-----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, QaG0V1jzswhdg1YtLXGlhaWl85U/4oC7fvTtCEE2yYdIL0+jeOozXq/cN3ujA3qx FK3uq9Uz9haT+hzP5KWK5A== 0000032870-97-000008.txt : 19970520 0000032870-97-000008.hdr.sgml : 19970520 ACCESSION NUMBER: 0000032870-97-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUIXOTE CORP CENTRAL INDEX KEY: 0000032870 STANDARD INDUSTRIAL CLASSIFICATION: PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652] IRS NUMBER: 362675371 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08123 FILM NUMBER: 97608627 BUSINESS ADDRESS: STREET 1: ONE E WACKER DR STREET 2: STE 3000 CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3124676755 MAIL ADDRESS: STREET 1: ONE EAST WACKER DRIVE CITY: CHICAGO STATE: IL ZIP: 60601 FORMER COMPANY: FORMER CONFORMED NAME: ENERGY ABSORPTION SYSTEMS INC DATE OF NAME CHANGE: 19800815 10-Q 1 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ______________________________ [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended March 31, 1997 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 number 0-7903 I.R.S. Employer Identification Number 36-2675371 QUIXOTE CORPORATION (a Delaware Corporation) One East Wacker Drive Chicago, Illinois 60601 Telephone: (312) 467-6755 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 XX NO -------- -------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 7,974,612 shares of the Company's Common Stock ($.01-2/3 par value) were outstanding as of March 31, 1997. PART I FINANCIAL INFORMATION QUIXOTE CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Operations (Unaudited)
Nine Months Ended March 31, -------------------------------- 1997 1996 ---- ---- Net sales.............................$ 30,559,000 $ 33,241,000 Cost of sales......................... 15,857,000 16,348,000 ----------- ----------- Gross profit.......................... 14,702,000 16,893,000 Operating Expenses: Selling & administrative............ 11,236,000 11,406,000 Research & development.............. 1,816,000 1,115,000 ----------- ----------- 13,052,000 12,521,000 Operating profit...................... 1,650,000 4,372,000 ----------- ----------- Other income (expense): Interest income..................... 1,000 229,000 Interest expense.................... (494,000) (1,350,000) Other............................... (385,000) (274,000) ----------- ----------- (878,000) (1,395,000) ----------- ----------- Earnings from continuing operations before income taxes................... 772,000 2,977,000 Provisions for income taxes........... 193,000 1,131,000 ----------- ----------- Earnings from continuing operations... 579,000 1,846,000 ----------- ----------- Discontinued operations (net of tax): Loss from operations................ (2,231,000) (2,979,000) Loss on disposition................. (4,507,000) (10,913,000) ----------- ----------- Loss from discontinued operations... (6,738,000) (13,892,000) ----------- ----------- Net loss..............................$ (6,159,000) $(12,046,000) =========== =========== Per share data: Earnings from continuing operations.$ .07 $ .23 Loss from discontinued operations... (.84) (1.74) ----------- ----------- Net loss...... .....................$ (.77) $ (1.51) =========== =========== Weighted average common and common equivalent shares outstanding......... 8,024,729 7,964,706 =========== =========== See Notes to Consolidated Condensed Financial Statements.
QUIXOTE CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Operations (Unaudited)
Three Months Ended March 31, -------------------------------- 1997 1996 ---- ---- Net sales.............................$ 10,268,000 $ 10,953,000 Cost of sales......................... 5,471,000 5,176,000 ----------- ----------- Gross profit.......................... 4,797,000 5,777,000 Operating Expenses: Selling & administrative............ 3,505,000 4,156,000 Research & development.............. 768,000 540,000 ----------- ----------- 4,273,000 4,696,000 Operating profit...................... 524,000 1,081,000 ----------- ----------- Other income (expense): Interest income..................... 64,000 Interest expense.................... (176,000) (453,000) Other............................... (133,000) 176,000 ----------- ----------- (309,000) (213,000) ----------- ----------- Earnings from continuing operations before income taxes................... 215,000 868,000 Provisions for income taxes........... 26,000 330,000 ----------- ----------- Earnings from continuing operations... 189,000 538,000 ----------- ----------- Discontinued operations (net of tax): Loss from operations................ (3,676,000) (2,339,000) Loss on disposition................. (4,507,000) ----------- ----------- Loss from discontinued operations... (8,183,000) (2,339,000) ----------- ----------- Net loss..............................$ (7,994,000) $ (1,801,000) =========== =========== Per share data: Earnings from continuing operations.$ .02 $ .07 Loss from discontinued operations... (1.02) (.30) ----------- ----------- Net loss............................$ (1.00) $ (.23) =========== =========== Weighted average common and common equivalent shares outstanding......... 8,027,166 7,969,669 =========== =========== See Notes to Consolidated Condensed Financial Statements.
