-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, m6HPj8bfdYZ6vNDdC546E6daaCOx1+JBqai3OeMDRYKx4KJCEphyVcq74U/uEtkr dJesWOYmZQdf72HuDXaehw== 0000030067-94-000011.txt : 19940822 0000030067-94-000011.hdr.sgml : 19940822 ACCESSION NUMBER: 0000030067-94-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DRAVO CORP CENTRAL INDEX KEY: 0000030067 STANDARD INDUSTRIAL CLASSIFICATION: 1400 IRS NUMBER: 250447860 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05642 FILM NUMBER: 94543655 BUSINESS ADDRESS: STREET 1: 3600 ONE OLIVER PLZ CITY: PITTSBURGH STATE: PA ZIP: 15222-2651 BUSINESS PHONE: 2054322651 MAIL ADDRESS: STREET 1: P O BOX 2068 CITY: MOBILE STATE: AL ZIP: 36652 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: June 30, 1994 Commission File Number: 1-5642 DRAVO CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 25-0447860 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) One Oliver Plaza, Pittsburgh, Pennsylvania 15222 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (412) 566-3000 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 The number of shares outstanding of each of the registrant's classes of common stock as of July 31, 1994: Title of Class Shares Outstanding Common Stock, $1.00 par value 14,863,402 DRAVO CORPORATION AND SUBSIDIARIES INDEX PART I - FINANCIAL INFORMATION Page No. Consolidated Balance Sheets at June 30, 1994 and December 31, 1993 3, 4 Consolidated Statements of Operations for the Quarters ended June 30, 1994 and 1993 5 Consolidated Statements of Operations for the Six month period ended June 30, 1994 and 1993 6 Consolidated Statements of Cash Flows for the Six month period ended June 30, 1994 and 1993 7, 8 Notes to Consolidated Financial Statements 9 - 15 Management's Discussion and Analysis of Financial Condition and Results of Operations 16, 17 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 18 Item 6. Exhibits and Reports on Form 8-K 19 SIGNATURES 20 -2- DRAVO CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000's)
June 30, December 31, 1994 1993 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,103 $ 808 Accounts receivable, net 45,673 44,225 Notes receivable, net 2,691 3,318 Inventories 54,942 57,536 Other current assets 4,992 2,417 Total current assets 109,401 108,304 Advances to and equity in joint ventures 4,542 4,348 Notes receivable 6,027 6,870 Other assets 20,599 17,729 Deferred tax asset 24,440 24,853 Property, plant and equipment 323,714 311,822 Less: accumulated depreciation and amortization 204,794 201,854 Net property, plant and equipment 118,920 109,968 Total assets $283,929 $272,072
See accompanying notes to consolidated financial statements. -3- DRAVO CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000's)
June 30, December 31, 1994 1993 (unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term notes $ 4,486 $ 4,488 Accounts payable - trade 35,953 28,622 Income taxes 369 23 Accrued insurance 5,039 3,049 Accrued retirement contribution 3,531 2,101 Net liabilities of discontinued operations 887 2,006 Accrued loss on leases - discontinued operations 2,353 2,448 Other current liabilities 7,694 6,113 Total current liabilities 60,312 48,850 Long-term notes 92,207 88,520 Other liabilities 3,108 3,033 Net liabilities of discontinued operations 12,564 14,276 Accrued loss on leases - discontinued operations 6,914 7,854 Redeemable preference stock: Par value $1, issued 200,000 shares: Series D, $12.35 cumulative, convertible, exchangeable (entitled in liquidation to $20.0 million) 20,000 20,000 Shareholders' equity: Preference stock, par value $1, authorized 1,878,870: Series B, $2.475 cumulative, convertible; issued 30,386 and 32,386 shares (entitled in liquidation to $1.7 million and $1.8 million); 30 32 Series D, reported above Common stock, par value $1, authorized 35,000,000 shares; issued 14,979,407 and 14,967,824 14,979 14,968 Other capital 63,292 63,260 Retained earnings 12,363 13,119 Treasury stock at cost: Common shares - 119,221 (1,840) (1,840) Total shareholders' equity 88,824 89,539 Total liabilities and shareholders' equity $283,929 $272,072 See accompanying notes to consolidated financial statements.
