-----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, HCp0CtTOZlyHDZKxo0R/sOKeHFoq+O7QVKfFuIjyUq7L4jUJPrz4TM3BLqULbD8a WvLykBUTOMWzzK6wGEywnA== /in/edgar/work/0000095953-00-000014/0000095953-00-000014.txt : 20001108 0000095953-00-000014.hdr.sgml : 20001108 ACCESSION NUMBER: 0000095953-00-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNALLOY CORP CENTRAL INDEX KEY: 0000095953 STANDARD INDUSTRIAL CLASSIFICATION: [3317 ] IRS NUMBER: 570426694 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19687 FILM NUMBER: 754615 BUSINESS ADDRESS: STREET 1: CROFT INDUSTRIAL PARK STREET 2: P O BOX 5627 CITY: SPARTANBURG STATE: SC ZIP: 29304 BUSINESS PHONE: 8035853605 MAIL ADDRESS: STREET 1: P O BOX 5627 CITY: SPARTANBURG STATE: SC ZIP: 29304 FORMER COMPANY: FORMER CONFORMED NAME: BLACKMAN UHLER INDUSTRIES INC DATE OF NAME CHANGE: 19710510 10-Q 1 0001.txt FORM 10-Q Securities and Exchange Commission Washington, D. C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 2000 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 0-19687 SYNALLOY CORPORATION (Exact name of registrant as specified in its charter) Delaware 57-0426694 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) Post Office Box 5627 Croft Industrial Park Spartanburg, South Carolina 29304 (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, Including Area Code (864) 585-3605 Not Applicable (Former name, former address and former fiscal year, if changed since last year.) 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____ Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practical date. Number of Shares Outstanding Title of Class As of September 30, 2000 Common Stock, $1.00 Par Value 6,093,034 - 1 - Synalloy Corporation Index PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Condensed consolidated balance sheets - September 30, 2000 and January 1, 2000 Condensed consolidated statements of income - Three and nine months ended September 30, 2000 and October 2, 1999 Condensed consolidated statements of cash flows - Nine months ended September 30, 2000 and October 2, 1999 Notes to condensed consolidated financial statements - September 30, 2000 Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K - 2 - PART 1. FINANCIAL STATEMENTS Synalloy Corporation Condensed Consolidated Balance Sheets Sept 30, 2000 Jan 1, 2000 (Unaudited) (Note) Assets Current assets Cash and cash equivalents $ 18,545 $ 120,549 Accounts receivable, less allowance for doubtful accounts 15,093,438 16,354,165 Inventories Raw materials 11,387,836 9,378,087 Work-in-process 5,485,991 6,033,389 Finished goods 16,116,083 13,407,243 Total inventories 32,989,910 28,818,719 Deferred income taxes 406,000 406,000 Prepaid expenses and other current assets 370,129 794,232 Total current assets 48,878,022 46,493,665 Cash value of life insurance 2,167,011 2,112,411 Investment 638,117 1,039,117 Property, plant & equipment, net of accumulated depreciation of $37,608,000 and $34,887,000 25,803,195 25,985,725 Deferred charges and other assets 2,879,134 2,421,655 Total assets $80,365,479 $78,052,573 Liabilities and Shareholders' Equity Current liabilities Notes payable $ 8,063,000 $ 3,084,000 Accounts payable 9,372,212 10,867,711 Income taxes 684,337 1,209,874 Accrued expenses 3,226,262 2,957,728 Current portion of environmental reserves 373,500 373,500 Total current liabilities 21,719,311 18,492,813 Long-term debt, less current portion 10,000,000 10,000,000 Environmental reserves 1,319,097 1,661,663 Deferred compensation 1,402,885 1,374,210 Deferred income taxes 1,823,000 1,864,000 Contingencies Shareholders' equity Common stock, par value $1 per