QUIXOTE CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheets
March 31, June 30, ------------------------------------- ASSETS 1997 1996 - ------------------------------------------------------------------------------- (Unaudited) Current assets: Cash and cash equivalents...................$ 22,411,000 $ 1,337,000 Accounts receivable, net of allowances for doubtful accounts of $163,000 at March 31 and $165,000 at June 30........... 6,783,000 9,042,000 Refundable income taxes....................... 3,016,000 Inventories: Raw materials............................... 1,890,000 2,016,000 Work in process............................. 897,000 627,000 Finished goods.............................. 1,435,000 713,000 ----------- ----------- 4,222,000 3,356,000 Deferred income tax assets.................... 1,170,000 1,170,000 Other current assets.......................... 651,000 490,000 ----------- ----------- Total current assets.......................... 35,237,000 18,411,000 ----------- ----------- Property, plant and equipment, at cost........ 21,237,000 21,148,000 Less accumulated depreciation................. (8,147,000) (8,035,000) ----------- ----------- 13,090,000 13,113,000 ----------- ----------- Net assets of discontinued operations......... 3,465,000 83,303,000 Other assets.................................. 2,867,000 3,158,000 ----------- ----------- $ 54,659,000 $117,985,000 =========== =========== See Notes to Consolidated Condensed Financial Statements.
QUIXOTE CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheets
March 31, June 30, ---------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996 - ------------------------------------------------------------------------------- (Unaudited) Current liabilities: Accounts payable........................... $ 1,420,000 $ 1,006,000 Dividends payable.......................... 946,000 Accrued expenses........................... 11,691,000 10,361,000 Income Taxes Payable....................... 931,000 ---------- ----------- Total current liabilities.................... 14,042,000 12,313,000 ---------- ----------- Long-term debt............................... 58,000,000 Deferred income taxes........................ 53,000 53,000 Shareholders' equity: Common stock............................... 145,000 145,000 Capital in excess of par value of stock.... 29,812,000 29,751,000 Retained earnings.......................... 16,080,000 23,196,000 Treasury stock, at cost.................... (5,473,000) (5,473,000) ----------- ----------- Total shareholders' equity 40,564,000 47,619,000 ----------- ----------- $ 54,659,000 $117,985,000 =========== =========== See Notes to Consolidated Condensed Financial Statements.
QUIXOTE CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (Unaudited)
Nine Months Ended March 31, -------------------------------- 1997 1996 ---- ---- Net loss............................................$(6,159,000) $(12,046,000) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation...................................... 1,130,000 10,198,000 Amortization...................................... 315,000 766,000 Provisions for losses on accounts receivable...... (2,000) 469,000 Changes in operating assets and liabilities: Accounts receivable............................. 2,261,000 2,502,000 Refundable income taxes......................... 3,016,000 Inventories and other current assets............ (1,027,000) (1,083,000) Accounts payable and accrued expenses........... 1,744,000 615,000 Income taxes payable............................ 931,000 (3,530,000) Discontinued operations-noncash charges and working capital changes........................... 19,000 12,242,000 Gain on sale of patent.............................. (347,000) ---------- ---------- Net cash provided by operating activities........... 2,228,000 9,786,000 ---------- ---------- Investing activities: Purchase of property, plant and equipment......... (1,107,000) (22,694,000) Proceeds from sales of discontinued operations.... 80,283,000 5,981,000 Decrease in funds deposited with Industrial Development Board.................... 2,323,000 Proceeds from the sale of patent.................. 1,960,000 Other............................................. (488,000) (802,000) ---------- ---------- Net cash provided by (used in) investing activities. 78,688,000 (13,232,000) ---------- ---------- Financing activities: Payments under revolving credit agreement.........(58,000,000) (500,000) Payment of semi-annual cash dividend.............. (1,903,000) (1,805,000) Proceeds from exercise of stock options........... 61,000 31,000 Proceeds from redemption of certificate of deposit...................................... 6,000,000 ---------- ---------- Net cash provided by (used in) financing activities.(59,842,000) 3,726,000 ---------- ---------- Increase in cash and cash equivalents............... 21,074,000 280,000 Cash and cash equivalents at beginning of period.... 1,337,000 2,075,000 ---------- ---------- Cash and cash equivalents at end of period..........$22,411,000 $ 2,355,000 ========== ========== Note: During the nine months ended March 31, 1997, the Company had net cash refunds of $3,762,000 for income taxes and paid $2,962,000 for interest. During the same period last year the Company made cash payments of $1,400,000 for income taxes and paid $4,014,000 for interest. See Notes to Consolidated Condensed Financial Statements.
