UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended March 31, 2004
Commission File No. 333-27665
CONTINENTAL GLOBAL GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 31-1506889
-------- ----------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
CO-REGISTRANTS AND SUBSIDIARY GUARANTORS
Continental Conveyor & Equipment Company Delaware 34-1603197
Goodman Conveyor Company Delaware 34-1603196
Continental Conveyor & Equipment
Continental Global Group, Inc. Company Goodman Conveyor Company
438 Industrial Drive 438 Industrial Drive Route 178 South
Winfield, Alabama 35594 Winfield, Alabama 35594 Belton, South Carolina 29627
(205) 487-6492 (205) 487-6492 (864) 338-7793
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
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 twelve 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 [ ] No [x]
Indicate by check mark if the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Act). Yes [ ] No [x]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practical date.
As of June 30, 2004, there were 100 shares of the registrant's common stock
outstanding.
INDEX
CONTINENTAL GLOBAL GROUP, INC.
Page
Part I Financial Information Number
Item 1 Financial Statements (Unaudited) 1
Condensed Consolidated Balance Sheets
March 31, 2004 and December 31, 2003 2
Condensed Consolidated Statements of Operations
Three Months ended March 31, 2004 and 2003 3
Condensed Consolidated Statements of Cash Flows
Three Months ended March 31, 2004 and 2003 4
Notes to Condensed Consolidated Financial Statements 5-14
Item 2 Management's Discussion and Analysis of Financial Condition and Results of
Operations 15-19
Item 3 Quantitative and Qualitative Disclosures about Market Risk 20
Item 4 Controls and Procedures 20
Part II Other Information
Item 1 Legal Proceedings 21
Item 3 Defaults upon Senior Securities 21
Item 6 Exhibits and Reports on Form 8-K 21
Signatures 22
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
1
Continental Global Group, Inc.
Condensed Consolidated Balance Sheets
March 31 December 31
2004 2003
-------------------- --------------------
(Unaudited) (Audited)
Assets:
Current assets:
Cash and cash equivalents $ 933,359 $ 850,727
Accounts receivable, net 33,752,610 32,225,793
Inventories 27,711,096 24,534,307
Deferred income taxes 285,351 264,770
Other current assets 1,090,892 942,179
-------------------- --------------------
Total current assets 63,773,308 58,817,776
Property, plant and equipment 32,727,055 32,269,483
Less accumulated depreciation 20,059,511 19,355,298
-------------------- --------------------
12,667,544 12,914,185
Goodwill 13,879,650 13,863,527
Deferred financing costs 1,559,706 1,689,682
Other assets 471,021 477,631
-------------------- --------------------
$ 92,351,229 $ 87,762,801
==================== ====================
Liabilities and Stockholder's Equity (Deficit):
Current liabilities:
Notes payable $ 15,377,276 $ 13,960,369
Trade accounts payable 29,034,241 24,703,137
Accrued compensation and employee benefits 5,233,268 7,422,648
Accrued interest on senior notes 6,600,000 3,300,000
Other accrued liabilities 8,375,039 8,520,662
Current maturities of long-term obligations 2,368,366 2,546,055
Senior notes in default 120,000,000 120,000,000
-------------------- --------------------
Total current liabilities 186,988,190 180,452,871
Pension obligations 490,836 340,836
Deferred income taxes 870,919 874,783
Other long-term obligations, less current maturities 487,897 369,449
Stockholder's equity (deficit):
Common stock, $0.01 par value, authorized 5,000,000 shares,
issued and outstanding 100 shares 1 1
Paid-in capital 1,993,687 1,993,687
Accumulated deficit (92,508,803) (90,287,074)
Accumulated other comprehensive loss (5,971,498) (5,981,752)
-------------------- --------------------
(96,486,613) (94,275,138)
-------------------- --------------------
$ 92,351,229 $ 87,762,801
==================== ====================
See notes to condensed consolidated financial statements.
2
Continental Global Group, Inc.
Condensed Consolidated Statements of Operations
Three months ended March 31
2004 2003
------------------- -------------------
(Unaudited)
Net sales $ 50,003,856 $ 42,572,936
Cost of products sold 42,275,108 36,626,640
------------------- -------------------
Gross profit 7,728,748 5,946,296
Operating expenses:
Selling and engineering 3,225,927 3,212,954
General and administrative 2,763,155 2,552,816
Management fee 109,360 36,009
Amortization expense 6,590 6,591
Restructuring charges 115,457 14,005
------------------- -------------------
Total operating expenses 6,220,489 5,822,375
------------------- -------------------
Operating income 1,508,259 123,921
Other expenses:
Interest expense, net 3,830,169 3,721,601
Miscellaneous, net (100,181) 190,066
------------------- -------------------
Total other expenses 3,729,988 3,911,667
------------------- -------------------
Net loss $ (2,221,729) $ (3,787,746)
=================== ===================
See notes to condensed consolidated financial statements.
3
Continental Global Group, Inc.
Condensed Consolidated Statements of Cash Flows
Three months ended March 31
2004 2003
---------------------- ---------------------
(Unaudited)
Operating activities:
Net loss $ (2,221,729) $ (3,787,746)
Adjustments to reconcile net loss to net cash used in
operating activities:
Provision for depreciation and amortization 569,580 560,250
Amortization of deferred financing costs 129,976 129,975
Loss (gain) on disposal of assets (3,093) 15,119
Changes in operating assets and liabilities 525,874 159,501
---------------------- ---------------------
Net cash used in operating activities (999,392) (2,922,901)
---------------------- ---------------------
Investing activities:
Purchases of property, plant, and equipment (125,820) (89,847)
Proceeds from sale of property, plant, and equipment 5,915 20,547
---------------------- ---------------------
Net cash used in investing activities (119,905) (69,300)
---------------------- ---------------------
Financing activities:
Net increase in borrowings on notes payable 1,324,459 1,905,105
Principal payments on long-term obligations (153,145) (143,085)
---------------------- ---------------------
Net cash provided by financing activities 1,171,314 1,762,020
Effect of exchange rate changes on cash 30,615 738
---------------------- ---------------------
Increase (decrease) in cash and cash equivalents 82,632 (1,229,443)
Cash and cash equivalents at beginning of period 850,727 5,635,042
---------------------- ---------------------
Cash and cash equivalents at end of period $ 933,359 $ 4,405,599
====================== =====================
See notes to condensed consolidated financial statements.