share - authorized 12,000,000 shares; issued 8,000,000 shares 8,000,000 8,000,000 Capital in excess of par value 9,491 9,491 Retained earnings 52,333,863 51,325,183 Accumulated other comprehensive income 201,000 461,000 Less cost of Common Stock in treasury (16,443,168) (15,135,787) Total shareholders' equity 44,101,186 44,659,887 Total liabilities and shareholders' equity $80,365,479 $78,052,573 Note: The balance sheet at January 1, 2000 has been derived from the audited financial statements at that date. See accompanying notes to condensed consolidated financial statements
- 3 - Synalloy Corporation Condensed Consolidated Statements of Income (Unaudited) Three Months Ended Nine Months Ended Sep 30, 2000 Oct 2, 1999 Sep 30, 2000 Oct 2, 1999 Net sales $24,963,661 $31,024,054 $89,126,032 $86,961,126 Cost of sales 22,733,500 26,424,178 76,762,940 75,658,723 Gross profit 2,230,161 4,599,876 12,363,092 11,302,403 Selling, general and administrative expense 2,484,258 3,159,168 8,566,366 8,567,623 Operating (loss) income (254,097) 1,440,708 3,796,726 2,734,780 Other (income) and expense Interest expense 303,085 179,836 815,163 535,617 Other, net (28,162) (19,661) (16,499) (102,731) (Loss)income before taxes (529,020) 1,280,533 2,998,062 2,301,894 Provision for income tax (201,000) 450,000 1,055,000 809,000 Net (loss) income $ (328,020) $ 830,533 $ 1,943,062 $ 1,492,894 Net (loss) income per common share Basic ($.05) $.13 $.31 $.23 Diluted ($.05) $.13 $.31 $.23 Dividends paid per Common share $.05 $.05 $.15 $.15 Average shares outstanding Basic 6,120,511 6,576,279 6,222,098 6,627,686 Diluted 6,120,541 6,576,279 6,222,306 6,629,974 See accompanying notes to condensed consolidated financial statements.
- 4 - Synalloy Corporation Condensed Consolidated Statements of Cash Flows Nine Months Ended Sep 30, 2000 Oct 2, 1999 Operating activities Net income $ 1,943,062 $ 1,492,894 Adjustments to reconcile net income to net Cash provided by operating activities: Depreciation expense 2,966,624 2,921,634 Amortization of deferred charges 243,956 195,939 Deferred compensation 28,675 10,899 Deferred income taxes 100,000 - Provision for losses on accounts receivable 103,986 594,107 (Gain) loss on sale of property, plant and equipment (5,426) 5,864 Cash value of life insurance (54,600) (28,069) Environmental reserves (342,566) (322,060) Changes in operating assets and liabilities: Accounts receivable 1,156,741 (6,502,301) Inventories (4,171,191) (1,795,436) Other assets 155,668 223,955 Accounts payable and accrued expenses (1,367,965) 5,460,640 Income taxes payable (525,537) 981,319 Net cash provided by operating activities 231,427 3,239,385 Investing activities Purchases of property, plant and equipment (2,793,858) (2,675,197) Proceeds from sale of property, plant and equipment 15,190 22,624 Acquisitions, net of cash - - Increase in note receivables (292,000) (237,000) Net cash used in investing activities (3,070,668) (2,889,573) Financing activities Proceeds from revolving lines of credit 34,375,000 25,357,000 Payments on revolving lines of credit (29,396,000) (23,676,000) Principal payments on long-term debt - - Payment of notes payable to employee - - Proceeds from exercised stock options - - Purchases of treasury stock (1,307,380) (1,149,565) Dividends paid (934,383) (993,950) Net cash provided by (used in) financing activities 2,737,237 (462,515) Decrease in cash and cash equivalents (102,004) (112,703) Cash and cash equivalents at beginning of year 120,549 117,658 Cash and cash equivalents at end of period $ 18,545 $ 4,955 See accompanying notes to condensed consolidated financial statements.