QUIXOTE CORPORATION AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements (Unaudited) 1. The interim financial statements are prepared pursuant to the requirements for reporting on Form 10-Q. The June 30, 1996 balance sheet data was derived from audited financial statements, adjusted for the reclassification of assets and liabilities related to the discontinued operations discussed in Note 2 below, but does not include all disclosures required by generally accepted accounting principles. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes included in the Company's latest annual report on Form 10-K. In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of the results for interim periods. The current period results of operations are not necessarily indicative of results which ultimately will be reported for the full fiscal year ending June 30, 1997. 2. On March 27, 1997, the Company sold substantially all of the assets and transferred significant operating liabilities of Disc Manufacturing, Inc. (DMI) to Cinram LTD. for $80.3 million in cash. The transaction excludes DMI's Huntsville, Alabama land and building as well as certain DMI litigation. The sale was approved by the Company's shareholders on March 26, 1997. The Company recorded a loss of $4,507,000 on the sale of DMI which was net of income tax benefits of $3,004,000. DMI incurred a loss on operations for the third quarter and nine months ended March 31, 1997 of $3,676,000 and $2,231,000, respectively, which are net of income tax benefits of $1,576,000 and $957,000, respectively. The results of operations of DMI and the loss on its disposition are presented as discontinued operations in the accompanying consolidated condensed statements of operations. The accompanying consolidated condensed balance sheets and consolidated condensed statements of operations have been restated in order to present DMI as a discontinued operation for accounting purposes. As part of this restatement, interest expense was allocated between continuing and discontinued operations based upon the net assets of each. 3. During the first quarter of fiscal 1996, the Company discontinued the operations of Legal Technologies, Inc., which was involved in the development, manufacture and sale of products and systems for the legal community. The results of operations of the legal technologies segment and the estimated loss on its disposition are presented as discontinued operations in the accompanying consolidated statements of operations in fiscal 1996. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CURRENT YEAR-TO-DATE VERSUS PRIOR YEAR-TO-DATE - --------------------------------------------------- The Company's sales for the first nine months of fiscal 1997 decreased 8% to $30,559,000 from $33,241,000 in the same period last year due to declines in sales at Energy Absorption Systems, Inc. (Energy). Sales at Energy declined in its permanent system product lines (which includes the GREAT -Registered Trademark- product) as well as in sales of the water-filled Triton Barrier- Registered Trademark- and in parts sales. The Company believes that some customers may have postponed their purchases in anticipation of several new products to be introduced by Energy that qualify under the new federal testing and evaluation guidelines known as NCHRP 350, coupled with a delay in certifying one of these new products. Somewhat offsetting these product line decreases were increases in the Energite -Registered Trademark- and truck mounted attenuator (TMA) product lines. The gross profit margin in the current nine month period decreased to 48.1% from 50.8% in the same period last year. This was due to the lower sales volume in the current period and increased costs due to the expansion of Energy's Pell City, Alabama facility. Selling and administrative expenses in the current nine month period decreased 1% to $11,236,000 from $11,406,000 in the same period last year. A decrease in expenses in the current period resulting from last year's write-off of the Company's sewer rehabilitation business was offset by the Company's $600,000 current year incremental investment in its joint venture to market seismic bridge bearings with FIP Industriale S.p.A. Sales commissions also declined as a result of the decrease in sales. Corporate level administrative expenses remained at a level consistent with last year. Research and development expenses in the current nine month period increased 63% to $1,816,000 compared to $1,115,000 in the same period last year. This increase is due to expenditures for the development of new products and for the upgrade of its existing product line in order to meet the revised NCHRP 350 standards and for some special application testing for the newly introduced QuadGuard -Registered Trademark- permanent system. Interest income in the current nine month period was $1,000 compared to $229,000 in the same period last year due to the redemption of the Company's $6 million certificate of deposit posted as injunction security for certain litigation. The Company replaced this certificate of deposit with a surety bond backed by a letter of credit in