-4- DRAVO CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (unaudited, $ in 000's, except per share data)
Quarters ended June 30, 1994 1993 Revenue $ 72,628 $ 70,192 Cost of revenue 59,982 56,269 Gross profit 12,646 13,923 Selling, general and administrative expenses 7,337 8,053 Earnings from operations 5,309 5,870 Other income (expense): Equity in earnings (loss) of joint ventures 441 (41) Other income 210 51 Interest income 212 360 Interest expense (2,397) (2,268) Net other expense (1,534) (1,898) Earnings before taxes 3,775 3,972 Provision for income taxes 626 277 Net earnings 3,149 3,695 Preference dividends 636 639 Net earnings available for common stock $ 2,513 $ 3,056 Earnings per share: Operations $ 0.17 $ 0.21 Weighted average shares outstanding 14,923 14,870
See accompanying notes to consolidated financial statements. -5- DRAVO CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (unaudited, $ in 000's, except per share data)
Six months ended June 30, 1994 1993 Revenue $130,309 $132,003 Cost of revenue 110,089 107,783 Gross profit 20,220 24,220 Selling, general and administrative expenses 14,816 15,996 Earnings from operations 5,404 8,224 Other income (expense): Equity in earnings of joint ventures 778 7 Other income 616 101 Interest income 344 667 Interest expense (4,638) (4,607) Net other expense (2,900) (3,832) Earnings before taxes 2,504 4,392 Provision for income taxes 626 306 Earnings before cumulative effect of accounting change 1,878 4,086 Cumulative effect of accounting change, net of tax (1,361) -- Net earnings 517 4,086 Preference dividends 1,273 1,278 Net earnings (loss) available for common stock $ (756) $ 2,808 Earnings (loss) per share: Operations $ 0.04 $ 0.19 Cumulative effect of accounting change (0.09) -- Total $ (0.05) $ 0.19 Weighted average shares outstanding 14,855 14,864 See accompanying notes to consolidated financial statements.
-6- DRAVO CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited, $ in 000's)
Six months ended June 30, 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 517 $ 4,086 Adjustments to reconcile net earnings to net cash provided (used) by continuing operations activities: Depreciation and amortization 8,722 8,921 Cumulative effect of accounting change 1,361 -- Gain on sale of assets (616) (101) Equity in joint ventures (194) (847) Changes in assets and liabilities: Increase in accounts receivable (1,448) (6,347) Decrease in notes receivable 670 43 Decrease in inventories 2,594 2,435 Increase in other current assets (2,575) (1,230) Increase in accounts payable and accrued expenses 12,678 2,244 Increase in other assets (2,870) (3,599) Decrease in deferred tax asset 413 -- Increase (decrease) in other liabilities (1,286) 207 Net cash provided by continuing operations activities 17,966 5,812 Decrease in net liabilities of discontinued operations (3,866) (7,254) Proceeds from repayment of notes receivable from sale of discontinued operations 800 1,192 Net cash used by discontinued operations activities (3,066) (6,062) Net cash provided (used) by operating activities 14,900 (250) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of assets 1,021 202 Additions to property, plant and equipment (18,079) (5,376) Other, net 1 -- Net cash used by investing activities $(17,057) $ (5,174)
See accompanying notes to consolidated financial statements. -7- DRAVO CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited, $ in 000's)
Six months ended June 30, 1994 1993 CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowing under revolving credit agreements $ 4,700 $ 8,600 Principal payments under long-term notes (1,016) (982) Proceeds from long-term notes -- (169) Proceeds from issuance of common stock 41 -- Dividends on preference stock (1,273) (1,278) Net cash provided by financing activities 2,452 6,171 Net increase in cash and cash equivalents 295 747 Cash and cash equivalents at beginning of period 808 970 Cash and cash equivalents at end of period $ 1,103 $ 1,717 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid (received) during the period for: Interest (net of amount capitalized) $ 4,558 $ 4,583 Income tax (133) 534
See accompanying notes to consolidated financial statements. -8- DRAVO CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (1) Basis of Presentation The accompanying consolidated financial statements include the accounts of Dravo Corporation and its majority-owned subsidiaries (the company). Significant intercompany balances and transactions have been eliminated in the consolidation process. These unaudited consolidated financial statements include all adjustments, consisting only of normal, recurring accruals, which management considers necessary for a fair presentation of the company's consolidated financial position, results of operations, and cash flows for the interim periods presented. Certain reclassifications of previously reported balances have been made to conform to the current period's presentation. (2) Inventories Inventories are classified as follows:
($ in 000's) June 30, December 31, 1994 1993 Finished goods $37,270 $40,660 Work in process 2,815 3,092 Materials and supplies 14,857 13,784 Net inventories $54,942 $57,536