- 5 - Synalloy Corporation Notes To Condensed Consolidated Financial Statements (Unaudited) September 30, 2000 NOTE 1--BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine-month periods ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 30, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the period ended January 1, 2000. NOTE 2--INVENTORIES Inventories are stated at the lower of cost (first-in, first-out method) or market. NOTE 3--LEGAL MATTERS The Company is from time-to-time subject to various claims, other possible legal actions for product liability and other damages, and other matters arising out of the normal conduct of the Company's business. Management believes that based on present information, it is unlikely that liability, if any, exists that would have a materially adverse effect on the consolidated operating results or financial position of the Company. NOTE 4--COMPREHENSIVE INCOME Comprehensive (loss) and income was ($515,000) and $1,683,000 for the three and nine months ended September 30, 2000, respectively. Comprehensive income consists of net income less unrealized losses on the Company's foreign equity investment, of $187,000 and $260,000, net of deferred income taxes of $101,000 and $141,000 for the three and nine months ended September 30, 2000, respectively, and is recorded in Shareholders' Equity. NOTE 5--ACCOUNTING FOR DERIVITIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company does not have any material derivative instruments nor does it participate in hedging activities, therefore management believes the adoption of Financial Accounting Statements 133, 137 and 138 will not have a material impact of the financial statements of the Company. NOTE 6--SEGMENT INFORMATION During the first quarter of 2000, the Company completed the reorganization of its Chemicals Segment changing the Segment into two separately managed product groups - Colors and Specialty Chemicals. Previously, the Segment had been managed by geographic location. The amounts presented for the third quarter and nine months of 1999 have been restated to reflect the reorganization. - 6 - Synalloy Corporation Notes To Condensed Consolidated Financial Statements - Continued (Unaudited) September 30, 2000 NOTE 6--SEGMENT INFORMATION (Continued) (Dollar amounts are in thousands.) Three Months Ended Nine Months Ended Sep 30, 2000 Oct 2, 1999 Sep 30, 2000 Oct 2, 1999 Net sales Colors Group $ 6,384 $ 7,331 $20,334 $22,895 Specialty Chemicals Group 5,240 5,709 16,424 17,319 Chemicals Segment 11,624 13,040 36,758 40,214 Metals Segment 13,340 17,984 52,368 46,747 $24,964 $31,024 $89,126 $86,961 Operating (loss) income Colors Group $ (353) $ 37 $ (223) $ 337 Specialty Chemicals Group (773) 69 (1,245) 374 Chemicals Segment (1,126) 106 (1,468) 711 Metals Segment 1,043 1,575 6,174 2,718 (83) 1,681 4,706 3,429 Unallocated expenses Corporate 171 200 909 703 Interest and debt expense, net of interest inc 275 201 799 424 (Loss) income before income taxes $ (529) $ 1,280 $ 2,998 $ 2,302
- 7 - Synalloy Corporation Management's Discussion And Analysis Of Financial Condition And Results Of Operations The following is management's discussion of certain significant factors that affected the Company during the quarter ended September 30, 2000. (Dollar amounts are in thousands except for per share data.) Consolidated sales decreased 20 percent and increased three percent, respectively, for the quarter and year-to-date compared to the same periods one year ago. The Company had a consolidated net loss for the quarter of $328 compared to net income of $830 for the third quarter of 1999. However, consolidated net income year to date was up 30 percent to $1,943 compared to $1,493 compared to the same period one year ago. Metals Segment sales decreased 26 percent and operating income declined 34 percent for the quarter. Sales year-to-date increased 12 percent and operating income increased over twice the level of the prior year. The decline in dollar sales in the quarter resulted from 42 percent lower unit volumes that were partially offset by a 27 percent increase in average selling prices. Unit volumes were also down the same 42 percent on a sequential quarterly basis. This is the steepest quarterly decline in unit volumes in management's memory. The decline appears to be caused by inventory liquidation resulting from lower prices for flat-rolled stainless steel and stainless pipe because of surcharge reductions that began in August. The surcharges reflect changes in the cost of certain raw materials, primarily nickel, that are added to the base price by the flat-rolled producers. The surcharge to be effective at the beginning of each month is announced in advance. This results in monthly price volatility that motivates distributors to add to inventories ahead of surcharge increases and reduce inventories ahead of