the third quarter of last year. Interest expense in the current nine month period decreased 63% to $494,000 from $1,350,000 in the same period last year. This was due to a decrease in average long-term debt outstanding in the current period compared to the same period last year. Other expenses in the current nine month period increased to $385,000 compared to $274,000 in the same period last year. The Company's effective tax rate decreased in the current nine month period to 25% from 38% in the same period last year due to the anticipated realization of certain tax benefits in the current year along with the settlement of certain tax contingencies. CURRENT YEAR QUARTER VERSUS PRIOR YEAR QUARTER - ---------------------------------------------- The Company's sales for the third quarter of fiscal 1997 decreased 6% to $10,268,000 from $10,953,000 in the same quarter last year due to a decline in Triton barrier sales. Sales for all other product lines during the quarter were consistent with the same quarter last year. The gross profit margin in the current quarter decreased to 46.7% from 52.7% in the same quarter last year. This was due to the lower sales volume in the current period and increased costs due to the expansion of Energy's Pell City, Alabama facility. Selling and administrative expenses in the current quarter decreased 16% in the current quarter to $3,505,000 from $4,156,000 in the same quarter last year. A decrease in expenses in the current period resulting from last year's write-off of the Company's sewer rehabilitation business was offset by the Company's $350,000 current year incremental investment in its joint venture to market seismic bridge bearings with FIP Industriale S.p.A. Sales commissions declined as a result of the decrease in sales. Administrative expenses at the corporate level decreased due to a decrease in salaries and related benefits. Research and development expenses in the current quarter increased 42% to $768,000 compared to $540,000 in the same quarter last year. This increase in R&D was due to expenditures for the development of new products as well as for the upgrade of the Company's existing product line in order to meet the revised NCHRP 350 standards. There was no interest income in the current quarter compared to $64,000 in the same quarter last year due to the Company's redemption of its $6 million certificate of deposit that was posted as injunction security for certain litigation. Interest expense in the current quarter decreased 61% to $176,000 from $453,000 in the same quarter last year. This was due to a decrease in average long-term debt outstanding in the current period compared to the same period last year. Other expenses in the current quarter were $133,000 compared to income of $176,000 in the same quarter last year. Other income was earned last year as a result of a $347,000 gain from the sale of a patent. As discussed in Note 2 to the Consolidated Condensed Financial Statements, on March 27, 1997, the Company sold substantially all of the assets and transferred significant operating liabilities of Disc Manufacturing, Inc. to Cinram LTD. for $80.3 million in cash. The transaction excludes the Huntsville, Alabama land and building as well as certain DMI litigation. The sale was approved by the Company's shareholders. The Company recorded a loss of $4,507,000 on the sale of DMI which was net of income tax benefits of $3,004,000. DMI incurred a loss on operations for the third quarter and nine months ended March 31, 1997 of $3,676,000 and $2,231,000, respectively, which are net of income tax benefits of $1,576,000 and $957,000, respectively. These results are presented as discontinued operations in the Company's Consolidated Condensed Statement of Operations. The Company used the proceeds of the sale to repay all of its $37.2 million in bank debt and to redeem all of its 8% Convertible Subordinated Debentures and pay the related accrued interest. The balance of the proceeds will be used to pay transaction costs of approximately $2.6 million and to invest in the highway safety and equipment business and in other opportunities deemed beneficial to stockholders, including the repurchase of a portion of the Company's Common Stock outstanding. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company has cash and cash equivalents of $22,411,000 and access to additional funds of $40,000,000 available under its bank arrangements at March 31, 1997. Operating activities were a source of cash for the Company for the nine months of fiscal 1997 providing cash of $2,228,000. Excluding the effect from discontinued operations, the Company's cash generated from operating activities was $8,947,000. Cash of $78,688,000 was provided by investing activities during the nine month period. This was due principally to $80,283,000 in cash received from the sale of DMI which was completed on March 27, 1997. In addition, the Company made investments of $1,107,000 in equipment for its highway safety business. Financing activities used cash of $59,842,000 principally to repay the Company's bank debt of $40,000,000 and to redeem all of its 8% Convertible