4
Continental Global Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2004
A. Organization and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31, 2004
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2004. For further information, refer to the consolidated
financial statements and footnotes of Continental Global Group, Inc. and
subsidiaries for the year ended December 31, 2003, included in the Company's
Form 10-K.
The Company's consolidated financial statements have been presented on a going
concern basis, which contemplates the realization of assets and the
satisfactions of liabilities in the normal course of business.
The Company has incurred recurring losses which totaled approximately $2,222,000
for the three months ended March 31, 2004, and approximately $12,633,000 and
$12,542,000 during the years ended December 31, 2003 and 2002, respectively. The
Company also had working capital deficiencies of approximately $123,215,000 and
$121,635,000 at March 31, 2004 and December 31, 2003, respectively. The
recurring losses are primarily the result of substantial debt service
obligations because the Company is highly leveraged and its current cash flows
from operations have been insufficient to service the interest expense on its
existing debt obligations.
The Company was not in compliance with certain covenants under its revolving
credit facilities as of December 31, 2003 or March 31, 2004, resulting in a
cross default under the terms of the Company's Senior Notes. In addition, the
Company failed to make its $6,600,000 semi-annual interest payment for the
Senior Notes due on April 1, 2004. Following expiration of the 30-day grace
period provided for in the indenture, the Senior Notes were in default and the
Company has subsequently received a notice of default from the Trustee for the
Senior Notes. Accordingly, the Senior Notes have been recorded as current
liabilities in the condensed consolidated balance sheet. However, on April 26,
2004, the Company entered into a forbearance agreement with the holders of a
majority interest ("Majority Holders") of the Senior Notes which instructed the
Trustee for the Senior Notes to refrain from taking any action with respect to
the default prior to May 31, 2004. On May 27, 2004, June 14, 2004, and July 13,
2004, this agreement was amended to extend the forbearance agreement until July
23, 2004.
The Company has been negotiating with the Majority Holders for a restructuring
of the Senior Notes. The restructuring would provide for an exchange of new
notes and a cash payment for all of the outstanding Senior Notes. The
restructuring agreement has not been finalized and the Company cannot assure
that it will be able to enter into a restructuring agreement or successfully
complete a restructuring.
5
Continental Global Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2004
A. Organization and Basis of Presentation (Continued)
On May 1, 2004, June 1, 2004, June 15, 2004 and July 13, 2004, the Company and
Bank One, N.A. entered into forbearance agreements under which Bank One has
agreed not to exercise its rights with respect to the defaults, including the
right to demand payment, under the revolving credit facility for a stated
period while the Company negotiates a possible restructuring of its Senior
Notes. On July 12, 2004, the Company received a commitment letter from Bank One
for a waiver of the covenant violations and an extension of the revolving credit
facility through July 31, 2006. The extension is contingent upon the completion
of a restructuring of the Company's Senior Notes. The commitment letter provides
for a $30 million revolving line of credit and a $5 million secured term loan
with a maturity date of July 31, 2006. The Company is currently in discussions
with the lenders under its existing foreign revolving credit facilities to
extend such credit facilities that have matured or are expiring in 2004.
At this time the ability of the Company to successfully extend its domestic and
foreign revolving credit facilities maturing in 2004 and to restructure the
terms of the Senior Notes is uncertain and subject to substantial risk. In the
event that the Company is not successful in the restructuring of its Senior
Notes, the Company may seek to implement the restructuring of its Senior Notes
through a plan of reorganization under Chapter 11 of the Bankruptcy Code.
The condensed consolidated financial statements do not include any adjustments
to reflect any possible future effects of a restructuring of the Senior Notes.
B. Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
C. Inventories
Inventories, which consist of raw materials, manufactured and purchased parts,
and work in process, are stated at the lower of cost or market. Since inventory
records are maintained on a job order basis, it is not practical to segregate
inventories into their major classes. The cost for approximately 57% of
inventories at March 31, 2004 and December 31, 2003 is determined using the
last-in, first-out (LIFO) method with the remainder determined using the
first-in, first-out (FIFO) method. Had the FIFO method of inventory (which
approximates replacement cost) been used to cost all inventories, inventories
would have increased by approximately $1,436,000 and $1,316,000 at March 31,
2004 and December 31, 2003, respectively.
6
Continental Global Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2004
D. Warranty Costs
The Company's products are generally covered by warranties against defects in
material and workmanship for periods up to two years from the date of sale or
installation of the product. The Company records a provision for estimated
warranty cost based on historical experience and expectations of future
conditions and continuously assesses the adequacy of its product warranty
accrual and makes adjustments as needed. A summary of accrued warranty costs
follows:
Balance as of January 1, 2004 $ 1,275,401
Provision for warranties 173,864
Settlements made during the period (61,765)
Effect of exchange rate changes 7,885
-----------------
Balance as of March 31, 2004 $ 1,395,385
=================
E. Restructuring Charges
The Company incurred restructuring charges of approximately $115,000 and $14,000
in 2004 and 2003, respectively, related to changes in staffing and production
requirements in its domestic operations. As part of this restructuring, in 2002
the Company developed a plan to discontinue the manufacturing operations in
certain of its domestic facilities and merge these operations with other
existing facilities. The process of merging the domestic operations began in
2003. However, in the fourth quarter of 2003, the Company hired a third-party
consultant to re-evaluate the restructuring plan and make further
recommendations. These recommendations are currently under review by the
Company's management and board of directors. The additional cost of this
restructuring has not been determined. The charges incurred in 2004 consist
primarily of consulting fees while the charges incurred in 2003 consist
primarily of severance costs associated with a reduction in personnel which
occurred in 2002 and 2003. Total restructuring charges incurred since this plan
was developed are approximately $822,000. As of March 31, 2004, the Company has
paid approximately $387,000 of the charges incurred to date, with the majority
of the remainder expected to be paid by 2008.
