SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the quarterly period ended June 29, 1997
--------------
or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File No. 0-24492
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CITATION CORPORATION
(Exact name of registrant as specified in its Charter)
DELAWARE 63-0828225
(State of Incorporation) (IRS Employer I.D. No.)
2 Office Park Circle, Suite 204
Birmingham, Alabama 35223
(Address of principal executive offices)
(205) 871-5731
(Registrant's telephone number)
-----------------------------------
Indicate by check mark whether the registrant has (1) 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 the registrant's class of
common stock, as of the latest practicable date.
Class Outstanding at August 8, 1997
- ---------------------------- -----------------------------
Common Stock, $.01 Par Value 17,750,100
INDEX
Page No.
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PART I: FINANCIAL INFORMATION
ITEM 1: Financial Statements................................................................................... 1
Interim Condensed Consolidated Balance Sheets..................................................... 2
Interim Condensed Consolidated Statements of Income............................................... 3
Interim Condensed Consolidated Statements of Cash Flows........................................... 4
Notes to Interim Condensed Consolidated Financial
Statements....................................................................................... 5
ITEM 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................................................... 9
PART II: OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K.................................................................. 12
SIGNATURES.................................................................................................. 13
EXHIBITS:
Exhibit 10.2(v) - Amended and Restated Credit Agreement dated as
of July 24, 1997
Exhibit 27 - Financial Data Schedule
PART I: FINANCIAL INFORMATION
ITEM I: FINANCIAL STATEMENTS
The financial statements listed below are included on the following pages
of this Report on Form 10-Q (Unaudited):
Interim Condensed Consolidated Balance Sheets at September 29, 1996
and June 29, 1997.
Interim Condensed Consolidated Statements of Income for the three
months and nine months ended June 30, 1996 and June 29, 1997.
Interim Condensed Consolidated Statements of Cash Flows for the nine
months ended June 30, 1996 and June 29, 1997.
Notes to Interim Condensed Consolidated Financial Statements.
__________________________________________
[The remainder of this page intentionally left blank]
1
CITATION CORPORATION
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of dollars, except share data)
September 29,1996 June 29, 1997
----------------- --------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 2,267 $ 3,105
Accounts receivable, net 77,931 98,120
Inventories 39,478 47,257
Deferred income taxes, prepaid expenses and
other assets 15,683 11,313
-------- --------
Total current assets 135,359 159,795
Property, plant and equipment, net 199,367 276,887
Other assets 48,831 50,363
-------- --------
$383,557 $487,045
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft $ 8,328 $ 430
Current portion of long-term debt 2,654 3,090
Accounts payable 33,668 39,864
Accrued expenses 28,205 48,568
-------- --------
Total current liabilities 72,855 91,952
Long-term debt, net of current portion 140,946 188,024
Deferred income taxes and other deferred liabilities 20,437 40,015
-------- --------
Total liabilities 234,238 319,991
-------- --------
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000,000
shares authorized, none issued and outstanding -- --
Common stock, $0.01 par value; 30,000,000
shares authorized, 17,715,540 shares issued
and outstanding at September 29, 1996, and
17,749,600 at June 29, 1997 177 177
Additional paid-in capital 107,087 107,154
Retained earnings 42,055 59,723
-------- --------
Total stockholders' equity 149,319 167,054
-------- --------
$383,557 $487,045
======== ========
See notes to interim condensed consolidated financial statements.
2
CITATION CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars, except share and per share data)
For the Three For the Nine
Months Ended Months Ended
June 30, 1996 June 29, 1997 June 30, 1996 June 29, 1997
-------------- -------------- -------------- --------------
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales $ 143,420 $ 177,858 $ 356,136 $ 488,779
Cost of sales 117,167 145,637 291,678 404,850
----------- ----------- ----------- -----------
Gross profit 26,253 32,221 64,458 83,929
Selling, general and administrative
expenses 12,326 15,648 34,059 43,743
----------- ----------- ----------- -----------
Operating income 13,927 16,573 30,399 40,186
Other (income) expenses:
Interest expense, net 2,559 3,778 5,210 11,131
Other, net (141) -- (358) 91
----------- ----------- ----------- -----------
2,418 3,778 4,852 11,222
----------- ----------- ----------- -----------
Income before provision for income taxes 11,509 12,795 25,547 28,964
Provision for income taxes 4,604 4,990 10,219 11,296
----------- ---------- ----------- -----------
Net income $ 6,905 $ 7,805 $ 15,328 $ 17,668
=========== =========== =========== ===========
Net income per share $ 0.39 $ 0.44 $ 0.87 $ 1.00
=========== =========== =========== ===========
Weighted average shares outstanding 17,699,331 17,734,427 17,686,639 17,725,929
=========== =========== =========== ===========
See notes to interim condensed consolidated financial statements.