Subordinated Debentures. The Company also used cash to pay semi-annual cash dividends of $1,903,000. During the balance of fiscal 1997, the Company anticipates needing less than $250,000 in cash for capital expenditures. The Company will also use cash to acquire businesses that complement its existing operations. Also, the Company will require additional investments in working capital to maintain growth and will need cash to repurchase its own stock from time to time. These expenditures will be financed either through the Company's invested cash, cash generated from its operations, or from borrowings available under the Company's revolving credit facility. The Company believes its existing cash, cash generated from operations and funds available under its existing credit facility are sufficient for all planned operating and capital requirements. ADOPTION OF NEW ACCOUNTING STANDARDS - ------------------------------------ Effective for periods ending after December 15, 1997, the Company is required to adopt SFAS 128 (Statement of Financial Accounting Standards No. 128, "Earnings Per Share"). SFAS 128 requires companies to calculate basic and diluted earnings per share based upon standards designed to provide consistency and compatibility with calculations of other countries and with that of the International Accounting Standards Committee. The Company does not expect earnings per share upon adoption of this new accounting standard to be materially different from earnings per share as currently determined. FORWARD LOOKING STATEMENTS - -------------------------- Various statements made within the Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Quarterly Report on Form 10-Q constitute "forward looking statements" for purposes of the Securities and Exchange Commission's "safe harbor" provisions under the Private Securities Litigation Reform Act of 1995 and Rule 3b-6 under the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward looking statements involve risks and uncertainties, including those detailed in the Company's filings with the Securities and Exchange Commission. There can be no assurance that actual results will not differ from the Company's expectations. Factors which could cause materially different results include, among others, uncertainties related to the introduction of the Company's products and services; the successful completion and integration of acquisitions; and competitive and general economic conditions. II OTHER INFORMATION ITEM 1. Legal Proceedings - -------------------------- 1. REPETITIVE STRESS INJURY LITIGATION. On March 25, 1997, six of the cases pending in U.S. District Court for the Eastern District of New York went to trial on the issue of design defect and warnings. Following a three-week jury trial, a twelve-person jury unanimously ruled that the Stenograph court reporting equipment manufactured from 1939-1993 was not negligently designed and that warnings were not necessary with regard to the use of the equipment. See the Company's Form 10-K Report for the fiscal year ended June 30, 1996, item 3, for additional information. 2. RESORT VIDEO V. LASERVIDEO, INC., NO. 74659, California Superior Court, County of Los Angeles. A new trial on damages is set to begin on August 11, 1997. See the Company's Form 10-K Report for the fiscal year ended June 30, 1996, item 3, for additional information. 3. JEFFREY SMITH V. ENERGY ABSORPTION SYSTEMS INC., NO. GD941220, Court of Common Pleas of Allegheny County, Pennsylvania. This matter was settled in March 1997 on terms mutually satisfactory to the parties. See the Company's Form 10-K Report for the fiscal year ended June 30, 1996, item 3, and Form 10-Q for the quarter ended December 31, 1996, item 1, for additional information. 4. DISCOVISION ASSOCIATES V. DISC MANUFACTURING, INC., CASE NO. 95-21, CONSOLIDATED WITH CASE NO. 95-345, U.S. District Court for the District of Delaware. Plaintiffs have dropped four patents from the case, leaving six patents in issue. In April 1997, the Judge denied Plaintiffs' motion to dismiss portions of DMI's antitrust claims and corresponding affirmative defenses, finding that DMI had sufficiently and properly pled the claims in issue. See the Company's Form 10-K Report for the fiscal year ended June 30, 1996, item 3, for additional information. 5. MICRO DYNAMICS V. STENOGRAPH CORPORATION, NO. CD-94-1805, U.S. District Court for the District of Maryland. Neither side appealed the verdict in this case and this matter is now concluded. See the Company's Form 10-K Report for the fiscal year ended June 30, 1996, item 3, and Form 10-Q Reports for the quarters ended September 30 and December 31, 1996, item 1, for additional information. 