F. Comprehensive Loss
The components of comprehensive loss for the three months ended March 31, 2004
and 2003 are as follows:
Three months ended
March 31
2004 2003
-----------------------------------
Net loss $ (2,221,729) $ (3,787,746)
Other comprehensive income (loss):
Foreign currency translation adjustment 37,077 151,187
Change in fair value of derivative hedge, net of tax (26,823) 43,263
-----------------------------------
Comprehensive loss $ (2,211,475) $ (3,593,296)
===================================
7
Continental Global Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2004
G. Employee Benefit Plans
As of March 31, 2004, the Company has made contributions of approximately
$2,477,000, including a required contribution of $266,000 and a voluntary
contribution of approximately $2,211,000 due to the underfunded status of the
plan. The Company does not expect to make any further contributions in 2004.
The components of net periodic benefit cost for the three months ended March 31
are as follows:
2004 2003
----------------- ----------------
Service cost $ 50,950 $ 46,717
Interest cost 115,570 110,401
Expected return on plan assets (127,960) (78,318)
Amortization of prior service cost 4,133 4,133
Recognized loss 14,933 17,626
----------------- ----------------
Net periodic benefit cost $ 57,626 $ 100,559
================= ================
H. Income Taxes
Income taxes are provided using the liability method in accordance with SFAS No.
109, "Accounting for Income Taxes". For tax reporting purposes, the Company is
included in the consolidated federal tax return of N.E.S. Investment Co.
However, for financial reporting purposes, the Company's tax provision has been
calculated on a stand-alone basis. The Company's effective tax rate differs from
the statutory rate in the United States due to losses incurred without a
corresponding tax benefit.
The Company has subsidiaries located in Australia, the United Kingdom, and South
Africa, which are subject to income taxes in their respective countries.
8
Continental Global Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2004
I. Segment Information
While the Company primarily manages its operations on a geographical basis, the
Company operates in two principal business segments: conveyor equipment and
manufactured housing products. The conveyor equipment business markets its
products in four main business areas. The mining equipment business area
includes the design, manufacture and testing (and, outside the United States,
installation and maintenance) of complete belt conveyor systems and components
for mining application primarily in the coal industry. The conveyor components
business area manufactures and sells components for conveyor systems primarily
for resale through distributor networks. The engineered systems business area
uses specialized project management and engineering skills to combine mining
equipment products, purchased equipment, steel fabrication and other outside
services for sale as complete conveyor equipment systems that meet specific
customer requirements. The bulk conveyor equipment business area designs and
manufactures a complete range of conveyor equipment sold to transport bulk
materials, such as cement, lime, food products and industrial waste.
The Company's manufactured housing products business manufactures and/or
refurbishes axle components sold directly to the manufactured housing industry.
As part of this segment the Company also sells mounted tire and rim assemblies
to the manufactured housing industry. Included in the other category is
primarily the manufacture and sale of air filtration equipment for use in
enclosed environments, principally in the textile industry.
Three months ended
March 31
2004 2003
--------------------------------------
(in thousands)
Net sales:
Conveyor equipment $ 44,368 $ 36,695
Manufactured housing products 5,481 5,668
Other 155 210
--------------------------------------
Total net sales $ 50,004 $ 42,573
======================================
Segment operating income:
Conveyor equipment $ 2,025 $ 333
Manufactured housing products 103 184
Other 57 77
--------------------------------------
Total segment operating income 2,185 594
Management fee 109 36
Amortization expense 7 7
Restructuring charges 115 14
Corporate expense 446 413
--------------------------------------
Total operating income 1,508 124
Interest expense, net 3,830 3,722
Miscellaneous, net (100) 190
--------------------------------------
Loss before income taxes $ (2,222) $ (3,788)
======================================
9
Continental Global Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2004
J. Guarantor and Non-Guarantor Subsidiaries
The Company's domestic subsidiaries, Continental Conveyor & Equipment Company
(CCE) and Goodman Conveyor Company (GCC), and certain of its Australian
subsidiaries, all of which are wholly owned, are the guarantors of the Senior
Notes. The guarantees are full, unconditional, and joint and several. Separate
financial statements of these guarantor subsidiaries are not presented as
management has determined that they would not be material to investors. The
Company's United Kingdom and South African subsidiaries are not guarantors of
the Senior Notes.
Summarized consolidating balance sheets as of March 31, 2004 and December 31,
2003 for the Company, the guarantor subsidiaries, and the non-guarantor
subsidiaries are as follows (in thousands):
Combined Combined
Guarantor Non-Guarantor
March 31, 2004: The Company Subsidiaries Subsidiaries Eliminations Total
-------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 53 $ 716 $ 164 $ - $ 933
Accounts receivable, net - 22,828 10,959 (34) 33,753
Inventories - 21,447 6,264 - 27,711
Deferred income taxes 81 - 374 (170) 285
Other current assets 333 549 1,830 (1,621) 1,091
-------------------------------------------------------------------------------
Total current assets 467 45,540 19,591 (1,825) 63,773
Property, plant, and
equipment, net - 7,941 4,726 - 12,667
Goodwill - 13,043 837 - 13,880
Investment in subsidiaries 60,009 21,597 - (81,606) -
Deferred financing costs 1,560 - - - 1,560
Other assets 12,980 2,602 - (15,111) 471
-------------------------------------------------------------------------------
Total assets $ 75,016 $ 90,723 $ 25,154 $ (98,542) $ 92,351
===============================================================================
Current liabilities:
Notes payable $ - $ 13,093 $ 3,224 $ (940) $ 15,377
Trade accounts payable 10 18,511 10,556 (43) 29,034
Accrued compensation and
employee benefits 104 3,921 1,208 - 5,233
Accrued interest 6,600 - - - 6,600
Other accrued liabilities 1,414 5,663 4,038 (2,740) 8,375
Current maturities of
long-term obligations - 2,354 15 - 2,369
Senior notes in default 120,000 - - - 120,000
-------------------------------------------------------------------------------
Total current liabilities 128,128 43,542 19,041 (3,723) 186,988
