-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ODpn5ZUyFvU7jOUxHIiPttkOOI07cljJbnznbk5DUJSVAcDp2RQoBWn04eFQUTlS 9GpRwrG7VqDs2dLcHRESsA== 0000911420-95-000088.txt : 19951119 0000911420-95-000088.hdr.sgml : 19951119 ACCESSION NUMBER: 0000911420-95-000088 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEVCON INTERNATIONAL CORP CENTRAL INDEX KEY: 0000028452 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 590671992 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07152 FILM NUMBER: 95592642 BUSINESS ADDRESS: STREET 1: 1350 E NEWPORT CENTER DR STREET 2: STE 201 CITY: DEERFIELD BEACH STATE: FL ZIP: 33443 BUSINESS PHONE: 3054291500 MAIL ADDRESS: STREET 1: 1350 E NEWPORT CENTER DR STREET 2: SUITE 201 CITY: DEERFIELD BEACH STATE: FL ZIP: 33442 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One)* [X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1994 for the quarterly period ended September 30, 1995 or [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to . Commission File No. 0-7152 DEVCON INTERNATIONAL CORP. (Exact name of Registrant as specified in its charter) FLORIDA 59-0671992 (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification No.) 1350 E. NEWPORT CENTER DRIVE, SUITE 201, DEERFIELD BEACH, FL 33442 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (305) 429-1500 Securities registered pursuant to section 12(g) of the Act: COMMON STOCK, $.10 PAR VALUE (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES X NO As of November 13, 1995, the number of shares outstanding of the Registrant's Common Stock was 4,431,177. DEVCON INTERNATIONAL CORP. AND SUBSIDIARIES INDEX Page Number Part I. Financial Information: Consolidated Balance Sheets - September 30, 1995 and December 31, 1994. . . . . . . . . . Consolidated Statements of Operations and Retained Earnings - Three and Nine Months Ended September 30, 1995 and 1994 . . . . . . . . Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . Notes to Consolidated Financial Statements. . . . Management's Discussion and Analysis of Financial Conditions and Results of Operations. . . . . . . . . . . . . . . . . . . . Part II. Other Information . . . . . . . . . . . . . . . . PART I. FINANCIAL INFORMATION DEVCON INTERNATIONAL CORP. AND SUBSIDIARIES Consolidated Balance Sheets September 30, 1995 and December 31, 1994 [CAPTION] September 30, December 31, 1995 1994 (Unaudited) (Audited) ASSETS Current assets: Cash $ 311,735 $ 159,118 Cash equivalents 965,491 920,944 Receivables, net 12,241,161 14,600,993 Prepaid expenses 1,058,514 986,317 Inventories 7,745,557 8,131,881 Costs in excess of billings and estimated earnings 2,718,921 2,611,494 Total current assets 25,041,379 27,410,747 Property, plant and equipment Land 5,767,976 5,498,857 Buildings 4,197,866 4,233,720 Leasehold interests 12,582,739 12,454,758 Machinery and equipment 71,215,161 69,865,911 Furniture and fixtures 1,003,936 970,571 Construction in process 2,442,807 2,285,638 97,210,485 95,309,455 Less accumulated depreciation (45,444,868) (43,761,782) 51,765,617 51,547,673 Investments in unconsolidated joint ventures and affiliates 230,280 230,280 Advances to unconsolidated joint ventures and affiliates 1,029,764 1,351,454 Receivables, net 17,580,855 18,420,072 Intangible assets, net of accumulated amortization 1,121,935 500,582 Other assets 715,502 1,044,311 $ 97,485,332 $100,505,119 See accompanying notes to consolidated financial statements.