6. XEROTEX ET AL. V. INTEGRATED INFORMATION SERVICES, CASE NO. 96 CIV 681, U.S. District Court for the District of New Jersey. This matter was settled in March 1997 on terms mutually satisfactory to the parties. See the Company's Form 10-K Report for the fiscal year ended June 30, 1996, item 3, for additional information. ITEM 2. Changes in Securities - ----------------------------- None. ITEM 3. Default upon Senior Securities - --------------------------------------- None. ITEM 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ A Special Meeting of Stockholders was held on March 26, 1997 to vote upon the approval of the sale of substantially all of the assets of Disc Manufacturing, Inc. to Cinram Inc. and Cinram Ltd. The matter was approved as follows: For Against Abstain --------- ------- ------- 6,278,852 42,531 31,813 ITEM 5. Other Information - -------------------------- On May 11, 1997, Leslie J. Jezuit, the Company's President and Chief Operating Officer, was elected to the Company's Board of Directors to fill the vacancy created by the resignation of David S. Ruder. Mr. Ruder resigned from the Board on April 24, 1997 for personal reasons after seven years of service. ITEM 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) On April 10, 1997, the Company filed a report on Form 8-K dated March 27, 1997, reporting under "Item 2 Acquisition or Disposition of Assets", that the Company had completed the sale of substantially all of the assets of Disc Manufacturing, Inc. to Cinram Inc. and Cinram Ltd. The Company received approximately $80.3 million in cash from the sale which was used to repay all of its $37.2 million of bank debt, to redeem all of its 8% Convertible Subordinated Debentures and to pay transaction costs. The Company reported that the balance would be used to invest in the highway safety and equipment business or in other opportunities deemed beneficial to stockholders, including repurchase of a portion of the Company's outstanding common stock. Included in the Form 8-K filing was the pro forma financial information required pursuant to Article 11 of regulation S-X in connection with the sale. The report on Form 8-K also reported under "Item 5 Other Events", the Company's exercise of its optional redemption rights to redeem on April 30, 1997 all of its 8% Convertible Subordinated Debentures. Also reported was the amendment of the Company's banking arrangements, including the reduction of its borrowing availability from $65 million to $40 million. (b) Exhibits * Management contract, compensatory plan or agreement 10.(a) *Second Amendment to Employment Agreement dated January 13, 1997 between the Company and Myron R. Shain; Letter Agreement dated January 13, 1997 between the Company and Myron R. Shain. SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 to be signed on its behalf by the undersigned thereunto duly authorized. QUIXOTE CORPORATION DATE: May 15, 1997 /s/ Daniel P. Gorey -------------- ------------------------------ DANIEL P. GOREY Chief Financial Officer, Vice President and Treasurer (Chief Financial & Accounting Officer) EX-10 2 Exhibit 10 (a-1) SECOND AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT This Second Amendment to Executive Employment Agreement is made and entered into as of this 13th day of January, 1997, by and between Quixote Corporation, a Delaware corporation (hereinafter referred to as the "Company"), and Myron R. Shain of Palos Hills, Illinois (hereinafter referred to as the "Executive"). RECITALS WHEREAS, the Company and the Executive have entered into an Executive Employment Agreement dated as of June 24, 1991 as amended (the "Agreement"), which provides for certain benefits to the Executive upon a "change of control" of the Company; and WHEREAS, the Company and the Executive agree that the change of control provision of the Agreement might be deemed to include the proposed transactions contemplated in that Asset Purchase Agreement dated as of December 8, 1996 among the Company, Disc Manufacturing, Inc., Cinram Ltd. and Cinram Inc.; and WHEREAS, the Executive and the Company agree that consummation of the transactions contemplated in said Asset Purchase Agreement is not intended to be a "change in control" for purposes of the Agreement; and WHEREAS, the parties desire to modify the Agreement to set forth their understanding; NOW, THEREFORE, in consideration of the foregoing, and of the respective covenants and agreements of the parties contained herein, the parties agree as follows: 1. Section 6(g)(iii) of the Agreement shall be amended to read as follows: there shall be consummated (A) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (B) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company; provided, however, that the consummation of the transactions contemplated in that Asset Purchase Agreement dated as of December 8, 1996 by and among the Company, Disc Manufacturing, Inc., Cinram Ltd. and Cinram Inc., shall not, in and of itself, constitute a change in control of the Company within the meaning of this Section 6(g). 2. The first sentence of Section 8(a) of the Agreement shall be amended to read as follows: The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all, or substantially all, of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place; provided, however, that the consummation of the transactions contemplated in that Asset Purchase Agreement dated as of December 8, 1996 by and among the Company, Disc Manufacturing, Inc., Cinram Ltd. and Cinram Inc. shall not, in and of itself, be deemed to require compliance with this first sentence of Section 8(a). 