-----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, F+ZL2nO/1hrqGsQMmp7eHaUms4lKZWfpY37Y2HRJTh53iaTFRE+HBIyYkgEsJ8N1 1X/w1kiGtAjopK9I2lNO2g== 0000950134-96-006194.txt : 19961118 0000950134-96-006194.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950134-96-006194 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TYLER CORP /NEW/ CENTRAL INDEX KEY: 0000860731 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES & ROLLING & FINISHING MILLS [3310] IRS NUMBER: 752303920 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10485 FILM NUMBER: 96663718 BUSINESS ADDRESS: STREET 1: 2121 SAN JACINTO ST STREET 2: STE 3200 SAN JACINTO TOWER CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2147547800 MAIL ADDRESS: STREET 1: 2121 SAN JACINTO STREET STREET 2: SUITE 3200 CITY: DALLAS STATE: TX ZIP: 75201 FORMER COMPANY: FORMER CONFORMED NAME: TYLER THREE INC DATE OF NAME CHANGE: 19600201 10-Q 1 FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 1996 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-10485 TYLER CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 75-2303920 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 2121 SAN JACINTO STREET SUITE 3200, DALLAS, TEXAS 75201 (Address of principal executive offices) (Zip code) (214) 754-7800 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) 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 ----- ------ Number of shares of common stock of registrant outstanding at November 11, 1996: 19,875,454 Page 1 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements TYLER CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30 December 31 September 30 1996 1995 1995 ------------ ------------ ------------ ASSETS Current assets Cash and cash equivalents $ 8,931,000 $ 3,247,000 $ 1,768,000 Accounts receivable (less allowance for losses of: 9/30/96 - $385,000; 12/31/95 - $396,000; 9/30/95 - $641,000) 4,970,000 16,250,000 6,900,000 Amount due from Union Acquisition Corporation -- 7,599,000 -- Merchandise inventories 25,355,000 22,258,000 26,675,000 Income tax receivable 1,632,000 4,361,000 5,108,000 Prepaid expense 4,949,000 5,529,000 2,154,000 Deferred income tax benefit 1,406,000 1,406,000 3,981,000 ------------ ------------ ------------ Total current assets 47,243,000 60,650,000 46,586,000 Net assets of discontinued operations (1) -- -- 95,405,000 Property, plant and equipment, at cost 18,592,000 16,062,000 17,151,000 Less allowance for depreciation 7,554,000 6,376,000 6,480,000 ------------ ------------ ------------ 11,038,000 9,686,000 10,671,000 Other assets Goodwill and other intangibles 52,633,000 54,265,000 55,855,000 Sundry 2,439,000 4,036,000 3,702,000 ------------ ------------ ------------ 55,072,000 58,301,000 59,557,000 ------------ ------------ ------------ $113,353,000 $128,637,000 $212,219,000 ============ ============ ============
See accompanying notes. - 2 - 3 TYLER CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) (Unaudited)
September 30 December 31 September 30 1996 1995 1995 ------------ ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 8,337,000 $ 7,587,000 $ 8,882,000 Accrued liabilities 6,010,000 15,972,000 12,182,000 ------------ ------------ ------------ Total current liabilities 14,347,000 23,559,000 21,064,000 Deferred income tax 8,058,000 8,058,000 8,084,000 Other liabilities 2,282,000 3,658,000 4,216,000 Long-term debt -- -- 72,500,000 Commitments and contingencies (2) Shareholders' equity Common stock ($.01 par value, 50,000,000 shares authorized, 21,309,277 shares issued) 213,000 213,000 213,000 Capital surplus 48,538,000 48,538,000 48,530,000 Retained earnings 46,551,000 51,247,000 64,259,000 ------------ ------------ ------------ 95,302,000 99,998,000 113,002,000 Less treasury shares, at cost: (9/30/96 - 1,433,823; 12/31/95 - 1,433,783; 9/30/95 - 1,437,408) 6,636,000 6,636,000 6,647,000 ------------ ------------ ------------ Total shareholders' equity 88,666,000 93,362,000 106,355,000 ------------ ------------ ------------ $113,353,000 $128,637,000 $212,219,000 ============ ============ ============
See accompanying notes. - 3 - 4 TYLER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Nine Months Ended September 30 ------------------------------ 1996 1995 ------------ ------------ Net sales $ 83,237,000 $ 87,772,000 Costs and expenses Cost of sales 42,282,000 45,473,000 Selling, general and administrative expenses 47,375,000 50,543,000 Interest (income) expense, net (219,000) 2,085,000 ------------ ------------ 89,438,000 98,101,000 ------------ ------------ Loss from continuing operations before income tax benefit (6,201,000) (10,329,000) Income tax benefit (1,505,000) (5,264,000) ------------ ------------ Loss from continuing operations (4,696,000) (5,065,000) Income from discontinued operations, net of income tax (1) -- 1,104,000 ------------ ------------ Net loss $ (4,696,000) $ (3,961,000) ============ ============ Earnings (loss) per common share Continuing operations $ (.24) $ (.26) Discontinued operations -- .06 ------------ ------------ Net loss per common share $ (.24) $ (.20) ============ ============ Average shares outstanding during the period 19,875,000 19,868,000
