the Comprehensive Environmental Response Compensation and Liability Act of
1980, as amended ("CERCLA"). Vicksburg has been named as a defendant in at least
two of the suits: Jimmie Burns v. Illinois Central Railroad Company,
Vicksburg Chemical Company and Union Tank Car, Inc., in the United States
District Court, Eastern District of Louisiana; and In Re: Nitrogen Tetroxide
(N204) Leak at Bogalusa, in the 22nd Judicial District Court, Parish of
Washington, State of Louisiana. Vicksburg did not do anything to contribute to
or bear any responsibility for the incident and intends to deny and vigorously
defend against the allegations of the complaints with respect to itself.
14
15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 10.1 - Credit Agreement, dated as of November 3, 1995, among Cedar
Chemical Corporation, the Lenders listed on the signature pages thereof and
The Chase Manhattan Bank (National Association), as Administrative Agent
(exhibits and schedules omitted).
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which this report
is filed.
15
16
Form 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANS-RESOURCES, INC.
-----------------------------
(Registrant)
Date: November 10, 1995 Lester W. Youner
-----------------------------
Vice President, Treasurer and
Chief Financial Officer
16
17
TRANS-RESOURCES, INC.
INDEX TO EXHIBITS
Exhibit Description Page No.
------- ----------- --------
10.1 Credit Agreement, dated as of November 3, 1995, among Cedar Chemical
Corporation, the Lenders listed on the signature pages thereof and The Chase
Manhattan Bank (National Association), as Administrative Agent (exhibits and
schedules omitted).
27 Financial Data Schedule.
17