1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________to__________________
Commission File Number 1-7477
CRSS INC.
(Exact Name of registrant as specified in its Charter)
DELAWARE 74-1677382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1177 WEST LOOP SOUTH, SUITE 800, HOUSTON, TEXAS 77027
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (713) 552-2000
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at February 7, 1995
- --------------------- -------------------------------
$1 Par Value 12,786,912
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CRSS INC. AND SUBSIDIARIES
FORM 10-Q
DECEMBER 31, 1994
INDEX
PAGE NUMBER
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CRSS Inc.
Consolidated Balance Sheet-
December 31, 1994 and June 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statement of Operations-Three and
Six Months Ended December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statement of Cash Flows-Three and Six
Months Ended December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Equity Investment Partnerships of CRSS Inc.
Combined Balance Sheet-
December 31, 1994 and June 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Combined Statement of Operations-Three and
Six Months Ended December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Combined Statement of Cash Flows-Three and Six
Months Ended December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CRSS INC.
CONSOLIDATED BALANCE SHEET
December 31, June 30,
(DOLLARS IN THOUSANDS) 1994 1994
------------ --------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 16,201 $ 2,229
Accounts receivable 5,326 4,664
Deferred income taxes 1,959 1,959
Other current assets 7,953 5,546
Net current assets from discontinued operations 9,797 36,621
-------- --------
Total current assets 41,236 51,019
Property, plant and equipment, net 76,426 78,043
Net noncurrent assets from discontinued operations 7,326 7,326
Other assets:
Equity investment in partnerships 60,231 61,538
Other noncurrent assets 12,800 12,746
-------- --------
73,031 74,284
-------- --------
$198,019 $210,672
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 972 $ 946
Current portion of long-term obligations 3,153 3,096
Other current liabilities 5,943 9,510
-------- --------
Total current liabilities 10,068 13,552
Non-recourse project financing 59,715 60,937
Other long-term obligations 7,956 7,845
Deferred income taxes 41,558 40,452
Shareholders' equity:
Preferred stock, no par value, 2,000,000 shares authorized
but unissued - -
Common stock, $l.00 par value, 50,000,000 shares
authorized; issued December 31, 1994 - 16,609,000 shares
and June 30, 1994 - 16,492,000 16,609 16,492
Additional paid-in capital 70,234 69,253
Retained earnings 21,779 29,184
-------- --------
108,622 114,929
Treasury stock, at cost, 3,841,000 shares at
December 31, 1994 and 3,574,000 shares at June 30, 1994 (29,840) (26,946)
Other (60) (97)
-------- --------
78,722 87,886
-------- --------
$198,019 $210,672
======== ========
See Notes to Unaudited Consolidated and Combined Financial Statements
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CRSS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
December 31, December 31,
---------------------- --------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1994 1993 1994 1993
-------- -------- ------- -------
Revenues:
Electricity and steam sales $ 6,485 $ 6,274 $12,786 $12,767
Operations and administrative service fees 867 1,221 1,676 2,116
Other revenues 25 26 52 51
-------- -------- ------- -------
7,377 7,521 14,514 14,934
Costs and expenses:
Plant operations 5,651 5,739 11,174 10,507
General and administrative 2,495 2,598 4,978 4,173
Marketing and project development 632 847 998 1,282
-------- -------- ------- -------
8,778 9,184 17,150 15,962
Equity income in partnerships 5,371 4,632 9,455 7,586
-------- -------- ------- -------
Operating income from continuing operations 3,970 2,969 6,819 6,558
Other income (expense):
Non-operating income 216 7 481 190
Interest expense (1,760) (1,881) (3,557) (3,770)
Minority interest in earnings - (279) - (468)
-------- -------- ------- -------
(1,544) (2,153) (3,076) (4,048)
-------- -------- ------- -------
Earnings from continuing operations before income tax 2,426 816 3,743 2,510
Income tax expense 1,068 351 1,647 1,080
-------- -------- ------- -------
Earnings from continuing operations 1,358 465 2,096 1,430
Earnings (loss) from discontinued operations, net of
income tax benefit of $3,277 for the six months ended
December 31, 1994 and expense of $658 and $806
for the three and six months ended December 31, 1993,
respectively - 719 (8,723) 784
-------- -------- ------- -------
Net earnings (loss) $ 1,358 $ 1,184 $(6,627) $ 2,214
======== ======== ======= =======
Primary and fully diluted earnings (loss) per common share:
Earnings from continuing operations $ 0.10 $ 0.04 $ 0.16 $ 0.11
Net earnings (loss) $ 0.10 $ 0.09 $ (0.50) $ 0.17
======== ======== ======= =======
Weighted average common shares outstanding 13,094 13,013 13,142 13,010
======== ======== ======= =======
Dividends per common share $ 0.03 $ 0.03 $ 0.03 $ 0.03
======== ======== ======= =======
See Notes to Unaudited Consolidated and Combined Financial Statements.