See accompanying notes. - 4 - 5 TYLER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended September 30 ------------------------------- 1996 1995 ------------ ------------ Net sales $ 25,879,000 $ 29,010,000 Costs and expenses Cost of sales 13,847,000 15,763,000 Selling, general and administrative expenses 15,641,000 16,725,000 Interest (income) expense, net (73,000) 764,000 ------------ ------------ 29,415,000 33,252,000 ------------ ------------ Loss from continuing operations before income tax benefit (3,536,000) (4,242,000) Income tax benefit (66,000) (1,766,000) ------------ ------------ Loss from continuing operations (3,470,000) (2,476,000) Income from discontinued operations, net of income tax (1) -- 220,000 ------------ ------------ Net loss $ (3,470,000) $ (2,256,000) ============ ============ Earnings (loss) per common share Continuing operations $ (.18) $ (.13) Discontinued operations -- .02 ------------ ------------ Net loss per common share $ (.18) $ (.11) ============ ============ Average shares outstanding during the period 19,875,000 19,872,000
See accompanying notes. - 5 - 6 TYLER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30 ------------------------------ 1996 1995 ------------ ------------ Cash flows from operating activities Net loss $ (4,696,000) $ (3,961,000) Adjustments to reconcile net loss to net cash provided by operations Depreciation and amortization 3,075,000 3,462,000 Provision for losses on accounts receivable 150,000 143,000 Decrease in accounts receivable 11,130,000 12,498,000 Increase in inventories (3,097,000) (1,729,000) Decrease (increase) in income tax receivable 2,729,000 (5,108,000) Decrease in prepaid expense 580,000 863,000 Increase in accounts payable 750,000 879,000 Decrease in accrued liabilities (8,642,000) (5,283,000) Decrease in income tax payable -- (947,000) Decrease in other liabilities (168,000) (875,000) Discontinued operations-noncash charges and working capital changes -- 1,233,000 ------------ ----------- Net cash provided by operations 1,811,000 1,175,000 ------------ ----------- Cash flows from investing activities Net amount due from Union Acquisition Corporation 7,599,000 -- Additions to property, plant and equipment (3,230,000) (1,008,000) Cost of acquisition (2,528,000) -- Proceeds from disposal of property, plant and equipment 435,000 22,000 Investing activities of discontinued operations -- (8,588,000) Other 1,597,000 (748,000) ------------ ----------- Net cash provided (used) by investing activities 3,873,000 (10,322,000) ------------ ----------- Cash flows from financing activities Long-term borrowings -- 9,000,000 Issuance of common stock -- 18,000 ------------ ----------- Net cash provided by financing activities -- 9,018,000 ------------ ----------- Net increase (decrease) in cash and cash equivalents 5,684,000 (129,000) Cash and cash equivalents at beginning of period 3,247,000 1,897,000 ------------ ----------- Cash and cash equivalents at end of period $ 8,931,000 $ 1,768,000 ============ =========== Supplemental disclosures Interest paid $ 60,000 $ 4,552,000 Income tax (received) paid $ (4,414,000) $ 2,039,000
See accompanying notes. - 6 - 7 Tyler Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) (1) Discontinued Operations On December 1, 1995, Tyler Corporation (the "Company") sold all the outstanding capital stock of Swan Transportation Company ("Swan") to Ransom Industries, Inc., formerly known as Union Acquisition Corporation ("Union"), an Alabama corporation. In the same transaction, Tyler Pipe Industries, Inc. ("Tyler Pipe"), a wholly owned subsidiary of the Company, sold substantially all of its assets to Union, and Union assumed substantially all the liabilities of Tyler Pipe. The results of these entities are included as discontinued operations. The assets Tyler Pipe sold and the liabilities Union assumed included all those relating to Tyler Pipe's business of manufacturing and marketing cast iron pipe and fittings, excluding cash and certain other assets and liabilities. Swan is a motor-carrier company that provided transportation services to Tyler Pipe prior to the closing. Based on a July 1, 1995 balance sheet, Union paid a net amount of $66,139,000 for the stock of Swan and assets of Tyler Pipe of which $58,540,000 was received at closing on December 1, 1995, and the net remaining payment was received in January 1996. In addition, Tyler Pipe distributed cash of approximately $17,700,000 to the Company from July 1, 1995 through closing. The net assets of discontinued operations at September 30, 1995, consist principally of working capital (including accounts receivable, inventories, accounts payable and accrued liabilities), property, plant and equipment, and intangibles and other assets of