Inventories are valued at average production cost or market, whichever is lower. The cost of products produced includes raw materials, direct labor, and operating overhead. -9- DRAVO CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (3) Contingent Liabilities The company has been notified by the Federal Environmental Protection Agency (EPA) that the EPA believes the company is a potentially responsible party (PRP) for the clean-up of soil and groundwater contamination at three subsites in Hastings, Nebraska, one of the EPA's priority sites for taking remedial action under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). At one of these subsites, a municipal landfill, the company, after a limited investigation, has determined that it believes it disposed of no hazardous substances at the particular site and has so informed the EPA. On December 31, 1991, the EPA sent a formal demand to the company as well as other PRPs at this subsite demanding that they reimburse the EPA for already incurred response costs in the amount of $1.2 million, and requesting that the PRPs submit a good faith proposal to perform soil and groundwater remediation at this subsite. The company has rejected the EPA's demand and decided not to submit the offer requested by the EPA. No PRP at this subsite has agreed to pay the EPA's response costs. As a result, statutory interest is being added to the EPA's response costs. Other PRPs, including the local municipality, have agreed to perform the remedial investigation and to design soil and groundwater remediation remedies at this subsite, but no party has agreed to conduct the remediation. At the second subsite, the company, again after a limited investigation, concluded that release of contaminants from this subsite is not sufficient to warrant the taking of remedial action. In January, 1994 the EPA sent a specific notice to the company that the EPA considered it and three other parties PRPs at this subsite. The letter invited the company and the other PRPs to make an offer to conduct a remedial investigation and feasibility study (RI/FS) of this subsite and stated that the EPA was in the process of preparing a workplan for the RI/FS. With respect to the third subsite, the company, along with one other PRP, has been served with administrative orders directing it to undertake soil remediation and interim groundwater remediation at that subsite. The company is currently complying with these orders while reserving its right to seek reimbursement from the United States for its costs if it is determined it is not liable for response costs or if it is required to incur costs because of arbitrary, capricious or unreasonable requirements imposed by the EPA. The issuance of the order concerning interim groundwater remediation followed many months of unresolved negotiations with the EPA, the other PRP and the company's insurers with respect to the EPA's demands that the company and the other PRP either finance or voluntarily undertake the interim groundwater remediation as well as their liability to complete the soil remediation and to pay for past response costs. The EPA has taken no legal action with respect to its demand that the company and the other PRP pay its past response costs. A third PRP has been notified by the EPA that the EPA regards it as potentially liable -10- DRAVO CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (3) Contingent Liabilities (continued) under Section 107(a) of CERCLA for costs the EPA has incurred or will incur in responding to the release and threat of release at this subsite. A total of five parties have been named by the EPA as PRPs at this subsite. The company may proceed against other parties at the subsite who have not been named by the EPA as PRPs or who have not contributed to the company's cost in complying with the EPA's administrative orders. The company, along with other PRPs from various other subsites, has recommended that the EPA adopt area-wide institutional controls as the permanent remedy at the site. No formal response to this proposal has been received by the PRPs. However, EPA has solicited a proposal from the PRPs to perform a remedial investigation of area-wide contamination. The company notified its primary and excess general liability insurance carriers of the claims by the EPA at the first and third subsites. Although one primary carrier agreed to pay for a part of the company's defense, it has not done so and has refused to pay for expenses the company has already incurred. The company's other primary carrier has declined coverage altogether. On August 10, 1992 the company filed suit in the Alabama District Court against its primary liability insurance carriers seeking a declaratory judgment that the company is entitled to a defense and indemnity under its contracts of insurance (including certain excess policies provided by one of the primary carriers). This complaint is limited to the EPA's claims at the third subsite. The suit has been amended to include as a defendant the excess liability carrier of the company's predecessor at the site. An investigation of the coverage