DEVCON INTERNATIONAL CORP. AND SUBSIDIARIES Consolidated Balance Sheets September 30, 1995 and December 31, 1994
September 30, December 31, 1995 1994 (Unaudited) (Audited) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable, trade and other $ 6,481,929 $ 6,598,439 Accrued expenses and other liabilities 974,744 1,273,003 Notes payable to banks 3,347,000 2,480,000 Current installments of long-term debt 7,163,660 7,033,073 Billings in excess of costs and estimated earnings 87,777 56,278 Income taxes 34,316 50,000 Total current liabilities 18,089,426 17,490,793 Long-term debt, excluding current installments 15,544,641 18,074,674 Minority interest in consolidated subsidiaries 1,049,051 771,503 Deferred income taxes 1,429,000 1,429,000 Other liabilities 990,730 1,084,058 Total liabilities 37,102,848 38,850,028 Stockholders' Equity: Common stock, $0.10 par value Authorized 15,000,000 shares; issued and outstanding 4,431,177 shares in 1995 and 1994 443,118 443,118 Additional paid-in capital 11,740,700 11,740,700 Retained earnings 48,198,666 49,471,273 Total stockholders' equity 60,382,484 61,655,091 $ 97,485,332 $100,505,119 See accompanying notes to consolidated financial statements.
DEVCON INTERNATIONAL CORP. AND SUBSIDIARIES Consolidated Statements of Operations and Retained Earnings Three and Nine Months Ended September 30, 1995 and 1994 (Unaudited)
Three Three Nine Months Months Months Ended Ended Ended Sept 30, Sept 30, Sept 30, 1995 1994 1995 Concrete and related products revenues $ 8,032,604 $10,443,873 $27,791,599 Contracting revenues 3,366,867 4,816,284 11,228,479 Other revenues 764,723 980,649 2,756,455 Total revenues 12,164,194 16,240,806 41,776,533 Cost of concrete and related products revenues 6,804,224 7,628,512 21,384,054 Cost of contracting revenues 3,262,097 3,934,707 9,859,228 Cost of other revenues 621,861 759,279 2,030,509 Gross profit 1,476,012 3,918,308 8,502,742 Selling, general and administrative expenses 2,881,931 2,783,851 8,444,395 Operating income (loss) (1,405,919) 1,134,457 58,347 Other income (deductions) Interest expense (632,335) (668,228) (1,947,086) Gain on sale of equipment 2,841 16,950 156,062 Interest and other income 88,562 204,109 324,420 Minority interest 48,907 37,277 135,650 (492,025) (409,892) (1,330,954) Income (loss) before income taxes (1,897,944) 724,565 (1,272,607) Income taxes - - - Net earnings (loss) (1,897,944) 724,565 (1,272,607) Retained earnings, beginning of period 50,096,610 48,542,117 49,471,273 Retained earnings, end of period $48,198,666 $49,266,682 $48,198,666 Earnings (loss) per share $ (.42) $ .16 $ (.28) Weighted average number of shares outstanding 4,562,317 4,569,590 4,560,046 (continued) Nine Months Ended Sept 30, 1994 Concrete and related products revenues $30,170,067 Contracting revenues 16,928,440 Other revenues 3,271,926 Total revenues 50,370,433 Cost of concrete and related products revenues 22,380,499 Cost of contracting revenues 14,036,908 Cost of other revenues 2,520,035 Gross profit 11,432,991 Selling, general and administrative expenses 8,310,311 Operating income (loss) 3,122,680 Other income (deductions) Interest expense (2,008,694) Gain on sale of equipment 32,617 Interest and other income 648,979 Minority interest 111,293 (1,215,805) Income (loss) before income taxes 1,906,875 Income taxes - Net earnings (loss) 1,906,875 Retained earnings, beginning of period 47,359,807 Retained earnings, end of period $49,266,682 Earnings (loss) per share $ .42 Weighted average number of shares outstanding 4,561,595 See accompanying notes to consolidated financial statements.