Tyler Pipe. Net sales of discontinued operations for the three and nine months ended September 30, 1995, were $57,409,000 and $166,837,000, respectively. Results of discontinued operations include interest expense on debt associated with discontinued operations of $716,000 and $2,473,000, respectively, for the three and nine months ended September 30, 1995. Income tax of $227,000 and $1,143,000, respectively, for the three and nine months ended September 30, 1995, has been provided on discontinued operations based on the income tax resulting from inclusion of the discontinued segment in the Company's consolidated federal income tax return. Subsequent to the closing, Tyler Pipe was renamed TPI of Texas, Inc. ("TPI"). TPI is subject to various environmental laws and regulations and, as such, is involved in environmental matters related to its manufacturing operations conducted prior to the sale. TPI is also involved in legal actions and claims arising in the ordinary course of business. Certain contingent liabilities related to these matters were retained by TPI in the transaction. See "Commitments and Contingencies" footnote. - 7 - 8 (2) Commitments and Contingencies The New Jersey Department of Environmental Protection and Energy ("NJDEPE") has alleged that a site where Jersey-Tyler Foundry Company ("Jersey-Tyler"),a former affiliate of TPI, once operated a foundry contains lead and possible other priority pollutant metals and may need on-site and off-site remediation. The foundry was operated on the site from the early part of this century to 1969 when it was acquired by Jersey-Tyler. Jersey- Tyler operated the foundry from 1969 to 1976, at which time the foundry was closed. Subsequently, the property was sold to other persons who have operated a salvage yard on the site. TPI has performed a remedial investigation and submitted the results to the NJDEPE for review. While TPI has not committed to further action, it is probable that the NJDEPE will seek to require TPI to remediate the site. TPI denies liability because it never owned the property. In connection with the sale of the assets of TPI to Union, an affiliate of McWane, Inc., on December 1, 1995, pursuant to an acquisition agreement among the Company, TPI and Union (the "Acquisition Agreement"), Union agreed to manage and direct the prosecution or defense of these matters on behalf of TPI. In addition, Union agreed to reimburse TPI the first $3,000,000 of certain costs and expenses incurred in connection with the investigation or remediation of the site, and one-half of such expenses in excess of $3,000,000. Under any circumstances, however, the maximum amount that Union agreed to reimburse TPI in connection with this matter is $6,500,000. Union, on behalf of TPI, is proceeding against predecessor owners and operators of the site, as well as others, to bear their share of the cost of the investigation and any other costs, including any remediation incurred by TPI. Some costs may also be covered by insurance although the insurance carriers are expected to deny coverage. TPI expects Union, on its behalf, to proceed against such insurance carriers seeking coverage of remediation costs. Environmental consultants have been engaged to estimate the extent of environmental contamination. In June 1992 Anaheim Foundry Co. ("Anaheim") sued TPI in federal district court in the Central District of California alleging that TPI violated various antitrust laws and making other common law claims of anticompetitive business practices. On October 30, 1996, the parties agreed to an order of dismissal and TPI paid $125,000, which was previously accrued, to Union to resolve any obligation it had under the Acquisition Agreement as it related to this lawsuit. - 8 - 9 On January 18, 1988, the Environmental Protection Agency ("EPA") notified TPI that it is a potentially responsible party at the Novak Sanitary Landfill Superfund site in Lehigh County, Pennsylvania (the "Novak Site"). TPI has recently negotiated a settlement agreement with other potentially responsible parties at the Novak Site. Although there is some possibility that the matter could be reopened and Tyler continues to be required to guarantee its portion of the cleanup costs, the settlement agreement should resolve TPI's liability for the site. The settlement agreement is based in part on TPI's payment of $213,500 and certain amounts previously paid. TPI will be reimbursed by Union for these amounts, pursuant to the Acquisition Agreement. Pursuant to the Acquisition Agreement, Union agreed to manage and direct the prosecution or defense of certain matters on behalf of TPI, including but not limited to the Anaheim suit and remediation of the Novak Site, and to reimburse related costs and expenses. Union agreed to reimburse TPI the first $750,000 of all costs and expenses incurred in connection with each such matter, and one-half of such expenses in excess of $750,000. The maximum amount that Union