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CRSS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six Months Ended
December 31,
--------------------------
(DOLLARS IN THOUSANDS) 1994 1993
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations $ 2,167 $ 1,430
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Deferred income taxes 1,149 2,451
Depreciation and amortization 1,667 1,646
Equity income in partnerships (9,487) (7,586)
Increase in receivables (662) (351)
Increase in other current assets (2,394) (1,752)
Decrease in accounts payable and other current
liabilities (3,261) (452)
Distributions from partnerships 10,762 3,244
Payments to discontinued operations (23,954) (3,722)
Other operating activities 87 99
--------- --------
Net cash used in operating activities (23,926) (4,993)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in investments in affiliates - (30,000)
Payments from discontinued operations - 338
Proceeds from sale of discontinued operations 41,983 -
--------- --------
Net cash provided by (used in) investing activities 41,983 (29,662)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term obligations (1,145) (1,046)
Proceeds from short-term borrowings - 9,500
Proceeds from exercise of stock options 725 111
Purchase of treasury shares (2,885) -
Contributions from minority interest - 5,700
Dividends paid on common stock (780) (764)
--------- --------
Net cash provided by (used in) financing activities (4,085) 13,501
--------- --------
Net increase (decrease) in cash and cash equivalents 13,972 (21,154)
Cash and cash equivalents at beginning of period 2,229 28,220
--------- --------
Cash and cash equivalents at end of period $ 16,201 $ 7,066
========= ========
See Notes to Unaudited Consolidated and Combined Financial Statements.
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EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED BALANCE SHEET
December 31, June 30,
(DOLLARS IN THOUSANDS) 1994 1994
------------ ---------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 35,171 $ 51,304
Accounts receivable 16,774 18,272
Accounts receivable from affiliates 2,672 2,735
Prepaid expenses and other assets 2,650 2,874
--------- ---------
Total current assets 57,267 75,185
Restricted cash 57,823 47,392
Property, plant and equipment, net 483,006 488,525
Power purchase agreement, net 57,122 60,030
Other noncurrent assets 978 1,014
--------- ---------
$ 656,196 $ 672,146
========= =========
Liabilities and Partners' Capital
Current liabilities:
Accounts payable $ 1,040 $ 72
Accounts and notes payable to affiliates 5,639 5,699
Current portion of long-term obligations 28,455 27,626
Operations and maintenance reserves 3,686 4,508
Other current liabilities 12,261 15,202
--------- ---------
Total current liabilities 51,081 53,107
Non-recourse project financing 444,052 460,989
Other long-term obligations 40,218 34,661
Partners' capital 120,845 123,389
--------- ---------
$ 656,196 $ 672,146
========= =========
Supplemental information:
Partners' capital $ 120,845 $ 123,389
Attributable to other partners (60,614) (61,851)
--------- ---------
CRSS' equity investment in partnerships $ 60,231 $ 61,538
========= =========
See Notes to Unaudited Consolidated and Combined Financial Statements
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EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
December 31, December 31,
----------------------- ----------------------
(DOLLARS IN THOUSANDS) 1994 1993 1994 1993
-------- -------- -------- --------
Revenues:
Electricity and steam sales $ 45,087 $ 45,158 $ 89,290 $ 89,928
Costs and expenses:
Plant operations 22,255 21,400 45,758 47,451
General and administrative 1,409 2,977 2,711 4,105
-------- -------- -------- --------
23,664 24,377 48,469 51,556
-------- -------- -------- --------
Operating income 21,423 20,781 40,821 38,372
Interest expense (10,653) (11,359) (21,806) (23,136)
-------- -------- -------- --------
Net earnings $ 10,770 $ 9,422 $ 19,015 $ 15,236
======== ======== ======== ========
Supplemental information:
Net earnings $ 10,770 $ 9,422 $ 19,015 $ 15,236
Attributable to other partners (5,399) (4,790) (9,560) (7,650)
-------- -------- -------- --------
CRSS' equity income in partnerships $ 5,371 $ 4,632 $ 9,455 $ 7,586
======== ======== ======== ========
See Notes to Unaudited Consolidated and Combined Financial Statements.