3
CITATION CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
For the Nine Months Ended
June 30, 1996 June 29, 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES: (unaudited) (unaudited)
Net income $ 15,328 $ 17,668
-------- --------
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for losses on receivables 208 84
Depreciation and amortization 14,394 22,620
Changes in operating assets and liabilities, net:
Accounts receivable (10,467) (8,336)
Inventories (5,765) 521
Prepaid expenses and other assets (1,785) 6,179
Accounts payable 1,697 436
Accrued expenses and other liabilities 4,603 12,869
-------- --------
Total adjustments 2,885 34,373
-------- --------
Net cash provided by operating activities 18,213 52,041
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment expenditures - net (22,662) (27,448)
Other nonoperating assets, net (2,699) --
Proceeds from sale of Penn Steel -- 9,006
Cash paid for acquisitions (36,450) (50,014)
-------- --------
Net cash used in investing activities (61,811) (68,456)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash overdraft -- (7,671)
Repayments of acquired debt -- (16,340)
Change in long-term debt, note payable and other financing arrangements, net 35,267 41,197
Other, net 119 67
-------- --------
Net cash provided by financing activities 35,386 17,253
-------- --------
Net (decrease) increase in cash and cash equivalents (8,212) 838
Cash and cash equivalents, beginning of period 9,812 2,267
-------- --------
Cash and cash equivalents, end of period $ 1,600 $ 3,105
======== ========
See notes to interim condensed consolidated financial statements.
4
CITATION CORPORATION
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars, except share and per share data)
1. The interim condensed consolidated balance sheet of Citation Corporation
(the "Company") at September 29, 1996 has been derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles (GAAP). The interim condensed
consolidated financial statements at June 29, 1997 and for the three months
and the nine months ended June 29, 1997 and June 30, 1996 are unaudited;
however, in the opinion of management, all adjustments, consisting only of
normal recurring accruals necessary for a fair presentation, have been
included. These financial statements should be read in conjunction with the
1996 annual report on SEC Form 10-K.
Recently Issued Accounting Standards. In October 1995, the Financial
Accounting Standards Board (FASB) issued SFAS No. 123, "Accounting for
Stock-Based Compensation." The Company is required to adopt this statement
no later than fiscal year 1997. The Company anticipates continuing to
account for its stock-based compensation plans in accordance with APB
Opinion No. 25, "Accounting for Stock Issued to Employees," as permitted by
SFAS No. 123. When this statement becomes applicable, the Company intends
to provide the appropriate pro forma net income and net income per share
disclosures required by SFAS No. 123.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128).
SFAS 128 supersedes existing generally accepted accounting principles
relative to the calculation of earnings per share, is effective for years
ending after December 15, 1997 and requires restatement of all prior period
earnings per share information upon adoption. Generally, SFAS 128 requires
a calculation of basic earnings per share, which takes into consideration
income (loss) available to common shareholders and the weighted average of
common shares outstanding. SFAS 128 also requires the calculation of a
diluted earnings per share, which takes into effect the impact of all
additional common shares that would have been outstanding if all potential
common shares relating to options, warrants, and convertible securities had
been issued, as long as their effect is dilutive, with a related adjustment
of income available for common shareholders, as appropriate. SFAS 128
requires dual presentation of basic and diluted earnings per share on the
face of the statement of income and requires a reconciliation of the
numerator and denominator of the basic earnings per share computation. The
Company does not expect the effect of its adoption of SFAS 128 to be
material.