surcharge decreases. If the decline in unit volume is not due to lower-end use demand but is the result of destocking, as industry sources believe, sales should recover quickly when distributor inventories are depleted. Chemicals Segment sales decreased 11 and nine percent in the quarter and year- to-date, respectively, with both Colors and Specialty Chemicals contributing to the decline. The third quarter is traditionally the worst for the Textile Colors Group but management is nonetheless disappointed with the 13 percent decline in sales from a year earlier and the significant operating loss experienced during the quarter. The domestic textile color business can only be described as brutally competitive. Both unit volume demand and sales prices can't seem to find a bottom. An unavoidable consequence of price declines is inventory losses that lead to lower profit margins. This business will continue to be under pressure as long as the domestic textile industry continues to shrink because of imports from low wage countries. Management's focus is to consider all alternatives to generate a reasonable return on the capital utilized in this business. The Augusta plant suffered a $539 operating loss in the quarter and has incurred $1,434 in losses for the first nine months of this year, which represents most of the loss of the Specialty Chemicals Group. Site preparation is underway in Spartanburg for the move of equipment from Augusta. The move should be completed by year-end after which the Augusta plant losses will be eliminated and profits in Spartanburg should be enhanced by improved utilization. However, the Company expects to take a restructuring charge in the fourth quarter, which has not been quantified. The Spartanburg plant also had a loss for the quarter as a result of lower than expected production. Management plans to bring expenses in line with production volume by year-end. - 8 - Synalloy Corporation Management's Discussion And Analysis Of Financial Condition And Results Of Operations - Continued Selling and administrative expense for the quarter and year-to-date were ten percent of consolidated sales, respectively, compared to last year's ten percent. Cash flows from operations totaled $231 during the first nine months of 2000 compared to $3,239 generated during the same period one year ago. The decrease in cash flows came primarily from an increase in inventories and a decrease in accounts payable, offset by a decrease in accounts receivable totaling $4,382 in 2000, compared to a net decrease of $2,837 from the same accounts in 1999. In addition, a decline in income taxes payable in 2000 of $526 compared to an increase of $981 in 1999 contributed to the decline. The Company used part of the cash flows generated in 2000 and short term borrowings to purchase 52,700 shares of the Company's common stock for $1,307. The Company expects that available cash and existing lines of credit will be sufficient to meet normal operating requirements, including capital expenditures and payment of dividends over the near term. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 The statements contained in this management discussion and analysis that are not historical facts may be forward looking statements. The forward looking statements are subject to certain risks and uncertainties, including without limitation those identified below, which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of their dates. The following factors could cause actual results to differ materially from historical results or those anticipated: adverse economic conditions, the impact of competitive products and pricing, product demand and acceptance risks, raw material and other increased costs, customer delays or difficulties in the production of products, and other risks detailed from time to time in Synalloy's Securities and Exchange Commission filings. Synalloy Corporation assumes no obligation to update the information included herein. - 9 - PART II: OTHER INFORMATION Synalloy Corporation Item 1. Legal Proceedings None Item 2. Change In Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission Of Matters To A Vote Of Security Holders: None Item 5. Other Information None Item 6. Exhibits And Reports On Form 8-K The following exhibits are included herein: Financial Data Schedule - 10 - Synalloy Corporation 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. SYNALLOY CORPORATION (Registrant) Date: November 10, 2000 /s/ James G. Lane, Jr. James G. Lane, Jr., Chairman and Chief Executive Officer Date: November 10, 2000 /s/ Gregory M. Bowie Gregory M. Bowie Vice President, Finance - 11 - EX-27 2 0002.txt
5 1000 9-MOS DEC-30-2000 SEP-30-2000 19 0 15093 0 32990 48878 63411 37608 80365 21719 0 0 0 8000 36101 80365 89126 89126 76763 76763 8566 0 815 2998 1055 1943 0 0 0 1943 .31 .31
-----END PRIVACY-ENHANCED MESSAGE-----