Pension obligation - 491 - - 491
Deferred income taxes - 13,551 - (12,680) 871
Other long-term obligations - 255 1,216 (983) 488
Stockholder's equity
(deficit) (53,112) 32,884 4,897 (81,156) (96,487)
-------------------------------------------------------------------------------
Total liabilities and
stockholder's equity
(deficit) $ 75,016 $ 90,723 $ 25,154 $ (98,542) $ 92,351
===============================================================================
10
Continental Global Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2004
J. Guarantor and Non-Guarantor Subsidiaries (Continued)
Combined Combined
Guarantor Non-Guarantor
December 31, 2003: The Company Subsidiaries Subsidiaries Eliminations Total
-------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 114 $ 734 $ 3 $ - $ 851
Accounts receivable, net - 17,951 14,338 (63) 32,226
Inventories - 19,925 4,609 - 24,534
Deferred income taxes 81 - 372 (188) 265
Other current assets 51 647 2,061 (1,817) 942
-------------------------------------------------------------------------------
Total current assets 246 39,257 21,383 (2,068) 58,818
Property, plant, and
equipment, net - 8,182 4,732 - 12,914
Goodwill - 13,031 832 - 13,863
Investment in subsidiaries 60,009 21,520 - (81,529) -
Deferred financing costs 1,690 - - - 1,690
Other assets 12,285 2,023 - (13,830) 478
-------------------------------------------------------------------------------
Total assets $ 74,230 $ 84,013 $ 26,947 $ (97,427) $ 87,763
===============================================================================
Current liabilities:
Notes payable $ - $ 11,298 $ 3,393 $ (731) $ 13,960
Trade accounts payable 34 12,922 11,810 (63) 24,703
Accrued compensation and
employee benefits 42 6,006 1,375 - 7,423
Accrued interest 3,300 - - - 3,300
Other accrued liabilities 878 5,737 4,441 (2,535) 8,521
Current maturities of
long-term obligations - 2,456 90 - 2,546
Senior Notes in default 120,000 - - - 120,000
-------------------------------------------------------------------------------
Total current liabilities 124,254 38,419 21,109 (3,329) 180,453
Pension obligation - 341 - - 341
Deferred income taxes - 12,860 - (11,985) 875
Other long-term obligations - 196 1,131 (958) 369
Stockholder's equity
(deficit) (50,024) 32,197 4,707 (81,155) (94,275)
-------------------------------------------------------------------------------
Total liabilities and
stockholder's equity
(deficit) $ 74,230 $ 84,013 $ 26,947 $ (97,427) $ 87,763
===============================================================================
11
Continental Global Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2004
J. Guarantor and Non-Guarantor Subsidiaries (Continued)
Summarized consolidating statements of operations for the three months ended
March 31, 2004 and 2003, respectively, for the Company, the guarantor
subsidiaries, and the non-guarantor subsidiaries are as follows (in thousands):
Combined Combined
Guarantor Non-Guarantor
The Company Subsidiaries Subsidiaries Eliminations Total
------------- ------------- --------------- ------------- -------------
Three months ended March 31, 2004:
Net sales $ - $ 37,324 $ 12,688 $ (8) $ 50,004
Cost of products sold - 30,830 11,453 (8) 42,275
------------- ------------- --------------- ------------- -------------
Gross profit - 6,494 1,235 - 7,729
Total operating expenses 353 4,570 1,298 - 6,221
------------- ------------- --------------- ------------- -------------
Operating income (loss) (353) 1,924 (63) - 1,508
Interest expense, net 3,430 272 128 - 3,830
Miscellaneous, net - (92) (8) - (100)
------------- ------------- --------------- ------------- -------------
Income (loss) before income taxes (3,783) 1,744 (183) - (2,222)
Income tax expense (benefit) (695) 695 - - -
------------- ------------- --------------- ------------- -------------
Net income (loss) $ (3,088) $ 1,049 $ (183) $ - $ (2,222)
============= ============= =============== ============= =============
Combined Combined
Guarantor Non-Guarantor
The Company Subsidiaries Subsidiaries Eliminations Total
------------- ------------- --------------- ------------- -------------
Three months ended March 31, 2003:
Net sales $ - $ 33,553 $ 9,046 $ (26) $ 42,573
Cost of products sold - 28,198 8,455 (26) 36,627
------------- ------------- --------------- ------------- -------------
Gross profit - 5,355 591 - 5,946
Total operating expenses 449 4,231 1,142 - 5,822
------------- ------------- --------------- ------------- -------------
Operating income (loss) (449) 1,124 (551) - 124
Interest expense, net 3,427 238 57 - 3,722
Miscellaneous, net 170 24 (4) - 190
------------- ------------- --------------- ------------- -------------
Income (loss) before income taxes (4,046) 862 (604) - (3,788)
Income tax expense (benefit) (398) 398 - - -
------------- ------------- --------------- ------------- -------------
Net income (loss) $ (3,648) $ 464 $ (604) $ - $ (3,788)
============= ============= =============== ============= =============
12
Continental Global Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2004
J. Guarantor and Non-Guarantor Subsidiaries (Continued)
Summarized consolidating cash flow statements for the three months ended March
31, 2004 and 2003, respectively, for the Company, the guarantor subsidiaries,
and the non-guarantor subsidiaries are as follows (in thousands):
Combined Combined
Guarantor Non-Guarantor
The Company Subsidiaries Subsidiaries Eliminations Total
------------- ------------- --------------- ------------- -------------
Three months ended March 31, 2004:
Net cash provided by (used in)
operating activities $ (61) $ (1,231) $ 293 $ - $ (999)
Investing activities:
Purchases of property, plant, and
equipment - (55) (71) - (126)
Proceeds from sale of property,
plant, and equipment - 6 - - 6
------------- ------------- --------------- ------------- -------------
Net cash used in investing activities - (49) (71) - (120)
------------- ------------- --------------- ------------- -------------
Financing activities:
Net increase (decrease) in
borrowings on notes payable - 1,797 (473) - 1,324
Principal payments on long-term
obligations - (130) (23) - (153)
Intercompany loan activity - (377) 377 - -
------------- ------------- --------------- ------------- -------------
Net cash provided by (used in)
financing activities - 1,290 (119) - 1,171
Exchange rate changes on cash - (28) 58 - 30
------------- ------------- --------------- ------------- -------------
Increase (decrease) in cash and cash
equivalents (61) (18) 161 - 82
Cash and cash equivalents at beginning
of period 114 734 3 - 851
------------- ------------- --------------- ------------- -------------
Cash and cash equivalents at end of
period $ 53 $ 716 $ 164 $ - $ 933
============= ============= =============== ============= =============
13
Continental Global Group, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2004
J. Guarantor and Non-Guarantor Subsidiaries (Continued)