DEVCON INTERNATIONAL CORP. AND SUBSIDIARIES Consolidated Statements of Cash Flows Nine Months Ended September 30, 1995 and 1994 (Unaudited) [CAPTION] 1995 1994 Cash flows from operating activities: Net earnings (loss) $(1,272,607) $ 1,906,875 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 3,546,623 4,948,795 Provision for doubtful accounts and notes 223,000 225,000 Gain on sale of equipment (156,069) (32,617) Minority interest income (48,907) (111,293) Changes in operating assets and liabilities: Decrease (Increase) in receivables, net 912,839 (2,023,577) Increase in costs in excess of billings and estimated earnings (107,427) (1,228,304) Decrease (Increase) in inventories 386,324 (69,561) Increase in other current assets (72,197) (284,346) Increase in other assets (24,190) (150,103) Increase (Decrease) in accounts payable, trade and other (144,289) 429,318 Increase in billings in excess of costs and estimated earnings 31,499 336,000 Decrease in income taxes payable (15,684) (121,267) Increase (Decrease) in other liabilities (93,328) 288,755 Net cash provided by operating activities 3,165,587 4,113,675 Cash flows from investing activities: Purchase of property, plant and equipment (3,870,453) (2,850,036) Proceeds from disposition of property, plant and equipment 640,601 530,536 Payment to acquire subsidiary company (1,000,000) - Issuance of notes (227,233) (1,827,546) Payments received on notes 2,643,443 344,189 Advances to affiliates (18,310) (92,294) Advances from affiliates 340,000 100,000 Net cash used in investing activities (1,491,952) (3,795,151) See accompanying notes to consolidated financial statements.
DEVCON INTERNATIONAL CORP. AND SUBSIDIARIES Consolidated Statements of Cash Flows Nine Months Ended September 30, 1995 and 1994 (Unaudited) [CAPTION] 1995 1994 Cash flows from financing activities: Proceeds from debt $ 6,509,127 $ 5,727,223 Principal payments on debt (8,041,573) (6,576,617) Net borrowings from bank overdrafts 55,975 415,031 Net cash used in financing activities (1,476,471) (434,363) Net increase (decrease) in cash and cash equivalents 197,164 (115,839) Cash and cash equivalents, beginning of period 1,080,062 1,263,827 Cash and cash equivalents, end of period $ 1,277,266 $ 1,147,988 Supplemental disclosures of cash flow information Cash paid for Interest $ 2,011,139 $ 1,782,174 Income taxes $ 33,986 $ 156,825 See accompanying notes to consolidated financial statements.
DEVCON INTERNATIONAL CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. The accounting policies followed by the Company are set forth in Note (l) to the Company's financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 1994. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the Company's financial position as of September 30, 1995 and the results of its operations and cash flows for the nine months ended September 30, 1995 and 1994. The results of operations for the nine months ended September 30, 1995 are not necessarily indicative of the results to be expected for the full year. On August 16, 1995, the Company acquired, for $1,000,000 cash, the stock of Societe des Carriers de Grand Case (SCGC) a French company engaged in the ready mix concrete and quarry business on the French island of St. Martin. The transaction was accounted for as a purchase. The financial effects of this acquisition were not material to the Company's financial position or results of operations. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All dollar amounts of $1.0 million or more are rounded to the nearest one tenth of a million; all other dollar amounts are rounded to the nearest one thousand and all percentages are stated to the nearest one tenth of one percent. RESULTS OF OPERATIONS Comparison of Three Months Ended September 30, 1995 vs Three Months Ended September 30, 1994 REVENUES The Company's revenues during the third quarter of 1995 were $12.2 million, as compared to $16.2 million during the third quarter of 1994. This 25.1 percent decrease was primarily due to decreases in the Company's land development contracting division and concrete and related products division revenues. The Company's concrete and related products division revenues decreased 23.1 percent to $8.0 million during the third quarter of 1995 from $10.4 million during the third quarter of 1994. This decrease was primarily due to the disruption in operations caused by Hurricanes Luis and Marilyn. Hurricane Luis, which struck Antigua, St. Maarten and St. Martin on September 5th caused serious property damage on both islands. Hurricane Marilyn, which struck St. Thomas and St. Croix on September 15th, caused extensive property damage on St. Thomas. The Company's plants and equipment did not suffer significant damage and reopened within a week of the storms; however, except for St. Maarten and St. Martin, sales volumes have not yet returned to or exceeded pre-storm levels. The Company believes that demand for concrete and related products in 1996 will be stronger in Antigua, St. Maarten, St. Martin and St. Thomas, as the owners