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EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six Months Ended
December 31,
------------------------
(DOLLARS IN THOUSANDS) 1994 1993
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 19,015 $ 15,236
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 14,796 13,926
Loss on replacement of equipment - 189
Decrease in receivables 1,561 7,450
(Increase) decrease in prepaid expenses and other assets 225 (1,324)
Increase (decrease) in accounts payable and other current
liabilities (1,056) 4,438
-------- --------
Net cash provided by operating activities 34,541 39,915
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (6,332) (8,156)
Increase in restricted cash (10,431) (6,103)
-------- --------
Net cash used in investing activities (16,763) (14,259)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on non-recourse project financing (16,107) (37,232)
Proceeds from non-recourse project financing - 3,220
Increase in other long-term obligations 3,757 5,773
Contributions from partners - 30,000
Distributions to partners (21,561) (6,487)
-------- --------
Net cash used in financing activities (33,911) (4,726)
-------- --------
Net increase (decrease) in cash and cash equivalents (16,133) 20,930
Cash and cash equivalents at beginning of period 51,304 11,144
-------- --------
Cash and cash equivalents at end of period $ 35,171 $ 32,074
======== ========
See Notes to Unaudited Consolidated and Combined Financial Statements.
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CRSS INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The Consolidated Financial Statements include the accounts of CRSS Inc.
("CRSS") and its wholly-owned subsidiary, CRSS Capital, Inc. ("CRSS Capital"),
collectively referred to herein as the "Company".
The Combined Financial Statements include the accounts of the four less than
majority-owned power and cogeneration limited partnerships in which CRSS
Capital has equity interests ranging from 47.5 percent to 50 percent: Hopewell
Cogeneration Limited Partnership ("Hopewell"), Naheola Cogeneration Limited
Partnership ("Naheola"), Appomattox Cogeneration Limited Partnership
("Appomattox"), and Westwood Energy Properties Limited Partnership
("Westwood"), collectively referred to herein as the "Partnerships".
In the opinion of management, the accompanying unaudited Consolidated and
Combined Financial Statements contain all adjustments necessary to present
fairly the respective financial positions of the Company and the Partnerships
as of December 31, 1994, the results of operations for the three and six months
ended December 31, 1994 and 1993 and cash flows for the six months ended
December 31, 1994 and 1993. All adjustments are of a normal recurring nature.
These unaudited Consolidated and Combined Financial Statements should be read
in conjunction with the audited Consolidated and Combined Financial Statements
included in the June 30, 1994 Annual Report to Shareholders. The results of
operations for the three and six months ended December 31, 1994 are not
necessarily indicative of the results to be expected for the full fiscal year.
Certain amounts in the prior period Consolidated Financial Statements have been
reclassified to conform to the current year presentation.
NOTE 2. DISCONTINUED OPERATIONS
As of June 30, 1994, the design, engineering and construction management
segment was reflected as discontinued operations in conjunction with the
Company's plan to dispose of this business.
