-----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, P84At1xIj2S9LsJxxPCioiREgMkXSjSNbJtPa24oAycWaNqbsW3RjZqQboivihhO aNN9GXPPjM1CO4aIhlDs8w== 0000030067-96-000006.txt : 19960517 0000030067-96-000006.hdr.sgml : 19960517 ACCESSION NUMBER: 0000030067-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DRAVO CORP CENTRAL INDEX KEY: 0000030067 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [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: 96565923 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: March 31, 1996 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 April 30, 1996: Title of Class Shares Outstanding Common Stock, $1.00 par value 14,712,546 DRAVO CORPORATION AND SUBSIDIARIES INDEX PART I - FINANCIAL INFORMATION Page No. Consolidated Balance Sheets at March 31, 1996 and December 31, 1995 3, 4 Consolidated Statements of Operations for the Quarters ended March 31, 1996 and 1995 5 Consolidated Statements of Cash Flows for the Quarters ended March 31, 1996 and 1995 6, 7 Notes to Consolidated Financial Statements 8-10 Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 -2- DRAVO CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000's)
March 31, December 31, 1996 1995 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 586 $ 1,086 Accounts receivable, net of allowance for uncollectibles of $117 and $934 26,922 24,251 Notes receivable, net 1,294 1,296 Inventories 16,377 14,194 Net assets of discontinued operations - 923 Other current assets 1,674 1,322 Total current assets 46,853 43,072 Advances to and equity in joint ventures 2,704 2,466 Notes receivable 3,491 3,497 Other assets 22,745 23,205 Deferred income taxes 24,853 24,853 Property, plant and equipment 228,384 225,835 Less: accumulated depreciation and amortization 112,290 109,667 Net property, plant and equipment 116,094 116,168 Total assets $216,740 $213,261
See accompanying notes to consolidated financial statements. -3- DRAVO CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets ($ in 000's)
March 31, December 31, 1996 1995 (unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term notes $ 6,127 $ 6,099 Accounts payable - trade 14,163 17,969 Income taxes 83 208 Accrued insurance 1,269 1,639 Accrued retirement contribution 2,245 2,423 Net liabilities of discontinued operations 5,025 - Other current liabilities 4,792 4,969 Total current liabilities 33,704 33,307 Long-term notes 64,414 64,292 Net liabilities of discontinued operations 9,540 9,517 Other liabilities 6,719 6,290 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 25,386 shares (entitled in liquidation to $1.4 million); 25 25 Series D, reported above Common stock, par value $1, authorized 35,000,000 shares; issued 15,058,237 and 15,055,237 15,058 15,055 Other capital 60,847 60,818 Retained earnings 10,940 8,464 Treasury stock at cost: Common shares 347,691 (4,507) (4,507) Total shareholders' equity 82,363 79,855 Total liabilities and shareholders' equity $216,740 $213,261
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 March 31, 1996 1995 Revenue $ 38,224 $ 33,905 Cost of revenue 28,486 25,204 Gross profit 9,738 8,701 Selling, general and administrative expenses 5,071 5,191 Earnings from operations 4,667 3,510 Other income (expense): Equity in earnings of joint ventures 234 234 Other income - 179 Interest income - 75 Interest expense (1,696) (1,273) Net other income (expense) (1,462) (785) Earnings before taxes 3,205 2,725 Provision for income taxes 96 190 Net earnings 3,109 2,535 Preference dividends 633 634 Net earnings available for common shares $ 2,476 $ 1,901 Earnings per share: Operations $ 0.17 $ 0.13 Weighted average shares outstanding 14,823 14,912
See accompanying notes to consolidated financial statements. -5- DRAVO CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited, $ in 000's)
Quarters ended March 31, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 3,109 $ 2,535 Adjustments to reconcile net earnings to net cash provided (used) by continuing operations activities: Depreciation and amortization 2,790 2,151 Equity in joint ventures (238) 376 Changes in assets and liabilities: Decrease (increase) in accounts receivable (2,671) 2,625 Decrease in notes receivable 9 77 Increase in inventories (2,183) (1,137) Increase in other current assets (352) (1,368) Decrease in accounts payable and accrued expenses (4,531) (19,448) Increase (decrease) in taxes payable (125) 157 Decrease in other assets 460 359 Increase in other liabilities 429 88 Net cash used by continuing operations activities (3,303) (13,585) Increase (decrease) in net liabilities of discontinued operations 5,971 (4,952) Proceeds from repayment of notes receivable from sale of discontinued operations - 2,200 Net cash provided (used) by discontinued operations activities 5,971 (2,752) Net cash provided (used) by operating activities 2,668 (16,337) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of assets - 120,464 Additions to property, plant and equipment (2,716) (16,954) Other, (net) - (1) Net cash provided (used) by investing activities $ (2,716) $103,509
See accompanying notes to consolidated financial statements. -6- DRAVO CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited, $ in 000's)
Quarters ended March 31, 1996 1995 CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowing under revolving credit agreements $ 6,150 $ 1 Principal payments under long-term notes (6,001) (85,141) Proceeds from issuance of common stock 32 24 Purchase of treasury stock - (696) Dividends on preference stock (633) (634) Net cash used by financing activities (452) (86,446) Net increase (decrease) in cash and cash equivalents (500) 726 Cash and cash equivalents at beginning of period 1,086 2,027 Cash and cash equivalents at end of period $ 586 $ 2,753 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid (received) during the period for: Interest (net of amount capitalized) $ 1,712 $ 1,748 Income taxes 221 33