of storm damaged homes and businesses begin and continue repair and rebuilding work. Revenues from the Company's land development contracting division decreased by 30.1 percent to $3.4 million during the third quarter of 1995 from $4.8 million during the third quarter of 1994. This decrease was primarily attributable to the completion in late 1994 of several construction contracts obtained during the latter part of 1993. The Company's contracting division operations were not adversely affected by Hurricanes Luis and Marilyn, although the Company has acquired one new construction project and believes it will acquire other storm- related projects. The Company's backlog of unfilled portions of land development contracts at September 30, 1995 was $9.2 million, involving twelve projects. As a result of the Company's current backlog it does not appear likely that the Company will achieve the contract revenue levels obtained in 1994. The Company expects that most of the backlog outstanding at September 30, 1995 will be completed by the end of 1995. Revenues from the Company's other operations (a marina and a ceiling tile manufacturing partnership) were $765,000 during the third quarter of 1995 and $1.0 million during the third quarter of 1994. This decrease is due primarily to a decrease in marina revenues resulting from a reduction in occupancy levels over those attained during the third quarter of 1994. The marina was damaged by Hurricane Marilyn but reopened for business within a week of the storm and is now back in operation. COST OF CONCRETE AND RELATED PRODUCTS Cost of concrete and related products as a percentage of concrete and related products revenues increased to 84.7 percent during the third quarter of 1995 from 73.0 percent during the third quarter of 1994. This increase was primarily attributable to the decrease in revenues recognized, offset by some reductions in fixed operating costs. The Company's margins will also fluctuate depending on the mix of products sold and the locations in which sales are made during the quarter. COST OF CONTRACTING Cost of contracting as a percentage of land development contracting revenues increased to 96.9 percent during the third quarter of 1995 from 81.7 percent during the third quarter of 1994. This increase is primarily attributable to the decline in revenues actually recognized and the costs incurred as a result of owning and operating heavy construction equipment, some of which, because of the Company's current level of construction volume, is not heavily utilized. In addition, the Company's gross margins are affected by the varying profitability levels of individual contracts and the stage of completion of such contracts. COST OF OTHER Cost of other as a percentage of other revenues was 81.3 percent in the third quarter of 1995 and 77.3 percent in the third quarter of 1994. This increase is primarily attributable to the decline in revenues actually recognized, offset by improvements in the ceiling tile manufacturing process which has resulted in a lower spoilage rate during production. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses ("SG&A expense") was $2.9 million during the third quarter of 1995 and $2.8 million during the third quarter of 1994. This increase was primarily attributable to higher than expected operating expenses, offset by a reduction in expense attributable to personnel reductions. Due to severance costs, the full impact of these cost reductions will not be realized until 1996. As a percentage of revenue, SG&A expense increased to 22.5 percent for the third quarter of 1995 from 17.2 percent for the third quarter of 1994. This percentage increase was primarily attributable to the decrease in revenues actually recognized. DIVISIONAL OPERATING INCOME (LOSS) The Company had an operating loss of $1.4 million for the third quarter of 1995 as compared to operating income of $1.1 million for the third quarter of 1994. The Company's concrete and related products division operating income decreased to a loss of $604,000 during the third quarter of 1995 from income of $946,000 during the third quarter of 1994. This decrease is primarily attributable to declines in revenues and gross profits, offset by reductions in SG&A expense incurred by this division. The Company's land development contracting division operating income decreased to a loss of $428,000 for the third quarter of 1995 from income of $428,000 for the third quarter of 1994. This decrease is primarily attributable to the reduction in contract revenues and gross profits. NET EARNINGS (LOSS) The Company had a net loss of $1.9 million during the third quarter of 1995 as compared to earnings of $725,000 for the same period in 1994. This decrease is primarily attributable to decreases in concrete and related products and contracting revenues and profits. Comparison of Nine Months Ended September 30, 1995 vs Nine Months Ended September 30, 1994 REVENUES The Company's revenues during the first nine months of 1995 were $41.8 million, as compared to $50.4 million during