agreed to reimburse TPI in connection with all of these matters excluding Jersey- Tyler is $8,000,000. Although it is impossible to predict the outcome of legal or regulatory proceedings, based on the Company's negotiations and activities before the sale of TPI's business, the Company believes that substantially all of the costs, expenses and damages, if any, resulting from the legal proceedings and environmental matters described above will be reimbursed by Union pursuant to the Acquisition Agreement. In connection with the sale of assets of Tyler Pipe, the Company retained some additional legal exposure. However, the Company believes that the resolution of any potential legal proceedings would not be material. In June 1995 Forest City Auto Parts Company ("Forest City") was sued by a former executive in the Court of Common Pleas of Cuyahoga County, Ohio alleging that Forest City terminated the plaintiff because of his age and making other common law claims arising out of his termination. The plaintiff seeks damages in excess of $16,000,000. Although Forest City maintains insurance to cover claims of this nature, such insurance would not cover awards, if any, of punitive and certain other damages. Forest City is defending this lawsuit vigorously. The case has subsequently been moved to federal district court in Cleveland. The discovery process has not been completed and based on results of discovery to date the outcome of this lawsuit is uncertain. Other than ordinary course, routine litigation incidental to the business of the Company and except as described herein, there are no material legal proceedings pending to which the Company or its subsidiaries are parties or to which any of its properties are subject. - 9 - 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results This Quarterly Report on Form 10-Q contains forward-looking statements about the business, financial condition and prospects of the Company. The actual results of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties including, without limitation, changes in product demand, the availability of products, changes in competition, economic conditions, interest rate fluctuations, various inventory risks due to changes in market conditions, changes in tax and other governmental rules and regulations applicable to the Company and other risks indicated in the Company's filings with the Securities and Exchange Commission. These risks and uncertainties are beyond the ability of the Company to control, and in many cases, the Company cannot predict the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words "believes", "estimates", "plans", "expects", "anticipates" and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. Analysis of Results of Continuing Operations For the three months ended September 30, 1996, Tyler Corporation recorded a loss from continuing operations before income tax benefit of $3.5 million compared to a $4.2 million loss last year. Sales declined 11% to $25.9 million. For the nine-month period, Tyler had a loss from continuing operations before income tax benefit of $6.2 million versus a $10.3 million loss in 1995. Sales were $83.2 million, down 5%. Same-store sales at Forest City Auto Parts were off 4.1% for the quarter ended September 30, 1996, compared to last year and up 1.6% year to date. Sales comparisons to last year have become more difficult as competitors have aggressively opened new stores in Forest City's markets. In the last three months, several major competitors have opened approximately 25 new stores near existing Forest City locations. Operating profit advanced 38% for the nine months ended September 30, 1996, compared to last year. A higher gross margin was partially offset by operating expenses associated with the new point-of-sale ("POS") computer system. Forest City is continuing to install a perpetual inventory system in its stores. Thus far lines comprising approximately 45% of inventory value are up and running on the perpetual system in all 62 stores. The balance of the company's products should be installed on the new system by early 1997. -10- 11 IFS domestic sales were 27% and 16% below last year for the quarter and nine months ended September 30, 1996, respectively. Competition in fund raising has intensified with attendant pricing pressures on the profit percentages offered to school sponsors. IFS is responding to competitive inroads by emphasizing full-service programs offering higher profit percentages to school sponsors. The company posted a significantly larger domestic operating loss due to higher selling and operating expenses on lower sales for the quarter and nine months ended September 30, 1996. The Company had much lower corporate expense for the nine-month period compared to last year. Savings related to a gain produced through the sale of an asset and a lower personnel expense contributed to the cost reductions. The effective tax benefit rate declined from 51% in 