See accompanying notes to consolidated financial statements. -7- 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). The principal subsidiary is Dravo Lime Company, one of the nation's largest lime producers. The company completed a transaction on December 30, 1994 in which it sold substantially all the assets and certain liabilities of Dravo Basic Materials Company, Inc. (DBM), a former principal subsidiary. The consolidated cash flow statement for the quarter ended March 31, 1995 reflects the collection of proceeds from the sale of DBM, repayment of debt, and satisfaction of DBM liabilities, primarily accounts payable. 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. (2) Inventories Inventories are classified as follows: ($ in 000's)
March 31, December 31, 1996 1995 Finished goods $ 2,961 $ 1,677 Materials and supplies 13,416 12,517 Net inventories $16,377 $14,194
Finished goods are valued at average production cost or market, whichever is lower, and include raw materials, direct labor, and operating overhead. Materials and supplies are valued at average cost. (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 four sub-sites in Hastings, Nebraska. The Hastings site is 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 sub-sites, a municipal landfill, the company believes it could not have disposed of hazardous wastes at the particular sub-site because the landfill was closed prior to the time the company and its predecessor initiated the operation which generated the type of hazardous substances found at this sub-site. Other PRPs, including the local municipality, have agreed to perform the remedial investigation and to design soil and groundwater remedies at this sub-site. The company has agreed to participate in an EPA-initiated allocation proceeding for this sub-site. -8- DRAVO CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (3) Contingent Liabilities (continued) The company has also been notified by the EPA that the EPA considers it a PRP at another municipal landfill in Hastings. At least three other parties (including the City of Hastings) are considered by the EPA to be PRPs at this second sub-site. At this sub-site, the company has concluded that the City of Hastings is responsible for a proper closure of the landfill and the remediation of any release of hazardous substances. In January, 1994, EPA invited the company and the other PRPs to make an offer to conduct a remedial investigation and feasibility study (RI/FS) of this sub-site and stated that the EPA was in the process of preparing a work plan for the RI/FS. None of the PRPs has volunteered to undertake the RI/FS. With respect to the third sub-site, the company and two other PRPs have been served with administrative orders directing them to undertake soil remediation and interim groundwater remediation at that sub-site. 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 EPA has taken no legal action with respect to its demand that the company and the other PRPs pay its past response costs. A total of five parties have been named by the EPA as PRPs at this sub-site, but two of them have been granted de minimis status. The company believes other persons should also be named as PRPs. The fourth sub-site is a former naval ammunition depot which was subsequently converted to an industrial park. The company and its predecessor owned and operated a manufacturing facility in this industrial park. To date, the company's investigation indicates that it did not cause the release of hazardous substances at this sub-site during the time it owned and operated the facility. The United States has undertaken to conduct the remediation of this sub-site. In addition to sub-site clean-up, the EPA is seeking a clean-up of area- wide contamination associated with all of the sub-sites in and around Hastings, Nebraska. The company, along with other Hastings PRPs, has recommended that the EPA adopt institutional controls as the area-wide remedy in Hastings. The EPA has indicated some interest in this proposal but has decided to first conduct an area-wide remedial investigation before choosing a remedy. On August 10, 1992 the company filed suit in the Alabama District Court against its primary liability insurance carriers and one of its predecessor's insurers, 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) with regard to the third Hastings sub-site. The company has settled the claim against its predecessor's insurer, but the case against the company's insurers is still in litigation. An award of punitive damages is also being sought against the company's insurers for their bad faith in failing to investigate the company's claim and/or denying the company's claim. 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 first, second and fourth sub-sites. -9- DRAVO CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (3) Contingent Liabilities (continued) Estimated total clean-up costs, including capital outlays and future maintenance costs for soil and groundwater remediation of approximately $18 million, are based on independent engineering studies. Included in the discontinued operations provision is the company's estimate that it will participate in 33 percent of these remediation costs. The company's estimated share of the costs is based on its assessment of the total clean-up costs, its potential exposure, and the viability of other named PRPs. Other claims and assertions made against the company will be resolved, in the opinion of management, without material additional charges to earnings. The company has asserted claims that management believes to be meritorious, but no estimate can be made at present of the timing or the amount of recovery. (4) Discontinued Operations In December, 1987, Dravo's Board of Directors approved a major restructuring program which concentrated the company's future direction exclusively on opportunities involving its natural resources business. The remaining discontinued operations' assets and liabilities at March 31, 1996 and December 31, 1995 relate to non-cancelable leases, insurance, environmental, legal and other matters associated with exiting the engineering and construction business and are presented below:
($ in 000's) March 31, December 31, 1996 1995 Current assets: Accounts and retainers receivable $ 2,397 $ 122 Other - 7,185 Total current assets 2,397 7,307 Accounts and retainers receivable 342 333 Other 309 309 Total assets $ 3,048 $ 7,949 Current liabilities: Accounts and retainers payable $ 146 $ 140 Accrued loss on leases 2,260 2,240 Other 5,016 4,004 Total current liabilities 7,422 6,384 Accounts and retainers payable - - Accrued loss on leases 2,803 3,328 Other 7,388 6,831 Total liabilities $ 17,613 $ 16,543 Net liabilities and accrued loss on leases of discontinued operations $(14,565) $ (8,594)
-10- DRAVO CORPORATION AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations In 1995, the company completed a major expansion at its Black River facility in northern Kentucky. The resulting production from the expansion enabled the company to increase revenue over 1995 levels by nearly 13 percent to $38.2 million. The higher revenue was the principal contributor to first quarter 1996 net earnings increasing to $3.1 million, or 17 cents per common share, from $2.5 million, or 13 cents per share, in 1995. The company completed a transaction on December 30, 1994 in which it sold substantially all the assets and certain liabilities of Dravo Basic Materials Company, Inc. (DBM), a former principal subsidiary. Proceeds received from the sale of DBM were used to reduce debt $85 million early in 1995. Debt levels subsequently increased as DBMs' liabilities were satisfied and the company internally financed the completion of the Black River expansion project. The higher debt levels caused 1996 interest expense to be $423,000 higher than 1995. Current net liabilities of discontinued operations increased $5.0 million and current net assets decreased $923,000 from December 31, 1995. The changes reflect the collection of $7.3 million for a judgment and interest awarded to the company by a Georgia court related to a subcontractor dispute on a contract performed by a discontinued engineering subsidiary. The judgment and interest, classified as a discontinued operations current receivable in the company's year-end financial statements, were collected in March. The consolidated cash flow statement for the quarter ended March 31, 1995 reflects the collection of proceeds from the sale of DBM, $120 million; repayment of debt, $85 million; and satisfaction of DBM liabilities, primarily accounts payable. The company is currently adding a fourth kiln and ancillary equipment as part of a $20 million expansion of its lime production facility near Maysville, Kentucky. The new kiln, expected to start-up late in the first quarter of 1997, will increase Maysville's production capacity by 350,000 tons, or 33 percent. -11- 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 March 31, 1996. -12- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DRAVO CORPORATION (Registrant) Date: May 15, 1996 /s/ERNEST F. LADD III Ernest F. Ladd III Executive Vice President and Chief Financial Officer Date: May 15, 1996 /s/LARRY J.WALKER Larry J. Walker Vice President and Controller (Principal Accounting Officer) -13- EX-11 2 Exhibit 11. Statement Re Computation of Per Share Earnings
(In 000's, except per share data) Quarters ended March 31, Primary 1996 1995 Earnings: Net earnings $ 3,109 $ 2,535 Deduct dividends on preference stock 633 634 Net earnings applicable to common stock $ 2,476 $ 1,901 Shares: Weighted average number of common shares outstanding 14,708 14,853 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) 115 59 Weighted average number of shares outstanding, as adjusted 14,823 14,912 Primary earnings per share $ 0.17 $ 0.13 Fully diluted Earnings: Net earnings $ 3,109 $ 2,535 Deduct dividends on preference stock (1) 633 634 Net earnings applicable to common stock $ 2,476 $ 1,901 Shares: Weighted average number of common shares outstanding 14,708 14,853 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) 143 59 Weighted average number of shares outstanding, as adjusted 14,851 14,912 Fully diluted earnings per share $ 0.17 $ 0.13
-14- Exhibit 11. Statement Re Computation of Per Share Earnings (continued)
(In 000's, except per share data) Quarters ended March 31, 1996 1995 Additional Fully Diluted Computation (2) Earnings: Net earnings $ 3,109 $ 2,535 Shares: Weighted average number of common shares outstanding 14,708 14,853 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) 143 59 Shares issuable from assumed exercise of convertible preference stock 1,682 1,688 Weighted average number of shares outstanding, as adjusted 16,533 16,600 Fully diluted earnings per share $ 0.19 $ 0.15
(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-dilutive result. -15- EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DRAVO CORPORATION'S MARCH 31, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1996 MAR-31-1996 586 0 28333 117 16377 46853 228384 112290 216740 33704 0 15058 20000 25 67280 216740 38224 38224 28486 28486 0 0 1696 3205 96 3109 0 0 0 3109 .17 0
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