the same period in 1994. This 17.1 percent decrease was primarily due to decreases in the Company's concrete and related products and land development contracting division revenues. The Company's concrete and related products division revenues decreased 7.9 percent to $27.8 million during the first nine months of 1995 from $30.2 million during the same period in 1994. This decrease was primarily due to decreased demand for this division's products in the third quarter caused by the disruption in operations resulting from Hurricanes Luis and Marilyn, which struck the Caribbean in September 1995. Hurricane Luis, which struck Antigua, St. Maarten and St. Martin on September 5th caused serious property damage on both islands. Hurricane Marilyn, which struck St. Thomas and St. Croix on September 15th, caused extensive property damage on St. Thomas. The Company's plants and equipment did not suffer significant damage and reopened within a week of the storms; however, except for St. Maarten and St. Martin, sales volumes have not yet returned to or exceeded pre-storm levels. The Company believes that demand for concrete and related products in 1996 will be stronger in Antigua, St. Maarten, St. Martin and St. Thomas, as the owners of storm damaged homes and businesses begin and continue repair and rebuilding work. Revenues from the Company's land development contracting division decreased by 33.7 percent to $11.2 million during the first nine months of 1995 from $16.9 million for the same period in 1994. This decrease was primarily attributable to the completion in late 1994 of several construction contracts obtained during the latter part of 1993. The Company's contracting division operations were not adversely affected by Hurricanes Luis and Marilyn, although the Company has acquired one new construction project and believes it will acquire other storm related projects. The Company's backlog of unfilled portions of land development contracts at September 30, 1995 was $9.2 million, involving twelve projects. As a result of the Company's current backlog it does not appear likely that the Company will achieve the contract revenue levels obtained in 1994. The Company expects that most of the backlog outstanding at September 30, 1995 will be completed by the end of 1995. Revenues from the Company's other operations (a marina and a ceiling tile manufacturing partnership) were $2.8 million during the first nine months of 1995 and $3.3 million for the same period in 1994. This decrease is due primarily to a decrease in marina revenues resulting from a reduction in occupancy levels over those attained during the first nine months of 1994. COST OF CONCRETE AND RELATED PRODUCTS Cost of concrete and related products as a percentage of concrete and related products revenues increased to 76.9 percent during the first nine months of 1995 from 74.2 percent for the same period in 1994. This increase was primarily attributable to the decrease in revenues recognized, offset by some reductions in fixed operating costs. The Company's margins will also fluctuate depending on the mix of products sold and the locations in which sales are made during the quarter. COST OF CONTRACTING Cost of contracting as a percentage of land development contracting revenues increased to 87.8 percent during the first nine months of 1995 from 82.9 percent during the same period in 1994. This increase is primarily attributable to the decline in revenues actually recognized and the costs incurred as a result of owning and operating heavy construction equipment, some of which, because of the Company's current level of construction volume, is not heavily utilized. In addition, the Company's gross margins are affected by the varying profitability levels of individual contracts and the stage of completion of such contracts. COST OF OTHER Cost of other as a percentage of other revenues decreased to 73.7 percent during the first nine months of 1995 from 77.0 percent for the same period in 1994. This decrease is primarily attributable to improvements in the ceiling tile manufacturing process which has resulted in a lower spoilage rate during production, offset by the decline in revenues actually recognized. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses ("SG&A expense") was $8.4 million during the first nine months of 1995 and $8.3 million for the same period in 1994. This increase was primarily attributable to higher than expected operating expenses, offset by a reduction in expense attributable to personnel reductions. Due to severance costs, the full impact of these cost reductions will not be realized until 1996. As a percentage of revenue, SG&A expense increased to 20.2 percent for the first nine months of 1995 from 16.5 percent for the same period in 1994. This percentage increase was primarily attributable to the decrease in revenues actually recognized and the increase in SG&A expenses actually incurred. DIVISIONAL OPERATING INCOME (LOSS) The Company had operating income of $59,000 for the first nine months of 1995 as compared to