Combined Combined
Guarantor Non-Guarantor
The Company Subsidiaries Subsidiaries Eliminations Total
------------- ------------- --------------- ------------- -------------
Three months ended March 31, 2003:
Net cash provided by (used in)
operating activities $ (744) $ (788) $ (1,396) $ 5 $ (2,923)
Investing activities:
Purchases of property, plant, and
equipment - (43) (47) - (90)
Proceeds from sale of property,
plant, and equipment - 21 - - 21
------------- ------------- --------------- ------------- -------------
Net cash used in investing activities - (22) (47) - (69)
------------- ------------- --------------- ------------- -------------
Financing activities:
Net increase (decrease) in
borrowings on notes payable - 705 1,200 - 1,905
Principal payments on long-term
obligations - (125) (18) - (143)
Intercompany loan activity (1,175) 925 250 - -
------------- ------------- --------------- ------------- -------------
Net cash provided by (used in)
financing activities (1,175) 1,505 1,432 - 1,762
Exchange rate changes on cash - (5) 11 (5) 1
------------- ------------- --------------- ------------- -------------
Increase (decrease) in cash and cash
equivalents (1,919) 690 - - (1,229)
Cash and cash equivalents at beginning
of period 4,524 1,109 2 - 5,635
------------- ------------- --------------- ------------- -------------
Cash and cash equivalents at end of
period $ 2,605 $ 1,799 $ 2 $ - $ 4,406
============= ============= =============== ============= =============
14
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the Consolidated
Financial Statements and related notes included in the Company's Form 10-K for
the year ended December 31, 2003.
General
The Company, through its subsidiaries, is primarily engaged in the manufacture
and distribution of bulk material handling and replacement equipment, primarily
for use in the mining industry. The Company is a holding company organized under
the Delaware General Corporation law and conducts all of its business through
its direct and indirect operating subsidiaries. The Company's direct operating
subsidiaries are Continental Conveyor and Equipment Company and Goodman Conveyor
Company. The Company also owns indirectly all of the capital stock of
Continental Conveyor & Equipment Pty. Ltd., an Australian holding company that
owns all of the capital stock of four Australian operating companies. The
Company also owns indirectly all of the capital stock of Continental Conveyor
Ltd., a U.K. operating company, and Continental MECO (Pty.) Ltd., a South
African operating company.
Results of Operations
The following table sets forth, on a comparative basis, selected income
statement data as a percentage of net sales for the three months ended March 31,
2004 and 2003.
Three months ended
March 31
--------------------------
2004 2003
Net sales 100.0% 100.0%
Cost of products sold 84.5 86.0
Gross profit 15.5 14.0
SG&A expenses 12.0 13.5
Management fee 0.2 0.1
Restructuring charges 0.3 0.1
Operating income 3.0 0.3
Three months ended March 31, 2004, compared to three months ended March 31,
2003:
Net Sales
Net sales increased $7.4 million, or 17%, from $42.6 million in 2003 to $50.0
million in 2004. Net sales in the domestic operations of the Company's conveyor
equipment segment increased $1.5 million due to improved sales volume in the
mining equipment and conveyor components business areas. Net sales in the
foreign operations of the Company's conveyor equipment segment increased $6.2
million. Changes in foreign currency translation rates resulted in $3.6 million
of the increase in the foreign subsidiaries. The remaining increase in sales in
the foreign subsidiaries primarily resulted from increases in Australia and the
United Kingdom of $0.6 million and $1.7 million, respectively. The increase in
Australia was due to improved market conditions in the coal industry and the
increase in the United Kingdom was the result of increased sales of large system
contracts. Net sales in the Company's manufactured housing and other segments
decreased $0.2 million and $0.1 million, respectively.
15
Gross Profit
Gross profit increased $1.8 million, or 30%, from $5.9 million in 2003 to $7.7
million in 2004. Gross profit in the domestic operations of the Company's
conveyor equipment segment increased $1.0 million due to a more favorable
product mixture in the mining equipment business area and increased sales volume
in the higher margin conveyor components business area. Gross profit in the
foreign operations of the Company's conveyor equipment segment increased $0.8
million. Changes in foreign currency translation rates resulted in $0.4 million
of this increase. The remaining increase in the foreign subsidiaries was
primarily due to improved profit margins in the United Kingdom due to the
increased sales volume resulting in more efficient utilization of overhead
expenses.
SG&A Expenses
SG&A expenses increased $0.2 million, or 3%, from $5.8 million in 2003 to $6.0
million in 2004. The increase is almost entirely attributable to the Company's
foreign subsidiaries. Foreign currency translation rates caused an increase in
SG&A expenses of $0.4 million. Adjusted for foreign currency translation rates,
SG&A expenses at the Australian and United Kingdom subsidiaries each decreased
by $0.1 million.
Operating Income
Operating income increased $1.4 million, from $0.1 million in 2003 to $1.5
million in 2004. This increase resulted from the $1.8 million increase in gross
profit, offset by the $0.2 million increase in SG&A expenses, a $0.1 million
increase in management fees, and a $0.1 million increase in restructuring
charges.
Restructuring Charges
The Company incurred restructuring charges of approximately $0.1 million and
less than $0.1 million in 2004 and 2003 related to changes in staffing and
production requirements in its domestic operations. As part of this
restructuring, in 2002 the Company developed a plan to discontinue the
manufacturing operations in certain of its domestic facilities and merge these
operations with other existing facilities. The process of merging the domestic
operations began in 2003. However, in the fourth quarter of 2003, the Company
hired a third-party consultant to re-evaluate the restructuring plan and make
further recommendations. These recommendations are currently under review by the
Company's management and board of directors. The additional cost of this
restructuring has not been determined. The charges incurred in 2004 consist
primarily of consulting fees while the charges incurred in 2003 consist
primarily of severance costs associated with a reduction in personnel which
occurred in 2002 and 2003. Total restructuring charges incurred since this plan
was developed are approximately $0.8 million. As of March 31, 2004, the Company
has paid approximately $0.4 million of the charges incurred to date, with the
majority of the remainder expected to be paid by 2008.