1995 to 24% in 1996 due to the Company's expectations of significantly lower profits in the fourth quarter of 1996 and a large permanent difference relating to the settlement of certain employee benefit plans. In May 1996, the Company entered into a one-year, $14.0 million credit facility with its bank. The purpose of this credit facility is primarily to fund seasonal working capital requirements at IFS. As of November 1996, no borrowings are outstanding except certain letters of credit. Interest rates are negotiated with the participating banks and are based on current market conditions as evidenced by LIBOR and Eurodollar rates. The Company had $8.9 million in cash and approximately $2.7 million letters of credit outstanding at September 30, 1996. We expect the fourth quarter of 1996 to be significantly below last year at both IFS and Forest City. Our emphasis in the coming months will be on evaluating both IFS and Forest City for opportunities to strengthen their operations. Specifically, we are studying the value of the underlying assets which we anticipate could lead to restructuring charges and write-downs of goodwill in the fourth quarter. We will be exploring all available avenues to enhance shareholders' returns. On October 7, 1996, Joseph F. McKinney announced his retirement as chairman of the board and chief executive officer of Tyler Corporation. The board of directors elected C.A. Rundell, Jr., a 30-year director of Tyler, to serve as interim chairman and chief executive officer, and we have commenced a search for a permanent chief executive officer. The board also appointed James Russell to the executive committee and named Fred Meyer chairman of the executive committee of the board. Perry J. Lewis resigned from the board of directors effective August 20, 1996. In his letter of resignation, he indicated that other commitments prevented him from devoting the time to Tyler he felt the shareholders deserved. -11- 12 September 30, 1996 vs. December 31, 1995 Cash and cash equivalents increased $5.7 million primarily due to the settlement of outstanding amounts at December 31, 1995, related to the sale of Tyler Pipe which was offset somewhat by seasonal working capital increases at IFS. In January 1996, the Company received the net remaining payment of $7.6 million from Union for the sale of Tyler Pipe. The Company also received an income tax refund of $4.1 million in August 1996, associated with the loss on the sale of Tyler Pipe. Historically, IFS generates approximately 60% of its sales in the fall. Working capital builds from July through December with subsequent liquidations when the company collects accounts receivable for fall sales. In connection with the 1991 acquisition of Forest City, the Company made a final payment of $1.3 million in the first quarter of 1996 to former shareholders and executives of Forest City as the result of achieving certain cumulative profit objectives. The amount paid was accrued at December 31, 1995. Pursuant to the 1994 IFS acquisition agreement, the Company made a payment of $1.2 million in the third quarter of 1996 to former shareholders and executives of IFS. The amount paid was accrued at December 31, 1995. Other assets and accrued liabilities each include a decline of approximately $2.1 million relating to the settlement of certain employee benefit plans which were primarily funded through insurance policies that the Company redeemed in 1996. Capital expenditures included interim financing of approximately $1.6 million for expanding an IFS warehouse. These amounts were refunded in October 1996, when construction was completed and IFS entered into a sale-leaseback transaction. The new lease covers the original warehouse and the expansion for a 10-year term with annual lease payments of approximately $800,000. Prior to the expansion the annual lease payments relating to warehouse facilities were approximately $700,000. September 30, 1996 vs. September 30, 1995 Working capital at September 30, 1996, rose $7.4 million from September 30, 1995, principally due to the cash retained from the sale of Tyler Pipe which eliminated the Company's debt, collection of an income tax refund of $4.1 million relating to the loss on the sale and significantly lower accrued liabilities. Accounts receivable and inventories have declined from September 30,1995 levels mainly due to lower 1996 fall sales activity. In addition Forest City has closed three unprofitable stores and relocated one store since September 1995 which contributed slightly to the inventory decline. -12- 13 In connection with the sale of Tyler Pipe to Union on December 1, 1995, and pursuant to the terms of the acquisition agreement among the Company, Tyler Pipe and Union, the Company froze benefit accruals for all Tyler Pipe employees and agreed to transfer the benefit obligation relating to the Tyler Pipe employees and the related assets to a new plan established by Union ("the Union Plan"). As a