3. Except as set forth herein, the Agreement is not in any way amended, modified or changed. IN WITNESS WHEREOF, this Second Amendment to Executive Employment Agreement is executed as of the date above written. QUIXOTE CORPORATION EXECUTIVE By:/s/ Leslie J. Jezuit /s/ Myron R. Shain Its: President Myron R. Shain EX-10 3 Exhibit 10 (a-2) January 13, 1997 Myron R. Shain 9723 Hickory Crest Palos Hills, IL 60465 Dear Myron: In connection with the proposed sale of the business of Disc Manufacturing, Inc. (the "Sale"), you and Quixote Corporation ("Quixote") executed today a Second Amendment to Executive Employment Agreement, and this letter summarizes our agreement with respect to your request for early retirement as an employee of Quixote, assuming and specifically conditioned upon the consummation of the Sale. We have agreed as follows: 1. You will be employed by Quixote through the close of business on June 30, 1997 on the terms and conditions of your Executive Employment Agreement dated June 24, 1991, as amended by this letter agreement. 2. For the two years beginning July 1, 1997 and ending June 30, 1999 (the "Consulting Period"), you will be available to provide consulting services to Quixote on an as-needed basis in connection with various legal, tax and litigation aspects of Quixote's discontinued operations. 3. During the Consulting Period, Quixote will pay you a consulting fee equal to your base salary on June 30, 1997, payable semi-monthly. In the alternative, Quixote is willing to pay you this consulting fee in a lump sum on June 30, 1997, discounted to present value at a 6% rate. In addition, on June 30, 1997, you will be paid an amount equal to the number of paid vacation days that you have accrued and are entitled to in 1997 (including any vacation days carried over from 1996) that you have not taken or used prior to the date of your retirement. During the Consulting Period, you will be entitled to receive prompt reimbursement for all reasonable expenses incurred by you (in accordance with Quixote's policies and procedures for its senior executive officers) in performing your consulting services for Quixote, provided that you properly account therefor in accordance with its policies. 4. During the Consulting Period, Quixote will provide you healthcare benefits comparable to those provided all other Quixote employees. Quixote shall offer without cost or charge to you the right to assume ownership and related premiums of any policies of life insurance, if any, purchased on your life which are in force upon expiration of the Consulting Period. 5. For each of the twelve-month periods ending June 30, 1998 and June 30, 1999, Quixote will pay you a $60,000 bonus, payable when other Quixote employees receive their cash bonuses for the fiscal years ended June 30, 1998 and June 30, 1999, but in no event later than August 31, 1998, and August 31, 1999, respectively. 6. As you know, if the Sale is consummated, all of your outstanding incentive stock options will immediately vest, and you will have 3 months to exercise any options upon your retirement. 7. You may continue to use your company-leased automobile, and Quixote will continue to make lease payments for the term of the lease. When the lease expires, Quixote will make arrangements with the auto leasing company to deliver title to that automobile to you. 8. In accordance with your Retirement Award Agreement, Quixote will deliver to you 4,600 shares of Quixote Common Stock as of June 30, 1997 and will pay the appropriate cash retirement award, as required by the Retirement Award Agreement. Thereafter, you shall not be entitled to any additional shares pursuant to that Retirement Award Agreement, but all restrictions on your sale or transfer of your retirement award shares will terminate as of the close of business on June 30, 1997. 9. You and Quixote will cooperate to implement the consummation of the Sale, to provide the services required pursuant to Quixote's consulting agreement with Cinram, and to document any necessary arrangements mutually determined to be needed to implement this agreement. 10. This agreement is intended to be binding on you and Quixote upon consummation of the Sale. You and Quixote agree that this agreement is intended to be in lieu of any and all other arrangements and obligations between the parties, and that, except as provided in paragraph 11 below, the Executive Employment Agreement dated June 24, 1991 between you and Quixote will be cancelled and terminated in full upon implementation of these arrangements. 11. You agree that during the period of your employment by Quixote and the Consulting Period, you will not, without the written consent of Quixote, disclose to any person other than an employee of Quixote, any confidential information of Quixote and its subsidiaries which was obtained by you while in the employ of Quixote or during the Consulting Period, the disclosure of which will be damaging to Quixote. 12. Quixote will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all, or substantially all, of the business and/or assets of Quixote, by agreement in form and substance satisfactory to you, to expressly assume and agree to perform this agreement in the same manner and to the same extent that Quixote would be required to perform it if no such succession had taken place. If you agree that this letter accurately summarizes our agreement, please so indicate by signing one copy of this letter and returning it to me. Sincerely, /s/ Philip E. Rollhaus, Jr. Philip E. Rollhaus, Jr. I agree that this letter accurately states our agreement with respect to my employment by Quixote Corporation and future retirement plans. Date:January 13, 1997 /s/ Myron R. Shain Myron R. Shain EX-11 4 EXHIBIT 11 QUIXOTE CORPORATION AND SUBSIDIARIES Computation of Net Earnings Per Average Common and Common Equivalent Share