provided by the primary carrier of the company's predecessor is also underway. An award of punitive damages is being sought against two of these carriers for their bad faith in failing to investigate the company's claim and/or denying the company's claim. The case is proceeding in accordance with a case management order issued by the District Court Magistrate assigned to handle pretrial matters. The company has notified its primary and excess general liability carrier, as well as the excess carrier of its predecessor, of the receipt of its notice of potential liability at the second subsite. Estimated total cleanup costs, including capital outlays and future maintenance costs for soil and groundwater remediation of approximately $17 million, are based on independent engineering studies. The company has assumed that it will participate in 33 percent of the costs. -11- DRAVO CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (3) Contingent Liabilities (continued) Included in the discontinued operations provision is the company's estimate of its share of the likely cost of soil and groundwater remediation at these three subsites. The company's estimated share of the costs is based on its assessment of the total cleanup costs, its potential exposure, and the viability of other named PRPs. On May 27, 1993, the company was also notified by the EPA that the company might be liable for costs incurred by the United States in responding to a release or threatened release of hazardous substances at a non-operating research facility in Golden, Colorado. The notice, which was received without any advance indicating that the EPA regarded the company as a potentially responsible party, asked the company and other responsible parties to conduct or participate in response actions at the site. On June 8, 1993, the company responded to the EPA's notice of potential liability by stating that it does not believe it is a responsible party at the site. In June, 1994, the company, along with other qualifying potentially responsible parties, was offered a de minimis settlement by EPA of their liability for response costs at this site. The company has accepted the de minimis settlement. The settlement requires the company to pay EPA $1,700. In return for this payment, the company will receive a release from liability for incurred response costs at the site up to $20 million and protection from contribution claims from third parties. In accepting the de minimis settlement offer, the company expressly retains the right to maintain that it has no liability for response costs at this site. The company's decision to accept the de minimis settlement was based solely on its conclusion that the costs of defending itself in this matter far outweighed the costs of the de minimis settlement. There are no reliable estimates of the cost of remediation at this site. In June, 1994, the company received two notices from EPA advising the company that it is potentially liable for the cost of responding to the release or threat of a release of hazardous substances at a site located in Slidell, St. Tammany Parish, Louisiana. The notice, which was sent to approximately 200 other parties, also contains an offer to enter into negotiations with potentially responsible parties to conduct necessary response actions at the site. The company has requested and received the information from EPA which forms the basis for EPA's decision to send the company notices of potential liability. The company is currently investigating whether it has any liability for response costs at this site and is preparing a response to information requested by EPA concerning the nature of the company's business. -12- DRAVO CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (3) Contingent Liabilities (continued) In 1990, the company filed an action now pending in Luzerne County, Pennsylvania alleging breach of contract and unjust enrichment arising out of the termination of a Turnkey Construction Contract for the Hazleton Gasification Facility Expansion. The suit named as defendants Continental Energy Associates (CEA), the project owner, Continental Cogeneration Corporation (CCC), the general partner of CEA, and Swiss Bank Corporation, the project lender. CEA and CCC filed a separate suit against the company which, as amended, seeks damages for breach of contract, negligent design and construction, negligent misrepresentation, fraud and tortious interference with the contract of surety. The two suits, along with a third action commenced by CEA and CCC against the company's surety, the Insurance Company of North America, have been consolidated. Documents produced by CEA and CCC during the course of discovery allege claims at an amount from approximately $10 million to approximately $35 million. However, the construction contract contains a provision limiting damages to the value of the contract (a net of approximately $10 million) which the company would seek to have specifically enforced. The company continues to vigorously assert its claims and to deny any liability. The company filed an action in 1981 to collect on a promissory note issued by Meladuras