Backlog
Backlog at March 31, 2004 was $61.1 million, an increase of $26.1 million, or
75%, from $35.0 million at December 31, 2003. At March 31, 2004, backlog in the
domestic operations of the Company's conveyor equipment segment was $20.5
million, an increase of $9.5 million from December 31, 2003, and backlog in the
foreign operations of the Company's conveyor equipment segment was $40.6
million, an increase of $16.6 million from December 31, 2003. Management
believes that approximately 95% of the backlog will be shipped in 2004.
Liquidity and Capital Resources
Net cash used in operating activities was $1.0 and $2.9 million for the three
months ending March 31, 2004 and 2003, respectively. Net cash used in operating
activities in 2004 resulted from a net loss of $2.2 million offset by non-cash
expenses of $0.7 million and a net decrease in operating assets and liabilities
16
of $0.5 million. Net cash used in operating activities in 2003 resulted from a
net loss of $3.8 million offset by non-cash expenses of $0.7 million and a net
decrease in operating assets and liabilities of $0.2 million. The reduction in
net cash used in operating activities from 2003 to 2004 was due to the reduction
in the net loss which resulted from higher net sales and improved gross profit
margins.
Net cash used in investing activities was $0.1 million for the three months
ending March 31, 2004 and 2003, and represents net purchases of property, plant,
and equipment for both years.
Net cash provided by financing activities was $1.2 million and $1.8 million for
the three months ending March 31, 2004 and 2003, respectively. Net cash provided
by financing activities in 2004 resulted from a net increase in borrowings on
notes payable of $1.3 million offset by principal payments on long-term
obligations of $0.1 million. Net borrowings on notes payable under the Company's
domestic credit facility increased $0.8 million and net borrowings on notes
payable under the Company's various credit facilities at the foreign
subsidiaries increased $0.5 million. Net cash provided by financing activities
in 2003 resulted from a net increase in borrowings on notes payable of $1.9
million offset by principal payments on long-term obligations of $0.1 million.
Net borrowings on notes payable under the Company's domestic credit facility
increased $0.4 million while net borrowings on notes payable under the Company's
various credit facilities at the foreign subsidiaries increased $1.5 million.
The Company's primary capital requirements consist of capital expenditures and
debt service. The Company utilizes cash on hand and its available credit
facilities to satisfy these requirements. The Company anticipates that capital
expenditures in 2004, which will be primarily for maintenance capital, will
approximate those made in 2003. In addition to the Company's debt service
requirements for interest expense, as of March 31, 2004, the Company's domestic
and foreign credit facilities had outstanding principal balances of
approximately $10.0 million and $5.4 million, respectively.
The Company has incurred recurring losses which totaled approximately $2.2
million for the three months ended March 31, 2004, and approximately $12.6
million and $12.5 million during the years ended December 31, 2003 and 2002,
respectively. The Company also had working capital deficiencies of approximately
$123.2 million and $121.6 million at March 31, 2004 and December 31, 2003,
respectively. The recurring losses are primarily the result of substantial debt
service obligations because the Company is highly leveraged and its current cash
flows from operations have been insufficient to service the interest expense on
its existing debt obligations.
The Company was not in compliance with certain covenants under its revolving
credit facilities as of December 31, 2003 or March 31, 2004, resulting in a
cross default under the terms of the Company's Senior Notes. In addition, the
Company failed to make its $6.6 million semi-annual interest payment for the
Senior Notes due on April 1, 2004. Following expiration of the 30-day grace
period provided for in the indenture, the Senior Notes were in default and the
Company has subsequently received a notice of default from the Trustee for the
Senior Notes. Accordingly, the Senior Notes have been recorded as current
liabilities in the condensed consolidated balance sheet. However, on April 26,
2004, the Company entered into a forbearance agreement with the holders of a
majority interest ("Majority Holders") of the Senior Notes which instructed the
Trustee for the Senior Notes to refrain from taking any action with respect to
the default prior to May 31, 2004. On May 27, 2004, June 14, 2004 and July 13,
2004, this agreement was amended to extend the forbearance agreement until July
23, 2004.
The Company has been negotiating with the Majority Holders for a restructuring
of the Senior Notes. The restructuring would provide for an exchange of new
notes and a cash payment for all of the outstanding Senior Notes. The
17
restructuring agreement has not been finalized and the Company cannot assure
that it will be able to enter into a restructuring agreement or successfully
complete a restructuring.
On May 1, 2004, June 1, 2004, June 15, 2004 and July 13, 2004, the Company and
Bank One, N.A. entered into forbearance agreements under which Bank One has
agreed not to exercise its rights with respect to the defaults, including the
right to demand payment, under the revolving credit facility for a stated period
while the Company negotiates a possible restructuring of its Senior Notes. On
July 12, 2004, the Company received a commitment letter from Bank One for a
waiver of the covenant violations and an extension of the revolving credit
facility. The extension is contingent upon the completion of a restructuring of
the Company's Senior Notes. The Company is currently in discussions with the
lenders under its existing foreign revolving credit facilities to extend such
credit facilities that have matured or are expiring in 2004.
The credit facility of the Company's United Kingdom subsidiary matured on March
31, 2004. The subsidiary was not in compliance with its debt covenants at March
31, 2004. However, the subsidiary's principal lender has continued to allow the
subsidiary to borrow under the facility to date at a reduced line of 2.25
million British pounds sterling. The subsidiary is currently in negotiations for
a new agreement. The credit facility of the Company's Australian subsidiary also
matured on March 31, 2004. The subsidiary's principal lender has continued to
allow the subsidiary to borrow under the facility to date and the subsidiary is
currently in negotiations for a new agreement.