5
2. A summary of inventories is as follows:
September 29, June 29,
1996 1997
------------- --------
Raw materials $ 8,872 $ 9,337
Supplies and containers 9,817 11,132
Finished goods 20,789 26,788
------- -------
$39,478 $47,257
======= =======
3. Balances of major classes of property, plant and equipment and accumulated
depreciation are as follows:
September 29, June 29,
1996 1997
------------- --------
Land and improvements $ 7,166 $ 10,369
Buildings 37,316 48,885
Plant and equipment 195,370 260,059
Office equipment 9,230 11,873
Transportation equipment 8,788 10,149
Construction in progress 8,403 21,064
-------- --------
266,273 362,399
Less accumulated depreciation (66,906) (85,512)
-------- --------
$199,367 $276,887
======== ========
4. The Company's other assets consist of the following:
September 29, June 29,
1996 1997
------------- --------
Goodwill $ 45,704 $ 46,776
Consulting and non-competition
agreements 1,893 1,391
Other 1,234 2,196
-------- --------
$ 48,831 $ 50,363
======== ========
5. Long term debt consists of the following:
September 29, June 29,
1996 1997
------------- --------
Note payable $ 133,055 $ 177,000
Industrial development bonds 1,085 951
Other financing arrangements 9,460 13,163
-------- --------
143,600 191,114
Less current portion of
long-term debt 2,654 3,090
-------- --------
$ 140,946 $ 188,024
========= =========
6
6. The following unaudited pro forma summary for the nine months ended June
30, 1996 combines the results of operations of the Company with the
acquisitions of Texas Steel Company ("Texas Steel"), Hi-Tech Corporation
("Hi-Tech"), Southern Aluminum Castings Company ("Southern Aluminum") and
Bohn Aluminum Corporation ("Bohn"), Interstate Forging Industries, Inc.
("Interstate"), the sale of Pennsylvania Steel Foundry & Machine Company
("Penn Steel"), and the idling of the steel division operations at Texas
Foundries ("TF Steel") as if the acquisitions, sale and idling had occurred
at the beginning of the 1996 fiscal year. For the nine months ended June
29, 1997, the pro forma summary presents the results of operations of the
Company as if the acquisitions of Interstate and the sale of Penn Steel had
occurred at the beginning of the 1997 fiscal year. Certain adjustments,
including additional depreciation expense, interest expense on the
acquisition debt, amortization of intangible assets and income tax effects,
have been made to reflect the impact of the purchase transactions. These
pro forma results have been prepared for comparative purposes only and do
not purport to be indicative of what would have occurred had the
acquisitions, sale and idling been made at the beginning of either fiscal
years 1996 or 1997, or of results which may occur in the future.
Pro forma interim condensed consolidated statements of income are as
follows:
Nine Months Ended
---------------------------------
June 30, 1996 June 29, 1997
------------- -------------
Sales $ 446,732 $ 497,926
Operating income $ 38,466 $ 41,162
Income before provision for income taxes $ 28,046 $ 29,488
Pro forma net income $ 16,828 $ 17,987
Pro forma earnings per common share $ 0.95 $ 1.01
Pro forma earnings per share for the nine months ended June 30, 1996 and
June 29, 1997 is calculated by dividing pro forma net income by the
weighted average shares outstanding of 17,686,639 and 17,725,929,
respectively.
7. On October 31, 1996, the Company completed the sale of Penn Steel. The
sales price was based on the book value of Penn Steel at October 31, 1996
less $600. The Company recorded a one-time pre-tax loss of $1,807 in the
consolidated statement of income for the year ended September 29, 1996
based on its estimate of the October 31, 1996 book value of Penn Steel.
The actual book value for purposes of this calculation is subject to
negotiation by both parties to the agreement. The agreement states that if
the parties do not agree on the book value of Penn Steel, the disagreement
will be resolved through negotiation between the chief executive officers
of the purchaser and the Company.