operating income of $3.1 million for the same period in 1994. The Company's concrete and related products division operating income decreased to $894,000 during the first nine months of 1995 from income of $1.8 million during the same period in 1994. This decrease is primarily attributable to reductions in revenues and gross profit by this division. The Company's land development contracting division operating income decreased to a loss of $370,000 for the first nine months of 1995 from income of $1.5 million during the same period in 1994. This decrease is primarily attributable to the reduction in contract revenues and gross profits. NET EARNINGS (LOSS) The Company had a net loss of $1.3 million during the first nine months of 1995 as compared to earnings of $1.9 million during the same period in 1994. This decrease is primarily attributable to decreases in concrete and related products and contracting revenues and profits. LIQUIDITY AND CAPITAL RESOURCES The Company generally funds its working capital needs from operations and bank borrowings. In the land development contracting business, the Company must expend considerable amounts of funds for equipment, labor and supplies to meet the needs of particular projects. The Company's capital needs are greatest at the start of any new contract, since the Company generally must complete 45 to 60 days of work before receiving the first progress payment. In addition, as a project continues, a portion of the progress billing is usually withheld as retainage until all work is complete, further increasing the need for capital. On occasion the Company has provided long-term financing to certain customers who have utilized its land development contracting services. The Company has also provided financing for other business ventures from time to time. With respect to the Company's concrete and related products division, accounts receivable are typically outstanding for a minimum of 60 days and in some cases much longer. The nature of the Company's business requires a continuing investment in plant and equipment, as was done in 1994, along with the related maintenance and upkeep costs of such equipment. The Company has funded many of these expenditures out of its current working capital. However, notwithstanding the foregoing and after factoring in the Company's obligations as set forth below, management believes that the Company's cash flow from operations, existing working capital (approximately $7.0 million at September 30, 1995) and funds available from lines of credit will be adequate to meet the Company's anticipated needs for operations during the next twelve months. At September 30, 1995, the Company had a revolving secured line of credit in the amount of $2.0 million and three secured lines of credit in the amount of $1.0 million, $400,000 and $400,000 from commercial banks in South Florida and the Caribbean. The Company had $2.0 million of borrowings outstanding under the $2.0 million line of credit, $567,000 of borrowings outstanding under the $1.0 million line of credit and $800,000 of borrowings outstanding under the two $400,000 lines of credit. The $2.0 million line expires in May 1996, the $1.0 million line expires in June 1996 and the two $400,000 lines have no expiration date. The interest rates on all such indebtedness outstanding at September 30, 1995 was 9.3 percent. The Company has a $500,000 unsecured overdraft facility from a commercial bank in the Caribbean. The facility expired on September 30, 1995 and is being continued on a month to month basis until reapproved. The facility bears interest at 14.0 percent per annum. At September 30, 1995 the Company had borrowings of $489,000 outstanding under this line. The Company also has a $500,000 secured line of credit from a commercial bank in the United States. The line expires in October 1996 and bears interest at the prime interest rate plus one half of one percent. At September 30, 1995, the Company had no borrowings outstanding under this line. The Company has entered into three term loans with a Caribbean bank, repayable in varying monthly installments through December 2001. The interest rate on indebtedness outstanding at September 30, 1995 ranged from 9.0 percent to 10.3 percent and the Company had $4.9 million of borrowings outstanding. The loans are secured by individual leasehold mortgages on a block manufacturing plant, a cement distribution facility and a marina in the U.S. Virgin Islands. In September 1993, the Company entered into a $4.0 million secured term loan. Borrowings outstanding bear interest at the prime interest rate plus three fourths of one percent. The interest rate on indebtedness outstanding at September 30, 1995 was 9.5 percent and the Company has $2.3 million of borrowings outstanding. This loan is being repaid in quarterly installments which commenced in November 1993 and all remaining unpaid amounts are due in full on June 30, 1996. The loan is secured by the Company's notes receivable from the Government of Antigua and Barbuda. The Company has