At March 31, 2004, the Company had cash and cash equivalents of approximately
$0.9 million and approximately $7.6 million available for use under its domestic
credit facility, representing approximately $8.5 million of liquidity. At this
time the ability of the Company to successfully extend its domestic and foreign
revolving credit facilities maturing in 2004 and to restructure the terms of the
Senior Notes is uncertain and subject to substantial risk. In the event that the
Company is not successful in the restructuring of its Senior Notes, the Company
may seek to implement the restructuring of its Senior Notes through a plan of
reorganization under Chapter 11 of the Bankruptcy Code.
International Operations
The Company transacts business in a number of countries throughout the world and
has facilities in the United States, Australia, the United Kingdom, and South
Africa. As a result, the Company is subject to business risks inherent in
non-U.S. operations, including political and economic uncertainty, import and
export limitations, exchange controls and currency fluctuations. The Company
believes that the risks related to its foreign operations are mitigated by the
relative political and economic stability of the countries in which its largest
foreign operations are located. As the U.S. dollar strengthens and weakens
against foreign currencies in which the Company transacts business, its
financial results will be affected. The principal foreign currencies in which
the Company transacts business are the Australian dollar, the British pound
sterling, and the South African rand. The fluctuation of the U.S. dollar versus
other currencies resulted in increases to stockholder's equity (deficit) of
approximately $.04 million and $0.15 million for the three months ended March
31, 2004 and 2003, respectively.
Cautionary Statement for Safe Harbor Purposes
This Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) contains forward-looking statements within the meaning of the
federal securities laws. As a general matter, forward-looking statements are
those focused upon future plans, objectives or performance as opposed to
historical items and include statements of anticipated events or trends and
expectations and beliefs relating to matters that are not historical in nature.
Such forward looking statements are subject to uncertainties and factors
relating to the Company's operations and business environment, all of which are
18
difficult to predict and many of which are beyond the control of the Company,
that could cause actual results of the Company to differ materially from those
matters expressed in or implied by such forward-looking statements.
In addition, the Company's future results of operations, financial condition,
liquidity and capital resources could be materially adversely affected by, among
other things, economic and political uncertainties or prolonged economic
recession.
19
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The following table provides information about the Company's Senior Notes. The
table presents principal cash flows and interest rate by expected maturity date.
Interest Rate Sensitivity
Principal Amount by Expected Maturity
Average Interest Rate
Fair
Value,
(dollars in thousands) 2004 2005 2006 2007 2008 Total 3/31/04
- ------------------------------------------------------------------------------------------------------
Long-Term Obligations,
including current portion
Fixed Rate $ 120,000 $ - $ - $ - $ - $ 120,000 $ 18,000
Average interest rate 11%
The Company's interest income and expense are most sensitive to changes in the
general level of U.S. interest rates. In this regard, changes in U.S. interest
rates affect the interest earned on the Company's cash equivalents as well as
interest paid on its debt. To mitigate the impact of fluctuations in U.S.
interest rates, the Company generally borrows on a long-term basis to maintain a
debt structure that is fixed rate in nature.
A portion of the Company's operations consists of manufacturing and sales
activities in foreign jurisdictions. The Company manufactures and sells its
products in the United States, Australia, the United Kingdom, and South Africa.
As a result, the Company's financial results could be significantly affected by
factors such as changes in foreign currency exchange rates or weak economic
conditions in the foreign markets in which the Company distributes its products.
The Company's operating results are exposed to changes in exchange rates between
the U.S. dollar and the Australian dollar, the British pound sterling, and the
South African rand.
Item 4. Controls and Procedures
As of March 31, 2004, the Company carried out an evaluation, under the
supervision and with the participation of the Company's management, including
the Company's Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries) required to be
included in the Company's periodic filings with the Securities and Exchange
Commission. There were no significant changes in the Company's internal controls
over financial reporting that occurred during the Company's most recent fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.
20
Part II. Other Information
Item 1. Legal Proceedings
In August and September 2003, Continental Conveyor & Equipment Company was
served as one of fifty-eight known and unknown defendants in nineteen separate
actions pending in various state courts in the State of Alabama alleging various
contract, tort and warranty claims. All claims in such actions arose out of
alleged injuries and deaths occurring at the Jim Walters Resources No. 5 Mine
which occurred on September 23, 2001. The plaintiffs in such actions do not
allege a particular set of actions or omissions by Continental Conveyor &
Equipment Company that give rise to the claims, nor is there a specific amount
of damages sought. The Company believes that these claims are without merit and
intends to vigorously defend all claims. The Company considers such claims to be
the type of claims that arise in the normal course of its business. While it is
not feasible to predict the outcome of these matters with certainty, management
is of the opinion that their ultimate disposition should not have a material
adverse effect on the Company's financial condition.
Item 3. Defaults upon Senior Securities
On April 1, 2004, the Company failed to make its $6.6 million semi-annual
interest payment due for the 11% Senior Notes due 2007. Following expiration of
the 30-day grace period provided for in the indenture, the Senior Notes were in
default and the Company has subsequently received a notice of default from the
Trustee for the Senior Notes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: Refer to the index of exhibits.
(b) Reports on Form 8-K;
On April 1, 2004, the Company filed a Form 8-K regarding
Regulation FD Disclosure, which contained as an Exhibit a letter
of notification to Wells Fargo Bank, the Trustee of the
Company's 11% Senior Notes due 2007, that the Company had
determined to avail itself of the 30-day grace period for the
payment of interest due on April 1, 2004.
21
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.
CONTINENTAL GLOBAL GROUP, INC.
By: /s/ Jimmy L. Dickinson
-----------------------
Jimmy L. Dickinson
Vice President and Chief Financial
Officer (As duly authorized
representative and as Principal
Financial and Accounting Officer)
CONTINENTAL CONVEYOR & EQUIPMENT COMPANY
By: /s/ Jimmy L. Dickinson
-----------------------
Jimmy L. Dickinson
Vice President - Finance (As duly
authorized representative and as
Principal Financial and Accounting
Officer)
GOODMAN CONVEYOR COMPANY
By: /s/ J. Mark Etchberger
-----------------------
J. Mark Etchberger
Controller (As duly authorized
representative and as Principal
Financial and Accounting Officer)
Date: July 19, 2004
22
Continental Global Group, Inc.