Portuguesa, C.A. (Melaport) and its principal, Alberto Caldera (Caldera). In 1985, Melaport and Caldera filed a counterclaim for damages alleging the company breached a contract between Melaport and the company relating to engineering and procurement services rendered between 1973 and 1978 for a sugar cane processing facility. A local Venezuelan court ruled partially in favor of Melaport's counterclaim. The ruling was upheld by a Venezuelan appeals court on September 25, 1992 and by the Venezuelan Supreme Court on June 8, 1993. The court ruling does not specify damages to be paid but does identify certain categories of damages to which Caldera and Melaport are entitled: (1) the losses suffered by Melaport from the time it commenced operations in 1974 to 1978; (2) the value of certain equipment and other assets which had been pledged by Melaport to secure borrowing in connection with the project; (3) the value of approximately 540 acres of land which a corporation controlled by Caldera had mortgaged to secure the borrowings. The amount of damages in these three categories will be established by an appraisal process conducted by the trial court. Damages will be adjusted for inflation since the counterclaim was filed in 1985 and for interest at 12 percent per year. While the opposing counsel has asserted that the damages are in excess of $35 million, the company at this time cannot predict the result of the appraisal proceedings. The company has no assets in Venezuela and will challenge the enforcement in the United States if a judgment is finally issued by the Venezuelan courts. On November 2, 1993, the company filed suit against Melaport and Caldera in the United States District court for the Western District of Pennsylvania, seeking an injunction and a declaratory judgment with respect to the proceedings in Venezuela. The -13- DRAVO CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (3) Contingent Liabilities (continued) company is requesting a determination that any judgment in the Venezuelan proceedings is not enforceable against the company and is also seeking indemnification for all costs, expenses, losses and damages incurred and which may be incurred by the company in the Venezuelan proceedings and the costs and expenses of the United States District Court action. On February 25, 1994, Melaport and Caldera filed a motion asking the Court to dismiss the suit based on the lack of personal jurisdiction over the defendants and based on the doctrines of forum non conveniens, res judicata and judicial estoppel. It also asked the Court to dismiss, as premature, the company's demand for injunction and declaratory relief. If the ruling of the Venezuelan Courts is successfully enforced against the company in the United States, the liability would be material to the company. If these lawsuits, claims and assertions, discussed above, are sustained against the company, material charges would be recorded in the company's financial statements. However, in some instances, it is not possible to determine the outcome of these matters or to estimate with any degree of certainty the range of potential costs which may be involved. In other instances, based upon the knowledge the company has of these lawsuits, claims and assertions, management believes the ultimate disposition of these matters will not result in material charges to earnings in excess of amounts recorded in the financial statements. Other claims and assertions made against the company, will be resolved, in the opinion of management, without material additional charges to earnings. The company has asserted claims, both in lawsuits and in administrative proceedings for contract adjustments under various contracts, which management believes to be meritorious, but no estimate can be made at present of the timing or the amount of recovery. -14- DRAVO CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (4) Discontinued Operations In December, 1987, Dravo's Board of Directors approved a major restructuring program which concentrated the company's future direction exclusively on opportunities involving its natural resources business. The plan included the sale or other disposition of the former Engineering and Construction segment. No provision has been made, except as noted, for the ultimate outcome of the matters in litigation which are disclosed in Note 3: Contingent Liabilities, because the outcome of these matters cannot be predicted or reasonably estimated. A ruling by the courts or a settlement of the disputes that is adverse to Dravo's position, or other unforeseen developments, could require a future additional provision for losses on discontinued operations. The remaining assets and liabilities at June 30, 1994 and December 31, 1993 of the discontinued operations relate to certain remaining unresolved construction contracts, accrued losses on leases and various insurance, environmental, and other matters associated with exiting the engineering and construction business and are presented below:
($ in 000's) June 30, December 31, 1994 1993 Current assets: Accounts and retainers receivable $ 24 $ 23 Other 3,512 3,512 Total current assets 3,536 3,535 Accounts and retainers receivable 444 472 Other 513 309 Total assets $ 4,493 $ 4,316 Current liabilities: Accounts and retainers payable $ 151 $ 178 Accrued loss on leases 2,353 2,448 Other 4,272 5,363 Total current liabilities 6,776 7,989 Accounts and retainers payable -- 45 Accrued loss on leases 6,914 7,854 Other 13,521 15,012 Total liabilities $ 27,211 $ 30,900 Net liabilities and accrued loss on leases of discontinued operations $(22,718) $(26,584)
-15- DRAVO CORPORATION AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations Earnings for the quarter were $3.1 million, or 17 cents per common share, compared to $3.7 million, or 21 cents per share, in the year ago quarter. Year-to-date earnings before cumulative effect of an accounting change are $1.9 million, or $2.2 million less than last year. The lower earnings for the quarter and six months resulted from price competition in the utility lime market and increased production costs. Higher production costs were incurred at lime and aggregate facilities located in the Ohio River Valley as a result of unusually bad weather in the first quarter and adverse river conditions which continued through April. Selling, general and administrative expenses were down $716,000 for the quarter and $1.2 million year-to-date, primarily from a cost reduction program. Earnings from joint ventures are significantly higher than last year due to strong demand for phosphorus produced by an Idaho joint venture mining operation and improved results by a Louisiana shell dredging joint venture. The company adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS 112) during the first quarter. A $1.4 million charge for the cumulative effect of a change in accounting principle was taken to recognize the company's liability under SFAS 112. Two significant changes on the company's balance sheet since December 31, 1993 are an increase in property, plant and equipment and accounts payable. Property, plant and equipment increased primarily due to construction-in-progress associated with a $61 million expansion at the company's Black River lime facility. Accounts payable are higher due to seasonal fluctuations and payments associated with the Black River construction. The company has substantially completed a $50 million 15-year term debt financing arrangement with Prudential Power Funding Associates, a unit of The Prudential Insurance Company of America, for the Black River expansion. Finalization of the 10.13 percent loan is pending final satisfaction of closing conditions. An agreement was reached with Ohio Edison Company's Pennsylvania Power Company subsidiary on a 13-year renewal of a lime supply contract for the Bruce Mansfield Station in Shippingport, Pennsylvania. Shipments are expected to be in the range of 450,000 tons annually, representing nearly 40 percent of existing utility lime business. Prices under the renewal agreement, which became effective May 1, 1994, are lower than the contract that it replaces. Future sales prices will be subject to escalation. The total income to be derived from the extension of the Ohio Edison contract will far outweigh the impact lower prices will have on profit margins. The company is currently negotiating the terms of another long-term lime supply contract that is approaching expiration. -16- DRAVO CORPORATION AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations The company announced on April 28, 1994 that it is exploring strategic alternatives which include joint venture opportunities, the sale of parts or all of one of its business segments, or the sale of the company as a whole. Discussions with various interested parties have taken place but no conclusive decisions have been made at this time. -17- DRAVO CORPORATION AND SUBSIDIARIES PART II - Other Information Item 4. Submission of Matters to a Vote of Security Holders The annual meeting of shareholders was held on April 28, 1994 in Pittsburgh, Pennsylvania. Listed below are the proposals submitted to shareholders in the company's Proxy Statement dated March 16, 1994 and the results of the shareholder votes. Election of three directors for a three year term:
For Withheld Jack Edwards 13,310,016 519,875 William E. Kassling 13,319,064 510,827 Konrad M. Weis 13,319,386 510,505 Jack W. Forrest 949,800 --
Election of one director for a two year term:
For Withheld Arthur E. Byrnes 13,783,352 56,139
Election of Certified Public Accountants:
For Against Abstain KPMG Peat Marwick 13,882,801 37,313 20,376
Proposal to approve the Dravo Corporation Stock Option Plan of 1994:
Broker For Against Abstain Non-vote 8,372,806 3,507,046 164,208 2,514,431
-18- DRAVO CORPORATION AND SUBSIDIARIES PART II - Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits The following is filed as an exhibit to Part I of this Form 10-Q: Exhibit No. 11 - Statement re computation of per share earnings. (b) Reports on Form 8-K The company filed no Reports on Form 8-K for the quarter ended June 30, 1994. -19- 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. DRAVO CORPORATION (Registrant) Date: August 12, 1994 /s/ERNEST F. LADD III Ernest F. Ladd III Executive Vice President, Finance and Administration Date: August 12, 1994 /s/LARRY J. WALKER Larry J. Walker Controller (Principal Accounting Officer) -20- Exhibit 11. Statement Re Computation of Per Share Earnings