7
8. Effective October 29, 1996 the Company completed the purchase of the stock
of Interstate Forging Industries, Inc. ("Interstate") of Milwaukee,
Wisconsin and Navasota, Texas for $47.8 million plus the assumption of
approximately $22.7 million of Interstate's debt. In addition, the
agreement includes contingent payments equal to five (5) times the amount
by which the average annual net earnings of Interstate before interest,
income taxes and franchise taxes during the three year period from January
1, 1996 through December 31, 1998 exceeds $10 million computed in
accordance with GAAP on a pre-merger basis. Through June 29, 1997, the
Company has made contingent payments to the former Interstate shareholders
of approximately $2.2 million. This acquisition has been accounted for
under the purchase method of accounting and, accordingly, the purchase
price has been allocated to the assets and liabilities of Interstate based
on their estimated fair values at the date of acquisition. Operating
results of Interstate since October 29, 1996 are included in the Company's
condensed consolidated financial statements. Interstate, which produces
custom closed die forgings of carbon, alloy, and stainless steel, has
approximately 500 employees and had annual sales for the years ended
December 31, 1995 and December 29, 1996 of approximately $83.4 million and
$103.7 million, respectively. The estimated fair values of assets acquired
and liabilities assumed are as follows:
Accounts receivable $ 15,161
Inventories 12,946
Property, plant and equipment 78,770
Other assets 3,014
Accounts payable and accrued expenses (19,378)
Deferred income taxes (17,536)
Long-term debt (22,657)
--------
Purchase Price $ 50,320
========
__________________________________
8
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors that have affected the Company's financial condition and
earnings during the periods included in the accompanying interim condensed
consolidated financial statements.
Forward Looking Statements. The statements in this Form 10-Q that are not
historical fact are forward looking statements. Such statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially from those projected. Readers are cautioned not to place undue
reliance on these forward looking statements which speak only as of the date
hereof. Readers are also urged to carefully review and consider the various
disclosures made by the Company which attempt to advise interested parties of
the factors which affect the Company's business, including the disclosures made
in other periodic reports on Forms 10-K, 10-Q and 8-K filed with the Securities
and Exchange Commission.
QUARTER ENDED JUNE 29, 1997 COMPARED TO THE QUARTER ENDED JUNE 30, 1996
Sales. Sales increased 24.0%, or $34.5 million, to $177.9 million for the three
months ended June 29, 1997 from $143.4 million in the comparable prior year
period. The increase was primarily attributable to the acquisition of
Interstate, which represented $29.6 million of the increase, while sales from
the Company's existing foundry and machining operations increased approximately
10.3% or $13.9 million. The above increases were partially offset by the sale
of Penn Steel during the first fiscal quarter of 1997 and the idling of TF Steel
during the last quarter of fiscal 1996. The total sales of Penn Steel and TF
Steel that were included in the third fiscal quarter of 1996 were approximately
$9.0 million. Tons shipped increased 24.6% or 15,000 tons, to 76,000 tons for
the three months ended June 29, 1997 from 61,000 tons in the comparable prior
year quarter.
Gross Profit. Gross profit increased 22.8%, or $6.0 million, to $32.2 million in
the 1997 third fiscal quarter from $26.2 million in the comparable prior year
quarter. The overall gross margin decreased slightly to 18.1% in the 1997 third
fiscal quarter from 18.3% in the comparable prior year quarter. The gross
margin from existing units decreased to 18.0% in the 1997 third fiscal quarter
from 18.7% in the comparable prior year quarter. Penn Steel and TF Steel had a
combined gross margin of 12.2% in the third fiscal quarter of 1996.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SGA") increased 27.0%, or $3.3 million, to $15.6
million in the 1997 third fiscal quarter from $12.3 million in the comparable
prior year quarter. SGA costs at existing Company operations increased
approximately 14.6%, or $1.7 million. SGA costs included in the third fiscal
quarter of 1996 related to Penn Steel and TF Steel were approximately $725
thousand. As a percentage of sales, overall SGA expenses increased to 8.8% in
the 1997 third fiscal quarter from 8.6% in the comparable prior year quarter.
9
Operating Income. Operating income increased 19.0%, or $2.6 million, to $16.5
million for the 1997 third fiscal quarter from $13.9 million for the comparable
prior year quarter. The overall operating margin decreased to 9.3% in the 1997
third fiscal quarter from 9.7% in the comparable prior year quarter. The
operating margin of existing Company operations decreased to 9.0% in the 1997
third fiscal quarter from 10.0% in the comparable prior year quarter.