Form 10-Q
Index of Exhibits
Exhibit
Number Description of Exhibit
3.1
(a) Certificate of Incorporation of Continental Global Group, *
Inc., as currently in effect.
(b) Certificate of Amendment of Certificate of Incorporation of
Continental Global Group, Inc. (Filed as Exhibit 3.1(b) to the
Company's Form 10-Q for the quarter ended September 30, 2000,
and is incorporated herein by reference.)
3.2 By-Laws of Continental Global Group, Inc., as currently in *
effect.
3.3 Certificate of Incorporation of Continental Conveyor & *
Equipment Company, as currently in effect.
3.4 By-Laws of Continental Conveyor & Equipment Company, as *
currently in effect.
3.5 Certificate of Incorporation of Goodman Conveyor Company, as *
currently in effect.
3.6 By-Laws of Goodman Conveyor Company, as currently in effect. *
4.1 Indenture, dated as of April 1, 1997, among Continental *
Global Group, Inc., Continental Conveyor & Equipment Company,
Goodman Conveyor Company, and the Trustee (containing, as
exhibits, specimens of the Series A Notes and the Series B
Notes).
10.1 Amended and Restated Credit Facility and Security Agreement,
dated as of July 25, 2002, among Bank One, NA, Continental
Conveyor & Equipment Company, and Goodman Conveyor Company.
(Filed as Exhibit 10.1 to the Company's Form 10-Q for the
quarter ended September 30, 2002, and is incorporated herein
by reference.)
10.2 Management Agreement, dated as of April 1, 1997, between *
Continental Global Group, Inc. and Nesco, Inc.
10.3 Employment Agreement, effective November 4, 2002, between
Continental Global Group, Inc. and Robert Hale. (Filed as
Exhibit 10.3 to the Company's Form 10-K for the year ended
December 31, 2002, and is incorporated herein by reference.)
10.4 Continental Global Group, Inc. Phantom Stock Plan dated as of
November 4, 2002. (Filed as Exhibit 10.4 to the Company's Form
10-K for the year ended December 31, 2002, and is incorporated
herein by reference.)
10.5 Second Amendment to Amended and Restated Credit Facility and
Security Agreement, effective as of August 12, 2003, by and
among Bank One, NA, Continental Conveyor & Equipment Company,
and Goodman Conveyor Company. (Filed as Exhibit 10.5 to the
Company's Form 10-Q for the quarter ended June 30, 2003, and
is incorporated herein by reference.)
10.6 Forbearance Agreement, effective as of April 26, 2004, by and
among Continental Global Group, Inc., N.E.S. Investment Co.,
and CFSC Wayland Advisers, Inc. (Filed as Exhibit 10.6 to the
Company's Form 10-K for the year ended December 31, 2003, and
is incorporated herein by reference.)
10.7 Forbearance Agreement, effective as of May 1, 2004, by and
among Bank One, NA, Continental Conveyor & Equipment Company,
and Goodman Conveyor Company. (Filed as Exhibit 10.7 to the
Company's Form 10-K for the year ended December 31, 2003, and is
incorporated herein by reference.)
10.8 Amendment 1, dated as of May 27, 2004, to Forbearance Agreement
effective as of April 26, 2004, by and among Continental Global
Group, Inc., N.E.S. Investment Co., and CFSC Wayland Advisers,
Inc. (Filed as Exhibit 10.8 to the Company's Form 10-K for the
year ended December 31, 2003, and is incorporated herein by
reference.)
10.9 Forbearance Agreement, effective as of June 1, 2004, by and
among Bank One, NA, Continental Conveyor & Equipment Company,
and Goodman Conveyor Company. (Filed as Exhibit 10.9 to the
Company's Form 10-K for the year ended December 31, 2003, and is
incorporated herein by reference.)
10.10 Amendment 2, dated as of June 14, 2004, to Forbearance Agreement
effective as of April 26, 2004, by and among Continental Global
Group, Inc., N.E.S. Investment Co., and CFSC Wayland Advisers,
Inc. (Filed as Exhibit 10.10 to the Company's Form 10-K for the
year ended December 31, 2003, and is incorporated herein by
reference.)
10.11 Forbearance Agreement, effective as of June 15, 2004, by and
among Bank One, NA, Continental Conveyor & Equipment Company,
and Goodman Conveyor Company. (Filed as Exhibit 10.11 to the
Company's Form 10-K for the year ended December 31, 2003, and is
incorporated herein by reference.)
10.12 Commitment Letter, dated as of July 12, 2004, from Bank One, NA,
to Continental Conveyor & Equipment Company, Goodman Conveyor
Company, and Continental Global Group, Inc. (Filed as Exhibit
10.12 to the Company's Form 10-K for the year ended Decenber 31,
2003, and is incorporated herein by reference.)
10.13 Amendment 3, dated as of July 13, 2004, to Forbearance Agreement
effective as of April 26, 2004, by and among Continental Global
Group, Inc., N.E.S. Investment Co., and Wayzata Advisers LLC.
(Filed as Exhibit 10.13 to the Company's Form 10-K for the year
ended December 31, 2003, and is incorporated herein by reference.)
10.14 Forbearance Agreement, effective as of July 13, 2004, by and
among Bank One, NA, Continental Conveyor & Equipment Company,
and Goodman Conveyor Company. (Filed as Exhibit 10.14 to the
Company's Form 10-K for the year ended December 31, 2003, and
is incorporatd herein by reference.)
31.1 Certification of the Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of the Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
32 Certifications of the Chief Executive Officer and Chief Financial
Officer pursuant to 18, U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Certain instruments with respect to long-term debt have not been filed as
exhibits as the total amount of securities authorized under any one of such
instruments does not exceed 10 percent of the total assets of the registrant and
its subsidiaries on a consolidated basis. The registrant agrees to furnish to
the Commission a copy of each such instrument upon request.
* Incorporated by reference from Form S-4 Registration Number 333-27665 filed
under the Securities Act of 1933.