On July 21, 1994, the Company sold CRSS Architects, Inc. to Hellmuth, Obata &
Kassabaum, Inc. ("HOK"). Total consideration amounted to $6.8 million,
consisting of $4.8 million in cash at closing and a $2.0 million sharing of
future net cash distributions from the Peace Shield project, of which $0.6
million was received during the six months ended December 31, 1994.
On July 29, 1994, the Company sold its engineering and construction management
operations, consisting primarily of CRSS Constructors, Inc. and certain assets
and liabilities of CRS Sirrine Engineers, Inc. to Jacobs Engineering Group,
Inc. ("Jacobs"). Total consideration paid by Jacobs was $33.5 million in
cash, representing $14.0 million over the aggregate book value at June 30, 1994
of the business acquired. An additional purchase price adjustment for an
increase in the aggregate book value of the businesses acquired between June
30, 1994 and the closing date of July 29, 1994 has not yet been finalized,
however an additional $3.4 million was received from Jacobs during the three
months ended December 31, 1994.
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Net assets from discontinued operations at December 31, 1994 consists primarily
of the assets and liabilities of the retained power plant contracts (primarily
receivables and payables), cash of $7.9 million held by CRSS's captive
insurance company net of claims reserves of $6.9 million, NaTec's investment in
the White River Nahcolite Minerals joint venture, deferred taxes, legal claims
reserves and accrued discontinuance costs.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
Electricity sales, steam sales and plant operations expense included in the
Company's Consolidated Statement of Operations consist of the revenues and
costs associated with the three Viking cogeneration facilities. These projects
are wholly-owned by CRSS Capital. Equity income in partnerships includes CRSS
Capital's interest in cogeneration facilities that are less than majority-owned
and are accounted for using the equity method. These partnerships include the
Hopewell, Naheola, Westwood, and Appomattox facilities. Operations and
administrative service fees arise from management services provided by CRSS
Capital to each project in which it maintains an ownership interest. Costs
associated with providing these services are included in general and
administrative expense. In addition to the components discussed previously,
costs and expenses included general and administrative overhead costs as well
as expenses related to the Company's project development efforts.
CONTINUING OPERATIONS
Consolidated earnings from continuing operations for the three months ended
December 31, 1994 were $1.4 million, or $0.10 per share, compared to $0.5
million, or $0.04 per share, for the three months ended December 31, 1993. For
the six months ended December 31,1994, consolidated earnings from continuing
operations were $2.1 million, or $0.16 per share, compared to $1.4 million, or
$0.11 per share for the six months ended December 31,1993.
Total revenues for the three months ended December 31, 1994 of $7.4 million
were consistent with the corresponding period of the prior year. For the six
months ended December 31, 1994, total revenues were $14.5 million compared to
$14.9 million for the six months ended December 31, 1993. The decrease was
primarily attributable to lower operations and maintenance services provided by
the Company to the Hopewell project during the current year.
Plant operations costs of $5.7 million for the three months ended December
31,1994 were consistent with prior year costs for the same period. Higher wood
fuel prices during the first quarter of the year resulted in an increase in
plant operations costs of $0.7 million for the six months ended December
31,1994 as compared to the six months ended December 31, 1993. The higher wood
fuel prices were attributable to difficulties in procuring adequate wood
supplies during the period.
General and administrative expenses for the quarter ended December 31, 1994
were consistent with the quarter ended December 31,1993. General and
administrative expenses for the six months ended December 31, 1994 of $5.0
million, were $0.8 million higher than the prior year amount of $4.2 million.
The increase is due to the prior year amount including
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expense reimbursements of $1.6 million related to a developmental project.
Excluding the effect of this reimbursement, general and administrative expenses
for the six months ended December 31, 1994 would have been lower than the prior
year.