Interest Expense. Interest expense increased to $3.8 million in the 1997 third
fiscal quarter from $2.6 million in the comparable prior year quarter. This
increase is primarily attributable to higher average outstanding debt balances
relating to the acquisition of Interstate during the first quarter of fiscal
1997. The purchase price plus assumed debt of Interstate totalled approximately
$72.7 million. Capitalized interest for the 1997 third fiscal quarter was
approximately $70 thousand. There was no capitalized interest during the 1996
third fiscal quarter.
NINE MONTHS ENDED JUNE 29, 1997 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 1996
Sales. Sales increased 37.3%, or $132.7 million, to $488.8 million for the nine
months ended June 29, 1997, from $356.1 million in the comparable prior year
period. The increase was primarily attributable to fiscal year 1996 and 1997
acquisitions. Sales at Texas Steel, Hi-Tech, Southern Aluminum, Bohn Aluminum
and Interstate (collectively the "Acquisitions") in the first nine months of
fiscal 1997 were approximately $141.0 million. Sales from the Company's
existing foundry operations in the first nine months of fiscal 1997 were up
approximately 5.0%, or $16.7 million. The above increases were partially offset
by the sale of Penn Steel during the first fiscal quarter of 1997 and the idling
of TF Steel during the last quarter of fiscal 1996. The total sales of Penn
Steel and TF Steel that were included in the first nine months of fiscal 1996
were approximately $25.0 million. Tons shipped increased 22.9% or 39,000 tons,
to 209,000 tons for the nine months ended June 29, 1997 from 170,000 tons in the
comparable prior year period.
Gross Profit. Gross profit increased 30.2%, or $19.5 million, to $83.9 million
for the nine months ended June 29, 1997 from $64.4 million in the comparable
prior year period. The overall gross margin decreased to 17.2% for the first
nine months of fiscal 1997 from 18.1% in the comparable prior year period. This
decrease was due primarily to the integration of the Acquisitions. The gross
margin for the Acquisitions included in the first nine months of fiscal 1997 was
approximately 14.4%. The gross margin from existing units decreased to 18.3%
during the first nine months of fiscal 1997 from 18.9% in the comparable prior
year period. Penn Steel and TF Steel had a combined gross margin of 8.0%
during the first nine months of fiscal 1996.
Selling, General and Administrative Expenses. SGA increased 28.4%, or $9.7
million, to $43.7 million for the nine months ended June 29, 1997 from $34.0
million in the comparable prior year period. SGA costs attributable to the
Acquisitions were $11.2 million, and SGA costs at existing Company operations
increased approximately 2.8%, or $0.9 million. SGA costs included in the first
nine months of fiscal 1996 related to Penn Steel and TF Steel were approximately
$2.4
10
million. As a percentage of sales, overall SGA expenses decreased to 9.0% in the
first nine months of fiscal 1997 from 9.6% in the comparable prior year period.
Operating Income. Operating income increased 32.2%, or $9.8 million, to $40.2
million for the nine months ended June 29, 1997 from $30.4 million for the
comparable prior year period. The overall operating margin decreased to 8.2%
for the first nine months of fiscal 1997 from 8.5% in the comparable prior year
period. The decrease is primarily due to the integration of fiscal year 1996
and 1997 Acquisitions, which had an operating margin of approximately 6.5%. The
operating margin of existing Company operations decreased slightly to 8.9% for
the first nine months of fiscal 1997 from 9.3% in the comparable prior year
period.
Interest Expense. Interest expense increased to $11.1 million in the first nine
months of fiscal 1997 from $5.2 million in the comparable prior year period.
This increase is primarily attributable to high average outstanding debt
balances as a result of completing five acquisitions during the second and third
quarters of fiscal 1996 and the first quarter of fiscal 1997. The purchase
price plus assumed debt of the Acquisitions totalled approximately $144.5
million. Capitalized interest for the nine months ended June 29, 1997 and June
30, 1996 was approximately $96 thousand and $453 thousand, respectively.