(In 000's, except per share data) Quarters ended June 30, 1994 1993 Primary Earnings: Net earnings $ 3,149 $ 3,695 Deduct dividends on preference stock 636 639 Net earnings applicable to common stock $ 2,513 $ 3,056 Shares: Weighted average number of common shares outstanding 14,858 14,828 Dilutive effect of outstanding options and rights (as determined by the application of the treasury stock method at the average market price for the period) 65 42 Weighted average number of shares outstanding, as adjusted 14,923 14,870 Primary earnings per share $ 0.17 $ 0.21 Fully diluted Earnings: Net earnings $ 3,149 $ 3,695 Deduct dividends on preference stock (1) 636 639 Net earnings applicable to common stock $ 2,513 $ 3,056 Shares: Weighted average number of common shares outstanding 14,858 14,828 Dilutive effect of outstanding options and rights (as determined by the application of the treasury stock method at the higher of the closing or the average market price for the period) 65 73 Weighted average number of shares outstanding, as adjusted 14,923 14,901 Fully diluted earnings per share $ 0.17 $ 0.21
-21- Exhibit 11. Statement Re Computation of Per Share Earnings (continued)
(In 000's, except per share data) Quarters ended June 30, 1994 1993 Additional Fully Diluted Computation (2) Earnings: Net earnings $ 3,149 $ 3,695 Shares: Weighted average number of common shares outstanding 14,858 14,828 Dilutive effect of outstanding options and rights (as determined by the application of the treasury stock method at the higher of the closing or average market price for the period) 65 73 Shares issuable from assumed exercise of convertible preference stock 1,699 1,710 Weighted average number of shares outstanding, as adjusted 16,622 16,611 Fully diluted earnings per share $ 0.19 $ 0.22
(1) The inclusion of preference stock in the fully Dilutive computation would have an anti-Dilutive effect on earnings per share. (2) This calculation is submitted in accordance with Securities Exchange Act of 1934, Regulation S-K, paragraph 229.601 (b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15 because it produces an anti-Diltive result. -22- Exhibit 11. Statement Re Computation of Per Share Earnings
(In 000's, except per share data) Six months ended June 30, 1994 1993 Primary Earnings: Earnings before cumulative effect of accounting change $ 1,878 $ 4,086 Deduct dividends on preference stock 1,273 1,278 Earnings before cumulative effect of accounting change applicable to common stock 605 2,808 Cumulative effect of accounting change (1,361) -- Net earnings (loss) applicable to common stock $ (756) $ 2,808 Shares: Weighted average number of common shares outstanding 14,855 14,827 Dilutive effect of outstanding options and rights (as determined by the application of the treasury stock method at the average market price for the period) (1) -- 37 Weighted average number of shares outstanding, as adjusted 14,855 14,864 Primary earnings (loss) per share: Operations $ 0.04 $ 0.19 Cumulative effect of accounting change (0.09) -- Net earnings (loss) per share $ (0.05) $ 0.19 Fully diluted Earnings: Net earnings $ 517 $ 4,086 Deduct dividends on preference stock (2) 1,273 1,278 Net earnings (loss) applicable to common stock $ (756) $ 2,808 Shares: Weighted average number of common shares outstanding 14,855 14,827 Dilutive effect of outstanding options and rights (as determined by the application of the treasury stock method at the higher of the closing or the average market price for the period) (1) -- 73 Weighted average number of shares outstanding, as adjusted 14,855 14,900
-23- Exhibit 11. Statement Re Computation of Per Share Earnings (continued)
(In 000's, except per share data) Six Months ended June 30, 1994 1993 Fully diluted earnings (loss) per share: Operations $ 0.04 $ 0.19 Cumulative effect of accounting change (0.09) -- Net earnings (loss) per share $ (0.05) $ 0.19 Additional Fully Diluted Computation (3) Earnings: Net earnings $ 517 $ 4,086 Shares: Weighted average number of common shares outstanding 14,855 14,827 Dilutive effect of outstanding options and rights (as determined by the application of the treasury stock method at the higher of the closing or average market price for the period) 76 73 Shares issuable from assumed exercise of convertible preference stock 1,700 1,710 Weighted average number of shares outstanding, as adjusted 16,631 16,610 Fully diluted earnings per share $ 0.03 $ 0.25
(1) The inclusion of outstanding options and rights in the computation would have an anti-dilutive effect on earnings per share. (2) The inclusion of preference stock in the fully dilutive computation would have an anti-dilutive effect on earnings per share. (3) This calculation is submitted in accordance with Securities Exchange Act of 1934, Regulation S-K, paragraph 229.601 (b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15 because it produces an anti-dilutive result. -24- -----END PRIVACY-ENHANCED MESSAGE-----