Marketing and project development costs for the three months ended December 31,
1994 were $0.6 million compared to $0.8 million for the three months ended
December 31, 1993. For the six months ended December 31, 1994, marketing and
project development costs were $1.0 million compared to $1.3 million for the
corresponding period of the prior year. The decreases in current year costs
are primarily due to expense reimbursements received related to a current
developmental project.
Non-operating income increased $0.2 million and $0.3 million for the three and
six months ended December 31,1994, respectively, as compared to the
corresponding periods of the prior year. The increases are due to higher cash
balances available for investment in addition to higher rates of interest
during the current year. Interest expense, which is primarily related to the
long-term non-recourse debt used to finance the Viking cogeneration facilities,
was $0.1 million lower for the quarter ended December 31, 1994, and $0.2
million lower for the six months ended December 31, 1994 as compared to the
prior year amounts. The decreases are due to reductions in the outstanding
principal balances on the non-recourse debt.
Minority interest in earnings of $0.3 million and $0.5 million for the three
and six months ended December 31, 1993, respectively, represents the minority
interest in CRSS Capital previously owned by Paribas North America, Inc.
("Paribas"). The Company (via redemption by CRSS Capital) repurchased all of
the common stock of CRSS Capital owned by Paribas on January 31, 1994 resulting
in CRSS Capital becoming wholly-owned by the Company.
EQUITY INCOME IN PARTNERSHIPS
Equity income in partnerships reflects CRSS Capital's 50 percent interest in
the Hopewell, Naheola, and Appomattox power and cogeneration facilities and the
47.5 percent interest in the Westwood facility.
Equity income in partnerships increased from $4.6 million for the three months
ended December 31, 1993 to $5.4 million for the three months ended December 31,
1994, an increase of $0.7 million, or 16 percent. The increase is primarily
due to improved operating results at the Hopewell and Naheola facilities in
addition to a retroactive rate adjustment at the Appomattox facility. Equity
income in partnerships for the six months ended December 31, 1994 was $9.5
million compared to $7.6 million for the six months ended December 31, 1993,
representing an increase of $1.9 million, or 25 percent. In addition to the
items noted above, the increase for the six months ended December 31, 1994 is
primarily related to the Westwood project, which experienced an unscheduled
outage during the first quarter of the prior fiscal year.
DISCONTINUED OPERATIONS
Earnings from discontinued operations for the three and six months ended
December 31, 1993 reflect the operating results of the design, engineering and
construction management segment which was classified as discontinued operations
as of June 30, 1994, in conjunction with the Company's plan to dispose of this
business. As further discussed below under "Liquidity and Capital Resources",
the Company sold its primary subsidiaries related to this business segment
during the first quarter of fiscal year 1995. As part of the sale
transactions, CRSS retained certain assets and liabilities, the majority of
which relate to four power plant engineering, procurement, and construction
contracts which were substantially complete or in the later stages of
completion. Additionally, the Company agreed to indemnify the
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purchasers against certain legal claims. During the three months ended
September 30, 1994, the Company recorded an additional reserve of $9.5 million
for the discontinued design, engineering and construction management segment
related to changes in the estimates to complete these power plant contracts and
for additional legal claims reserves.
The Company is continuing discussions with several parties for the disposition
of its holdings in NaTec Resources, Inc. ("NaTec"), the discontinued acid
rain/pollution control segment. Based on these discussions, the Company
increased its provision for the estimated loss on disposal of NaTec by an
additional $2.5 million during the three months ended September 30, 1994.
CONSOLIDATED RESULTS
Consolidated net earnings for the three months ended December 31, 1994, was
$1.4 million or, $0.10 per share versus net earnings of $1.2 million, or $0.09
per share for the corresponding period of the prior year. For the six months
ended December 31, 1994, consolidated net loss was $6.7 million, or $0.50 per
share versus net earnings of $2.2 million, or $0.17 per share for the six
months ended December 31,1993.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 1994, totalled $31.2 million, which included
$16.2 million in cash and cash equivalents. As of June 30, 1994, working
capital was $37.5 million, which included cash and cash equivalents of $2.2
million. The $14.0 million increase in cash and cash equivalents for the
period from June 30, 1994 to December 31, 1994 is primarily due to the sale of
the discontinued design, engineering and construction management segment, as
further discussed below, and distributions from the equity investment
partnerships of $10.7 million.