borrowed $4.4 million from a Company officer. One note has an outstanding balance of $4.2 million, is unsecured, bears interest at the prime interest rate and is due in full on January 1, 1997. The other note has a balance of $170,000, is secured by equipment, bears interest at 8.0 percent per annum and is due in monthly principal installments through February 1997 of $10,000, plus interest. The Company purchases equipment from time to time as needed for its ongoing business operations. At present, management believes that the Company's inventory of equipment is adequate for its current contractual commitments and operating activities, however, the acquisition of significant new construction contracts, depending on the nature of the contract, the job location and job duration, may require the Company to make significant investments in heavy construction equipment. Through September 30, 1995, the Company has sold equipment with an original cost basis of approximately $2.4 million and net book value of $485,000. Additional sales are expected over the remainder of 1995. Accordingly, except for the circumstances previously discussed, and normal equipment replacements and additions, management does not anticipate having to make a substantial investment in new equipment during the current year. The Company believes it has available or can obtain sufficient financing for all of its contemplated equipment replacements and additions. Historically, the Company has used a number of lenders to finance machinery and equipment purchases, including its ocean going bulk cement vessel, on an individual asset basis. At September 30, 1995 amounts outstanding to these lenders totalled $6.7 million. These loans are typically repaid over a three to six year term in monthly principal and interest installments. The Company is in violation of certain loan covenants in two of its loan agreements. The Company has obtained a waiver from one lender and believes it can obtain a waiver of these violations from the other lender. A significant portion of the Company's outstanding debt bears interest at variable rates. The Company could be negatively impacted by a substantial increase in interest rates. The Company has contingent obligations and has made certain guarantees in connection with acquisitions, its participation in certain joint ventures, certain employee and construction bonding matters and its receipt of a tax exemption. In connection with the St. Maarten acquisition, the Company agreed to pay the seller annually an amount per unit of certain concrete and stone products sold by the Company in St. Maarten from April 1, 1990 to March 31, 1998, but in no event less than $500,000 per year. The Company has certain offsets available against this payment which has reduced the minimum annual payment to $350,000 per year. Notes receivable and accrued interest at September 30, 1995 include $16.8 million, net due the Company pursuant to certain promissory notes delivered to the Company in connection with two construction contracts with the Government of Antigua, $2.5 million of which is classified as a current receivable. Scheduled payments call for both quarterly and monthly principal and interest payments until maturity in 1997. The Government of Antigua has routinely made the required quarterly payments aggregating $2.0 million per year but has made only some of the required monthly payments. The Company does not presently anticipate material increases in or accelerations of payments by the Government of Antigua. The Company expects that the notes will not be satisfied at maturity but the Antiguan government has advised the Company that the current payment stream will continue until the obligation is satisfied. A portion of the payment received from Antigua is derived from the lease proceeds the Antiguan government receives from the United States Department of Defense for the rental of two military bases. In January 1995, the Antiguan government was notified by the United States government that one of the bases would be closed in 1996. The Antiguan government has advised the Company that it will make up any shortfall in the military base proceeds from its general treasury. II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: None (b) Reports on Form 8-K: No reports on Form 8-K were filed by the Company during the first nine months of fiscal 1995. SIGNATURES Pursuant to the requirement 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: November 13, 1995 By: /S/ DONALD L. SMITH, JR. Donald L. Smith, Jr. President and Chief Executive Officer Date: November 13, 1995 By: /S/ WALTER B. BARRETT Walter B. Barrett Vice President, Finance and Chief Financial Officer EX-27 2
5 1 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 311,735 0 14,995,613 (2,754,452) 7,745,557 25,041,379 97,210,485 (45,444,868) 97,485,332 18,089,426 0 443,118 0 0 11,740,700 97,485,332 41,776,533 41,776,533 33,273,791 7,828,263 0 0 (1,947,086) (1,272,607) 0 0 0 0 0 (1,272,607) (.42) (.42)
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