result, in April of 1996 the Company transferred the Tyler Pipe employees' obligation and related asset amounts to the Union Plan. The Company's prepaid pension expense at September 30, 1996 and December 31, 1995 also increased approximately $2.5 million. The Company received governmental approval in November 1996 to terminate the defined benefit pension plan and expects to record a loss upon settlement of the plan of approximately $3.0 to $4.0 million in the fourth quarter of 1996. Because the plan is overfunded, the Company does not anticipate any cash contributions will be necessary to terminate the Plan. Prior to the sale of Tyler Pipe to Union on December 1, 1995, the Company maintained a savings and investment plan primarily for the employees at Tyler Pipe and certain other employees of the Company. As a result of the sale, the Company ceased substantially all contributions as of December 1, 1995. The Company transferred all Tyler Pipe employee account balances to a new plan established by Union in the first quarter of 1996 and received governmental approval in November 1996 to terminate the remaining savings and investment plan. Tyler anticipates all account balances to be distributed by year end. Substantially all expenses relating to the savings and investment plan are included in discontinued operations. The deferred income tax benefit decline from September 30, 1995 is due to recognizing benefit of foreign abandonment losses recorded in 1994 and deferred tax related to the pension plan curtailment gain recorded in December 1995. Accrued liabilities at September 30, 1995 were higher than 1996 due to $1.4 million interest on related bank debt, $1.7 million for certain employee benefit plans and $1.3 million of accrued earnout subsequently paid to former shareholders and executives of Forest City. In addition, declining sales levels at IFS have resulted in lower accrued liabilities associated with sales volume such as sales commissions, contributions to the defined contribution profit sharing plan, sales prize obligations and certain other sales related expenses. -13- 14 ******************** The above unaudited information in the opinion of the Company's management includes all adjustments which the Company considers necessary for a fair summarized presentation of the condensed consolidated balance sheets at September 30, 1996 and 1995, the condensed consolidated results of operations for the three months and nine months ended September 30, 1996 and 1995, and the condensed consolidated cash flows for the nine months ended September 30, 1996 and 1995. The consolidated results of operations for the nine months ended September 30, 1996, are not necessarily indicative of the results of operations for the full year. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (b) There were no reports filed on Form 8-K during the third quarter of 1996. -14- 15 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TYLER CORPORATION By: /s/Linda K. Hill --------------------------------------------- Linda K. Hill, Vice President, Controller, Treasurer and Assistant Secretary - principal financial officer, principal accounting officer and an authorized signatory Date: November 14, 1996 -15- 16 EXHIBIT INDEX
Exhibit Number Exhibit ------- ------- 12 Ratio of Earnings to Fixed Charges 27 Financial Data Schedule
EX-12 2 RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12 TYLER CORPORATION RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS(1) (in thousands)
Three Months Nine Months Ended Ended September 30, September 30, 1996 1996 ------------- ------------- Loss as adjusted: Loss from operations before income tax benefit $(3,536) $(6,201) Interest expense 75 178 Rental expense interest factor 256 766 ------- ------- Loss as adjusted $(3,205) $(5,257) ======= ======= Fixed charges: Interest expense $ 75 $ 178 Rental expense interest factor 256 766 ------- ------- $ 331 $ 944 ======= ======= Ratio of earnings to fixed charges --(2) --(2)
(1) For purposes of computing the ratio of earnings to fixed charges and preferred stock dividends, the loss, as adjusted, consists of the loss from operations before income tax benefit, plus fixed charges. Fixed charges consist of interest on all indebtedness and the portion of rental expense that the Company believes to be representative of interest. For the periods indicated, no preferred stock of the Company was outstanding. (2) The loss from operations before income tax benefit was inadequate to cover fixed charges for the three and nine months ended September 30, 1996, by $3,536,000 and $6,201,000, respectively. EX-27 3 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 8,931,000 0 4,970,000 385,000 25,355,000 47,243,000 18,592,000 7,554,000 113,353,000 14,347,000 0 0 0 213,000 88,453,000 113,353,000 83,237,000 0 42,282,000 0 0 150,000 178,000 (6,201,000) (1,505,000) (4,696,000) 0 0 0 (4,696,000) (.24) (.24)
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