On July 21, 1994, the Company sold CRSS Architects, Inc. to Hellmuth, Obata &
Kassabaum, Inc. ("HOK"). Total consideration amounted to $6.8 million,
consisting of $4.8 million in cash at closing and a $2.0 million sharing of
future net cash distributions from the Peace Shield project, of which $0.6
million was received during the six months ended December 31, 1994.
On July 29, 1994, the Company sold its engineering and construction management
operations, consisting primarily of CRSS Constructors, Inc. and certain assets
and liabilities of CRS Sirrine Engineers, Inc., to Jacobs Engineering Group,
Inc. ("Jacobs"). Total consideration paid by Jacobs was $33.5 million in
cash, representing $14.0 million over the aggregate book value at June 30, 1994
of the business acquired. An additional purchase price adjustment for an
increase in the aggregate book value of the businesses acquired between June
30, 1994 and the closing date of July 29, 1994 has not yet been finalized,
however an additional $3.4 million was received from Jacobs during the three
months ended December 31, 1994.
Cash payments related to the discontinued operations during the six months
ended December 31, 1994 of $24.0 million consisted of working capital
requirements of the businesses prior to the sale, severance and other employee
related costs, legal fees and settlements, costs related to the retained power
plant engineering, procurement, and construction contracts, and closing costs.
The Company maintains a letter of credit facility with two banks. The facility
may be used to fund draws under existing outstanding letters of credit issued
thereunder, which totalled $32.3 million at December 31, 1994. The credit
facility, which is available through July 1,
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1995 is subject to certain restrictive covenants including, among others,
liquidity ratio, tangible net worth, and limitations on capital investments.
The Company's non-recourse project financing represents long-term non-recourse
debt related to the Viking projects. The notes provide for interest payments
at 11.15 percent per annum due in quarterly installments of principal and
interest through the year 2009. The Company has entered into negotiations with
the lenders for the restructuring of the debt.
At December 31, 1994 cash totalling $0.6 million has been reserved for plant
maintenance on the Viking projects in accordance with the terms of the
non-recourse project financing. An additional $0.7 million is reserved for
debt service.
The Company has received a formal call notice on its interest in the Naheola
partnership from its partner, James River Corporation, for fair value. The
project, which includes a chemical recovery boiler and cogeneration assets
located at James River's Naheola Mill in Pennington, Alabama, has been in
operation since March 1993. The timing and the actual call price has not yet
been determined, pending a formal update of the financial projections and
operating assumptions remaining in the project, which runs through 2013.
Management believes that existing cash, cash flow from operations and project
distributions, and existing credit facilities will be sufficient to meet the
ongoing requirements of the operations of the Company. In addition, the above
sources can be supplemented with other external sources of funds to meet
additional cash requirements if necessary.
PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
10.1 Credit Agreement (Letter of Credit Facility) dated December
30, 1994 among CRSS Inc., NationsBank of Texas, N.A. as agent
and Texas Commerce Bank National Association
27.1 Financial data schedule.
(b) Report on Form 8-K
None
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CRSS INC. AND SUBSIDIARIES
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.
CRSS Inc.
(Registrant)
Date February 7, 1995 /s/ Bruce W. Wilkinson
Bruce W. Wilkinson
Chief Executive Officer and
Chairman of the Board
Date February 7, 1995 /s/ William J. Gardiner
William J. Gardiner
Senior Vice President/Chief
Financial Officer and
Treasurer (Principal
Financial and Accounting
Officer)
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INDEX TO EXHIBITS
EXHIBIT
NUMBER
- -------
10.1 Credit Agreement (Letter of Credit Facility) dated December 30, 1994 among CRSS Inc., NationsBank
of Texas, N.A. as agent and Texas Commerce Bank National Association
27.1 Financial data schedule