For the Nine Months Ended March 31, 1997 ------------------------- Fully Primary Diluted ---------- ---------- Net loss as reported (A) $(6,159,000) $(6,159,000) =========== =========== Average common shares outstanding would be adjusted for the exercise of stock options as follows: Weighted average shares outstanding 7,972,175 7,972,175 Incremental shares outstanding assuming exercise of stock options using the treasury stock method 52,554 79,439 ---------- ---------- Average common and common equivalent shares outstanding (B) 8,024,729 8,051,614 ========== ========== Net loss per common and common equivalent share (A/B) $ (.77) $ (.76) ========== ==========
EXHIBIT 11 QUIXOTE CORPORATION AND SUBSIDIARIES Computation of Net Earnings Per Average Common and Common Equivalent Share
For the Nine Months Ended March 31, 1996 ------------------------- Fully Primary Diluted ---------- ---------- Net loss as reported $(12,046,000) $(12,046,000) Add interest expense and deferred charge amortization (net of income taxes) 735,000(1) ----------- ----------- Adjusted net loss for computation (A) $(12,046,000) $(11,311,000) =========== =========== Average common shares outstanding would be adjusted for the additional shares that would be issued assuming conversion of the debentures and exercise of stock options as follows: Weighted average shares outstanding 7,865,538 7,865,538 Shares assumed issued upon conversion of debentures 1,051,316 Incremental shares outstanding assuming exercise of stock options using the treasury stock method 99,168 99,168 ----------- ---------- Average common and common equivalent shares outstanding (B) 7,964,706 9,016,022 =========== ========== Net loss per common and common equivalent share (A/B) $ (1.51) $ (1.25) =========== ========== Notes: (1) The net loss for the fully diluted calculation is adjusted for interest expense and deferred charge amortization, assuming exercise of the conversion privilege on the 8% convertible debentures.
EXHIBIT 11 QUIXOTE CORPORATION AND SUBSIDIARIES Computation of Net Earnings per Average Common and Common Equivalent Share
For the Three Months Ended March 31, 1997 -------------------------- Fully Primary Diluted ---------- ---------- Net loss as reported (A) $(7,994,000) $(7,994,000) =========== =========== Average common shares outstanding would be adjusted for the exercise of stock options as follows: Weighted average shares outstanding 7,974,612 7,974,612 Incremental shares outstanding assuming exercise of stock options using the treasury stock method 52,554 79,439 ---------- ---------- Average common and common equivalent shares outstanding (B) 8,027,166 8,054,051 ========== ========== Net loss per common and common equivalent shares (A/B) $ (1.00) $ (.99) ========== ==========
EXHIBIT 11 QUIXOTE CORPORATION AND SUBSIDIARIES Computation of Net Earnings Per Average Common and Common Equivalent Share
For the Three Months Ended March 31, 1996 -------------------------- Fully Primary Diluted ---------- ---------- Net loss as reported $(1,801,000) $(1,801,000) Add interest expense and deferred charge amortization (net of income taxes) 245,000 (1) ---------- ---------- Adjusted net loss for computation (A) $(1,801,000) $(1,556,000) ========== ========== Average common shares outstanding would be adjusted for the additional shares that would be issued assuming conversion of the debentures and exercise of stock options as follows: Weighted average shares outstanding 7,870,501 7,870,501 Shares assumed issued upon conversion of debentures 1,051,316 Incremental shares outstanding assuming exercise of stock options using the treasury stock method 99,168 99,168 ---------- ---------- Average common and common equivalent shares outstanding (B) 7,969,669 9,020,985 ========== ========== Net loss per common and common equivalent shares (A/B) $ (.23) $ (.17) ========== ========== Notes: (1) The net loss for the fully diluted calculation is adjusted for interest expense and deferred charge amortization, assuming exercise of the conversion privilege on the 8% convertible debentures.
EX-27 5
5 9-MOS JUN-30-1997 MAR-31-1997 22,411,000 0 6,946,000 163,000 4,222,000 35,237,000 21,237,000 8,147,000 54,659,000 14,042,000 0 0 0 145,000 40,419,000 54,659,000 30,559,000 30,559,000 15,857,000 15,857,000 13,052,000 0 494,000 772,000 193,000 579,000 (6,738,000) 0 0 (6,159,000) (.77) (.77)
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