LIQUIDITY AND CAPITAL RESOURCES
On July 1, 1996, the Company executed a new primary credit facility with a
consortium of banks, led by the National Bank of Detroit ("NBD Bank"), to borrow
up to $230 million to be used for working capital purposes and to fund future
acquisitions. The facility expires on July 31, 1998 and is collateralized by
substantially all of the assets of the Company as well as the stock of its
subsidiaries. The facility consists of a swing line of credit bearing interest
at prime and revolving credit borrowings which bear interest at LIBOR plus a
margin based on the Company's leverage ratio, as defined in the credit agreement
as amended, at the time of the borrowing. The facility calls for a commitment
fee payable quarterly, in arrears, of 0.25% based on the daily unused portion.
The total balance outstanding under this credit facility was $133.1 and $177
million at September 29, 1996 and June 29, 1997, respectively.
As of September 29, 1996, the Company had $3.1 million outstanding under the
swing line of credit at the prime rate of 8.25%. There were no outstanding
borrowings under the swing line of credit at June 29, 1997. The $177 million
outstanding at June 29, 1997 under this facility related to six revolving loans.
The Company had $25, $20 and $52 million outstanding under these loans at
interest rates of 7.10%, 7.19%, and 7.50% which reprice on July 2, 1997, August
4, 1997 and November 5, 1997, respectively. The Company has entered into one
$40 million and two $20 million five-year interest rate swap agreements
establishing fixed interest rates for the remaining $80 million of debt
outstanding under the credit facility. These agreements are repriced every 90
days and expire between August 2001 and February 2002. These agreements have
fixed rates plus a margin of 1.0% to 2.0%, based on the Company's leverage ratio
on the dates the agreements are priced. The Company's fixed interest rates were
8.54% and 8.36% on the two $20,000 swap
11
agreements and 8.30% on the $40,000 swap agreement at June 29, 1997. The Company
is exposed to credit risk in the event of nonperformance by the counterparty to
the interest rate swap agreements. The Company mitigates credit risk by dealing
with financially sound U.S. banks. Accordingly, the Company does not anticipate
loss for nonperformance by these counterparties.
After the end of the 1997 third quarter, effective July 24, 1997, the Company's
credit facility was increased from $230 million to $300 million to be used for
working capital purposes and to fund future acquisitions. Several new banks
were added to the lending group. Under the amended facility, the Company can
borrow at interest rates from LIBOR plus .5% to LIBOR plus 1.375% based upon the
Company's ratios of debt to its cash flow, measured by earnings before interest
and taxes plus depreciation and amortization. Effective July 24, 1997, the
Company was able to borrow at LIBOR plus 1%. The facility expires on July 24,
2000 and is collateralized by substantially all of the assets of the Company as
well as the stock of its subsidiaries.
The Company's primary sources of working capital are cash flows from operating
activities, equity offerings and borrowings under the above mentioned credit
facility. Primary uses of working capital are the funding of operations,
capital expenditures and acquisitions.
ACQUISITIONS
Notes 7 and 8 of the interim condensed consolidated financial statements
included elsewhere in this report describe the recent acquisition of Interstate
Forging and the sale of Penn Steel.
PART II: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.2(v) Amended and Restated Credit Agreement dated as of
July 24, 1997
Exhibit 27 - Financial Data Schedule, submitted to the
Securities and Exchange Commission in
electronic format
(b) Reports on Form 8-K:
There were no Reports on Form 8-K filed during the quarter ended June
29, 1997.
12
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.
DATE: CITATION CORPORATION
August 6, 1997 /s/ T. Morris Hackney
------------------------------------------------
T. MORRIS HACKNEY
Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)
August 6, 1997 /s/ Frederick F. Sommer
-----------------------------------------------
FREDERICK F. SOMMER
President and Chief Operating Officer
August 6, 1997 /s/ R. Conner Warren
-----------------------------------------------
R. CONNER WARREN
Executive Vice President of Finance and
Administration and Treasurer
(Principal Financial Officer)
August 6, 1997 /s/ Thomas W. Burleson
----------------------------------------------
THOMAS W. BURLESON
Vice President-Controller and Assistant Secretary
(Principal Accounting Officer)
13